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<TITLE>CRUM & FORSTER HOLDINGS CORP.</TITLE>
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<B><FONT size="2">Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
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<B><FONT size="4">SECURITIES AND EXCHANGE COMMISSION</FONT></B>
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<B><FONT size="2">Washington, D.C. 20549</FONT></B>
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<B><FONT size="4">FORM S-1</FONT></B>

<DIV align="center">
<B><FONT size="2">REGISTRATION STATEMENT</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">UNDER</FONT></B>
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<DIV align="center">
<B><FONT size="2">THE SECURITIES ACT OF 1933</FONT></B>
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<B><FONT size="5">CRUM &#38; FORSTER HOLDINGS CORP.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of registrant as specified in its
charter)</FONT></I>
</DIV>

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	<TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
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	<TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
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	<B><FONT size="2">Delaware</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">6411</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">04-3611900</FONT></B></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<I><FONT size="2">(State or Other Jurisdiction of<BR>
	Incorporation or Organization)</FONT></I></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<I><FONT size="2">(Primary Standard Industrial Classification<BR>
	Code Number, if applicable)</FONT></I></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<I><FONT size="2">(I.R.S. Employer Identification<BR>
	No., if applicable)</FONT></I></TD>
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<B><FONT size="2">305 Madison Avenue</FONT></B>

<DIV align="center">
<B><FONT size="2">Morristown, NJ 07962</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(973) 490-6600</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address and telephone number of
Registrant&#146;s principal executive offices)</FONT></I>
</DIV>

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<B><FONT size="2">Valerie J. Gasparik</FONT></B>

<DIV align="center">
<B><FONT size="2">Corporate Secretary</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDINGS CORP.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">305 Madison Avenue</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Morristown, NJ 07962</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(973)&nbsp;490-6600</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Name, address, including zip code, and
telephone number,</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">including area code, of agent for
service)</FONT></I>
</DIV>

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<B><I><FONT size="2">Copies to:</FONT></I></B>

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	<TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
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	<TD align="center" valign="top">
	<B><FONT size="2">Brice T. Voran, Esq.<BR>
	Shearman &#38; Sterling<BR>
	599 Lexington Avenue<BR>
	New York, New York 10022<BR>
	(212) 848-4000</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="top">
	<B><FONT size="2">Peter J. Gordon, Esq.<BR>
	Simpson Thacher &#38; Bartlett<BR>
	425 Lexington Avenue<BR>
	New York, New York 10017<BR>
	(212) 455-2000</FONT></B></TD>
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<P align="left">
<B><FONT size="2">Approximate date of commencement of the
proposed sale of the securities to the
public:</FONT></B><FONT size="2"> As soon as practicable after
this Registration Statement becomes effective.
</FONT>

<P align="left">
<FONT size="2">If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant
to Rule&nbsp;415 under the Securities Act of 1933, check the
following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">If this Form is filed to register additional
securities for an offering pursuant to Rule&nbsp;462(b) under
the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">
<FONT size="2">If this Form is a post-effective amendment filed
pursuant to Rule&nbsp;462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">
<FONT size="2">If this Form is a post-effective amendment filed
pursuant to Rule&nbsp;462(d) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</FONT>

<P align="left">
<FONT size="2">If delivery of the prospectus is expected to be
made pursuant to Rule&nbsp;434, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

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<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

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	<TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="22%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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	<TD colspan="5"></TD>
</TR>

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	<TD colspan="5"></TD>
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	<TD align="center" nowrap><B><FONT size="1">Title of each class of</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Proposed maximum</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Amount of</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">securities to be registered</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">aggregate offering price(1)</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">registration fee</FONT></B></TD>
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	<TD colspan="5"></TD>
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	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common Stock, par value $.01 per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">$100,000,000
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">$9,200
	</FONT></TD>
</TR>

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	<TD colspan="5" align="left"><HR size="1" noshade></TD>

</TR>

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	<TD width="3%"></TD>
	<TD width="97%"></TD>
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<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Estimated pursuant to Rule&nbsp;457 under the
	Securities Act of 1933, as amended solely for purposes of
	calculating the registration fee.
	</FONT></TD>
</TR>

</TABLE>

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<HR size="1" width="30%" align="center" noshade>

<P align="left">
<B><FONT size="2">The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section&nbsp;8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section&nbsp;8(a), may
determine.</FONT></B>

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<P align="center">
<B><FONT size="2">PART I</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION REQUIRED TO BE DELIVERED TO
OFFEREES OR PURCHASERS</FONT></B>

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<DIV align="left">
<FONT size="2"> <B>The information in this prospectus is not
complete and may be changed without notice. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities, and we are not
soliciting offers to buy these securities, in any state where
the offer or sale of these securities is not permitted.</B>
</FONT>
</DIV>

<DIV align="center">
<B><FONT size="2" color="#D81E05">SUBJECT TO COMPLETION, DATED
MARCH&nbsp;8, 2002</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">PROSPECTUS</FONT></B>

<P align="center">
<B><FONT size="4">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares</FONT></B>

<P align="center">
<IMG src="z06544crumfors.gif">

<P align="center">
<B><FONT size="4">CRUM &#38; FORSTER HOLDINGS CORP.</FONT></B>

<P align="center">
<B><FONT size="4">Common Stock</FONT></B>

<P align="center">
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crum &#38; Forster Holdings Corp. is
offering &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock and our stockholder, Fairfax, is
selling &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock in a firmly underwritten offering. This is
Crum &#38; Forster&#146;s initial public offering, and no public
market currently exists for Crum &#38; Forster&#146;s shares of
common stock. Crum &#38; Forster anticipates that the initial
public offering price for the shares will be between
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crum &#38; Forster has applied for a listing of
the common stock on
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under
the symbol &#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="center">
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Investing in the common stock involves a high
degree of risk. See &#147;Risk Factors&#148; beginning on
page&nbsp;10.</FONT></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="9"></TD>
</TR>

<TR>
	<TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD colspan="9"></TD>
</TR>

<TR>
	<TD colspan="9" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Offering Price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Discounts and Commissions to Underwriters
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Offering Proceeds to Crum &#38; Forster
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Offering Proceeds to Selling Stockholder
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
	<TD colspan="9" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax has granted the underwriters the right to
purchase up to an
additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock to cover any over-allotments. The underwriters
may exercise this right at any time within thirty days after the
offering. The underwriters expect to deliver the shares of
common stock to investors on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002.
</FONT>

<P align="center">
<B><FONT size="4">Banc of America Securities LLC</FONT></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002
</FONT>
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<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

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<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prospectus Summary
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Risk Factors
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Forward-Looking Statements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Use of Proceeds
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend Policy
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">20</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capitalization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">21</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilution
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Selected Financial Data
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Management&#146;s Discussion and Analysis of
	Financial Condition and Results of Operations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Business
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">39</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Insurance Regulatory Matters
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">61</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Management
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">67</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Certain Relationships and Related Transactions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">71</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Principal Stockholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Description of Capital Stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Shares Eligible for Future Sale
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">78</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Certain United States Federal Tax Considerations
	for Non-United States Holders of Common Stock
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">80</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">83</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Legal Matters
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Experts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">85</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Available Information
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">86</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Glossary of Selected Insurance Terms
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">G-1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Index to Consolidated Financial Statements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">F-1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you
with different information. We are not making an offer to sell
these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover
of this prospectus only, regardless of the time of delivery of
this prospectus or of any sale of our common stock.
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "PROSPECTUS SUMMARY" -->

<P align="center">
<B><FONT size="2">PROSPECTUS SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary may not contain all of the
information that may be important to you. You should read all of
the information delivered in connection with this prospectus,
including the consolidated financial statements and related
notes and the risks of investing in our common stock discussed
under &#147;Risk Factors,&#148; before making an investment
decision. This prospectus contains terms that are specific to
the insurance industry and may be technical in nature. For a
description of these terms, please refer to the &#147;Glossary
of Selected Insurance Terms&#148; in this prospectus. As used in
this prospectus, references to &#147;Crum &#38; Forster,&#148;
&#147;we,&#148; &#147;us&#148; and &#147;our&#148; refer to Crum
&#38; Forster Holdings Corp. and, unless the context otherwise
requires or otherwise as expressly stated, its subsidiaries.
</FONT>

<P align="center">
<B><FONT size="2">Crum &#38; Forster Holdings Corp.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. We distinguish ourselves by applying individual
risk selection to business which requires greater underwriting
expertise. Our objective is to expand opportunistically into
classes of business or market segments that are consistent with
our underwriting expertise and have the potential to generate an
underwriting profit. We write a broad range of commercial
coverages, including general liability, property, workers&#146;
compensation, commercial automobile and surety. We operate
through our home office and a regional branch network, allowing
us to centrally control our underwriting process, respond to
local market conditions and build close relationships with our
producers and insureds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is distributed exclusively through
approximately 1,050 producers located throughout the United
States. Our producers include independent regional retail agents
and brokers, national brokers and wholesale brokers. Through our
producers, we access a broad cross section of business
opportunities, spanning a variety of market segments and product
groupings. This enables us to respond to changing market
conditions while promoting relative stability in our premium
production.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our senior management team is led by Bruce A.
Esselborn, our Chief Executive Officer. Since joining us in
October 1999, Mr.&nbsp;Esselborn has applied a hands-on
management style in redesigning our underwriting strategies and
policies and improving our operating efficiency.
Mr.&nbsp;Esselborn has 35&nbsp;years of experience in the
insurance industry, over 18&nbsp;years of which were spent at
American International Group, Inc. While at AIG,
Mr.&nbsp;Esselborn held a variety of senior operating and
technical positions at several of AIG&#146;s domestic insurance
subsidiaries. In 1986, Mr.&nbsp;Esselborn left AIG to found
United Capitol Insurance Company, an excess and surplus lines
insurer, which was acquired by Capsure Holdings Corp., a
publicly traded company. While under Mr.&nbsp;Esselborn&#146;s
leadership from 1990 through September 1997, Capsure was a
highly successful underwriting operation, reporting an average
combined ratio of 75.6%, weighted by net premiums earned, during
his tenure. Our President, Nick Antonopoulos, has over
20&nbsp;years of experience in the insurance industry, including
13&nbsp;years at AIG, where he most recently held the position
of Senior Vice President of Operations in AIG&#146;s Domestic
Brokerage Group.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2000 we acquired Seneca, which provides
specialty coverages such as bail bonds, non-standard property in
inner city markets, inland marine, boiler and machinery and
environmental liability. In 2001, Seneca reported gross written
premiums of $143.4&nbsp;million and a combined ratio of 97.8%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we generated $843.2&nbsp;million of
gross premiums written, $607.1&nbsp;million of net premiums
written and $683.9&nbsp;million of total revenue. In 2001, 74.0%
of our business related to casualty coverages and 26.0% to
property coverages, as measured by gross premiums written. As of
December&nbsp;31, 2001, we had cash and invested assets of
$2.3&nbsp;billion, total assets of $5.1&nbsp;billion and
stockholder&#146;s equity of $719.6&nbsp;million. Following the
completion of this offering, we expect to have total
capitalization, including debt, of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="left">
<B><FONT size="2">Management Initiatives</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of 1999, we appointed a
proven senior management which made a number of significant
changes designed to increase our profitability and competitive
position. We have:
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">implemented a highly focused underwriting
	strategy and realigned our operating structure to emphasize
	product line experience and expertise and to provide a high
	degree of centralized control over underwriting and claims;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">hired five experienced underwriting executives
	aligned with our target classes of business and approximately
	93&nbsp;underwriters representing 57% of our current
	underwriting staff;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">discontinued unprofitible classes of business,
	that contributed approximately nine percentage points of our
	loss and LAE ratio for 2000, which significantly contributed to
	a 13.9% decrease in total gross premiums written in 2000 from
	1999;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">restructured our reinsurance programs to reduce
	our net retentions and gross policy limits, particularly in
	property;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">targeted classes of business and types of
	insureds that tend to have larger premium policies, which
	contributed to increasing our average premiums per policy from
	approximately $20,000 in 1999 to $59,000 in 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">enhanced our price monitoring systems and
	contracts;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased renewal prices by approximately 11% in
	2000 and achieved an additional renewal price increase of
	approximately 17% in 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">diversified our distribution by appointing 480
	new producers and entering into new arrangements with national
	brokers and wholesale brokers, in each case, aligned with our
	targeted classes of business and types of insureds;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">adjusted our commission structure to be in line
	with market practice, resulting in a reduction of our gross
	commissions expense by 4.7&nbsp;percentage points from 1999 to
	2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">reduced the number of employees by 25%, and
	reduced our payroll by 18% from 1999 to 2001, while increasing
	our gross premiums per employee by 25% over this time period;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">created a disciplined expense management culture
	and carefully analyzed our existing cost structure; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">acquired Seneca, a specialty insurer focused on
	non-commodity lines of business, in August 2000 to participate
	in the small commercial market in a manner consistent with our
	underwriting philosophy.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Corporate Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our objective is to build shareholder value by
achieving a superior return on equity over the long term. We
intend to achieve our goal by focusing on underwriting
profitability and generating superior long-term investment
returns. The major elements of our strategy are:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Adhere to a disciplined underwriting
philosophy. </FONT></I><FONT size="2">We focus on individual
risk selection and do not manage our business based on premium
growth or market share. We adhere to a centrally controlled
underwriting philosophy and focus on generating underwriting
profit by carefully selecting the risks we insure and
determining the appropriate price for such risks. Our Chief
Executive Officer and President are actively involved in our
overall underwriting function, as well as specific risk
underwriting across all lines of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Expand and diversify our production sources.
</FONT></I><FONT size="2">We produce business through
diversified sources of production, in each case aligned with our
target underwriting classes. We continue to provide new products
and services within our lines of business and markets which
generate closer relationships with our agents, brokers and
insureds. We also strengthen customer relationships by providing
timely and responsive quotes, claims handling and loss control
services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Opportunistically pursue attractive lines of
business. </FONT></I><FONT size="2">We believe our ability to
identify and react to changing market conditions provides us
with a competitive advantage. Based on the experience and
</FONT>

<P align="center"><FONT size="2">4
</FONT>
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<DIV align="left">
<FONT size="2">underwriting expertise of our management, we seek
to write new lines of business and expand existing classes of
business based on market conditions and expected profitability.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Continue to aggressively manage expenses.
</FONT></I><FONT size="2">We are committed to a competitive
expense structure that complements our disciplined underwriting
strategy. We foster a culture of cost efficiency and have
developed systems and procedures through which we carefully
monitor and control expenses and promote efficient operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Commitment to financial strength and security.
</FONT></I><FONT size="2">We are committed to maintaining a
strong balance sheet in order to attract and retain high-quality
business. As of December&nbsp;31, 2001 we had total assets of
$5.1&nbsp;billion, stockholder&#146;s equity of
$719.6&nbsp;million and statutory surplus of
$708.4&nbsp;million. To protect our financial security, we
carefully monitor and control our gross and net limits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Invest our assets on a total return basis.
</FONT></I><FONT size="2">We follow a long term value-oriented
investment philosophy, with the goal of optimizing investment
returns viewed on a total return basis, while maintaining a
sensitivity to our liquidity needs. This is coordinated through
our investment advisors, Hamblin Watsa Investment Counsel Ltd.,
a subsidiary of Fairfax.
</FONT>

<P align="left">
<B><FONT size="2">Industry Trends and Market
Opportunity</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Throughout the 1990s and into 2000, the property
and casualty insurance industry was overcapitalized, which
resulted in highly competitive market conditions as evidenced by
declining premium rates and poor underwriting results. Beginning
in mid-2000, excess capacity began to contract as companies
either ceased writing selected lines or withdrew from the market
completely. Capacity was further reduced by companies tightening
underwriting guidelines and returning to a focus on underwriting
profitability. In response to these market conditions, insurers
began to seek and achieve significant price increases, in
addition to improved terms and conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terrorist attacks of September&nbsp;11, 2001
accelerated the improvement in pricing and terms which were
underway in 2001 prior to these events. More importantly, the
events of September&nbsp;11th have led to a fundamental
reevaluation of risk by commercial insureds which is increasing
the demand for insurance. These events have caused further
capacity to exit the market as reinsurance rates increased to
levels where primary carriers were forced to retain higher
amounts of net exposure or exit market segments entirely.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, based on publicly available industry
information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment.
Based on a recent report by A.M. Best, approximately 25% of
medium and large accounts have experienced rate increases in
excess of 30% on their commercial coverages since
September&nbsp;11, 2001. In particular, certain classes, such as
umbrella, business interruption, property and commercial auto,
are experiencing rate increases as high as 30% to 100%. Given
the further reduction in capacity and the continued uncertainty
caused by the events of September&nbsp;11th, we believe the
current favorable market environment will continue into 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of our management initiatives, we
believe we are well positioned to take advantage of the current
favorable market. During 2001, we achieved price increases of
approximately 17% on renewal business across our portfolio
(weighted by premium volume). Through January 2002, we
experienced price increases of approximately 25% on renewal
business across our portfolio (weighted by premium volume). In
2002, our property and umbrella lines of business are
experiencing the largest price increases within our portfolio.
Our focused underwriting strategy, together with higher prices
and improved terms and conditions, provide us with the best
opportunity in the past decade to achieve a combined ratio of
100% or better in 2002.
</FONT>

<P align="center"><FONT size="2">5
</FONT>
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<P align="center">
<B><FONT size="2">Corporate Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crum &#38; Forster Holdings Corp. was
incorporated on March&nbsp;6, 2002 as a holding company for our
insurance operating subsidiaries. As part of this offering,
Fairfax Inc., a wholly owned subsidiary of Fairfax, will
sell &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of Crum &#38; Forster directly to the public. In connection with
the completion of this offering, we will issue a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
term note to Fairfax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The organization chart shown below illustrates
the corporate relationships among us and certain of our
affiliates as they will exist immediately following the
completion of this offering. The ownership percentages shown in
this chart assume the sale by us
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock and the sale by Fairfax
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock pursuant to this offering. See &#147;Certain
Relationships and Related Transactions.&#148; Unless otherwise
indicated, each of the companies depicted below is, directly or
indirectly, wholly owned.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our executive offices are located at 305 Madison
Avenue, Morristown, New Jersey 07962, and our telephone number
is (973)&nbsp;490-6600.
</FONT>

<P align="center">
<IMG src="z06544t0654401.gif" alt="(CORPORATE STRUCTURE)">

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">The Offering</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Common stock offered hereby
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By Crum &#38;
	Forster
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	</FONT></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By Fairfax
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Total
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Common stock to be
	outstanding &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;after the offering
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Use of proceeds
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">We estimate that our net proceeds from this
	offering will be
	$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
	We intend to use these proceeds for general corporate purposes,
	including payment of interest on outstanding debt and the
	payment of our quarterly cash dividends. We will not receive any
	proceeds from the sale of shares by Fairfax.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Dividend policy
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">We intend to declare an initial quarterly cash
	dividend of
	$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
	share of common stock in the third quarter of 2002, payable in
	the fourth quarter, subject to approval by our board of
	directors.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Proposed symbol
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">We will apply to list our common stock on
	the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;under
	the symbol
	&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
	</FONT></TD>
</TR>

</TABLE>

<P align="center">
<HR size="1" width="37%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of common stock to be
outstanding after the offering does not include shares of common
stock reserved for issuance under our equity incentive plan,
employee stock plan and stock option plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise indicated, the information
included above and elsewhere in this prospectus assumes the
over-allotment option granted by Fairfax to the underwriters to
purchase up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares is not exercised.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">Summary Financial Data</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table shown below presents our summary
financial data for the three years ended December&nbsp;31, 2001.
The data is derived from our consolidated financial statements
which have been audited by PricewaterhouseCoopers LLP,
independent accountants. The financial data was prepared in
accordance with generally accepted accounting principles.
Consolidated balance sheets at December&nbsp;31, 2000 and 2001
and the related consolidated statements of operations and
comprehensive income, of stockholder&#146;s equity and of cash
flows for the three years ended December&nbsp;31, 2001 and
accompanying notes appear elsewhere in this prospectus. The
combined statutory data has been derived from annual statutory
financial statements filed with the domiciliary states of our
insurance operating subsidiaries and prepared in accordance with
statutory accounting practices, which differ from GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The summary financial data presented below should
be read in conjunction with &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operations&#148; and our consolidated financial statements and
accompanying notes included elsewhere in this prospectus. The
results for the year ended December 31, 2000 include the results
for Seneca from August&nbsp;31, 2000, its date of acquisition.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in thousands, except per share data)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">GAAP Statement of Operations Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744,888</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506,473</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,711</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,103</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,358</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,041</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,305</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">839,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">683,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,411</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other underwriting expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,558</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">792,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">609,154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">853,984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss)&nbsp;before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170,050</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)&nbsp;per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">As Adjusted<SUP>(1)</SUP></FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in thousands, except per share data)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">GAAP Balance Sheet Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments (including cash and cash
	equivalents)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,517,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,278,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,795,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,147,959</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,423,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">801,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Book value per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in thousands, except ratios)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Selected GAAP Financial Ratios:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and loss adjustment expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%<SUP>(2)</SUP></FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Selected Combined Statutory Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and loss adjustment expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%<SUP>(2)</SUP></FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Policyholders&#146; surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">689,601</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">769,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">708,388</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ratio of net premiums written to surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.74x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">&#147;As adjusted&#148; GAAP data reflects our
	financial information after giving effect to the issuance of a
	$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
	term note to Fairfax and the sale by us
	of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	of common stock pursuant to this offering at an assumed initial
	public offering price of
	$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share,
	after deducting the estimated underwriting discounts,
	commissions, and offering expenses of
	$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
	payable by us.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The GAAP and statutory combined ratios on an
	accident year basis were 113.1% and 113.6%, respectively.
	Accident year refers to the accounting period in which loss
	events occurred, regardless of when the losses are actually
	reported, recorded or paid and, as such, excludes the impact of
	development of prior years&#146; loss and LAE reserves.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">9
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "RISK FACTORS" -->

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should carefully consider the risks
described below before making an investment decision. You should
also refer to the other information in this prospectus,
including our financial statements and accompanying notes
appearing elsewhere in this prospectus.</FONT></I>

<P align="center">
<B><FONT size="2">Risks Relating To Our Business</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We may incur a reduction in our net income if
	our claim reserves are insufficient.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We maintain reserves to cover our estimated
ultimate liability for losses and loss adjustment expenses (LAE)
with respect to reported and unreported claims incurred as of
the end of each period. Our gross loss and loss adjustment
expense reserves were $3.5&nbsp;billion, $3.3&nbsp;billion and
$3.4 billion at December&nbsp;31, 1999, 2000 and 2001,
respectively. These reserves do not represent an exact
measurement of liability, but are our estimates based upon
various factors, including: (i)&nbsp;actuarial projections of
what we, at a given time, expect to be the cost of the ultimate
settlement and administration of claims reflecting facts and
circumstances then known, (ii)&nbsp;estimates of future trends
in claims severity and frequency, (iii)&nbsp;judicial theories
of liability and (iv)&nbsp;other factors, such as variables in
claims handling procedures, economic factors and judicial and
legislative trends and actions. Most or all of these factors are
not directly quantifiable, particularly on a prospective basis.
In addition, there may be significant reporting lags between the
occurrence of the insured event and the time it is actually
reported to the insurer and additional lags between the time of
reporting and final settlement of claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are significant additional uncertainties in
estimating the amount of reserves required for asbestos,
environmental, construction defect and other latent exposure
claims. The possibility that these claims would emerge was often
not anticipated at the time the policies were written, and
traditional actuarial reserving methodologies have not been
useful in accurately estimating ultimate losses and expenses for
these types of claims. In addition, the loss settlement period
of certain of these claims may extend for decades after the
expiration of the policy period, and during such time it often
becomes necessary to adjust, sometimes to a significant degree,
the estimates of liability on a claim either upward or downward.
Our asbestos reserves, net of reinsurance, were
$164.4&nbsp;million, $174.1&nbsp;million and $228.1&nbsp;million
at December 31, 1999, 2000 and 2001, respectively; while, at the
same time, our environmental reserves, net of reinsurance, were
$167.2&nbsp;million, $145.4&nbsp;million and
$124.8&nbsp;million, respectively, and the reserves for other
latent exposure claims, net of reinsurance, were
$55.9&nbsp;million, $31.1&nbsp;million and $27.3 million,
respectively. Among the uncertainties relating to such reserves
are a lack of historical data, long reporting delays, and
complex, unresolved legal issues regarding policy coverage and
the extent and timing of any such contractual liability. Courts
have reached different and frequently inconsistent conclusions
as to when the loss occurred, what claims are covered, under
what circumstances the insurer has an obligation to defend, how
policy limits are determined and how policy exclusions are
applied and interpreted. Because of these uncertainties, our
exposure to asbestos, environmental and other latent exposure
claims is more difficult to estimate and is subject to a higher
degree of variability than our exposure to non-latent exposure
claims. In addition, insurers generally, including us, are
experiencing an increase in the number of asbestos-related
claims due to, among other things, more intensive advertising by
lawyers seeking asbestos claimants, an increasing focus by
plaintiffs on new and previously peripheral defendants and an
increase in the number of entities seeking bankruptcy protection
as a result of asbestos-related liabilities. In addition to
contributing to the increase in claims, the bankruptcy
proceedings may have the effect of significantly accelerating
and increasing loss payments by insurers, including us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Increasingly, policyholders have asserted that
their claims for asbestos-related insurance are not subject to
aggregate limits on coverage and that each individual bodily
injury claim should be treated as a separate occurrence under
the policy. We expect this trend to continue. Although it is
difficult to predict whether these policyholders will be
successful on either issue, to the extent either issue is
resolved in their favor, our coverage obligations under the
policies at issue would be materially increased and bounded only
by the applicable per occurrence limits and the number of
asbestos bodily injury claims against the policyholders.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">Accordingly, it is difficult to predict the
ultimate size of the claims for coverage not subject to
aggregate limits.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, recently proceedings have been
launched directly against insurers challenging insurers&#146;
conduct in respect of asbestos claims, including in some cases
with respect to previous settlements. We anticipate the filing
of other direct actions against insurers, potentially including
us, in the future. Particularly in light of jurisdictional
issues, it is difficult to predict the outcome of these
proceedings, including whether the plaintiffs will be able to
sustain these actions against insurers based on novel legal
theories of liability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the last few months of 2001 and continuing
into 2002, the asbestos-related trends described above have both
accelerated and become more visible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the years ended December&nbsp;31, 2000 and
2001, we increased our reserves for unpaid losses and loss
adjustment expenses by $32.2&nbsp;million and
$183.1&nbsp;million, respectively. See
&#147;Business&nbsp;&#151; Reserves.&#148; To the extent
reserves prove to be deficient in the future, we will have to
increase our reserves by the amount of such deficiency and incur
a charge to earnings in the period such reserves are increased.
We believe that it is possible that the outcome of the
uncertainties regarding reserves (including reserves for
asbestos, environmental and other latent exposure claims and
construction defect claims) could result in a liability
exceeding the reserves by an amount that would be material to
our financial condition or results of operations in a future
period.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">If we are unable to maintain a favorable
	financial strength rating, it may be difficult for us to write
	new or renewal business.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Third party rating agencies assess and rate the
claims-paying ability of insurers based upon criteria
established by the rating agencies. Periodically the rating
agencies evaluate us to confirm that we continue to meet the
criteria of the ratings previously assigned to us. The
claims-paying ability ratings assigned by rating agencies to
insurance companies represent independent opinions of financial
strength and ability to meet policyholder obligations, and are
not directed toward the protection of investors. Ratings by
rating agencies are not ratings of securities or recommendations
to buy, hold or sell any security and are not applicable to the
securities being offered by this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries have an &#147;A-&#148;
rating from A.M. Best (the fourth highest of fifteen ratings)
with a negative outlook and a &#147;BBB&#148; financial strength
rating from Standard &#38; Poor&#146;s Insurance Rating Services
(the fourth highest of nine ratings categories). Financial
strength ratings are used by insurance consumers and insurance
intermediaries as an important means of assessing the financial
strength and quality of insurers. We may not maintain our
favorable financial strength ratings from the rating agencies. A
downgrade or withdrawal of any rating could severely limit or
prevent us from writing any new insurance policies. According to
A.M. Best, a failure by management to achieve its near term
calendar year combined ratio targets or any further
deterioration in near-term underwriting or operating performance
will likely result in a rating downgrade.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">The effects of emerging claim and coverage
	issues on our business are uncertain.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As industry practices and legal, judicial, social
and other environmental conditions change, unexpected and
unintended issues related to claims and coverage may emerge.
These issues can have a negative effect on our business by
either extending coverage beyond our underwriting intent or by
increasing the number or size of claims. Recent examples of
emerging claims and coverage issues include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increases in the number and size of claims
	relating to construction defects, mold, lead and diet drugs,
	which often present complex coverage and damage valuation
	questions;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in interpretation of the named insured
	provision with respect to the uninsured/underinsured motorist
	coverage in commercial automobile policies; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a growing trend of plaintiffs targeting property
	and casualty insurers in purported class action litigation
	relating to claims-handling and other practices.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">11
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<FONT size="2">The effects of these and other unforeseen
emerging claim and coverage issues are extremely hard to predict
and could harm our business.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We are a holding company and are dependent on
	dividends and other payments from our operating subsidiaries,
	which are subject to dividend restrictions.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a holding company with no direct
operations, and our principal asset is the capital stock of
several operating insurance subsidiaries. We rely primarily on
dividends from these operating subsidiaries to meet our
obligations for payment of interest and principal on outstanding
debt obligations, holding company expenses and dividends to
shareholders. The ability of our operating subsidiaries to pay
dividends to us depends on their statutory earned surplus,
earnings and on regulatory restrictions. Our principal insurance
company subsidiaries are US Fire, domiciled in the State of New
York, and North River, domiciled in the State of New Jersey. New
York law provides that an insurer domiciled in New York must
obtain the prior approval of the state insurance commissioner
for the declaration or payment of any dividend which, together
with dividends declared or paid in the preceding 12 months,
exceeds the lesser of (i)&nbsp;10% of policyholders&#146;
surplus as shown by its last statement on file with the New York
Insurance Department (NYID)&nbsp;and (ii) adjusted net
investment income for the preceding 12-month period. Adjusted
net investment income includes a carry forward of undistributed
net investment income for two years. Under New York law, an
insurer domiciled in New York may not pay dividends to
shareholders except out of earned surplus, which is defined as
&#147;the portion of the surplus that represents the net
earnings, gains or profits, after deduction of all losses, that
have not been distributed to the shareholders as dividends or
transferred to stated capital or capital surplus or applied to
other purposes permitted by law but does not include unrealized
appreciation of assets.&#148; US Fire reported negative earned
surplus at December&nbsp;31, 2001 and, as a result, US Fire
currently has no dividend capacity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New Jersey laws provide that an insurer domiciled
in the state must obtain the approval of the state insurance
commissioner for payment of any dividend which, together with
dividends paid in the previous 12&nbsp;months, exceeds the
greater of (i)&nbsp;10% of policyholders&#146; surplus at the
preceding December&nbsp;31 or (ii)&nbsp;statutory net income for
the 12-month period ending the preceding December 31. In New
Jersey, dividends may not be paid unless prior notice has been
given to the New Jersey Department of Banking and Insurance
(NJDOBI)&nbsp;within five business days after the dividend is
declared and 30&nbsp;days prior to payment. In addition, except
for extraordinary dividends or distributions paid with the
approval of the NJDOBI, dividends may be paid by insurers
domiciled in New Jersey only from earned surplus, which means
&#147;unassigned funds (surplus) as reported on the
insurer&#146;s annual statement as of December&nbsp;31 next
preceding, less unrealized capital gains and revaluation of
assets.&#148; North River reported negative earned surplus at
December&nbsp;31, 2001 and, as a result, North River currently
has no dividend capacity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, our insurance
operating subsidiaries do not have the ability to pay dividends
to us. We cannot assure you that our insurance operating
subsidiaries will be able to pay dividends in an amount
sufficient to enable us to meet our liquidity requirements,
including payments on outstanding indebtedness, and to pay
dividends in the future. Further, we cannot predict whether any
legislative proposals relating to dividend regulations in New
York or New Jersey will be made, whether any legislative
proposal will be adopted in the future, or the effect, if any,
any proposal would have on us. In addition, the insurance
commissioner of every state has broad authority to limit
payments (dividends or otherwise) by domestic insurance
companies if the insurance commissioner believes payments would
leave the insurer in a hazardous financial condition. We cannot
assure you that some or all of the domiciliary states of our
operating subsidiaries will not adopt regulatory provisions more
restrictive than those currently in effect. See
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&nbsp;&#151; Liquidity and
Capital Resources&#148; and &#147;Insurance Regulatory
Matters&nbsp;&#151; Regulation of Dividends and Other Payments
from Our Operating Subsidiaries.&#148;
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We may be unable to obtain reinsurance
	coverage at reasonable prices or on terms that adequately
	protect us.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use reinsurance to help manage our exposure to
insurance risks. The availability and cost of reinsurance are
subject to prevailing market conditions, both in terms of price
and available capacity, which can affect our business volume and
profitability. Many reinsurance companies have begun to exclude
certain coverages from, or alter terms in, the policies that we
purchase from them. Some exclusions are with respect to risks
which we cannot exclude in policies we write due to business or
regulatory constraints, such as coverage with respect to mold
and cyber risk. In addition, reinsurers are imposing terms, such
as lower per occurrence and aggregate limits, on primary
insurers that are inconsistent with corresponding terms in the
policies written by these primary insurers. As a result, we,
like other primary insurance companies, increasingly are writing
insurance policies which to some extent do not have the benefit
of reinsurance protection. These gaps in reinsurance protection
expose us to greater risk and greater potential losses.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We may not be able to obtain reinsurance
	coverage for terrorist acts. If that happens, we would have a
	significant gap in our reinsurance protection and would be
	exposed to potential losses as a result of any terrorist
	acts.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot determine the full impact of the
terrorist attacks of September 11, 2001 on the availability,
price and terms of insurance and reinsurance for future acts of
terrorism. Certain reinsurers have excluded coverage for
terrorist acts or priced such coverage at unreasonably high
rates. Many primary insurers, including us, have written
policies without terrorist act exclusions and in many cases we
cannot exclude terrorist acts because of regulatory constraints.
We may, therefore, be exposed to potential losses as a result of
terrorist acts.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We bear credit risk with respect to our
	reinsurers and certain insureds and if one or more of them fails
	to pay us we could experience losses.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although reinsurance makes the assuming reinsurer
liable to us to the extent of the risk ceded, we are not
relieved of our primary liability to our insureds as the direct
insurer. As a result, we bear credit risk with respect to our
reinsurers. We cannot assure you that our reinsurers will pay
all reinsurance claims on a timely basis or at all. At
December&nbsp;31, 2001, we had reinsurance recoverables on paid
and unpaid losses and loss adjustment expenses, net of
uncollectible reinsurance reserves, of $2,131.7&nbsp;million due
from approximately 320 reinsurers; however, the preponderance of
these recoverables is with a relative few reinsurers. At such
date, our ten largest gross reinsurance recoverables aggregated
$1,577.5&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We write certain retrospectively rated policies
and large deductible policies in which the insured must
reimburse us for certain losses. Accordingly, we bear credit
risk on these policies and cannot assure you that our insureds
will pay us on a timely basis or at all.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">The loss of any of our key producers could
	have an adverse effect on our financial condition.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, our two largest producers accounted for
12% and 8% of our gross premiums written. Our top five
producers, including all locations of national brokers,
accounted for nearly 30% of gross premiums written. However, on
an individual office basis, the top five producers accounted for
18% of 2001 gross premiums written. We have no long term
commitments from any of our producers, any of whom could cease
doing business with us at any time. The loss or deterioration of
one or more of these relationships could adversely affect our
financial condition. We cannot assure you we will be successful
in maintaining our current relationships with our significant
producers.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We operate in a highly competitive environment
	which makes it more difficult for us to attract and retain
	business.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The commercial lines property and casualty
insurance industry is highly competitive, and we believe that it
will remain so for the foreseeable future. We face competition
from domestic and foreign insurers, many of which are larger and
have greater financial, marketing and management resources than
we do. Competition in
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<FONT size="2">the commercial lines property and casualty
insurance industry is based on many factors, including overall
financial strength of the insurer, ratings by rating agencies,
price, policy terms and conditions, services offered,
reputation, agent and broker compensation and experience. We may
face increased competition in the future from other insurance
companies, and such increased competition, should it occur,
could have a material adverse effect on us. See
&#147;Business&nbsp;&#151; Competition.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Several commercial property and casualty insurers
and industry groups and associations currently offer alternative
forms of risk protection in addition to traditional insurance
products. These products, including large deductible programs
and various forms of self-insurance that utilize captive
insurance companies and risk retention groups, have been
instituted to allow for better control of risk management and
costs. It is not possible to predict how continued growth in
alternative forms of risk protection will affect our future
operations, but it could reduce our premium volume.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the terrorist attacks on
September&nbsp;11, 2001, a number of new insurers and reinsurers
have been formed to compete in our industry, and a number of
existing market participants have raised new capital which may
enhance their ability to compete with us. In addition, other
financial institutions are now able to offer services similar to
our own as a result of the Gramm-Leach-Bliley Act, which was
adopted in November 1999.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Results in the property and casualty insurance
	industry are subject to fluctuations and uncertainty which may
	adversely affect our ability to write policies.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The results of companies in the property and
casualty insurance industry historically have been subject to
broad fluctuations. These results can be affected significantly
by price competition, volatile and unpredictable developments
(including catastrophes), changes in loss reserves resulting
from changing legal environments as different types of claims
arise and judicial interpretations relating to the scope of
insurers&#146; liability develop, fluctuations in interest rates
and other changes in the investment environment which affect
returns on invested assets and inflationary pressures that
affect the size of losses. The property and casualty insurance
industry as a whole historically has experienced pricing and
profitability cycles related to levels of industry underwriting
capacity which have affected almost all product lines. In
contrast to broad industry-based profitability cycles,
profitability in the commercial property and casualty insurance
industry in recent years has varied significantly by product
line. As a result of fluctuations in pricing, we may be unable
to obtain business that meets our underwriting standards and
pricing expectations. See &#147;Business&nbsp;&#151;
Competition&#148; and &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Unpredictable catastrophic events could reduce
	our net income.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Catastrophes can be caused by various natural and
unnatural events. Natural catastrophic events include
hurricanes, windstorms, earthquakes, hailstorms, explosions,
severe winter weather and fires, and unnatural catastrophic
events, which include terrorist acts, riots, crashes and
derailments. The incidence and severity of catastrophes are
inherently unpredictable. The extent of losses from a
catastrophe is a function of both the total amount of insured
exposure in the area affected by the event and the severity of
the event. Most catastrophes are restricted to small geographic
areas; however, hurricanes, windstorms and earthquakes may
produce significant damage in large, heavily populated areas.
Catastrophes can cause losses in a variety of property and
casualty lines for which we provide insurance. For example, the
terrorist attacks on September&nbsp;11, 2001 caused losses in
several of our lines, including business interruption, business
personal property and workers&#146; compensation. Insurance
companies are not permitted to reserve for a catastrophe until
it has occurred. It is therefore possible that a catastrophic
event or multiple catastrophic events could have a material
adverse effect upon our net income and financial condition.
Increases in the value and geographic concentration of insured
property and the effects of inflation could increase the
severity of claims from future catastrophic events. In addition,
states have from time to time passed legislation that has the
effect of limiting the ability of insurers to manage
catastrophic risk, such as legislation prohibiting insurers from
withdrawing from catastrophe-prone areas.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Our ability to borrow is limited by
	Fairfax&#146;s bank credit facilities which could have an
	adverse effect on our financial condition.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The current agreements governing Fairfax&#146;s
bank credit facilities prevent any subsidiaries of Fairfax from
borrowing money. Although Fairfax intends to seek a modification
of these agreements as they pertain to us, our financial
flexibility in the future will be limited by the terms of those
agreements if Fairfax is unable to obtain such a waiver.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">If we are unable to realize our investment
	objectives, our financial condition may be adversely
	affected.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating results depend in part on the
performance of our investment portfolio. The ability to achieve
our investment objectives is affected by general economic
conditions that are beyond our control. General economic
conditions can adversely affect the markets for
interest-rate-sensitive securities, including the extent and
timing of investor participation in such markets, the level and
volatility of interest rates and, consequently, the value of
fixed income securities. Interest rates are highly sensitive to
many factors, including governmental monetary policies, domestic
and international economic and political conditions and other
factors beyond our control. General economic conditions, stock
market conditions and many other factors can also adversely
affect the equities markets and, consequently, the value of the
equity securities we own. We may not be able to realize our
investment objectives, which could reduce our net income
significantly.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Our business could be adversely affected by
	the loss of one or more key employees.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are substantially dependent on a small number
of key employees, in particular Bruce Esselborn, our Chief
Executive Officer, Nick Antonopoulos, our President, Mary Jane
Robertson, our Executive Vice President and Chief Financial
Officer, and Doug Libby, Seneca&#146;s Chief Executive Officer.
We believe that the experiences and reputations in the insurance
industry of Mr.&nbsp;Esselborn, Mr.&nbsp;Antonopoulos,
Ms.&nbsp;Robertson and Mr.&nbsp;Libby are important factors in
our ability to attract new business. Our success has been, and
will continue to be, dependent on our ability to retain the
services of our existing key employees and to attract and retain
additional qualified personnel in the future. The loss of the
services of Mr.&nbsp;Esselborn, Mr.&nbsp;Antonopoulos, Ms.
Robertson or Mr.&nbsp;Libby or any other key employee, or the
inability to identify, hire and retain other highly qualified
personnel in the future, could adversely affect the quality and
profitability of our business operations. We currently do not
maintain key employee insurance with respect to any of our
employees.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">We are subject to extensive government
	regulation.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to extensive regulation and
supervision in the states in which we do business. Regulators
oversee matters relating to rate setting with respect to certain
lines of insurance, trade practices, market conduct, policy
forms, claims practices, mandated participation in shared
markets, types and amounts of investments, reserve adequacy,
insurer solvency, minimum amounts of capital and surplus,
authorized lines of business, transactions with related parties,
the payment of dividends and a variety of other financial and
non-financial components of an insurance company&#146;s
business. Regulators may limit the rates that an insurance
company can charge for certain lines of business so that premium
rates may not keep pace with inflation. State insurance laws and
regulations are administered by agencies that have broad powers
and are concerned primarily with the protection of policyholders
rather than shareholders or other investors. It is possible that
future regulatory changes or developments may impede rate
increases or other actions that we propose to take to enhance
our operating results or fundamentally change the business
environment in which we operate. Future legislative or
regulatory changes or developments, depending on their nature
and magnitude, could have a material adverse effect on us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All 50&nbsp;states have insurance guaranty fund
laws requiring property and casualty insurance companies doing
business within the state to participate, through the payment of
assessments, in guaranty funds or associations that are
organized to pay contractual obligations under insurance
policies issued by impaired or
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<DIV align="left">
<FONT size="2">insolvent insurance companies. These assessments
may increase in the future depending upon the rate of
insolvencies of insurance companies. We cannot predict the
amount of any assessments applicable to guaranty funds.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of our operating subsidiaries typically is
required to participate in mandatory property and casualty
shared market mechanisms or pooling arrangements, which provide
various insurance coverages to individuals or other entities
that are otherwise unable to purchase such coverage in the
commercial insurance marketplace. The amount of future losses or
assessments from such shared market mechanisms and pooling
arrangements cannot be predicted with certainty. The
underwriting results of these pools historically have been
unprofitable. We cannot assure you that future losses or
assessments from such mechanisms and pooling arrangements will
not have a material adverse effect on our results of operations
or financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In recent years, the insurance regulatory
framework has come under increased federal scrutiny, and certain
state legislatures have considered or enacted laws that altered
and, in many cases, increased state authority to regulate
insurance companies and insurance holding companies. For
example, the states of Hawaii and Florida have implemented
arrangements whereby property insurance in catastrophe prone
areas is provided through state-sponsored entities. The
California Earthquake Authority, the first privately financed,
publicly operated, residential earthquake insurance pool,
provides earthquake insurance to California homeowners. Further,
the National Association of Insurance Commissioners
(NAIC)&nbsp;and state insurance regulators are re-examining
existing laws and regulations, specifically focusing on
investment practices, risk-based capital guidelines,
interpretations of existing laws and the development of new
laws. In addition, several committees of Congress have made
inquiries and conducted hearings as part of a broad study of the
regulation of insurance companies. Although the federal
government currently does not regulate the business of insurance
directly, federal initiatives often affect the insurance
industry in a variety of ways. We cannot predict with certainty
the effect any proposed or future legislation or NAIC
initiatives may have on the conduct of our business, financial
condition or results of operations. See &#147;Insurance
Regulatory Matters.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">If certain policies with respect to which
	other insurance companies have assumed liability from us have
	not been effectively novated, our credit risk for amounts due
	from reinsurers will increase.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to our acquisition by Fairfax in 1998 we
were a subsidiary of Xerox Corporation. In connection with a
business realignment and restructuring of its insurance
companies, Xerox required the transfer of a number of policies
and related assets and liabilities from certain of our insurance
company subsidiaries to other insurance companies also
controlled by Xerox. These transfers were effected through
assumption and indemnity reinsurance agreements providing for
100% quota share reinsurance of the subject business by the
assuming company. In some cases the assuming party also was
required to seek a novation of certain policies. Novation of an
insurance policy effects the legal substitution of one insurance
company for the original policy-issuing company and generally
requires either the express or implied consent of the
policyholder. To the extent that the novation process is
challenged or if the amount of policies considered novated is
overestimated, our reserves could be understated and the credit
risk associated with policies considered novated could also be
materially understated. We may be unable to recover our losses
from the reinsurers that have assumed these policies.
</FONT>

<P align="center">
<B><FONT size="2">Risks Relating to this Offering and Our Common
Stock</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Because our controlling stockholder intends to
	retain control, you may be unable to realize a gain on your
	investment in our common stock in connection with an acquisition
	bid.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately upon completion of this offering,
Fairfax, through its wholly owned subsidiary Fairfax Inc., will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of our outstanding common stock, or
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
if the underwriters&#146; over-allotment option is exercised in
full. Consequently, Fairfax will be in a position to determine
the outcome of corporate actions requiring stockholder approval,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">electing members of our board of directors;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">adopting amendments to our charter documents; and
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">approving a merger or consolidation, liquidation
	or sale of all or substantially all of our assets.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, Fairfax has provided us, and after
completion of this offering will continue to provide us, with
certain services. All of our directors, except for
Mr.&nbsp;Esselborn, also are directors or officers of Fairfax or
certain of its subsidiaries. Conflicts of interest could arise
between our company and Fairfax or one of its subsidiaries, and
any conflict of interest may be resolved in a manner that does
not favor us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax intends to retain control of us and
cannot foresee any circumstances under which it would sell a
sufficient number of shares of our common stock to cause it not
to retain such control. In order to retain control, Fairfax may
decide not to enter into a transaction in which our stockholders
would receive consideration for their shares that is much higher
than the cost of their investment in our common stock or the
then current market price of our common stock. Any decision
regarding the ownership of us that Fairfax may make at some
future time will be in its absolute discretion.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Investors will incur immediate dilution and
	may experience further dilution.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The initial public offering price of our common
stock will be substantially higher than the net tangible book
value per share of the outstanding common stock immediately
after this offering. If you purchase common stock in this
offering, based upon the issuance and sale of shares of common
stock at the initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, you will incur immediate dilution of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in
the net tangible book value per share of the common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">There has been no prior public market for our
	common stock, and our stock price may be volatile and could
	decline significantly.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no public
market for our common stock and an active public market for our
common stock may not develop or be sustained after this
offering. The initial public offering price for the common stock
has been determined by negotiations between us and the
underwriters, and may not be representative of the price that
will prevail in the open market. See &#147;Underwriting&#148;
for a discussion of the factors considered in determining the
initial public offering price. In addition, the market price of
our common stock could fluctuate significantly in response to
various factors, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">actual or anticipated variations in our results
	of operations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">announcements of innovations, new services or
	products or significant price reductions by us or our
	competitors;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the occurrence of major catastrophic events; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">changes in financial estimates by securities
	analysts.
	</FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Significant fluctuation in the market price of
	our common stock could result in securities class action claims
	against us.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Significant price and value fluctuations have
occurred with respect to the securities of insurance and
insurance-related companies. Our common stock price is likely to
be volatile in the future. In the past, following periods of
downward volatility in the market price of a company&#146;s
securities, class action litigation has often been pursued
against such companies. If similar litigation were pursued
against us, it could result in substantial costs and a diversion
of our management&#146;s attention and resources.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Provisions in our charter documents and
	Delaware law and state insurance laws may impede attempts to
	replace or remove our management or inhibit a takeover, which
	could adversely affect the value of our common stock.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation and bylaws, as
well as Delaware corporate law, contain provisions that could
delay or prevent changes in our management or a change of
control that a stockholder might consider favorable and may
prevent you from receiving a takeover premium for your shares.
These provisions include, for example,
</FONT>

<P align="center"><FONT size="2">17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">authorizing the issuance of preferred stock, the
	terms of which may be determined at the sole discretion of the
	board of directors;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">establishing advance notice requirements for
	nominations for election to the board of directors or for
	proposing matters that can be acted on by stockholders at
	meetings; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">providing that special meetings of shareholders
	may be called only by our board of directors, the chairman of
	our board of directors, our president or our secretary.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, state insurance laws provide that no
person or entity may directly or indirectly acquire control of
an insurance company unless that person or entity has received
approval from the insurance regulator. An acquisition of control
of our insurance operating subsidiaries generally would be
presumed if any person or entity acquires 10% or more of our
outstanding common stock, unless the applicable insurance
regulator determines otherwise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions apply even if the offer may be
considered beneficial by some of our stockholders. If a change
in management or a change of control is delayed or prevented,
the market price of our common stock could decline.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">&nbsp;</FONT></B></TD>
	<TD>
	<B><FONT size="2">Substantial sales of our common stock after
	this offering could result in a lower market price of our common
	stock.</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales of substantial amounts of our common stock
in the public market after 180&nbsp;days following this
offering, or the perception that these sales will occur, could
adversely affect the market price of our common stock. After
completion of this offering, our outstanding shares of common
stock owned by Fairfax will be eligible for sale in the public
market at various times after 180&nbsp;days from the date of
this prospectus, subject to volume limitations. We have entered
into an agreement with Fairfax giving them the right, in certain
circumstances, to demand that we file a registration statement
to enable them to sell their common stock. Fairfax has stated
that it does not intend to sell a sufficient number of shares of
our common stock to cause it not to retain control of us.
</FONT>

<P align="center"><FONT size="2">18
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "FORWARD-LOOKING STATEMENTS" -->

<P align="center">
<B><FONT size="2">FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any written or oral statements made by us or on
our behalf may include forward-looking statements that reflect
our current views with respect to future events and financial
performance. These forward-looking statements relate to, among
other things, our plans and objectives for future operations.
These forward-looking statements are subject to uncertainties
and other factors that could cause actual results to differ
materially from such statements. These uncertainties and other
factors, which we describe in more detail elsewhere in this
prospectus, include, but are not limited to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">reduction in net income if our claim reserves are
	insufficient;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">exposure to emerging claims and coverage issues;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">lowering or loss of one of our financial or
	claims-paying ratings;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">inability to receive dividends and other payments
	from our operating subsidiaries;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">inability to obtain reinsurance coverage on
	reasonable terms and prices;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">exposure to credit risk in the event reinsurers
	fail to pay;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">inability to obtain terrorist act reinsurance
	coverage;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">loss of key producers;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased competition;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">uncertainty in insurance market;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">occurrence of catastrophic events;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">limited ability to borrow;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">inability to realize our investment objectives;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">loss of key employees;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">change in government regulation; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">exposure to credit risks on novated policies.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The words &#147;believe,&#148;
&#147;anticipate,&#148; &#147;project,&#148; &#147;expect,&#148;
&#147;intend,&#148; &#147;will likely result,&#148; &#147;will
seek to&#148; or &#147;will continue&#148; and similar
expressions identify forward-looking statements. We caution
readers not to place undue reliance on these forward-looking
statements, which speak only as of their dates. We have
described some important factors that could cause our actual
results to differ materially from our expectations in this
prospectus, including in the section titled &#147;Risk
Factors.&#148; Except as otherwise required by federal
securities laws, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "USE OF PROCEEDS" -->

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that we will receive net proceeds
from this offering of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
assuming an initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share (the midpoint of the range set forth on the cover of this
prospectus) and after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us.
We will not receive any proceeds from the sale of shares by
Fairfax, including any shares issued pursuant to the exercise of
the over-allotment option granted by Fairfax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to use the net proceeds from this
offering for general corporate purposes, including payment of
our quarterly cash dividend and interest payments on the
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
term note issued to Fairfax. Until we use the net proceeds from
this offering, we intend to invest the net proceeds in U.S.
Treasury and government agency obligations and high grade
corporate debt securities.
</FONT>

<!-- link1 "DIVIDEND POLICY" -->

<P align="center">
<B><FONT size="2">DIVIDEND POLICY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors intends to establish an
initial policy of declaring quarterly cash dividends on our
common stock. We intend to declare an initial quarterly cash
dividend of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share, or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
common share annually, commencing in the third quarter of 2002
and paid in the fourth quarter of 2002. The declaration and
payment of dividends are subject to the discretion of our board
of directors and depend on, among other things, our financial
condition, general business conditions and contractual
restrictions regarding the payment of dividends by us and other
factors which our board may in the future consider to be
relevant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a holding company with no direct operations,
we will rely on cash proceeds from this offering and cash
dividends and other permitted payments from our insurance
operating subsidiaries to pay dividends to our stockholders.
State insurance law limits the amount that may be paid to us by
our insurance company subsidiaries without the prior approval of
the applicable state insurance department. See &#147;Insurance
Regulatory Matters.&#148;
</FONT>

<P align="center"><FONT size="2">20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "CAPITALIZATION" -->

<P align="center">
<B><FONT size="2">CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our capitalization
as of December 31, 2001. The &#147;As Adjusted&#148; column
reflects our capitalization after giving effect to the issuance
by us
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock pursuant to this offering, after deducting
estimated underwriting discounts and commissions and offering
expenses payable by us, and the issuance of a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
term note to Fairfax in connection with this offering. See
&#147;Use of Proceeds.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This table should be read in conjunction with
&#147;Selected Financial Data,&#148; &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&#148; and our consolidated financial statements and
accompanying notes appearing elsewhere in this prospectus.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">At December 31, 2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">As Adjusted</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><I><FONT size="1">(dollars in thousands)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Debt
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Preferred stock, none authorized, issued and
	outstanding (actual);<BR>
	$.01&nbsp;par value, 100,000,000 shares authorized, none issued
	and outstanding (as&nbsp;adjusted)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock, $1 par value, 1,000 shares
	authorized, issued and outstanding (actual); $.01 par value,
	200,000,000 shares authorized, shares issued and outstanding (as
	adjusted)(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional paid-in capital
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated other comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,865</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retained earnings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,046</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total capitalization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ratio of debt to total capitalization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">In connection with this offering, Fairfax will
	receive &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	of our common stock.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "DILUTION" -->

<P align="center">
<B><FONT size="2">DILUTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, our actual net
tangible book value was
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, based
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock outstanding. Net tangible book value represents
the amount of our total tangible assets, including deferred
acquisition costs, less our total liabilities. After giving
effect to the issuance and sale of
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock offered by us at the initial public offering
price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share (the midpoint of the range set forth on the cover of this
prospectus) and the issuance of a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
of term note to Fairfax, our adjusted net tangible book value as
of December&nbsp;31, 2001 would have
been &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. The adjusted net tangible book value after this offering
assumes that the proceeds to us from this offering, net of
underwriting discounts and commissions and offering expenses,
will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
Based on the foregoing, there would be as at December&nbsp;31,
2001 an immediate decrease in net tangible book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to our existing stockholder and an immediate dilution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to new investors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dilution in net tangible book value per share
represents the difference between the amount per share paid by
purchasers of our common stock in this offering and the net
tangible book value per share immediately following this
offering. Amounts per share
reflect&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock that will be received by Fairfax in
conjunction with this offering. The following table illustrates
this per share dilution:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="83%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Assumed initial public offering price per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net tangible book value per share at
	December&nbsp;31, 2001 before the issuance of the term note and
	application of the net proceeds to us from this offering
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decrease per share due to issuance of shares of
	common stock in this offering
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decrease per share attributable to the issuance
	of the term note
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Increase per share attributable to the purchase
	of common stock by new investors
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">As adjusted net tangible book value per share
	after this offering
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dilution per share to new investors
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New investors under this offering will
purchase &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock, or
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of our common stock outstanding after the offering, at the
initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share for total consideration of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
Our existing stockholder will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock, or
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of our common stock outstanding after the offering, representing
a total value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
based on the midpoint of the range set forth on the cover of
this prospectus.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "SELECTED FINANCIAL DATA" -->

<P align="center">
<B><FONT size="2">SELECTED FINANCIAL DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table shown below presents our selected
financial data for the five years ended December&nbsp;31, 2001.
The GAAP statement of operations data and balance sheet data
relating to each of the years 1999 through 2001 have been
derived from the consolidated financial statements audited by
PricewaterhouseCoopers LLP, independent accountants. The GAAP
statement of operations data and balance sheet data relating to
the 1997&nbsp;year and the periods January&nbsp;1, 1998 through
August&nbsp;13, 1998 and August&nbsp;14 through
December&nbsp;31, 1998, respectively, have been derived from
unaudited consolidated financial statements. Consolidated
balance sheets at December&nbsp;31, 2000 and 2001 and the
related consolidated statements of operations and comprehensive
income, of stockholder&#146;s equity and of cash flows for the
three years ended December&nbsp;31, 2001, the report thereon of
PricewaterhouseCoopers LLP, and accompanying notes, appear in
this prospectus beginning at page&nbsp;F-1.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The combined statutory data has been derived from
annual statutory statements filed with the domiciliary states of
our operating subsidiaries and prepared in accordance with
statutory accounting practices, which differ from GAAP.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selected financial data presented below
should be read in conjunction with &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&#148; and our consolidated financial statements and
accompanying notes included elsewhere in this prospectus. The
results for the period from January&nbsp;1, 1997 through
August&nbsp;13, 1998 reflect the historical results of
Crum&nbsp;&#38; Forster prior to its acquisition by Fairfax. The
results for the period from August&nbsp;14, 1998 through
December&nbsp;31, 1998 reflect the results of Crum&nbsp;&#38;
Forster after it was acquired by Fairfax. The results for the
year ended December&nbsp;31, 2000 include the results for Seneca
from August&nbsp;31, 2000, its date of acquisition.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">From and</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Through</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">After</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">August&nbsp;13</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">August&nbsp;14</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><I><FONT size="1">(dollars in thousands, except per share data)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="10" align="left" valign="top">
	<B><FONT size="2">GAAP Statement of Operations Data:</FONT></B></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,058,465</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">581,656</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">294,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744,888</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">939,353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">523,158</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">255,270</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506,473</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">933,783</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">553,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">307,451</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">185,784</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111,003</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,711</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,939</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,072</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,103</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,358</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,958</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,041</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,305</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenues
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,146,506</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">669,671</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">495,947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">839,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">683,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">758,852</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684,736</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">230,565</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">172,025</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,083</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,411</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other underwriting expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,535</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,107</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,558</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,646</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,317</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,448</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,619</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,103,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">893,513</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">329,203</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">792,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">609,154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">853,984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss)&nbsp;before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,829</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(223,842</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">166,744</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170,050</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,282</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(78,438</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,579</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,547</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(145,404</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)&nbsp;per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">23
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><I><FONT size="1">(dollars in thousands, except per share data)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">GAAP Balance Sheet Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments (including cash and cash
	equivalents)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,038,084</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,274,279</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,656,239</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,517,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,278,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,370,652</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,093,691</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,731,003</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,795,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,147,959</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expense
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,562,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,597,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,492,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,423,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Stockholders&#146; equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,049,685</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">773,842</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">585,852</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">801,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Book value per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">From and</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Through</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">After</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">August&nbsp;13</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">August&nbsp;14</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Selected GAAP Financial Ratios:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and loss adjustment expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">123.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">161.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">107.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">% <SUP>(1)</SUP></FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><I><FONT size="1">(dollars in thousands)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Selected Combined Statutory Data:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and loss adjustment expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">180.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">% <SUP>(1)</SUP></FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Policyholders&#146; surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">832,068</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">734,933</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">689,601</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">769,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">708,388</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ratio of net premiums written to surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.13</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.06</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.74</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The GAAP and statutory combined ratios on an
	accident year basis were 113.1% and 113.6%, respectively.
	Accident year refers to the accounting period in which loss
	events occurred, regardless of when the losses are actually
	reported, recorded or paid and, as such, excludes the impact of
	development of prior years&#146; loss and LAE reserves.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND
ANALYSIS</FONT></B>

<DIV align="center">
<B><FONT size="2">OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following discussion and analysis should
be read in conjunction with our consolidated financial
statements and accompanying notes included elsewhere in this
prospectus. Certain information contained in
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; constitutes
forward-looking statements that involve risks and uncertainties.
Our actual results may differ materially from the results
discussed in the forward-looking statements as a result of
certain factors, including those set forth under &#147;Risk
Factors,&#148; &#147;Business&nbsp;&#151; Reserves,&#148;
&#147;Business&nbsp;&#151; Investments&#148; and elsewhere in
this prospectus.</FONT></I>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. Operating through our home office and regional
branch network, we write a broad range of commercial coverages,
including general liability, property, workers&#146;
compensation, commercial auto and surety. We conduct business
through approximately 1,050 producers located throughout the
United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The property and casualty industry is cyclical
and influenced by many factors, including price competition,
economic conditions, natural and man-made disasters, interest
rates and changes in law and regulations. Throughout the 1990s
and into 2000, the industry was characterized by excess
capacity, which resulted in highly competitive market
conditions, as evidenced by declining premium rates, poor
underwriting results and declining cash flow. In response to the
effects of prolonged soft market conditions, capacity was
withdrawn from the market. Commencing in mid-2000, insurers
began to achieve significant rate increases and improved terms
and conditions. During 2001, based on publicly available
industry information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment. The
terrorist attacks of September&nbsp;11, 2001 represent the
largest insured catastrophe in history and have accelerated the
pace of improvement in pricing and terms, particularly in
property lines of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have experienced significant price increases
in 2001 and early 2002. While conditions in the insurance
market, such as continuing consolidation among leading insurance
firms and increased competition, may lead to pricing pressure,
we expect the improved pricing and terms to continue into 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have exposure to the September&nbsp;11, 2001
terrorist attacks, with claims arising mainly from our business
interruption, business personal property and workers&#146;
compensation coverages. We have carefully reviewed our exposure
to these events and we estimate a loss of approximately
$1.5&nbsp;million (net of reinsurance) based on current
information. As more information becomes available, this
estimate could change.
</FONT>

<P align="left">
<B><FONT size="2">Management Initiatives</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have made significant changes to the
management and operations of the Crum &#38; Forster companies
acquired by Fairfax in August 1998. In the fourth quarter of
1999, we appointed a proven senior management team, led by Bruce
Esselborn, which made a number of significant changes designed
to increase our profitability and competitive position. These
changes include redesigning our underwriting and pricing
strategies, expanding our distribution network and implementing
a disciplined expense management culture. In addition, in August
2000, we acquired Seneca, a specialty insurer focused on
non-commodity lines of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Underwriting Initiatives.
</FONT></I><FONT size="2">We have taken a number of actions
designed to improve underwriting profitability at the
Crum&nbsp;&#38; Forster companies acquired in 1998. These
actions resulted in a significant improvement in our accident
year loss and LAE ratio from 112.6% in 1999 to 79.3% in 2001.
Accident year refers to the accounting period in which loss
events occurred, regardless of when the losses are actually
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">reported, recorded or paid. We believe that an
accident year is the most indicative measure of the underlying
profitability of the business earned in that period. The actions
include:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">centralized underwriting operations to provide a
	high degree of home office control over underwriting and claims;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">realigned our operating structure to emphasize
	product line experience and expertise. Hired five experienced
	underwriting product line executives aligned with our targeted
	classes of business and production sources. Approximately 93 of
	our current underwriters, representing 57% of the entire
	underwriting staff, were hired since the arrival of our new
	management team;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">enhanced our price monitoring systems to provide
	us with increased control over pricing and profitability. In
	addition, we adjusted our pricing models to emphasize a targeted
	combined ratio, without regard to the imputed benefit of
	investment income;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased our pricing on renewal business by
	approximately 11% in 2000 and achieved an additional price
	increase of approximately 17% in 2001. In both years we
	experienced price increases across all of our lines of business.
	General liability and commercial multi-peril experienced above
	average increases of 24% and 19%, respectively, in 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">emphasized classes of business and types of
	insureds that tend to have larger premium policies and
	instituted minimum premium guidelines, which resulted in an
	increase in our average premiums per policy from approximately
	$20,000 in 1999 to $59,000 in 2001. We believe larger premium
	policies complement our strength of specialized individual risk
	underwriting and provide expense benefits. The average direct
	premiums written per policy, excluding surety bonds, is
	summarized below for the periods indicated:
	</FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Policy</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Policy</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Count</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Per Policy</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Count</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Per Policy</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,601</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,877</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,117</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,455</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,882</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,026</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">152,096</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,931</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,721</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,841</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,826</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial automobile
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,444</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,654</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">66,115</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,324</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,384</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37,204</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,790</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,022</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58,828</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">restructured our reinsurance program to reduce
	our net retentions to $1&nbsp;million on casualty lines and
	$2&nbsp;million on property lines, and reduced our gross policy
	limits, particularly in property; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">discontinued unprofitable classes of business,
	including large fleet long haul tracking, New York and
	California contractors, taxis and limousines, fast food
	restaurant programs, country clubs and nursing homes, which
	represented approximately $250&nbsp;million of gross premiums
	written, or 34%, of total gross premiums written in 1999.
	Discontinued lines accounted for approximately nine percentage
	points of our loss and LAE ratio in 2000 and significantly
	contributed to a 13.9% decrease in total gross premiums written
	in 2000 from 1999.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Distribution Initiatives.
</FONT></I><FONT size="2">We evaluated the profitability and
productivity of our producer relationships. Consistent with our
strategy to write larger risks which benefit from individual
risk underwriting, we have grown the portion of our business
from national brokers and wholesale brokers. The key elements
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">diversified our distribution by appointing 480
	new producers and entering into new arrangements with national
	brokers and wholesale brokers, in each case, aligned with our
	targeted classes of business and types of insureds;
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">adjusted our commission structure to be in line
	with market practice and revised contingent commission
	agreements with producers to require a higher level of
	sustainable underwriting profit before producers earn a profit
	sharing payment. These actions resulted in a reduction of our
	gross commissions expense (as a percentage of gross premiums
	written) of 4.7&nbsp;percentage points from 1999 to 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">during 2001, we more than doubled our new
	business production, with one-third of the new business written
	by producers who were appointed since January&nbsp;1, 2000; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">production from national brokers and wholesale
	brokers has increased from&nbsp;20.4% of total gross premiums
	written in 1999 to 45.0% in&nbsp;2001.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Expense Initiatives.
</FONT></I><FONT size="2">We have created a disciplined expense
management culture to improve operating efficiencies. We
carefully analyzed our cost structure and implemented new
strategies to reduce operating expenses. The key elements
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">reduced our number of employees by 25%
	from&nbsp;1,357 at December&nbsp;31, 1999, to&nbsp;1,023 at
	December&nbsp;31, 2001, and correspondingly reduced our payroll
	by 18%;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">increased our productivity as measured by gross
	premiums per employee from approximately $549,000 in 1999 to
	approximately $684,000 in&nbsp;2001, or 25%; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">reduced our information technology expenses by
	approximately $10&nbsp;million, or 24%, in 2001 while improving
	functionality.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Seneca Acquisition.
</FONT></I><FONT size="2">In August 2000, we acquired Seneca,
which provides specialty coverages such as bail bonds,
non-standard property in inner city markets, inland marine,
boiler and machinery and environmental liability. Selected
statutory data of Seneca for the three years ended
December&nbsp;31, 2001, which includes periods prior to its
acquisition by us, is summarized as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of our net income (loss)&nbsp;for
the three years ended December 31, 2001 are summarized as
follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(113.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(86.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(288.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss)&nbsp;before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Underwriting Results</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Underwriting results for the three years ended
December&nbsp;31, 2001 are summarized as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other underwriting expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(113.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(86.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(288.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">150.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Crum &#38; Forster excluding Seneca
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Seneca
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We experienced underwriting losses of
$113.0&nbsp;million, $86.4&nbsp;million and $288.2&nbsp;million
in 1999, 2000 and 2001, respectively. The substantial loss in
2001 was principally the result of adverse development of prior
years&#146; loss and LAE reserves of approximately
$183.1&nbsp;million. In 2001, we significantly increased
reserves for our general liability, workers&#146; compensation,
commercial auto liability and commercial multi-peril lines of
business, principally in respect of accident years 1997 through
2000. The benefit of aggregate excess of loss reinsurance
reduced our underwriting loss by $149.5&nbsp;million, $188.1
million and $190.2 million in 1999, 2000 and 2001, respectively.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Gross Premiums Written</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our gross premiums written by line of business
for the three years ended December&nbsp;31, 2001 are summarized
as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">204.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">171.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">159.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial automobile
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">262.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">88.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gross premiums written by Crum &#38; Forster and
Seneca as reflected in our results in the three years ended
December&nbsp;31, 2001 are summarized as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Crum &#38; Forster
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">699.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Seneca
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gross premiums written decreased by
$65.1&nbsp;million, or 8.7%, in 2000 and increased by
$163.4&nbsp;million, or 24.0%, in 2001. Excluding the
acquisition of Seneca, gross premiums written decreased by
$103.6&nbsp;million, or 13.9%, in 2000 and increased by
$58.5&nbsp;million, or 9.1%, in 2001. Our pricing levels
increased by more than 10% in 2000 and 15% to 20% in 2001. Gross
premiums written on new business steadily increased from
$144.5&nbsp;million in 1999 to $368.8&nbsp;million in 2001. The
growth in new business was attributable to an increased emphasis
on larger premium accounts and expansion into new classes of
business, which included directors&#146; and officers&#146;
liability, surety and excess and surplus lines. The expansion of
our distribution force also contributed to the growth. These
positive influences on gross premiums written were partially
offset by lower retention ratios, which were influenced by the
implementation of a refocused underwriting philosophy upon the
arrival of our Chief Executive Officer in late 1999. Increased
underwriting discipline resulted in a decline in our retention
rates from 71% in 1999 and 51% in 2000 to 44% in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Highlights of our gross premiums written by line
follow.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">General liability gross premiums written
increased 7.7% in 2000 and 50.3% in 2001. Growth is attributable
primarily to business from wholesale brokers and national
brokers underwritten within the home office, the acquisition of
Seneca and, in 2001, $24&nbsp;million from retrospective
premiums related to expired policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Workers&#146; compensation gross premiums written
increased 12.9% in 2000 and 18.0% in 2001, as we have increased
our emphasis on large loss rated policies, written on either a
guaranteed cost or loss sensitive basis. In addition,
Seneca&#146;s gross premiums written increased from
$1.7&nbsp;million in 2000 to $6.9&nbsp;million in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property gross premiums written declined 4.3% in
2000 and increased 256% in 2001. The significant increase in
2001 is due to the combined impact of unbundling these coverages
as part of the commercial multi-peril line of business and
Seneca&#146;s contribution of property gross written premiums,
which increased
</FONT>

<P align="center"><FONT size="2">29
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">from $5.3&nbsp;million in 2000 to $22.3 million
in 2001. Much of the growth in this line in 2001 also came from
targeted excess property policies.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial automobile gross premiums written
decreased 36.9% in 2000 and increased 10.7% in 2001. We have
significantly limited or eliminated the writing of selected
classes of commercial auto, including large fleet long haul
trucking and taxis and limousines. The increase in 2001 reflects
improved pricing on the selected automobile classes we chose to
write.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial multi-peril gross premiums written
declined 18.2% in 2000 and 54.4% in 2001. We intentionally wrote
less commercial multi-peril business in each of 2000 and 2001 as
we have emphasized separately writing property and liability
coverages for larger accounts and eliminated business written in
higher hazard grades. As a result, commercial multi-peril
premiums have been reduced from more than one-third of our gross
premiums written in 1999 to 12% of gross premiums written in
2001. Partially offsetting the decline in premium volume in this
line was an increase of $19.6&nbsp;million in Seneca&#146;s
gross premiums written from $7.4&nbsp;million in 2000 to
$27.0&nbsp;million in 2001. The commercial multi-peril form is
best suited to smaller commercial risks, the sector targeted by
Seneca.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Surety gross premiums written increased
substantially over the last three years, primarily as a result
of the acquisition of Seneca. Seneca&#146;s gross premiums
written reflected in our 2000 and 2001 results included
$20.3&nbsp;million and $70.3&nbsp;million, respectively, of bail
bond premiums.
</FONT>

<P align="left">
<B><FONT size="2">Net Premiums Written</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our net premiums written by line of business for
the three years ended December&nbsp;31, 2001 are summarized as
follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">106.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">149.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial automobile
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">148.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">207.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net premiums written decreased by
$92.6&nbsp;million, or 15.5%, in 2000, followed by an increase
of $100.6&nbsp;million, or 19.9%, in 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The decrease in net premiums written in 2000 was
largely attributable to increased cessions to reinsurers,
reflecting the reduction in our net retentions on our property
and general liability&nbsp;&#151; umbrella lines of business.
The change in net premiums written for the remaining lines of
business was consistent with their respective growth in gross
premiums written.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The increase in net premiums written of
$100.6&nbsp;million in 2001 was generally in line with the
growth in gross premiums written, in total and by line of
business.
</FONT>

<P align="left">
<B><FONT size="2">Net Premiums Earned</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net premiums earned reflect the amount of net
premiums written applicable to the portion of the policy term
that expires in a given year. We generally earn premiums on a
pro&nbsp;rata basis over the period in which the coverages are
provided. Net premiums earned decreased by $156.9&nbsp;million,
or 23.1%, in 2000 and increased by $43.1&nbsp;million, or 8.2%,
in 2001.
</FONT>

<P align="center"><FONT size="2">30
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Losses and LAE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below displays the loss and
LAE&nbsp;ratios before and after giving effect to aggregate
excess of loss reinsurance, and also shows the effect of reserve
development on the loss and LAE&nbsp;ratios.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE ratios
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Benefit of aggregate excess of loss reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Calendar year ratios before impact of aggregate
	excess of loss reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accident year loss and LAE ratios as of
	December&nbsp;31, 2001.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The impact of aggregate excess of loss
reinsurance on income (loss)&nbsp;before income taxes is
summarized as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded losses and LAE
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">216.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">251.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">255.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded premiums written and earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net benefit to income (loss)&nbsp;before income
	taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">179.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our aggregate excess of loss treaties provide
either current accident year protection on a prospective basis
or adverse development protection related to prior accident
years on a retroactive basis. Coverage under these contracts is
generally triggered when our loss ratio for the subject period
exceeds a specified level or when reserves in respect of all
periods prior to a certain date exceed a stated amount. We cede
losses and LAE to our reinsurers in excess of those specified
levels or amounts, along with the related written and earned
premiums. We will recover the ceded losses and LAE from our
reinsurers as we settle the related claims, which may occur over
several years. These contracts generally provide that interest
expense be charged to us, for the benefit of the reinsurers, on
any premiums withheld by us. Interest rates specified in these
contracts are 7.0% to&nbsp;7.5%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have not purchased, and do not intend to
purchase, any aggregate stop loss reinsurance to protect us from
losses from business written in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our accident year loss and LAE ratios as
estimated as of December&nbsp;31, 2001 by line of business
without giving effect to aggregate excess of loss reinsurance
are summarized as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">88.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial automobile
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">95.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Accident year loss and LAE ratio</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">91.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">31
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our accident year loss and LAE ratio has improved
from 112.6% in 1999 to 91.3% in 2000 and to 79.3% in 2001
without giving effect to aggregate excess of loss reinsurance.
This improvement reflects the impact of our underwriting
actions, as well as improved pricing conditions during 2001.
Approximately nine points of this improvement is represented by
unprofitable classes of business which we ceased writing. Our
individual risk underwriting approach and more profitable mix of
business further contributed to the increase, as did the
inclusion of the results of Seneca, which had loss and LAE
ratios for 2000 and 2001 of 60.6% and 59.2%, respectively.
Improved market conditions enabled us to obtain renewal price
increases of approximately 11% in 2000 and 15-20% in 2001. Price
increases were greater than 10% in each line, with general
liability experiencing a 24% increase. We believe that the
impact of our management initiatives will, together with
continued favorable pricing conditions, permit us to achieve
further improvements in our loss and LAE ratio for 2002.
</FONT>

<P align="left">
<B><FONT size="2">Underwriting Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Underwriting expenses are comprised of
acquisition costs and other underwriting expenses. Acquisition
costs are composed principally of commissions paid to agents and
brokers and premium taxes. Other underwriting expenses consist
of all other operating expenses associated with our underwriting
activities and include salaries and benefits, information
technology and rent. Our reported results have been affected by
aggregate excess of loss reinsurance and fair value adjustments
related to our acquisition by Fairfax. We believe an analysis of
our underwriting expenses without giving effect to aggregate
excess of loss reinsurance and fair value adjustments more
accurately reflects the impact of our expense reduction efforts
and we analyze our underwriting expenses on that basis below.
The table below displays our underwriting expense ratios in the
three&nbsp;years ended December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting expense ratio, as adjusted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">37.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Acquisition costs, as adjusted, showed a downward
trend in dollar terms and the acquisition expense ratio declined
from 21.6% in 1999 to 19.3% in 2000 to 14.5% in 2001. These
improvements were attributable to reduced direct commissions
paid to producers of approximately five percentage points and
increased ceding commissions from reinsurers, primarily on the
property and umbrella lines.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The other underwriting expense ratio adjusted for
aggregate excess of loss reinsurance and fair value adjustments
increased from 16.2% in 1999 to 20.4% in 2000, followed by a
decline to 19.6% in 2001. The increase in 2000 was primarily
attributable to the significant decline in net premiums earned
in that year.
</FONT>

<P align="left">
<B><FONT size="2">Dividends to Policyholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends to policyholders decreased by
$4.7&nbsp;million from $10.7&nbsp;million in 1999 to
$6.0&nbsp;million in 2000, followed by a decrease of
$3.5&nbsp;million to $2.5&nbsp;million in 2001. The dividends to
policyholders ratio, dividends to policyholders expressed as a
percentage of earned premium, declined from 1.6% in 1999 to 1.1%
in 2000 and to 0.4% in 2001. The lower dividends to policyholder
ratio reflects our decision in early 2000 to substantially
eliminate participating workers&#146; compensation policies.
</FONT>

<P align="center"><FONT size="2">32
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Investment Results</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information on investment results for the three
years ended December&nbsp;31, 2001 is summarized as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average investments, including cash and cash
	equivalents, at book value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,166.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,853.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,539.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross investment yield
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment yield
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our net investment income was
$157.7&nbsp;million, $142.6&nbsp;million and $119.2&nbsp;million
in 1999, 2000 and 2001, respectively. The decrease in net
investment income of $15.1&nbsp;million, or 9.6%, in 2000 was
primarily the result of a lower average level of invested assets
of approximately $313.6&nbsp;million. The decline in average
invested assets was due principally to reduced premium
collections and payments on maturing claims made during the
year. A further decrease in net investment income of
$23.4&nbsp;million, or 16.4%, occurred in 2001. This decrease in
net investment income was due to the combined impact of a lower
level of average invested assets of approximately
$313.8&nbsp;million, driven by maturing claim payments, and a
lower net investment yield. The net investment yield over the
three year period was affected by interest charged on funds
withheld from reinsurers under our aggregate excess of loss
contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net realized investment losses decreased by
$7.3&nbsp;million from a loss of $7.1&nbsp;million in 1999 to a
gain of $0.2&nbsp;million in 2000, primarily due to realized
losses on fixed income securities recognized in 1999. The net
realized investment gains decreased by $5.6&nbsp;million from a
gain of $0.2&nbsp;million in 2000 to a loss of $5.4&nbsp;million
in 2001, primarily due to the realized loss arising from an
other than temporary decline in the value of a single equity
security.
</FONT>

<P align="left">
<B><FONT size="2">Other Income</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other income, net, decreased by $2.7&nbsp;million
from $9.0&nbsp;million in 1999 to $6.3&nbsp;million in 2000,
followed by a decrease of $2.0&nbsp;million to $4.3&nbsp;million
in 2001. The principal component of other income is negative
goodwill amortization of $9.8&nbsp;million in each of the three
years ending December&nbsp;31. Other income in 2000 included a
one-time charge of $3.1&nbsp;million arising from the
termination of a long-term information technology outsourcing
contract, and for 2001 included $4.0&nbsp;million in employee
severance costs.
</FONT>

<P align="left">
<B><FONT size="2">Income Tax Expense (Benefit)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income taxes decreased by $19.0&nbsp;million,
from an expense of $10.1&nbsp;million in 1999 to a benefit of
$8.9&nbsp;million in 2000. The effective tax rates were 21.7%
and (14.2)%, respectively. Our income tax benefit for 2000
included an adjustment of $26.3&nbsp;million related to the
resolution of the deductibility of certain reinsurance premiums.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The income tax benefit increased by
$54.6&nbsp;million, from a benefit of $8.9 million in 2000 to a
benefit of $63.6&nbsp;million in 2001. The effective tax rates
were (14.2)% and (37.4)%, respectively.
</FONT>

<P align="center"><FONT size="2">33
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Quarterly Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our quarterly results of operations for 2001 are
summarized as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Third</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="15" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">179.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">213.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(226.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">) <SUP>(1)</SUP></FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss)&nbsp;before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(199.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(70.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(128.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined ratio
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">114.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">309.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="2%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Includes adverse development of prior years&#146;
	loss and LAE reserves of approximately $183.1&nbsp;million.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash provided by operating activities primarily
consists of premium collections, reinsurance recoveries,
investment income and income tax receipts. Cash provided from
these sources is generally used for payment of loss and LAE,
acquisition costs, operating expenses, ceded reinsurance
premiums and income taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash used in operating activities, net amounted
to $272.0&nbsp;million, $404.0 million and $289.6&nbsp;million
for 1999, 2000 and 2001, respectively. Cash used in operating
activities increased in 2000, as a result of lower collections
on premiums and payment of maturing claims. Net premiums written
in 2000 were $92.6&nbsp;million less than in 1999 and loss and
LAE payments were $26.2 million higher in 2000 than in 1999.
Cash used in operating activities improved in 2001 as a result
of our increase in premium collections and reduced claim
payments. Net premiums written increased by $100.6&nbsp;million
in 2001 compared to 2000 and loss and LAE payments decreased by
$56.5&nbsp;million in 2001 compared to 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Total cash provided by investing activities
during 1999, 2000 and 2001 was $308.2&nbsp;million,
$411.3&nbsp;million and $464.9&nbsp;million, respectively, which
principally reflected the portfolio repositioning in 1999
following our acquisition by Fairfax, as well as proceeds from
the sale of investments which were required to make claim
payments. In 2001, we sold investments to raise liquidity, which
increased the amount of cash and cash equivalents at
December&nbsp;31, 2001 to $273.6&nbsp;million from
$89.3&nbsp;million at December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash provided by financing activities was
$2.7&nbsp;million and $9.1&nbsp;million for 2000 and 2001,
respectively. The cash flow from financing activities for 2000
included a capital contribution of $59.4&nbsp;million and
shareholder dividends of $56.7&nbsp;million. A capital
contribution of $9.1&nbsp;million was received from Fairfax in
2001 and no shareholder dividends were paid. No capital
contributions were received or shareholder dividends paid during
1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Consistent with our disciplined underwriting
strategy, we have aggressively re-underwritten our book of
business, resulting in a decline in premium levels in recent
years compared to the years prior to our acquisition by Fairfax.
As a result of making claim payments related to years in which
we wrote considerably more business, we have experienced
negative cash flow from operations in each of the last three
years. We expect our operating cash flow to improve in the
future as we expand our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax has bank credit facilities which prevent
any subsidiaries of Fairfax, including us, from borrowing funds.
This affects our ability to incur debt pursuant to bank loans or
to raise funds in the capital markets.
</FONT>

<P align="center"><FONT size="2">34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">However, US Fire, CF Indemnity and CF
Underwriters have each entered into a securities repurchase
agreement which allows these companies to raise funds through
repurchase arrangements with Fairfax. Under these agreements, US
Fire may raise a maximum of $100.0&nbsp;million at any one time
and CF Indemnity and CF Underwriters are limited to
$5.0&nbsp;million each.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The aggregate carrying value of our invested
assets, including cash and short-term investments, was
$2.7&nbsp;billion, $2.5&nbsp;billion and $2.3&nbsp;billion as of
December&nbsp;31, 1999, 2000 and 2001, respectively. The
aggregate carrying value of invested assets, including cash and
cash equivalents, decreased by $0.4 billion from 1999 to 2001.
The decrease in cash and invested assets resulted from negative
cash flows from operations due to payment of maturing claims in
all years, reduced premium collections in 2000, and the
acquisitions of Seneca and CF Specialty in 2000. Gross
unrealized investment losses were $376.6 million at
December&nbsp;31, 1999 and $127.1&nbsp;million at
December&nbsp;31, 2001, relating principally to our fixed income
portfolio which value increased as interest rates fell in that
period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our stockholder&#146;s equity was
$585.9&nbsp;million, $801.5&nbsp;million and $719.6 million as
of December&nbsp;31, 1999, 2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our combined policyholders&#146; surplus
increased from $689.6&nbsp;million at December&nbsp;31, 1999 to
$708.4&nbsp;million at December&nbsp;31, 2001 and our ratio of
statutory net premiums written to surplus has remained
relatively stable at 0.87x over the same period. The improvement
in this ratio in 2000 was due to lower net premiums written in
that year. Statutory surplus is an important measure utilized by
us, our regulators and rating agencies to assess our ability to
support business operations.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Combined policyholders&#146; surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">689.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">769.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">708.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating leverage (statutory net premiums
	written to end of period surplus)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.74x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.87x</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we recorded net
deferred tax assets of $293.9&nbsp;million, which primarily
related to net operating loss carry-forwards and the discount on
unpaid losses and LAE.
</FONT>

<P align="left">
<B><FONT size="2">Regulatory Issues</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The NAIC uses risk-based capital
(RBC)&nbsp;formulas for property and casualty insurers which
serve as an early warning tool by the NAIC and state regulators
to identify companies that are undercapitalized and merit
further regulatory attention or the initiation of regulatory
action. Our property and casualty companies have more than
sufficient capital to meet the RBC requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The NAIC recently finished revising the
Accounting Practices and Procedures Manual (Codification). The
revised manual was effective January&nbsp;1, 2001. The
domiciliary states of our insurance subsidiaries have adopted a
majority of the provisions of the revised manual. The revised
manual has changed, to some extent, prescribed statutory
accounting practices and resulted in changes to the accounting
practices that our insurance subsidiaries use to prepare their
statutory-basis financial statements. Adoption of the manual
increased statutory surplus of our property and casualty
insurance companies by approximately $10&nbsp;million in the
aggregate. Nearly all of the increase in the amount of statutory
surplus relates to the recording of deferred tax assets that
were not recorded in the statutory basis financial statements
under the prior statutory accounting practices.
</FONT>

<P align="left">
<B><FONT size="2">Ratings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The claims-paying abilities of insurers are rated
to provide both insurance consumers and industry participants
with comparative information on specific insurance companies.
Claims-paying ratings are important for the marketing of certain
insurance products, such as umbrella and special accounts
products. Higher ratings generally indicate greater financial
strength and a stronger ability to pay claims. Ratings focus
</FONT>

<P align="center"><FONT size="2">35
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">on factors such as results of operations, capital
resources, debt-to-equity ratio, demonstrated management
expertise in the insurance business, marketing, investment
operations, minimum policyholders&#146; surplus requirements and
capital sufficiency to meet projected growth, as well as access
to such traditional capital as may be necessary to continue to
meet standards for capital adequacy. Our operating subsidiaries
have an &#147;A-&#148; rating from A.M. Best (the fourth highest
of 15&nbsp;ratings) with a negative outlook and a
&#147;BBB&#148; financial strength rating from
Standard&nbsp;&#38; Poor&#146;s (the fourth highest of nine
ratings categories). According to A.M.&nbsp;Best, a failure by
management to achieve its near term calendar year combined ratio
targets or any further deterioration in near term underwriting
or operating performance will likely result in a rating
downgrade. We intend to pursue an improvement in our rating in
conjunction with the completion of this offering.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Market Sensitive Instruments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we are principally exposed to
four types of market risk related to our investment operations.
These risks are interest rate risk, credit risk, equity price
risk and foreign currency risk. The term market risk refers to
the risk of loss arising from adverse changes in market rates
and prices, such as interest rates, equity prices and foreign
currency exchange rates. All market sensitive instruments
discussed here relate to our investment assets which are
classified as available for sale.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, our
$2.3&nbsp;billion investment portfolio included
$1.9&nbsp;billion of fixed income securities that are subject
primarily to interest rate risk and credit risk. Our portfolio
includes $300 million of cash and cash equivalents.
</FONT>

<P align="left">
<B><FONT size="2">Interest Rate Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our fixed income portfolio is exposed to interest
rate risk. Fluctuations in interest rates have a direct impact
on the market valuation of these securities. As interest rates
rise, market values of fixed income portfolios fall and vice
versa.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below displays the potential impact of
market value fluctuations on our fixed income portfolio as of
December&nbsp;31, 2000 and December&nbsp;31, 2001 based on
parallel 200 basis point shifts in interest rates up and down in
100 basis points increments. This analysis was performed on each
security individually.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">As of December 31, 2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">As of December 31, 2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair Value</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of&nbsp;Fixed</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Fixed</FONT></B></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Percent Change in</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Hypothetical</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Hypothetical</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Hypothetical</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Hypothetical</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Interest&nbsp;Rates</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Portfolio</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">$ Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Portfolio</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">$ Change</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% Change</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">200 basis point rise
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,939.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(343.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">-15.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,559.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(291.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">-15.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">100 basis point rise
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,098.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(184.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">-8.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,687.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(163.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">-8.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Base Scenario
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">100 basis point decline
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,557.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">274.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,076.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">225.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">200 basis point decline
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,915.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">633.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,363.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">511.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preceding table indicates an asymmetric
market value response to equivalent basis point shifts up and
down in interest rates. This reflects significant exposure to
fixed income securities containing a put feature. In total these
securities represent approximately 52.2% and 44.8% of the fair
market value of the total fixed income portfolio as of
December&nbsp;31, 2000 and December&nbsp;31, 2001, respectively.
The asymmetric market value response reflects our ability to put
these bonds back to the issuer for early maturity in a rising
interest rate environment (thereby limiting market value loss)
but to hold these bonds to their much longer full maturity dates
in a falling interest rate environment (thereby maximizing the
full benefit of higher market values in that environment).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Computations of prospective effects of
hypothetical interest rate changes are based on numerous
assumptions, including the maintenance of the existing level and
composition of fixed income security assets, and should not be
relied on as indicative of future results.
</FONT>

<P align="center"><FONT size="2">36
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain shortcomings are inherent in the method
of analysis presented in the computation of the fair value of
fixed rate instruments. Actual values may differ from those
projections presented should market conditions vary from
assumptions used in the calculation of the fair value of
individual securities, including non-parallel shifts in the term
structure of interest rates and changing individual issuer
credit spreads.
</FONT>

<P align="left">
<B><FONT size="2">Credit Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have exposure to credit risk primarily as a
holder of fixed income securities. We control this exposure by
emphasizing investment grade credit quality in the fixed income
securities we purchase.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2000 and
December&nbsp;31, 2001, 99.4% and 98.2%, respectively, of our
fixed income portfolio consisted of securities rated investment
grade, with 0.6% and 1.8%, respectively, rated below investment
grade.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that this concentration in investment
grade securities reduces our exposure to credit risk on these
fixed income investments to an acceptable level.
</FONT>

<P align="left">
<B><FONT size="2">Equity Price Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2000 and
December&nbsp;31, 2001, 5.8% and 6.7%, respectively, of our
investment portfolio, including cash and cash equivalents, was
in common stocks (unaffiliated and affiliated). Marketable
equity securities, which represented approximately 5.5% and
5.9%, respectively of our investment portfolio, including cash
and cash equivalents, are exposed to equity price risk, defined
as the potential for loss in market value owing to a decline in
equity prices. A 10% decline in the price of each of these
marketable equity securities would result in a total
$13.8&nbsp;million at December 31, 2000 and $13.5&nbsp;million
at December&nbsp;31, 2001 decline in the fair value of the total
investment portfolio.
</FONT>

<P align="left">
<B><FONT size="2">Foreign Currency Exchange Rate Risk</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through investment in securities denominated in
foreign currencies, we are exposed to foreign currency exchange
rate risk. Foreign currency exchange rate risk is the potential
for loss in market value owing to a decline in the U.S. dollar
value of these investments due to a decline in the exchange rate
of the foreign currency in which these assets are denominated.
As of December&nbsp;31, 2000 and December&nbsp;31, 2001, our
total exposure to foreign denominated securities in U.S. dollar
terms was approximately $86.5&nbsp;million and $88.4 million,
respectively, or 3.4% and 3.9%, respectively, of our investment
portfolio, including cash and cash equivalents. The primary
foreign currency exposure was in Canadian dollar denominated
securities, which represented 3.4% and 3.9%, respectively, of
our investment portfolio, including cash and cash equivalents.
The potential impact of a 10% decline in each of the foreign
exchange rates on the valuation of investment assets denominated
in those respective foreign currencies would result in a total
decline in the fair value of the total investment portfolio of
$8.7&nbsp;million at December&nbsp;31, 2000 and
$8.8&nbsp;million at December&nbsp;31, 2001.
</FONT>

<P align="left">
<B><FONT size="2">Accounting Standards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Statement of Financial Accounting Standards
(SFAS) No.&nbsp;133 (&#147;SFAS No.&nbsp;133&#148;),
<I>Accounting for Derivative Instruments and Hedging
Activities,</I> was issued in June 1998 and amended by SFAS
No.&nbsp;138, issued in June 2000. The requirements of SFAS
No.&nbsp;133, as amended, became effective in the first quarter
of the fiscal year beginning January&nbsp;1, 2001. The standard
establishes accounting and reporting standards for derivative
instruments embedded in other contracts and for hedging
activities. Under the standard, certain contracts that were not
formerly considered derivatives may now meet the definition of a
derivative. We have determined SFAS No.&nbsp;133 has no impact
on our financial position and results of operations because we
have no derivative activity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No.&nbsp;141, <I>Business
Combinations</I>. SFAS No.&nbsp;141 requires that we account for
all business combinations in the scope of the statement using
the purchase method. SFAS No.&nbsp;141 is effective for business
combinations initiated after June&nbsp;30, 2001 and for business
combinations accounted for using the purchase method for which
the
</FONT>

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<DIV align="left">
<FONT size="2">date of acquisition is July&nbsp;1, 2001 or
later. Our acquisition by Fairfax in 1998 resulted in the
recognition of negative goodwill as a result of net assets
acquired in excess of the purchase price of $97,800. Prior to
adoption of SFAS No.&nbsp;141, the unamortized balance of
negative goodwill was $74,591 and $64,809 at December&nbsp;31,
2000 and 2001, respectively, and is included in other
liabilities in the consolidated balance sheet. Under SFAS
No.&nbsp;141, the remaining unamortized negative goodwill of
$64,809 at December&nbsp;31, 2001 will be recognized as an
extraordinary item on the statement of operations in 2002.
Amortization of the negative goodwill of $9,782 is included in
other income, net for each of the years ended December&nbsp;31,
1999, 2000 and 2001, which, upon adoption of SFAS No.&nbsp;41,
will no longer be recognized.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the FASB issued SFAS No.&nbsp;142,
<I>Goodwill and Other Intangible Assets</I>, which addresses
accounting and reporting for intangible assets, except for those
acquired in a business combination. SFAS No.&nbsp;142 presumes
that goodwill and certain other intangible assets have
indefinite useful lives. Accordingly, goodwill will not be
amortized but rather will be tested at least annually for
impairment. SFAS No.&nbsp;142 is became effective for us on
January&nbsp;1, 2002. We have not yet completed our assessment
of the impact of SFAS No.&nbsp;142 on our financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, the FASB issued SFAS
No.&nbsp;144, <I>Accounting for the Impairment or Disposal of
Long-lived Assets</I>. SFAS No.&nbsp;144 establishes a single
accounting model for long-lived assets to be disposed of by
sale. A long-lived asset classified as held for sale is to be
measured at the lower of its carrying amount or fair value less
cost to sell. Depreciation (amortization) is to cease.
Impairment is recognized only if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash
flows and is measured as the difference between the carrying
amount and fair value of the asset. Long-lived assets to be
abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off are considered held and used
until disposed of. Accordingly, discontinued operations are no
longer to be measured on a net realizable value basis, and
future operating losses are no longer recognized before they
occur. We adopted SFAS No.&nbsp;144 effective January&nbsp;1,
2002. The provisions of the new standard are generally to be
applied prospectively and are not expected to significantly
affect our results of operations, financial condition or
liquidity.
</FONT>

<P align="center"><FONT size="2">38
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<P align="center">
<B><FONT size="2">BUSINESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. We distinguish ourselves by applying individual
risk selection to business which requires greater underwriting
expertise. Our objective is to expand opportunistically into
classes of business or market segments that are consistent with
our underwriting expertise and have the potential to generate an
underwriting profit. We write a broad range of commercial
coverages, including general liability, property, workers&#146;
compensation, commercial automobile and surety. We operate
through our home office and a regional branch network, allowing
us to centrally control our underwriting process, respond to
local market conditions and build close relationships with our
producers and insureds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is distributed exclusively through
approximately 1,050 producers located throughout the United
States. Our producers include independent regional retail agents
and brokers, national brokers and wholesale brokers. Through our
producers, we access a broad cross section of business
opportunities, spanning a variety of market segments and product
groupings. This enables us to respond to changing market
conditions while promoting relative stability in our premium
production.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our senior management team is led by Bruce A.
Esselborn, our Chief Executive Officer. Since joining us in
October 1999, Mr.&nbsp;Esselborn has applied a hands-on
management style in redesigning our underwriting strategies and
policies and improving our operating efficiency.
Mr.&nbsp;Esselborn has 35&nbsp;years of experience in the
insurance industry, over 18&nbsp;years of which were spent at
American International Group, Inc. While at AIG,
Mr.&nbsp;Esselborn held a variety of senior operating and
technical positions at several of AIG&#146;s domestic insurance
subsidiaries. In 1986, Mr.&nbsp;Esselborn left AIG to found
United Capitol Insurance Company, an excess and surplus lines
insurer, which was acquired by Capsure Holdings Corp., a
publicly traded company. While under Mr.&nbsp;Esselborn&#146;s
leadership from 1990 through September 1997, Capsure was a
highly successful underwriting operation, reporting an average
combined ratio of 75.6%, weighted by net premiums earned, during
his tenure. Our President, Nick Antonopoulos, has over
20&nbsp;years of experience in the insurance industry, including
13&nbsp;years at AIG where he most recently held the position of
Senior Vice President of Operations in AIG&#146;s Domestic
Brokerage Group.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2000 we acquired Seneca which provides
specialty coverages such as bail bonds, non-standard property in
inner city markets, inland marine, boiler and machinery and
environmental liability. Seneca maintains a flexible approach to
the market, emphasizing lines of business which require strong
technical underwriting expertise and effective claims
management. In 2001, Seneca reported gross premiums written of
$143.4&nbsp;million and a combined ratio of 97.8%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we generated $843.2&nbsp;million of
gross premiums written, $607.1&nbsp;million of net premiums
written and $683.9&nbsp;million of total revenue. In 2001, 74.0%
of our business related to casualty coverages and 26.0% to
property coverages, as measured by gross premiums written. As of
December&nbsp;31, 2001, we had cash and invested assets of
$2.3&nbsp;billion, total assets of $5.1&nbsp;billion and
stockholder&#146;s equity of $719.6&nbsp;million. Following the
completion of this offering, we expect to have total
capitalization, including debt, of approximately.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crum &#38; Forster is a major component of the
U.S.&nbsp;commercial property and casualty insurance operations
of Fairfax Financial Holdings Limited, a Canadian publicly
traded financial services company principally engaged in
property and casualty insurance and reinsurance, investment
management and insurance claims management. The Crum&nbsp;&#38;
Forster companies were acquired by Fairfax in August 1998.
</FONT>

<P align="left">
<B><FONT size="2">Management Initiatives</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have made the following significant changes to
the management and operations of the Crum &#38; Forster
companies acquired by Fairfax in August 1998. We have:
</FONT>
<P>

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	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">appointed in late 1999 a proven and incentivized
	management team, with an average of 23&nbsp;years of insurance
	industry experience, led by Mr.&nbsp;Esselborn,
	Mr.&nbsp;Antonopoulos and Mary Jane Robertson, our Chief
	Financial Officer;
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">39
</FONT>
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	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">implemented a highly focused underwriting
	strategy and realigned our operating structure to emphasize
	product line experience and expertise and to provide a high
	degree of centralized control over underwriting and claims;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">discontinued unprofitable classes of business,
	such as large fleet long haul trucking, New York and California
	contractors, taxis and limousines, fast food restaurant
	programs, country clubs and nursing homes, which represented
	approximately $250&nbsp;million of gross premiums written, or
	34% of total gross premiums written in 1999. Discontinued lines
	accounted for approximately nine percentage points of our loss
	and LAE ratio for 2000, and significantly contributed to a 13.9%
	decrease in total gross premiums written in 2000 from 1999;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">restructured our reinsurance programs to reduce
	our net retentions to $1&nbsp;million on casualty lines and
	$2&nbsp;million on property lines, from up to $8.8&nbsp;million
	and $5&nbsp;million, respectively, and reduced our gross policy
	limits, particularly in property;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">targeted classes of business and types of
	insureds that tend to have larger premium policies and
	instituted minimum premium guidelines, which resulted in an
	increase in our average premiums per policy from approximately
	$20,000 in 1999 to $59,000 in 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">enhanced our price monitoring systems to provide
	management with better controls, to enable us to achieve our
	targeted pricing and profitability levels. In 2000 we increased
	renewal prices by approximately 11% and achieved an additional
	renewal price increase of approximately 17% in 2001;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">evaluated the profitability and productivity of
	our producer relationships and terminated 130&nbsp;producers. We
	diversified our distribution by appointing 480 new producers and
	entering into new arrangements with national brokers and
	wholesale brokers, in each case, aligned with our targeted
	classes of business and our insureds;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">adjusted our commission structure to be in line
	with market practice and revised contingent commission
	agreements with producers to require a higher level of
	sustainable underwriting profit before producers earn a profit
	sharing payment. These actions resulted in a reduction of our
	gross commissions expense (as a percentage of gross premiums
	written) of 4.7&nbsp;percentage points from 1999 to 2001;
	</FONT></TD>
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</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">reduced the number of employees by 25% from 1,357
	at December&nbsp;31, 1999 to 1,023 at December&nbsp;31, 2001,
	and reduced our payroll in 2001 by 18%, as compared to 1999,
	while productivity increased. Over this time, our gross premiums
	per employee increased 25% from approximately $549,000 to
	approximately $684,000;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">created a disciplined expense management culture
	and carefully analyzed our existing cost structure. As a result,
	we undertook a number of expense reductions, the largest of
	which was a $10&nbsp;million savings in our information
	technology expenses in 2001 while improving functionality; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">acquired Seneca, a specialty insurer focused on
	non-commodity lines of business, in August 2000 to participate
	in the small commercial market in a manner consistent with our
	underwriting philosophy. In 2001, Seneca reported a combined
	ratio of 97.8%.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Corporate Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our objective is to build shareholder value by
achieving a superior return on equity over the long term. We
intend to achieve our goal by focusing on underwriting
profitability and generating superior long-term investment
returns. The major elements of our strategy are:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Adhere to a disciplined underwriting
philosophy. </FONT></I><FONT size="2">We focus on individual
risk selection and do not manage our business based on premium
growth or market share. We adhere to a centrally controlled
underwriting philosophy and focus on generating underwriting
profit by carefully selecting the risks we insure and
determining the appropriate price for such risks. Our Chief
Executive Officer and President are actively involved in our
overall underwriting function, as well as specific risk
underwriting across all lines of business.
</FONT>

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<DIV align="left">
<FONT size="2">1We will change pricing and terms based on
prevailing market conditions, sharply reduce or discontinue a
product or line in our existing book of business or refuse to
write business that we believe presents unacceptable pricing and
terms.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Expand and diversify our production sources.
</FONT></I><FONT size="2">We produce business through
diversified sources of production, in each case aligned with our
target underwriting classes. We continue to provide new products
and services within our lines of business and markets which
generate closer relationships with our agents, brokers and
insureds. We also strengthen customer relationships by providing
timely and responsive quotes, claims handling and loss control
services. Our high service standards foster closer relationships
with our producers and insureds. We believe that the Crum &#38;
Forster name is well known within the commercial lines insurance
markets we serve.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Opportunistically pursue attractive lines of
business. </FONT></I><FONT size="2">We believe our ability to
identify and react to changing market conditions provides us
with a competitive advantage. Based on the experience and
underwriting expertise of our management, we seek to write new
lines of business or expand existing classes of business based
on market conditions and expected profitability. For example, we
recently have expanded our business in excess property and
directors&#146; and officers&#146; liability insurance programs,
which have shown improved pricing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Continue to aggressively manage expenses.
</FONT></I><FONT size="2">We are committed to a competitive
expense structure that complements our disciplined underwriting
strategy. We foster a culture of cost efficiency and have
developed systems and procedures through which we carefully
monitor and control expenses and promote efficient operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Commitment to financial strength and security.
</FONT></I><FONT size="2">We are committed to maintaining a
strong balance sheet in order to attract and retain high-quality
business. As of December&nbsp;31, 2001 we had total assets of
$5.1&nbsp;billion, stockholder&#146;s equity of
$719.6&nbsp;million and statutory surplus of
$708.4&nbsp;million. To protect our financial security, we
carefully monitor and control our gross and net limits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Invest our assets on a total return basis.
</FONT></I><FONT size="2">We follow a long term value-oriented
investment philosophy, with the goal of optimizing investment
returns viewed on a total return basis, while maintaining a
sensitivity to our liquidity needs. This is coordinated through
our investment advisors, Hamblin Watsa Investment Counsel Ltd.,
a subsidiary of Fairfax. We intend to protect our capital from
loss and invest in debt and equity securities which we believe
are selling at prices below their intrinsic value.
</FONT>

<P align="left">
<B><FONT size="2">Industry Trends and Market
Opportunity</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Throughout the 1990s and into 2000, the property
and casualty insurance industry was overcapitalized, which
resulted in highly competitive market conditions as evidenced by
declining premium rates and poor underwriting results. Beginning
in mid-2000, excess capacity began to contract as companies
either ceased writing selected lines or withdrew from the market
completely. Capacity was further reduced by companies tightening
underwriting guidelines and returning to a focus on underwriting
profitability. In response to these market conditions, insurers
began to seek and achieve significant price increases, in
addition to improved terms and conditions. This has affected all
major lines of business with a more significant impact in
selected lines.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terrorist attacks of September&nbsp;11, 2001
accelerated the improvement in pricing and terms which were
underway in 2001 prior to these events. The losses from these
attacks represented the largest insured catastrophe in the
history of the insurance industry, surpassing the
$19.6&nbsp;billion in losses (inflation adjusted) from Hurricane
Andrew in 1992, previously the largest insured event in history.
Current loss estimates for these attacks for the property and
casualty industry exceed $40&nbsp;billion before taxes. This
loss estimate amounts to approximately 13% of the total
industry&#146;s surplus of approximately $300&nbsp;billion, or
21% of the approximately $190&nbsp;billion of the combined
surplus of the commercial property and casualty and reinsurance
sectors. More importantly, the events of September&nbsp;11th
have led to a fundamental reevaluation of risk by commercial
insureds which is increasing the demand for insurance. These
events have caused further capacity
</FONT>

<P align="center"><FONT size="2">41
</FONT>

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<DIV align="left">
<FONT size="2">to exit the market as reinsurance rates increased
to levels where primary carriers were forced to retain higher
amounts of net exposure or exit market segments entirely.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, based on publicly available industry
information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment.
Based on a recent report by A.M. Best, approximately 25% of
medium and large accounts have experienced rate increases in
excess of 30% on their commercial coverages since
September&nbsp;11, 2001. In particular, certain classes, such as
umbrella, business interruption, property and commercial auto,
are experiencing rate increases as high as 30% to 100%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Given the further reduction in capacity and the
continued uncertainty caused by the events of
September&nbsp;11th, we believe the current favorable market
environment will continue into 2003. The improvements in
pricing, to some degree, will be offset by the impact of loss
cost trends and the increased cost of reinsurance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of our management initiatives, we
believe we are well positioned to take advantage of the current
favorable market. During 2001, we achieved price increases of
approximately 17% on renewal business across our portfolio
(weighted by premium volume). Through January 2002, we
experienced price increases of approximately 25% on renewal
business across our portfolio (weighted by premium volume). In
2002, our property and umbrella lines of business are
experiencing the largest price increases within our portfolio.
Our focused underwriting strategy, together with higher prices
and improved terms and conditions, provide us with the best
opportunity in the past decade to achieve a combined ratio of
100% or better in 2002.
</FONT>

<P align="left">
<B><FONT size="2">Recent Developments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">September&nbsp;11, 2001 Terrorist Attacks.
</FONT></I><FONT size="2">We provided insurance coverages,
including property, general liability, auto and workers&#146;
compensation insurance, to businesses located in or near the
World Trade Center on September&nbsp;11, 2001 and to other
parties alleging insured damage as a result of the terrorist
attacks of September&nbsp;11. Following these attacks, we
carefully evaluated the impact on our financial position,
including a thorough review of our insurance portfolio on a
policy by policy basis. As of December&nbsp;31, 2001, we
recorded losses and LAE for claims arising from the terrorist
attacks of $167.5&nbsp;million, before ceded reinsurance, and
$1.5&nbsp;million, net of reinsurance. Our estimated net
liability equals 0.2% of combined statutory surplus as of
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our estimated losses are based on an evaluation
of each claim and include a provision for losses incurred but
not reported, as well as estimated costs related to settlement
of the claims. We believe our reserves for losses and LAE
related to the events of September&nbsp;11, 2001 make adequate
provision for uncollectable reinsurance and thus, our ultimate
net liability. However, there can be no assurance that actual
ultimate net losses will not vary, perhaps substantially, from
our current estimate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Corporate Reorganizations.
</FONT></I><FONT size="2">It has recently been reported that
Enron Corp., Global Crossing Ltd. and Kmart Corporation have
filed voluntary petitions for Chapter&nbsp;11 reorganization.
Following a thorough review of our operations, we have
determined that we do not write any policies for these
companies, other than one property policy with Kmart
Corporation. In addition, we do not hold any equity, fixed
income or derivative securities issued by these companies.
</FONT>

<P align="left">
<B><FONT size="2">Corporate Organization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We were incorporated in Delaware on March&nbsp;6,
2002 to serve as the holding company for the Crum &#38; Forster
companies. We have seven operating subsidiaries: US Fire; North
River; CF Insurance; CF Indemnity; CF Underwriters; CF
Specialty; and Seneca.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Crum &#38; Forster companies were acquired by
Fairfax on August&nbsp;13, 1998. We acquired Seneca and its
subsidiaries on August&nbsp;31, 2000. We acquired
CF&nbsp;Specialty (formerly Transnational Insurance Company) on
December&nbsp;21, 2000.
</FONT>

<P align="center"><FONT size="2">42
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating insurance subsidiaries, except
Seneca and CF Specialty, participate in a pooling arrangement
pursuant to which the premiums, losses, dividends to
policyholders and other underwriting expenses of each
participant are pooled by means of mutual reinsurance on a fixed
percentage basis as follows: US Fire, 75%, North River, 22%, CF
Insurance, 1%, CF Indemnity, 1% and CF Underwriters, 1%. The
intercompany agreement provides that US Fire, acting as the lead
company, assumes from the other pool participants 100% of their
premiums, losses, dividends to policyholders, and other
underwriting expenses, and in turn, cedes to each pool
participant its participating percentage of premiums, losses and
other underwriting expenses. The pool permits each pool
participant to rely on the capacity of the entire pool, rather
than only its own capital and surplus. Further, it prevents any
one pool participant from suffering any undue losses, as all
pool participants share underwriting profits and losses in
proportion to their pool participation percentages. All
participants in the pool receive a uniform rating from
A.M.&nbsp;Best and Standard and Poor&#146;s. Seneca and
CF&nbsp;Specialty, each of which was acquired in 2000, operate
independently from the pool.
</FONT>

<P align="left">
<B><FONT size="2">Lines of Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We offer a broad range of property and casualty
insurance coverages to a variety of commercial accounts located
throughout the United States. In 2001, we reported
$843.2&nbsp;million of gross premiums written in six major lines
of business. The following table illustrates our gross premiums
written for each of our six&nbsp;major lines of business for the
periods indicated:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">$</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">$</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">$</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">%</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">204.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">128.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">171.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">159.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial automobile
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">175.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">110.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">262.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">214.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">88.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">General
liability</FONT></I></B><FONT size="2"> provides coverage for
liability exposures, including bodily injury and third-party
property damage arising from products sold and general business
operations. General liability also includes coverage to protect
insureds against third party personal injury. This includes
umbrella coverages which provide additional insurance protection
to businesses for amounts that exceed the limits of their
liability policies they have with us or another insurance
carrier. Approximately 64% of our umbrella premiums are for
accounts for which the underlying liability coverage is provided
by another insurance carrier. We also write specialty classes,
such as directors&#146; and officers&#146; liability, which
involves coverage for liability arising in their official
capacities, and employment practices liability, which protects
the insured from liability arising from employment policies and
plans, such as discrimination.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have increased our gross premiums written in
general liability due to a de-emphasis on commercial multi-peril
policies that include this coverage and our expansion into new
specialty classes. We have expanded our business in the heavy
manufacturing and servicing sectors, while eliminating selected
classes including contractors operating in California and
New&nbsp;York.
</FONT>

<P align="center"><FONT size="2">43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the distribution
of our total general liability gross premiums written by type of
coverage for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Umbrella liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Products liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Directors&#146; and officers&#146; liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Employment practices liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other general liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Workers&#146;
compensation</FONT></I></B><FONT size="2"> provides coverage for
the obligations of an employer under state law to provide its
employees with specified benefits for work-related injuries,
deaths and diseases, regardless of fault. Typically, there are
four types of benefits payable under workers&#146; compensation
policies: medical benefits, disability benefits, death benefits
and vocational rehabilitation benefits. The benefits payable and
the duration of such benefits are set by statute, and vary by
state and with the nature and severity of the injury or disease
and the wages, occupation and age of the employee. We offer
three types of workers&#146; compensation products:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">guaranteed cost products in which policy premiums
	are fixed for the period of coverage, and do not vary as a
	result of the insured&#146;s loss experience;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">large deductible policies in which deductibles
	are typically $100,000 or greater; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">retrospectively rated policies, in which premiums
	are adjusted based on the actual loss experience of the insured
	during the policy period.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, premiums are a function of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the applicable premium rate, which varies
	according to the employee&#146;s duties and the business of the
	employer;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the insured employer&#146;s experience
	modification factor (where applicable); and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the insured employer&#146;s payroll.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A deposit premium generally is paid at the
beginning of the policy period and periodic installment payments
are paid during the policy period. The final premium is
determined at the end of the policy period and after the
employer&#146;s payroll records are audited. Premiums are
continually reviewed for adequacy using an actuarial analysis of
current and anticipated trends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We apply a comprehensive approach to our
workers&#146; compensation business that benefits both us and
our insureds. We emphasize loss cost containment methods which
involve employers, employees and care providers that focus on
cost-effective quality care and early return to work for injured
employees. We also strive to prevent costs associated with
fraudulent claims by applying a proactive approach to
investigation and litigation of claims where appropriate. We
provide our insureds loss prevention services focused on
workplace safety and the prevention of accidents.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the distribution
of our total workers&#146; compensation gross premiums written
by type of coverage for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Guaranteed cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Large deductible
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retrospectively rated
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Property</FONT></I></B><FONT size="2">
provides coverage for loss or damage to buildings, inventory and
equipment and financial loss due to business interruption
resulting from covered property damage. Policies are typically
&#147;all risk&#148; in nature, providing protection from
natural disasters, including losses from hurricanes, windstorms,
earthquakes, hail, severe winter weather and other events such
as theft and vandalism, fires, explosions and storms. Certain
risks such as war and nuclear risk generally are excluded from
all policies. Property insurance is principally provided through
fire and allied lines and inland marine coverage. Fire and
allied lines insure business property for damage and protect
businesses from financial loss due to business interruption.
Inland marine provides coverage for goods in transit and
builders&#146; risk for buildings in the course of construction
and for tools and contractors&#146; equipment. We increased our
property gross premiums written in 2001 due to a de-emphasis of
commercial multi-peril policies which include this coverage and
the writing of larger policies on an excess basis whereby our
policy extends coverage beyond that of one or more policies
provided by other carriers. Policies written on an excess basis
comprised 35% of our property gross premiums written in 2001 and
we expect this amount to increase in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the distribution
of our total property gross premiums written by type of coverage
for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fire and allied lines
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inland marine
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Commercial
automobile</FONT></I></B><FONT size="2"> provides coverages for
businesses against losses arising from personal bodily injury,
bodily injury to third parties, property damage to an
insured&#146;s vehicle, property damage to other vehicles and
other property resulting from the ownership, maintenance or use
of automobiles and trucks in a business. We target insureds with
fleets of 25 to 75 vehicles, particularly those with newer model
year vehicles, low driver turnover and good driving records. Our
gross premiums written have declined from 1999 primarily due to
the elimination of certain classes of business which we did not
expect to produce an underwriting profit, such as taxis and
limousines and large fleet long haul trucking.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Commercial
multi-peril</FONT></I></B><FONT size="2"> combines property and
liability coverage under one insurance policy. We typically
write these package policies for smaller businesses where
expense advantages can be gained by combining these coverages
rather than purchasing two separate policies. For the years
ended December&nbsp;31, 1999, 2000 and 2001, approximately
51.8%, 53.0% and 61.6%, respectively, of our commercial
multi-peril gross premiums written were attributable to property
coverage. We intentionally wrote less commercial multi-peril
business in each of 2000 and 2001 as we have substantially
unbundled property and liability coverages for larger accounts
and eliminated business written in higher hazard grades. We
intend to continue to write commercial multi-peril for smaller
businesses, particularly through Seneca.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Surety</FONT></I></B><FONT size="2">
involves three party agreements in which the issuer of the bond
(the surety) joins with a second party (the principal) in
guaranteeing to a third party (the owner/ obligor) the
fulfilment of some obligation on the part of the principal. The
surety generally has a right to recover from the principal any
losses or expenses paid to the third party.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Surety is generally classified into two broad
types: contract bonds and commercial bonds. Contract bonds
secure a contractor&#146;s performance and/or payment obligation
generally with respect to a construction project and are
generally required by federal, state and local governments for
public works projects. Our average contract bond amount was
approximately $2&nbsp;million in 2001, and had an average job
length of approximately one and a half&nbsp;years. Commercial
bonds cover obligations typically required by law or regulation
such as bail bonds and license and permit bonds. Bail bonds,
which represents the largest source of our surety premium,
provide for the issuance of financial security to a court to
guarantee the return at specific dates of a person facing
criminal charges. We wrote $70.9&nbsp;million of gross premiums
in the bail bonds business in 2001.
</FONT>

<P align="center"><FONT size="2">45
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the distribution
of our total surety gross premiums written by type of coverage
for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial bonds:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bail
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Contract bonds
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Geographic Distribution</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are licensed and currently write insurance in
all 50&nbsp;states. For the year ended December&nbsp;31, 2001,
our top ten states represented 70.4% of direct written premiums.
The following table displays the distribution of our direct
written premiums by state as a percent of total direct written
premiums for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">California
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.1</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Florida
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">New York
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Pennsylvania
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">New Jersey
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Texas
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Illinois
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Massachusetts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Colorado
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Maryland
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other states(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">34.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">No other state comprises more than 2.2% of 2001
	total direct premiums written.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Methods of Distribution and Business
Development</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We depend on producers to provide us with access
to a wide range of business opportunities. Our ability to
develop strong and mutually beneficial relationships, and
successfully market our products and services to producers, is
paramount to our success. All of our business is distributed
through approximately 1,050 producers located throughout the
United States. We intend to continue to expand our producer
force. We offer our producers underwriting expertise and timely
policy processing, which assists them in placing business in
overlooked markets. Our service extends to loss control and
claims services, particularly on large accounts where this
expertise is highly valued by both the producer and the insured.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our producers generally fall into three
categories: independent agents and brokers; national brokers;
and wholesale brokers. Each of these channels has its own
distinct distribution characteristics and customers. Independent
agents and brokers generally operate in a limited geographic
region. These producers often focus on smaller to mid-size
accounts. National brokers generally have a significant number
of locations throughout the United States and target larger
risks requiring complex insurance analysis and placement. Our
policies with these producers tend to be large, loss rated
casualty products and excess property policies. Wholesale
brokers primarily produce business that retail agents and
brokers have difficulty placing because it is unique, unusual or
hazardous.
</FONT>

<P align="center"><FONT size="2">46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since our management team was appointed in late
1999, we have significantly refined our producer business
development strategy. We have:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">established formal annual assessment criteria and
	business planning commitments for each of our larger producers,
	including financial performance, market and customer segment
	compatibility and growth expectations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">implemented new compensation structures offering
	incentives based on higher profitability thresholds and improved
	transaction efficiency;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">refreshed our producer base appointing 480 new
	producers, which resulted in a significant increase in new
	business in 2001, and cancelled 130&nbsp;independent agent and
	broker relationships due to lack of customer fit or inadequate
	profitability; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">entered into national broker and wholesale broker
	distribution channels, which accounted for approximately 60% of
	our new gross written premiums in 2001.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the percentage of
our business, other than bail bonds, from these categories of
producers for the periods indicated:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Independent agents and brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">National brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Wholesale brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The portion of our business from national brokers
and wholesale brokers has grown significantly since 1999,
consistent with our strategy to write larger risks, which favors
individual risk underwriting. During 2001 we more than doubled
our new business production, with one-third of the new business
written by producers who were appointed since January&nbsp;1,
2000. Our business strategy is designed to increase our gross
premiums written through increasing sales with our existing
producers as well as continuing to selectively add new
appointments. The following table displays gross premiums
written from new business by producer category for the periods
indicated, excluding Seneca:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Independent agents and brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">88.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">154.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">National brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">30.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">155.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Wholesale brokers
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">144.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">169.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">368.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Pricing and Underwriting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We adhere to a disciplined underwriting strategy
that focuses on profitability without regard to premium growth
or market share. Each policy is individually underwritten based
on particular risk and class of business. We set prices based on
these risk characteristics and consider other factors such as
estimated frequency and severity of expected losses, the
expenses of producing the business and managing claims and an
allowance for an underwriting profit. Our disciplined
underwriting strategy may restrict our premium growth when
market conditions do not meet our pricing and underwriting
standards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our underwriting process is centrally controlled
by product line executives in our head office, who together have
an average of approximately 25&nbsp;years of experience in the
insurance industry. Each executive is held accountable for the
underwriting results of his or her line of business.
Underwriting authority levels are established based on
characteristics such as class of business, hazard grade and
policy limit and are assigned
</FONT>

<P align="center"><FONT size="2">47
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">based on the experience and expertise of the
underwriter. Regional underwriting product line managers report
to the head office executives on all underwriting matters. A
significant amount of business is underwritten directly by
underwriters in the head office. Large accounts, which typically
include workers&#146; compensation, automobile, property and
general liability coverage, are rated on individual loss history
and projected loss patterns with the pricing developed in
concert by field underwriting, head office underwriting and
actuarial personnel.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is either manually-rated or
judgment-rated, depending generally on the size of the risk to
be priced. Manual rating begins with a classification rate
provided by an industry rating bureau. We then determine
deviations from this rate based on the individual
characteristics and loss history of the risk, as well as the
desirability of the class of business. Judgment-rating is where
there is no appropriate classification rate, and the rate is
developed entirely on the basis of the specific characteristics
of the individual risk.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The majority of our property business is written
in excess of one or more underlying insurance policies. Pricing
of excess property business requires significant underwriting
expertise. Pricing as a percentage of total insured values is
also considered on this business. Inland marine is typically
rated individually by the underwriter based on the
characteristics of the risk and the class of business, without
the use of an industry manual rate. Our underwriting of property
also considers the aggregate exposures to natural catastrophic
losses and attempts to mitigate such exposure. We monitor total
insured values in areas most susceptible to a hurricane or
earthquake event, and use sophisticated modeling software to
quantify the probable maximum loss on such events. Catastrophe
exposure is also considered when pricing individual property
risks.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A significant portion of our business is large
enough to be rated on its own loss history. This loss rated
business is within the automobile, general liability and
workers&#146; compensation lines of business, and includes
guaranteed cost policies, where policy premiums are fixed, and
loss sensitive rating programs where the ultimate costs to the
insured are dependent upon its loss experience. The underwriting
of larger loss rated business requires approval by head office
underwriting and actuarial personnel. Loss sensitive business
includes retrospectively rated policies in which premiums are
adjusted based on the actual loss experience of the insured, and
large deductible policies where the insured must reimburse the
company for any losses below the deductible, which is typically
$100,000 or greater. Both of these loss sensitive products
expose us to potential credit risk since we may be due payment
from the insured after coverage has been provided. Loss
sensitive policies are subject to extensive financial analysis
prior to binding, and generally require that the insured provide
collateral as a condition to our writing the policy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Surety underwriting also requires significant
financial analysis, as well as underwriting expertise.
Collateral is often required as a condition to writing the bond.
On our bail bond business, we deal with one agent, who in turn
deals with a significant number of agents nationally. These
obligations are secured by both the one agent we deal with and
its agents. We must approve, prior to binding, all bail bonds
with values in excess of $500,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We closely monitor underwriting on an on-going
basis to enforce compliance with standards throughout the field
organization. A premium register, which lists each policy
processed on the prior day, is distributed daily to senior
management and to the head office underwriting executives. We
review these reports regularly and the underwriting executive or
field underwriter is asked to justify any policy which may be
inconsistent with the established underwriting standards of the
company. On larger policies, a more detailed underwriting
summary sheet is prepared and distributed to senior management
and the head office underwriting executives on a timely basis.
This report identifies the insured name, line of business,
policy premium, commission, prior loss history and other
relevant information relating to the underlying risk. Each of
our Chief Executive Officer and President regularly interact
with the underwriting executive throughout the underwriting
process and review the premium register and underwriting summary
sheets on a daily basis. A detailed price monitoring process is
conducted by actuarial personnel, with region and line of
business pricing results released on a weekly and monthly basis.
These pricing results include price increases on policies that
are renewed and new business prices versus established targets
that are intended to produce an underwriting profit. Large
accounts which are rated based on their own loss history are
monitored separately with an expected combined ratio quantified
for each account.
</FONT>

<P align="center"><FONT size="2">48
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Claims Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our claims management practices
and philosophy provide us with an advantage over our
competition. We have developed claims cost management
methodologies designed to monitor, control and measure all
aspects of the claims resolution process. We also have developed
and implemented competitive medical management and managed care
programs to control workers&#146; compensation claim costs. Our
claims management philosophy emphasizes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">maintenance of timely and adequate reserves for
	claims, and the cost effective delivery of claims services by
	controlling loss and loss expenses;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">financial integrity through the employment of
	investigative specialists who attempt to limit fraudulent claims
	activity and a program to pursue appropriate subrogation and
	recovery opportunities; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">exceptional customer service whereby we apply our
	resources to make timely investigation and resolution of
	customer claims.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Substantially all claims are handled by our
regional offices, with the exception of umbrella, high value
casualty and large property claims, which are handled in our
home office. As of December&nbsp;31, 2001 we had 410 employees
dedicated to claims management and administration, 71 of whom
were located at our headquarters providing supervisory and
control functions. These employees include adjusters, litigation
specialists, regional and corporate claims management, line
specialists and support staff. We regularly conduct internal
reviews and audits to monitor the regional offices&#146;
adherence to claim policies and procedures, the adequacy of case
reserves, loss expenses, productivity and service standards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We continue to emphasize a specialized approach
to managing of our exposure to asbestos, environmental and other
latent claims. We employ The RiverStone Group, a Fairfax
affiliate solely focused on providing claim and reinsurance
recovery services with respect to asbestos, environmental and
other latent exposure claims to the Fairfax group of companies.
Prior to its acquisition by Fairfax in 1999, RiverStone had
already acquired significant experience in specialized claims
and reinsurance recovery services of latent exposures.
</FONT>

<P align="left">
<B><FONT size="2">Reserves</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and casualty insurers establish reserves
to provide for future amounts needed to pay claims with respect
to insured events that have occurred, including events that have
not yet been reported to the insurer. Reserves are also
established for LAE, representing the estimated expenses of
adjusting claims, including legal and other fees, and general
expenses of administering the claims settlement process.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After a claim is reported where appropriate, our
claims personnel establish a &#147;case reserve&#148; for the
estimated amount of the ultimate payment. The estimate reflects
the informed judgment of management based on reserving practices
and management&#146;s experience and knowledge regarding the
nature and value of the specific type of claim. Claims personnel
review and update their estimates as additional information
becomes available and claims proceed towards resolution. In
addition, reserves are also established on an aggregate basis
for losses incurred but not reported to the insurer and for
potential further loss development on reported claims, including
LAE (referred to collectively as IBNR).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We derive estimates for unreported claims and
development on reported claims principally from actuarial
analyses of historical patterns of loss development by accident
year for each type of exposure and market segment. Similarly, we
derive estimates of unpaid LAE principally from actuarial
analyses of historical development patterns of the relationship
of LAE to losses for each line of business and type of exposure.
The significant changes we have made to our operations since
1999 make it more difficult to accurately estimate our potential
losses. The historical patterns upon which we typically would
rely to develop reserves are not consistent with our current
lines of business, net retention levels, premium sizes, risk
profiles of insureds and other operational changes. As we review
our reserves, we stress actuarial methodologies that recognize
these new directions by line of business. We compare historical
and current case, settlement and payment patterns by line to
establish loss patterns that recognize the new development
patterns and retention levels.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The process of estimating loss reserves is
imprecise due to a number of variables. These variables are
affected by both internal and external events such as, changes
in claims handling procedures, inflation,
</FONT>

<P align="center"><FONT size="2">49
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">judicial trends and legislative changes. Many of
these items are not directly quantifiable, particularly on a
prospective basis. Additionally, there may be significant
reporting lags between the occurrence of the insured event and
the time it is actually reported to the insurer. We continually
refine reserve estimates in a regular ongoing process as
historical loss experience develops and additional claims are
reported and settled. We reflect adjustments to reserves in the
results of operations in the periods in which the estimates are
changed. In establishing reserves, we take into account
estimated recoveries for reinsurance, salvage and subrogation.
The aggregate reserves are also reviewed at least annually by a
nationally recognized actuarial firm.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We discount long-term disability payments under
our workers&#146; compensation policies using a maximum interest
rate of 5%. The amount of discount was $101.5&nbsp;million and
$107.1&nbsp;million at December&nbsp;31, 2000 and 2001,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Loss Development Data.
</FONT></I></B><FONT size="2">The table below presents a
reconciliation of the net liability for unpaid losses and LAE
for the periods indicated:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in thousands)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and LAE, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,597,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,492,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less ceded unpaid losses and LAE
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,105,466</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304,908</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,570,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and LAE, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,491,875</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,187,528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,736,633</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Seneca net unpaid loss and LAE at acquisition
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE incurred related to:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">541,782</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,946</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">458,675</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prior years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,082</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and LAE incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Paid losses and LAE related to:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">196,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">139,801</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">163,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prior years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,653</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">667,134</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and LAE paid
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">861,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">887,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">830,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,187,528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,736,633</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,547,455</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded unpaid losses and LAE
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304,908</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,570,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,876,338</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,492,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,423,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reserves for losses and LAE were increased in
each year based on the latest actuarial estimates. The
components of development of prior years&#146; loss and LAE
reserves are as follows for the periods indicated:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><I><FONT size="1">(dollars in thousands)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,888</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224,212</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51,194</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,797</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,198</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,572</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial auto liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,005</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,408</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,563</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,222</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,725</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total unfavorable development before benefit of
	aggregate excess of loss reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103,403</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,840</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">421,090</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE ceded to aggregate excess of loss
	reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(88,321</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(115,684</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(238,017</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unfavorable development
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,082</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">50
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Adverse development in calendar year 2001 was
attributable to accident years 2000 (9.5% of total before
benefit of aggregate excess of loss reinsurance), 1999 (29.4%),
1998 (26.4%), 1997 (10.5%) and 1996 and prior years (24.2%). The
net $183.1&nbsp;million of unfavorable development in 2001 was
ceded to a retroactive aggregate excess of loss reinsurance
contract, the benefit of which was deferred and will be
amortized to earnings over the period in which the reinsurance
recoveries are expected to be made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also establish reserves to provide for
estimated amounts recoverable from our reinsurers which they may
be unable or unwilling to pay. We evaluate the creditworthiness
of reinsurers, their anticipated interpretation of the
applicability of reinsurance agreements to certain types of
claims or exposures, and our collections experience.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, asbestos, environmental and other
latent liability claims may give rise to collectibility issues
both because of their inherent complexity and attendant issues
and because these exposures arise under insurance policies that,
in many cases, were written decades ago, when we used a large
number of reinsurers, some of which subsequently encountered
financial difficulties. As reserves for asbestos, environmental
and other latent liability exposures were increased, we also
increased reserves, where appropriate, for uncollectible
reinsurance. Reserves for uncollectible reinsurance were
$41.2&nbsp;million at December&nbsp;31, 2000 and
$38.3&nbsp;million at December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following loss and LAE reserve development
table illustrates the development of balance sheet liabilities
from 1991 through 2001 and the subsequent changes in those
reserves, presented on a historical basis. The first line of the
table is the estimated liability for unpaid losses and LAE, net
of reinsurance recoverable, recorded at the balance sheet date
for each year. The lower section of the table shows the updated
amount of the previously recorded liability based on experience
as of the close of each succeeding year. Care must be taken to
avoid misinterpretation by those unfamiliar with this
information or familiar with other data commonly reported by the
insurance industry. The accompanying data is not accident year
data, but rather a display of 1991 to 2001&nbsp;year-end
reserves and the subsequent changes in those reserves.
</FONT>

<P align="center"><FONT size="2">51
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">Ten Year Analysis of Consolidated Loss and
Loss Adjustment Expense Reserve Development</FONT></B>

<DIV align="center">
<B><FONT size="2">Presented Net of Reinsurance with Supplemental
Gross Data</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="41%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="43"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="43" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="43" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1991</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1992</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1993</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1994</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1995</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1996</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="43"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="43" align="center" nowrap><B><FONT size="1">(dollars in millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Reserves for unpaid loss and LAE
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,174</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,357</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,292</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,168</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,184</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,385</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,383</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,492</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,188</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,737</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,547</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Cumulative paid as of:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">One year later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">723</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">499</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">565</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">555</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">502</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">561</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">564</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">664</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">744</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">667</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Two years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,099</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">937</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">964</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">923</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">876</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">949</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,050</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,220</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,280</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Three years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,460</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,273</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,243</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,208</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,153</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,315</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,479</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,627</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Four years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,735</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,479</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,449</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,394</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,432</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,648</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,767</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Five years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,904</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,643</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,588</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,593</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,689</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,836</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Six years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,039</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,736</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,730</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,791</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,828</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Seven years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,115</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,863</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,882</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,897</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Eight years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,228</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,998</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,973</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Nine years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,351</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,076</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Ten years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,423</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Liability re-estimated as of:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">One year later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,721</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,351</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,300</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,273</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,358</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,390</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,550</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,507</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,220</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,920</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Two years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,622</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,400</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,355</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,401</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,331</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,549</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,555</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,496</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,407</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Three years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,659</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,428</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,460</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,372</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,460</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,542</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,546</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,561</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Four years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,687</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,520</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,424</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,468</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,449</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,539</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,561</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Five years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,819</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,492</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,508</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,450</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,448</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,550</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Six years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,806</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,572</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,478</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,449</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,454</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Seven years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,875</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,540</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,478</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,450</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Eight years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,843</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,539</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,478</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Nine years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,844</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,536</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Ten years later
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,839</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Cumulative redundancy/ (deficiency)
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(179</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(186</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(282</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(270</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(165</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(178</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(69</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(219</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(183</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">End of year:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Gross liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,597</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,492</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,307</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,424</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Reinsurance recoverable
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,105</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,305</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,570</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,876</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Net liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,492</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,188</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,737</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,547</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Latest:
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Gross re-estimated liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">4,011</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,978</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">3,685</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Re-estimated reinsurance recoverable
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,450</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,571</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,765</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Net re-estimated liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,561</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">2,407</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">1,920</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="1">Gross cumulative redundancy/ (deficiency)
	</FONT></DIV>
	</TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(486</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="1">(378</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
	<TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Asbestos, Environmental and Other Latent
Exposures. </FONT></I></B><FONT size="2">Claims resulting from
asbestos, environmental and other latent exposures provide
unique and difficult challenges to the insurance industry. The
possibility that these claims would emerge was typically not
contemplated at the time the policies were written, and
traditional actuarial reserving methodologies have not been
useful in accurately estimating ultimate losses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Asbestos claims, which began to emerge in the
1970s, were the first type of latent exposure to cause
significant losses to the insurance industry. Historically, the
largest asbestos claims came from manufacturers of asbestos
because their claims typically involved many injured parties.
Over time, case law has become reasonably well developed in the
asbestos bodily injury claim area, and many of these claims from
manufacturers have been settled. Recently, however, the number
of asbestos bodily injury claims pertaining to suppliers and
distributors of asbestos, as well as users of asbestos products,
has been increasing.
</FONT>

<P align="center"><FONT size="2">52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Environmental claims were the second major type
of latent exposure claims to emerge and significantly affect the
insurance industry. Environmental claims have generally been
defined by the insurance industry as loss or potential loss
related to the alleged contamination of a site resulting from
operations on the site, waste disposal or other causes. Examples
of environmental exposure include possible liabilities resulting
from chemical waste, hazardous waste, industrial waste disposal
facilities, landfills, toxic waste pits and underground storage
tanks. Inconsistent federal and state case law have compounded
the industry&#146;s difficulties in adequately assessing these
complex exposures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal federal statute that requires
cleanup of environmental damage is the Comprehensive
Environmental Response, Compensation and Liability Act passed in
1980 and better known as &#147;Superfund.&#148; It imposes
liability on &#147;potentially responsible parties,&#148;
subjecting them to liability for cleanup costs on National
Priority List sites regardless of fault, time period and
relative contribution of pollutants. Many different reform
proposals have been put forth, most of which generally have been
supported by the insurance industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other latent exposure claims include those for
predominantly chemical and lead exposure and to a lesser extent
repetitive stress, construction defects, sick building, latex
products, chemical sensitivity, noise-induced hearing loss and
tobacco and tobacco-related products, as well as other exposures
that were not anticipated at the time the policies were written.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have exposure to asbestos and environmental
claims arising from the sale of general liability, commercial
multi-peril and umbrella insurance policies, the predominance of
which were written for accident years 1985 and prior. Since
1985, we have had a specialized claims unit dedicated to the
management and settlement of asbestos and environmental claims.
In 2000, we entered into an agreement with RiverStone for claims
handling services for asbestos and environmental claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We establish both case and bulk reserves for
asbestos and environmental. The bulk reserves include both a
provision for potential development on known cases and a
provision for claims incurred but not yet reported. The bulk
reserves are established based on a detailed ground-up exposure
model.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimation of ultimate liabilities for these
exposures is unusually difficult due to outstanding issues such
as whether coverage exists, definition of an occurrence,
determination of ultimate damages and allocation of such damages
to financially responsible parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our survival ratio for environmental and asbestos
related liabilities as of December&nbsp;31, 2001 is
10&nbsp;years, reflecting full utilization of remaining
indemnifications. The survival ratio represents the
environmental and asbestos related reserves, net of reinsurance,
on December&nbsp;31, 2001 plus remaining indemnifications
divided by the average paid environmental and asbestos claims,
net of reinsurance, for the last three years. Our survival ratio
is nine years prior to the reflection of remaining
indemnifications. Our survival ratio compares favorably with
A.M. Best&#146;s 3-year average survival ratio of 6.7&nbsp;years
for the United States property and
</FONT>

<P align="center"><FONT size="2">53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">casualty industry. The development of reserve and
claim information by latent exposure category is as follows:
</FONT>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Net</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="23" align="center" nowrap><B><I><FONT size="1">(dollars in thousands)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Latent total:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, beginning of
	year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">525,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,641</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">508,642</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">387,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">350,641</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE incurred during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,845</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,398</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,588</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">78,986</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74,482</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE paid during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,107</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,012</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">112,182</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73,421</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">73,679</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,897</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">508,642</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">387,474</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">444,858</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">350,641</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">450,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">380,226</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Asbestos:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, beginning of
	year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">242,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE incurred during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,927</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,739</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,968</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,335</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75,897</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,254</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE paid during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,261</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50,626</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,232</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">261,471</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">228,146</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Environmental:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, beginning of
	year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,131</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">192,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE incurred during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,097</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(166</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,036</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,982</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE paid during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,007</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,396</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">19,883</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,691</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">192,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Other Latent:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, beginning of
	year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67,604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,246</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,928</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,093</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and LAE incurred during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,272</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">466</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">235</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,195</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Loss and LAE paid during the year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,715</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,590</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,525</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,070</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,170</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,974</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Liability for unpaid losses and LAE, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,122</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,928</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,063</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,093</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,314</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">54
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Reinsurance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to control our exposure to losses and
protect our capital resources, we cede a portion of our gross
policy premiums to reinsurers in exchange for the
reinsurer&#146;s agreement to share a portion of the covered
losses. The purchase of reinsurance does not discharge us from
our primary liability to our policyholders. The net liability we
retain on individual risks varies by product and by the nature
of the risk. Insured liabilities can be reinsured either by
treaty, wherein reinsurers agree in advance to provide coverage
above retained limits or for a specified percentage of losses
attributable to specific policies, or by facultative
arrangements, wherein reinsurance is provided for individual
risks based on individual negotiations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of January&nbsp;1, 2002, our per risk
reinsurance coverages were as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reinsured</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Our Retention</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Limits(1)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="5"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="5" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General Liability:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Umbrella
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">$1.0
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Directors&#146; and officers&#146; liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">18% Quota Share
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	&nbsp;&nbsp;&nbsp;<FONT size="2">$1.0(2)&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">99.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">$2.0
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety per principal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">$5.0
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety per bond
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="center" valign="bottom">
	<FONT size="2">Variable Quota Share(3)
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="2%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Represents the amount of loss protection above
	our net retention on an excess of loss basis unless otherwise
	noted.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">We also retain 6.875% of losses in excess of
	$20.0&nbsp;million.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Our percentage retention varies based on the bond
	limit. The weighted average of our retention at January&nbsp;1,
	2002 was 6.5%.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We manage our exposure to catastrophes by
monitoring the accumulation of insured value in
catastrophe-prone areas. Our property catastrophe reinsurance
treaty protects us in the event of property losses arising from
one defined catastrophic occurrence or series of events. This
treaty provides $155.0&nbsp;million of coverage in excess of our
$25.0&nbsp;million retention level. We have an approximate 2%
co-participation on the reinsured layer, which amounts to an
additional retained loss of $3.1&nbsp;million in the event that
the entire treaty limit is utilized. Under certain conditions,
we may recover $22.5&nbsp;million of the $25.0&nbsp;million net
retention per occurrence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, we put in place two aggregate stop loss
treaties to protect us from adverse development of prior
years&#146; loss and LAE reserves. One treaty provides
$400.0&nbsp;million of coverage for 2000 and prior accident
years. At December&nbsp;31, 2001, $190.0&nbsp;million of the
limit was available, with additional premiums payable if the
remaining limit is used. The second treaty provides
$100.0&nbsp;million of coverage for accident periods prior to
August&nbsp;13, 1998, the date we were acquired by Fairfax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have not purchased, and do not intend to
purchase, any aggregate stop loss reinsurance to protect us from
losses from business written in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reinsurance recoverables, net of uncollectible
reinsurance reserves, were $1.3&nbsp;billion as of
December&nbsp;31, 1999, $1.6&nbsp;billion as of
December&nbsp;31, 2000 and $2.1&nbsp;billion as of
December&nbsp;31, 2001. We regularly review our reserves for
uncollectible reinsurance. Included in net reinsurance
recoverables at December&nbsp;31, 2001 are reserves for
uncollectible paid and unpaid reinsurance totaling
$38.3&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is a table showing the ten
largest reinsurance recoverables by reinsurer as of
December&nbsp;31, 2001. Reinsurance recoverables from these
reinsurers totaled approximately $1,577.5&nbsp;million as of
December&nbsp;31, 2001, or 74.0% of reinsurance recoverable
balances. Amounts recoverable from pools and associations and
contingent obligations associated with structured settlements
with life insurance companies amounted to an additional
$190.5&nbsp;million, or 8.9% of reinsurance recoverables, at
December&nbsp;31, 2001.
</FONT>

<P align="center"><FONT size="2">55
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">Reinsurance Recoverables as of
December&nbsp;31, 2001</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="48%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">A.M. Best</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Security</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Reinsurance</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Reinsurer</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Rating(1)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Provided</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Recoverables</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="19" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Inter-Ocean Reinsurance Company Limited(3)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">405.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">386.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ridge Reinsurance Limited
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">235.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">233.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">North American Specialty Insurance Company
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">210.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">International Insurance Company(4)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">B++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Federal Insurance Company
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">58.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">166.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mountain Ridge Insurance Company(5)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(6),</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;<FONT size="2">45.5(7)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">125.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Swiss Reinsurance America Corp.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4.5</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General Reinsurance Corp.
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Converium Holding AG
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">64.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">American Re-Insurance Company
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">A++</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(2),</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;<FONT size="2">45.1(7)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">554.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">(8)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total gross recoverables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,131.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The A.M. Best rating system includes ratings of
	&#147;A++&#148; and &#147;A+&#148; (which are
	&#147;Superior&#148; ratings), &#147;A&#148; and &#147;A-&#148;
	(which are &#147;Excellent&#148; ratings), &#147;B++&#148; and
	&#147;B+&#148; (which are &#147;Very Good&#148; ratings) and
	nine lower ratings categories.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(2)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Value of New York Reg. 114&nbsp;compliant trust
	accounts as of December&nbsp;31, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(3)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Inter-Ocean is fully reinsured under a
	retrocession agreement with American Re. Inter-Ocean has
	assigned its payment rights under the retrocession agreement to
	Crum&nbsp;&#38; Forster.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(4)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">International Insurance is a Fairfax subsidiary
	which is currently in runoff, with capital and surplus at the
	end of 2001 of $319.2&nbsp;million. These recoverables arise
	from a restructuring in 1993, prior to Fairfax&#146;s
	acquisition of Crum &#38; Forster.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(5)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Recoverable guaranteed by the St.&nbsp;Paul
	Companies (parent).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(6)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Funds held balances as of December&nbsp;31, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(7)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Clean, irrevocable, unconditional and evergreen
	letters of credit.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(8)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">84% of these recoverables are from companies
	having an A.M. Best rating of &#147;A&#148; or better.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Investments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the fair value of
our investments by type of investment including cash and cash
equivalents at the dates indicated:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">At December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States government and government agencies
	and authorities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,070.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">832.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">States, municipalities and political subdivisions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign governments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Public utilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">366.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">323.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other corporate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">833.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total fixed income securities</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,517.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,278.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we held
investments, including cash and cash equivalents, totaling
$2.3&nbsp;billion. Our overall investment strategy is to
maximize the total return of the portfolio while prudently
preserving invested capital for protection of policyholders and
providing sufficient liquidity for the payment of claims and
other policy obligations. Our investment policy provides the
flexibility to implement this strategy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our investments are managed by Hamblin Watsa, a
subsidiary of Fairfax. Our investment guidelines, which are
approved by our board of directors and implemented by Hamblin
Watsa, stress preservation of capital, market liquidity,
diversification of risk and long-term, value-oriented style.
Long-term investments generally are made using the value
approach by investing in securities which we believe are selling
below their intrinsic value to protect capital from loss and
generate above-average, long term total returns.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With regard to equities, no attempt is made to
forecast the economy or the stock market. Equities are selected
on the basis of prices which are perceived to be selling at a
discount to Hamblin Watsa&#146;s conservative estimate of
intrinsic values. Downside protection is obtained by seeking a
margin of safety in terms of a sound financial position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As regards fixed income, no attempt is made to
forecast the economy or interest rates. Rather, fixed income
securities are selected on the basis of yield spreads over
Treasury bonds, subject to stringent credit analysis. Securities
meeting these criteria may not be readily available, in which
case Treasury bonds are emphasized. The fixed income portfolio
currently has an average credit quality of &#147;AA&#148; as
measured by S&#38;P or Aa2 as measured by Moody&#146;s, using
the higher rating in the event there is a split rating.
Notwithstanding the foregoing, our investments are subject to
market risks and fluctuations, as well as to risks inherent in
particular securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the whole, the availability of equity
securities meeting our value-based criteria will dictate the
portfolio&#146;s exposure to equities. Similarly, the
availability of attractive yield spreads and strong credits will
determine the level of exposure to corporate bonds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of our review and monitoring process, we
regularly test the impact of a simultaneous substantial
reduction in common stock, preferred stock and bond prices on
insurance regulatory capital to ensure that capital adequacy
will be maintained at all times.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Primarily because of the potential for large
claims payments, our investment portfolio is structured to
provide a high level of liquidity. The table below shows the
aggregate amounts of investments available for sale, equity
securities and cash and cash equivalents comprising our
portfolio of invested assets:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">At December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments available for sale, at fair value
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total invested assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,517.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,278.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently hold 3,307,222 shares of common
stock of Zenith National Insurance Corp (NYSE: ZNT). Zenith is a
holding company with total assets of approximately
$1.5&nbsp;billion and is principally engaged in California
workers&#146; compensation business. Our investment in Zenith
represents approximately 17.8% of its issued and outstanding
shares of common stock. Fairfax and its affiliates, including
us, currently own approximately 42.1% of the outstanding common
stock of Zenith. Our investment in Zenith common stock is
currently valued at approximately $92&nbsp;million which is
equal to its carrying value. We currently do not intend to
acquire or dispose of shares of common stock of Zenith, but may
decide to do so in the future. We intend to review, on a
continuous basis, various factors related to our investment in
Zenith, including the price and availability of the common stock
of Zenith, subsequent developments affecting Zenith&#146;s
business, other investment and business opportunities available
to us and general stock market and economic conditions.
</FONT>

<P align="center"><FONT size="2">57
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">Based upon these and other factors, we may decide
to purchase additional shares of common stock of Zenith or may
decide in the future to sell all or part of our investment in
Zenith.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, based on the
portfolio&#146;s market value, the fixed income portion of our
investment portfolio had a dollar weighted average rating of
&#147;AA,&#148; an average duration of 8.5&nbsp;years and an
average yield to maturity of 6.3% before investment expenses and
assuming all put features are exercised.
</FONT>

<P align="left">
<B><FONT size="2">Market Sensitive Instruments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our investment portfolio includes investments
which are subject to changes in market values with changes in
interest rates. The aggregate hypothetical loss generated from
an immediate adverse parallel shift in the treasury yield curve
of 100 or 200 basis points would cause a decrease in total
return of approximately 8.9% and 15.8%, respectively, which
equates to a decrease in market value of approximately
$163.9&nbsp;million or $291.7&nbsp;million, respectively, on a
portfolio valued at $1,851.3&nbsp;million at December&nbsp;31,
2001. The foregoing reflects the use of an immediate time
horizon, since this presents the worst-case scenario. Credit
spreads are assumed to remain constant in these hypothetical
examples.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the fair value by
the earliest contractual maturity of our fixed income investment
portfolio at the date indicated.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">At December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><I><FONT size="1">(dollars in millions)</FONT></I></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due in less than one year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after one through five years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">430.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">608.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after five through ten years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,116.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">560.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after ten years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">730.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">660.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Actual maturities may differ from the maturities
shown above, which consider the existence of call features or
put features. At December&nbsp;31, 2000 and 2001, approximately
1.4% and 1.8%, respectively, of the fixed income securities
shown above had a call feature which, at the issuer&#146;s
option, allowed the issuer to repurchase the securities on one
or more dates prior to their maturity. At December&nbsp;31, 2000
and 2001, approximately 52.2% and 44.8%, respectively, of the
fixed income securities shown above had a put feature which, at
our option, required the issuer to repurchase the investments on
one or more dates prior to their maturity. For the investments
listed above which have the call feature or put feature the
actual maturities may be longer than the call or put date
maturities, which are shown above. In the case of securities
that are subject to early call by the issuer, the actual
maturities will be longer than the call date maturities shown
above if the issuer elects not to exercise its call feature. In
the case of securities containing put features, the actual
maturities will be longer than the put date maturities shown
above if we elect not to exercise its put feature, but to hold
the securities to their final maturity dates. The maturities of
our fixed income securities, without consideration of the call
or put features, indicates that at December&nbsp;31, 2001
$1,522.6&nbsp;million of the investments were due after ten
years, or 82.2% of the fixed income securities portfolio.
</FONT>

<P align="center"><FONT size="2">58
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><B><I><FONT size="2">&nbsp;</FONT></I></B></TD>
	<TD>
	<B><I><FONT size="2">Quality of Debt Securities in
	Portfolio</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the composition of
the fair value of our fixed income investment portfolio at the
dates indicated by rating as assigned by S&#38;P or
Moody&#146;s, using the higher of these ratings for any security
where there is a split rating.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">At December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Rating</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">AAA/Aaa
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45.6</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">AA/Aa2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">A/A2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29.5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">BBB/Baa2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12.0</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">BB/Ba2
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The property and casualty insurance industry is
highly competitive in the areas of price, service, product
offerings and agent and broker relationships. According to A.M.
Best, there are approximately 1,000 property and casualty
organizations in the United States, comprised of approximately
2,500 property and casualty companies. Of those organizations,
the top 150 accounted for approximately 90% of the consolidated
industry&#146;s total net written premiums in 2000 and no one
company or company group has a market share greater than
approximately 12.0%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We compete with large, national insurers who
often have greater financial strength and broader product
offerings than we do. In addition, we compete with regional
companies who have an in-depth knowledge of the local insurance
marketplace and who are positioned to be responsive to local
needs. We believe that we are able to effectively compete with
both national and regional companies due to our strong
relationships with producers, combined with our underwriting
expertise and timely and responsive service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Competition in the commercial lines property and
casualty insurance industry is based on many factors, including
overall financial strength of the insurer, ratings by rating
agencies, premiums charged, policy terms and conditions,
services offered, reputation, broker compensation and
experience. Our challenge is to retain existing business and
attract new business on terms offering acceptable return
potentials in an environment in which both established
competitors and newer entrants are aggressively seeking premium
growth. We cannot assure you that we will not face increased
competition in the future and that such increased competition
will not have a material adverse effect on us. See &#147;Risk
Factors.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Ratings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insurance companies are rated by rating agencies
to provide both industry participants and insurance consumers
with meaningful information on specific insurance companies.
Higher ratings generally indicate relative financial stability
and a strong ability to pay claims. These ratings are based upon
factors relevant to policyholders and are not directed toward
protection of investors. Such ratings are neither a rating of
securities nor a recommendation to buy, hold or sell any
security. Ratings focus on the following factors: capital
resources, financial strength, demonstrated management expertise
in the insurance business, credit analysis, systems development,
marketing, investment operations, minimum policyholders&#146;
surplus requirements and capital sufficiency to meet projected
growth, as well as access to such traditional capital as may be
necessary to continue to meet standards for capital adequacy.
Our insurance operating subsidiaries hold an &#147;A-&#148;
(Excellent) rating from A.M. Best (the fourth highest of 15
ratings) with a negative outlook and a &#147;BBB&#148; financial
strength rating from S&#38;P (the fourth highest of nine ratings
categories). According to A.M.&nbsp;Best, if management does not
achieve its near-term calendar year combined ratio targets or if
there is
</FONT>

<P align="center"><FONT size="2">59
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">any further deterioration in our near-term
underwriting or operating performance a rating downgrade will
likely result.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to pursue an improvement in our rating
in conjunction with the completion of this offering.
</FONT>

<P align="left">
<B><FONT size="2">Legal Proceedings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the ordinary course of business, we receive
claims asserting alleged injuries and damages from asbestos,
environmental and other latent exposures. As a result of these
claims, we review required reserves and reinsurance
recoverables. In each of these areas of exposure, we litigate
individual cases when appropriate and endeavour to settle other
claims on favorable terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January of 2001, Bechtel Group, Inc. and other
Bechtel entities filed a lawsuit in San Francisco Superior Court
(California) against us in connection with certain general
liability policies that we have agreed to reinsure. Bechtel
alleges, among other things, that it has overpaid premiums to us
and seeks damages in excess of $20&nbsp;million, plus interest,
punitive damages, attorneys fees, costs and a declaration that
we had and have a duty to defend and indemnify Bechtel in
certain bodily injury lawsuits (including asbestos lawsuits)
under Bechtel&#146;s pre-March&nbsp;1, 1978 policies. We believe
that the allegations made by Bechtel are without merit and we
intend to vigorously defend the lawsuit. We do not expect the
lawsuit to have a material adverse effect on our financial
condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are involved in numerous other lawsuits (other
than asbestos, environmental and other latent exposure claims)
arising, for the most part, in the ordinary course of our
business operations either as a liability insurer defending
third-party claims brought against our insureds or as an insurer
defending coverage claims brought against us. Although there can
be no assurances, we believe, based on information currently
available, that the ultimate resolution of these legal
proceedings will not likely have a material adverse effect on
our results of operations or financial condition. See
&#147;Business&nbsp;&#151; Reserves&nbsp;&#151; Asbestos,
Environmental and Other Latent Exposures&#148; and Note&nbsp;6
to our consolidated financial statements included elsewhere in
this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">Properties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal offices are located in space leased
by us in Morristown, New Jersey. The lease covers approximately
201,887 square feet of office space at 305&nbsp;Madison Avenue.
The term of the lease ends November&nbsp;30, 2009, and provides
for up to six&nbsp;consecutive additional terms of five years
each at our option, which must be exercised not less than
330&nbsp;days prior to the expiration of the then-existing term.
The principal offices of U.S.&nbsp;Fire, North River,
CF&nbsp;Insurance, CF&nbsp;Indemnity and CF&nbsp;Underwriters
are also at this location.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal offices of Seneca are located in
space leased by Seneca in New&nbsp;York, New&nbsp;York. The
lease covers approximately 21,500&nbsp;square feet at
160&nbsp;Water Street. The term of the lease ends June&nbsp;30,
2007.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also lease office space for our branch
offices. We do not own any of the real estate used for our
operations. See &#147;Certain Relationships and Related
Transactions&nbsp;&#151; Lease.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, we had
1,171&nbsp;employees. None of these employees is represented by
a labor union and we consider our employee relations to be
satisfactory.
</FONT>

<P align="center"><FONT size="2">60
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<P align="center">
<B><FONT size="2">INSURANCE REGULATORY MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to regulation under the insurance
statutes, including insurance holding company statutes, of
various jurisdictions, including New&nbsp;York, the domiciliary
state of US&nbsp;Fire and New&nbsp;Jersey, the domiciliary state
of North&nbsp;River. In addition, we are subject to regulation
by the insurance regulators of other states and foreign
jurisdictions in which we or our operating subsidiaries do
business.
</FONT>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries are subject to
detailed regulation throughout the United&nbsp;States. Although
there is limited federal regulation of the insurance business,
each state has a comprehensive system for regulating insurers
operating in that state. The laws of the various states
establish supervisory agencies with broad authority to regulate,
among other things, licenses to transact business, premium rates
for certain coverages, trade practices, market conduct, agent
licensing, policy forms, underwriting and claims practices,
reserve adequacy, transactions with affiliates, and insurer
solvency. Many states also regulate investment activities on the
basis of quality, distribution and other quantitative criteria.
Further, most states compel participation in and regulate
composition of various shared market mechanisms. States have
also enacted legislation which regulates insurance holding
company systems, including acquisitions, dividends, the terms of
affiliate transactions, and other related matters. Our operating
subsidiaries are domiciled in New&nbsp;York, New&nbsp;Jersey,
Ohio, and Arizona.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insurance companies are also affected by a
variety of state and federal legislative and regulatory measures
and judicial decisions that define and qualify the risks and
benefits for which insurance is sought and provided. These
include redefinitions of risk exposure in such areas as product
liability, environmental damage and workers&#146; compensation.
In addition, individual state insurance departments may prevent
premium rates for some classes of insureds from reflecting the
level of risk assumed by the insurer for those classes. Such
developments may result in adverse effects on the profitability
of various lines of insurance. In some cases, these adverse
effects on profitability can be minimized, when possible,
through the repricing of coverages if permitted by applicable
regulations, or the limitation or cessation of the affected
business, which may be restricted by state law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Most states have insurance laws requiring that
property and casualty rate schedules, policy or coverage forms,
and other information be filed with the state&#146;s regulatory
authority. In many cases, such rates and/or policy forms must be
approved prior to use. A few states have recently considered or
enacted limitations on the ability of insurers to share data
used to compile rates. Such restrictions have had, and are
expected to have, no significant impact on us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insurance companies are required to file detailed
annual reports with the state insurance regulators in each of
the states in which they do business, and their business and
accounts are subject to examination by such regulators at any
time. In addition, these insurance regulators periodically
examine each insurer&#146;s financial condition, adherence to
statutory accounting practices, and compliance with insurance
department rules and regulations. The 1997 examination report of
North River contained minor financial adjustments which had
already been addressed as part of the 1998 reserve strengthening
actions. A draft of the 1998 examination report of
U.S.&nbsp;Fire was released by NYID to us for review and
response, and contained no financial adjustments. NYID has not
finalized this examination report yet, pending further review of
loss reserves by its independent actuaries. We do not anticipate
any financial adjustments to reserves in excess of the 2001
strengthening actions as a result of this loss reserve review.
The last examination for CF&nbsp;Insurance and
CF&nbsp;Underwriters was conducted for the years ended
December&nbsp;31, 1997 and 1996, respectively, and contained no
financial adjustments. CF&nbsp;Indemnity was last examined as of
December&nbsp;31, 2000 and the draft report released to the
Company contained no financial adjustments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Applicable state insurance laws, rather than
federal bankruptcy laws, apply to the liquidation or
reorganization of insurance companies.
</FONT>

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<P align="left">
<B><FONT size="2">Insurance Regulation&nbsp;Concerning Change or
Acquisition of Control</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The insurance regulatory codes in our operating
subsidiaries&#146; respective domiciliary states each contain
similar provisions (subject to certain variations) to the effect
that the acquisition of &#147;control&#148; of a domestic
insurer or of any person that directly or indirectly controls a
domestic insurer cannot be consummated without the prior
approval of the domiciliary insurance regulator. In general, a
presumption of &#147;control&#148; arises from the direct or
indirect ownership, control, possession with the power to vote
or possession of proxies with respect to 10% or more of the
voting securities of a domestic insurer or of a person that
controls a domestic insurer. A person seeking to acquire
control, directly or indirectly, of a domestic insurance company
or of any person controlling a domestic insurance company must
generally file with the relevant insurance regulatory authority
a statement relating to the acquisition of control containing
certain information required by statute and published
regulations and provide a copy of such statement to the domestic
insurer and obtain the prior approval of such regulatory agency
for the acquisition. In addition, certain state insurance laws
contain provisions that require pre-acquisition notification to
state agencies of a change in control of a non-domestic
insurance company admitted in that state. While such
pre-acquisition notification statutes do not authorize the state
agency to disapprove the change of control, such statutes do
authorize certain remedies, including the issuance of a cease
and desist order with respect to the non-domestic admitted
insurer&#146;s doing business in the state if certain conditions
exist, such as undue market concentration.
</FONT>

<P align="left">
<B><FONT size="2">Regulation of Dividends and Other Payments
from Our Operating Subsidiaries</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a legal entity separate and distinct from
our subsidiaries. As a holding company with no other business
operations, our primary sources of cash to meet our obligations,
including principal and interest payments with respect to
indebtedness, are available dividends and other statutorily
permitted payments, such as tax allocation payments and
management and other fees, from our operating subsidiaries. Our
operating subsidiaries are subject to various state statutory
and regulatory restrictions, including regulatory restrictions
that are imposed as a matter of administrative policy,
applicable generally to any insurance company in its state of
domicile, which limit the amount of dividends or distributions
an insurance company may pay to its shareholders without prior
regulatory approval. The restrictions are generally based on
certain levels or percentages of surplus, investment income and
operating income, as determined in accordance with SAP, which
differ from GAAP. Generally, dividends may be paid only out of
earned surplus. In every case, surplus subsequent to the payment
of any dividends must be reasonable in relation to an insurance
company&#146;s outstanding liabilities and must be adequate to
meet its financial needs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New&nbsp;York law provides that an insurer
domiciled in New York must obtain the prior approval of the
state insurance commissioner for the declaration or payment of
any dividend which, together with dividends declared or paid in
the preceding 12&nbsp;months, exceeds the lesser of (i)&nbsp;10%
of policyholders&#146; surplus as shown by its last statement on
file with the New York Insurance Department (NYID) and
(ii)&nbsp;adjusted net investment income for the preceding
12-month period. Adjusted net investment income includes a carry
forward of undistributed net investment income for two years.
Such declaration or payment is further limited by earned
surplus, as determined in accordance with statutory accounting
practices prescribed or permitted in New York. Under New York
law, an insurer domiciled in New York may not pay dividends to
shareholders except out of earned surplus, which is defined as
&#147;the portion of the surplus that represents the net
earnings, gains or profits, after deduction of all losses, that
have not been distributed to the shareholders as dividends or
transferred to stated capital or capital surplus or applied to
other purposes permitted by law but does not include unrealized
appreciation of assets.&#148; New Jersey laws provide that an
insurer domiciled in the state must obtain the approval of the
state insurance commissioner for payment of any dividend which,
together with dividends paid in the previous 12&nbsp;months,
exceeds the greater of (i)&nbsp;10% of policyholders&#146;
surplus at the preceding December&nbsp;31 or (ii)&nbsp;statutory
net income for the 12-month period ending the preceding
December&nbsp;31. In New&nbsp;Jersey, dividends may not be paid
unless prior notice has been given to the New Jersey Department
of Banking and Insurance (NJDOBI) within five business days
after the dividend is declared and 30&nbsp;days prior to
payment. In addition, except for extraordinary dividends or
distributions paid with the approval of the NJDOBI, dividends
may be paid by insurers domiciled in New&nbsp;Jersey only from
earned
</FONT>

<P align="center"><FONT size="2">62
</FONT>

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<DIV align="left">
<FONT size="2">surplus, which means &#147;unassigned funds&#148;
(surplus) as reported on the insurer&#146;s annual statement as
of December&nbsp;31 next preceding, less unrealized capital
gains and revaluation of assets.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to reserve strengthening in recent years and
the accounting treatment prescribed for retroactive reinsurance,
US Fire, our principal New York-domiciled insurance subsidiary,
and North River, our principal New Jersey domiciled insurance
subsidiary, have negative earned surplus and therefore no
ordinary dividend capacity at December&nbsp;31, 2001. No
assurance can be given that some or all of our operating
subsidiaries&#146; domiciliary states will not adopt statutory
provisions more restrictive than those currently in effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the aggregate
amount available for the payment of ordinary dividends by our
operating subsidiaries during 2002 is $0.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If insurance regulators determine that payment of
a dividend or any other payments to an affiliate (such as
payments under a tax-sharing agreement or payments for employee
or other services) would, because of the financial condition of
the paying insurance company or otherwise, be hazardous to such
insurance company&#146;s policyholders, the regulators may
prohibit such payments that would otherwise be permitted without
prior approval.
</FONT>

<P align="left">
<B><FONT size="2">Statutory Surplus and Capital</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the licensing of insurance
companies, an insurance regulator may limit or prohibit the
writing of new business by an insurance company within its
jurisdiction when, in the regulator&#146;s judgment, the
insurance company is not maintaining adequate statutory surplus
or capital. We do not currently anticipate that any regulator
would limit the amount of new business that our operating
subsidiaries may write given their current levels of statutory
surplus and capital.
</FONT>

<P align="left">
<B><FONT size="2">Risk-Based Capital</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to enhance the regulation of insurer
solvency, the NAIC adopted risk-based capital (RBC) requirements
for property and casualty insurance companies commencing with
filings made in 1995 covering the 1994 calendar year. These RBC
requirements are designed to monitor capital adequacy and to
raise the level of protection that statutory surplus provides
for policyholders. The RBC formula measures four major areas of
risk facing property and casualty insurers:
(i)&nbsp;underwriting risk, which is the risk of errors in
pricing and reserve setting; (ii)&nbsp;asset risk, which is the
risk of asset default for fixed-income assets and loss in market
value for equity assets; (iii)&nbsp;credit risk, which is the
risk of losses from unrecoverable reinsurance and the inability
of insurers to collect agents&#146; balances; and
(iv)&nbsp;off-balance sheet risk, which is primarily the risk
created by excessive growth. The RBC formula provides a
mechanism for the calculation of an insurance company&#146;s
Authorized Control Level (ACL) RBC amount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The NAIC RBC model law stipulates four levels of
regulatory action with the degree of regulatory intervention
increasing as the ratio of surplus to RBC decreases. The initial
level, the &#147;Company Action Level,&#148; requires the
insurance company to submit a plan of corrective action to the
relevant insurance commissioner if surplus falls below 200% of
the ACL amount. The next level, the &#147;Regulatory Action
Level,&#148; requires the company to submit a plan of corrective
action and also allows the regulator to perform an examination
of the company&#146;s business and operations and issue a
corrective order if surplus falls below 150% of the ACL amount.
The third level, the ACL, permits the regulator to place the
company under regulatory control, including rehabilitation or
liquidation, if surplus falls below 100% of that amount. The
final action level, the &#147;Mandatory Control Level,&#148;
requires the insurance commissioner to place the company under
regulatory control if surplus falls below 70% of the ACL amount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the foregoing formula, at
December&nbsp;31, 2001, the capital of each of our operating
subsidiaries exceeded the Company Action Level, and, as a
result, no regulatory response or action was required.
</FONT>

<P align="left">
<B><FONT size="2">NAIC IRIS Ratios</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the 1970s, the NAIC developed a set of
financial relationships or &#147;tests&#148; called the
Insurance Regulatory Information System (IRIS) that were
designed to facilitate early identification of companies which
</FONT>

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<FONT size="2">may require special attention by insurance
regulatory authorities. Insurance companies submit data on an
annual basis to the NAIC, which in turn analyzes the data
utilizing ratios covering 12 categories of financial data with
defined &#147;usual ranges&#148; for each category. An insurance
company may fall out of the usual range for one or more ratios
because of specific transactions that are in themselves
immaterial or eliminated at the consolidated level. Generally,
an insurance company may become subject to increased scrutiny if
it falls outside the usual ranges on four or more of the ratios.
Prior to 2001, there had been instances in which certain IRIS
ratios of one or more of our operating subsidiaries have fallen
outside of the usual ranges. In all instances where follow-up
information was requested, our responses have not resulted in
additional requests or further action.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Primarily as a result of the reserve
strengthening actions recorded during 2001, US Fire, North
River, CF&nbsp;Insurance, CF Indemnity and CF Underwriters had
unusual values in a number of IRIS ratios as of
December&nbsp;31, 2001. US Fire reported six ratios outside of
the usual range and each of the other insurance companies
mentioned above had four ratios outside the usual range.
Virtually all of these unusual values relate to the impact on
operations and surplus of the reserve strengthening actions. The
Company expects regulatory inquiries relative to the IRIS
results and will provide information responsive to the effects
of the reserve strengthening on these ratios.
</FONT>

<P align="left">
<B><FONT size="2">Investment Regulation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries are subject to state
laws and regulations that require diversification of investment
portfolios and that limit the amount of investments in certain
investment categories. Failure to comply with these laws and
regulations may cause non-conforming investments to be treated
as non-admitted assets for purposes of measuring statutory
surplus and, in some instances, would require divestiture. As of
December&nbsp;31, 2001, we believe our investments complied with
such laws and regulations in all material respects.
</FONT>

<P align="left">
<B><FONT size="2">Guaranty Funds</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All fifty states have separate insurance guaranty
fund laws requiring property and casualty insurance companies
doing business within their respective jurisdictions to be
members of their guaranty associations. These associations are
organized to pay covered claims (as defined and limited by the
various guaranty association statutes) under insurance policies
issued by insolvent insurance companies. Such guaranty
association laws, except the one applicable in New York, create
post-assessment associations which make assessments against
member insurers to obtain funds to pay association covered
claims after an insurer insolvency occurs. These associations
levy assessments (up to prescribed limits) on all member
insurers in a particular state on the basis of the proportionate
share of the premiums written by member insurers in the covered
lines of business in that state. Maximum assessments permitted
by law in any one year generally vary between 1% and 2% of
annual premiums written by a member in that state. New York has
a pre-assessment guaranty fund which makes assessments prior to
the occurrence of an insolvency. Florida, New Jersey, New York
and Pennsylvania have created, by statute, a separate guaranty
association for workers&#146; compensation business. Some states
permit member insurers to recover assessments paid through
surcharges on policyholders or through full or partial premium
tax offsets, while other states permit recovery of assessments
through the rate filing process.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and casualty guaranty fund assessments
incurred by us totaled $1.3&nbsp;million, $1.1&nbsp;million and
$0.5&nbsp;million for 1999, 2000 and 2001, respectively. Our
policy is to accrue for insolvencies when the loss is probable
and the assessment amount can be reasonably estimated. In the
case of most insurance insolvencies, our ability to reasonably
estimate the insolvent insurer&#146;s liabilities or develop a
meaningful range of the insolvent&#146;s liabilities is
significantly impaired by inadequate financial data with respect
to the estate of the insolvent company as supplied by the
guaranty funds. Although the amount of any assessments
applicable to guaranty funds cannot be predicted with certainty,
we believe that future guaranty association assessments for
known insurer insolvencies will not have a material adverse
effect on our results or operations or financial condition.
</FONT>

<P align="center"><FONT size="2">64
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<P align="left">
<B><FONT size="2">Shared Markets</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a condition of their licenses to do business,
our operating subsidiaries are required to participate in
mandatory property and casualty shared market mechanisms or
pooling arrangements which provide various insurance coverages
to individuals or other entities that are otherwise unable to
purchase such coverage in the commercial insurance marketplace.
Our operating subsidiaries&#146; participation in such shared
markets or pooling mechanisms is generally proportionate to the
amount of each of our operating subsidiaries&#146; direct
writings for the type of coverage written by the specific
pooling mechanism in the applicable state.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many states have laws that established
second-injury funds to provide compensation to injured employees
for aggravation of a prior condition or injury. Insurers writing
workers&#146; compensation in those states having second-injury
funds are subject to the laws creating the funds, including the
various funding mechanisms that those states have adopted to
fund the second-injury funds. Several of the states having
larger second-injury funds utilize a premium surcharge that
effectively passes the cost of the fund to policyholders. Other
states assess the insurer based on paid losses and allow the
insurer to recoup the assessment through future premium rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commercial automobile insurance and workers&#146;
compensation lines have mandatory pooling arrangements on a
state-by-state basis for segments of the market that have
difficulty finding coverage from insurers. The shared market
mechanisms for providing commercial automobile coverages are
generally assigned risk plans, reinsurance facilities and joint
underwriting facilities. Additionally, another pooling
mechanism, a Commercial Automobile Insurance Procedure (CAIP),
uses a limited number of servicing carriers to handle
assignments from other insurers. The CAIP servicing carrier is
paid a fee for the responsibility of handling the commercial
automobile policy and paying claims. For workers&#146;
compensation, the pooling in each state is generally in the form
of a reinsurance-type arrangement with servicing carriers
providing the policy services and claims handling services. The
National Council of Compensation Insurance provides services for
calculating member pooling of losses and expenses in 32 states,
with the remainder of the states having their own independent
servicing plans. Certain of our operating subsidiaries
participate in the Florida Hurricane Catastrophe Fund, a
state-mandated catastrophe reinsurance fund. Business insurance
is also subject to pooled insurance on a small scale for
commercial properties insured through the various Fair Access to
Insurance Requirements (FAIR) Plans which exist in most states.
We reported underwriting results from participation in such
mandatory pools and underwriting associations of
$1.4&nbsp;million, $4.4&nbsp;million and $(5.3)&nbsp;million in
1999, 2000, and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of future losses or assessments from
the shared market mechanisms and pooling arrangements described
above cannot be predicted with certainty. The underwriting
results of these pools traditionally have been unprofitable.
Although it is possible that future losses or assessments from
such mechanisms and pooling arrangements could have a material
adverse effect on results of operations, we do not expect future
losses or assessments to have a material adverse effect on our
liquidity or capital resources.
</FONT>

<P align="left">
<B><FONT size="2">Federal Regulation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;1, 2000, federal regulators issued
final regulations implementing the provisions of the
Gramm-Leach-Bliley Act, governing the privacy of consumer
financial information. The regulations limit disclosure by
financial institutions of &#147;nonpublic personal
information&#148; about individuals who obtain financial
products or services for personal, family, or household
purposes. The Act and the regulations generally apply to
disclosures to nonaffiliated third parties, subject to specified
exceptions, but not to disclosures to affiliates. This is an
evolving area of regulation, which requires us to continue to
monitor developments.
</FONT>

<P align="left">
<B><FONT size="2">Possible Legislative and Regulatory
Changes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In recent years, the insurance industry has been
subject to increased scrutiny by regulators and legislators. The
NAIC and a number of state legislatures have considered or
adopted legislative proposals that alter and, in many cases,
increase the authority of state agencies to regulate insurance
companies and holding company systems. In addition, several
committees of Congress have made inquiries and conducted
hearings as part of a broad study of the regulation of insurance
companies, and legislation has been introduced in several
</FONT>

<P align="center"><FONT size="2">65
</FONT>

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<DIV align="left">
<FONT size="2">of the past sessions of Congress which, if
enacted, could result in the federal government assuming some
role in the regulation of the insurance industry. Although the
federal government does not regulate the business of insurance
directly, federal initiatives often affect the insurance
business in a variety of ways. Current and proposed federal
measures which may significantly affect the insurance business
include changes in environmental laws and tort reform.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is not possible to predict the outcome of any
of the foregoing legislative, administrative or congressional
activities or the potential effects thereof on us.
</FONT>

<P align="center"><FONT size="2">66
</FONT>

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<P align="center">
<B><FONT size="2">MANAGEMENT</FONT></B>

<P align="left">
<B><FONT size="2">Directors and Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our directors and executive officers as of the
date of this prospectus are as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">V. Prem Watsa
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">51</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Chairman of our Board of Directors
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bruce A. Esselborn
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">59</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Chief Executive Officer and Director
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Nikolas Antonopoulos
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">President
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mary Jane Robertson
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">48</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Senior Executive Vice President and
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Chief Financial Officer
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dennis J. Hammer
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">52</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Controller
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valerie J. Gasparik
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Corporate Secretary
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Winslow W. Bennett(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">76</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Anthony F. Griffiths(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">71</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Robbert Hartog(1)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">83</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="2%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Audit and Compensation Committee members.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of our directors and officers described
below has served with us since our incorporation on
March&nbsp;6, 2002:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">V.&nbsp;Prem Watsa</FONT></B><FONT size="2">
is the Chairman of our board of directors. Mr.&nbsp;Watsa has
served as Chairman and Chief Executive Officer of Fairfax since
1985 and as Vice President of Hamblin Watsa Investment Counsel
Ltd. since 1985. He formerly served as Vice President of GW
Asset Management from 1983 to 1984 and Vice President of
Confederation Life Investment Counsel from 1974 to 1983.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Bruce A. Esselborn</FONT></B><FONT size="2">
is our Chief Executive Officer and one of our directors.
Mr.&nbsp;Esselborn has served as Chairman and Chief Executive
Officer of Crum &#38; Forster Holding Inc. since 1999. From 1997
to 1999, Mr.&nbsp;Esselborn was a consultant with Marsh &#38;
McLennan Risk Capital Corp. Mr.&nbsp;Esselborn has 35&nbsp;years
of experience in the insurance business. Mr.&nbsp;Esselborn
formerly served as President of Capsure Holdings Corp. from 1990
to 1997, and Chairman, President and Chief Executive Officer of
United Capitol Insurance Company, which he co-founded in 1986.
Prior to 1986 Mr.&nbsp;Esselborn held a variety of senior
operating and technical positions at the operating company level
within AIG&#146;s domestic insurance business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Nikolas Antonopoulos</FONT></B><FONT size="2">
is our President. Mr.&nbsp;Antonopoulos has been President of
Crum &#38; Forster Holding Inc. since 1999.
Mr.&nbsp;Antonopoulos formerly served as Principal of Marsh
&#38; McLennan Risk Capital Corp. from 1996 to 1999. Prior to
1996, Mr.&nbsp;Antonopoulos held a variety of senior operating
positions in AIG&#146;s Domestic Brokerage Group where he most
recently held the position of Senior Vice President of
Operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Mary Jane Robertson</FONT></B><FONT size="2">
is our Senior Executive Vice President and Chief Financial
Officer. Ms.&nbsp;Robertson has served as Executive Vice
President, Treasurer and a director of Crum &#38; Forster
Holding Inc. since 1999. Ms.&nbsp;Robertson formerly served as
Managing Principal and Chief Financial Officer of Global Markets
Access Limited from 1998 to 1999, and Senior Vice President and
Chief Financial Officer of Capsure Holdings Corp. from 1993 to
1997. Ms.&nbsp;Robertson is also a director of Russell
Corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Dennis J. Hammer</FONT></B><FONT size="2"> is
our Controller. Mr.&nbsp;Hammer, who has been with Crum &#38;
Forster since 1979, has been the Controller of our operating
subsidiaries since 1993.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Valerie J. Gasparik</FONT></B><FONT size="2">
is our Corporate Secretary. Ms.&nbsp;Gasparik has been the
Corporate Secretary of our operating subsidiaries since 1996.
Ms.&nbsp;Gasparik joined Crum &#38; Forster in 1988.
</FONT>

<P align="center"><FONT size="2">67
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Winslow W. Bennett</FONT></B><FONT size="2">
is a member of our board of directors. Mr.&nbsp;Bennett has been
President of Winwood Holdings Ltd., a private investment
company, for the past six years. He is a director of Fairfax and
its various operating subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Anthony F. Griffiths</FONT></B><FONT size="2">
is a member of our board of directors. Since 1993,
Mr.&nbsp;Griffiths has been an independent business consultant
and corporate director. Mr.&nbsp;Griffiths became the Chairman
of Mitel Corporation, a telecommunications company, in 1987 and
also assumed the positions of President and Chief Executive
Officer in addition to that of Chairman from 1991 to 1993. He is
currently a director of various operating subsidiaries of
Fairfax and of Alliance Atlantis Communications Inc., Leitch
Technology Company, QLT&nbsp;Inc. and Russel Metals&nbsp;Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Robbert Hartog</FONT></B><FONT size="2"> is a
member of our board of directors. Mr.&nbsp;Hartog has been
President of Robhar Investments Limited, a private investment
company, for the past six years. He is a director of Fairfax and
various of its operating subsidiaries and Russel Metals&nbsp;Inc.
</FONT>

<P align="left">
<B><FONT size="2">Audit Committee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors has established an audit
committee comprised of directors who are independent of our
management and are free of any relationship that, in the opinion
of the board of directors, would interfere with their exercise
of independent judgment as committee members. The audit
committee&#146;s primary responsibilities include: engaging
independent accountants; appointing the chief internal auditor;
approving independent audit fees; reviewing quarterly and annual
financial statements, audit results and reports, including
management comments and recommendations thereto; reviewing our
system of controls and policies, including those covering
conflicts of interest and business ethics; evaluating reports of
actual or threatened litigation; considering significant changes
in accounting practices; and examining improprieties or
suspected improprieties, with the authority to retain outside
counsel or experts. Our audit committee is composed of
Messrs.&nbsp;Bennett, Griffiths and Hartog.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Committee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors has established a
compensation committee comprised of directors who are
independent of our management and are free of any relationship
that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as committee
members. The compensation committee&#146;s primary
responsibilities include reviewing and making recommendations to
our board of directors regarding our equity incentive plan and
annual incentive plan and compensation to our officers. The
compensation committee also establishes and reviews general
policies relating to compensation and benefits of our employees.
Our compensation committee is composed of Messrs Bennett,
Griffiths and Hartog.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Committee Interlocks and Insider
Participation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">V. Prem Watsa, Chairman of our board of
directors, is also the Chairman and Chief Executive Officer of
Fairfax Financial Holdings Limited.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nikolas Antonopoulos, our President, is a
director of US Fire, North River, CF Insurance, CF Indemnity and
CF Underwriters, each of which Bruce A. Esselborn, one of our
directors, is Chairman of the Board and Chief Executive Officer.
Mr.&nbsp;Antonopoulos is also a director of CF Specialty,
Seneca, Seneca Specialty Insurance Company and Sen-Tech
International Holdings, Inc., of which Mr.&nbsp;Esselborn is a
director.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mary Jane Robertson, our Executive Vice President
and Treasurer, is a director of US Fire, North River, CF
Insurance, CF Indemnity and CF Underwriters, each of which Bruce
A.&nbsp;Esselborn is Chairman of the Board and Chief Executive
Officer. Ms.&nbsp;Robertson is also a director of CF Specialty,
Seneca, Seneca Specialty Insurance Company and Sen-Tech
International Holdings, Inc., of which Mr.&nbsp;Esselborn is a
director.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dennis Hammer, our Controller, is a director of
US Fire, CF Indemnity and Seneca, of which Bruce
A.&nbsp;Esselborn is Chairman of the Board and Chief Executive
Officer.
</FONT>

<P align="center"><FONT size="2">68
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No member of our compensation committee has at
any time been an officer or employee of Crum &#38; Forster.
</FONT>

<P align="left">
<B><FONT size="2">Compensation of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our three independent
directors, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
are compensated annually in the amount of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
plus
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
board meeting attended and their reasonable expenses of each
attendance. In addition, serve on our audit and compensation
committees and receive
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
committee meeting attended if held separately from the board
meeting.
</FONT>

<P align="left">
<B><FONT size="2">Executive Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth compensation
information for our Chief Executive Officer and the four other
most highly compensated executive officers, referred to as our
named executive officers, during the year ended
December&nbsp;31, 2001:
</FONT>

<P align="center">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Long Term</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Stock&nbsp;Awards</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">($)(1)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">($)</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bruce A. Esselborn <I>Chief Executive Officer</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Nikolas Antonopoulos <I>President</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mary Jane Robertson <I>Senior Executive Vice
	President and Chief Financial Officer</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dennis J. Hammer <I>Controller</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom" bgcolor="#EEEEEE">
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	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valerie J. Gasparik <I>Corporate Secretary</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">2001</FONT></TD>
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<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">As required by regulation, perquisites and other
	personal benefits, securities or property are only included in
	the &#147;Other Annual Compensation&#148; column where items
	exceed the lesser of $50,000 or 10% of an executive
	officer&#146;s salary and bonus.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to enter into employment agreements
with key employees in connection with the initial public
offering.
</FONT>

<P align="left">
<B><FONT size="2">Equity-Based and Other Compensation
Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to adopt an equity incentive plan
providing for equity-based awards, an employee stock option
plan, an employee stock purchase plan, and an annual bonus
compensation plan in connection with our initial public
offering. The terms of these plans will be finalized prior to
the completion of this offering.
</FONT>

<DIV>&nbsp;</DIV>

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<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Profit Sharing Plans</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our employees participate in The Individual
Retirement Plan of United States Fire Insurance Company, which
is a defined contribution plan that is intended to qualify under
sections&nbsp;401(a), 401(k) and 501(a) of the Code. Under the
plan, each participant is eligible to enter into a written
salary reduction agreement with
</FONT>

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<DIV align="left">
<FONT size="2">us whereby a participant&#146;s salary will be
reduced by a whole percentage from 1% to 12%, as elected by the
participant, on either a before-tax or after-tax basis in
accordance with the rules governing cash or deferred
arrangements under section&nbsp;401(k) of the Code, provided,
however, that the aggregate amount of before-tax and after-tax
contributions cannot exceed 12% of a participant&#146;s salary.
The amount deferred by a participant is contributed to the trust
fund for the plan and invested in accordance with the election
of the participant from among investment funds established under
the trust agreement. It is anticipated that after the completion
of this offering a common stock fund will be added to the other
investment funds available under the trust agreement. We make
matching contributions to the trust fund equal to 50% of a
participant&#146;s pre-tax and after-tax contributions.
Contributions by a participant in excess of 6% of base salary
are not matched. We may, at our discretion, also make a
supplemental profit sharing contribution to a participant&#146;s
account. In addition, we make a basic contribution to the plan
trust fund equal to 3% of a participant&#146;s salary regardless
of whether the participant elects to make pre-tax or after-tax
contributions. We may, at our discretion, also make a
supplemental profit sharing basic contribution to a
participant&#146;s account. All contributions by a participant
are 100% vested at all times. A participant is 100% vested at
all times in all basic and additional basic contributions made
by us. With respect to matching contributions made by us, a
participant becomes 20% vested after one year of service, 40%
after two years of service, 60% after three years of service,
80% after four years of service, and 100% after five years of
service. At the election of a participant, the
participant&#146;s account under the plan will be distributed
after termination of employment or remain in the plan segregated
from active participant accounts. The Code imposes various
limits on the amounts that can be contributed to the plan by or
for any participant each year. During the year ended
December&nbsp;31, 2001, the following matching contributions
were made on behalf of the named executive officers:
Mr.&nbsp;Esselborn,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Mr.&nbsp;Antonopoulous,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Ms.&nbsp;Robertson,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Mr.&nbsp;Hammer,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
and Ms.&nbsp;Gasparik,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent that a participant&#146;s
contributions and our matching contributions are affected by
such Code limitations, compensating benefits are provided for
eligible employees under the Supplemental Individual Retirement
Plan of United States Fire Insurance Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Participants in the plan who have annual
compensation at or in excess of the annual compensation
limitations imposed by the Code may participate in the
Supplemental Individual Retirement Plan of United States Fire
Insurance Company, which provides benefits that would have been
available to eligible employees under the plan but for the
limitations imposed under the Code. Participant contributions to
the plan and the supplemental plan are limited to a combined
maximum of 12% of base salary, and matching contribution to a
maximum of 6% of base salary. Matching contributions under the
supplemental plan are subject to the same vesting schedule as
set forth in the plan. During the year ended December&nbsp;31,
2001, the following matching contributions were made on behalf
of the named executive officers: Mr.&nbsp;Esselborn,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Mr.&nbsp;Antonopoulous,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Ms.&nbsp;Robertson,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Mr.&nbsp;Hammer,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
Ms.&nbsp;Gasparik,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The supplemental plan is not tax qualified under
the Code and is unfunded.
</FONT>

<P align="center"><FONT size="2">70
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<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax and some of its affiliates have engaged
in certain transactions, and are parties to certain
arrangements, with us and with our affiliates. Some of these
transactions and arrangements are material and are expected to
continue after the completion of this offering.
</FONT>

<P align="left">
<B><FONT size="2">Recapitalization and Corporate
Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the completion of this
offering, we will make a payment to Fairfax Inc. consisting
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock and a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
term note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the completion of this offering, public
stockholders will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares,
or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%,
of our outstanding common stock, and Fairfax Inc. will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares,
or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%,
of our outstanding common stock
(approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
if the underwriters&#146; over-allotment option is exercised in
full).
</FONT>

<P align="left">
<B><FONT size="2">Inter-Corporate Debt</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In conjunction with the completion of this
offering, we will issue a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;year
term note to Fairfax Inc. The note will pay interest quarterly
at a rate of &nbsp;basis points over the three month LIBOR.
Under the terms of the note, we will retain the right to repay
the note at any time without bonus or penalty. The term note
will contain certain covenants, which may include, among other
things, restrictions on our ability to incur indebtedness and
liens and restrictions on our ability to enter into a merger.
</FONT>

<P align="left">
<B><FONT size="2">Registration Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the consummation of this offering, we
will enter into a registration rights agreement with Fairfax
Inc. The registration rights agreement will include rights to
require us to register the offer and sale of shares of our
common stock held by Fairfax Inc. on up to three different
occasions. Fairfax may also require us to file registration
statements on Form&nbsp;S-3 once we become eligible to use that
form. The registration rights agreement also will include the
right to require us to include our common stock held by Fairfax
in up to three future registration statements that we file with
the Securities and Exchange Commission. We also will provide
Fairfax with the right to participate in any securities
offerings by us in order to maintain its percentage ownership.
These rights are subject to various conditions and limitations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will bear all expenses incurred in connection
with these registrations, other than any underwriting discounts
and commissions. Registration of shares of common stock upon the
exercise of these registration rights would result in such
shares becoming freely tradable without restriction under the
Securities Act.
</FONT>

<P align="left">
<B><FONT size="2">Investment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries have each entered into
an investment management agreement with Hamblin Watsa Investment
Counsel Ltd., authorizing Hamblin Watsa to manage an investment
account on a continuous basis in accordance with our investment
objectives. Under the agreements, the annual base fee payable to
Hamblin Watsa is 0.10% of the total assets managed, calculated
at the end of each quarter based upon the average market value
of the assets under management for the three preceding months,
and payable on a quarterly basis. In addition, Hamblin Watsa
receives an annual incentive fee relating to the management of
our equity securities accounts equal (subject to an annual
maximum) to 10% of every percentage point of return in the
equities account achieved in the relevant year in excess of the
Standard &#38; Poor&#146;s 500 Index return plus 200 basis
points, if the equities account has achieved such an excess on a
cumulative basis from the inception of Hamblin Watsa&#146;s
management. The maximum annual fee for equity securities,
including base fee and incentive fee, is subject to an annual
maximum of 1.75% of the total assets managed, while the base fee
is subject to an aggregate maximum of 0.25% of assets managed.
Either party may terminate the agreement on thirty days&#146;
written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries have each entered into
an investment administration agreement with Fairfax, pursuant to
which Fairfax agrees to provide specified investment
administration services in return for an
</FONT>

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<DIV align="left">
<FONT size="2">annual fee of 0.10% of the total assets managed
under the investment management agreements described above,
calculated and payable quarterly.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These investment management and investment
administration agreements may be terminated by either party on
30&nbsp;days&#146; notice. For the year ended December&nbsp;31,
2001, total fees of $4.43&nbsp;million were paid by us for
services under the investment management and investment
administration agreements.
</FONT>

<P align="left">
<B><FONT size="2">Benefit Claims Payment Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">US Fire participates in a program of employee
welfare benefits that has been established by Fairfax Inc.,
including dental and medical plans for employees and designated
retirees. US Fire has entered into a benefit claims payment
agreement effective January&nbsp;1, 2001 with Fairfax wherein US
Fire has agreed to fund one or more accounts as directed by
Fairfax in amounts sufficient to cover disbursements by the
plans&#146; service provider and US Fire&#146;s proportionate
share of plan-related expenses. The agreement is for a term of
one year with automatic successive renewal terms of one year
each unless terminated by either party on sixty days&#146;
written notice.
</FONT>

<P align="left">
<B><FONT size="2">Fairfax Insurance Coverage</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax has purchased an insurance policy from
Lloyd&#146;s of London and various other insurance companies
covering comprehensive crime insurance, insurance companies
professional liability insurance, directors&#146; and
officers&#146; liability and company reimbursement insurance,
employment practices liability insurance and fiduciary liability
insurance. Fairfax&#146;s coverage under the policy is subject
to an overall aggregate limit of $250&nbsp;million combined
during the policy period which runs from May&nbsp;31, 2000 to
May&nbsp;31, 2003, subject to various single loss limits,
deductibles, retentions, and other exclusions, adjustments and
limitations. The comprehensive crime insurance portion of the
policy covers specified losses sustained by Fairfax and certain
entities, including us, in which more than 50% of the
outstanding voting shares are owned directly or indirectly by
Fairfax, and other entities in which Fairfax maintains an
ownership interest. The professional liability insurance,
directors&#146; and officers&#146; liability and company
reimbursement insurance, employment practices liability
insurance and fiduciary liability insurance portion of the
policy cover specified losses sustained by Fairfax and its
subsidiaries, including us, and officers and directors of
Fairfax and its subsidiaries, including us, in respect of claims
first made during the policy period. Coverage includes directors
and officers and company liability coverage, employment
practices coverage, fiduciary liability coverage, and errors and
omissions coverage. Our share of the premiums for this coverage
was $1,000,000, which was paid to Fairfax in December 2000.
</FONT>

<P align="left">
<B><FONT size="2">Information Technology Services
Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective September&nbsp;1,
2001, US Fire has agreed to obtain certain information
technology services on a non-exclusive basis from Fairfax
Information Technology Services, Inc., a wholly owned subsidiary
of Fairfax. The agreement requires US Fire to make monthly
payments based on a mutually agreed annual budget, which
payments amounted to $5.3&nbsp;million in 2001 for capital and
operating expenditures. Under the agreement, Fairfax Information
Technology is the prime contractor in overseeing, managing and
providing information technology services including software
application development, voice support, arranging for third
party licenses, capacity planning, manpower, data protection,
and asset lifecycle management. The initial term of the
agreement is five years commencing September&nbsp;1, 2001 and US
Fire has the option of extending the initial term for any number
of successive one year periods on the same terms on ninety
days&#146; written notice prior to the end of the then current
term. The agreement is renewable at the option of Fairfax
Information Technology, subject to agreement upon pricing and
other terms and conditions. The agreement is terminable by US
Fire at any time in whole or in part on 180 days&#146; written
notice.
</FONT>

<P align="center"><FONT size="2">72
</FONT>
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<P align="left">
<B><FONT size="2">Tax Sharing Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following this offering, we will continue to be
included in the consolidated federal income tax returns of
Fairfax Inc. (the &#147;Fairfax Inc. Group&#148;), as well as
the consolidated or combined state income or franchise tax
returns of Fairfax Inc. Subject to the tax sharing agreement
discussed in this paragraph, every member of the Fairfax Inc.
Group will continue to be jointly and severally liable for the
federal income tax liabilities of the Fairfax Inc. Group, and
may be liable under similar rules for state income or franchise
taxes of the entire group. Prior to the completion of this
offering, we will enter into an amended tax sharing agreement
with Fairfax Inc. that will require us to make payments to
Fairfax Inc. equal to the amount of federal and state income and
franchise taxes that would be paid by us, subject to some
adjustments, if we and our subsidiaries included in the Fairfax
Inc. Group were to file our own separate, combined or
consolidated, federal and state income or franchise tax returns.
Subject to the immediately preceding sentence, Fairfax Inc. will
be responsible for filing and paying taxes with respect to all
consolidated, or combined returns which include both Fairfax
Inc. and us. Fairfax Inc. and the other member of the Fairfax
Group will be solely responsible, and will indemnify and hold us
harmless, for any taxes that are attributable to Fairfax Inc.
and such other members of the Fairfax Group.
</FONT>

<P align="left">
<B><FONT size="2">Master Repurchase Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">US Fire, CF Indemnity, and CF Underwriters have
each entered into a master securities repurchase agreement with
Fairfax effective July&nbsp;1, 2000. Each agreement provides for
the repurchase of securities that are transferred to Fairfax
from time to time in order to provide liquidity in the event
that we are required to pay claims or other corporate
obligations. Under each agreement we are obligated to repurchase
from Fairfax the securities that are transferred for this
purpose at a price equal to the amount initially raised from
their sale plus the stated interest rate of each security
pursuant to its initial sale. During the time that such
securities are transferred to Fairfax, we are entitled to
receive the income payable in respect of such securities.
</FONT>

<P align="left">
<B><FONT size="2">Administrative Services Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">US Fire has entered into an administrative
services agreement with Fairfax Information Technology effective
January&nbsp;1, 2001 pursuant to which US Fire provides certain
management and general services. In return for these services,
Fairfax Information Technology has agreed to make monthly
payments to US Fire reflecting the actual cost to US Fire of
providing such services. The services to be provided by US Fire
relate to corporate communications and public relations, audit,
executive, legal, personnel, benefit and benefits plans,
financial services including accounting and tax, technology
services and facilities management. The agreement may be
terminated by either party on 180&nbsp;days&#146; written notice.
</FONT>

<P align="left">
<B><FONT size="2">Claims Services and Management
Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">US Fire and CF Indemnity have each entered into a
services agreement, effective January&nbsp;1, 2000, with TIG
Insurance Company, a wholly owned subsidiary of Fairfax, to
obtain certain services relating to issuing policies and
handling claims in return for payments reflecting the actual
cost of providing such services. The agreement was renewed on
January&nbsp;1, 2001 for one year, and will be automatically
extended for successive one year terms unless terminated by
either party on 180&nbsp;days&#146; written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective as of July&nbsp;1,
2000, US Fire appointed RiverStone Claims Management LLC, a
wholly owned subsidiary of Fairfax, as its claims manager to
handle certain claims, including environmental, asbestos,
tobacco, firearms and construction defect claims, referred to
RiverStone by US Fire within the full policy limits and to
recommend the amount of loss reserves to be established for each
claim. The agreement provides for an annual service fee of
$2.1&nbsp;million, subject to annual adjustments. In 2001, we
paid $2.4&nbsp;million to RiverStone in respect of the
agreement. The agreement is terminable by either party on
60&nbsp;days&#146; written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an annually renewable agreement effective
March&nbsp;1, 1999, our operating subsidiaries, except Seneca,
have agreed to obtain loss adjusting services from Cunningham
Lindsay U.S., Inc., a wholly owned
</FONT>

<P align="center"><FONT size="2">73
</FONT>
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<DIV align="left">
<FONT size="2">subsidiary of Fairfax, for property losses that
result from catastrophes, including windstorms, hailstorms,
hurricanes, earthquakes, and certain specialty lines including
environmental losses. US Fire has agreed to a schedule of fees
that delineates the amounts due for particular claims based on
the type of catastrophe and the full cost of repair. Fees paid
by us amounted to $258,000 in 2001.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Reinsurance Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have numerous reinsurance agreements in effect
which include Odyssey Re Holdings Corp., an affiliate of
Fairfax, and its subsidiaries as parties. Under these
arrangements Odyssey Re participates in varying layers of our
risk across most of our lines of business, including property
and fidelity, umbrella, workers&#146; compensation,
directors&#146; and officers&#146; liability, environmental
liability and errors and omissions. The majority of these
agreements may be terminated on 60&nbsp;days&#146; notice. For
the year ended December&nbsp;31, 2001, we ceded
$3.5&nbsp;million in premiums to Odyssey Re.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective March&nbsp;1, 1999,
we have agreed to cede and Ranger Insurance Company, a wholly
owned subsidiary of Fairfax, has agreed to reinsure 100% of
direct written premiums for all business in effect or commencing
on or after March&nbsp;1, 1999 that is arranged or brokered
through Ranger Insurance Managers, Inc., a wholly owned
subsidiary of Ranger, that is classified as excess liability for
public entities and that incepts, renews, has an anniversary
date or comes into effect on or after March&nbsp;1, 1999. This
contract provides a 23% ceding commission. We may terminate the
agreement at any time with ninety days prior written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective November&nbsp;15,
1999, we have agreed to cede and Ranger agreed to reinsure 100%
of direct written premiums for all new and renewal business that
is arranged or brokered through Ranger Insurance Managers that
is classified as Ranger Self Storage Warehouse Program Business.
The agreement provides a 33.5% ceding commission. We may
terminate the agreement at any time with ninety days&#146; prior
written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective January&nbsp;1,
2001, we have agreed to reinsure, and Lombard General Insurance
Company of Canada has agreed to cede, 100% of the surety
business of Lombard. The agreement provides a 10% ceding
commission. This is a continuous term agreement that can be
cancelled by either party with sixty days&#146; prior written
notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operating subsidiaries, excluding Seneca,
have agreed to reinsure and TIG Insurance Company, a Fairfax
subsidiary, has agreed to cede 100% of the surety bond business
written by TIG through the surety bond division of US Fire,
under an agreement effective as of January&nbsp;1, 2001. The
agreement allows a ceding commission to TIG of 7.35% of ceded
premiums plus an amount equal to any commissions paid by TIG to
an agent or sub-producer of the subject policies. The agreement
is for an unspecified term and will continue until terminated by
either party on 60&nbsp;days&#146; written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have a 24.5% participation in a
$102&nbsp;million property catastrophe reinsurance cover through
Odyssey America for calendar years 2001 and 2002. Odyssey Re
receives a ceding commission of acquisition cost plus 7.5%.
</FONT>

<P align="left">
<B><FONT size="2">Lease</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal offices are located in space leased
by us in Morristown, New Jersey. The lease covers approximately
201,887 square feet of office space at 305 Madison Avenue. The
term of the lease ends November&nbsp;30, 2009, and provides for
up to six consecutive additional terms of five years each at our
option, which must be exercised not less than 330&nbsp;days
prior to the expiration of the then-existing term.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Seneca&#146;s principal offices are located in
space leased by Seneca. The lease covers approximately 21,500
square feet of office space at 160 Water Street. The term of the
lease ends in 2007.
</FONT>

<P align="center"><FONT size="2">74
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "PRINCIPAL STOCKHOLDERS" -->

<P align="center">
<B><FONT size="2">PRINCIPAL STOCKHOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information with
respect to the beneficial ownership of our capital stock
immediately prior to the completion of this offering and as
adjusted to reflect the sale of common stock by us and Fairfax
Inc. in this offering by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">all those known by us to be beneficial owners of
	more than five percent of the outstanding shares of common stock;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">our named executive officers;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">each of our directors; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">all executive officers and directors as a group.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission that
deem shares to be beneficially owned by any person or group who
has or shares voting or investment power with respect to such
shares. Unless otherwise indicated, the persons named in this
table have sole voting and investment control with respect to
all shares beneficially owned.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Beneficially</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Owned&nbsp;Prior to</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Owned&nbsp;After</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">Offering</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Shares Offered</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fairfax Inc.<SUP>(1)</SUP>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bruce A. Esselborn <I>Chief Executive Officer</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Nikolas Antonopoulos <I>President</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Mary Jane Robertson <I>Senior Executive Vice
	President and Chief&nbsp;Financial Officer</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dennis J. Hammer <I>Controller</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valerie J. Gasparik <I>Corporate Secretary</I>
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Directors
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Directors and Executive Group</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Subtotal</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Total</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
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	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="2%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD><FONT size="2">(1)&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">Fairfax Inc. is a subsidiary of Fairfax. The
	principal office address of Fairfax&nbsp;Inc. is
	305&nbsp;Madison Avenue, Morristown, New&nbsp;Jersey 07962. The
	Sixty&nbsp;Two Investment Company Limited, a company controlled
	by V.&nbsp;Prem Watsa, Chairman of our board of directors, owns
	subordinated and multiple voting shares representing 55.8% of
	the total votes attached to all classes of shares of Fairfax.
	Mr.&nbsp;Watsa himself beneficially owns and controls additional
	subordinate voting shares which, together with the shares owned
	by Sixty&nbsp;Two, represent 56.3% of the total votes attached
	to all classes of Fairfax&#146;s shares.
	</FONT></TD>
</TR>

</TABLE>

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<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our amended and restated certificate of
incorporation authorizes the issuance of up to
200,000,000&nbsp;shares of common stock, par value $.01 per
share, and up to 100,000,000 shares of preferred stock, par
value $.01 per share, the rights and preferences of which may be
established from time to time by our board of directors.
Immediately prior to the consummation of this
offering, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock and no shares of preferred stock will be
outstanding.
</FONT>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of record of common stock are entitled to
one vote per share on all matters upon which stockholders have
the right to vote. The rights attached to the shares of common
stock do not provide for cumulative voting rights or preemptive
rights. Therefore, holders of more than 50% of the shares of
common stock are able to elect all our directors eligible for
election each year. All issued and outstanding shares of our
common stock are, and the common stock to be sold in this
offering, when issued and paid for, will be, validly issued,
fully paid and non-assessable. Holders of our common stock are
entitled to such dividends as may be declared from time to time
by our board of directors out of funds legally available for
that purpose. Upon dissolution, holders of our common stock are
entitled to share pro rata in the assets of our company
remaining after payment in full of all our liabilities and
obligations, including payment of the liquidation preference, if
any, or any preferred stock then outstanding. There are no
redemption or sinking provisions applicable to the common stock.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors is authorized, subject to
Delaware law, without stockholder approval, from time to time to
issue up to an aggregate of 100,000,000 shares of preferred
stock in one or more series. The board of directors can fix the
rights, preferences and privileges of the shares of each series
and any qualifications, limitations or restrictions. Issuance of
preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to
acquire, a majority of our outstanding voting stock. After the
closing of this offering, no shares of preferred stock will be
outstanding. We have no present plans to issue any shares of
preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">Registration Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have granted certain registration rights to
Fairfax Inc. For a discussion of these registration rights see
&#147;Certain Relationships and Related Transactions&nbsp;&#151;
Registration Rights.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Delaware Anti-Takeover Statute and Charter
Provisions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Delaware law, we may not engage in a
&#147;business combination,&#148; which includes a merger or
sale of more than 10% of our assets, with any &#147;interested
stockholder,&#148; namely, a stockholder who owns 15% or more of
our outstanding voting stock, as well as affiliates and
associates of any of these persons, for three years following
the time that stockholder became an interested stockholder
unless:
</FONT>
<P>

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	<TD width="1%"></TD>
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<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the transaction in which the stockholder became
	an interested stockholder is approved by our board of directors
	prior to the time the interested stockholder attained that
	status;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">upon completion of the transaction that resulted
	in the stockholder becoming an interested stockholder, the
	interested stockholder owned at least 85% of our voting stock
	outstanding at the time the transaction commenced, excluding
	those shares owned by persons who are directors and also
	officers; or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">at or after the time the stockholder became an
	interested stockholder the business combination is approved by
	the board of directors and authorized at an annual or special
	meeting of stockholders by the affirmative vote of at least
	two-thirds of the outstanding voting stock which is not owned by
	the interested stockholder.
	</FONT></TD>
</TR>

</TABLE>

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</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The authorization of undesignated preferred stock
in our charter makes it possible for our board of directors to
issue preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control
of us. These and other provisions may have the effect of
deterring hostile takeovers or delaying changes in control or
management of us.
</FONT>

<P align="left">
<B><FONT size="2">Limitations on Liability and Indemnification
of Officers and Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation limits the
liability of directors to the fullest extent permitted by
Delaware law. In addition, the certificate of incorporation and
bylaws provide that we will indemnify our directors and officers
to the fullest extent permitted by Delaware law. We believe that
the provisions in our certificate of incorporation and bylaws
are necessary to attract and retain qualified persons as
directors and officers.
</FONT>

<P align="left">
<B><FONT size="2">Transfer Agent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The transfer agent and registrar for our common
stock
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="center"><FONT size="2">77
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<P align="center">
<B><FONT size="2">SHARES ELIGIBLE FOR FUTURE SALE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this
offering, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be outstanding. Subject to the lock-up
agreements described below, all of the shares sold in this
offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, as amended,
unless these shares are purchased by our affiliates, or persons
who directly or indirectly control, are controlled by or are
under common control with us. Shares held by affiliates
generally may only be sold in compliance with the limitations of
Rule&nbsp;144 of the Securities Act.
</FONT>

<P align="left">
<B><FONT size="2">Lock-up Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We, and each of our officers and Fairfax, have
agreed, subject to limited exceptions, for a period of
180&nbsp;days after the date of this prospectus, not to, without
the prior written consent of Banc of America Securities LLC:
</FONT>
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	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">directly, or indirectly, sell, offer, contract or
	grant any option to sell (including without limitation any short
	sale), pledge, transfer, establish an open &#147;put equivalent
	position&#148; within the meaning of Rule&nbsp;16a-1(h) under
	the Securities Exchange Act of 1934, as amended, or otherwise
	dispose of any share of common stock or any securities
	exercisable or exchangeable for or convertible into shares of
	common stock currently or hereafter owned either of record or
	beneficially (as defined in Rule&nbsp;13d-3 under the Securities
	Exchange Act); or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">enter into any swap or other arrangement that
	transfers all or a portion of the economic consequences
	associated with the ownership of any common stock.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Either of the foregoing transfer restrictions
will apply regardless of whether a covered transaction is to be
settled by the delivery of common stock of such other
securities, in cash or otherwise. In addition, during this
180-day period, we have also agreed not to file any registration
statement for, and each of our officers and Fairfax has agreed
not to make any demand for, or exercise any right of, the
registration of any shares of common stock of any securities
convertible into or exercisable or exchangeable for common stock
without the prior written consent of Banc of America
Securities&nbsp;LLC.
</FONT>

<P align="left">
<B><FONT size="2">Rule&nbsp;144</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, under Rule&nbsp;144 as currently in
effect, a person who has beneficially owned shares of our common
stock for a least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the
greater of:
</FONT>
<P>

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<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">1% of the number of shares of our common stock
	then outstanding, which will equal
	approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
	immediately after this offering; or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the average weekly trading volume of our common
	stock
	on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;during
	the four calendar weeks preceding the filing of a notice on
	Form&nbsp;144 concerning that sale.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales under Rule&nbsp;144 are also subject to
manner of sale provisions and notice requirements and to the
availability of current public information about Crum&nbsp;&#38;
Forster.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Rule&nbsp;144(k) as currently in effect, a
person who has not been one of our affiliates at any time during
the 90&nbsp;days preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an
affiliate, is entitled to sell those shares without complying
with the manner of sale, public information, volume limitation
or notice provisions of Rule&nbsp;144. Therefore, unless
otherwise restricted, Rule&nbsp;144(k) shares may be sold
immediately upon the completion of this offering.
</FONT>

<P align="left">
<B><FONT size="2">Registration Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the completion of this offering, Fairfax
Inc., the holder
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock, will be entitled to registration rights.
See &#147;Certain Relationships and Related
Transactions&nbsp;&#151; Registration
</FONT>

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<DIV align="left">
<FONT size="2">Rights&#148; for more information regarding these
rights. Registration of these shares would result in such shares
becoming freely tradable without restriction under the
Securities Act. These sales could have a material adverse effect
on the trading price of our common stock.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Stock Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shortly after this offering, we intend to file a
registration statement on Form&nbsp;S-8 covering the shares of
common stock reserved for issuance under our equity incentive
plan and our employee stock option plan that will provide for
awards of restricted shares of our common stock and stock
options to purchase our common stock.
</FONT>

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<P align="center">
<B><FONT size="2">CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS</FONT></B>

<DIV align="center">
<B><FONT size="2">FOR NON-UNITED STATES HOLDERS OF COMMON
STOCK</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general discussion of the
principal U.S.&nbsp;federal income and estate tax consequences
of the ownership and disposition of our common stock that may be
relevant to you if you are a non-U.S.&nbsp;holder. For purposes
of this discussion, you are a non-U.S.&nbsp;holder if you are a
beneficial owner of common stock that is any of the following
for U.S.&nbsp;federal income tax purposes:
</FONT>
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<TR>
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	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a nonresident alien individual;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a foreign corporation;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a foreign estate, the income of which is not
	subject to U.S.&nbsp;federal income taxation regardless of its
	source;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a trust that is not subject to the supervision of
	a court within the United States and the control of one or more
	U.S.&nbsp;persons and that does not have a valid election in
	effect under the applicable U.S.&nbsp;treasury regulations to be
	treated as a U.S.&nbsp;person;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">a foreign partnership.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special rules may apply to certain
non-U.S.&nbsp;holders such as &#147;controlled foreign
corporations,&#148; &#147;passive foreign investment
companies,&#148; &#147;foreign personal holding companies&#148;
and corporations that accumulate earnings to avoid
U.S.&nbsp;federal income tax, that are subject to special tax
treatment under the Internal Revenue Code. Such entities should
consult their own tax advisors to determine the
U.S.&nbsp;federal, state, local and other tax consequences that
may be relevant to them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The discussion does not address all aspects of
U.S.&nbsp;federal income and estate taxation that may be
relevant to you in light of your particular circumstances, and
does not address any foreign, state or local tax consequences.
Furthermore, this discussion is based on provisions of the
Internal Revenue Code, Treasury regulations and administrative
and judicial interpretations as of the date of this prospectus.
All of these are subject to change, possibly with retroactive
effect, or different interpretations. If you are considering
buying our common stock you should consult your own tax advisor
about current and possible future tax consequences of holding
and disposing of our common stock in your particular situation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a partnership holds our common stock, the tax
treatment of a partner will generally depend on the status of
the partner and the activities of the partnership. If you are a
partner in a partnership holding our common stock, you should
consult your own tax advisor.
</FONT>

<P align="left">
<B><FONT size="2">Distributions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If distributions are paid on the shares of our
common stock, these distributions generally will constitute
dividends for U.S.&nbsp;federal income tax purposes to the
extent paid from our current or accumulated earnings and
profits, as determined under U.S&nbsp;federal income tax
principles. To the extent these distributions exceed those
earnings and profits, the distributions will constitute a return
of capital that is applied against, and will reduce, your basis
in our common stock, but not below zero, and then will be
treated as gain from the sale of stock. Dividends that are not
effectively connected with a U.S.&nbsp;trade or business by you
will be subject to U.S.&nbsp;withholding tax at a 30% rate or,
if a tax treaty applies, a lower rate specified by the treaty.
For purposes of withholding, we will determine the amount of
distribution subject to withholding based on a reasonable
estimate made by us of our accumulated and current earnings and
profits. To receive a reduced treaty rate, you must furnish to
us or our paying agent a duly completed Form&nbsp;W-8BEN,
W-8IMY, or similar appropriate documentation, or substitute form
certifying your qualification for the reduced rate. If you are
eligible for a reduced rate of U.S.&nbsp;withholding tax under
an income tax treaty, you may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund along
with the required information with the Internal Revenue Service.
</FONT>

<P align="center"><FONT size="2">80
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends that are effectively connected with the
conduct or a trade or business within the United States and, if
a tax treaty applies, are attributable to a U.S.&nbsp;permanent
establishment, are exempt from U.S.&nbsp;federal withholding
tax, provided that you furnish to us or our paying agent a duly
completed Form&nbsp;W-8ECI, or similar appropriate
documentation, or substitute form certifying the exemption.
However, dividends exempt from U.S.&nbsp;withholding because
they are effectively connected or they are attributable to a
U.S.&nbsp;permanent establishment are subject to
U.S.&nbsp;federal income tax on a net income basis at the
applicable graduated U.S.&nbsp;federal income tax rates. In
addition, if you are a foreign corporation, under certain
circumstances, you may be subject to an additional &#147;branch
profits tax&#148; at a 30% rate or a lower rate specified by an
applicable income tax treaty.
</FONT>

<P align="left">
<B><FONT size="2">Gain on Disposition of Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You generally will not be subject to
U.S.&nbsp;federal income tax with respect to gain recognized on
a sale or other disposition of our common stock unless one of
the following applies:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">The gain is effectively connected with a trade or
	business conducted by you in the United States and, if a tax
	treaty applies, the gain is attributable to a
	U.S.&nbsp;permanent establishment, in which case you would be
	taxed on the net gain derived from the sale or other disposition
	under applicable graduated U.S.&nbsp;federal income tax rates.
	If you are a foreign corporation, you may be subject to an
	additional &#147;branch profits tax&#148; at a rate of 30% or a
	lower rate specified by an applicable income tax treaty.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">You are an individual, hold our common stock as a
	capital asset and are present in the United States for 183 or
	more days in the taxable year of the sale or other disposition,
	and other conditions are met, in which case you will be subject
	to a flat 30% tax on the gain derived from the sale or other
	disposition, which may be offset by certain U.S.&nbsp;capital
	losses (even though you are not considered to be a resident of
	the United&nbsp;States).
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">We are or have been a &#147;U.S.&nbsp;real
	property holding corporation&#148; for U.S.&nbsp;federal income
	tax purposes at any time during the shorter of the five-year
	period ending on the date of the disposition or the period
	during which you held the common stock in which case you will be
	taxed on the gain from the sale pursuant to the effectively
	connected rules above. We believe that we never have been, are
	not currently and do not anticipate becoming a U.S.&nbsp;real
	property holding corporation for U.S.&nbsp;federal income tax
	purposes. If we were to become a U.S.&nbsp;real property holding
	corporation, you still would not be subject to U.S.&nbsp;tax if
	the shares of our common stock are considered to be
	&#147;regularly traded on an established securities market&#148;
	and if you do not own, actually or constructively, at any time
	during the shorter of the periods described above, more than
	five percent of our common stock.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Federal Estate Tax</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you are an individual who is not a citizen or
resident, as defined for U.S.&nbsp;estate tax purposes, of the
United States at the time of death, the shares of common stock
held by you will be included in your gross estate for
U.S.&nbsp;federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
</FONT>

<P align="left">
<B><FONT size="2">Information Reporting and Backup Withholding
Tax</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under U.S.&nbsp;Treasury regulations, we must
report annually to the Internal Revenue Service and to each
non-U.S.&nbsp;holder the amount of dividends paid to that holder
and the tax withheld with respect to those dividends. These
information reporting requirements apply even if withholding was
not required because the dividends were effectively connected or
withholding was reduced or eliminated by an applicable income
tax treaty. Pursuant to an applicable tax treaty, that
information may also be made available to the tax authorities in
the country in which the non-U.S.&nbsp;holder resides.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">U.S.&nbsp;federal backup withholding generally is
a withholding tax imposed at the rate of 30%, subject to
reduction in future years followed by a possible increase
beginning in 2010, on specified payments, including dividends,
to persons that fail to furnish required information.
</FONT>

<P align="center"><FONT size="2">81
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a general matter, information reporting and
backup withholding will not apply to a payment by or through a
foreign office of a foreign broker of the proceeds of a sale of
our common stock effected outside the U.S.&nbsp;However,
information reporting requirements, but not backup withholding,
will apply to a payment by or through a foreign office of a
broker of the proceeds of a sale of our common stock effected
outside the U.S.&nbsp;if that broker:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">is a U.S.&nbsp;person;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">is a foreign person that derives 50% or more of
	its gross income for specified periods from the conduct of a
	trade or business in the U.S.;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">is a &#147;controlled foreign corporation&#148;
	as defined in the Internal Revenue Code; or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">is a foreign partnership with certain specified
	U.S.&nbsp;connections.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information reporting requirements will not apply
in the above cases if the broker has documentary evidence in its
records that the beneficial owner is a non-U.S.&nbsp;holder and
specified conditions are met or the beneficial owner otherwise
establishes an exemption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Payment by or through a U.S.&nbsp;office of a
broker of the proceeds of a sale of our common stock is subject
to both backup withholding and information reporting unless the
holder certifies to the payor in the manner required as to its
non-U.S.&nbsp;status under penalties of perjury or otherwise
establishes an exemption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amounts withheld under the backup withholding
rules do not constitute a separate U.S.&nbsp;federal income tax.
Rather, any amounts withheld under the backup withholding rules
will be refunded or allowed as a credit against the
holder&#146;s U.S.&nbsp;federal income tax liability, if any,
provided the required information or appropriate claim for
refund is filed with the Internal Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">THE FOREGOING DISCUSSION IS A SUMMARY OF THE
PRINCIPAL TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER
DISPOSITION OF OUR COMMON STOCK BY NON-U.S. HOLDERS FOR
U.S.&nbsp;FEDERAL INCOME AND ESTATE TAX PURPOSES. YOU ARE URGED
TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR
TAX CONSEQUENCES TO YOU OF OWNERSHIP AND DISPOSITION OR OUR
COMMON STOCK, INCLUDING THE EFFECT OF ANY STATE, LOCAL, FOREIGN
OR OTHER TAX LAWS.
</FONT>

<P align="center"><FONT size="2">82
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "UNDERWRITING" -->

<P align="center">
<B><FONT size="2">UNDERWRITING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the terms and conditions of an
underwriting agreement among Crum &#38; Forster, Fairfax Inc.
and each of the underwriters named below, dated the date of this
prospectus, each of the underwriters named below, who are
represented by Banc of America Securities LLC, have severally
agreed to purchase and Crum &#38; Forster and Fairfax Inc. have
severally agreed to sell the respective number of shares of
common stock shown opposite its name below.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Underwriters</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Banc of America Securities LLC
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriting agreement provides that the
obligations of the several underwriters to purchase shares of
common stock offered in this offering are subject to approval of
certain legal matters and to specified conditions precedent. The
underwriters are committed to purchase all of the shares, other
than those shares covered by the over-allotment option described
below, if any are purchased.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters propose to initially offer some
of the shares of common stock directly to the public at the
public offering price on the cover page of this prospectus and
some of the shares to dealers at the public offering price less
a concession not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. The underwriters may allow, and these dealers may
re-allow, a concession not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share on sales to other dealers. After the initial offering of
the shares to the public, the representatives of the
underwriters may change the public offering price and such
concessions. The underwriters do not intend to confirm sales to
any accounts over which they exercise discretionary authority.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the public offering
price, underwriting discount and proceeds before expenses to us
and to Fairfax. The information assumes either no exercise or
full exercise by the underwriters of the over-allotment option
granted to them by Fairfax.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="65%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Without</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">With</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Option</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Public offering price
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Underwriting discount
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds, before expenses, to us
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds, before expenses, to Fairfax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that the total expenses of this
offering, excluding underwriting discounts and commissions, will
be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax has granted to the underwriters an
option, exercisable for 30&nbsp;days after the date of the
underwriting agreement, to purchase up
to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares of common stock at the initial public offering price less
the underwriting discount. The underwriters may exercise this
option solely to cover over-allotments, if any, made in
connection with this offering. To the extent that the
underwriters exercise this option, each underwriter will become
obligated, subject to various conditions, to purchase a number
of additional shares proportionate to such underwriter&#146;s
initial public commitment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters are offering the shares, subject
to prior sale, when, as and if issued to and accepted by them,
subject to approval of legal matters by their counsel, including
the validity of the shares, and other conditions contained in
the underwriting agreement, such as receipt by the underwriters
of officers&#146; certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
</FONT>

<P align="center"><FONT size="2">83
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed to indemnify the underwriters
against various civil liabilities, including liabilities under
the Securities Act, or to contribute the payments that the
underwriters may be required to make in respect of these
liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and each of our officers and Fairfax have
agreed, subject to limited exceptions, for a period of
180&nbsp;days after the date of this prospectus, not to, without
the prior written consent of Banc of America Securities LLC:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">directly or indirectly, sell, offer, contract or
	grant any option to sell (including without limitation any short
	sale), pledge, transfer, establish an open &#147;put equivalent
	position&#148; within the meaning of Rule&nbsp;16a-1(h) under
	the Securities Exchange Act of 1934, as amended, or otherwise
	dispose of any shares of common stock or any securities
	exercisable or exchangeable for or convertible into shares of
	common stock currently or hereafter owned either of record or
	beneficially (as defined in Rule&nbsp;13d-3 under the Securities
	Exchange Act); or
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">enter into any swap or other arrangement that
	transfers all or a portion of the economic consequences
	associated with the ownership of any common stock.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Either of the foregoing transfer restrictions
will apply regardless of whether a covered transaction is to be
settled by the delivery of common stock or such other
securities, in cash or otherwise. In addition, during this
180-day period, we have also agreed not to file any registration
statement for, and each of our officers and Fairfax has agreed
not to make any demand for, or exercise any right of, the
registration of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock
without the prior written consent of Banc of America Securities
LLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no
established trading market for our common stock. The initial
public offering price for the shares of common stock offered by
this prospectus will be determined by negotiations among us and
the representatives of the underwriters. The factors to be
considered in determining the initial public offering price
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="1%"></TD>
	<TD width="96%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the history of and the prospects for the industry
	in which we compete;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">our past and present operations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">our historical results of operations;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">our prospects for future earnings;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the recent market prices of securities of
	generally comparable companies; and
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">&#149;&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">the general condition of the securities markets
	at the time of the offering.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our common stock has been approved for listing
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
subject to notice of issuance. In order to meet one of the
requirements for listing our common stock
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
Banc of America Securities LLC has undertaken to sell 100 or
more shares of our common stock to a minimum of 2,000 beneficial
holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other than in the United States, no action has
been taken by us or the underwriters that would permit a public
offering of the shares of common stock included in this offering
in any jurisdiction that requires action for that purpose. The
shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other
offering material or advertisements in connection with the offer
and sale of any of these shares be distributed or published in
any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that
jurisdiction. We advise persons who receive this prospectus to
inform themselves about and to observe any restrictions relating
to the offering of the common stock and the distribution of this
prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy any shares of our common stock
included in this offering in any jurisdiction where such an
offer or a solicitation would not be permitted or legal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A prospectus in electronic form may be made
available on the web sites maintained by one or more of the
underwriters participating in this offering. Other than the
prospectus in electronic format, the information on any such web
site, or accessible through any such web site, is not part of
the prospectus.
</FONT>

<P align="center"><FONT size="2">84
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with this offering, some
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the common stock. Specifically,
the underwriters may over-allot this offering, creating a
syndicate short position. The underwriters may bid for and
purchase shares of our common stock in the open market to cover
syndicate short positions or to stabilize the price of the
common stock. The underwriting syndicate may reclaim selling
concessions if the syndicate repurchases previously distributed
common stock in syndicate covering transactions, in
stabilization transactions or in some other way or if Banc of
America Securities LLC receives a report that indicates clients
of such syndicate members have &#147;flipped&#148; the common
stock. These activities may stabilize or maintain the market
price of the common stock above independent market levels. The
underwriters are not required to engage in these activities, and
may end any of these activities at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Banc of America Securities LLC and its affiliates
have provided credit and other banking and investment banking
services to Fairfax and other of our affiliates, for which
services they have received customary fees, and they anticipate
providing such services to us and our affiliates in the future.
</FONT>

<!-- link1 "LEGAL MATTERS" -->

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The validity of the shares of our common stock
offered hereby and other legal matters related to this offering
will be passed upon for us and Fairfax Inc. by Shearman &#38;
Sterling, New York, New York. Legal matters relating to this
offering will be passed upon for the underwriters by Simpson
Thacher &#38; Bartlett, New York, New York.
</FONT>

<!-- link1 "EXPERTS" -->

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements as of
December&nbsp;31, 2000 and 2001, and for each of the years in
the three-year period ended December&nbsp;31, 2001, included in
this prospectus have been so included in reliance upon the
reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and
accounting.
</FONT>

<P align="center"><FONT size="2">85
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "AVAILABLE INFORMATION" -->

<P align="center">
<B><FONT size="2">AVAILABLE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the Securities and Exchange
Commission a Registration Statement (of which this prospectus is
a part and which term shall encompass all amendments, exhibits
and schedules thereto) on Form&nbsp;S-1 under the Securities Act
of 1933 with respect to the shares of our common stock offered
hereby. This prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are
omitted from this prospectus in accordance with the rules and
regulations of the Commission. For further information about us
and the securities offered hereby, reference is made to the
Registration Statement. Statements made in this prospectus as to
the contents of any contract, agreement or other document
referred to are not necessarily complete and, in each instance,
reference is made to the copy of such contract, agreement or
other document filed as an exhibit to the Registration
Statement, each such statement being qualified in its entirety
by such reference.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of this offering, we will be
subject to the information and reporting requirements of the
Exchange Act and in accordance therewith, will be required to
file reports, proxy statements and other information with the
Commission. The Registration Statement, reports, proxy
statements and other information filed by us with the
Commission, maybe inspected and copied at the public reference
facilities maintained by the Commission at Room&nbsp;1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional office of the Commission located at
CiticorpCenter, 500 West Madison Street, Suite&nbsp;1400,
Chicago, Illinois 60661. Copies of such material also can be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such material may also be accessed electronically by
means of the Commission&#146;s home page on the Internet at
http://www.sec.gov.
</FONT>

<P align="center"><FONT size="2">86
</FONT>

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<!-- link1 "GLOSSARY OF SELECTED INSURANCE TERMS" -->

<P align="center">
<B><FONT size="2">GLOSSARY OF SELECTED INSURANCE TERMS</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Accident year
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The annual accounting period in which loss events
	occurred, regardless of when the losses are actually reported,
	recorded or paid.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Admitted assets
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Assets of an insurer permitted by a state to be
	taken into account in determining the insurer&#146;s financial
	condition for statutory purposes.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Admitted insurer
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A company authorized to transact insurance
	business within a state.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">A.M. Best
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A.M. Best Company, Inc. is a rating agency and
	publisher for the insurance industry.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Assume
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">To accept from the primary insurer or reinsurer
	all or a portion of the liability underwritten by such primary
	insurer or reinsurer.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Assumed reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Insurance liabilities acquired from a ceding
	company through reinsurance.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Assumption reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A transaction whereby the ceding company
	transfers its entire obligation under the policy to the
	reinsurer, who becomes liable for all obligations under the
	policy, including collecting premiums and paying benefits.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Attachment point
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount of losses above which excess of loss
	reinsurance becomes operative.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Broker
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">One who negotiates contracts of insurance or
	reinsurance, receiving a commission from the insurer or
	reinsurer for placement and other services rendered.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Calendar year
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The calendar year in which loss events were
	recorded, regardless of when the losses are actually reported or
	paid.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Capacity
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The percentage of surplus, or the dollar amount
	of exposure, that an insurer or reinsurer is willing or able to
	place at risk. Capacity may apply to a single risk, a program, a
	line of business or an entire book of business. Capacity may be
	constrained by legal restrictions, corporate restrictions or
	indirect restrictions.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Case reserves
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Loss reserves established with respect to
	outstanding, individually reported claims.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Casualty insurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Insurance which is primarily concerned with the
	losses caused by injuries to third persons (i.e., not the
	insured) and the legal liability imposed on the insured
	resulting therefrom. It includes, but is not limited to,
	employers&#146; liability, workers&#146; compensation, public
	liability, automobile liability, personal liability and aviation
	liability insurance. It excludes certain types of losses that by
	law or custom are considered as being exclusively within the
	scope of other types of insurance, such as fire or marine.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Catastrophe
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A severe event triggering a claim, which could
	involve natural risks such as fire, earthquake, windstorm,
	explosion and other similar events or unnatural events such as
	terrorist acts, riots, crashes, derailments and other similar
	events.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Catastrophe loss
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Loss and directly identified loss expenses from
	catastrophes.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Catastrophe reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A form of excess of loss property reinsurance
	which, subject to a specified limit, indemnifies the ceding
	company for the amount of loss in excess of a specified
	retention with respect to an accumulation of
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-1
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
</TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">losses resulting from a catastrophic event. The
	actual reinsurance document is called a &#147;catastrophe
	cover.&#148;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Cede; ceding company
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">When an insurer reinsures its liability with
	another insurer (a &#147;cession&#148;), it &#147;cedes&#148;
	business and is referred to as the &#147;ceding company.&#148;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Claim
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Request by an insured for indemnification by an
	insurance company for loss incurred from an insured peril.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Combined ratio
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The sum of the loss and loss expense ratio, the
	underwriting expense ratio and the dividend ratio, each
	determined in accordance with GAAP or SAP, as applicable. A
	combined ratio under 100% generally indicates an underwriting
	profit. A combined ratio over 100% generally indicates an
	underwriting loss.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Commercial lines
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The various kinds of insurance which are written
	for businesses.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Deductible
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount of loss that an insured retains.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Direct premiums written
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amounts charged by a primary insurer to
	insureds in exchange for coverages provided in accordance with
	the terms of an insurance contract generally excluding any
	assumed reinsurance premiums.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Dividend ratio
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Relationship of policyholder dividends to net
	premiums earned.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Excess liability
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Additional casualty coverage above the first
	layer.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Excess of loss reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Reinsurance that indemnifies the reinsured
	against all or a specified portion of losses under reinsured
	policies in excess of a specified dollar amount or
	&#147;retention.&#148;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Expense ratio
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">See &#147;underwriting expense ratio.&#148;
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Facultative reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The reinsurance of all or a portion of the
	insurance provided by a single policy. Each policy reinsured is
	separately negotiated.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Fidelity and surety programs
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Insurance which guarantees performance of an
	obligation or indemnifies for loss due to embezzlement or
	wrongful abstraction of money, securities or other property.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Generally accepted accounting principles (GAAP)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The method of accounting used for reporting to
	shareholders as defined by the American Institute of Certified
	Public Accountants or the Financial Accounting Standards Board.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Gross premiums written
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The sum of direct premiums written and
	reinsurance premiums assumed during a given period.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Guaranteed cost products
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An insurance policy where the premiums charged
	will not be adjusted for actual loss experience during the
	covered period.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Guaranty fund
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">State-regulated mechanism which is financed by
	assessing insurers doing business in those states. Should
	insolvencies of an insurer occur, these funds are available to
	meet some or all of the insolvent insurer&#146;s obligations to
	policyholders.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">High or large deductible policy
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An insurance policy where the customer assumes at
	least $25,000 or more of each loss.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-2
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Incurred but not reported (IBNR) claims
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Claims under policies that have been incurred but
	have not yet been reported to the insurer by the insured.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Incurred but not reported (IBNR) reserves
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Reserves for estimated losses and loss expenses
	which have been incurred but not yet reported to the insurer.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Indemnity reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A transaction whereby the reinsurer agrees to
	indemnify the ceding company against all or part of the loss
	that the latter may sustain under the policies it issued that
	are being reinsured. The ceding company remains primarily liable
	as the direct insurer on all risks ceded.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Inland marine
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A broad type of insurance generally covering
	articles that may be transported from one place to another, as
	well as bridges, tunnels and other instrumentalities of
	transportation. It includes goods in transit (generally other
	than transoceanic) and may include policies for movable objects
	such as personal effects, personal property, jewelry, furs, fine
	arts and others.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Insurance Regulatory Information System
	(&#147;IRIS&#148;) ratios
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Financial ratios calculated by the NAIC to assist
	state insurance departments in monitoring the financial
	condition of insurance companies.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Known loss costs
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Loss and loss adjustment expenses commonly
	expected for a given type of risk based on historical and
	projected experience. In a highly competitive market, an
	underwriter may price a policy unprofitably, i.e. with an
	insufficient provision for known loss costs, in order to
	maintain or increase market share.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Loss
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An occurrence that is the basis for submission
	and/or payment of a claim and the costs of indemnification of
	such a claim. Losses may be covered, limited or excluded from
	coverage, depending on the terms of the policy.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Loss and loss expense <BR>
	 Ratios
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The ratio of incurred losses and loss expenses to
	net premiums earned.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Loss and loss expense <BR>
	 Reserves
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A balance sheet liability for unpaid losses and
	loss expenses which represents estimates of amounts needed to
	pay losses and expenses, including legal fees and the expense of
	administering the claims adjustment process, both on claims
	which have been reported but have not yet been resolved and on
	claims which have occurred but have not yet been reported.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Loss expenses
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The expenses of settling claims, including legal
	and other fees and the portion of internal operating expenses
	allocated to claim settlement costs.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Loss reserves
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Liabilities established by insurers and
	reinsurers to reflect the estimated cost of claims incurred that
	the insurer or reinsurer will ultimately be required to pay in
	respect of insurance or reinsurance it has written. Reserves are
	established for losses and consist of case reserves and IBNR
	reserves.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Losses and loss expenses
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The sum of losses and loss expenses incurred.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-3
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Losses incurred
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The total losses sustained by an insurance
	company under a policy or policies, whether paid or unpaid.
	Losses incurred include a provision for IBNR.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Multi-peril policies
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Refers to policies which cover both property and
	third party liability exposures.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">National Association of Insurance Commissioners
	(NAIC)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An organization of the insurance commissioners or
	directors of all 50&nbsp;states and the District of Columbia
	organized to promote consistency of regulatory practice and
	statutory accounting standards throughout the United States.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Net premiums earned
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The portion of premiums written that is
	recognized for accounting purposes as revenue during a period,
	i.e., the portion of premiums written allocable to the expired
	portion of policies after the assumption and cessation of
	reinsurance.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Net premiums written
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Gross premiums written less premiums ceded to
	reinsurers.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Novation
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The substitution of one insurer (assuming
	company) for the original issuing insurer (ceding company) under
	an insurance policy, whereby the assuming company accepts all of
	the rights and liabilities of the insurer under the policy from
	the effective date of the novation and the ceding company is
	relieved of any further obligation under the novated policy.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Policyholders&#146; surplus
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">As determined under SAP, the amount remaining
	after all liabilities, including loss reserves, are subtracted
	from all admitted assets. Policyholder surplus is also referred
	to as &#147;statutory surplus,&#148; &#147;surplus&#148; or
	&#147;surplus as regards policyholders&#148; for statutory
	accounting purposes.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Pool
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An organization of insurers or reinsurers through
	which particular types of risks are underwritten with premiums,
	losses and expenses being shared in agreed percentages.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Premiums
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount charged during the year on policies
	and contracts issued, renewed or reinsured by an insurance
	company.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Probable maximum loss (PML)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">PML is the underwriter&#146;s estimate of the
	largest loss expected to occur and is important in considering
	reinsurance needs.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Property insurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Insurance that provides coverage to a person with
	an insurable interest in tangible property for that
	person&#146;s property loss, damage or loss of use.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Quota share reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Reinsurance wherein the insurer cedes an agreed
	fixed percentage of liabilities, premiums and losses for each
	policy covered on a pro rata basis.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Rate of renewal/retention ratio
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Current period renewal accounts or policies as a
	percentage of the prior period accounts or policies.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Rates
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Amounts charged per unit of insurance.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Redundancy (deficiency)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Estimates in reserves change as more information
	becomes known about the frequency and severity of claims for
	each year. A redundancy (deficiency)&nbsp;exists when the
	liability is less (greater) than the posted reserves. The
	cumulative redundancy (deficiency) is the aggregate net change
	in estimates over time subsequent to establishing the original
	liability estimate.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-4
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Reinsurance
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The practice whereby one insurer, called the
	reinsurer, in consideration of a premium paid to such insurer,
	agrees to indemnify another insurer, called the ceding company,
	for part or all of the liability assumed by the ceding company
	under one or more policies or contracts of insurance which it
	has issued.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Reinsurance agreement
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A contract specifying the terms of a reinsurance
	transaction.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Reserves or loss reserves
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Estimated liabilities established by an insurer
	to reflect the estimated costs of claims payments that the
	insurer will ultimately be required to pay with respect to
	insurance it has written.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Residual market (involuntary <BR>
	 Business)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Insurance market which provides coverage for
	risks with respect to which prospective insured parties are
	unable to purchase insurance in the voluntary market either
	because the risk is too great or rate inadequacy has reduced the
	supply of insurance. Residual markets are frequently created by
	state legislation either because of lack of available coverage
	such as property coverage in a windstorm prone area or
	protection of the accident victim as in the case of
	workers&#146; compensation. The costs of the residual market are
	usually charged back to the direct insurance carriers in
	proportion to the carriers&#146; voluntary market shares for the
	type of coverage involved.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Retention
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount of exposure an insurance company
	retains on any one risk or group of risks.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Retrospective premiums
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Premiums related to retrospectively rated
	policies.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Retrospective rating
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A plan or method which permits adjustment of the
	final premium or commission on the basis of actual loss
	experience, subject to certain minimum and maximum limits.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Risk retention
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount or portion of a risk an insurer
	retains for its own account after ceded reinsurance. Losses
	above the stated retention level are collectible from the
	reinsurer. The retention level may be stated as a percentage or
	dollar amount.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Salvage
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The amount of money an insurer recovers through
	the sale of property transferred to the insurer as a result of a
	loss payment.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Servicing carrier
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An insurance company that provides, for a fee,
	various services including policy issuance, claims adjusting and
	customer service for insureds in a reinsurance pool.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Standard &#38; Poor&#146;s (S &#38; P)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Standard &#38; Poor&#146;s Ratings Group is a
	rating agency and publisher for the business and corporate
	industry. It is a division of McGraw-Hill Companies, Inc.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Statutory accounting practices (SAP)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The accounting principles required by statute,
	regulation, or rule, or permitted by specific approval by the
	insurance department in the company&#146;s state of domicile for
	recording transactions and preparing financial statements.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Statutory surplus
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">As determined under SAP, the amount remaining
	after all liabilities, including loss reserves, are subtracted
	from all admitted assets. This sum is regarded as financial
	protection to policyholders in the event an insurance company
	suffers unexpected or catastrophic losses.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="24%"></TD>
	<TD width="1%"></TD>
	<TD width="75%"></TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Structured settlements
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">Periodic payments to an injured person or
	survivor for a determined number of years or for life, typically
	in settlement of a claim under a liability policy.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Subrogation
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A principle of law incorporated in insurance
	policies, which enables an insurance company, after paying a
	loss to its insured, to recover the amount of the loss from
	another who is legally liable for it.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Surplus (Unassigned funds)
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The undistributed and unappropriated amount of
	policyholder surplus.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Tabular reserving
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A method of setting reserves for a class of risk
	among a given population of insureds, based on a table
	evaluating the likelihood and magnitude of the relevant loss
	among that population.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Third party liability
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A liability owed to a claimant (or &#147;third
	party&#148;) who is not one of the two parties to the insurance
	contract. Insured liability claims are referred to as third
	party claims.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Umbrella coverage
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A form of insurance protection against losses in
	excess of amounts covered by other liability insurance policies
	or amounts not covered by the usual liability policies.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Underwriter
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">An individual who examines, accepts or rejects
	risks and classifies accepted risks in order to charge an
	appropriate premium for each accepted risk. The underwriter is
	expected to select business that will produce an average risk of
	loss no greater than that anticipated for the class of business.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Underwriting
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The insurer&#146;s or reinsurer&#146;s process of
	reviewing applications for insurance coverage, and the decision
	whether to accept all or part of the coverage and determination
	of the applicable premiums; also refers to the acceptance of
	such coverage.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Underwriting expense ratio
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The ratio of underwriting, acquisition and other
	insurance expenses incurred to net premiums earned. (For
	statutory purposes, the ratio of underwriting expenses incurred
	to net premiums written.)
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Underwriting expenses
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">All costs associated with acquiring and servicing
	business, including commissions, premium taxes, general and
	administrative expenses.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Underwriting profit or <BR>
	 underwriting loss results
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The pre-tax profit or loss experienced by a
	property and casualty insurance company after deducting loss and
	loss adjustment expenses, underwriting expenses and policyholder
	dividends from net earned premiums. This profit or loss
	calculation includes reinsurance assumed and ceded but excludes
	investment income.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Unearned premium
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The portion of premiums written that is allocable
	to the unexpired portion of the policy term.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Voluntary market
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">The market in which a person seeking insurance
	obtains coverage without the assistance of residual market
	mechanisms.
	</FONT></TD>
</TR>

<TR>
	<TD>&nbsp;</TD>
</TR>

<TR>
	<TD valign="top">
	<FONT size="2">Workers&#146; compensation
	</FONT></TD>
	<TD></TD>
	<TD valign="top">
	<FONT size="2">A system (established under state laws) under
	which employers provide insurance for benefit payments to their
	employees for work-related injuries, deaths and diseases,
	regardless of fault.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">G-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<P align="center">
<B><FONT size="2">INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><B><FONT size="1">Documents</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Report of PricewaterhouseCoopers LLP</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Balance Sheet as of
	December&nbsp;31, 2000 and 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statement of Operations and
	Comprehensive Income for the Years Ended December&nbsp;31, 1999,
	2000 and 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statement of Stockholder&#146;s
	Equity for the Years Ended December&nbsp;31, 1999, 2000 and 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Consolidated Statement of Cash Flows for the
	Years Ended December&nbsp;31, 1999, 2000 and 2001
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Notes to Consolidated Financial Statements
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">REPORT OF INDEPENDENT ACCOUNTANTS</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors and Stockholder of <BR>
 Crum &#38; Forster Holding Inc. and Subsidiaries:
</FONT>

<P align="left">
<FONT size="2">In our opinion, the accompanying consolidated
balance sheet and the related consolidated statements of
operations and comprehensive income, of stockholder&#146;s
equity and of cash flows present fairly, in all material
respects, the financial position of Crum &#38; Forster Holding
Inc. and its subsidiaries at December&nbsp;31, 2001 and 2000,
and the results of their operations and their cash flows for
each of the three years in the period ended December&nbsp;31,
2001 in conformity with accounting principles generally accepted
in the United States of America. These financial statements are
the responsibility of the Company&#146;s management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally
accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
</FONT>

<P align="left">
<FONT size="2">/s/&nbsp;PRICEWATERHOUSECOOPERS LLP
</FONT>

<P align="left">
<FONT size="2">PricewaterhouseCoopers LLP
</FONT>

<DIV align="left">
<FONT size="2">New York, New York
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">March&nbsp;6, 2002
</FONT>
</DIV>

<P align="center"><FONT size="2">F-2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEET</FONT></B>

<DIV align="center">
<B><FONT size="2">December&nbsp;31,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">ASSETS</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fixed income securities, at fair value (amortized
	cost $2,449,127 and $1,991,551, respectively)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851,343</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities, at fair value (cost $135,130
	and $140,075, respectively)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153,214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,427,758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,004,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,275</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,620</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,522</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premium receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">221,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">218,852</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,413</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance recoverables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,611,010</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,131,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prepaid reinsurance premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">235,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">293,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred policy acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">31,398</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,320</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100,641</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,795,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,147,959</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">LIABILITIES</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,423,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">300,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">343,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income on retroactive reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Funds held under reinsurance treaties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,623</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,652</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accounts payable and other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">245,653</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">258,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,994,180</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,428,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">STOCKHOLDER&#146;S EQUITY</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stock, $1 par value; 1,000 shares
	authorized; 1,000 issued and outstanding
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Additional paid-in capital
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">738,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accumulated other comprehensive loss, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,865</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Retained earnings
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,046</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total stockholder&#146;s equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">801,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total liabilities and stockholder&#146;s equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,795,672</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,147,959</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
the consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE INCOME</FONT></B>

<DIV align="center">
<B><FONT size="2">Years Ended December&nbsp;31,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">REVENUE</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">744,888</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">843,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(145,750</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(173,330</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(236,063</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506,473</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Decrease (increase) in unearned premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80,511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(41,298</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,711</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,103</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,358</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,041</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,305</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,321</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">839,298</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671,831</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">683,934</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">EXPENSES</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Policy acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">109,411</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,503</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other underwriting expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">115,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,558</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,991</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">792,693</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">609,154</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">853,984</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income (loss) before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,677</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(170,050</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,585</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29,309</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,267</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,715</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,406</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,808</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">NET INCOME (LOSS)</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Average shares outstanding
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic earnings (loss) per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">COMPREHENSIVE INCOME (LOSS)</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income (loss), net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,465</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">141,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(187,990</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212,954</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(90,960</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
the consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENT OF STOCKHOLDER&#146;S
EQUITY</FONT></B>

<DIV align="center">
<B><FONT size="2">Years Ended December&nbsp;31,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">COMMON STOCK</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, beginning and end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">ADDITIONAL PAID-IN CAPITAL</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">738,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital contribution
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">738,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">ACCUMULATED OTHER COMPREHENSIVE LOSS,
	NET&nbsp;OF&nbsp;TAX</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(17,323</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(241,788</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized investment (losses) gains
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(227,591</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,324</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,824</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,126</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,950</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,275</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(241,788</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,865</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">RETAINED EARNINGS</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111,165</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends paid
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(56,665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">147,640</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,555</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">56,046</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">TOTAL STOCKHOLDER&#146;S EQUITY</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">585,852</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">801,492</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">719,605</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">COMMON SHARES OUTSTANDING</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance, beginning and end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
the consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "CRUM &#38; FORSTER HOLDING INC." -->

<P align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENT OF CASH FLOWS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years Ended December&nbsp;31,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(In thousands)</FONT></B>
</DIV>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">OPERATING ACTIVITIES:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Adjustments to reconcile net income (loss) to net
	cash used in operating activities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment gains (losses)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,103</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,358</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Depreciation and amortization
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(120</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,950</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,873</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,176</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,794</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premium receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">63,519</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,885</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other receivables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(829</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(657</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,099</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance recoverables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(193,161</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(246,337</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(520,688</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prepaid reinsurance premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,110</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,353</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,631</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred policy acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,164</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,041</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,922</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,537</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,401</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(104,905</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(263,940</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">117,052</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,621</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,890</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">42,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to policyholders
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,763</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,095</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income on retroactive reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,613</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Funds held under reinsurance treaties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">68,863</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44,520</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">134,029</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(43,814</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(22,532</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,804</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,715</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,406</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,808</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net accretion of discount on fixed income
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(25,599</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,209</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(24,948</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total adjustments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(308,488</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(475,624</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(179,710</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash used in operating activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(272,013</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(404,044</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(286,219</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">INVESTING ACTIVITIES:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(575,748</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(116,070</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(53,401</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sales of fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,059,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">517,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">526,288</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from maturities of fixed income
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,045</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,405</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,310</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchases of equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(215,540</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29,940</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,704</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Proceeds from sales of equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,340</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">728</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Payment for the purchase of Sen-Tech
	International Holdings, Inc.&nbsp;&#151; net of cash and cash
	equivalents acquired
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(20,137</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Payment for the purchase of Crum &#38; Forster
	Specialty Insurance Company&nbsp;&#151; net of cash and cash
	equivalents acquired
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,684</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Purchase of fixed assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,997</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,256</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(6,764</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by investing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">308,152</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">411,308</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">461,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">FINANCING ACTIVITIES:</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital contributions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends to parent
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(56,665</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net cash provided by financing activities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net increase in cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,139</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,950</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">184,311</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents, beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">43,186</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,275</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Cash and cash equivalents, end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">79,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,275</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">273,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Supplemental Cash Flow Information:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes (paid to) received from parent
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(79</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,972</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,861</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">The accompanying notes are an integral part of
the consolidated financial statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">1.&nbsp;&nbsp;Organization and Basis of
Presentation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Crum &#38; Forster Holding Inc. (the
&#147;Company&#148; or &#147;Crum &#38; Forster&#148;) is a
Delaware holding company. The Company is 100% owned by Fairfax
Inc., a Wyoming holding company. Fairfax Inc. is in turn wholly
owned by Fairfax Financial Holdings Limited
(&#147;Fairfax&#148;), a Canadian financial services holding
company which is publicly traded on the Toronto Stock Exchange.
The Company, through its various subsidiaries, provides a full
range of commercial property and casualty insurance distributed
through an independent producer force located across the United
States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements are
prepared in accordance with accounting principles generally
accepted in the United States of America and include the
accounts of the Company and its wholly owned subsidiaries,
United States Fire Insurance Company (&#147;US Fire&#148;), The
North River Insurance Company (&#147;North River&#148;), Crum
&#38; Forster Indemnity Company, Crum and Forster Insurance
Company, and Crum &#38; Forster Underwriters Co. of Ohio. US
Fire owns 100% of the stock of Crum &#38; Forster Specialty
Insurance Company (&#147;Specialty&#148;). North River owns 100%
of the stock of Sen-Tech International Holdings, Inc.
(&#147;Seneca&#148;) and its subsidiaries. Material intercompany
accounts and transactions are eliminated in consolidation. See
Note&nbsp;10&nbsp;&#151; Related Party Transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of the consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions, which could differ from actual
results, that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent
assets and liabilities.
</FONT>

<P align="left">
<B><FONT size="2">2.&nbsp;&nbsp;Summary of Significant
Accounting Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Significant accounting policies followed by the
Company are summarized below:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Investments</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s fixed income securities and
equity securities are categorized as &#147;available for
sale&#148;, and are recorded at their fair value based primarily
on quoted market prices. Unrealized gains or losses on the
Company&#146;s fixed income and equity securities, net of
applicable income taxes, are included in other comprehensive
income. Unrealized losses which are deemed other than temporary
are charged to operations. Factors considered in evaluating
whether a decline in value is other than temporary include:
1)&nbsp;periodic assessment of the changes in intrinsic value of
investments relative to declines in market values in determining
whether the underlying valuation fluctuations are other than
temporary; 2)&nbsp;the Company&#146;s ability and intent to
retain the investment for a period of time sufficient to allow
for an anticipated recovery in value; and 3)&nbsp;the financial
condition, credit analysis, and future prospects of the issuer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Realized investment gains or losses are
determined on the basis of average cost. Investment income is
recorded as earned.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Cash and Cash Equivalents</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company considers highly liquid debt
instruments purchased with an original maturity of three months
or less to be cash equivalents.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Deferred Policy Acquisition Costs</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain costs, consisting of commissions and
premium taxes incurred in acquiring insurance premiums, are
deferred and amortized over the period in which the related
premiums are earned. Deferred policy acquisition costs are
limited to their estimated realizable value which considers
anticipated losses and loss adjustment
</FONT>

<P align="center"><FONT size="2">F-7
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">expenses and estimated remaining costs of
servicing the contracts. Realizability is determined without
consideration of investment income.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Goodwill</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase price in excess of net assets
acquired (&#147;goodwill&#148;) and net assets acquired in
excess of purchase price (&#147;negative goodwill&#148;) are
amortized on a straight-line basis over 10&nbsp;years and are
included in other income, net. Goodwill is included in other
assets and negative goodwill is included in other liabilities on
the consolidated balance sheet.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Unpaid Losses and Loss Adjustment
	Expenses</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reserves for unpaid losses and loss
adjustment expenses are based on claim adjusters&#146;
evaluations and other estimates, including those for incurred
but not reported (IBNR) losses, and future salvage and
subrogation recoveries. The reserves are reviewed continually
during the year and changes in estimates are reflected currently
in operating results. Accordingly, losses and loss adjustment
expenses are charged to income as incurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reserves for unpaid losses and loss
adjustment expenses are estimates of amounts needed to pay
reported and unreported claims and related loss adjustment
expenses. The estimates are based on assumptions related to the
ultimate cost to settle such claims. Management believes that
reserves for unpaid losses and loss adjustment expenses are
adequate.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Dividends to Policyholders</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends to policyholders are declared in
accordance with the insurance contract and approved by the
Company&#146;s Board of Directors. Dividends are charged to
operations as the related premiums are earned.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Reinsurance</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company reinsures, in the ordinary course of
business, certain risks with other insurance and reinsurance
companies. These arrangements provide the means for greater
diversification of business and serve to limit the net loss
potential of unusually severe or frequent losses. The ceding of
insurance does not discharge the original insurer from its
primary liability to its policyholder; however, the insurance
company that accepted the risk assumes an obligation to the
original insurer. The ceding insurer retains a contingent
liability with respect to reinsurance ceded to the extent that a
reinsuring company may not be able to meet its obligations.
Reinsurance recoverables include balances due from reinsurance
companies for paid and unpaid losses and loss adjustment
expenses that will be recovered from reinsurers, based on
contracts in force. A reserve for uncollectible reinsurance has
been determined based upon a review of the financial condition
of the reinsurers and an assessment of other available
information. Prepaid reinsurance premiums represent the portion
of premiums ceded to reinsurers applicable to the unexpired
terms of the reinsurance contracts in force.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For retroactive reinsurance contracts, the amount
by which liabilities associated with the reinsured policies
exceed the amount paid for reinsurance coverage is deferred and
amortized as a reduction to losses and loss adjustment expenses
using the interest method.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Funds Held Under Reinsurance
	Treaties</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Premiums withheld from reinsurers under
reinsurance contracts are included in funds held under
reinsurance treaties. Interest generally accrues on withheld
funds in accordance with contract terms and is included in net
investment income.
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Income Taxes</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and its subsidiaries are included in
the consolidated federal income tax return filed by Fairfax Inc.
The consolidated federal income tax provision is allocated to
each of the companies in the consolidated group, pursuant to a
written agreement, on a separate return basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred income taxes are provided for temporary
differences between the financial statement and tax bases of
assets and liabilities. Such differences relate principally to
net operating loss carryforwards, unpaid losses and loss
adjustment expenses, deferred income on retroactive reinsurance,
unrealized net depreciation of investments, unearned premiums,
and deferred policy acquisition costs. A valuation allowance for
deferred tax assets is recorded if it is more likely than not
that all or some portion of the benefits related to deferred tax
assets will not be realized.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Premiums</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insurance premiums are earned over the terms of
the related policies. Unearned premium reserves are established
for the unexpired portion of policy premiums. Premiums are
accrued for retrospectively rated policies and policies subject
to audit on an estimated basis throughout the contract or policy
term. Prepaid reinsurance premiums are reported as assets. The
reserve for uncollectible premiums is determined principally on
the basis of past collection experience. As of December&nbsp;31,
2000 and 2001, the reserve was $18,855 and $21,259, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bail bond premiums are recorded upon issuance of
the bond based upon filed premium rates. Estimated losses,
commissions and premium taxes related to bail bond premiums are
recorded at the time the premiums are earned.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">Earnings Per Share</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Basic earnings per share are calculated by
dividing net income by the weighted average number of common
shares outstanding. The Company has no securities outstanding
that would result in the potential issuance of additional common
shares.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="99%"></TD>
</TR>

<TR valign="top">
	<TD><I><FONT size="2">&nbsp;</FONT></I></TD>
	<TD>
	<I><FONT size="2">New Accounting Pronouncements</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;133 (&#147;SFAS No.&nbsp;133&#148;),
<I>Accounting for Derivative Instruments and Hedging
Activities,</I> was issued in June 1998 and amended by SFAS
No.&nbsp;138, issued in June 2000. The requirements of SFAS
No.&nbsp;133, as amended, were effective for the Company in the
first quarter of the fiscal year beginning January&nbsp;1, 2001.
The standard establishes accounting and reporting standards for
derivative instruments embedded in other contracts and for
hedging activities. Under the standard, certain contracts that
were not formerly considered derivatives may now meet the
definition of a derivative. The Company has determined SFAS
No.&nbsp;133 to have no impact on the Company&#146;s financial
position and results of operations because the Company has no
derivative activity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the Financial Accounting Standards
Board (&#147;FASB&#148;) issued SFAS No.&nbsp;141, <I>Business
Combinations</I>. SFAS No.&nbsp;141 requires that the Company
account for all business combinations in the scope of the
statement using the purchase method. SFAS No.&nbsp;141 is
effective for business combinations initiated after
June&nbsp;30, 2001 and for business combinations accounted for
using the purchase method for which the date of acquisition is
July&nbsp;1, 2001 or later. The acquisition of the Company by
Fairfax in 1998 resulted in the recognition of negative goodwill
as a result of net assets acquired in excess of the purchase
price of $97,800. Prior to adoption of SFAS No.&nbsp;141, the
unamortized balance of negative goodwill was $74,591 and $64,809
at December&nbsp;31, 2000 and 2001, respectively, and is
included in other liabilities in the consolidated balance sheet.
Under SFAS No.&nbsp;141, the
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">remaining unamortized negative goodwill of
$64,809 at December&nbsp;31, 2001 will be recognized as an
extraordinary item on the statement of operations in 2002.
Amortization of the negative goodwill of $9,782 is included in
other income, net for each of the years ended December&nbsp;31,
1999, 2000 and 2001, which, upon adoption of SFAS No.&nbsp;141,
will no longer be recognized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2001, the FASB issued SFAS No.&nbsp;142,
<I>Goodwill and Other Intangible Assets</I> which addresses
accounting and reporting for intangible assets, except for those
acquired in a business combination. SFAS No.&nbsp;142 presumes
that goodwill and certain intangible assets have indefinite
useful lives. Accordingly, goodwill will not be amortized but
rather will be tested at least annually for impairment. SFAS
No.&nbsp;142 is effective for the Company on January&nbsp;1,
2002. The Company has not yet completed its assessment of the
impact of SFAS No.&nbsp;142 on its financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, the FASB issued SFAS
No.&nbsp;144, <I>Accounting for the Impairment or Disposal of
Long-lived Assets</I>. SFAS No.&nbsp;144 establishes a single
accounting model for long-lived assets to be disposed of by
sale. A long-lived asset classified as held for sale is to be
measured at the lower of its carrying amount or fair value less
cost to sell. Depreciation (amortization) is to cease.
Impairment is recognized only if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash
flows and is measured as the difference between the carrying
amount and fair value of the asset. Long-lived assets to be
abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off are considered held and used
until disposed of. Accordingly, discontinued operations are no
longer to be measured on a net realizable value basis, and
future operating losses are no longer recognized before they
occur. The Company will adopt SFAS No.&nbsp;144 effective
January&nbsp;1, 2002. The provisions of the new standard are
generally to be applied prospectively and are not expected to
significantly affect the Company&#146;s results of operations,
financial condition or liquidity.
</FONT>

<P align="left">
<B><FONT size="2">3.&nbsp;&nbsp;Acquisitions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;31, 2000, the Company acquired,
for cash consideration, all of the outstanding common stock of
Seneca. This acquisition was accounted for as a purchase. The
purchase price of $65,314 has been allocated to assets acquired
and liabilities assumed based on estimated fair market value at
the date of acquisition with the balance of $6,014 recorded as
goodwill. The goodwill of $5,821 and $5,212 at December&nbsp;31,
2000 and 2001, respectively, is reflected in other assets in the
consolidated balance sheet, while the related amortization of
the goodwill acquired on a straight-line basis over
10&nbsp;years of $193 and $609 for the years ended
December&nbsp;31, 2000 and 2001, respectively, is included in
other income, net in the consolidated statement of operations.
The operating results of Seneca have been included in the
consolidated statement of operations from the date of
acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;21, 2000, the Company acquired,
for cash consideration, all of the outstanding common stock of
Specialty (formerly Transnational Insurance Company). This
acquisition was accounted for as a purchase. The purchase price
of $17,400 has been allocated to assets acquired and liabilities
assumed based on estimated fair market value at the date of
acquisition with the balance of $2,344 recorded as goodwill. The
goodwill of $2,334 and $2,099 at December&nbsp;31, 2000 and
2001, respectively, is reflected in other assets in the
consolidated balance sheet and is being amortized on a
straight-line basis over 10&nbsp;years. Amortization of goodwill
of $10 and $235 for the years ended December&nbsp;31, 2000 and
2001, respectively, is included in other income, net in the
consolidated statement of operations. The operating results of
Specialty have been included in the consolidated statement of
operations from the date of acquisition.
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following unaudited pro forma consolidated
results of operations for the year ended December&nbsp;31, 1999
and 2000 assume the Seneca acquisition occurred as of
January&nbsp;1, 1999:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premium earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">767,301</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">590,696</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">163,808</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">146,682</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net realized investment losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,191</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,301</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other income, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,679</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total revenue
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">932,597</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">739,994</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">610,278</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">434,502</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other operating expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">269,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">244,257</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">880,142</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">678,759</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income before income taxes
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">52,455</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">61,235</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,357</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,515</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic/ diluted earnings per share
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">70,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The results for Specialty were immaterial for
1999 and 2000.
</FONT>

<P align="left">
<B><FONT size="2">4.&nbsp;&nbsp;Investments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The composition of the investment portfolio,
which is carried at fair value, as of December&nbsp;31, 2000
follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost or</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amortized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gains</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Losses</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fixed income securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bonds
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States government and government agencies
	and authorities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,136,988</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,289</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,084</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,070,193</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">States, municipalities and political subdivisions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,540</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">287</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">103</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,724</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign governments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">947</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">997</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Public utilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">384,263</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">291</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">366,345</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other corporate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">915,389</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">674</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">82,773</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">833,290</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,449,127</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,169</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,282,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stocks
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Banks, trusts and insurance companies
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,987</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,547</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,320</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">108,214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Industrial, miscellaneous and all other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,143</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,804</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,952</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,995</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total common stocks
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">135,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,272</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,209</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,584,257</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,942</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">173,441</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,427,758</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-11
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The composition of the investment portfolio,
which is carried at fair value, as of December&nbsp;31, 2001
follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost or</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gross</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amortized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Unrealized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Gains</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Losses</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fixed income securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Bonds
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">United States government and government agencies
	and authorities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">919,726</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,263</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">94,628</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">832,361</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">States, municipalities and political subdivisions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,291</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">439</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,730</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign governments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">953</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,037</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Public utilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">331,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">511</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,240</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">323,938</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">All other corporate
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">729,914</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,596</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,233</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">684,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,991,551</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,893</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851,343</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Common stocks
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Banks, trusts and insurance companies
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">101,225</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Industrial, miscellaneous and all other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,883</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">967</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">51,989</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total common stocks
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">140,075</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,153</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,014</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153,214</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,131,626</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,046</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">152,115</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,004,557</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amortized cost and fair value of fixed income
securities as of December&nbsp;31, 2001, by contractual
maturity, are shown below. Actual maturities may differ from
maturities shown below due to the existence of call features or
put features. At December&nbsp;31, 2001, total securities
subject to call represent 1.8% of total fair value and total
securities containing a put feature represent 44.8% of total
fair value.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amortized</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due in one year or less
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,944</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after one year through five years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,459</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">198,668</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after five years through ten years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,244</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113,127</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Due after ten years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,660,300</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,522,604</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total fixed income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,991,551</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,851,343</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of net investment income for the
years ended December&nbsp;31, 1999, 2000 and 2001 follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest on fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">162,290</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,431</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,088</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividends on equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,686</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest on cash and cash equivalents
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,894</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,840</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,169</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,104</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">171,657</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,061</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">139,025</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,668</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,666</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,276</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest on funds held under reinsurance treaties
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,278</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,809</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14,578</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net investment income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">157,711</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,586</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">119,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of gross and net realized
investment gains (losses) for the years ended December&nbsp;31,
1999, 2000 and 2001 follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fixed income securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gains
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,148</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,074</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(9,326</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(12,257</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,151</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,178</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,183</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,086</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gains
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,795</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">11,133</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,674</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gains
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,322</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">735</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,247</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,461</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(729</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(726</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(598</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total realized gains (losses):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gains
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,470</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,942</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">317</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,573</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(13,718</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,675</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7,103</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,358</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included in gross losses for the year ended
December&nbsp;31, 2001, is $4,701 related to losses on other
than temporary impairments in investments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gains and losses on other assets relate to
partnerships and other assets which are included in other assets
on the consolidated balance sheet.
</FONT>

<P align="center"><FONT size="2">F-13
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Changes in net unrealized gains (losses) on
investments, and the related tax effect, for the years ended
December&nbsp;31, 1999, 2000 and 2001 follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fixed income securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(331,950</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">191,632</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,370</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Equity securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(18,189</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,469</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,060</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(438</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Subtotal
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(350,139</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income taxes expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(76,777</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,168</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net change in net unrealized gains (losses) on
	investments reflected in stockholder&#146;s equity
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(227,591</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,324</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,824</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fixed income securities and cash and cash
equivalents of $116,248 and $135,559 as of December&nbsp;31,
2000 and 2001, respectively, were on deposit with various state
regulatory authorities as required by insurance laws.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Equity securities as of December&nbsp;31, 2001
are primarily comprised of the Company&#146;s investments in TRG
Holding Corporation (27.5% owned by Fairfax and its affiliates,
including 5.2% owned by the Company), HUB International Limited
(36.8% owned by Fairfax and its affiliates, including 16.9%
owned by the Company), Zenith National Insurance Corp. (42.0%
owned by Fairfax and its affiliates, including 17.8% owned by
the Company), and ORCASIA Limited, which is carried at equity
(100.0% owned by Fairfax and its affiliates, including 20.3%
owned by the Company).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2000 and 2001, the
Company&#146;s investment in TRG Holding Corporation is carried
at $7,613 and $7,756, respectively; the Company&#146;s
investment in HUB International Limited is carried at $31,695
and $34,985, respectively; and the Company&#146;s investment in
Zenith National Insurance Corp. is carried at $97,150 and
$92,404, respectively. The investment in ORCASIA Limited,
acquired in December 2001, is carried at $10,704 at
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, no investments, other
than investments in United States government securities and the
investment in Zenith National Insurance Corp., exceeded 10% of
stockholder&#146;s equity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included in fixed income securities at
December&nbsp;31, 2001 is the Company&#146;s investment of
$17,500 in debentures issued by HUB International Limited. At
the option of the holder and at any time preceding their
maturity, these bonds are convertible into HUB International
Limited common shares at seventeen Canadian dollars per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a securities lending program
administered by its custodial bank whereby securities are loaned
to third parties, primarily major brokerage firms. Company
policy requires a minimum of 102&nbsp;percent of market value of
the loaned securities to be separately maintained as collateral
for the loan. In addition, the Company maintains full ownership
rights to the securities loaned including the collection of
associated investment income and the ability to sell the
securities. The Company is not permitted to sell or repledge any
collateral and therefore does not record the amount of
collateral held. The loaned securities remain a recorded asset
of the Company. The collateral value retained by the
Company&#146;s custodial bank amounted to $357,202 and $61,295
as of December&nbsp;31, 2000 and 2001, respectively.
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">5.&nbsp;&nbsp;Unpaid Losses and Loss
Adjustment Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Activity in the liability for unpaid losses and
loss adjustment expenses follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,597,341</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,492,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,105,466</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304,908</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,570,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,491,875</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,187,528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,736,633</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Acquisition of Seneca&nbsp;&#151; net unpaid loss
	and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">45,457</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses incurred
	related to:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">541,782</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">358,946</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">458,675</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prior years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,082</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,156</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">183,073</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and loss adjustment expenses incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and loss adjustment expenses paid
	related to:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">196,750</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">139,801</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">163,792</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prior years
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">664,461</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">747,653</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">667,134</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total losses and loss adjustment expenses paid
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">861,211</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">887,454</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">830,926</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,187,528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,736,633</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,547,455</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Add ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,304,908</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,570,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,876,338</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,492,436</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,306,741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,423,793</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reserves were strengthened based on the latest
actuarial estimates, reflecting adverse emergence primarily in
the other liability, commercial auto liability, workers&#146;
compensation and commercial multi-peril lines of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company uses tabular reserving for
workers&#146; compensation indemnity reserves and discounts such
reserves using an interest rate of 5%. The amount of the related
discount was $101,546 and $107,133 at December&nbsp;31, 2000 and
2001, respectively. Accretion of the discount is immaterial to
the statement of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has exposure to the
September&nbsp;11, 2001 terrorist attacks, with claims expected
to arise primarily from business interruption, business personal
property and workers&#146; compensation insurance coverages. The
Company has performed a detailed analysis of contracts believed
to be exposed to this event and, as of December&nbsp;31, 2001,
the Company recorded loss and loss adjustment expenses for
claims arising from the terrorist attacks of
$167.5&nbsp;million, before ceded reinsurance, and
$1.5&nbsp;million net of reinsurance. While this is the
Company&#146;s best estimate at this time, it could change as
more information becomes available.
</FONT>

<P align="left">
<B><FONT size="2">6.&nbsp;&nbsp;Asbestos and Environmental Loss
and Loss Adjustment Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has exposure to asbestos and
environmental pollution claims arising from the sale of general
liability, commercial multi-peril and umbrella insurance
policies, the predominance of which were written for accident
years 1985 and prior.
</FONT>

<DIV align="left">
<FONT size="2">Estimation of ultimate liabilities for these
exposures is unusually difficult due to issues such as whether
or not coverage exists, definition of an occurrence,
determination of ultimate damages and allocation of such damages
to financially responsible parties.
</FONT>
</DIV>

<P align="center"><FONT size="2">F-15
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s asbestos and environmental
reserve development, gross and net of reinsurance, for the years
ended December&nbsp;31, 1999, 2000 and 2001 is set forth in the
table below:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Asbestos</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">242,951</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,076</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">142,871</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net losses and loss adjustment expenses incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,739</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,335</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">69,254</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net paid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,236</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29,585</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,232</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">164,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">174,124</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">228,146</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Add ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">90,119</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62,076</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">33,325</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">236,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">261,471</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<B><FONT size="2">Environmental</FONT></B></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">215,131</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">192,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Less ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27,607</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,855</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">187,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net losses and loss adjustment expenses incurred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(167</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,982</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,032</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net paid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,185</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22,690</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">167,172</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">145,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">124,766</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Add ceded unpaid losses and loss adjustment
	expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">24,855</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,937</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Gross unpaid losses and loss adjustment expenses,
	end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">192,027</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">170,595</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">151,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also maintains reserves for other
latent exposures such as those associated with chemical and lead
exposure, construction defects and tobacco products, net of
reinsurance, of $55,928, $31,093 and $27,314 as of
December&nbsp;31, 1999, 2000 and&nbsp;2001, respectively.
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">7.&nbsp;&nbsp;Reinsurance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of the Company&#146;s net premiums
written and net premiums earned for each of the three&nbsp;years
ended December&nbsp;31 follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premiums written:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Direct
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">730,297</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">666,245</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">801,268</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Assumed from other companies, pools or
	associations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">13,558</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41,893</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded to other companies, pools or associations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(145,750</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(173,330</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(236,063</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums written
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">599,138</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">506,473</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">607,098</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premiums earned:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Direct
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">812,040</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">671,277</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">761,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Assumed from other companies, pools or
	associations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">17,424</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,973</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">39,060</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ceded to other companies, pools or associations
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(149,815</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(163,534</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(234,750</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net premiums earned
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of the Company&#146;s total
reinsurance recoverables at December&nbsp;31, 2000 and 2001
follow:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance receivable on paid losses and loss
	adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40,902</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,618</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance recoverable on unpaid losses and loss
	adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,570,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,084,080</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total reinsurance recoverables
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,611,010</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,131,698</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reinsurance recoverables are net of a reserve for
uncollectible reinsurance of $41,200 and $38,316 at
December&nbsp;31, 2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company actively monitors and evaluates the
financial condition of its reinsurers and prepares estimates of
the uncollectible amounts due from troubled reinsurers. The
evaluation focuses on financial and other available data such as
whether or not the reinsurer is in rehabilitation or in
liquidation proceedings and provides an estimate of the amount
that will be ultimately collected from these troubled
reinsurers. In addition to the reinsurers&#146; ability to pay
claims, from time to time disputes arise over amounts and
reinsurance coverage. The Company pursues its remedies in these
cases and recognizes the impact of developments in these
situations as the disputes are resolved. At December&nbsp;31,
2000 and 2001, the Company&#146;s top ten reinsurers represented
69.8% and 72.7%, respectively, of the gross reinsurance
recoverable on paid and unpaid losses. At December&nbsp;31,
2001, the Company&#146;s two largest reinsurers, Inter-Ocean
Reinsurance Company Ltd. and Swiss Re and subsidiaries,
represented 17.8% and 13.4%, respectively, of the reinsurance
recoverable on paid and unpaid losses and loss adjustment
expenses. Management believes the reinsurance recoverables, net
of the reserve for uncollectible reinsurance, are valid and
collectible.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During 2001, the Company entered into adverse
development contracts with two reinsurers. One provided for
$400,000 reinsurance coverage for accident years 2000 and prior
at a cost of $80,500, which is included in funds held under
reinsurance treaties. The other contract provided the Company
with $19,248 of adverse development coverage for accident years
prior to August&nbsp;13, 1998 at a cost of $7,925. Both of these
contracts are recorded as retroactive reinsurance with the
future recovery of adverse development reflected on the balance
sheet as deferred income, which is being amortized under the
interest method. As of December&nbsp;31, 2001, the amount of
deferred income on retroactive reinsurance was $134,613. The
Company amortized $1,924 in 2001, which is included in losses
and loss adjustment expenses in the statement of operations.
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">8.&nbsp;&nbsp;Income Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of income tax expense (benefit)
for the years ended December&nbsp;31, 1999, 2000 and 2001 follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income tax expense (benefit):
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,585</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(29,309</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,267</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,715</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">20,406</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(66,808</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred income taxes reflect the tax impact of
temporary differences between the amount of assets and
liabilities for financial reporting purposes and such amounts as
measured by tax laws and regulations. Components of deferred
income tax assets and liabilities as of December&nbsp;31, 2000
and 2001 follow:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="4"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Operating losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">59,404</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,722</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81,237</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,939</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred income on retroactive reinsurance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">47,115</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized net depreciation of investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">54,465</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">46,060</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unearned premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,398</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,418</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Employee benefit plans
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,819</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,628</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Leasehold accruals
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,326</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,328</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Investments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,348</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Allowance for doubtful accounts
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,192</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,033</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Policyholder dividends
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,286</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,028</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Capital losses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">983</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,019</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Others
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,913</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,364</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax assets before valuation allowance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">254,215</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">318,002</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Valuation allowance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,179</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,179</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax assets after valuation allowance
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">252,036</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">315,823</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax liabilities:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred policy acquisition costs
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,812</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers compensation audit premiums
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,783</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,213</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Others
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,751</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,881</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Deferred tax liabilities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,524</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,906</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="4" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total deferred tax assets
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">235,512</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">293,917</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2000 and 2001, based on
limitations imposed by Section&nbsp;382 of the Internal Revenue
Code related to a previous change in control of Seneca, and
future expiration of its net operating loss carryforwards,
management believes that it is more likely than not that a
portion of the net deferred tax asset
</FONT>

<P align="center"><FONT size="2">F-18
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">related to Seneca&#146;s net operating loss
carryforward will not be realized and has recorded a valuation
allowance of $2,179 for 2000 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on projections of estimated future
operations, management has assessed that the deferred income tax
asset is expected to be recovered from future profitable
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company has net
operating loss carryforwards of approximately $299,204 of which
$11,519 expires in 2004. The remainder will expire in years 2019
through 2021. Capital loss carryforwards of $2,913 expire in
2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table reconciles income taxes at
the statutory federal income tax rate to the Company&#146;s tax
expense (benefit) for the years ended December&nbsp;31, 1999,
2000 and 2001:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">% of</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pre-tax</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pre-tax</FONT></B></TD>
	<TD></TD>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pre-tax</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Income</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Income taxes computed on pre-tax operating income
	(loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,312</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,936</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(59,517</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(35.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Increase (decrease) in income taxes resulting
	from:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Dividend received deduction and tax-exempt income
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(413</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,106</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,160</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Goodwill
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,424</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(7.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,353</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5.3</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,129</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1.8</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prior year provision adjustment
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(26,250</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(41.9</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Others, net
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,345</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5.0</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(130</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(0.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">265</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total income tax expense (benefit)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,130</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21.7</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,903</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(14.2</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,541</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(37.4</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)%</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Company recorded an adjustment to
current income tax of $26,250 related to the resolution of the
deductibility of certain reinsurance premiums. Under its tax
sharing agreements the Company paid income taxes to Fairfax of
$79 and $2,861 in 1999 and 2001, respectively, and received
$9,972 from Fairfax in 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under federal tax regulation, in the event the
Company ceases to be included in the Fairfax Inc. consolidated
tax return, the Company&#146;s recorded deferred tax asset could
be adjusted. As of December&nbsp;31, 2001, the estimated effect
of such tax deconsolidation would result in a reduction in the
net operating loss carryforward and the recorded deferred tax
asset of $58,247 and $20,386, respectively.
</FONT>

<P align="center"><FONT size="2">F-19
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">9.&nbsp;&nbsp;Accumulated Other Comprehensive
Loss</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the components of the
change in accumulated other comprehensive loss for years ending
December&nbsp;31, 2000 and 2001:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Beginning balance of accumulated other
	comprehensive loss, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(241,788</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Beginning balance of net unrealized losses on
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(244,792</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101,468</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ending balance of net unrealized losses on
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(101,468</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(82,644</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current period change in net unrealized losses on
	securities
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,324</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,824</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Beginning balance of foreign currency translation
	adjustments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,004</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,054</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ending balance of foreign currency translation
	adjustments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,054</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,221</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current period change in foreign currency
	translation adjustments
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,950</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,275</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Current period change in accumulated other
	comprehensive loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">141,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Ending balance of accumulated other comprehensive
	loss, net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(100,414</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(84,865</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of comprehensive income (loss) for
the periods ending December&nbsp;31, 1999, 2000 and 2001 are
shown in the following table:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income, before tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrealized gains (losses) on securities arising
	during&nbsp;the&nbsp;period
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(350,139</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">220,101</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">28,992</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Foreign currency translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,809</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,001</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(5,037</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income (loss), before tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(345,330</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">217,100</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">23,955</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit (expense) from unrealized gains
	(losses) arising during&nbsp;the&nbsp;period
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">122,548</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(76,777</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(10,168</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Tax benefit (expense) from foreign currency
	translation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(1,683</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,051</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,762</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total tax benefit (expense)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">120,865</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(75,726</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(8,406</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Other comprehensive income (loss), net of tax
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(224,465</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">141,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">15,549</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Comprehensive income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(187,990</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">212,954</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(90,960</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">10.&nbsp;Related Party Transactions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and its subsidiaries have entered
into various reinsurance arrangements with their affiliates. The
approximate amounts included or deducted from income, expense,
assets and liabilities in the accompanying consolidated
financial statements, with respect to reinsurance assumed and
ceded follow:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Statement of operations:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premiums written&nbsp;&#151; assumed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,243</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">&nbsp;&#151;
	ceded
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,345</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,059</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,317</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Premiums earned&nbsp;&nbsp;&#151; assumed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,896</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">&nbsp;&#151;
	ceded
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,224</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,255</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,575</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,331</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,579</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Balance sheet:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance receivable on paid losses and loss
	adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,374</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance recoverable on losses and loss
	adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">353</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">797</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unpaid losses and loss adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,161</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance balances payable
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">741</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Reinsurance recoverable on unpaid losses and loss
	adjustment expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">205,393</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">240,108</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Prepaid reinsurance premiums&nbsp;&#151; assumed
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,348</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">&nbsp;&#151;
	ceded
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">5,925</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,667</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is the beneficiary of a blended
aggregate stop loss reinsurance agreement effective
January&nbsp;1, 2000 through December&nbsp;31, 2002. A domestic
third party reinsurer was the sole subscribing reinsurer for the
2000 contract year. This reinsurance agreement was interceded
during 2000 by such reinsurer to ORC Re Limited, a wholly owned
subsidiary of Fairfax, and for the years 2001 and 2002 the sole
subscribing reinsurer is ORC Re Limited. The Company retains an
ultimate net loss up to 73% in 2001 and 70% in 2002 of the
subject net earned premium income. Both terms are subject to a
per term maximum recovery of $150,000. Pursuant to the
agreement, the Company ceded premiums of 5% of the subject net
earned premium income or $31,398 in 2001. Reinsurance
recoverable on unpaid losses and loss adjustment expenses
amounted to $39,097 at December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is party to an adverse development
contract with Ridge Re Limited, providing $233,750 of coverage
for accident years 1992 and prior. The Company has fully
utilized the limits of this contract and has a reinsurance
recoverable from Ridge Re Limited at December&nbsp;31, 2001 of
$233,750. This reinsurance was retroceded to ORC Re Limited
during 1998 after the acquisition of the Company by Fairfax.
This reinsurance recoverable is fully collateralized by trust
agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A former parent of the Company required the
transfer of a number of policies and related assets and
liabilities among insurance companies controlled by the Parent,
effective through assumption and indemnity reinsurance
arrangement. The assuming parties were required to seek novation
of certain policies. As of December&nbsp;31, 2000 and 2001,
reinsurance recoverable from related parties included $194,658
and $184,662, from International Insurance Company as a result
of certain policies not yet accepted for novation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has several reinsurance agreements in
the normal course of business in effect with Odyssey
Re&nbsp;Holdings Corp. (&#147;Odyssey&nbsp;Re&#148;), an
affiliate of Fairfax, and its subsidiaries as parties. Under
these agreements, a subsidiary of Odyssey&nbsp;Re participates
in varying layers of risk for lines of business pertaining to
</FONT>

<P align="center"><FONT size="2">F-21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">property, including per risk and catastrophe,
fidelity and umbrella. For the year ended December&nbsp;31,
2001, the Company ceded $3,498 in premiums to this subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investment management agreements have been
entered into between the Company and its subsidiaries and
Hamblin Watsa Investment Counsel,&nbsp;Ltd. (&#147;Hamblin
Watsa&#148;), a wholly owned subsidiary of Fairfax. Pursuant to
the agreements, basic and incentive fees, based upon total
assets under management, are paid to Hamblin Watsa. For the
years ended December&nbsp;31, 1999, 2000 and 2001, $2,942,
$2,348 and $2,216, respectively, of such fees are included in
investment expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company paid investment administrative fees
to Fairfax for services provided to the Company. For the years
ended December&nbsp;31, 1999, 2000 and 2001, $4,164, $2,348 and
$2,216, respectively, for administrative fees were included in
investment expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A Master Repurchase Agreement between the Company
and Fairfax, effective July&nbsp;1, 2000, provides for the
repurchase of securities transferred to Fairfax in order to
provide liquidity. The Company is obligated to repurchase from
Fairfax securities transferred at a price equal to the amount
initially raised from their sale plus the stated interest rate
of each security pursuant to its initial sale. In December 2000,
the Company transferred securities with a market value of
$25,000 to Fairfax in exchange for $25,000 in cash.
Subsequently, in December 2000 the Company repurchased the
securities from Fairfax for $25,000 in cash. There were no
outstanding repurchase transactions at December&nbsp;31, 2000
and&nbsp;2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fairfax has purchased an insurance policy from
Lloyd&#146;s of London and various other insurance companies
covering comprehensive crime insurance, insurance companies
professional liability insurance, directors&#146; and
officers&#146; liability and company reimbursement insurance,
employment practices liability insurance and fiduciary liability
insurance. The Company&#146;s share of the expense incurred for
this coverage, which runs from May&nbsp;31, 2000 to May&nbsp;31,
2003, was $194 and $333 for the years ended December&nbsp;31,
2000 and 2001, respectively, and is included in losses and loss
adjustment expenses and other underwriting expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective September&nbsp;1,
2001, a subsidiary of the Company has agreed to obtain certain
information technology services on a non-exclusive basis from
Fairfax Information Technology Services, Inc.
(&#147;FITS&#148;), a wholly owned subsidiary of Fairfax. The
expense incurred for these services was $1,829 for the year
ended December&nbsp;31, 2001, and is included in losses and loss
adjustment expenses and other underwriting expenses. In
addition, FITS entered into an agreement with a subsidiary of
the Company effective January&nbsp;1, 2001 pursuant to which
FITS is provided certain management and general services. No
amounts were billed under this agreement during the year ended
December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company entered into a services agreement,
effective January&nbsp;1, 2000, with TIG&nbsp;Insurance Company,
a wholly owned subsidiary of Fairfax, to obtain certain services
relating to issuing policies and handling claims. Expenses
incurred for these services were $2,200 and $1,765 for the years
ended December&nbsp;31, 2000 and 2001, respectively, and are
included in losses and loss adjustment expenses and other
underwriting expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an agreement effective July&nbsp;1, 2000,
the Company appointed Riverstone Claims Management&nbsp;LLC, a
wholly owned subsidiary of Fairfax, as its claims manager to
handle certain claims, including environmental, asbestos,
tobacco, firearms and construction defects. Expenses incurred
for these services were $700 and $2,100 for the years ended
December&nbsp;31, 2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under an annually renewable agreement effective
March&nbsp;1, 1999, the Company agreed to obtain loss adjusting
services from Cunningham Lindsay U.S.,&nbsp;Inc., a wholly owned
subsidiary of Fairfax, for property losses that result from
catastrophes, including windstorms, hailstorms, hurricanes,
earthquakes, and certain specialty lines including environmental
losses. Expenses incurred for these services were $653, $656 and
$258 for the
</FONT>

<P align="center"><FONT size="2">F-22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">years ended December&nbsp;31, 1999, 2000 and
2001, respectively, and are included in losses and loss
adjustment expenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included in other assets on the consolidated
balance sheet are amounts receivable from Fairfax affiliates of
$378 and $11,997 as of December&nbsp;31, 2000 and 2001,
respectively, and payable to parent, subsidiaries and affiliates
of $2,099 as of December&nbsp;31, 2000, including amounts due to
parent for income taxes of $353 and $325 as of December&nbsp;31,
2000 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management believes that the revenues and
expenses related to the transactions with affiliated entities
would not be materially different if such transactions were with
unaffiliated entities.
</FONT>

<P align="left">
<B><FONT size="2">11.&nbsp;Employee Benefits</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company sponsors a qualified defined
contribution plan pursuant to sections&nbsp;401(k) and 401(a) of
the Internal Revenue Code, for which all employees are eligible
after completing one year of service. The Company makes an
annual contribution equal to 3% of base salary and a matching
contribution equal to one-half of each employee&#146;s
contribution up to the first 6% of base salary. Certain
employees also have the opportunity to participate in a
non-qualified plan that permits contributions which would
otherwise be limited by IRS regulations. Total defined
contribution plan expense was $4,402, $3,013 and $3,199 for the
years ended December&nbsp;31, 1999, 2000 and 2001, respectively.
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company provides postretirement health care
and life insurance benefits for certain retired employees.
Medical benefits are provided to employees who were at least age
50 on January&nbsp;1, 1994 and upon retirement are at least
age&nbsp;55 and have at least 15&nbsp;years of service. Company
contributions to the retiree medical plan are capped at the
Company&#146;s incurred claims cost in 1995. Employees hired
before August&nbsp;1, 1990 are eligible for retiree life
insurance coverage based on defined age, service and salary
criteria. The following tables provide a reconciliation of the
changes in the postretirement plans, benefit obligations and
fair value of assets for the years ended December&nbsp;31, 2000
and 2001, and a statement of the funded status at
December&nbsp;31, 2000 and 2001:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Changes in benefit obligation:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Benefit obligation at beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">26,476</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,038</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Service cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,490</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,447</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Plan participants&#146; contribution
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Actuarial (gain) loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,465</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,764</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Benefits paid
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,321</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,493</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Benefit obligation at end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">21,038</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,189</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Change in fair value of assets:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fair value of assets at beginning of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Employer contributions
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,485</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,544</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Plan participants&#146; contribution
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">836</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">949</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Benefits paid
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(3,321</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(2,493</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Fair value of assets at end of year
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Funded status:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Funded status
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(21,038</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(16,189</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrecognized net actuarial gain (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(4,064</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Unrecognized transition obligation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,171</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8,354</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accrued benefit cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,159</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(11,899</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="3" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Components of net periodic benefit cost:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Service cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Interest cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,451</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,561</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,447</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Amortization of transition obligation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">817</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Recognized net actuarial loss
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net periodic benefit cost
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,297</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,408</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">2,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The weighted average discount rate used in
determining the accumulated postretirement benefit obligation
was 7.25% at December&nbsp;31, 2000 and 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of measuring the accumulated
postretirement benefit obligation at December&nbsp;31, 2001, the
health care cost trend rates for the period 2002 through 2008
are 8.0% for participants under age&nbsp;65 and 10.5%
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">for participants over age&nbsp;65, and both of
these rates decline gradually to 5.25% in the year 2009 and
thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated
postretirement benefit obligation at December&nbsp;31, 2001 by
$1,679, and the aggregate of the service and interest cost
components of net periodic postretirement benefit expense for
2001 by $169. Conversely, decreasing the assumed health care
cost trend rates by one percentage point in each year would
decrease the accumulated postretirement benefit obligation at
December&nbsp;31, 2001 by $1,250, and the aggregate of the
service and interest cost components of net periodic
postretirement benefit expense for 2001 by $127.
</FONT>

<P align="left">
<B><FONT size="2">12.&nbsp;Commitments and
Contingencies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and its subsidiaries lease office
space and furniture and equipment under long-term leases
expiring through the year 2009. Minimum annual rentals follow:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,815</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">12,385</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,225</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">7,484</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2006
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2007 and thereafter
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,690</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">49,589</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amounts above are reduced by space subleased
to other companies providing for an aggregate minimum rental
recovery of $6,627.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Rental expense, before sublease income, under
these operating leases was $12,864, $11,608 and $14,952 in 1999,
2000 and 2001, respectively. The Company recognized $1,466,
$1,375 and $2,055 in 1999, 2000 and 2001, respectively, from
subleases. These amounts included $317 and $204 in 2000 and
2001, respectively, from related parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included in the total minimum annual rentals
above is $14,571 resulting from a sale-leaseback transaction
entered into in 1984 involving our office space at 305 Madison
Avenue, Morristown, New Jersey. The minimum annual rentals do
not include possible future adjustments based on inflation. The
lease terminates November&nbsp;30, 2009, and provides for up to
six consecutive additional terms of five years each at our
option, which must be exercised not less than 330&nbsp;days
prior to the expiration of the then-existing term. The sale was
financed in part by a purchase money note secured by the
building with a carrying value of $14,479 and $15,522 at
December&nbsp;31, 2000 and 2001, respectively, which is included
in other receivables in the consolidated balance sheet.
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective October&nbsp;12, 2000, the Company
entered into an information technology services agreement with
American International Technology Enterprises, Inc. The
agreement has an initial term of five years and a renewal
provision which extends the initial term by additional periods
of one year each. Under the agreement, the Company pays baseline
charges for mainframe usage and production system support with
adjustments based on actual activity. Services utilized by the
Company under the agreement totaled $20,916 in 2001. As of
December&nbsp;31, 2001, future estimated minimum payments
required under the agreement are summarized below:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2002
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2003
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2004
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">4,284</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">2005
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,570</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">16,422</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon 180&nbsp;days prior written notice and
payment of early termination fees, the Company may terminate the
mainframe usage portion of the agreement at any time and
production system support after eighteen months. The mainframe
usage and production system support early termination fees,
which decrease over the initial term of the agreement, are
$1,712 and $4,075 at the earliest termination date of
June&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has purchased structured settlement
annuities from various companies in order to settle certain
claim liabilities. Should these other companies become unable to
make the annuity payments, the Company would be liable. The
value of these annuities at December&nbsp;31, 2000 and 2001 was
$171,420 and $163,059, respectively, and is included in
reinsurance recoverables in the consolidated balance sheet.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has been named as defendant in
various litigation in the ordinary course of business. In
management&#146;s opinion, the outcome of these suits,
individually or collectively, is not likely to result in
judgments which would be material to the financial condition or
results of operations or cash flows of the Company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD><B><FONT size="2">13.</FONT></B></TD>
	<TD>
	<B><FONT size="2">Dividend Restrictions, Statutory Information
	and Capitalization</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company, through its subsidiaries, is subject
to state regulatory restrictions which limit the maximum amount
of dividends payable. The restrictions limit the payment of
dividends based on the net income and policyholders&#146;
surplus of each insurance company, and these regulations vary by
state. The Company has U.S.&nbsp;insurance subsidiaries
domiciled in the states of New York, New Jersey, Ohio and
Arizona. Generally, the payment of dividends must be from the
earned policyholders&#146; surplus of the insurance company. Any
payment of dividends above the regulatory limits is subject to
the approval of the Insurance Commissioner in the state of
domicile.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Company paid a dividend to its
parent of $56,665. The Company cannot pay dividends in 2002
without the prior approval of the Insurance Commissioners of New
York, New Jersey and Ohio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is the combined statutory basis net
income (loss) and policyholders&#146; surplus of Crum &#38;
Forster&#146;s insurance subsidiaries for the years ended as of
December&nbsp;31, 1999, 2000 and 2001:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(19,715</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">72,761</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(63,725</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Policyholders&#146; surplus
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">689,601</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">769,483</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">708,388</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal differences between statutory
policyholders&#146; surplus and stockholder&#146;s equity,
determined in accordance with accounting principles generally
accepted in the United States of America, are deferred income
</FONT>

<P align="center"><FONT size="2">F-26
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">taxes, deferred policy acquisition costs,
unrealized gains (losses) on investment securities, and deferred
gains on retroactive reinsurance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Accounting principles generally accepted in the
United States of America differ in certain respects from the
statutory accounting practices prescribed or permitted by
insurance regulatory authorities for the Company&#146;s
insurance subsidiaries. Prescribed statutory accounting
practices include state laws, regulations, and general
administrative rules, as well as a variety of publications of
the National Association of Insurance Commissioners
(&#147;NAIC&#148;). Permitted statutory accounting practices
encompass all accounting practices that are not prescribed; such
practices differ from state to state, may differ from company to
company within a state, and may change in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1998, the NAIC adopted the Codification of
Statutory Accounting Principles (&#147;Codification&#148;) which
replaced the Accounting Practices and Procedures manual
effective January&nbsp;1, 2001. The New York, New Jersey, Ohio
and Arizona Insurance Departments have substantially adopted
Codification as of January&nbsp;1, 2001. The effect of adoption
resulted in a net increase to policyholders&#146; surplus of
approximately $10,259, primarily as a result of the
admissibility of a portion of deferred income taxes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company owns in excess of 10% of the
outstanding shares of Zenith National Insurance Corp.
(&#147;Zenith&#148;), which requires it to be valued as an
affiliate under Codification. In 2001, the Company submitted a
filing for non-control of Zenith, which was approved by the
Insurance Department of the State of New York. The valuation of
Zenith as a non-affiliated investment is a permitted accounting
practice approved by the Insurance Department in the State of
New York. As of December&nbsp;31, 2001, this permitted valuation
increased statutory surplus by $13,777 over what it would have
been had prescribed accounting practice been followed. The
Company has no other material permitted accounting practices
from state insurance departments.
</FONT>

<P align="left">
<B><FONT size="2">14.&nbsp;Earnings per share</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net income per common share has been computed in
the following table based upon weighted average common shares
outstanding:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss) (in thousands)
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average common shares outstanding
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Weighted average shares outstanding&nbsp;&#151;
	Basic and diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Net income (loss) per common share:
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Basic/ diluted
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">36,475</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,580</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">(106,509</FONT></TD>
	<TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B><FONT size="2">CRUM &#38; FORSTER HOLDING INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">(In thousands, except share amounts)</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">15.&nbsp;Segment Reporting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company operates in commercial property and
casualty insurance business. The net earned premiums for the
Company&#146;s lines of business for the years ended
December&nbsp;31, 1999, 2000 and 2001 are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">38,990</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32,357</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55,622</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">225,560</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">178,703</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,401</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial auto
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">176,591</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100,659</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">98,223</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105,360</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80,723</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">93,894</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126,493</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">104,930</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">136,309</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">6,655</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">25,344</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">77,351</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">679,649</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">522,716</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">565,800</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information on the losses and loss adjustment
expenses and loss and loss adjustment expense ratios of the
Company&#146;s lines of business for the years ended
December&nbsp;31, 1999, 2000 and 2001 is as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
	<TD></TD>
	<TD colspan="7"></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Ratio</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Ratio</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Ratio</FONT></B></TD>
</TR>

<TR>
	<TD colspan="2"></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Property
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,618</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">27.2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">14,234</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">18,005</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">32.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial multi-peril
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">190,602</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84.5%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">144,650</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">80.9%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">116,746</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">111.6%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Commercial auto
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">153,681</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">87.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">97,372</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">96.7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126,692</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">129.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">General liability
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">71,451</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">67.8%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">35,515</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">44.0%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">188,528</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">201.2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Workers&#146; compensation
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">126,803</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">100.2%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">89,058</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">84.9%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">143,772</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">105.5%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2" align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Surety
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">3,709</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">55.7%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,273</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">40.5%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">48,005</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">62.1%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">556,864</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">81.9%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">391,102</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">74.8%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">641,748</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">113.4%</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company does not allocate investment results,
policy acquisition costs or other underwriting expenses for
purposes of evaluating financial performance of each line of
business.
</FONT>

<P align="left">
<B><FONT size="2">16.&nbsp;Subsequent Events</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March&nbsp;2002, the Board of Directors of
Fairfax authorized the sale of the Company&#146;s common stock
to Crum&nbsp;&#38; Forster Holdings Corp.
(&#147;Holdings&#148;), a newly formed holding company. In
addition, the Board of Directors of Fairfax authorized the sale
of shares of common stock of Holdings in an initial public
offering. Terms of these transactions will be finalized prior to
the completion of the offering. Following the completion of the
offering, the accompanying financial statements of the Company
will become the historical financial statements of Holdings.
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
<B><FONT size="4">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares</FONT></B>

<P align="center">
<IMG src="z06544crumfors.gif">

<P align="center">
<B><FONT size="5">CRUM &#38; FORSTER HOLDINGS CORP.</FONT></B>

<P align="center">
<B><FONT size="4">Common Stock</FONT></B>

<P align="center">
<HR size="1" width="37%" align="center" noshade>

<DIV align="center">
<B>Prospectus</B>
</DIV>

<P align="center">
<BR>
<B> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002</B>

<DIV align="center">
<HR size="1" width="37%" align="center" noshade>
</DIV>

<P align="center">
<B><FONT size="4">Banc of America Securities LLC</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002, all dealers that buy, sell or trade the common stock may
be required to deliver a prospectus, regardless of whether they
are participating in the offering. This is in addition to the
dealers&#146; obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
</FONT>

<P align="left">
<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "PART II INFORMATION NOT REQUIRED IN PROSPECTUS" -->

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION NOT REQUIRED IN
PROSPECTUS</FONT></B>

<P align="left">
<B><FONT size="2">ITEM 13.&nbsp;OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">SEC registration fee
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">9,200</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">NASD filing fee
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">10,500</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT size="2">listing fee
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Blue Sky fees and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Printing and engraving expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Attorneys&#146; fees and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Accountants&#146; fees and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Transfer agent&#146;s and registrar&#146;s fees
	and expenses
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Miscellaneous
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="1" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
	<TD align="left" valign="top">
	<DIV style="margin-left:10px; text-indent:-10px">
	<FONT size="2">Total
	</FONT></DIV>
	</TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
	<TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left"><HR size="4" noshade></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>

<P align="left">
<FONT size="2">The amounts set forth above are estimates except
for the SEC registration fee and the NASD filing fee.
</FONT>

<P align="left">
<FONT size="2">*&nbsp;To be provided by amendment.
</FONT>

<P align="left">
<B><FONT size="2">ITEM 14.&nbsp;INDEMNIFICATION OF DIRECTORS AND
OFFICERS.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;145 of the Delaware General
Corporation Law provides, in summary, that directors and
officers of Delaware corporations are entitled, under certain
circumstances, to be indemnified against all expenses and
liabilities (including attorney&#146;s fees) incurred by them as
a result of suits brought against them in their capacity as a
director or officer, if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to our best
interests, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their
conduct was unlawful; provided that no indemnification may be
made against expenses in respect of any claim, issue or matter
as to which they shall have been adjudged to be liable to us,
unless and only to the extent that the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, they are fairly and reasonably
entitled to indemnity for such expenses which the court shall
deem proper. Any such indemnification may be made by us only as
authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is
proper because the indemnitee has met the applicable standard of
conduct.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation and by-laws
provide for indemnification of our directors and officers to the
fullest extent permitted by Delaware law, as the same may be
amended from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, we maintain liability insurance for
our directors and officers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reference is made to the form of Indemnification
Agreement to be entered into between the registrant and each of
its directors and officers filed as Exhibit&nbsp;10.56 to this
Registration Statement pursuant to which we will agree to
indemnify such directors and officers to the fullest extent
permitted by Delaware law, as the same may be amended from time
to time.
</FONT>

<P align="left">
<B><FONT size="2">ITEM 15.&nbsp;RECENT SALES OF UNREGISTERED
SECURITIES.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registrant has not made any sales of
unregistered securities within the past three years.
</FONT>

<P align="center"><FONT size="2">II-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">ITEM 16.&nbsp;EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;Exhibits.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Underwriting Agreement.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amended and Restated Certificate of Incorporation
	of the Registrant.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amended and Restated By-Laws of the Registrant.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Specimen Certificate representing Common Stock.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">5.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Opinion of Shearman&nbsp;&#38; Sterling as to the
	legality of the Common Stock.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Information Technology Services Agreement between
	US Fire and Fairfax Information Technology Services, Inc.
	effective from September&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Information Technology Services Agreement between
	US Fire and American International Technology Enterprises, Inc.,
	as amended.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Benefit Claims Payment Agreement between Fairfax
	Inc. and US Fire effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Claims Service and Management Agreement between
	US Fire and Riverstone Claims Management LLC effective as of
	July&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.5*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Catastrophe Agreement between US Fire and Lindsay
	Morden Claim Services, Inc. effective as of
	March&nbsp;1,&nbsp;1999.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Insurance effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Indemnity effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Underwriters effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and North River effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.10</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and Seneca effective as
	of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and Transnational Insurance Company effective as of
	December&nbsp;21, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and US Fire effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Insurance effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Underwriters effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and North River effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and US Fire effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and Seneca effective as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Indemnity effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and Transnational Insurance Company effective as of
	December&nbsp;21, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Tax Allocation Agreement between Fairfax Inc. and
	Crum&nbsp;&#38; Forster and Odyssey Re Holdings, Inc. and
	RiverStone Group, LLC and TIG Holdings, Inc. effective as of
	January&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intercompany Tax Allocation Agreement between
	Fairfax Inc. and US Fire and CF Indemnity and Seneca effective
	as of December&nbsp;15,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between CF Indemnity
	and Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between US Fire and
	Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between CF
	Underwriters and Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Services Agreement between TIG Insurance Company
	and CF Indemnity effective as of January&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Administrative Services Agreement between US Fire
	and Fairfax Information Technology Services, Inc. effective as
	of January&nbsp;1, 2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Services Agreement between TIG Insurance Company
	and US Fire effective as of January&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Sale/Leaseback Agreement between Crostex
	Associates Limited Partnership and Crum&nbsp;&#38; Forster
	Corporation in relation to 305 Madison Avenue, Morristown, New
	Jersey dated March&nbsp;1,&nbsp;1985.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">The Individual Retirement Plan of US Fire as
	amended and restated effective August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.30</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Supplemental Individual Retirement Plan of US
	Fire effective August&nbsp;13,&nbsp;1998.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.31</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Trust Agreement between US Fire and AMVESCAP
	National Trust Company relating to The Individual Retirement
	Plan of US Fire effective April&nbsp;30,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.32</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Employment Agreement among Douglas Libby,
	Crum&nbsp;&#38; Forster, Sen-Tech International Holdings, Inc.
	and Seneca effective as of April&nbsp;26, 2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.33</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.34</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Umbrella/ Excess Per Risk Excess of Loss
	Reinsurance Contract between the insurance subsidiaries of
	Crum&nbsp;&#38; Forster and various reinsurers effective as of
	January&nbsp;1,&nbsp;2000.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.35</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property and Fidelity First, Second, Third and
	Fourth Risk Excess Per Loss Reinsurance Contract between the
	insurance subsidiaries of Crum&nbsp;&#38; Forster and various
	reinsurers effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.36</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property Catastrophe Excess of Loss Reinsurance
	Contract between the insurance subsidiaries of Crum&nbsp;&#38;
	Forster and various reinsurers effective as of
	April&nbsp;15,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Lombard General
	Insurance Company of Canada and US Fire effective as of
	January&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.38</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of March&nbsp;1,&nbsp;1999.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.39</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of
	November&nbsp;15,&nbsp;1999.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.40</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Aggregate Excess of Loss Reinsurance Agreement
	among US Fire, Ridge Reinsurance Limited and Xerox Financial
	Services, Inc. effective as of December&nbsp;31,&nbsp;1992.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.41</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Springing First Aggregate Excess of Loss
	Reinsurance Agreement among US Fire, Ridge Reinsurance Limited
	and Xerox Financial Services, Inc. effective as of
	December&nbsp;31,&nbsp;1992.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.42</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.43</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Environmental Liability Excess of Loss Cover
	between Crum&nbsp;&#38; Forster and various reinsurers effective
	as of March&nbsp;15,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.44</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Environmental Liability Quota Share Reinsurance
	Contract between Crum&nbsp;&#38; Forster and various reinsurers
	effective as of January&nbsp;1,&nbsp;2002.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.45</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property Catastrophe Non-Obligatory Quota Share
	Contract between Odyssey America Reinsurance Corporation and US
	Fire effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.46</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.47</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.48</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Surety Bond Quota Share Reinsurance Agreement
	between TIG Insurance Company and US Fire effective as of
	January&nbsp;1,&nbsp;2001.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.49</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.50</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.51</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Assumption and Indemnity Reinsurance Agreement
	between US Fire and various assuming reinsurers effective as of
	January&nbsp;1,&nbsp;1993.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.52</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Registration Rights Agreement between
	Fairfax Inc. and Crum&nbsp;&#38; Forster Holdings Corp.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.53</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Term Note.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.54</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Plan, as amended.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.55</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Exchange Agreement among Fairfax Inc. and
	Crum&nbsp;&#38; Forster Holdings Corp.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.56</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Indemnification Agreement among
	Crum&nbsp;&#38; Forster Holdings Corp. and each of its directors
	and officers.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">List of the Registrant&#146;s Subsidiaries.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consent of Shearman&nbsp;&#38; Sterling (included
	in its opinion in Exhibit&nbsp;5.1).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consent of PricewaterhouseCoopers LLP.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.3*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">24.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Powers of Attorney (included on the signature
	page of this Registration Statement).
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;I&nbsp;&#151; Summary of
	Investments&nbsp;&#151; Other Than Investments in Related
	Parties.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;II&nbsp;&#151; Condensed Financial
	Information of Crum &#38; Forster Holding Inc.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.3*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;III&nbsp;&#151; Supplementary
	Insurance Information.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.4*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;IV&nbsp;&#151; Reinsurance.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.5*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;V&nbsp;&#151; Valuation and
	Qualifying Accounts.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.6*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;VI&nbsp;&#151; Supplemental
	Information Concerning Property-Casualty Insurance.
	</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.7*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Report of PricewaterhouseCoopers LLP regarding
	Schedules&nbsp;99.1 to 99.6 herein dated March&nbsp;6, 2001.
	</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="1%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">*&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">To be filed by amendment.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">ITEM 17.&nbsp;UNDERTAKINGS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act of 1933&nbsp;may be permitted
to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The undersigned registrant hereby undertakes that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	<FONT size="2">(1)&nbsp;For purposes of determining any
	liability under the Securities Act of 1933, the information
	omitted from the form of prospectus filed as part of this
	registration statement in reliance upon Rule&nbsp;430A and
	contained in a form of prospectus filed by the registrant
	pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the
	Securities Act of 1933 shall be deemed to be part of this
	registration statement as of the time it was declared effective.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">II-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="3%"></TD>
	<TD width="97%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
	<FONT size="2">(2)&nbsp;For the purposes of determining any
	liability under the Securities Act of 1933, each post-effective
	amendment that contains a form of prospectus shall be deemed to
	be a new registration statement relating to the securities
	offered therein, and the offering of such securities at that
	time shall be deemed to be the initial bona fide offering
	thereof.
	</FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The undersigned registrant hereby undertakes to
provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such name as required by the underwriters to
permit prompt delivery to each purchaser.
</FONT>

<P align="center"><FONT size="2">II-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has duly caused
the Registration Statement on Form&nbsp;S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of New&nbsp;York in the State of New&nbsp;York on
March&nbsp;8, 2002.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<B><FONT size="2">CRUM &#38; FORSTER HOLDINGS CORP.</FONT></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="2%"></TD>
	<TD width="58%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">By:&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">/s/ BRUCE A. ESSELBORN
	</FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="40%"></TD>
	<TD width="60%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">Name: Bruce A. Esselborn
	</FONT></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD align="left">
	<FONT size="2">Title: &nbsp;Chief Executive Officer
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">II-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints, jointly
and severally, V.&nbsp;Prem Watsa, Bruce&nbsp;A. Esselborn and
Mary Jane Robertson, his or her true and lawful
attorneys-in-fact and agents, each of whom may act alone, with
full powers of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and
to sign any related registration statement that is to be
effective upon filing pursuant to Rule&nbsp;462(b) promulgated
under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do
in person, and hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the date indicated.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ BRUCE A. ESSELBORN<BR>
	<HR size="1" noshade>Bruce A. Esselborn
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director and Principal<BR>
	Executive Officer
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">March&nbsp;8, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ MARY JANE ROBERTSON<BR>
	<HR size="1" noshade>Mary Jane Robertson
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Principal Financial and Accounting&nbsp;Officer
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">March&nbsp;8, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ V. PREM WATSA<BR>
	<HR size="1" noshade>V. Prem Watsa
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">March&nbsp;8, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<FONT size="2">/s/ WINSLOW W. BENNETT<BR>
	<HR size="1" noshade>Winslow W. Bennett
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">March&nbsp;8, 2002
	</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<BR>
	<HR size="1" noshade><FONT size="2">Anthony F. Griffiths
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD align="center" valign="top">
	<BR>
	<HR size="1" noshade><FONT size="2">Robbert Hartog
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="top">
	<FONT size="2">Director
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">INDEX OF EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Sequentially</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Numbered</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pages</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">1.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Underwriting Agreement.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amended and Restated Certificate of Incorporation
	of the Registrant.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">3.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Amended and Restated By-Laws of the Registrant.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">4.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Specimen Certificate representing Common Stock.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">5.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Opinion of Shearman&nbsp;&#38; Sterling as to the
	legality of the Common Stock.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Information Technology Services Agreement between
	US Fire and Fairfax Information Technology Services, Inc.
	effective from September&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Information Technology Services Agreement between
	US Fire and American International Technology Enterprises, Inc.,
	as amended.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Benefit Claims Payment Agreement between Fairfax
	Inc. and US Fire effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Claims Service and Management Agreement between
	US Fire and Riverstone Claims Management LLC effective as of
	July&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.5*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Catastrophe Agreement between US Fire and Lindsay
	Morden Claim Services, Inc. effective as of
	March&nbsp;1,&nbsp;1999.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Insurance effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Indemnity effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.8</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and CF Underwriters effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.9</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and North River effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.10</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and Seneca effective as
	of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and Transnational Insurance Company effective as of
	December&nbsp;21, 2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Administration Agreement between
	Fairfax and US Fire effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Insurance effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Underwriters effective as of
	August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and North River effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and US Fire effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and Seneca effective as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and CF Indemnity effective as of August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Investment Management Agreement between Hamblin
	Watsa and Transnational Insurance Company effective as of
	December&nbsp;21, 2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Sequentially</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Numbered</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pages</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Tax Allocation Agreement between Fairfax Inc. and
	Crum&nbsp;&#38; Forster and Odyssey Re Holdings, Inc. and
	RiverStone Group, LLC and TIG Holdings, Inc. effective as of
	January&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intercompany Tax Allocation Agreement between
	Fairfax Inc. and US Fire and CF Indemnity and Seneca effective
	as of December&nbsp;15,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between CF Indemnity
	and Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between US Fire and
	Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Master Repurchase Agreement between CF
	Underwriters and Fairfax effective as of July&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Services Agreement between TIG Insurance Company
	and CF Indemnity effective as of January&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Administrative Services Agreement between US Fire
	and Fairfax Information Technology Services, Inc. effective as
	of January&nbsp;1, 2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Services Agreement between TIG Insurance Company
	and US Fire effective as of January&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Sale/Leaseback Agreement between Crostex
	Associates Limited Partnership and Crum&nbsp;&#38; Forster
	Corporation in relation to 305 Madison Avenue, Morristown, New
	Jersey dated March&nbsp;1,&nbsp;1985.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">The Individual Retirement Plan of US Fire as
	amended and restated effective August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.30</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Supplemental Individual Retirement Plan of US
	Fire effective August&nbsp;13,&nbsp;1998.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.31</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Trust Agreement between US Fire and AMVESCAP
	National Trust Company relating to The Individual Retirement
	Plan of US Fire effective April&nbsp;30,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.32</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Employment Agreement among Douglas Libby,
	Crum&nbsp;&#38; Forster, Sen-Tech International Holdings, Inc.
	and Seneca effective as of April&nbsp;26, 2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.33</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.34</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Umbrella/ Excess Per Risk Excess of Loss
	Reinsurance Contract between the insurance subsidiaries of
	Crum&nbsp;&#38; Forster and various reinsurers effective as of
	January&nbsp;1,&nbsp;2000.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.35</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property and Fidelity First, Second, Third and
	Fourth Risk Excess Per Loss Reinsurance Contract between the
	insurance subsidiaries of Crum&nbsp;&#38; Forster and various
	reinsurers effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.36</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property Catastrophe Excess of Loss Reinsurance
	Contract between the insurance subsidiaries of Crum&nbsp;&#38;
	Forster and various reinsurers effective as of
	April&nbsp;15,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.37</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Lombard General
	Insurance Company of Canada and US Fire effective as of
	January&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.38</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of March&nbsp;1,&nbsp;1999.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.39</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of
	November&nbsp;15,&nbsp;1999.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.40</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Aggregate Excess of Loss Reinsurance Agreement
	among US Fire, Ridge Reinsurance Limited and Xerox Financial
	Services, Inc. effective as of December&nbsp;31,&nbsp;1992.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.41</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Springing First Aggregate Excess of Loss
	Reinsurance Agreement among US Fire, Ridge Reinsurance Limited
	and Xerox Financial Services, Inc. effective as of
	December&nbsp;31,&nbsp;1992.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-9
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
	<TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
	<TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD colspan="3"></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Sequentially</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
	<TD></TD>
	<TD></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Numbered</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
	<TD></TD>
	<TD align="center" nowrap><B><FONT size="1">Description of Exhibit</FONT></B></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><B><FONT size="1">Pages</FONT></B></TD>
</TR>

<TR>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD align="center" nowrap><HR size="1" noshade></TD>
	<TD></TD>
	<TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.42</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.43</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Environmental Liability Excess of Loss Cover
	between Crum&nbsp;&#38; Forster and various reinsurers effective
	as of March&nbsp;15,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.44</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Environmental Liability Quota Share Reinsurance
	Contract between Crum&nbsp;&#38; Forster and various reinsurers
	effective as of January&nbsp;1,&nbsp;2002.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.45</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Property Catastrophe Non-Obligatory Quota Share
	Contract between Odyssey America Reinsurance Corporation and US
	Fire effective as of January&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.46</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.47</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.48</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Surety Bond Quota Share Reinsurance Agreement
	between TIG Insurance Company and US Fire effective as of
	January&nbsp;1,&nbsp;2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.49</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.50</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.51</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Assumption and Indemnity Reinsurance Agreement
	between US Fire and various assuming reinsurers effective as of
	January&nbsp;1,&nbsp;1993.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.52</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Registration Rights Agreement between
	Fairfax Inc. and Crum&nbsp;&#38; Forster Holdings Corp.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.53</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Term Note.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.54</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Plan, as amended.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.55</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Exchange Agreement among Fairfax Inc. and
	Crum&nbsp;&#38; Forster Holdings Corp.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">10.56</FONT></TD>
	<TD align="left" valign="top" nowrap><FONT size="2">*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Form of Indemnification Agreement among
	Crum&nbsp;&#38; Forster Holdings Corp. and each of its directors
	and officers.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">List of the Registrant&#146;s Subsidiaries.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consent of Shearman&nbsp;&#38; Sterling (included
	in its opinion in Exhibit&nbsp;5.1).
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Consent of PricewaterhouseCoopers LLP.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">23.3*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Intentionally left blank.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">24.1</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Powers of Attorney (included on the signature
	page of this Registration Statement).
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.1*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;I&nbsp;&#151; Summary of
	Investments&nbsp;&#151; Other Than Investments in Related
	Parties.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.2*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;II&nbsp;&#151; Condensed Financial
	Information of Crum &#38; Forster Holding Inc.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.3*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;III&nbsp;&#151; Supplementary
	Insurance Information.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.4*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;IV&nbsp;&#151; Reinsurance.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.5*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;V&nbsp;&#151; Valuation and
	Qualifying Accounts.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.6*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Schedule&nbsp;VI&nbsp;&#151; Supplemental
	Information Concerning Property-Casualty Insurance.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="right" valign="top" nowrap><FONT size="2">99.7*</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD align="left" valign="bottom">
	<FONT size="2">Report of PricewaterhouseCoopers LLP regarding
	Schedules&nbsp;99.1 to 99.6 herein dated March&nbsp;6, 2001.
	</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
	<TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="15%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
	<TD width="1%"></TD>
	<TD width="1%"></TD>
	<TD width="98%"></TD>
</TR>

<TR valign="top">
	<TD>&nbsp;</TD>
	<TD><FONT size="2">*&nbsp;</FONT></TD>
	<TD align="left">
	<FONT size="2">To be filed by amendment.
	</FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">II-10
</FONT>
</BODY>
</HTML>
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{"company-data": {"conformed-name": "CRUM & FORSTER HOLDINGS CORP", "cik": "0001168338", "state-of-incorporation": "DE"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-84068", "film-number": "02571173"}, "business-address": {"street1": "305 MADISON AVE.", "city": "MORRISTOWN", "state": "NJ", "zip": "07962", "phone": "9734906600"}}
CRUM & FORSTER HOLDINGS CORP.
Registration
No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CRUM & FORSTER HOLDINGS CORP.
(Exact name of registrant as specified in its
charter)
Delaware
6411
04-3611900
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial Classification
Code Number, if applicable)
(I.R.S. Employer Identification
No., if applicable)
305 Madison Avenue
Morristown, NJ 07962
(973) 490-6600
(Address and telephone number of
Registrant's principal executive offices)
Valerie J. Gasparik
Corporate Secretary
CRUM & FORSTER HOLDINGS CORP.
305 Madison Avenue
Morristown, NJ 07962
(973) 490-6600
(Name, address, including zip code, and
telephone number,
including area code, of agent for
service)
Copies to:
Brice T. Voran, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
(212) 848-4000
Peter J. Gordon, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
Approximate date of commencement of the
proposed sale of the securities to the
public:
As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933, check the
following
box.
o
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under
the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.
o
If delivery of the prospectus is expected to be
made pursuant to Rule 434, check the following
box.
o
CALCULATION OF REGISTRATION FEE
Title of each class of
Proposed maximum
Amount of
securities to be registered
aggregate offering price(1)
registration fee
Common Stock, par value $.01 per share
$100,000,000
$9,200
(1)
Estimated pursuant to Rule 457 under the
	Securities Act of 1933, as amended solely for purposes of
	calculating the registration fee.
The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
PART I
INFORMATION REQUIRED TO BE DELIVERED TO
OFFEREES OR PURCHASERS
The information in this prospectus is not
complete and may be changed without notice. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities, and we are not
soliciting offers to buy these securities, in any state where
the offer or sale of these securities is not permitted.
SUBJECT TO COMPLETION, DATED
MARCH 8, 2002
PROSPECTUS
Shares
CRUM & FORSTER HOLDINGS CORP.
Common Stock
Crum & Forster Holdings Corp. is
offering                     shares
of common stock and our stockholder, Fairfax, is
selling                     shares
of our common stock in a firmly underwritten offering. This is
Crum & Forster's initial public offering, and no public
market currently exists for Crum & Forster's shares of
common stock. Crum & Forster anticipates that the initial
public offering price for the shares will be between
$                    and
$          per
share.
Crum & Forster has applied for a listing of
the common stock on
the                     under
the symbol "     ."
Investing in the common stock involves a high
degree of risk. See "Risk Factors" beginning on
page 10.
Per Share
Total
Offering Price
$
$
Discounts and Commissions to Underwriters
$
$
Offering Proceeds to Crum & Forster
$
$
Offering Proceeds to Selling Stockholder
$
$
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
Fairfax has granted the underwriters the right to
purchase up to an
additional                    shares
of common stock to cover any over-allotments. The underwriters
may exercise this right at any time within thirty days after the
offering. The underwriters expect to deliver the shares of
common stock to investors on or
about                     ,
2002.
Banc of America Securities LLC
,
2002
TABLE OF CONTENTS
Page
Prospectus Summary
3
Risk Factors
10
Forward-Looking Statements
19
Use of Proceeds
20
Dividend Policy
20
Capitalization
21
Dilution
22
Selected Financial Data
23
Management's Discussion and Analysis of
	Financial Condition and Results of Operations
25
Business
39
Insurance Regulatory Matters
61
Management
67
Certain Relationships and Related Transactions
71
Principal Stockholders
75
Description of Capital Stock
76
Shares Eligible for Future Sale
78
Certain United States Federal Tax Considerations
	for Non-United States Holders of Common Stock
80
Underwriting
83
Legal Matters
85
Experts
85
Available Information
86
Glossary of Selected Insurance Terms
G-1
Index to Consolidated Financial Statements
F-1
You should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you
with different information. We are not making an offer to sell
these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover
of this prospectus only, regardless of the time of delivery of
this prospectus or of any sale of our common stock.
2
PROSPECTUS SUMMARY
The following summary may not contain all of the
information that may be important to you. You should read all of
the information delivered in connection with this prospectus,
including the consolidated financial statements and related
notes and the risks of investing in our common stock discussed
under "Risk Factors," before making an investment
decision. This prospectus contains terms that are specific to
the insurance industry and may be technical in nature. For a
description of these terms, please refer to the "Glossary
of Selected Insurance Terms" in this prospectus. As used in
this prospectus, references to "Crum & Forster,"
"we," "us" and "our" refer to Crum
& Forster Holdings Corp. and, unless the context otherwise
requires or otherwise as expressly stated, its subsidiaries.
Crum & Forster Holdings Corp.
We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. We distinguish ourselves by applying individual
risk selection to business which requires greater underwriting
expertise. Our objective is to expand opportunistically into
classes of business or market segments that are consistent with
our underwriting expertise and have the potential to generate an
underwriting profit. We write a broad range of commercial
coverages, including general liability, property, workers'
compensation, commercial automobile and surety. We operate
through our home office and a regional branch network, allowing
us to centrally control our underwriting process, respond to
local market conditions and build close relationships with our
producers and insureds.
Our business is distributed exclusively through
approximately 1,050 producers located throughout the United
States. Our producers include independent regional retail agents
and brokers, national brokers and wholesale brokers. Through our
producers, we access a broad cross section of business
opportunities, spanning a variety of market segments and product
groupings. This enables us to respond to changing market
conditions while promoting relative stability in our premium
production.
Our senior management team is led by Bruce A.
Esselborn, our Chief Executive Officer. Since joining us in
October 1999, Mr. Esselborn has applied a hands-on
management style in redesigning our underwriting strategies and
policies and improving our operating efficiency.
Mr. Esselborn has 35 years of experience in the
insurance industry, over 18 years of which were spent at
American International Group, Inc. While at AIG,
Mr. Esselborn held a variety of senior operating and
technical positions at several of AIG's domestic insurance
subsidiaries. In 1986, Mr. Esselborn left AIG to found
United Capitol Insurance Company, an excess and surplus lines
insurer, which was acquired by Capsure Holdings Corp., a
publicly traded company. While under Mr. Esselborn's
leadership from 1990 through September 1997, Capsure was a
highly successful underwriting operation, reporting an average
combined ratio of 75.6%, weighted by net premiums earned, during
his tenure. Our President, Nick Antonopoulos, has over
20 years of experience in the insurance industry, including
13 years at AIG, where he most recently held the position
of Senior Vice President of Operations in AIG's Domestic
Brokerage Group.
In August 2000 we acquired Seneca, which provides
specialty coverages such as bail bonds, non-standard property in
inner city markets, inland marine, boiler and machinery and
environmental liability. In 2001, Seneca reported gross written
premiums of $143.4 million and a combined ratio of 97.8%.
In 2001, we generated $843.2 million of
gross premiums written, $607.1 million of net premiums
written and $683.9 million of total revenue. In 2001, 74.0%
of our business related to casualty coverages and 26.0% to
property coverages, as measured by gross premiums written. As of
December 31, 2001, we had cash and invested assets of
$2.3 billion, total assets of $5.1 billion and
stockholder's equity of $719.6 million. Following the
completion of this offering, we expect to have total
capitalization, including debt, of approximately
$                    .
Management Initiatives
In the fourth quarter of 1999, we appointed a
proven senior management which made a number of significant
changes designed to increase our profitability and competitive
position. We have:
3
•
implemented a highly focused underwriting
	strategy and realigned our operating structure to emphasize
	product line experience and expertise and to provide a high
	degree of centralized control over underwriting and claims;
•
hired five experienced underwriting executives
	aligned with our target classes of business and approximately
	93 underwriters representing 57% of our current
	underwriting staff;
•
discontinued unprofitible classes of business,
	that contributed approximately nine percentage points of our
	loss and LAE ratio for 2000, which significantly contributed to
	a 13.9% decrease in total gross premiums written in 2000 from
	1999;
•
restructured our reinsurance programs to reduce
	our net retentions and gross policy limits, particularly in
	property;
•
targeted classes of business and types of
	insureds that tend to have larger premium policies, which
	contributed to increasing our average premiums per policy from
	approximately $20,000 in 1999 to $59,000 in 2001;
•
enhanced our price monitoring systems and
	contracts;
•
increased renewal prices by approximately 11% in
	2000 and achieved an additional renewal price increase of
	approximately 17% in 2001;
•
diversified our distribution by appointing 480
	new producers and entering into new arrangements with national
	brokers and wholesale brokers, in each case, aligned with our
	targeted classes of business and types of insureds;
•
adjusted our commission structure to be in line
	with market practice, resulting in a reduction of our gross
	commissions expense by 4.7 percentage points from 1999 to
	2001;
•
reduced the number of employees by 25%, and
	reduced our payroll by 18% from 1999 to 2001, while increasing
	our gross premiums per employee by 25% over this time period;
•
created a disciplined expense management culture
	and carefully analyzed our existing cost structure; and
•
acquired Seneca, a specialty insurer focused on
	non-commodity lines of business, in August 2000 to participate
	in the small commercial market in a manner consistent with our
	underwriting philosophy.
Corporate Strategy
Our objective is to build shareholder value by
achieving a superior return on equity over the long term. We
intend to achieve our goal by focusing on underwriting
profitability and generating superior long-term investment
returns. The major elements of our strategy are:
Adhere to a disciplined underwriting
philosophy.
We focus on individual
risk selection and do not manage our business based on premium
growth or market share. We adhere to a centrally controlled
underwriting philosophy and focus on generating underwriting
profit by carefully selecting the risks we insure and
determining the appropriate price for such risks. Our Chief
Executive Officer and President are actively involved in our
overall underwriting function, as well as specific risk
underwriting across all lines of business.
Expand and diversify our production sources.
We produce business through
diversified sources of production, in each case aligned with our
target underwriting classes. We continue to provide new products
and services within our lines of business and markets which
generate closer relationships with our agents, brokers and
insureds. We also strengthen customer relationships by providing
timely and responsive quotes, claims handling and loss control
services.
Opportunistically pursue attractive lines of
business.
We believe our ability to
identify and react to changing market conditions provides us
with a competitive advantage. Based on the experience and
4
underwriting expertise of our management, we seek
to write new lines of business and expand existing classes of
business based on market conditions and expected profitability.
Continue to aggressively manage expenses.
We are committed to a competitive
expense structure that complements our disciplined underwriting
strategy. We foster a culture of cost efficiency and have
developed systems and procedures through which we carefully
monitor and control expenses and promote efficient operations.
Commitment to financial strength and security.
We are committed to maintaining a
strong balance sheet in order to attract and retain high-quality
business. As of December 31, 2001 we had total assets of
$5.1 billion, stockholder's equity of
$719.6 million and statutory surplus of
$708.4 million. To protect our financial security, we
carefully monitor and control our gross and net limits.
Invest our assets on a total return basis.
We follow a long term value-oriented
investment philosophy, with the goal of optimizing investment
returns viewed on a total return basis, while maintaining a
sensitivity to our liquidity needs. This is coordinated through
our investment advisors, Hamblin Watsa Investment Counsel Ltd.,
a subsidiary of Fairfax.
Industry Trends and Market
Opportunity
Throughout the 1990s and into 2000, the property
and casualty insurance industry was overcapitalized, which
resulted in highly competitive market conditions as evidenced by
declining premium rates and poor underwriting results. Beginning
in mid-2000, excess capacity began to contract as companies
either ceased writing selected lines or withdrew from the market
completely. Capacity was further reduced by companies tightening
underwriting guidelines and returning to a focus on underwriting
profitability. In response to these market conditions, insurers
began to seek and achieve significant price increases, in
addition to improved terms and conditions.
The terrorist attacks of September 11, 2001
accelerated the improvement in pricing and terms which were
underway in 2001 prior to these events. More importantly, the
events of September 11th have led to a fundamental
reevaluation of risk by commercial insureds which is increasing
the demand for insurance. These events have caused further
capacity to exit the market as reinsurance rates increased to
levels where primary carriers were forced to retain higher
amounts of net exposure or exit market segments entirely.
During 2001, based on publicly available industry
information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment.
Based on a recent report by A.M. Best, approximately 25% of
medium and large accounts have experienced rate increases in
excess of 30% on their commercial coverages since
September 11, 2001. In particular, certain classes, such as
umbrella, business interruption, property and commercial auto,
are experiencing rate increases as high as 30% to 100%. Given
the further reduction in capacity and the continued uncertainty
caused by the events of September 11th, we believe the
current favorable market environment will continue into 2003.
As a result of our management initiatives, we
believe we are well positioned to take advantage of the current
favorable market. During 2001, we achieved price increases of
approximately 17% on renewal business across our portfolio
(weighted by premium volume). Through January 2002, we
experienced price increases of approximately 25% on renewal
business across our portfolio (weighted by premium volume). In
2002, our property and umbrella lines of business are
experiencing the largest price increases within our portfolio.
Our focused underwriting strategy, together with higher prices
and improved terms and conditions, provide us with the best
opportunity in the past decade to achieve a combined ratio of
100% or better in 2002.
5
Corporate Structure
Crum & Forster Holdings Corp. was
incorporated on March 6, 2002 as a holding company for our
insurance operating subsidiaries. As part of this offering,
Fairfax Inc., a wholly owned subsidiary of Fairfax, will
sell                     shares
of Crum & Forster directly to the public. In connection with
the completion of this offering, we will issue a
$                     million
term note to Fairfax.
The organization chart shown below illustrates
the corporate relationships among us and certain of our
affiliates as they will exist immediately following the
completion of this offering. The ownership percentages shown in
this chart assume the sale by us
of                      shares
of common stock and the sale by Fairfax
of                      shares
of our common stock pursuant to this offering. See "Certain
Relationships and Related Transactions." Unless otherwise
indicated, each of the companies depicted below is, directly or
indirectly, wholly owned.
Our executive offices are located at 305 Madison
Avenue, Morristown, New Jersey 07962, and our telephone number
is (973) 490-6600.
6
The Offering
Common stock offered hereby
By Crum &
	Forster
shares
By Fairfax
shares
Total
shares
Common stock to be
	outstanding      after the offering
shares
Use of proceeds
We estimate that our net proceeds from this
	offering will be
	$                     million.
	We intend to use these proceeds for general corporate purposes,
	including payment of interest on outstanding debt and the
	payment of our quarterly cash dividends. We will not receive any
	proceeds from the sale of shares by Fairfax.
Dividend policy
We intend to declare an initial quarterly cash
	dividend of
	$                    per
	share of common stock in the third quarter of 2002, payable in
	the fourth quarter, subject to approval by our board of
	directors.
Proposed symbol
We will apply to list our common stock on
	the                     under
	the symbol
	"                    ."
The number of shares of common stock to be
outstanding after the offering does not include shares of common
stock reserved for issuance under our equity incentive plan,
employee stock plan and stock option plan.
Unless otherwise indicated, the information
included above and elsewhere in this prospectus assumes the
over-allotment option granted by Fairfax to the underwriters to
purchase up
to                     additional
shares is not exercised.
7
Summary Financial Data
The table shown below presents our summary
financial data for the three years ended December 31, 2001.
The data is derived from our consolidated financial statements
which have been audited by PricewaterhouseCoopers LLP,
independent accountants. The financial data was prepared in
accordance with generally accepted accounting principles.
Consolidated balance sheets at December 31, 2000 and 2001
and the related consolidated statements of operations and
comprehensive income, of stockholder's equity and of cash
flows for the three years ended December 31, 2001 and
accompanying notes appear elsewhere in this prospectus. The
combined statutory data has been derived from annual statutory
financial statements filed with the domiciliary states of our
insurance operating subsidiaries and prepared in accordance with
statutory accounting practices, which differ from GAAP.
The summary financial data presented below should
be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and
accompanying notes included elsewhere in this prospectus. The
results for the year ended December 31, 2000 include the results
for Seneca from August 31, 2000, its date of acquisition.
Years Ended December 31,
1999
2000
2001
(dollars in thousands, except per share data)
GAAP Statement of Operations Data:
Gross premiums written
$
744,888
$
679,803
$
843,161
Net premiums written
$
599,138
$
506,473
$
607,098
Net premiums earned
$
679,649
$
522,716
$
565,800
Net investment income
157,711
142,586
119,171
Net realized investment gains (losses)
(7,103
)
224
(5,358
)
Other income, net
9,041
6,305
4,321
Total revenues
839,298
671,831
683,934
Losses and loss adjustment expenses
556,864
391,102
641,748
Acquisition costs
109,411
98,503
90,385
Other underwriting expenses
115,709
113,558
119,358
Dividends to policyholders
10,709
5,991
2,493
Total losses and expenses
792,693
609,154
853,984
Income (loss) before income taxes
46,605
62,677
(170,050
)
Income tax expense (benefit)
10,130
(8,903
)
(63,541
)
Net income (loss)
$
36,475
$
71,580
$
(106,509
)
Net income (loss) per share
$
$
$
8
As of December 31,
2000
2001
Actual
As Adjusted
(1)
(dollars in thousands, except per share data)
GAAP Balance Sheet Data:
Total investments (including cash and cash
	equivalents)
$
2,517,033
$
2,278,143
Total assets
4,795,672
5,147,959
Debt
—
—
Unpaid losses and loss adjustment expenses
3,306,741
3,423,793
Stockholders' equity
801,492
719,605
Book value per share
Years Ended December 31,
1999
2000
2001
(dollars in thousands, except ratios)
Selected GAAP Financial Ratios:
Loss and loss adjustment expense ratio
81.9
%
74.8
%
113.4
%
Underwriting expense ratio
33.1
40.6
37.1
Dividend ratio
1.6
1.1
0.4
Combined ratio
116.6
%
116.5
%
150.9
%
(2)
Selected Combined Statutory Data:
Loss and loss adjustment expense ratio
93.7
%
95.8
%
142.1
%
Underwriting expense ratio
41.6
42.8
36.9
Dividend ratio
1.0
1.5
1.0
Combined ratio
136.3
%
140.1
%
180.0
%
(2)
Policyholders' surplus
$
689,601
$
769,483
$
708,388
Ratio of net premiums written to surplus
0.87x
0.74x
0.87x
(1)
"As adjusted" GAAP data reflects our
	financial information after giving effect to the issuance of a
	$                million
	term note to Fairfax and the sale by us
	of                shares
	of common stock pursuant to this offering at an assumed initial
	public offering price of
	$        per share,
	after deducting the estimated underwriting discounts,
	commissions, and offering expenses of
	$                million
	payable by us.
(2)
The GAAP and statutory combined ratios on an
	accident year basis were 113.1% and 113.6%, respectively.
	Accident year refers to the accounting period in which loss
	events occurred, regardless of when the losses are actually
	reported, recorded or paid and, as such, excludes the impact of
	development of prior years' loss and LAE reserves.
9
RISK FACTORS
You should carefully consider the risks
described below before making an investment decision. You should
also refer to the other information in this prospectus,
including our financial statements and accompanying notes
appearing elsewhere in this prospectus.
Risks Relating To Our Business
We may incur a reduction in our net income if
	our claim reserves are insufficient.
We maintain reserves to cover our estimated
ultimate liability for losses and loss adjustment expenses (LAE)
with respect to reported and unreported claims incurred as of
the end of each period. Our gross loss and loss adjustment
expense reserves were $3.5 billion, $3.3 billion and
$3.4 billion at December 31, 1999, 2000 and 2001,
respectively. These reserves do not represent an exact
measurement of liability, but are our estimates based upon
various factors, including: (i) actuarial projections of
what we, at a given time, expect to be the cost of the ultimate
settlement and administration of claims reflecting facts and
circumstances then known, (ii) estimates of future trends
in claims severity and frequency, (iii) judicial theories
of liability and (iv) other factors, such as variables in
claims handling procedures, economic factors and judicial and
legislative trends and actions. Most or all of these factors are
not directly quantifiable, particularly on a prospective basis.
In addition, there may be significant reporting lags between the
occurrence of the insured event and the time it is actually
reported to the insurer and additional lags between the time of
reporting and final settlement of claims.
There are significant additional uncertainties in
estimating the amount of reserves required for asbestos,
environmental, construction defect and other latent exposure
claims. The possibility that these claims would emerge was often
not anticipated at the time the policies were written, and
traditional actuarial reserving methodologies have not been
useful in accurately estimating ultimate losses and expenses for
these types of claims. In addition, the loss settlement period
of certain of these claims may extend for decades after the
expiration of the policy period, and during such time it often
becomes necessary to adjust, sometimes to a significant degree,
the estimates of liability on a claim either upward or downward.
Our asbestos reserves, net of reinsurance, were
$164.4 million, $174.1 million and $228.1 million
at December 31, 1999, 2000 and 2001, respectively; while, at the
same time, our environmental reserves, net of reinsurance, were
$167.2 million, $145.4 million and
$124.8 million, respectively, and the reserves for other
latent exposure claims, net of reinsurance, were
$55.9 million, $31.1 million and $27.3 million,
respectively. Among the uncertainties relating to such reserves
are a lack of historical data, long reporting delays, and
complex, unresolved legal issues regarding policy coverage and
the extent and timing of any such contractual liability. Courts
have reached different and frequently inconsistent conclusions
as to when the loss occurred, what claims are covered, under
what circumstances the insurer has an obligation to defend, how
policy limits are determined and how policy exclusions are
applied and interpreted. Because of these uncertainties, our
exposure to asbestos, environmental and other latent exposure
claims is more difficult to estimate and is subject to a higher
degree of variability than our exposure to non-latent exposure
claims. In addition, insurers generally, including us, are
experiencing an increase in the number of asbestos-related
claims due to, among other things, more intensive advertising by
lawyers seeking asbestos claimants, an increasing focus by
plaintiffs on new and previously peripheral defendants and an
increase in the number of entities seeking bankruptcy protection
as a result of asbestos-related liabilities. In addition to
contributing to the increase in claims, the bankruptcy
proceedings may have the effect of significantly accelerating
and increasing loss payments by insurers, including us.
Increasingly, policyholders have asserted that
their claims for asbestos-related insurance are not subject to
aggregate limits on coverage and that each individual bodily
injury claim should be treated as a separate occurrence under
the policy. We expect this trend to continue. Although it is
difficult to predict whether these policyholders will be
successful on either issue, to the extent either issue is
resolved in their favor, our coverage obligations under the
policies at issue would be materially increased and bounded only
by the applicable per occurrence limits and the number of
asbestos bodily injury claims against the policyholders.
10
Accordingly, it is difficult to predict the
ultimate size of the claims for coverage not subject to
aggregate limits.
In addition, recently proceedings have been
launched directly against insurers challenging insurers'
conduct in respect of asbestos claims, including in some cases
with respect to previous settlements. We anticipate the filing
of other direct actions against insurers, potentially including
us, in the future. Particularly in light of jurisdictional
issues, it is difficult to predict the outcome of these
proceedings, including whether the plaintiffs will be able to
sustain these actions against insurers based on novel legal
theories of liability.
During the last few months of 2001 and continuing
into 2002, the asbestos-related trends described above have both
accelerated and become more visible.
During the years ended December 31, 2000 and
2001, we increased our reserves for unpaid losses and loss
adjustment expenses by $32.2 million and
$183.1 million, respectively. See
"Business — Reserves." To the extent
reserves prove to be deficient in the future, we will have to
increase our reserves by the amount of such deficiency and incur
a charge to earnings in the period such reserves are increased.
We believe that it is possible that the outcome of the
uncertainties regarding reserves (including reserves for
asbestos, environmental and other latent exposure claims and
construction defect claims) could result in a liability
exceeding the reserves by an amount that would be material to
our financial condition or results of operations in a future
period.
If we are unable to maintain a favorable
	financial strength rating, it may be difficult for us to write
	new or renewal business.
Third party rating agencies assess and rate the
claims-paying ability of insurers based upon criteria
established by the rating agencies. Periodically the rating
agencies evaluate us to confirm that we continue to meet the
criteria of the ratings previously assigned to us. The
claims-paying ability ratings assigned by rating agencies to
insurance companies represent independent opinions of financial
strength and ability to meet policyholder obligations, and are
not directed toward the protection of investors. Ratings by
rating agencies are not ratings of securities or recommendations
to buy, hold or sell any security and are not applicable to the
securities being offered by this prospectus.
Our operating subsidiaries have an "A-"
rating from A.M. Best (the fourth highest of fifteen ratings)
with a negative outlook and a "BBB" financial strength
rating from Standard & Poor's Insurance Rating Services
(the fourth highest of nine ratings categories). Financial
strength ratings are used by insurance consumers and insurance
intermediaries as an important means of assessing the financial
strength and quality of insurers. We may not maintain our
favorable financial strength ratings from the rating agencies. A
downgrade or withdrawal of any rating could severely limit or
prevent us from writing any new insurance policies. According to
A.M. Best, a failure by management to achieve its near term
calendar year combined ratio targets or any further
deterioration in near-term underwriting or operating performance
will likely result in a rating downgrade.
The effects of emerging claim and coverage
	issues on our business are uncertain.
As industry practices and legal, judicial, social
and other environmental conditions change, unexpected and
unintended issues related to claims and coverage may emerge.
These issues can have a negative effect on our business by
either extending coverage beyond our underwriting intent or by
increasing the number or size of claims. Recent examples of
emerging claims and coverage issues include:
•
increases in the number and size of claims
	relating to construction defects, mold, lead and diet drugs,
	which often present complex coverage and damage valuation
	questions;
•
changes in interpretation of the named insured
	provision with respect to the uninsured/underinsured motorist
	coverage in commercial automobile policies; and
•
a growing trend of plaintiffs targeting property
	and casualty insurers in purported class action litigation
	relating to claims-handling and other practices.
11
The effects of these and other unforeseen
emerging claim and coverage issues are extremely hard to predict
and could harm our business.
We are a holding company and are dependent on
	dividends and other payments from our operating subsidiaries,
	which are subject to dividend restrictions.
We are a holding company with no direct
operations, and our principal asset is the capital stock of
several operating insurance subsidiaries. We rely primarily on
dividends from these operating subsidiaries to meet our
obligations for payment of interest and principal on outstanding
debt obligations, holding company expenses and dividends to
shareholders. The ability of our operating subsidiaries to pay
dividends to us depends on their statutory earned surplus,
earnings and on regulatory restrictions. Our principal insurance
company subsidiaries are US Fire, domiciled in the State of New
York, and North River, domiciled in the State of New Jersey. New
York law provides that an insurer domiciled in New York must
obtain the prior approval of the state insurance commissioner
for the declaration or payment of any dividend which, together
with dividends declared or paid in the preceding 12 months,
exceeds the lesser of (i) 10% of policyholders'
surplus as shown by its last statement on file with the New York
Insurance Department (NYID) and (ii) adjusted net
investment income for the preceding 12-month period. Adjusted
net investment income includes a carry forward of undistributed
net investment income for two years. Under New York law, an
insurer domiciled in New York may not pay dividends to
shareholders except out of earned surplus, which is defined as
"the portion of the surplus that represents the net
earnings, gains or profits, after deduction of all losses, that
have not been distributed to the shareholders as dividends or
transferred to stated capital or capital surplus or applied to
other purposes permitted by law but does not include unrealized
appreciation of assets." US Fire reported negative earned
surplus at December 31, 2001 and, as a result, US Fire
currently has no dividend capacity.
New Jersey laws provide that an insurer domiciled
in the state must obtain the approval of the state insurance
commissioner for payment of any dividend which, together with
dividends paid in the previous 12 months, exceeds the
greater of (i) 10% of policyholders' surplus at the
preceding December 31 or (ii) statutory net income for
the 12-month period ending the preceding December 31. In New
Jersey, dividends may not be paid unless prior notice has been
given to the New Jersey Department of Banking and Insurance
(NJDOBI) within five business days after the dividend is
declared and 30 days prior to payment. In addition, except
for extraordinary dividends or distributions paid with the
approval of the NJDOBI, dividends may be paid by insurers
domiciled in New Jersey only from earned surplus, which means
"unassigned funds (surplus) as reported on the
insurer's annual statement as of December 31 next
preceding, less unrealized capital gains and revaluation of
assets." North River reported negative earned surplus at
December 31, 2001 and, as a result, North River currently
has no dividend capacity.
As of December 31, 2001, our insurance
operating subsidiaries do not have the ability to pay dividends
to us. We cannot assure you that our insurance operating
subsidiaries will be able to pay dividends in an amount
sufficient to enable us to meet our liquidity requirements,
including payments on outstanding indebtedness, and to pay
dividends in the future. Further, we cannot predict whether any
legislative proposals relating to dividend regulations in New
York or New Jersey will be made, whether any legislative
proposal will be adopted in the future, or the effect, if any,
any proposal would have on us. In addition, the insurance
commissioner of every state has broad authority to limit
payments (dividends or otherwise) by domestic insurance
companies if the insurance commissioner believes payments would
leave the insurer in a hazardous financial condition. We cannot
assure you that some or all of the domiciliary states of our
operating subsidiaries will not adopt regulatory provisions more
restrictive than those currently in effect. See
"Management's Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and
Capital Resources" and "Insurance Regulatory
Matters — Regulation of Dividends and Other Payments
from Our Operating Subsidiaries."
12
We may be unable to obtain reinsurance
	coverage at reasonable prices or on terms that adequately
	protect us.
We use reinsurance to help manage our exposure to
insurance risks. The availability and cost of reinsurance are
subject to prevailing market conditions, both in terms of price
and available capacity, which can affect our business volume and
profitability. Many reinsurance companies have begun to exclude
certain coverages from, or alter terms in, the policies that we
purchase from them. Some exclusions are with respect to risks
which we cannot exclude in policies we write due to business or
regulatory constraints, such as coverage with respect to mold
and cyber risk. In addition, reinsurers are imposing terms, such
as lower per occurrence and aggregate limits, on primary
insurers that are inconsistent with corresponding terms in the
policies written by these primary insurers. As a result, we,
like other primary insurance companies, increasingly are writing
insurance policies which to some extent do not have the benefit
of reinsurance protection. These gaps in reinsurance protection
expose us to greater risk and greater potential losses.
We may not be able to obtain reinsurance
	coverage for terrorist acts. If that happens, we would have a
	significant gap in our reinsurance protection and would be
	exposed to potential losses as a result of any terrorist
	acts.
We cannot determine the full impact of the
terrorist attacks of September 11, 2001 on the availability,
price and terms of insurance and reinsurance for future acts of
terrorism. Certain reinsurers have excluded coverage for
terrorist acts or priced such coverage at unreasonably high
rates. Many primary insurers, including us, have written
policies without terrorist act exclusions and in many cases we
cannot exclude terrorist acts because of regulatory constraints.
We may, therefore, be exposed to potential losses as a result of
terrorist acts.
We bear credit risk with respect to our
	reinsurers and certain insureds and if one or more of them fails
	to pay us we could experience losses.
Although reinsurance makes the assuming reinsurer
liable to us to the extent of the risk ceded, we are not
relieved of our primary liability to our insureds as the direct
insurer. As a result, we bear credit risk with respect to our
reinsurers. We cannot assure you that our reinsurers will pay
all reinsurance claims on a timely basis or at all. At
December 31, 2001, we had reinsurance recoverables on paid
and unpaid losses and loss adjustment expenses, net of
uncollectible reinsurance reserves, of $2,131.7 million due
from approximately 320 reinsurers; however, the preponderance of
these recoverables is with a relative few reinsurers. At such
date, our ten largest gross reinsurance recoverables aggregated
$1,577.5 million.
We write certain retrospectively rated policies
and large deductible policies in which the insured must
reimburse us for certain losses. Accordingly, we bear credit
risk on these policies and cannot assure you that our insureds
will pay us on a timely basis or at all.
The loss of any of our key producers could
	have an adverse effect on our financial condition.
In 2001, our two largest producers accounted for
12% and 8% of our gross premiums written. Our top five
producers, including all locations of national brokers,
accounted for nearly 30% of gross premiums written. However, on
an individual office basis, the top five producers accounted for
18% of 2001 gross premiums written. We have no long term
commitments from any of our producers, any of whom could cease
doing business with us at any time. The loss or deterioration of
one or more of these relationships could adversely affect our
financial condition. We cannot assure you we will be successful
in maintaining our current relationships with our significant
producers.
We operate in a highly competitive environment
	which makes it more difficult for us to attract and retain
	business.
The commercial lines property and casualty
insurance industry is highly competitive, and we believe that it
will remain so for the foreseeable future. We face competition
from domestic and foreign insurers, many of which are larger and
have greater financial, marketing and management resources than
we do. Competition in
13
the commercial lines property and casualty
insurance industry is based on many factors, including overall
financial strength of the insurer, ratings by rating agencies,
price, policy terms and conditions, services offered,
reputation, agent and broker compensation and experience. We may
face increased competition in the future from other insurance
companies, and such increased competition, should it occur,
could have a material adverse effect on us. See
"Business — Competition."
Several commercial property and casualty insurers
and industry groups and associations currently offer alternative
forms of risk protection in addition to traditional insurance
products. These products, including large deductible programs
and various forms of self-insurance that utilize captive
insurance companies and risk retention groups, have been
instituted to allow for better control of risk management and
costs. It is not possible to predict how continued growth in
alternative forms of risk protection will affect our future
operations, but it could reduce our premium volume.
Following the terrorist attacks on
September 11, 2001, a number of new insurers and reinsurers
have been formed to compete in our industry, and a number of
existing market participants have raised new capital which may
enhance their ability to compete with us. In addition, other
financial institutions are now able to offer services similar to
our own as a result of the Gramm-Leach-Bliley Act, which was
adopted in November 1999.
Results in the property and casualty insurance
	industry are subject to fluctuations and uncertainty which may
	adversely affect our ability to write policies.
The results of companies in the property and
casualty insurance industry historically have been subject to
broad fluctuations. These results can be affected significantly
by price competition, volatile and unpredictable developments
(including catastrophes), changes in loss reserves resulting
from changing legal environments as different types of claims
arise and judicial interpretations relating to the scope of
insurers' liability develop, fluctuations in interest rates
and other changes in the investment environment which affect
returns on invested assets and inflationary pressures that
affect the size of losses. The property and casualty insurance
industry as a whole historically has experienced pricing and
profitability cycles related to levels of industry underwriting
capacity which have affected almost all product lines. In
contrast to broad industry-based profitability cycles,
profitability in the commercial property and casualty insurance
industry in recent years has varied significantly by product
line. As a result of fluctuations in pricing, we may be unable
to obtain business that meets our underwriting standards and
pricing expectations. See "Business —
Competition" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Unpredictable catastrophic events could reduce
	our net income.
Catastrophes can be caused by various natural and
unnatural events. Natural catastrophic events include
hurricanes, windstorms, earthquakes, hailstorms, explosions,
severe winter weather and fires, and unnatural catastrophic
events, which include terrorist acts, riots, crashes and
derailments. The incidence and severity of catastrophes are
inherently unpredictable. The extent of losses from a
catastrophe is a function of both the total amount of insured
exposure in the area affected by the event and the severity of
the event. Most catastrophes are restricted to small geographic
areas; however, hurricanes, windstorms and earthquakes may
produce significant damage in large, heavily populated areas.
Catastrophes can cause losses in a variety of property and
casualty lines for which we provide insurance. For example, the
terrorist attacks on September 11, 2001 caused losses in
several of our lines, including business interruption, business
personal property and workers' compensation. Insurance
companies are not permitted to reserve for a catastrophe until
it has occurred. It is therefore possible that a catastrophic
event or multiple catastrophic events could have a material
adverse effect upon our net income and financial condition.
Increases in the value and geographic concentration of insured
property and the effects of inflation could increase the
severity of claims from future catastrophic events. In addition,
states have from time to time passed legislation that has the
effect of limiting the ability of insurers to manage
catastrophic risk, such as legislation prohibiting insurers from
withdrawing from catastrophe-prone areas.
14
Our ability to borrow is limited by
	Fairfax's bank credit facilities which could have an
	adverse effect on our financial condition.
The current agreements governing Fairfax's
bank credit facilities prevent any subsidiaries of Fairfax from
borrowing money. Although Fairfax intends to seek a modification
of these agreements as they pertain to us, our financial
flexibility in the future will be limited by the terms of those
agreements if Fairfax is unable to obtain such a waiver.
If we are unable to realize our investment
	objectives, our financial condition may be adversely
	affected.
Our operating results depend in part on the
performance of our investment portfolio. The ability to achieve
our investment objectives is affected by general economic
conditions that are beyond our control. General economic
conditions can adversely affect the markets for
interest-rate-sensitive securities, including the extent and
timing of investor participation in such markets, the level and
volatility of interest rates and, consequently, the value of
fixed income securities. Interest rates are highly sensitive to
many factors, including governmental monetary policies, domestic
and international economic and political conditions and other
factors beyond our control. General economic conditions, stock
market conditions and many other factors can also adversely
affect the equities markets and, consequently, the value of the
equity securities we own. We may not be able to realize our
investment objectives, which could reduce our net income
significantly.
Our business could be adversely affected by
	the loss of one or more key employees.
We are substantially dependent on a small number
of key employees, in particular Bruce Esselborn, our Chief
Executive Officer, Nick Antonopoulos, our President, Mary Jane
Robertson, our Executive Vice President and Chief Financial
Officer, and Doug Libby, Seneca's Chief Executive Officer.
We believe that the experiences and reputations in the insurance
industry of Mr. Esselborn, Mr. Antonopoulos,
Ms. Robertson and Mr. Libby are important factors in
our ability to attract new business. Our success has been, and
will continue to be, dependent on our ability to retain the
services of our existing key employees and to attract and retain
additional qualified personnel in the future. The loss of the
services of Mr. Esselborn, Mr. Antonopoulos, Ms.
Robertson or Mr. Libby or any other key employee, or the
inability to identify, hire and retain other highly qualified
personnel in the future, could adversely affect the quality and
profitability of our business operations. We currently do not
maintain key employee insurance with respect to any of our
employees.
We are subject to extensive government
	regulation.
We are subject to extensive regulation and
supervision in the states in which we do business. Regulators
oversee matters relating to rate setting with respect to certain
lines of insurance, trade practices, market conduct, policy
forms, claims practices, mandated participation in shared
markets, types and amounts of investments, reserve adequacy,
insurer solvency, minimum amounts of capital and surplus,
authorized lines of business, transactions with related parties,
the payment of dividends and a variety of other financial and
non-financial components of an insurance company's
business. Regulators may limit the rates that an insurance
company can charge for certain lines of business so that premium
rates may not keep pace with inflation. State insurance laws and
regulations are administered by agencies that have broad powers
and are concerned primarily with the protection of policyholders
rather than shareholders or other investors. It is possible that
future regulatory changes or developments may impede rate
increases or other actions that we propose to take to enhance
our operating results or fundamentally change the business
environment in which we operate. Future legislative or
regulatory changes or developments, depending on their nature
and magnitude, could have a material adverse effect on us.
All 50 states have insurance guaranty fund
laws requiring property and casualty insurance companies doing
business within the state to participate, through the payment of
assessments, in guaranty funds or associations that are
organized to pay contractual obligations under insurance
policies issued by impaired or
15
insolvent insurance companies. These assessments
may increase in the future depending upon the rate of
insolvencies of insurance companies. We cannot predict the
amount of any assessments applicable to guaranty funds.
Each of our operating subsidiaries typically is
required to participate in mandatory property and casualty
shared market mechanisms or pooling arrangements, which provide
various insurance coverages to individuals or other entities
that are otherwise unable to purchase such coverage in the
commercial insurance marketplace. The amount of future losses or
assessments from such shared market mechanisms and pooling
arrangements cannot be predicted with certainty. The
underwriting results of these pools historically have been
unprofitable. We cannot assure you that future losses or
assessments from such mechanisms and pooling arrangements will
not have a material adverse effect on our results of operations
or financial condition.
In recent years, the insurance regulatory
framework has come under increased federal scrutiny, and certain
state legislatures have considered or enacted laws that altered
and, in many cases, increased state authority to regulate
insurance companies and insurance holding companies. For
example, the states of Hawaii and Florida have implemented
arrangements whereby property insurance in catastrophe prone
areas is provided through state-sponsored entities. The
California Earthquake Authority, the first privately financed,
publicly operated, residential earthquake insurance pool,
provides earthquake insurance to California homeowners. Further,
the National Association of Insurance Commissioners
(NAIC) and state insurance regulators are re-examining
existing laws and regulations, specifically focusing on
investment practices, risk-based capital guidelines,
interpretations of existing laws and the development of new
laws. In addition, several committees of Congress have made
inquiries and conducted hearings as part of a broad study of the
regulation of insurance companies. Although the federal
government currently does not regulate the business of insurance
directly, federal initiatives often affect the insurance
industry in a variety of ways. We cannot predict with certainty
the effect any proposed or future legislation or NAIC
initiatives may have on the conduct of our business, financial
condition or results of operations. See "Insurance
Regulatory Matters."
If certain policies with respect to which
	other insurance companies have assumed liability from us have
	not been effectively novated, our credit risk for amounts due
	from reinsurers will increase.
Prior to our acquisition by Fairfax in 1998 we
were a subsidiary of Xerox Corporation. In connection with a
business realignment and restructuring of its insurance
companies, Xerox required the transfer of a number of policies
and related assets and liabilities from certain of our insurance
company subsidiaries to other insurance companies also
controlled by Xerox. These transfers were effected through
assumption and indemnity reinsurance agreements providing for
100% quota share reinsurance of the subject business by the
assuming company. In some cases the assuming party also was
required to seek a novation of certain policies. Novation of an
insurance policy effects the legal substitution of one insurance
company for the original policy-issuing company and generally
requires either the express or implied consent of the
policyholder. To the extent that the novation process is
challenged or if the amount of policies considered novated is
overestimated, our reserves could be understated and the credit
risk associated with policies considered novated could also be
materially understated. We may be unable to recover our losses
from the reinsurers that have assumed these policies.
Risks Relating to this Offering and Our Common
Stock
Because our controlling stockholder intends to
	retain control, you may be unable to realize a gain on your
	investment in our common stock in connection with an acquisition
	bid.
Immediately upon completion of this offering,
Fairfax, through its wholly owned subsidiary Fairfax Inc., will
own           %
of our outstanding common stock, or
approximately           %
if the underwriters' over-allotment option is exercised in
full. Consequently, Fairfax will be in a position to determine
the outcome of corporate actions requiring stockholder approval,
including:
•
electing members of our board of directors;
•
adopting amendments to our charter documents; and
16
•
approving a merger or consolidation, liquidation
	or sale of all or substantially all of our assets.
In addition, Fairfax has provided us, and after
completion of this offering will continue to provide us, with
certain services. All of our directors, except for
Mr. Esselborn, also are directors or officers of Fairfax or
certain of its subsidiaries. Conflicts of interest could arise
between our company and Fairfax or one of its subsidiaries, and
any conflict of interest may be resolved in a manner that does
not favor us.
Fairfax intends to retain control of us and
cannot foresee any circumstances under which it would sell a
sufficient number of shares of our common stock to cause it not
to retain such control. In order to retain control, Fairfax may
decide not to enter into a transaction in which our stockholders
would receive consideration for their shares that is much higher
than the cost of their investment in our common stock or the
then current market price of our common stock. Any decision
regarding the ownership of us that Fairfax may make at some
future time will be in its absolute discretion.
Investors will incur immediate dilution and
	may experience further dilution.
The initial public offering price of our common
stock will be substantially higher than the net tangible book
value per share of the outstanding common stock immediately
after this offering. If you purchase common stock in this
offering, based upon the issuance and sale of shares of common
stock at the initial public offering price of
$                    per
share, you will incur immediate dilution of approximately
$                    in
the net tangible book value per share of the common stock.
There has been no prior public market for our
	common stock, and our stock price may be volatile and could
	decline significantly.
Prior to this offering, there has been no public
market for our common stock and an active public market for our
common stock may not develop or be sustained after this
offering. The initial public offering price for the common stock
has been determined by negotiations between us and the
underwriters, and may not be representative of the price that
will prevail in the open market. See "Underwriting"
for a discussion of the factors considered in determining the
initial public offering price. In addition, the market price of
our common stock could fluctuate significantly in response to
various factors, including:
•
actual or anticipated variations in our results
	of operations;
•
announcements of innovations, new services or
	products or significant price reductions by us or our
	competitors;
•
the occurrence of major catastrophic events; and
•
changes in financial estimates by securities
	analysts.
Significant fluctuation in the market price of
	our common stock could result in securities class action claims
	against us.
Significant price and value fluctuations have
occurred with respect to the securities of insurance and
insurance-related companies. Our common stock price is likely to
be volatile in the future. In the past, following periods of
downward volatility in the market price of a company's
securities, class action litigation has often been pursued
against such companies. If similar litigation were pursued
against us, it could result in substantial costs and a diversion
of our management's attention and resources.
Provisions in our charter documents and
	Delaware law and state insurance laws may impede attempts to
	replace or remove our management or inhibit a takeover, which
	could adversely affect the value of our common stock.
Our certificate of incorporation and bylaws, as
well as Delaware corporate law, contain provisions that could
delay or prevent changes in our management or a change of
control that a stockholder might consider favorable and may
prevent you from receiving a takeover premium for your shares.
These provisions include, for example,
17
•
authorizing the issuance of preferred stock, the
	terms of which may be determined at the sole discretion of the
	board of directors;
•
establishing advance notice requirements for
	nominations for election to the board of directors or for
	proposing matters that can be acted on by stockholders at
	meetings; and
•
providing that special meetings of shareholders
	may be called only by our board of directors, the chairman of
	our board of directors, our president or our secretary.
In general, state insurance laws provide that no
person or entity may directly or indirectly acquire control of
an insurance company unless that person or entity has received
approval from the insurance regulator. An acquisition of control
of our insurance operating subsidiaries generally would be
presumed if any person or entity acquires 10% or more of our
outstanding common stock, unless the applicable insurance
regulator determines otherwise.
These provisions apply even if the offer may be
considered beneficial by some of our stockholders. If a change
in management or a change of control is delayed or prevented,
the market price of our common stock could decline.
Substantial sales of our common stock after
	this offering could result in a lower market price of our common
	stock.
Sales of substantial amounts of our common stock
in the public market after 180 days following this
offering, or the perception that these sales will occur, could
adversely affect the market price of our common stock. After
completion of this offering, our outstanding shares of common
stock owned by Fairfax will be eligible for sale in the public
market at various times after 180 days from the date of
this prospectus, subject to volume limitations. We have entered
into an agreement with Fairfax giving them the right, in certain
circumstances, to demand that we file a registration statement
to enable them to sell their common stock. Fairfax has stated
that it does not intend to sell a sufficient number of shares of
our common stock to cause it not to retain control of us.
18
FORWARD-LOOKING STATEMENTS
Any written or oral statements made by us or on
our behalf may include forward-looking statements that reflect
our current views with respect to future events and financial
performance. These forward-looking statements relate to, among
other things, our plans and objectives for future operations.
These forward-looking statements are subject to uncertainties
and other factors that could cause actual results to differ
materially from such statements. These uncertainties and other
factors, which we describe in more detail elsewhere in this
prospectus, include, but are not limited to:
•
reduction in net income if our claim reserves are
	insufficient;
•
exposure to emerging claims and coverage issues;
•
lowering or loss of one of our financial or
	claims-paying ratings;
•
inability to receive dividends and other payments
	from our operating subsidiaries;
•
inability to obtain reinsurance coverage on
	reasonable terms and prices;
•
exposure to credit risk in the event reinsurers
	fail to pay;
•
inability to obtain terrorist act reinsurance
	coverage;
•
loss of key producers;
•
increased competition;
•
uncertainty in insurance market;
•
occurrence of catastrophic events;
•
limited ability to borrow;
•
inability to realize our investment objectives;
•
loss of key employees;
•
change in government regulation; and
•
exposure to credit risks on novated policies.
The words "believe,"
"anticipate," "project," "expect,"
"intend," "will likely result," "will
seek to" or "will continue" and similar
expressions identify forward-looking statements. We caution
readers not to place undue reliance on these forward-looking
statements, which speak only as of their dates. We have
described some important factors that could cause our actual
results to differ materially from our expectations in this
prospectus, including in the section titled "Risk
Factors." Except as otherwise required by federal
securities laws, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
19
USE OF PROCEEDS
We estimate that we will receive net proceeds
from this offering of approximately
$                    million,
assuming an initial public offering price of
$                    per
share (the midpoint of the range set forth on the cover of this
prospectus) and after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us.
We will not receive any proceeds from the sale of shares by
Fairfax, including any shares issued pursuant to the exercise of
the over-allotment option granted by Fairfax.
We intend to use the net proceeds from this
offering for general corporate purposes, including payment of
our quarterly cash dividend and interest payments on the
$                    million
term note issued to Fairfax. Until we use the net proceeds from
this offering, we intend to invest the net proceeds in U.S.
Treasury and government agency obligations and high grade
corporate debt securities.
DIVIDEND POLICY
Our board of directors intends to establish an
initial policy of declaring quarterly cash dividends on our
common stock. We intend to declare an initial quarterly cash
dividend of
$                    per
common share, or
$                    per
common share annually, commencing in the third quarter of 2002
and paid in the fourth quarter of 2002. The declaration and
payment of dividends are subject to the discretion of our board
of directors and depend on, among other things, our financial
condition, general business conditions and contractual
restrictions regarding the payment of dividends by us and other
factors which our board may in the future consider to be
relevant.
As a holding company with no direct operations,
we will rely on cash proceeds from this offering and cash
dividends and other permitted payments from our insurance
operating subsidiaries to pay dividends to our stockholders.
State insurance law limits the amount that may be paid to us by
our insurance company subsidiaries without the prior approval of
the applicable state insurance department. See "Insurance
Regulatory Matters."
20
CAPITALIZATION
The following table sets forth our capitalization
as of December 31, 2001. The "As Adjusted" column
reflects our capitalization after giving effect to the issuance
by us
of                    shares
of common stock pursuant to this offering, after deducting
estimated underwriting discounts and commissions and offering
expenses payable by us, and the issuance of a
$                    million
term note to Fairfax in connection with this offering. See
"Use of Proceeds."
This table should be read in conjunction with
"Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and
accompanying notes appearing elsewhere in this prospectus.
At December 31, 2001
Actual
As Adjusted
(dollars in thousands)
Debt
$
—
$
Stockholders' equity:
Preferred stock, none authorized, issued and
	outstanding (actual);
$.01 par value, 100,000,000 shares authorized, none issued
	and outstanding (as adjusted)
Common stock, $1 par value, 1,000 shares
	authorized, issued and outstanding (actual); $.01 par value,
	200,000,000 shares authorized, shares issued and outstanding (as
	adjusted)(1)
1,000
Additional paid-in capital
747,424
Accumulated other comprehensive loss
(84,865
)
Retained earnings
56,046
Total stockholders' equity
719,605
Total capitalization
$
719,605
$
Ratio of debt to total capitalization
—
%
(1)
In connection with this offering, Fairfax will
	receive                  shares
	of our common stock.
21
DILUTION
As of December 31, 2001, our actual net
tangible book value was
$          ,
or
$          per
share, based
on                     shares
of common stock outstanding. Net tangible book value represents
the amount of our total tangible assets, including deferred
acquisition costs, less our total liabilities. After giving
effect to the issuance and sale of
the                     shares
of common stock offered by us at the initial public offering
price of
$          per
share (the midpoint of the range set forth on the cover of this
prospectus) and the issuance of a
$                     million
of term note to Fairfax, our adjusted net tangible book value as
of December 31, 2001 would have
been                     million,
or
$                    per
share. The adjusted net tangible book value after this offering
assumes that the proceeds to us from this offering, net of
underwriting discounts and commissions and offering expenses,
will be approximately
$                     million.
Based on the foregoing, there would be as at December 31,
2001 an immediate decrease in net tangible book value of
$          per
share to our existing stockholder and an immediate dilution of
$          per
share to new investors.
Dilution in net tangible book value per share
represents the difference between the amount per share paid by
purchasers of our common stock in this offering and the net
tangible book value per share immediately following this
offering. Amounts per share
reflect                    shares
of our common stock that will be received by Fairfax in
conjunction with this offering. The following table illustrates
this per share dilution:
Assumed initial public offering price per share
$
Net tangible book value per share at
	December 31, 2001 before the issuance of the term note and
	application of the net proceeds to us from this offering
Decrease per share due to issuance of shares of
	common stock in this offering
(
)
Decrease per share attributable to the issuance
	of the term note
(
)
Increase per share attributable to the purchase
	of common stock by new investors
As adjusted net tangible book value per share
	after this offering
Dilution per share to new investors
$
New investors under this offering will
purchase                     shares
of our common stock, or
approximately           %
of our common stock outstanding after the offering, at the
initial public offering price of
$          per
share for total consideration of
$                    million.
Our existing stockholder will
own                     shares
of our common stock, or
approximately           %
of our common stock outstanding after the offering, representing
a total value of
$           million
based on the midpoint of the range set forth on the cover of
this prospectus.
22
SELECTED FINANCIAL DATA
The table shown below presents our selected
financial data for the five years ended December 31, 2001.
The GAAP statement of operations data and balance sheet data
relating to each of the years 1999 through 2001 have been
derived from the consolidated financial statements audited by
PricewaterhouseCoopers LLP, independent accountants. The GAAP
statement of operations data and balance sheet data relating to
the 1997 year and the periods January 1, 1998 through
August 13, 1998 and August 14 through
December 31, 1998, respectively, have been derived from
unaudited consolidated financial statements. Consolidated
balance sheets at December 31, 2000 and 2001 and the
related consolidated statements of operations and comprehensive
income, of stockholder's equity and of cash flows for the
three years ended December 31, 2001, the report thereon of
PricewaterhouseCoopers LLP, and accompanying notes, appear in
this prospectus beginning at page F-1.
The combined statutory data has been derived from
annual statutory statements filed with the domiciliary states of
our operating subsidiaries and prepared in accordance with
statutory accounting practices, which differ from GAAP.
The selected financial data presented below
should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and
accompanying notes included elsewhere in this prospectus. The
results for the period from January 1, 1997 through
August 13, 1998 reflect the historical results of
Crum & Forster prior to its acquisition by Fairfax. The
results for the period from August 14, 1998 through
December 31, 1998 reflect the results of Crum &
Forster after it was acquired by Fairfax. The results for the
year ended December 31, 2000 include the results for Seneca
from August 31, 2000, its date of acquisition.
Years Ended December 31,
1997
1998
1999
2000
2001
From and
Through
After
August 13
August 14
(dollars in thousands, except per share data)
GAAP Statement of Operations Data:
Gross premiums written
$
1,058,465
$
581,656
$
294,766
$
744,888
$
679,803
$
843,161
Net premiums written
$
939,353
$
523,158
$
255,270
$
599,138
$
506,473
$
607,098
Net premiums earned
$
933,783
$
553,255
$
307,451
$
679,649
$
522,716
$
565,800
Net investment income
185,784
111,003
70,588
157,711
142,586
119,171
Net realized investment gains (losses)
26,939
4,072
110,950
(7,103
)
224
(5,358
)
Other income, net
—
1,341
6,958
9,041
6,305
4,321
Total revenues
1,146,506
669,671
495,947
839,298
671,831
683,934
Losses and loss adjustment expenses
758,852
684,736
230,565
556,864
391,102
641,748
Acquisition costs
172,025
109,360
42,083
109,411
98,503
90,385
Other underwriting expenses
143,535
93,100
48,107
115,709
113,558
119,358
Dividends to policyholders
15,646
6,317
8,448
10,709
5,991
2,493
Other expense
13,619
—
—
—
—
—
Total losses and expenses
1,103,677
893,513
329,203
792,693
609,154
853,984
Income (loss) before income taxes
42,829
(223,842
)
166,744
46,605
62,677
(170,050
)
Income tax expense (benefit)
15,282
(78,438
)
55,579
10,130
(8,903
)
(63,541
)
Net income (loss)
$
27,547
$
(145,404
)
$
111,165
$
36,475
$
71,580
$
(106,509
)
Net income (loss) per share
$
$
$
$
$
$
23
As of December 31,
1997
1998
1999
2000
2001
(dollars in thousands, except per share data)
GAAP Balance Sheet Data:
Total investments (including cash and cash
	equivalents)
$
3,038,084
$
3,274,279
$
2,656,239
$
2,517,033
$
2,278,143
Total assets
5,370,652
5,093,691
4,731,003
4,795,672
5,147,959
Unpaid losses and loss adjustment expense
3,562,917
3,597,341
3,492,436
3,306,741
3,423,793
Stockholders' equity
1,049,685
773,842
585,852
801,492
719,605
Book value per share
Years Ended December 31,
1997
1998
1999
2000
2001
From and
Through
After
August 13
August 14
Selected GAAP Financial Ratios:
Loss and loss adjustment expense ratio
81.2
%
123.8
%
75.0
%
81.9
%
74.8
%
113.4
%
Underwriting expense ratio
33.8
36.6
29.3
33.1
40.6
37.1
Dividend ratio
1.7
1.1
2.8
1.6
1.1
0.4
Combined ratio
116.7
%
161.5
%
107.1
%
116.6
%
116.5
%
150.9
%
(1)
Years Ended December 31,
1997
1998
1999
2000
2001
(dollars in thousands)
Selected Combined Statutory Data:
Loss and loss adjustment expense ratio
81.3
%
104.1
%
93.7
%
95.8
%
142.1
%
Underwriting expense ratio
33.1
37.7
41.6
42.8
36.9
Dividend ratio
1.5
1.3
1.0
1.5
1.0
Combined ratio
115.9
%
143.1
%
136.3
%
140.1
%
180.0
%
(1)
Policyholders' surplus
$
832,068
$
734,933
$
689,601
$
769,483
$
708,388
Ratio of net premiums written to surplus
1.13
x
1.06
x
0.87
x
0.74
x
0.87
x
(1)
The GAAP and statutory combined ratios on an
	accident year basis were 113.1% and 113.6%, respectively.
	Accident year refers to the accounting period in which loss
	events occurred, regardless of when the losses are actually
	reported, recorded or paid and, as such, excludes the impact of
	development of prior years' loss and LAE reserves.
24
MANAGEMENT'S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should
be read in conjunction with our consolidated financial
statements and accompanying notes included elsewhere in this
prospectus. Certain information contained in
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitutes
forward-looking statements that involve risks and uncertainties.
Our actual results may differ materially from the results
discussed in the forward-looking statements as a result of
certain factors, including those set forth under "Risk
Factors," "Business — Reserves,"
"Business — Investments" and elsewhere in
this prospectus.
Overview
We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. Operating through our home office and regional
branch network, we write a broad range of commercial coverages,
including general liability, property, workers'
compensation, commercial auto and surety. We conduct business
through approximately 1,050 producers located throughout the
United States.
The property and casualty industry is cyclical
and influenced by many factors, including price competition,
economic conditions, natural and man-made disasters, interest
rates and changes in law and regulations. Throughout the 1990s
and into 2000, the industry was characterized by excess
capacity, which resulted in highly competitive market
conditions, as evidenced by declining premium rates, poor
underwriting results and declining cash flow. In response to the
effects of prolonged soft market conditions, capacity was
withdrawn from the market. Commencing in mid-2000, insurers
began to achieve significant rate increases and improved terms
and conditions. During 2001, based on publicly available
industry information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment. The
terrorist attacks of September 11, 2001 represent the
largest insured catastrophe in history and have accelerated the
pace of improvement in pricing and terms, particularly in
property lines of business.
We have experienced significant price increases
in 2001 and early 2002. While conditions in the insurance
market, such as continuing consolidation among leading insurance
firms and increased competition, may lead to pricing pressure,
we expect the improved pricing and terms to continue into 2003.
We have exposure to the September 11, 2001
terrorist attacks, with claims arising mainly from our business
interruption, business personal property and workers'
compensation coverages. We have carefully reviewed our exposure
to these events and we estimate a loss of approximately
$1.5 million (net of reinsurance) based on current
information. As more information becomes available, this
estimate could change.
Management Initiatives
We have made significant changes to the
management and operations of the Crum & Forster companies
acquired by Fairfax in August 1998. In the fourth quarter of
1999, we appointed a proven senior management team, led by Bruce
Esselborn, which made a number of significant changes designed
to increase our profitability and competitive position. These
changes include redesigning our underwriting and pricing
strategies, expanding our distribution network and implementing
a disciplined expense management culture. In addition, in August
2000, we acquired Seneca, a specialty insurer focused on
non-commodity lines of business.
Underwriting Initiatives.
We have taken a number of actions
designed to improve underwriting profitability at the
Crum & Forster companies acquired in 1998. These
actions resulted in a significant improvement in our accident
year loss and LAE ratio from 112.6% in 1999 to 79.3% in 2001.
Accident year refers to the accounting period in which loss
events occurred, regardless of when the losses are actually
25
reported, recorded or paid. We believe that an
accident year is the most indicative measure of the underlying
profitability of the business earned in that period. The actions
include:
•
centralized underwriting operations to provide a
	high degree of home office control over underwriting and claims;
•
realigned our operating structure to emphasize
	product line experience and expertise. Hired five experienced
	underwriting product line executives aligned with our targeted
	classes of business and production sources. Approximately 93 of
	our current underwriters, representing 57% of the entire
	underwriting staff, were hired since the arrival of our new
	management team;
•
enhanced our price monitoring systems to provide
	us with increased control over pricing and profitability. In
	addition, we adjusted our pricing models to emphasize a targeted
	combined ratio, without regard to the imputed benefit of
	investment income;
•
increased our pricing on renewal business by
	approximately 11% in 2000 and achieved an additional price
	increase of approximately 17% in 2001. In both years we
	experienced price increases across all of our lines of business.
	General liability and commercial multi-peril experienced above
	average increases of 24% and 19%, respectively, in 2001;
•
emphasized classes of business and types of
	insureds that tend to have larger premium policies and
	instituted minimum premium guidelines, which resulted in an
	increase in our average premiums per policy from approximately
	$20,000 in 1999 to $59,000 in 2001. We believe larger premium
	policies complement our strength of specialized individual risk
	underwriting and provide expense benefits. The average direct
	premiums written per policy, excluding surety bonds, is
	summarized below for the periods indicated:
Years Ended December 31,
1999
2001
Policy
Average
Policy
Average
Count
Per Policy
Count
Per Policy
General liability
10,601
$
10,877
4,117
$
35,455
Workers' compensation
3,474
$
33,882
1,026
$
152,096
Property
2,931
$
10,721
1,841
$
68,826
Commercial automobile
7,444
$
19,927
1,654
$
66,115
Commercial multi-peril
8,340
$
28,324
1,384
$
37,204
Total
32,790
$
19,792
10,022
$
58,828
•
restructured our reinsurance program to reduce
	our net retentions to $1 million on casualty lines and
	$2 million on property lines, and reduced our gross policy
	limits, particularly in property; and
•
discontinued unprofitable classes of business,
	including large fleet long haul tracking, New York and
	California contractors, taxis and limousines, fast food
	restaurant programs, country clubs and nursing homes, which
	represented approximately $250 million of gross premiums
	written, or 34%, of total gross premiums written in 1999.
	Discontinued lines accounted for approximately nine percentage
	points of our loss and LAE ratio in 2000 and significantly
	contributed to a 13.9% decrease in total gross premiums written
	in 2000 from 1999.
Distribution Initiatives.
We evaluated the profitability and
productivity of our producer relationships. Consistent with our
strategy to write larger risks which benefit from individual
risk underwriting, we have grown the portion of our business
from national brokers and wholesale brokers. The key elements
include:
•
diversified our distribution by appointing 480
	new producers and entering into new arrangements with national
	brokers and wholesale brokers, in each case, aligned with our
	targeted classes of business and types of insureds;
26
•
adjusted our commission structure to be in line
	with market practice and revised contingent commission
	agreements with producers to require a higher level of
	sustainable underwriting profit before producers earn a profit
	sharing payment. These actions resulted in a reduction of our
	gross commissions expense (as a percentage of gross premiums
	written) of 4.7 percentage points from 1999 to 2001;
•
during 2001, we more than doubled our new
	business production, with one-third of the new business written
	by producers who were appointed since January 1, 2000; and
•
production from national brokers and wholesale
	brokers has increased from 20.4% of total gross premiums
	written in 1999 to 45.0% in 2001.
Expense Initiatives.
We have created a disciplined expense
management culture to improve operating efficiencies. We
carefully analyzed our cost structure and implemented new
strategies to reduce operating expenses. The key elements
include:
•
reduced our number of employees by 25%
	from 1,357 at December 31, 1999, to 1,023 at
	December 31, 2001, and correspondingly reduced our payroll
	by 18%;
•
increased our productivity as measured by gross
	premiums per employee from approximately $549,000 in 1999 to
	approximately $684,000 in 2001, or 25%; and
•
reduced our information technology expenses by
	approximately $10 million, or 24%, in 2001 while improving
	functionality.
Seneca Acquisition.
In August 2000, we acquired Seneca,
which provides specialty coverages such as bail bonds,
non-standard property in inner city markets, inland marine,
boiler and machinery and environmental liability. Selected
statutory data of Seneca for the three years ended
December 31, 2001, which includes periods prior to its
acquisition by us, is summarized as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Gross premiums written
$
103.0
$
119.0
$
143.4
Loss and LAE ratio
61.0
%
62.9
%
59.2
%
Underwriting expense ratio
38.8
37.5
37.2
Combined ratio
99.8
%
100.4
%
96.4
%
27
Results of Operations
The components of our net income (loss) for
the three years ended December 31, 2001 are summarized as
follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Gross premiums written
$
744.9
$
679.8
$
843.2
Underwriting loss
$
(113.0
)
$
(86.4
)
$
(288.2
)
Net investment income
157.7
142.6
119.2
Net realized investment gains (losses)
(7.1
)
0.2
(5.4
)
Other income, net
9.0
6.3
4.3
Income (loss) before income taxes
46.6
62.7
(170.1
)
Income tax expense (benefit)
10.1
(8.9
)
(63.6
)
Net income (loss)
$
36.5
$
71.6
$
(106.5
)
Underwriting Results
Underwriting results for the three years ended
December 31, 2001 are summarized as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Gross premiums written
$
744.9
$
679.8
$
843.2
Net premiums written
$
599.1
$
506.5
$
607.1
Net premiums earned
$
679.6
$
522.7
$
565.8
Losses and LAE
556.8
391.1
641.7
Acquisition costs
109.4
98.5
90.4
Other underwriting expenses
115.7
113.5
119.4
Dividends to policyholders
10.7
6.0
2.5
Underwriting loss
$
(113.0
)
$
(86.4
)
$
(288.2
)
Loss and LAE ratio
81.9
%
74.8
%
113.4
%
Underwriting expense ratio
33.1
40.6
37.1
Dividend ratio
1.6
1.1
0.4
Combined ratio
116.6
%
116.5
%
150.9
%
Combined ratio:
Crum & Forster excluding Seneca
116.6
%
117.8
%
164.2
%
Seneca
—
97.8
97.8
We experienced underwriting losses of
$113.0 million, $86.4 million and $288.2 million
in 1999, 2000 and 2001, respectively. The substantial loss in
2001 was principally the result of adverse development of prior
years' loss and LAE reserves of approximately
$183.1 million. In 2001, we significantly increased
reserves for our general liability, workers' compensation,
commercial auto liability and commercial multi-peril lines of
business, principally in respect of accident years 1997 through
2000. The benefit of aggregate excess of loss reinsurance
reduced our underwriting loss by $149.5 million, $188.1
million and $190.2 million in 1999, 2000 and 2001, respectively.
28
Gross Premiums Written
Our gross premiums written by line of business
for the three years ended December 31, 2001 are summarized
as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
General liability
$
126.0
$
135.7
$
204.0
Workers' compensation
128.7
145.3
171.5
Property
46.7
44.7
159.1
Commercial automobile
175.2
110.6
122.4
Commercial multi-peril
262.1
214.4
97.7
Surety
6.2
29.1
88.5
Total
$
744.9
$
679.8
$
843.2
Gross premiums written by Crum & Forster and
Seneca as reflected in our results in the three years ended
December 31, 2001 are summarized as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Crum & Forster
$
744.9
$
641.3
$
699.8
Seneca
—
38.5
143.4
Total
$
744.9
$
679.8
$
843.2
Gross premiums written decreased by
$65.1 million, or 8.7%, in 2000 and increased by
$163.4 million, or 24.0%, in 2001. Excluding the
acquisition of Seneca, gross premiums written decreased by
$103.6 million, or 13.9%, in 2000 and increased by
$58.5 million, or 9.1%, in 2001. Our pricing levels
increased by more than 10% in 2000 and 15% to 20% in 2001. Gross
premiums written on new business steadily increased from
$144.5 million in 1999 to $368.8 million in 2001. The
growth in new business was attributable to an increased emphasis
on larger premium accounts and expansion into new classes of
business, which included directors' and officers'
liability, surety and excess and surplus lines. The expansion of
our distribution force also contributed to the growth. These
positive influences on gross premiums written were partially
offset by lower retention ratios, which were influenced by the
implementation of a refocused underwriting philosophy upon the
arrival of our Chief Executive Officer in late 1999. Increased
underwriting discipline resulted in a decline in our retention
rates from 71% in 1999 and 51% in 2000 to 44% in 2001.
Highlights of our gross premiums written by line
follow.
General liability gross premiums written
increased 7.7% in 2000 and 50.3% in 2001. Growth is attributable
primarily to business from wholesale brokers and national
brokers underwritten within the home office, the acquisition of
Seneca and, in 2001, $24 million from retrospective
premiums related to expired policies.
Workers' compensation gross premiums written
increased 12.9% in 2000 and 18.0% in 2001, as we have increased
our emphasis on large loss rated policies, written on either a
guaranteed cost or loss sensitive basis. In addition,
Seneca's gross premiums written increased from
$1.7 million in 2000 to $6.9 million in 2001.
Property gross premiums written declined 4.3% in
2000 and increased 256% in 2001. The significant increase in
2001 is due to the combined impact of unbundling these coverages
as part of the commercial multi-peril line of business and
Seneca's contribution of property gross written premiums,
which increased
29
from $5.3 million in 2000 to $22.3 million
in 2001. Much of the growth in this line in 2001 also came from
targeted excess property policies.
Commercial automobile gross premiums written
decreased 36.9% in 2000 and increased 10.7% in 2001. We have
significantly limited or eliminated the writing of selected
classes of commercial auto, including large fleet long haul
trucking and taxis and limousines. The increase in 2001 reflects
improved pricing on the selected automobile classes we chose to
write.
Commercial multi-peril gross premiums written
declined 18.2% in 2000 and 54.4% in 2001. We intentionally wrote
less commercial multi-peril business in each of 2000 and 2001 as
we have emphasized separately writing property and liability
coverages for larger accounts and eliminated business written in
higher hazard grades. As a result, commercial multi-peril
premiums have been reduced from more than one-third of our gross
premiums written in 1999 to 12% of gross premiums written in
2001. Partially offsetting the decline in premium volume in this
line was an increase of $19.6 million in Seneca's
gross premiums written from $7.4 million in 2000 to
$27.0 million in 2001. The commercial multi-peril form is
best suited to smaller commercial risks, the sector targeted by
Seneca.
Surety gross premiums written increased
substantially over the last three years, primarily as a result
of the acquisition of Seneca. Seneca's gross premiums
written reflected in our 2000 and 2001 results included
$20.3 million and $70.3 million, respectively, of bail
bond premiums.
Net Premiums Written
Our net premiums written by line of business for
the three years ended December 31, 2001 are summarized as
follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
General liability
$
91.1
$
81.3
$
106.6
Workers' compensation
111.0
125.2
149.0
Property
35.4
31.3
117.9
Commercial automobile
148.3
87.8
102.6
Commercial multi-peril
207.6
155.2
52.0
Surety
5.7
25.7
79.0
Total
$
599.1
$
506.5
$
607.1
Net premiums written decreased by
$92.6 million, or 15.5%, in 2000, followed by an increase
of $100.6 million, or 19.9%, in 2001.
The decrease in net premiums written in 2000 was
largely attributable to increased cessions to reinsurers,
reflecting the reduction in our net retentions on our property
and general liability — umbrella lines of business.
The change in net premiums written for the remaining lines of
business was consistent with their respective growth in gross
premiums written.
The increase in net premiums written of
$100.6 million in 2001 was generally in line with the
growth in gross premiums written, in total and by line of
business.
Net Premiums Earned
Net premiums earned reflect the amount of net
premiums written applicable to the portion of the policy term
that expires in a given year. We generally earn premiums on a
pro rata basis over the period in which the coverages are
provided. Net premiums earned decreased by $156.9 million,
or 23.1%, in 2000 and increased by $43.1 million, or 8.2%,
in 2001.
30
Losses and LAE
The table below displays the loss and
LAE ratios before and after giving effect to aggregate
excess of loss reinsurance, and also shows the effect of reserve
development on the loss and LAE ratios.
Years Ended December 31,
1999
2000
2001
Loss and LAE ratios
81.9
%
74.8
%
113.4
%
Benefit of aggregate excess of loss reinsurance
21.7
34.8
32.9
Calendar year ratios before impact of aggregate
	excess of loss reinsurance
103.6
%
109.6
%
146.3
%
Accident year loss and LAE ratios as of
	December 31, 2001.
112.6
%
91.3
%
79.3
%
The impact of aggregate excess of loss
reinsurance on income (loss) before income taxes is
summarized as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Ceded losses and LAE
$
216.5
$
251.8
$
255.6
Less:
Ceded premiums written and earned
67.0
63.7
65.4
Other expenses
5.6
8.8
14.4
Net benefit to income (loss) before income
	taxes
$
143.9
$
179.3
$
175.8
Our aggregate excess of loss treaties provide
either current accident year protection on a prospective basis
or adverse development protection related to prior accident
years on a retroactive basis. Coverage under these contracts is
generally triggered when our loss ratio for the subject period
exceeds a specified level or when reserves in respect of all
periods prior to a certain date exceed a stated amount. We cede
losses and LAE to our reinsurers in excess of those specified
levels or amounts, along with the related written and earned
premiums. We will recover the ceded losses and LAE from our
reinsurers as we settle the related claims, which may occur over
several years. These contracts generally provide that interest
expense be charged to us, for the benefit of the reinsurers, on
any premiums withheld by us. Interest rates specified in these
contracts are 7.0% to 7.5%.
We have not purchased, and do not intend to
purchase, any aggregate stop loss reinsurance to protect us from
losses from business written in 2002.
Our accident year loss and LAE ratios as
estimated as of December 31, 2001 by line of business
without giving effect to aggregate excess of loss reinsurance
are summarized as follows:
Years Ended December 31,
1999
2000
2001
General liability
136.2
%
97.1
%
88.9
%
Workers' compensation
112.6
%
99.5
%
81.8
%
Property
55.6
%
37.3
%
46.4
%
Commercial automobile
117.8
%
102.6
%
80.0
%
Commercial multi-peril
109.0
%
90.0
%
95.0
%
Surety
16.1
%
56.2
%
58.4
%
Accident year loss and LAE ratio
112.6
%
91.3
%
79.3
%
31
Our accident year loss and LAE ratio has improved
from 112.6% in 1999 to 91.3% in 2000 and to 79.3% in 2001
without giving effect to aggregate excess of loss reinsurance.
This improvement reflects the impact of our underwriting
actions, as well as improved pricing conditions during 2001.
Approximately nine points of this improvement is represented by
unprofitable classes of business which we ceased writing. Our
individual risk underwriting approach and more profitable mix of
business further contributed to the increase, as did the
inclusion of the results of Seneca, which had loss and LAE
ratios for 2000 and 2001 of 60.6% and 59.2%, respectively.
Improved market conditions enabled us to obtain renewal price
increases of approximately 11% in 2000 and 15-20% in 2001. Price
increases were greater than 10% in each line, with general
liability experiencing a 24% increase. We believe that the
impact of our management initiatives will, together with
continued favorable pricing conditions, permit us to achieve
further improvements in our loss and LAE ratio for 2002.
Underwriting Expenses
Underwriting expenses are comprised of
acquisition costs and other underwriting expenses. Acquisition
costs are composed principally of commissions paid to agents and
brokers and premium taxes. Other underwriting expenses consist
of all other operating expenses associated with our underwriting
activities and include salaries and benefits, information
technology and rent. Our reported results have been affected by
aggregate excess of loss reinsurance and fair value adjustments
related to our acquisition by Fairfax. We believe an analysis of
our underwriting expenses without giving effect to aggregate
excess of loss reinsurance and fair value adjustments more
accurately reflects the impact of our expense reduction efforts
and we analyze our underwriting expenses on that basis below.
The table below displays our underwriting expense ratios in the
three years ended December 31, 2001:
Years Ended December 31,
1999
2000
2001
Underwriting expense ratio
33.1
%
40.6
%
37.1
%
Underwriting expense ratio, as adjusted
37.8
%
39.7
%
34.1
%
Acquisition costs, as adjusted, showed a downward
trend in dollar terms and the acquisition expense ratio declined
from 21.6% in 1999 to 19.3% in 2000 to 14.5% in 2001. These
improvements were attributable to reduced direct commissions
paid to producers of approximately five percentage points and
increased ceding commissions from reinsurers, primarily on the
property and umbrella lines.
The other underwriting expense ratio adjusted for
aggregate excess of loss reinsurance and fair value adjustments
increased from 16.2% in 1999 to 20.4% in 2000, followed by a
decline to 19.6% in 2001. The increase in 2000 was primarily
attributable to the significant decline in net premiums earned
in that year.
Dividends to Policyholders
Dividends to policyholders decreased by
$4.7 million from $10.7 million in 1999 to
$6.0 million in 2000, followed by a decrease of
$3.5 million to $2.5 million in 2001. The dividends to
policyholders ratio, dividends to policyholders expressed as a
percentage of earned premium, declined from 1.6% in 1999 to 1.1%
in 2000 and to 0.4% in 2001. The lower dividends to policyholder
ratio reflects our decision in early 2000 to substantially
eliminate participating workers' compensation policies.
32
Investment Results
Information on investment results for the three
years ended December 31, 2001 is summarized as follows:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Average investments, including cash and cash
	equivalents, at book value
$
3,166.8
$
2,853.2
$
2,539.4
Gross investment yield
5.4
%
5.5
%
5.5
%
Net investment yield
5.0
%
5.0
%
4.7
%
Our net investment income was
$157.7 million, $142.6 million and $119.2 million
in 1999, 2000 and 2001, respectively. The decrease in net
investment income of $15.1 million, or 9.6%, in 2000 was
primarily the result of a lower average level of invested assets
of approximately $313.6 million. The decline in average
invested assets was due principally to reduced premium
collections and payments on maturing claims made during the
year. A further decrease in net investment income of
$23.4 million, or 16.4%, occurred in 2001. This decrease in
net investment income was due to the combined impact of a lower
level of average invested assets of approximately
$313.8 million, driven by maturing claim payments, and a
lower net investment yield. The net investment yield over the
three year period was affected by interest charged on funds
withheld from reinsurers under our aggregate excess of loss
contracts.
Net realized investment losses decreased by
$7.3 million from a loss of $7.1 million in 1999 to a
gain of $0.2 million in 2000, primarily due to realized
losses on fixed income securities recognized in 1999. The net
realized investment gains decreased by $5.6 million from a
gain of $0.2 million in 2000 to a loss of $5.4 million
in 2001, primarily due to the realized loss arising from an
other than temporary decline in the value of a single equity
security.
Other Income
Other income, net, decreased by $2.7 million
from $9.0 million in 1999 to $6.3 million in 2000,
followed by a decrease of $2.0 million to $4.3 million
in 2001. The principal component of other income is negative
goodwill amortization of $9.8 million in each of the three
years ending December 31. Other income in 2000 included a
one-time charge of $3.1 million arising from the
termination of a long-term information technology outsourcing
contract, and for 2001 included $4.0 million in employee
severance costs.
Income Tax Expense (Benefit)
Income taxes decreased by $19.0 million,
from an expense of $10.1 million in 1999 to a benefit of
$8.9 million in 2000. The effective tax rates were 21.7%
and (14.2)%, respectively. Our income tax benefit for 2000
included an adjustment of $26.3 million related to the
resolution of the deductibility of certain reinsurance premiums.
The income tax benefit increased by
$54.6 million, from a benefit of $8.9 million in 2000 to a
benefit of $63.6 million in 2001. The effective tax rates
were (14.2)% and (37.4)%, respectively.
33
Quarterly Results of Operations
Our quarterly results of operations for 2001 are
summarized as follows:
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
(dollars in millions)
Gross premiums written
$
252.2
$
198.4
$
179.4
$
213.2
Underwriting loss
$
(20.5
)
$
(22.0
)
$
(226.7
)
(1)
$
(19.0
)
Net investment income
33.7
31.9
25.8
27.8
Net realized investment gains (losses)
(0.5
)
(0.7
)
0.2
(4.4
)
Other income, net
2.1
2.2
1.4
(1.4
)
Income (loss) before income taxes
14.8
11.4
(199.3
)
3.0
Income tax expense (benefit)
4.2
2.9
(70.7
)
—
Net income (loss)
$
10.6
$
8.5
$
(128.6
)
$
3.0
Combined ratio
113.5
%
114.6
%
309.6
%
112.3
%
(1)
Includes adverse development of prior years'
	loss and LAE reserves of approximately $183.1 million.
Liquidity and Capital Resources
Cash provided by operating activities primarily
consists of premium collections, reinsurance recoveries,
investment income and income tax receipts. Cash provided from
these sources is generally used for payment of loss and LAE,
acquisition costs, operating expenses, ceded reinsurance
premiums and income taxes.
Cash used in operating activities, net amounted
to $272.0 million, $404.0 million and $289.6 million
for 1999, 2000 and 2001, respectively. Cash used in operating
activities increased in 2000, as a result of lower collections
on premiums and payment of maturing claims. Net premiums written
in 2000 were $92.6 million less than in 1999 and loss and
LAE payments were $26.2 million higher in 2000 than in 1999.
Cash used in operating activities improved in 2001 as a result
of our increase in premium collections and reduced claim
payments. Net premiums written increased by $100.6 million
in 2001 compared to 2000 and loss and LAE payments decreased by
$56.5 million in 2001 compared to 2000.
Total cash provided by investing activities
during 1999, 2000 and 2001 was $308.2 million,
$411.3 million and $464.9 million, respectively, which
principally reflected the portfolio repositioning in 1999
following our acquisition by Fairfax, as well as proceeds from
the sale of investments which were required to make claim
payments. In 2001, we sold investments to raise liquidity, which
increased the amount of cash and cash equivalents at
December 31, 2001 to $273.6 million from
$89.3 million at December 31, 2000.
Cash provided by financing activities was
$2.7 million and $9.1 million for 2000 and 2001,
respectively. The cash flow from financing activities for 2000
included a capital contribution of $59.4 million and
shareholder dividends of $56.7 million. A capital
contribution of $9.1 million was received from Fairfax in
2001 and no shareholder dividends were paid. No capital
contributions were received or shareholder dividends paid during
1999.
Consistent with our disciplined underwriting
strategy, we have aggressively re-underwritten our book of
business, resulting in a decline in premium levels in recent
years compared to the years prior to our acquisition by Fairfax.
As a result of making claim payments related to years in which
we wrote considerably more business, we have experienced
negative cash flow from operations in each of the last three
years. We expect our operating cash flow to improve in the
future as we expand our business.
Fairfax has bank credit facilities which prevent
any subsidiaries of Fairfax, including us, from borrowing funds.
This affects our ability to incur debt pursuant to bank loans or
to raise funds in the capital markets.
34
However, US Fire, CF Indemnity and CF
Underwriters have each entered into a securities repurchase
agreement which allows these companies to raise funds through
repurchase arrangements with Fairfax. Under these agreements, US
Fire may raise a maximum of $100.0 million at any one time
and CF Indemnity and CF Underwriters are limited to
$5.0 million each.
The aggregate carrying value of our invested
assets, including cash and short-term investments, was
$2.7 billion, $2.5 billion and $2.3 billion as of
December 31, 1999, 2000 and 2001, respectively. The
aggregate carrying value of invested assets, including cash and
cash equivalents, decreased by $0.4 billion from 1999 to 2001.
The decrease in cash and invested assets resulted from negative
cash flows from operations due to payment of maturing claims in
all years, reduced premium collections in 2000, and the
acquisitions of Seneca and CF Specialty in 2000. Gross
unrealized investment losses were $376.6 million at
December 31, 1999 and $127.1 million at
December 31, 2001, relating principally to our fixed income
portfolio which value increased as interest rates fell in that
period.
Our stockholder's equity was
$585.9 million, $801.5 million and $719.6 million as
of December 31, 1999, 2000 and 2001, respectively.
Our combined policyholders' surplus
increased from $689.6 million at December 31, 1999 to
$708.4 million at December 31, 2001 and our ratio of
statutory net premiums written to surplus has remained
relatively stable at 0.87x over the same period. The improvement
in this ratio in 2000 was due to lower net premiums written in
that year. Statutory surplus is an important measure utilized by
us, our regulators and rating agencies to assess our ability to
support business operations.
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Combined policyholders' surplus
$
689.6
$
769.5
$
708.4
Operating leverage (statutory net premiums
	written to end of period surplus)
0.87x
0.74x
0.87x
As of December 31, 2001, we recorded net
deferred tax assets of $293.9 million, which primarily
related to net operating loss carry-forwards and the discount on
unpaid losses and LAE.
Regulatory Issues
The NAIC uses risk-based capital
(RBC) formulas for property and casualty insurers which
serve as an early warning tool by the NAIC and state regulators
to identify companies that are undercapitalized and merit
further regulatory attention or the initiation of regulatory
action. Our property and casualty companies have more than
sufficient capital to meet the RBC requirements.
The NAIC recently finished revising the
Accounting Practices and Procedures Manual (Codification). The
revised manual was effective January 1, 2001. The
domiciliary states of our insurance subsidiaries have adopted a
majority of the provisions of the revised manual. The revised
manual has changed, to some extent, prescribed statutory
accounting practices and resulted in changes to the accounting
practices that our insurance subsidiaries use to prepare their
statutory-basis financial statements. Adoption of the manual
increased statutory surplus of our property and casualty
insurance companies by approximately $10 million in the
aggregate. Nearly all of the increase in the amount of statutory
surplus relates to the recording of deferred tax assets that
were not recorded in the statutory basis financial statements
under the prior statutory accounting practices.
Ratings
The claims-paying abilities of insurers are rated
to provide both insurance consumers and industry participants
with comparative information on specific insurance companies.
Claims-paying ratings are important for the marketing of certain
insurance products, such as umbrella and special accounts
products. Higher ratings generally indicate greater financial
strength and a stronger ability to pay claims. Ratings focus
35
on factors such as results of operations, capital
resources, debt-to-equity ratio, demonstrated management
expertise in the insurance business, marketing, investment
operations, minimum policyholders' surplus requirements and
capital sufficiency to meet projected growth, as well as access
to such traditional capital as may be necessary to continue to
meet standards for capital adequacy. Our operating subsidiaries
have an "A-" rating from A.M. Best (the fourth highest
of 15 ratings) with a negative outlook and a
"BBB" financial strength rating from
Standard & Poor's (the fourth highest of nine
ratings categories). According to A.M. Best, a failure by
management to achieve its near term calendar year combined ratio
targets or any further deterioration in near term underwriting
or operating performance will likely result in a rating
downgrade. We intend to pursue an improvement in our rating in
conjunction with the completion of this offering.
Market Sensitive Instruments
We believe that we are principally exposed to
four types of market risk related to our investment operations.
These risks are interest rate risk, credit risk, equity price
risk and foreign currency risk. The term market risk refers to
the risk of loss arising from adverse changes in market rates
and prices, such as interest rates, equity prices and foreign
currency exchange rates. All market sensitive instruments
discussed here relate to our investment assets which are
classified as available for sale.
As of December 31, 2001, our
$2.3 billion investment portfolio included
$1.9 billion of fixed income securities that are subject
primarily to interest rate risk and credit risk. Our portfolio
includes $300 million of cash and cash equivalents.
Interest Rate Risk
Our fixed income portfolio is exposed to interest
rate risk. Fluctuations in interest rates have a direct impact
on the market valuation of these securities. As interest rates
rise, market values of fixed income portfolios fall and vice
versa.
The table below displays the potential impact of
market value fluctuations on our fixed income portfolio as of
December 31, 2000 and December 31, 2001 based on
parallel 200 basis point shifts in interest rates up and down in
100 basis points increments. This analysis was performed on each
security individually.
As of December 31, 2000
As of December 31, 2001
Fair Value
Fair Value
of Fixed
of Fixed
Percent Change in
Income
Hypothetical
Hypothetical
Income
Hypothetical
Hypothetical
Interest Rates
Portfolio
$ Change
% Change
Portfolio
$ Change
% Change
(dollars in millions)
200 basis point rise
$
1,939.4
$
(343.1
)
-15.0
%
$
1,559.6
$
(291.7
)
-15.8
%
100 basis point rise
2,098.0
(184.5
)
-8.1
1,687.4
(163.9
)
-8.9
Base Scenario
2,282.5
—
—
1,851.3
—
—
100 basis point decline
2,557.3
274.8
12.0
2,076.5
225.2
12.2
200 basis point decline
2,915.6
633.1
27.7
2,363.2
511.9
27.7
The preceding table indicates an asymmetric
market value response to equivalent basis point shifts up and
down in interest rates. This reflects significant exposure to
fixed income securities containing a put feature. In total these
securities represent approximately 52.2% and 44.8% of the fair
market value of the total fixed income portfolio as of
December 31, 2000 and December 31, 2001, respectively.
The asymmetric market value response reflects our ability to put
these bonds back to the issuer for early maturity in a rising
interest rate environment (thereby limiting market value loss)
but to hold these bonds to their much longer full maturity dates
in a falling interest rate environment (thereby maximizing the
full benefit of higher market values in that environment).
Computations of prospective effects of
hypothetical interest rate changes are based on numerous
assumptions, including the maintenance of the existing level and
composition of fixed income security assets, and should not be
relied on as indicative of future results.
36
Certain shortcomings are inherent in the method
of analysis presented in the computation of the fair value of
fixed rate instruments. Actual values may differ from those
projections presented should market conditions vary from
assumptions used in the calculation of the fair value of
individual securities, including non-parallel shifts in the term
structure of interest rates and changing individual issuer
credit spreads.
Credit Risk
We have exposure to credit risk primarily as a
holder of fixed income securities. We control this exposure by
emphasizing investment grade credit quality in the fixed income
securities we purchase.
As of December 31, 2000 and
December 31, 2001, 99.4% and 98.2%, respectively, of our
fixed income portfolio consisted of securities rated investment
grade, with 0.6% and 1.8%, respectively, rated below investment
grade.
We believe that this concentration in investment
grade securities reduces our exposure to credit risk on these
fixed income investments to an acceptable level.
Equity Price Risk
As of December 31, 2000 and
December 31, 2001, 5.8% and 6.7%, respectively, of our
investment portfolio, including cash and cash equivalents, was
in common stocks (unaffiliated and affiliated). Marketable
equity securities, which represented approximately 5.5% and
5.9%, respectively of our investment portfolio, including cash
and cash equivalents, are exposed to equity price risk, defined
as the potential for loss in market value owing to a decline in
equity prices. A 10% decline in the price of each of these
marketable equity securities would result in a total
$13.8 million at December 31, 2000 and $13.5 million
at December 31, 2001 decline in the fair value of the total
investment portfolio.
Foreign Currency Exchange Rate Risk
Through investment in securities denominated in
foreign currencies, we are exposed to foreign currency exchange
rate risk. Foreign currency exchange rate risk is the potential
for loss in market value owing to a decline in the U.S. dollar
value of these investments due to a decline in the exchange rate
of the foreign currency in which these assets are denominated.
As of December 31, 2000 and December 31, 2001, our
total exposure to foreign denominated securities in U.S. dollar
terms was approximately $86.5 million and $88.4 million,
respectively, or 3.4% and 3.9%, respectively, of our investment
portfolio, including cash and cash equivalents. The primary
foreign currency exposure was in Canadian dollar denominated
securities, which represented 3.4% and 3.9%, respectively, of
our investment portfolio, including cash and cash equivalents.
The potential impact of a 10% decline in each of the foreign
exchange rates on the valuation of investment assets denominated
in those respective foreign currencies would result in a total
decline in the fair value of the total investment portfolio of
$8.7 million at December 31, 2000 and
$8.8 million at December 31, 2001.
Accounting Standards
Statement of Financial Accounting Standards
(SFAS) No. 133 ("SFAS No. 133"),
Accounting for Derivative Instruments and Hedging
Activities,
was issued in June 1998 and amended by SFAS
No. 138, issued in June 2000. The requirements of SFAS
No. 133, as amended, became effective in the first quarter
of the fiscal year beginning January 1, 2001. The standard
establishes accounting and reporting standards for derivative
instruments embedded in other contracts and for hedging
activities. Under the standard, certain contracts that were not
formerly considered derivatives may now meet the definition of a
derivative. We have determined SFAS No. 133 has no impact
on our financial position and results of operations because we
have no derivative activity.
In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 141,
Business
Combinations
. SFAS No. 141 requires that we account for
all business combinations in the scope of the statement using
the purchase method. SFAS No. 141 is effective for business
combinations initiated after June 30, 2001 and for business
combinations accounted for using the purchase method for which
the
37
date of acquisition is July 1, 2001 or
later. Our acquisition by Fairfax in 1998 resulted in the
recognition of negative goodwill as a result of net assets
acquired in excess of the purchase price of $97,800. Prior to
adoption of SFAS No. 141, the unamortized balance of
negative goodwill was $74,591 and $64,809 at December 31,
2000 and 2001, respectively, and is included in other
liabilities in the consolidated balance sheet. Under SFAS
No. 141, the remaining unamortized negative goodwill of
$64,809 at December 31, 2001 will be recognized as an
extraordinary item on the statement of operations in 2002.
Amortization of the negative goodwill of $9,782 is included in
other income, net for each of the years ended December 31,
1999, 2000 and 2001, which, upon adoption of SFAS No. 41,
will no longer be recognized.
In June 2001, the FASB issued SFAS No. 142,
Goodwill and Other Intangible Assets
, which addresses
accounting and reporting for intangible assets, except for those
acquired in a business combination. SFAS No. 142 presumes
that goodwill and certain other intangible assets have
indefinite useful lives. Accordingly, goodwill will not be
amortized but rather will be tested at least annually for
impairment. SFAS No. 142 is became effective for us on
January 1, 2002. We have not yet completed our assessment
of the impact of SFAS No. 142 on our financial statements.
In August 2001, the FASB issued SFAS
No. 144,
Accounting for the Impairment or Disposal of
Long-lived Assets
. SFAS No. 144 establishes a single
accounting model for long-lived assets to be disposed of by
sale. A long-lived asset classified as held for sale is to be
measured at the lower of its carrying amount or fair value less
cost to sell. Depreciation (amortization) is to cease.
Impairment is recognized only if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash
flows and is measured as the difference between the carrying
amount and fair value of the asset. Long-lived assets to be
abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off are considered held and used
until disposed of. Accordingly, discontinued operations are no
longer to be measured on a net realizable value basis, and
future operating losses are no longer recognized before they
occur. We adopted SFAS No. 144 effective January 1,
2002. The provisions of the new standard are generally to be
applied prospectively and are not expected to significantly
affect our results of operations, financial condition or
liquidity.
38
BUSINESS
We are a national commercial property and
casualty insurance company with a focused underwriting strategy,
targeting specialty classes of business and overlooked market
opportunities. We distinguish ourselves by applying individual
risk selection to business which requires greater underwriting
expertise. Our objective is to expand opportunistically into
classes of business or market segments that are consistent with
our underwriting expertise and have the potential to generate an
underwriting profit. We write a broad range of commercial
coverages, including general liability, property, workers'
compensation, commercial automobile and surety. We operate
through our home office and a regional branch network, allowing
us to centrally control our underwriting process, respond to
local market conditions and build close relationships with our
producers and insureds.
Our business is distributed exclusively through
approximately 1,050 producers located throughout the United
States. Our producers include independent regional retail agents
and brokers, national brokers and wholesale brokers. Through our
producers, we access a broad cross section of business
opportunities, spanning a variety of market segments and product
groupings. This enables us to respond to changing market
conditions while promoting relative stability in our premium
production.
Our senior management team is led by Bruce A.
Esselborn, our Chief Executive Officer. Since joining us in
October 1999, Mr. Esselborn has applied a hands-on
management style in redesigning our underwriting strategies and
policies and improving our operating efficiency.
Mr. Esselborn has 35 years of experience in the
insurance industry, over 18 years of which were spent at
American International Group, Inc. While at AIG,
Mr. Esselborn held a variety of senior operating and
technical positions at several of AIG's domestic insurance
subsidiaries. In 1986, Mr. Esselborn left AIG to found
United Capitol Insurance Company, an excess and surplus lines
insurer, which was acquired by Capsure Holdings Corp., a
publicly traded company. While under Mr. Esselborn's
leadership from 1990 through September 1997, Capsure was a
highly successful underwriting operation, reporting an average
combined ratio of 75.6%, weighted by net premiums earned, during
his tenure. Our President, Nick Antonopoulos, has over
20 years of experience in the insurance industry, including
13 years at AIG where he most recently held the position of
Senior Vice President of Operations in AIG's Domestic
Brokerage Group.
In August 2000 we acquired Seneca which provides
specialty coverages such as bail bonds, non-standard property in
inner city markets, inland marine, boiler and machinery and
environmental liability. Seneca maintains a flexible approach to
the market, emphasizing lines of business which require strong
technical underwriting expertise and effective claims
management. In 2001, Seneca reported gross premiums written of
$143.4 million and a combined ratio of 97.8%.
In 2001, we generated $843.2 million of
gross premiums written, $607.1 million of net premiums
written and $683.9 million of total revenue. In 2001, 74.0%
of our business related to casualty coverages and 26.0% to
property coverages, as measured by gross premiums written. As of
December 31, 2001, we had cash and invested assets of
$2.3 billion, total assets of $5.1 billion and
stockholder's equity of $719.6 million. Following the
completion of this offering, we expect to have total
capitalization, including debt, of approximately.
Crum & Forster is a major component of the
U.S. commercial property and casualty insurance operations
of Fairfax Financial Holdings Limited, a Canadian publicly
traded financial services company principally engaged in
property and casualty insurance and reinsurance, investment
management and insurance claims management. The Crum &
Forster companies were acquired by Fairfax in August 1998.
Management Initiatives
We have made the following significant changes to
the management and operations of the Crum & Forster
companies acquired by Fairfax in August 1998. We have:
•
appointed in late 1999 a proven and incentivized
	management team, with an average of 23 years of insurance
	industry experience, led by Mr. Esselborn,
	Mr. Antonopoulos and Mary Jane Robertson, our Chief
	Financial Officer;
39
•
implemented a highly focused underwriting
	strategy and realigned our operating structure to emphasize
	product line experience and expertise and to provide a high
	degree of centralized control over underwriting and claims;
•
discontinued unprofitable classes of business,
	such as large fleet long haul trucking, New York and California
	contractors, taxis and limousines, fast food restaurant
	programs, country clubs and nursing homes, which represented
	approximately $250 million of gross premiums written, or
	34% of total gross premiums written in 1999. Discontinued lines
	accounted for approximately nine percentage points of our loss
	and LAE ratio for 2000, and significantly contributed to a 13.9%
	decrease in total gross premiums written in 2000 from 1999;
•
restructured our reinsurance programs to reduce
	our net retentions to $1 million on casualty lines and
	$2 million on property lines, from up to $8.8 million
	and $5 million, respectively, and reduced our gross policy
	limits, particularly in property;
•
targeted classes of business and types of
	insureds that tend to have larger premium policies and
	instituted minimum premium guidelines, which resulted in an
	increase in our average premiums per policy from approximately
	$20,000 in 1999 to $59,000 in 2001;
•
enhanced our price monitoring systems to provide
	management with better controls, to enable us to achieve our
	targeted pricing and profitability levels. In 2000 we increased
	renewal prices by approximately 11% and achieved an additional
	renewal price increase of approximately 17% in 2001;
•
evaluated the profitability and productivity of
	our producer relationships and terminated 130 producers. We
	diversified our distribution by appointing 480 new producers and
	entering into new arrangements with national brokers and
	wholesale brokers, in each case, aligned with our targeted
	classes of business and our insureds;
•
adjusted our commission structure to be in line
	with market practice and revised contingent commission
	agreements with producers to require a higher level of
	sustainable underwriting profit before producers earn a profit
	sharing payment. These actions resulted in a reduction of our
	gross commissions expense (as a percentage of gross premiums
	written) of 4.7 percentage points from 1999 to 2001;
•
reduced the number of employees by 25% from 1,357
	at December 31, 1999 to 1,023 at December 31, 2001,
	and reduced our payroll in 2001 by 18%, as compared to 1999,
	while productivity increased. Over this time, our gross premiums
	per employee increased 25% from approximately $549,000 to
	approximately $684,000;
•
created a disciplined expense management culture
	and carefully analyzed our existing cost structure. As a result,
	we undertook a number of expense reductions, the largest of
	which was a $10 million savings in our information
	technology expenses in 2001 while improving functionality; and
•
acquired Seneca, a specialty insurer focused on
	non-commodity lines of business, in August 2000 to participate
	in the small commercial market in a manner consistent with our
	underwriting philosophy. In 2001, Seneca reported a combined
	ratio of 97.8%.
Corporate Strategy
Our objective is to build shareholder value by
achieving a superior return on equity over the long term. We
intend to achieve our goal by focusing on underwriting
profitability and generating superior long-term investment
returns. The major elements of our strategy are:
Adhere to a disciplined underwriting
philosophy.
We focus on individual
risk selection and do not manage our business based on premium
growth or market share. We adhere to a centrally controlled
underwriting philosophy and focus on generating underwriting
profit by carefully selecting the risks we insure and
determining the appropriate price for such risks. Our Chief
Executive Officer and President are actively involved in our
overall underwriting function, as well as specific risk
underwriting across all lines of business.
40
1We will change pricing and terms based on
prevailing market conditions, sharply reduce or discontinue a
product or line in our existing book of business or refuse to
write business that we believe presents unacceptable pricing and
terms.
Expand and diversify our production sources.
We produce business through
diversified sources of production, in each case aligned with our
target underwriting classes. We continue to provide new products
and services within our lines of business and markets which
generate closer relationships with our agents, brokers and
insureds. We also strengthen customer relationships by providing
timely and responsive quotes, claims handling and loss control
services. Our high service standards foster closer relationships
with our producers and insureds. We believe that the Crum &
Forster name is well known within the commercial lines insurance
markets we serve.
Opportunistically pursue attractive lines of
business.
We believe our ability to
identify and react to changing market conditions provides us
with a competitive advantage. Based on the experience and
underwriting expertise of our management, we seek to write new
lines of business or expand existing classes of business based
on market conditions and expected profitability. For example, we
recently have expanded our business in excess property and
directors' and officers' liability insurance programs,
which have shown improved pricing.
Continue to aggressively manage expenses.
We are committed to a competitive
expense structure that complements our disciplined underwriting
strategy. We foster a culture of cost efficiency and have
developed systems and procedures through which we carefully
monitor and control expenses and promote efficient operations.
Commitment to financial strength and security.
We are committed to maintaining a
strong balance sheet in order to attract and retain high-quality
business. As of December 31, 2001 we had total assets of
$5.1 billion, stockholder's equity of
$719.6 million and statutory surplus of
$708.4 million. To protect our financial security, we
carefully monitor and control our gross and net limits.
Invest our assets on a total return basis.
We follow a long term value-oriented
investment philosophy, with the goal of optimizing investment
returns viewed on a total return basis, while maintaining a
sensitivity to our liquidity needs. This is coordinated through
our investment advisors, Hamblin Watsa Investment Counsel Ltd.,
a subsidiary of Fairfax. We intend to protect our capital from
loss and invest in debt and equity securities which we believe
are selling at prices below their intrinsic value.
Industry Trends and Market
Opportunity
Throughout the 1990s and into 2000, the property
and casualty insurance industry was overcapitalized, which
resulted in highly competitive market conditions as evidenced by
declining premium rates and poor underwriting results. Beginning
in mid-2000, excess capacity began to contract as companies
either ceased writing selected lines or withdrew from the market
completely. Capacity was further reduced by companies tightening
underwriting guidelines and returning to a focus on underwriting
profitability. In response to these market conditions, insurers
began to seek and achieve significant price increases, in
addition to improved terms and conditions. This has affected all
major lines of business with a more significant impact in
selected lines.
The terrorist attacks of September 11, 2001
accelerated the improvement in pricing and terms which were
underway in 2001 prior to these events. The losses from these
attacks represented the largest insured catastrophe in the
history of the insurance industry, surpassing the
$19.6 billion in losses (inflation adjusted) from Hurricane
Andrew in 1992, previously the largest insured event in history.
Current loss estimates for these attacks for the property and
casualty industry exceed $40 billion before taxes. This
loss estimate amounts to approximately 13% of the total
industry's surplus of approximately $300 billion, or
21% of the approximately $190 billion of the combined
surplus of the commercial property and casualty and reinsurance
sectors. More importantly, the events of September 11th
have led to a fundamental reevaluation of risk by commercial
insureds which is increasing the demand for insurance. These
events have caused further capacity
41
to exit the market as reinsurance rates increased
to levels where primary carriers were forced to retain higher
amounts of net exposure or exit market segments entirely.
During 2001, based on publicly available industry
information, commercial property and casualty insurers
experienced price increases of approximately 15% to 20% over
expiring terms across all major classes of business, although
some of the increases varied by region and business segment.
Based on a recent report by A.M. Best, approximately 25% of
medium and large accounts have experienced rate increases in
excess of 30% on their commercial coverages since
September 11, 2001. In particular, certain classes, such as
umbrella, business interruption, property and commercial auto,
are experiencing rate increases as high as 30% to 100%.
Given the further reduction in capacity and the
continued uncertainty caused by the events of
September 11th, we believe the current favorable market
environment will continue into 2003. The improvements in
pricing, to some degree, will be offset by the impact of loss
cost trends and the increased cost of reinsurance.
As a result of our management initiatives, we
believe we are well positioned to take advantage of the current
favorable market. During 2001, we achieved price increases of
approximately 17% on renewal business across our portfolio
(weighted by premium volume). Through January 2002, we
experienced price increases of approximately 25% on renewal
business across our portfolio (weighted by premium volume). In
2002, our property and umbrella lines of business are
experiencing the largest price increases within our portfolio.
Our focused underwriting strategy, together with higher prices
and improved terms and conditions, provide us with the best
opportunity in the past decade to achieve a combined ratio of
100% or better in 2002.
Recent Developments
September 11, 2001 Terrorist Attacks.
We provided insurance coverages,
including property, general liability, auto and workers'
compensation insurance, to businesses located in or near the
World Trade Center on September 11, 2001 and to other
parties alleging insured damage as a result of the terrorist
attacks of September 11. Following these attacks, we
carefully evaluated the impact on our financial position,
including a thorough review of our insurance portfolio on a
policy by policy basis. As of December 31, 2001, we
recorded losses and LAE for claims arising from the terrorist
attacks of $167.5 million, before ceded reinsurance, and
$1.5 million, net of reinsurance. Our estimated net
liability equals 0.2% of combined statutory surplus as of
December 31, 2001.
Our estimated losses are based on an evaluation
of each claim and include a provision for losses incurred but
not reported, as well as estimated costs related to settlement
of the claims. We believe our reserves for losses and LAE
related to the events of September 11, 2001 make adequate
provision for uncollectable reinsurance and thus, our ultimate
net liability. However, there can be no assurance that actual
ultimate net losses will not vary, perhaps substantially, from
our current estimate.
Corporate Reorganizations.
It has recently been reported that
Enron Corp., Global Crossing Ltd. and Kmart Corporation have
filed voluntary petitions for Chapter 11 reorganization.
Following a thorough review of our operations, we have
determined that we do not write any policies for these
companies, other than one property policy with Kmart
Corporation. In addition, we do not hold any equity, fixed
income or derivative securities issued by these companies.
Corporate Organization
We were incorporated in Delaware on March 6,
2002 to serve as the holding company for the Crum & Forster
companies. We have seven operating subsidiaries: US Fire; North
River; CF Insurance; CF Indemnity; CF Underwriters; CF
Specialty; and Seneca.
The Crum & Forster companies were acquired by
Fairfax on August 13, 1998. We acquired Seneca and its
subsidiaries on August 31, 2000. We acquired
CF Specialty (formerly Transnational Insurance Company) on
December 21, 2000.
42
Our operating insurance subsidiaries, except
Seneca and CF Specialty, participate in a pooling arrangement
pursuant to which the premiums, losses, dividends to
policyholders and other underwriting expenses of each
participant are pooled by means of mutual reinsurance on a fixed
percentage basis as follows: US Fire, 75%, North River, 22%, CF
Insurance, 1%, CF Indemnity, 1% and CF Underwriters, 1%. The
intercompany agreement provides that US Fire, acting as the lead
company, assumes from the other pool participants 100% of their
premiums, losses, dividends to policyholders, and other
underwriting expenses, and in turn, cedes to each pool
participant its participating percentage of premiums, losses and
other underwriting expenses. The pool permits each pool
participant to rely on the capacity of the entire pool, rather
than only its own capital and surplus. Further, it prevents any
one pool participant from suffering any undue losses, as all
pool participants share underwriting profits and losses in
proportion to their pool participation percentages. All
participants in the pool receive a uniform rating from
A.M. Best and Standard and Poor's. Seneca and
CF Specialty, each of which was acquired in 2000, operate
independently from the pool.
Lines of Business
We offer a broad range of property and casualty
insurance coverages to a variety of commercial accounts located
throughout the United States. In 2001, we reported
$843.2 million of gross premiums written in six major lines
of business. The following table illustrates our gross premiums
written for each of our six major lines of business for the
periods indicated:
Years Ended December 31,
1999
2000
2001
$
%
$
%
$
%
(dollars in millions)
General liability
$
126.0
16.9
%
$
135.7
20.0
%
$
204.0
24.2
%
Workers' compensation
128.7
17.3
145.3
21.4
171.5
20.3
Property
46.7
6.3
44.7
6.6
159.1
18.9
Commercial automobile
175.2
23.5
110.6
16.3
122.4
14.5
Commercial multi-peril
262.1
35.2
214.4
31.5
97.7
11.6
Surety
6.2
0.8
29.1
4.2
88.5
10.5
Total
$
744.9
100.0
%
$
679.8
100.0
%
$
843.2
100.0
%
General
liability
provides coverage for
liability exposures, including bodily injury and third-party
property damage arising from products sold and general business
operations. General liability also includes coverage to protect
insureds against third party personal injury. This includes
umbrella coverages which provide additional insurance protection
to businesses for amounts that exceed the limits of their
liability policies they have with us or another insurance
carrier. Approximately 64% of our umbrella premiums are for
accounts for which the underlying liability coverage is provided
by another insurance carrier. We also write specialty classes,
such as directors' and officers' liability, which
involves coverage for liability arising in their official
capacities, and employment practices liability, which protects
the insured from liability arising from employment policies and
plans, such as discrimination.
We have increased our gross premiums written in
general liability due to a de-emphasis on commercial multi-peril
policies that include this coverage and our expansion into new
specialty classes. We have expanded our business in the heavy
manufacturing and servicing sectors, while eliminating selected
classes including contractors operating in California and
New York.
43
The following table illustrates the distribution
of our total general liability gross premiums written by type of
coverage for the periods indicated:
Years Ended December 31,
1999
2000
2001
Umbrella liability
59.1
%
45.0
%
33.9
%
Products liability
19.4
16.6
17.9
Directors' and officers' liability
0.1
2.4
4.1
Employment practices liability
0.5
0.7
1.2
All other general liability
20.9
35.3
42.9
100.0
%
100.0
%
100.0
%
Workers'
compensation
provides coverage for
the obligations of an employer under state law to provide its
employees with specified benefits for work-related injuries,
deaths and diseases, regardless of fault. Typically, there are
four types of benefits payable under workers' compensation
policies: medical benefits, disability benefits, death benefits
and vocational rehabilitation benefits. The benefits payable and
the duration of such benefits are set by statute, and vary by
state and with the nature and severity of the injury or disease
and the wages, occupation and age of the employee. We offer
three types of workers' compensation products:
•
guaranteed cost products in which policy premiums
	are fixed for the period of coverage, and do not vary as a
	result of the insured's loss experience;
•
large deductible policies in which deductibles
	are typically $100,000 or greater; and
•
retrospectively rated policies, in which premiums
	are adjusted based on the actual loss experience of the insured
	during the policy period.
Generally, premiums are a function of:
•
the applicable premium rate, which varies
	according to the employee's duties and the business of the
	employer;
•
the insured employer's experience
	modification factor (where applicable); and
•
the insured employer's payroll.
A deposit premium generally is paid at the
beginning of the policy period and periodic installment payments
are paid during the policy period. The final premium is
determined at the end of the policy period and after the
employer's payroll records are audited. Premiums are
continually reviewed for adequacy using an actuarial analysis of
current and anticipated trends.
We apply a comprehensive approach to our
workers' compensation business that benefits both us and
our insureds. We emphasize loss cost containment methods which
involve employers, employees and care providers that focus on
cost-effective quality care and early return to work for injured
employees. We also strive to prevent costs associated with
fraudulent claims by applying a proactive approach to
investigation and litigation of claims where appropriate. We
provide our insureds loss prevention services focused on
workplace safety and the prevention of accidents.
The following table illustrates the distribution
of our total workers' compensation gross premiums written
by type of coverage for the periods indicated:
Years Ended December 31,
1999
2000
2001
Guaranteed cost
87.7
%
81.7
%
72.2
%
Large deductible
9.6
9.2
14.9
Retrospectively rated
2.7
9.1
12.9
100.0
%
100.0
%
100.0
%
44
Property
provides coverage for loss or damage to buildings, inventory and
equipment and financial loss due to business interruption
resulting from covered property damage. Policies are typically
"all risk" in nature, providing protection from
natural disasters, including losses from hurricanes, windstorms,
earthquakes, hail, severe winter weather and other events such
as theft and vandalism, fires, explosions and storms. Certain
risks such as war and nuclear risk generally are excluded from
all policies. Property insurance is principally provided through
fire and allied lines and inland marine coverage. Fire and
allied lines insure business property for damage and protect
businesses from financial loss due to business interruption.
Inland marine provides coverage for goods in transit and
builders' risk for buildings in the course of construction
and for tools and contractors' equipment. We increased our
property gross premiums written in 2001 due to a de-emphasis of
commercial multi-peril policies which include this coverage and
the writing of larger policies on an excess basis whereby our
policy extends coverage beyond that of one or more policies
provided by other carriers. Policies written on an excess basis
comprised 35% of our property gross premiums written in 2001 and
we expect this amount to increase in 2002.
The following table illustrates the distribution
of our total property gross premiums written by type of coverage
for the periods indicated:
Years Ended
December 31,
1999
2000
2001
Fire and allied lines
24.8
%
23.6
%
68.6
%
Inland marine
65.6
69.2
24.3
Other
9.6
7.2
7.1
100.0
%
100.0
%
100.0
%
Commercial
automobile
provides coverages for
businesses against losses arising from personal bodily injury,
bodily injury to third parties, property damage to an
insured's vehicle, property damage to other vehicles and
other property resulting from the ownership, maintenance or use
of automobiles and trucks in a business. We target insureds with
fleets of 25 to 75 vehicles, particularly those with newer model
year vehicles, low driver turnover and good driving records. Our
gross premiums written have declined from 1999 primarily due to
the elimination of certain classes of business which we did not
expect to produce an underwriting profit, such as taxis and
limousines and large fleet long haul trucking.
Commercial
multi-peril
combines property and
liability coverage under one insurance policy. We typically
write these package policies for smaller businesses where
expense advantages can be gained by combining these coverages
rather than purchasing two separate policies. For the years
ended December 31, 1999, 2000 and 2001, approximately
51.8%, 53.0% and 61.6%, respectively, of our commercial
multi-peril gross premiums written were attributable to property
coverage. We intentionally wrote less commercial multi-peril
business in each of 2000 and 2001 as we have substantially
unbundled property and liability coverages for larger accounts
and eliminated business written in higher hazard grades. We
intend to continue to write commercial multi-peril for smaller
businesses, particularly through Seneca.
Surety
involves three party agreements in which the issuer of the bond
(the surety) joins with a second party (the principal) in
guaranteeing to a third party (the owner/ obligor) the
fulfilment of some obligation on the part of the principal. The
surety generally has a right to recover from the principal any
losses or expenses paid to the third party.
Surety is generally classified into two broad
types: contract bonds and commercial bonds. Contract bonds
secure a contractor's performance and/or payment obligation
generally with respect to a construction project and are
generally required by federal, state and local governments for
public works projects. Our average contract bond amount was
approximately $2 million in 2001, and had an average job
length of approximately one and a half years. Commercial
bonds cover obligations typically required by law or regulation
such as bail bonds and license and permit bonds. Bail bonds,
which represents the largest source of our surety premium,
provide for the issuance of financial security to a court to
guarantee the return at specific dates of a person facing
criminal charges. We wrote $70.9 million of gross premiums
in the bail bonds business in 2001.
45
The following table illustrates the distribution
of our total surety gross premiums written by type of coverage
for the periods indicated:
Years Ended
December 31,
1999
2000
2001
Commercial bonds:
Bail
0.0
%
69.7
%
80.1
%
Other
94.4
18.6
5.6
Contract bonds
5.6
11.7
14.3
100.0
%
100.0
%
100.0
%
Geographic Distribution
We are licensed and currently write insurance in
all 50 states. For the year ended December 31, 2001,
our top ten states represented 70.4% of direct written premiums.
The following table displays the distribution of our direct
written premiums by state as a percent of total direct written
premiums for the periods indicated:
Years Ended
December 31,
1999
2000
2001
California
5.4
%
8.1
%
15.3
%
Florida
12.3
12.3
11.3
New York
12.5
11.0
10.4
Pennsylvania
5.6
6.0
6.7
New Jersey
8.2
6.5
6.4
Texas
5.1
6.3
5.9
Illinois
3.8
4.4
5.5
Massachusetts
4.5
4.3
3.5
Colorado
3.1
3.1
2.7
Maryland
3.4
3.4
2.7
All other states(1)
36.1
34.6
29.6
100.0
%
100.0
%
100.0
%
(1)
No other state comprises more than 2.2% of 2001
	total direct premiums written.
Methods of Distribution and Business
Development
We depend on producers to provide us with access
to a wide range of business opportunities. Our ability to
develop strong and mutually beneficial relationships, and
successfully market our products and services to producers, is
paramount to our success. All of our business is distributed
through approximately 1,050 producers located throughout the
United States. We intend to continue to expand our producer
force. We offer our producers underwriting expertise and timely
policy processing, which assists them in placing business in
overlooked markets. Our service extends to loss control and
claims services, particularly on large accounts where this
expertise is highly valued by both the producer and the insured.
Our producers generally fall into three
categories: independent agents and brokers; national brokers;
and wholesale brokers. Each of these channels has its own
distinct distribution characteristics and customers. Independent
agents and brokers generally operate in a limited geographic
region. These producers often focus on smaller to mid-size
accounts. National brokers generally have a significant number
of locations throughout the United States and target larger
risks requiring complex insurance analysis and placement. Our
policies with these producers tend to be large, loss rated
casualty products and excess property policies. Wholesale
brokers primarily produce business that retail agents and
brokers have difficulty placing because it is unique, unusual or
hazardous.
46
Since our management team was appointed in late
1999, we have significantly refined our producer business
development strategy. We have:
•
established formal annual assessment criteria and
	business planning commitments for each of our larger producers,
	including financial performance, market and customer segment
	compatibility and growth expectations;
•
implemented new compensation structures offering
	incentives based on higher profitability thresholds and improved
	transaction efficiency;
•
refreshed our producer base appointing 480 new
	producers, which resulted in a significant increase in new
	business in 2001, and cancelled 130 independent agent and
	broker relationships due to lack of customer fit or inadequate
	profitability; and
•
entered into national broker and wholesale broker
	distribution channels, which accounted for approximately 60% of
	our new gross written premiums in 2001.
The following table illustrates the percentage of
our business, other than bail bonds, from these categories of
producers for the periods indicated:
Years Ended
December 31,
1999
2000
2001
Independent agents and brokers
79.6
%
69.4
%
55.0
%
National brokers
20.2
26.5
33.4
Wholesale brokers
0.2
4.1
11.6
100.0
%
100.0
%
100.0
%
The portion of our business from national brokers
and wholesale brokers has grown significantly since 1999,
consistent with our strategy to write larger risks, which favors
individual risk underwriting. During 2001 we more than doubled
our new business production, with one-third of the new business
written by producers who were appointed since January 1,
2000. Our business strategy is designed to increase our gross
premiums written through increasing sales with our existing
producers as well as continuing to selectively add new
appointments. The following table displays gross premiums
written from new business by producer category for the periods
indicated, excluding Seneca:
Years Ended December 31,
1999
2000
2001
(dollars in millions)
Independent agents and brokers
$
113.6
$
88.4
$
154.5
National brokers
30.9
63.6
155.0
Wholesale brokers
—
17.5
59.3
Total
$
144.5
$
169.5
$
368.8
Pricing and Underwriting
We adhere to a disciplined underwriting strategy
that focuses on profitability without regard to premium growth
or market share. Each policy is individually underwritten based
on particular risk and class of business. We set prices based on
these risk characteristics and consider other factors such as
estimated frequency and severity of expected losses, the
expenses of producing the business and managing claims and an
allowance for an underwriting profit. Our disciplined
underwriting strategy may restrict our premium growth when
market conditions do not meet our pricing and underwriting
standards.
Our underwriting process is centrally controlled
by product line executives in our head office, who together have
an average of approximately 25 years of experience in the
insurance industry. Each executive is held accountable for the
underwriting results of his or her line of business.
Underwriting authority levels are established based on
characteristics such as class of business, hazard grade and
policy limit and are assigned
47
based on the experience and expertise of the
underwriter. Regional underwriting product line managers report
to the head office executives on all underwriting matters. A
significant amount of business is underwritten directly by
underwriters in the head office. Large accounts, which typically
include workers' compensation, automobile, property and
general liability coverage, are rated on individual loss history
and projected loss patterns with the pricing developed in
concert by field underwriting, head office underwriting and
actuarial personnel.
Our business is either manually-rated or
judgment-rated, depending generally on the size of the risk to
be priced. Manual rating begins with a classification rate
provided by an industry rating bureau. We then determine
deviations from this rate based on the individual
characteristics and loss history of the risk, as well as the
desirability of the class of business. Judgment-rating is where
there is no appropriate classification rate, and the rate is
developed entirely on the basis of the specific characteristics
of the individual risk.
The majority of our property business is written
in excess of one or more underlying insurance policies. Pricing
of excess property business requires significant underwriting
expertise. Pricing as a percentage of total insured values is
also considered on this business. Inland marine is typically
rated individually by the underwriter based on the
characteristics of the risk and the class of business, without
the use of an industry manual rate. Our underwriting of property
also considers the aggregate exposures to natural catastrophic
losses and attempts to mitigate such exposure. We monitor total
insured values in areas most susceptible to a hurricane or
earthquake event, and use sophisticated modeling software to
quantify the probable maximum loss on such events. Catastrophe
exposure is also considered when pricing individual property
risks.
A significant portion of our business is large
enough to be rated on its own loss history. This loss rated
business is within the automobile, general liability and
workers' compensation lines of business, and includes
guaranteed cost policies, where policy premiums are fixed, and
loss sensitive rating programs where the ultimate costs to the
insured are dependent upon its loss experience. The underwriting
of larger loss rated business requires approval by head office
underwriting and actuarial personnel. Loss sensitive business
includes retrospectively rated policies in which premiums are
adjusted based on the actual loss experience of the insured, and
large deductible policies where the insured must reimburse the
company for any losses below the deductible, which is typically
$100,000 or greater. Both of these loss sensitive products
expose us to potential credit risk since we may be due payment
from the insured after coverage has been provided. Loss
sensitive policies are subject to extensive financial analysis
prior to binding, and generally require that the insured provide
collateral as a condition to our writing the policy.
Surety underwriting also requires significant
financial analysis, as well as underwriting expertise.
Collateral is often required as a condition to writing the bond.
On our bail bond business, we deal with one agent, who in turn
deals with a significant number of agents nationally. These
obligations are secured by both the one agent we deal with and
its agents. We must approve, prior to binding, all bail bonds
with values in excess of $500,000.
We closely monitor underwriting on an on-going
basis to enforce compliance with standards throughout the field
organization. A premium register, which lists each policy
processed on the prior day, is distributed daily to senior
management and to the head office underwriting executives. We
review these reports regularly and the underwriting executive or
field underwriter is asked to justify any policy which may be
inconsistent with the established underwriting standards of the
company. On larger policies, a more detailed underwriting
summary sheet is prepared and distributed to senior management
and the head office underwriting executives on a timely basis.
This report identifies the insured name, line of business,
policy premium, commission, prior loss history and other
relevant information relating to the underlying risk. Each of
our Chief Executive Officer and President regularly interact
with the underwriting executive throughout the underwriting
process and review the premium register and underwriting summary
sheets on a daily basis. A detailed price monitoring process is
conducted by actuarial personnel, with region and line of
business pricing results released on a weekly and monthly basis.
These pricing results include price increases on policies that
are renewed and new business prices versus established targets
that are intended to produce an underwriting profit. Large
accounts which are rated based on their own loss history are
monitored separately with an expected combined ratio quantified
for each account.
48
Claims Management
We believe that our claims management practices
and philosophy provide us with an advantage over our
competition. We have developed claims cost management
methodologies designed to monitor, control and measure all
aspects of the claims resolution process. We also have developed
and implemented competitive medical management and managed care
programs to control workers' compensation claim costs. Our
claims management philosophy emphasizes:
•
maintenance of timely and adequate reserves for
	claims, and the cost effective delivery of claims services by
	controlling loss and loss expenses;
•
financial integrity through the employment of
	investigative specialists who attempt to limit fraudulent claims
	activity and a program to pursue appropriate subrogation and
	recovery opportunities; and
•
exceptional customer service whereby we apply our
	resources to make timely investigation and resolution of
	customer claims.
Substantially all claims are handled by our
regional offices, with the exception of umbrella, high value
casualty and large property claims, which are handled in our
home office. As of December 31, 2001 we had 410 employees
dedicated to claims management and administration, 71 of whom
were located at our headquarters providing supervisory and
control functions. These employees include adjusters, litigation
specialists, regional and corporate claims management, line
specialists and support staff. We regularly conduct internal
reviews and audits to monitor the regional offices'
adherence to claim policies and procedures, the adequacy of case
reserves, loss expenses, productivity and service standards.
We continue to emphasize a specialized approach
to managing of our exposure to asbestos, environmental and other
latent claims. We employ The RiverStone Group, a Fairfax
affiliate solely focused on providing claim and reinsurance
recovery services with respect to asbestos, environmental and
other latent exposure claims to the Fairfax group of companies.
Prior to its acquisition by Fairfax in 1999, RiverStone had
already acquired significant experience in specialized claims
and reinsurance recovery services of latent exposures.
Reserves
Property and casualty insurers establish reserves
to provide for future amounts needed to pay claims with respect
to insured events that have occurred, including events that have
not yet been reported to the insurer. Reserves are also
established for LAE, representing the estimated expenses of
adjusting claims, including legal and other fees, and general
expenses of administering the claims settlement process.
After a claim is reported where appropriate, our
claims personnel establish a "case reserve" for the
estimated amount of the ultimate payment. The estimate reflects
the informed judgment of management based on reserving practices
and management's experience and knowledge regarding the
nature and value of the specific type of claim. Claims personnel
review and update their estimates as additional information
becomes available and claims proceed towards resolution. In
addition, reserves are also established on an aggregate basis
for losses incurred but not reported to the insurer and for
potential further loss development on reported claims, including
LAE (referred to collectively as IBNR).
We derive estimates for unreported claims and
development on reported claims principally from actuarial
analyses of historical patterns of loss development by accident
year for each type of exposure and market segment. Similarly, we
derive estimates of unpaid LAE principally from actuarial
analyses of historical development patterns of the relationship
of LAE to losses for each line of business and type of exposure.
The significant changes we have made to our operations since
1999 make it more difficult to accurately estimate our potential
losses. The historical patterns upon which we typically would
rely to develop reserves are not consistent with our current
lines of business, net retention levels, premium sizes, risk
profiles of insureds and other operational changes. As we review
our reserves, we stress actuarial methodologies that recognize
these new directions by line of business. We compare historical
and current case, settlement and payment patterns by line to
establish loss patterns that recognize the new development
patterns and retention levels.
The process of estimating loss reserves is
imprecise due to a number of variables. These variables are
affected by both internal and external events such as, changes
in claims handling procedures, inflation,
49
judicial trends and legislative changes. Many of
these items are not directly quantifiable, particularly on a
prospective basis. Additionally, there may be significant
reporting lags between the occurrence of the insured event and
the time it is actually reported to the insurer. We continually
refine reserve estimates in a regular ongoing process as
historical loss experience develops and additional claims are
reported and settled. We reflect adjustments to reserves in the
results of operations in the periods in which the estimates are
changed. In establishing reserves, we take into account
estimated recoveries for reinsurance, salvage and subrogation.
The aggregate reserves are also reviewed at least annually by a
nationally recognized actuarial firm.
We discount long-term disability payments under
our workers' compensation policies using a maximum interest
rate of 5%. The amount of discount was $101.5 million and
$107.1 million at December 31, 2000 and 2001,
respectively.
Loss Development Data.
The table below presents a
reconciliation of the net liability for unpaid losses and LAE
for the periods indicated:
Year Ended December 31,
1999
2000
2001
(dollars in thousands)
Gross unpaid losses and LAE, beginning of year
$
3,597,341
$
3,492,436
$
3,306,741
Less ceded unpaid losses and LAE
1,105,466
1,304,908
1,570,108
Net unpaid losses and LAE, beginning of year
2,491,875
2,187,528
1,736,633
Seneca net unpaid loss and LAE at acquisition
—
45,457
—
Losses and LAE incurred related to:
Current year
541,782
358,946
458,675
Prior years
15,082
32,156
183,073
Total losses and LAE incurred
556,864
391,102
641,748
Paid losses and LAE related to:
Current year
196,750
139,801
163,792
Prior years
664,461
747,653
667,134
Total losses and LAE paid
861,211
887,454
830,926
Net unpaid losses and LAE, end of year
2,187,528
1,736,633
1,547,455
Ceded unpaid losses and LAE
1,304,908
1,570,108
1,876,338
Gross unpaid losses and LAE, end of year
$
3,492,436
$
3,306,741
$
3,423,793
Reserves for losses and LAE were increased in
each year based on the latest actuarial estimates. The
components of development of prior years' loss and LAE
reserves are as follows for the periods indicated:
Years Ended December 31,
1999
2000
2001
(dollars in thousands)
General liability
$
16,490
$
35,888
$
224,212
Workers' compensation
8,121
51,194
31,797
Commercial multi-peril
56,198
14,572
81,793
Commercial auto liability
19,005
48,408
81,563
Other
3,589
(2,222
)
1,725
Total unfavorable development before benefit of
	aggregate excess of loss reinsurance
103,403
147,840
421,090
Losses and LAE ceded to aggregate excess of loss
	reinsurance
(88,321
)
(115,684
)
(238,017
)
Net unfavorable development
$
15,082
$
32,156
$
183,073
50
Adverse development in calendar year 2001 was
attributable to accident years 2000 (9.5% of total before
benefit of aggregate excess of loss reinsurance), 1999 (29.4%),
1998 (26.4%), 1997 (10.5%) and 1996 and prior years (24.2%). The
net $183.1 million of unfavorable development in 2001 was
ceded to a retroactive aggregate excess of loss reinsurance
contract, the benefit of which was deferred and will be
amortized to earnings over the period in which the reinsurance
recoveries are expected to be made.
We also establish reserves to provide for
estimated amounts recoverable from our reinsurers which they may
be unable or unwilling to pay. We evaluate the creditworthiness
of reinsurers, their anticipated interpretation of the
applicability of reinsurance agreements to certain types of
claims or exposures, and our collections experience.
In general, asbestos, environmental and other
latent liability claims may give rise to collectibility issues
both because of their inherent complexity and attendant issues
and because these exposures arise under insurance policies that,
in many cases, were written decades ago, when we used a large
number of reinsurers, some of which subsequently encountered
financial difficulties. As reserves for asbestos, environmental
and other latent liability exposures were increased, we also
increased reserves, where appropriate, for uncollectible
reinsurance. Reserves for uncollectible reinsurance were
$41.2 million at December 31, 2000 and
$38.3 million at December 31, 2001.
The following loss and LAE reserve development
table illustrates the development of balance sheet liabilities
from 1991 through 2001 and the subsequent changes in those
reserves, presented on a historical basis. The first line of the
table is the estimated liability for unpaid losses and LAE, net
of reinsurance recoverable, recorded at the balance sheet date
for each year. The lower section of the table shows the updated
amount of the previously recorded liability based on experience
as of the close of each succeeding year. Care must be taken to
avoid misinterpretation by those unfamiliar with this
information or familiar with other data commonly reported by the
insurance industry. The accompanying data is not accident year
data, but rather a display of 1991 to 2001 year-end
reserves and the subsequent changes in those reserves.
51
Ten Year Analysis of Consolidated Loss and
Loss Adjustment Expense Reserve Development
Presented Net of Reinsurance with Supplemental
Gross Data
Years Ended December 31,
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
(dollars in millions)
Reserves for unpaid loss and LAE
$
2,174
$
2,357
$
2,292
$
2,168
$
2,184
$
2,385
$
2,383
$
2,492
$
2,188
$
1,737
$
1,547
Cumulative paid as of:
One year later
723
499
565
555
502
561
564
664
744
667
Two years later
1,099
937
964
923
876
949
1,050
1,220
1,280
Three years later
1,460
1,273
1,243
1,208
1,153
1,315
1,479
1,627
Four years later
1,735
1,479
1,449
1,394
1,432
1,648
1,767
Five years later
1,904
1,643
1,588
1,593
1,689
1,836
Six years later
2,039
1,736
1,730
1,791
1,828
Seven years later
2,115
1,863
1,882
1,897
Eight years later
2,228
1,998
1,973
Nine years later
2,351
2,076
Ten years later
2,423
Liability re-estimated as of:
One year later
2,721
2,351
2,300
2,273
2,358
2,390
2,550
2,507
2,220
1,920
Two years later
2,622
2,400
2,355
2,401
2,331
2,549
2,555
2,496
2,407
Three years later
2,659
2,428
2,460
2,372
2,460
2,542
2,546
2,561
Four years later
2,687
2,520
2,424
2,468
2,449
2,539
2,561
Five years later
2,819
2,492
2,508
2,450
2,448
2,550
Six years later
2,806
2,572
2,478
2,449
2,454
Seven years later
2,875
2,540
2,478
2,450
Eight years later
2,843
2,539
2,478
Nine years later
2,844
2,536
Ten years later
2,839
Cumulative redundancy/ (deficiency)
(665
)
(179
)
(186
)
(282
)
(270
)
(165
)
(178
)
(69
)
(219
)
(183
)
—
End of year:
Gross liability
$
3,597
$
3,492
$
3,307
$
3,424
Reinsurance recoverable
1,105
1,305
1,570
1,876
Net liability
$
2,492
$
2,188
$
1,737
$
1,547
Latest:
Gross re-estimated liability
$
4,011
$
3,978
$
3,685
Re-estimated reinsurance recoverable
1,450
1,571
1,765
Net re-estimated liability
$
2,561
$
2,407
$
1,920
Gross cumulative redundancy/ (deficiency)
(414
)
(486
)
(378
)
Asbestos, Environmental and Other Latent
Exposures.
Claims resulting from
asbestos, environmental and other latent exposures provide
unique and difficult challenges to the insurance industry. The
possibility that these claims would emerge was typically not
contemplated at the time the policies were written, and
traditional actuarial reserving methodologies have not been
useful in accurately estimating ultimate losses.
Asbestos claims, which began to emerge in the
1970s, were the first type of latent exposure to cause
significant losses to the insurance industry. Historically, the
largest asbestos claims came from manufacturers of asbestos
because their claims typically involved many injured parties.
Over time, case law has become reasonably well developed in the
asbestos bodily injury claim area, and many of these claims from
manufacturers have been settled. Recently, however, the number
of asbestos bodily injury claims pertaining to suppliers and
distributors of asbestos, as well as users of asbestos products,
has been increasing.
52
Environmental claims were the second major type
of latent exposure claims to emerge and significantly affect the
insurance industry. Environmental claims have generally been
defined by the insurance industry as loss or potential loss
related to the alleged contamination of a site resulting from
operations on the site, waste disposal or other causes. Examples
of environmental exposure include possible liabilities resulting
from chemical waste, hazardous waste, industrial waste disposal
facilities, landfills, toxic waste pits and underground storage
tanks. Inconsistent federal and state case law have compounded
the industry's difficulties in adequately assessing these
complex exposures.
The principal federal statute that requires
cleanup of environmental damage is the Comprehensive
Environmental Response, Compensation and Liability Act passed in
1980 and better known as "Superfund." It imposes
liability on "potentially responsible parties,"
subjecting them to liability for cleanup costs on National
Priority List sites regardless of fault, time period and
relative contribution of pollutants. Many different reform
proposals have been put forth, most of which generally have been
supported by the insurance industry.
Other latent exposure claims include those for
predominantly chemical and lead exposure and to a lesser extent
repetitive stress, construction defects, sick building, latex
products, chemical sensitivity, noise-induced hearing loss and
tobacco and tobacco-related products, as well as other exposures
that were not anticipated at the time the policies were written.
We have exposure to asbestos and environmental
claims arising from the sale of general liability, commercial
multi-peril and umbrella insurance policies, the predominance of
which were written for accident years 1985 and prior. Since
1985, we have had a specialized claims unit dedicated to the
management and settlement of asbestos and environmental claims.
In 2000, we entered into an agreement with RiverStone for claims
handling services for asbestos and environmental claims.
We establish both case and bulk reserves for
asbestos and environmental. The bulk reserves include both a
provision for potential development on known cases and a
provision for claims incurred but not yet reported. The bulk
reserves are established based on a detailed ground-up exposure
model.
Estimation of ultimate liabilities for these
exposures is unusually difficult due to outstanding issues such
as whether coverage exists, definition of an occurrence,
determination of ultimate damages and allocation of such damages
to financially responsible parties.
Our survival ratio for environmental and asbestos
related liabilities as of December 31, 2001 is
10 years, reflecting full utilization of remaining
indemnifications. The survival ratio represents the
environmental and asbestos related reserves, net of reinsurance,
on December 31, 2001 plus remaining indemnifications
divided by the average paid environmental and asbestos claims,
net of reinsurance, for the last three years. Our survival ratio
is nine years prior to the reflection of remaining
indemnifications. Our survival ratio compares favorably with
A.M. Best's 3-year average survival ratio of 6.7 years
for the United States property and
53
casualty industry. The development of reserve and
claim information by latent exposure category is as follows:
Years Ended December 31,
1999
2000
2001
Gross
Net
Gross
Net
Gross
Net
(dollars in thousands)
Latent total:
Liability for unpaid losses and LAE, beginning of
	year
$
525,686
$
391,641
$
508,642
$
387,474
$
444,858
$
350,641
Losses and LAE incurred during the year
32,063
39,845
48,398
36,588
78,986
74,482
Loss and LAE paid during the year
49,107
44,012
112,182
73,421
73,679
44,897
Liability for unpaid losses and LAE, end of year
$
508,642
$
387,474
$
444,858
$
350,641
$
450,165
$
380,226
Asbestos:
Liability for unpaid losses and LAE, beginning of
	year
$
242,951
$
142,871
$
254,493
$
164,374
$
236,200
$
174,124
Losses and LAE incurred during the year
31,927
38,739
50,968
39,335
75,897
69,254
Loss and LAE paid during the year
20,385
17,236
69,261
29,585
50,626
15,232
Liability for unpaid losses and LAE, end of year
$
254,493
$
164,374
$
236,200
$
174,124
$
261,471
$
228,146
Environmental:
Liability for unpaid losses and LAE, beginning of
	year
$
215,131
$
187,524
$
192,027
$
167,172
$
170,595
$
145,424
Losses and LAE incurred during the year
(1,097
)
(166
)
(3,036
)
(2,982
)
991
2,033
Loss and LAE paid during the year
22,007
20,186
18,396
18,766
19,883
22,691
Liability for unpaid losses and LAE, end of year
$
192,027
$
167,172
$
170,595
$
145,424
$
151,703
$
124,766
Other Latent:
Liability for unpaid losses and LAE, beginning of
	year
$
67,604
$
61,246
$
62,122
$
55,928
$
38,063
$
31,093
Losses and LAE incurred during the year
1,233
1,272
466
235
2,098
3,195
Loss and LAE paid during the year
6,715
6,590
24,525
25,070
3,170
6,974
Liability for unpaid losses and LAE, end of year
$
62,122
$
55,928
$
38,063
$
31,093
$
36,991
$
27,314
54
Reinsurance
In order to control our exposure to losses and
protect our capital resources, we cede a portion of our gross
policy premiums to reinsurers in exchange for the
reinsurer's agreement to share a portion of the covered
losses. The purchase of reinsurance does not discharge us from
our primary liability to our policyholders. The net liability we
retain on individual risks varies by product and by the nature
of the risk. Insured liabilities can be reinsured either by
treaty, wherein reinsurers agree in advance to provide coverage
above retained limits or for a specified percentage of losses
attributable to specific policies, or by facultative
arrangements, wherein reinsurance is provided for individual
risks based on individual negotiations.
As of January 1, 2002, our per risk
reinsurance coverages were as follows:
Reinsured
Our Retention
Limits(1)
(dollars in millions)
General Liability:
Umbrella
$1.0
$
24.0
Directors' and officers' liability
18% Quota Share
$
15.0
Workers' compensation
$1.0(2)
$
99.0
(2)
Property
$2.0
$
48.0
Surety per principal
$5.0
$
10.0
Surety per bond
Variable Quota Share(3)
$
50.0
(1)
Represents the amount of loss protection above
	our net retention on an excess of loss basis unless otherwise
	noted.
(2)
We also retain 6.875% of losses in excess of
	$20.0 million.
(3)
Our percentage retention varies based on the bond
	limit. The weighted average of our retention at January 1,
	2002 was 6.5%.
We manage our exposure to catastrophes by
monitoring the accumulation of insured value in
catastrophe-prone areas. Our property catastrophe reinsurance
treaty protects us in the event of property losses arising from
one defined catastrophic occurrence or series of events. This
treaty provides $155.0 million of coverage in excess of our
$25.0 million retention level. We have an approximate 2%
co-participation on the reinsured layer, which amounts to an
additional retained loss of $3.1 million in the event that
the entire treaty limit is utilized. Under certain conditions,
we may recover $22.5 million of the $25.0 million net
retention per occurrence.
In 2001, we put in place two aggregate stop loss
treaties to protect us from adverse development of prior
years' loss and LAE reserves. One treaty provides
$400.0 million of coverage for 2000 and prior accident
years. At December 31, 2001, $190.0 million of the
limit was available, with additional premiums payable if the
remaining limit is used. The second treaty provides
$100.0 million of coverage for accident periods prior to
August 13, 1998, the date we were acquired by Fairfax.
We have not purchased, and do not intend to
purchase, any aggregate stop loss reinsurance to protect us from
losses from business written in 2002.
Reinsurance recoverables, net of uncollectible
reinsurance reserves, were $1.3 billion as of
December 31, 1999, $1.6 billion as of
December 31, 2000 and $2.1 billion as of
December 31, 2001. We regularly review our reserves for
uncollectible reinsurance. Included in net reinsurance
recoverables at December 31, 2001 are reserves for
uncollectible paid and unpaid reinsurance totaling
$38.3 million.
Set forth below is a table showing the ten
largest reinsurance recoverables by reinsurer as of
December 31, 2001. Reinsurance recoverables from these
reinsurers totaled approximately $1,577.5 million as of
December 31, 2001, or 74.0% of reinsurance recoverable
balances. Amounts recoverable from pools and associations and
contingent obligations associated with structured settlements
with life insurance companies amounted to an additional
$190.5 million, or 8.9% of reinsurance recoverables, at
December 31, 2001.
55
Reinsurance Recoverables as of
December 31, 2001
Gross
A.M. Best
Security
Reinsurance
% of
Reinsurer
Rating(1)
Provided
Recoverables
Total
(dollars in millions)
Inter-Ocean Reinsurance Company Limited(3)
$
405.0
(2)
$
386.7
18
%
Ridge Reinsurance Limited
235.0
(2)
233.8
11
North American Specialty Insurance Company
A++
79.9
(6)
210.0
10
International Insurance Company(4)
B++
—
184.7
8
Federal Insurance Company
A++
58.3
(6)
166.2
8
Mountain Ridge Insurance Company(5)
97.0
(6),
45.5(7)
125.5
6
Swiss Reinsurance America Corp.
A++
4.5
(6)
81.1
4
General Reinsurance Corp.
A++
—
69.0
3
Converium Holding AG
A
14.8
(6)
64.2
3
American Re-Insurance Company
A++
—
56.3
2
All other
15.0
(2),
45.1(7)
554.2
(8)
27
Total gross recoverables
$
2,131.7
100
%
(1)
The A.M. Best rating system includes ratings of
	"A++" and "A+" (which are
	"Superior" ratings), "A" and "A-"
	(which are "Excellent" ratings), "B++" and
	"B+" (which are "Very Good" ratings) and
	nine lower ratings categories.
(2)
Value of New York Reg. 114 compliant trust
	accounts as of December 31, 2001.
(3)
Inter-Ocean is fully reinsured under a
	retrocession agreement with American Re. Inter-Ocean has
	assigned its payment rights under the retrocession agreement to
	Crum & Forster.
(4)
International Insurance is a Fairfax subsidiary
	which is currently in runoff, with capital and surplus at the
	end of 2001 of $319.2 million. These recoverables arise
	from a restructuring in 1993, prior to Fairfax's
	acquisition of Crum & Forster.
(5)
Recoverable guaranteed by the St. Paul
	Companies (parent).
(6)
Funds held balances as of December 31, 2001.
(7)
Clean, irrevocable, unconditional and evergreen
	letters of credit.
(8)
84% of these recoverables are from companies
	having an A.M. Best rating of "A" or better.
Investments
The following table summarizes the fair value of
our investments by type of investment including cash and cash
equivalents at the dates indicated:
At December 31,
2000
2001
(dollars in millions)
United States government and government agencies
	and authorities
$
1,070.2
$
832.4
States, municipalities and political subdivisions
11.7
9.7
Foreign governments
1.0
1.0
Public utilities
366.3
323.9
All other corporate
833.3
684.3
Total fixed income securities
2,282.5
1,851.3
Equity securities
145.2
153.2
Cash and cash equivalents
89.3
273.6
Total
$
2,517.0
$
2,278.1
56
As of December 31, 2001, we held
investments, including cash and cash equivalents, totaling
$2.3 billion. Our overall investment strategy is to
maximize the total return of the portfolio while prudently
preserving invested capital for protection of policyholders and
providing sufficient liquidity for the payment of claims and
other policy obligations. Our investment policy provides the
flexibility to implement this strategy.
Our investments are managed by Hamblin Watsa, a
subsidiary of Fairfax. Our investment guidelines, which are
approved by our board of directors and implemented by Hamblin
Watsa, stress preservation of capital, market liquidity,
diversification of risk and long-term, value-oriented style.
Long-term investments generally are made using the value
approach by investing in securities which we believe are selling
below their intrinsic value to protect capital from loss and
generate above-average, long term total returns.
With regard to equities, no attempt is made to
forecast the economy or the stock market. Equities are selected
on the basis of prices which are perceived to be selling at a
discount to Hamblin Watsa's conservative estimate of
intrinsic values. Downside protection is obtained by seeking a
margin of safety in terms of a sound financial position.
As regards fixed income, no attempt is made to
forecast the economy or interest rates. Rather, fixed income
securities are selected on the basis of yield spreads over
Treasury bonds, subject to stringent credit analysis. Securities
meeting these criteria may not be readily available, in which
case Treasury bonds are emphasized. The fixed income portfolio
currently has an average credit quality of "AA" as
measured by S&P or Aa2 as measured by Moody's, using
the higher rating in the event there is a split rating.
Notwithstanding the foregoing, our investments are subject to
market risks and fluctuations, as well as to risks inherent in
particular securities.
On the whole, the availability of equity
securities meeting our value-based criteria will dictate the
portfolio's exposure to equities. Similarly, the
availability of attractive yield spreads and strong credits will
determine the level of exposure to corporate bonds.
As part of our review and monitoring process, we
regularly test the impact of a simultaneous substantial
reduction in common stock, preferred stock and bond prices on
insurance regulatory capital to ensure that capital adequacy
will be maintained at all times.
Primarily because of the potential for large
claims payments, our investment portfolio is structured to
provide a high level of liquidity. The table below shows the
aggregate amounts of investments available for sale, equity
securities and cash and cash equivalents comprising our
portfolio of invested assets:
At December 31,
2000
2001
(dollars in millions)
Investments available for sale, at fair value
$
2,282.5
$
1,851.3
Equity securities
145.2
153.2
Cash and cash equivalents
89.3
273.6
Total invested assets
$
2,517.0
$
2,278.1
We currently hold 3,307,222 shares of common
stock of Zenith National Insurance Corp (NYSE: ZNT). Zenith is a
holding company with total assets of approximately
$1.5 billion and is principally engaged in California
workers' compensation business. Our investment in Zenith
represents approximately 17.8% of its issued and outstanding
shares of common stock. Fairfax and its affiliates, including
us, currently own approximately 42.1% of the outstanding common
stock of Zenith. Our investment in Zenith common stock is
currently valued at approximately $92 million which is
equal to its carrying value. We currently do not intend to
acquire or dispose of shares of common stock of Zenith, but may
decide to do so in the future. We intend to review, on a
continuous basis, various factors related to our investment in
Zenith, including the price and availability of the common stock
of Zenith, subsequent developments affecting Zenith's
business, other investment and business opportunities available
to us and general stock market and economic conditions.
57
Based upon these and other factors, we may decide
to purchase additional shares of common stock of Zenith or may
decide in the future to sell all or part of our investment in
Zenith.
As of December 31, 2001, based on the
portfolio's market value, the fixed income portion of our
investment portfolio had a dollar weighted average rating of
"AA," an average duration of 8.5 years and an
average yield to maturity of 6.3% before investment expenses and
assuming all put features are exercised.
Market Sensitive Instruments
Our investment portfolio includes investments
which are subject to changes in market values with changes in
interest rates. The aggregate hypothetical loss generated from
an immediate adverse parallel shift in the treasury yield curve
of 100 or 200 basis points would cause a decrease in total
return of approximately 8.9% and 15.8%, respectively, which
equates to a decrease in market value of approximately
$163.9 million or $291.7 million, respectively, on a
portfolio valued at $1,851.3 million at December 31,
2001. The foregoing reflects the use of an immediate time
horizon, since this presents the worst-case scenario. Credit
spreads are assumed to remain constant in these hypothetical
examples.
The following table summarizes the fair value by
the earliest contractual maturity of our fixed income investment
portfolio at the date indicated.
At December 31,
2000
2001
(dollars in millions)
Due in less than one year
$
5.5
$
21.3
Due after one through five years
430.7
608.8
Due after five through ten years
1,116.0
560.8
Due after ten years
730.3
660.4
Total
$
2,282.5
$
1,851.3
Actual maturities may differ from the maturities
shown above, which consider the existence of call features or
put features. At December 31, 2000 and 2001, approximately
1.4% and 1.8%, respectively, of the fixed income securities
shown above had a call feature which, at the issuer's
option, allowed the issuer to repurchase the securities on one
or more dates prior to their maturity. At December 31, 2000
and 2001, approximately 52.2% and 44.8%, respectively, of the
fixed income securities shown above had a put feature which, at
our option, required the issuer to repurchase the investments on
one or more dates prior to their maturity. For the investments
listed above which have the call feature or put feature the
actual maturities may be longer than the call or put date
maturities, which are shown above. In the case of securities
that are subject to early call by the issuer, the actual
maturities will be longer than the call date maturities shown
above if the issuer elects not to exercise its call feature. In
the case of securities containing put features, the actual
maturities will be longer than the put date maturities shown
above if we elect not to exercise its put feature, but to hold
the securities to their final maturity dates. The maturities of
our fixed income securities, without consideration of the call
or put features, indicates that at December 31, 2001
$1,522.6 million of the investments were due after ten
years, or 82.2% of the fixed income securities portfolio.
58
Quality of Debt Securities in
	Portfolio
The following table summarizes the composition of
the fair value of our fixed income investment portfolio at the
dates indicated by rating as assigned by S&P or
Moody's, using the higher of these ratings for any security
where there is a split rating.
At December 31,
Rating
2000
2001
AAA/Aaa
47.4
%
45.6
%
AA/Aa2
10.5
8.5
A/A2
29.5
23.9
BBB/Baa2
12.0
20.2
BB/Ba2
0.6
1.8
Total
100.0
%
100.0
%
Competition
The property and casualty insurance industry is
highly competitive in the areas of price, service, product
offerings and agent and broker relationships. According to A.M.
Best, there are approximately 1,000 property and casualty
organizations in the United States, comprised of approximately
2,500 property and casualty companies. Of those organizations,
the top 150 accounted for approximately 90% of the consolidated
industry's total net written premiums in 2000 and no one
company or company group has a market share greater than
approximately 12.0%.
We compete with large, national insurers who
often have greater financial strength and broader product
offerings than we do. In addition, we compete with regional
companies who have an in-depth knowledge of the local insurance
marketplace and who are positioned to be responsive to local
needs. We believe that we are able to effectively compete with
both national and regional companies due to our strong
relationships with producers, combined with our underwriting
expertise and timely and responsive service.
Competition in the commercial lines property and
casualty insurance industry is based on many factors, including
overall financial strength of the insurer, ratings by rating
agencies, premiums charged, policy terms and conditions,
services offered, reputation, broker compensation and
experience. Our challenge is to retain existing business and
attract new business on terms offering acceptable return
potentials in an environment in which both established
competitors and newer entrants are aggressively seeking premium
growth. We cannot assure you that we will not face increased
competition in the future and that such increased competition
will not have a material adverse effect on us. See "Risk
Factors."
Ratings
Insurance companies are rated by rating agencies
to provide both industry participants and insurance consumers
with meaningful information on specific insurance companies.
Higher ratings generally indicate relative financial stability
and a strong ability to pay claims. These ratings are based upon
factors relevant to policyholders and are not directed toward
protection of investors. Such ratings are neither a rating of
securities nor a recommendation to buy, hold or sell any
security. Ratings focus on the following factors: capital
resources, financial strength, demonstrated management expertise
in the insurance business, credit analysis, systems development,
marketing, investment operations, minimum policyholders'
surplus requirements and capital sufficiency to meet projected
growth, as well as access to such traditional capital as may be
necessary to continue to meet standards for capital adequacy.
Our insurance operating subsidiaries hold an "A-"
(Excellent) rating from A.M. Best (the fourth highest of 15
ratings) with a negative outlook and a "BBB" financial
strength rating from S&P (the fourth highest of nine ratings
categories). According to A.M. Best, if management does not
achieve its near-term calendar year combined ratio targets or if
there is
59
any further deterioration in our near-term
underwriting or operating performance a rating downgrade will
likely result.
We intend to pursue an improvement in our rating
in conjunction with the completion of this offering.
Legal Proceedings
In the ordinary course of business, we receive
claims asserting alleged injuries and damages from asbestos,
environmental and other latent exposures. As a result of these
claims, we review required reserves and reinsurance
recoverables. In each of these areas of exposure, we litigate
individual cases when appropriate and endeavour to settle other
claims on favorable terms.
In January of 2001, Bechtel Group, Inc. and other
Bechtel entities filed a lawsuit in San Francisco Superior Court
(California) against us in connection with certain general
liability policies that we have agreed to reinsure. Bechtel
alleges, among other things, that it has overpaid premiums to us
and seeks damages in excess of $20 million, plus interest,
punitive damages, attorneys fees, costs and a declaration that
we had and have a duty to defend and indemnify Bechtel in
certain bodily injury lawsuits (including asbestos lawsuits)
under Bechtel's pre-March 1, 1978 policies. We believe
that the allegations made by Bechtel are without merit and we
intend to vigorously defend the lawsuit. We do not expect the
lawsuit to have a material adverse effect on our financial
condition.
We are involved in numerous other lawsuits (other
than asbestos, environmental and other latent exposure claims)
arising, for the most part, in the ordinary course of our
business operations either as a liability insurer defending
third-party claims brought against our insureds or as an insurer
defending coverage claims brought against us. Although there can
be no assurances, we believe, based on information currently
available, that the ultimate resolution of these legal
proceedings will not likely have a material adverse effect on
our results of operations or financial condition. See
"Business — Reserves — Asbestos,
Environmental and Other Latent Exposures" and Note 6
to our consolidated financial statements included elsewhere in
this prospectus.
Properties
Our principal offices are located in space leased
by us in Morristown, New Jersey. The lease covers approximately
201,887 square feet of office space at 305 Madison Avenue.
The term of the lease ends November 30, 2009, and provides
for up to six consecutive additional terms of five years
each at our option, which must be exercised not less than
330 days prior to the expiration of the then-existing term.
The principal offices of U.S. Fire, North River,
CF Insurance, CF Indemnity and CF Underwriters
are also at this location.
The principal offices of Seneca are located in
space leased by Seneca in New York, New York. The
lease covers approximately 21,500 square feet at
160 Water Street. The term of the lease ends June 30,
2007.
We also lease office space for our branch
offices. We do not own any of the real estate used for our
operations. See "Certain Relationships and Related
Transactions — Lease."
Employees
As of December 31, 2001, we had
1,171 employees. None of these employees is represented by
a labor union and we consider our employee relations to be
satisfactory.
60
INSURANCE REGULATORY MATTERS
We are subject to regulation under the insurance
statutes, including insurance holding company statutes, of
various jurisdictions, including New York, the domiciliary
state of US Fire and New Jersey, the domiciliary state
of North River. In addition, we are subject to regulation
by the insurance regulators of other states and foreign
jurisdictions in which we or our operating subsidiaries do
business.
General
Our operating subsidiaries are subject to
detailed regulation throughout the United States. Although
there is limited federal regulation of the insurance business,
each state has a comprehensive system for regulating insurers
operating in that state. The laws of the various states
establish supervisory agencies with broad authority to regulate,
among other things, licenses to transact business, premium rates
for certain coverages, trade practices, market conduct, agent
licensing, policy forms, underwriting and claims practices,
reserve adequacy, transactions with affiliates, and insurer
solvency. Many states also regulate investment activities on the
basis of quality, distribution and other quantitative criteria.
Further, most states compel participation in and regulate
composition of various shared market mechanisms. States have
also enacted legislation which regulates insurance holding
company systems, including acquisitions, dividends, the terms of
affiliate transactions, and other related matters. Our operating
subsidiaries are domiciled in New York, New Jersey,
Ohio, and Arizona.
Insurance companies are also affected by a
variety of state and federal legislative and regulatory measures
and judicial decisions that define and qualify the risks and
benefits for which insurance is sought and provided. These
include redefinitions of risk exposure in such areas as product
liability, environmental damage and workers' compensation.
In addition, individual state insurance departments may prevent
premium rates for some classes of insureds from reflecting the
level of risk assumed by the insurer for those classes. Such
developments may result in adverse effects on the profitability
of various lines of insurance. In some cases, these adverse
effects on profitability can be minimized, when possible,
through the repricing of coverages if permitted by applicable
regulations, or the limitation or cessation of the affected
business, which may be restricted by state law.
Most states have insurance laws requiring that
property and casualty rate schedules, policy or coverage forms,
and other information be filed with the state's regulatory
authority. In many cases, such rates and/or policy forms must be
approved prior to use. A few states have recently considered or
enacted limitations on the ability of insurers to share data
used to compile rates. Such restrictions have had, and are
expected to have, no significant impact on us.
Insurance companies are required to file detailed
annual reports with the state insurance regulators in each of
the states in which they do business, and their business and
accounts are subject to examination by such regulators at any
time. In addition, these insurance regulators periodically
examine each insurer's financial condition, adherence to
statutory accounting practices, and compliance with insurance
department rules and regulations. The 1997 examination report of
North River contained minor financial adjustments which had
already been addressed as part of the 1998 reserve strengthening
actions. A draft of the 1998 examination report of
U.S. Fire was released by NYID to us for review and
response, and contained no financial adjustments. NYID has not
finalized this examination report yet, pending further review of
loss reserves by its independent actuaries. We do not anticipate
any financial adjustments to reserves in excess of the 2001
strengthening actions as a result of this loss reserve review.
The last examination for CF Insurance and
CF Underwriters was conducted for the years ended
December 31, 1997 and 1996, respectively, and contained no
financial adjustments. CF Indemnity was last examined as of
December 31, 2000 and the draft report released to the
Company contained no financial adjustments.
Applicable state insurance laws, rather than
federal bankruptcy laws, apply to the liquidation or
reorganization of insurance companies.
61
Insurance Regulation Concerning Change or
Acquisition of Control
The insurance regulatory codes in our operating
subsidiaries' respective domiciliary states each contain
similar provisions (subject to certain variations) to the effect
that the acquisition of "control" of a domestic
insurer or of any person that directly or indirectly controls a
domestic insurer cannot be consummated without the prior
approval of the domiciliary insurance regulator. In general, a
presumption of "control" arises from the direct or
indirect ownership, control, possession with the power to vote
or possession of proxies with respect to 10% or more of the
voting securities of a domestic insurer or of a person that
controls a domestic insurer. A person seeking to acquire
control, directly or indirectly, of a domestic insurance company
or of any person controlling a domestic insurance company must
generally file with the relevant insurance regulatory authority
a statement relating to the acquisition of control containing
certain information required by statute and published
regulations and provide a copy of such statement to the domestic
insurer and obtain the prior approval of such regulatory agency
for the acquisition. In addition, certain state insurance laws
contain provisions that require pre-acquisition notification to
state agencies of a change in control of a non-domestic
insurance company admitted in that state. While such
pre-acquisition notification statutes do not authorize the state
agency to disapprove the change of control, such statutes do
authorize certain remedies, including the issuance of a cease
and desist order with respect to the non-domestic admitted
insurer's doing business in the state if certain conditions
exist, such as undue market concentration.
Regulation of Dividends and Other Payments
from Our Operating Subsidiaries
We are a legal entity separate and distinct from
our subsidiaries. As a holding company with no other business
operations, our primary sources of cash to meet our obligations,
including principal and interest payments with respect to
indebtedness, are available dividends and other statutorily
permitted payments, such as tax allocation payments and
management and other fees, from our operating subsidiaries. Our
operating subsidiaries are subject to various state statutory
and regulatory restrictions, including regulatory restrictions
that are imposed as a matter of administrative policy,
applicable generally to any insurance company in its state of
domicile, which limit the amount of dividends or distributions
an insurance company may pay to its shareholders without prior
regulatory approval. The restrictions are generally based on
certain levels or percentages of surplus, investment income and
operating income, as determined in accordance with SAP, which
differ from GAAP. Generally, dividends may be paid only out of
earned surplus. In every case, surplus subsequent to the payment
of any dividends must be reasonable in relation to an insurance
company's outstanding liabilities and must be adequate to
meet its financial needs.
New York law provides that an insurer
domiciled in New York must obtain the prior approval of the
state insurance commissioner for the declaration or payment of
any dividend which, together with dividends declared or paid in
the preceding 12 months, exceeds the lesser of (i) 10%
of policyholders' surplus as shown by its last statement on
file with the New York Insurance Department (NYID) and
(ii) adjusted net investment income for the preceding
12-month period. Adjusted net investment income includes a carry
forward of undistributed net investment income for two years.
Such declaration or payment is further limited by earned
surplus, as determined in accordance with statutory accounting
practices prescribed or permitted in New York. Under New York
law, an insurer domiciled in New York may not pay dividends to
shareholders except out of earned surplus, which is defined as
"the portion of the surplus that represents the net
earnings, gains or profits, after deduction of all losses, that
have not been distributed to the shareholders as dividends or
transferred to stated capital or capital surplus or applied to
other purposes permitted by law but does not include unrealized
appreciation of assets." New Jersey laws provide that an
insurer domiciled in the state must obtain the approval of the
state insurance commissioner for payment of any dividend which,
together with dividends paid in the previous 12 months,
exceeds the greater of (i) 10% of policyholders'
surplus at the preceding December 31 or (ii) statutory
net income for the 12-month period ending the preceding
December 31. In New Jersey, dividends may not be paid
unless prior notice has been given to the New Jersey Department
of Banking and Insurance (NJDOBI) within five business days
after the dividend is declared and 30 days prior to
payment. In addition, except for extraordinary dividends or
distributions paid with the approval of the NJDOBI, dividends
may be paid by insurers domiciled in New Jersey only from
earned
62
surplus, which means "unassigned funds"
(surplus) as reported on the insurer's annual statement as
of December 31 next preceding, less unrealized capital
gains and revaluation of assets.
Due to reserve strengthening in recent years and
the accounting treatment prescribed for retroactive reinsurance,
US Fire, our principal New York-domiciled insurance subsidiary,
and North River, our principal New Jersey domiciled insurance
subsidiary, have negative earned surplus and therefore no
ordinary dividend capacity at December 31, 2001. No
assurance can be given that some or all of our operating
subsidiaries' domiciliary states will not adopt statutory
provisions more restrictive than those currently in effect.
As of December 31, 2001, the aggregate
amount available for the payment of ordinary dividends by our
operating subsidiaries during 2002 is $0.
If insurance regulators determine that payment of
a dividend or any other payments to an affiliate (such as
payments under a tax-sharing agreement or payments for employee
or other services) would, because of the financial condition of
the paying insurance company or otherwise, be hazardous to such
insurance company's policyholders, the regulators may
prohibit such payments that would otherwise be permitted without
prior approval.
Statutory Surplus and Capital
In connection with the licensing of insurance
companies, an insurance regulator may limit or prohibit the
writing of new business by an insurance company within its
jurisdiction when, in the regulator's judgment, the
insurance company is not maintaining adequate statutory surplus
or capital. We do not currently anticipate that any regulator
would limit the amount of new business that our operating
subsidiaries may write given their current levels of statutory
surplus and capital.
Risk-Based Capital
In order to enhance the regulation of insurer
solvency, the NAIC adopted risk-based capital (RBC) requirements
for property and casualty insurance companies commencing with
filings made in 1995 covering the 1994 calendar year. These RBC
requirements are designed to monitor capital adequacy and to
raise the level of protection that statutory surplus provides
for policyholders. The RBC formula measures four major areas of
risk facing property and casualty insurers:
(i) underwriting risk, which is the risk of errors in
pricing and reserve setting; (ii) asset risk, which is the
risk of asset default for fixed-income assets and loss in market
value for equity assets; (iii) credit risk, which is the
risk of losses from unrecoverable reinsurance and the inability
of insurers to collect agents' balances; and
(iv) off-balance sheet risk, which is primarily the risk
created by excessive growth. The RBC formula provides a
mechanism for the calculation of an insurance company's
Authorized Control Level (ACL) RBC amount.
The NAIC RBC model law stipulates four levels of
regulatory action with the degree of regulatory intervention
increasing as the ratio of surplus to RBC decreases. The initial
level, the "Company Action Level," requires the
insurance company to submit a plan of corrective action to the
relevant insurance commissioner if surplus falls below 200% of
the ACL amount. The next level, the "Regulatory Action
Level," requires the company to submit a plan of corrective
action and also allows the regulator to perform an examination
of the company's business and operations and issue a
corrective order if surplus falls below 150% of the ACL amount.
The third level, the ACL, permits the regulator to place the
company under regulatory control, including rehabilitation or
liquidation, if surplus falls below 100% of that amount. The
final action level, the "Mandatory Control Level,"
requires the insurance commissioner to place the company under
regulatory control if surplus falls below 70% of the ACL amount.
Based on the foregoing formula, at
December 31, 2001, the capital of each of our operating
subsidiaries exceeded the Company Action Level, and, as a
result, no regulatory response or action was required.
NAIC IRIS Ratios
In the 1970s, the NAIC developed a set of
financial relationships or "tests" called the
Insurance Regulatory Information System (IRIS) that were
designed to facilitate early identification of companies which
63
may require special attention by insurance
regulatory authorities. Insurance companies submit data on an
annual basis to the NAIC, which in turn analyzes the data
utilizing ratios covering 12 categories of financial data with
defined "usual ranges" for each category. An insurance
company may fall out of the usual range for one or more ratios
because of specific transactions that are in themselves
immaterial or eliminated at the consolidated level. Generally,
an insurance company may become subject to increased scrutiny if
it falls outside the usual ranges on four or more of the ratios.
Prior to 2001, there had been instances in which certain IRIS
ratios of one or more of our operating subsidiaries have fallen
outside of the usual ranges. In all instances where follow-up
information was requested, our responses have not resulted in
additional requests or further action.
Primarily as a result of the reserve
strengthening actions recorded during 2001, US Fire, North
River, CF Insurance, CF Indemnity and CF Underwriters had
unusual values in a number of IRIS ratios as of
December 31, 2001. US Fire reported six ratios outside of
the usual range and each of the other insurance companies
mentioned above had four ratios outside the usual range.
Virtually all of these unusual values relate to the impact on
operations and surplus of the reserve strengthening actions. The
Company expects regulatory inquiries relative to the IRIS
results and will provide information responsive to the effects
of the reserve strengthening on these ratios.
Investment Regulation
Our operating subsidiaries are subject to state
laws and regulations that require diversification of investment
portfolios and that limit the amount of investments in certain
investment categories. Failure to comply with these laws and
regulations may cause non-conforming investments to be treated
as non-admitted assets for purposes of measuring statutory
surplus and, in some instances, would require divestiture. As of
December 31, 2001, we believe our investments complied with
such laws and regulations in all material respects.
Guaranty Funds
All fifty states have separate insurance guaranty
fund laws requiring property and casualty insurance companies
doing business within their respective jurisdictions to be
members of their guaranty associations. These associations are
organized to pay covered claims (as defined and limited by the
various guaranty association statutes) under insurance policies
issued by insolvent insurance companies. Such guaranty
association laws, except the one applicable in New York, create
post-assessment associations which make assessments against
member insurers to obtain funds to pay association covered
claims after an insurer insolvency occurs. These associations
levy assessments (up to prescribed limits) on all member
insurers in a particular state on the basis of the proportionate
share of the premiums written by member insurers in the covered
lines of business in that state. Maximum assessments permitted
by law in any one year generally vary between 1% and 2% of
annual premiums written by a member in that state. New York has
a pre-assessment guaranty fund which makes assessments prior to
the occurrence of an insolvency. Florida, New Jersey, New York
and Pennsylvania have created, by statute, a separate guaranty
association for workers' compensation business. Some states
permit member insurers to recover assessments paid through
surcharges on policyholders or through full or partial premium
tax offsets, while other states permit recovery of assessments
through the rate filing process.
Property and casualty guaranty fund assessments
incurred by us totaled $1.3 million, $1.1 million and
$0.5 million for 1999, 2000 and 2001, respectively. Our
policy is to accrue for insolvencies when the loss is probable
and the assessment amount can be reasonably estimated. In the
case of most insurance insolvencies, our ability to reasonably
estimate the insolvent insurer's liabilities or develop a
meaningful range of the insolvent's liabilities is
significantly impaired by inadequate financial data with respect
to the estate of the insolvent company as supplied by the
guaranty funds. Although the amount of any assessments
applicable to guaranty funds cannot be predicted with certainty,
we believe that future guaranty association assessments for
known insurer insolvencies will not have a material adverse
effect on our results or operations or financial condition.
64
Shared Markets
As a condition of their licenses to do business,
our operating subsidiaries are required to participate in
mandatory property and casualty shared market mechanisms or
pooling arrangements which provide various insurance coverages
to individuals or other entities that are otherwise unable to
purchase such coverage in the commercial insurance marketplace.
Our operating subsidiaries' participation in such shared
markets or pooling mechanisms is generally proportionate to the
amount of each of our operating subsidiaries' direct
writings for the type of coverage written by the specific
pooling mechanism in the applicable state.
Many states have laws that established
second-injury funds to provide compensation to injured employees
for aggravation of a prior condition or injury. Insurers writing
workers' compensation in those states having second-injury
funds are subject to the laws creating the funds, including the
various funding mechanisms that those states have adopted to
fund the second-injury funds. Several of the states having
larger second-injury funds utilize a premium surcharge that
effectively passes the cost of the fund to policyholders. Other
states assess the insurer based on paid losses and allow the
insurer to recoup the assessment through future premium rates.
Commercial automobile insurance and workers'
compensation lines have mandatory pooling arrangements on a
state-by-state basis for segments of the market that have
difficulty finding coverage from insurers. The shared market
mechanisms for providing commercial automobile coverages are
generally assigned risk plans, reinsurance facilities and joint
underwriting facilities. Additionally, another pooling
mechanism, a Commercial Automobile Insurance Procedure (CAIP),
uses a limited number of servicing carriers to handle
assignments from other insurers. The CAIP servicing carrier is
paid a fee for the responsibility of handling the commercial
automobile policy and paying claims. For workers'
compensation, the pooling in each state is generally in the form
of a reinsurance-type arrangement with servicing carriers
providing the policy services and claims handling services. The
National Council of Compensation Insurance provides services for
calculating member pooling of losses and expenses in 32 states,
with the remainder of the states having their own independent
servicing plans. Certain of our operating subsidiaries
participate in the Florida Hurricane Catastrophe Fund, a
state-mandated catastrophe reinsurance fund. Business insurance
is also subject to pooled insurance on a small scale for
commercial properties insured through the various Fair Access to
Insurance Requirements (FAIR) Plans which exist in most states.
We reported underwriting results from participation in such
mandatory pools and underwriting associations of
$1.4 million, $4.4 million and $(5.3) million in
1999, 2000, and 2001.
The amount of future losses or assessments from
the shared market mechanisms and pooling arrangements described
above cannot be predicted with certainty. The underwriting
results of these pools traditionally have been unprofitable.
Although it is possible that future losses or assessments from
such mechanisms and pooling arrangements could have a material
adverse effect on results of operations, we do not expect future
losses or assessments to have a material adverse effect on our
liquidity or capital resources.
Federal Regulation
On June 1, 2000, federal regulators issued
final regulations implementing the provisions of the
Gramm-Leach-Bliley Act, governing the privacy of consumer
financial information. The regulations limit disclosure by
financial institutions of "nonpublic personal
information" about individuals who obtain financial
products or services for personal, family, or household
purposes. The Act and the regulations generally apply to
disclosures to nonaffiliated third parties, subject to specified
exceptions, but not to disclosures to affiliates. This is an
evolving area of regulation, which requires us to continue to
monitor developments.
Possible Legislative and Regulatory
Changes
In recent years, the insurance industry has been
subject to increased scrutiny by regulators and legislators. The
NAIC and a number of state legislatures have considered or
adopted legislative proposals that alter and, in many cases,
increase the authority of state agencies to regulate insurance
companies and holding company systems. In addition, several
committees of Congress have made inquiries and conducted
hearings as part of a broad study of the regulation of insurance
companies, and legislation has been introduced in several
65
of the past sessions of Congress which, if
enacted, could result in the federal government assuming some
role in the regulation of the insurance industry. Although the
federal government does not regulate the business of insurance
directly, federal initiatives often affect the insurance
business in a variety of ways. Current and proposed federal
measures which may significantly affect the insurance business
include changes in environmental laws and tort reform.
It is not possible to predict the outcome of any
of the foregoing legislative, administrative or congressional
activities or the potential effects thereof on us.
66
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers as of the
date of this prospectus are as follows:
Name
Age
Position
V. Prem Watsa
51
Chairman of our Board of Directors
Bruce A. Esselborn
59
Chief Executive Officer and Director
Nikolas Antonopoulos
48
President
Mary Jane Robertson
48
Senior Executive Vice President and
Chief Financial Officer
Dennis J. Hammer
52
Controller
Valerie J. Gasparik
50
Corporate Secretary
Winslow W. Bennett(1)
76
Director
Anthony F. Griffiths(1)
71
Director
Robbert Hartog(1)
83
Director
(1)
Audit and Compensation Committee members.
Each of our directors and officers described
below has served with us since our incorporation on
March 6, 2002:
V. Prem Watsa
is the Chairman of our board of directors. Mr. Watsa has
served as Chairman and Chief Executive Officer of Fairfax since
1985 and as Vice President of Hamblin Watsa Investment Counsel
Ltd. since 1985. He formerly served as Vice President of GW
Asset Management from 1983 to 1984 and Vice President of
Confederation Life Investment Counsel from 1974 to 1983.
Bruce A. Esselborn
is our Chief Executive Officer and one of our directors.
Mr. Esselborn has served as Chairman and Chief Executive
Officer of Crum & Forster Holding Inc. since 1999. From 1997
to 1999, Mr. Esselborn was a consultant with Marsh &
McLennan Risk Capital Corp. Mr. Esselborn has 35 years
of experience in the insurance business. Mr. Esselborn
formerly served as President of Capsure Holdings Corp. from 1990
to 1997, and Chairman, President and Chief Executive Officer of
United Capitol Insurance Company, which he co-founded in 1986.
Prior to 1986 Mr. Esselborn held a variety of senior
operating and technical positions at the operating company level
within AIG's domestic insurance business.
Nikolas Antonopoulos
is our President. Mr. Antonopoulos has been President of
Crum & Forster Holding Inc. since 1999.
Mr. Antonopoulos formerly served as Principal of Marsh
& McLennan Risk Capital Corp. from 1996 to 1999. Prior to
1996, Mr. Antonopoulos held a variety of senior operating
positions in AIG's Domestic Brokerage Group where he most
recently held the position of Senior Vice President of
Operations.
Mary Jane Robertson
is our Senior Executive Vice President and Chief Financial
Officer. Ms. Robertson has served as Executive Vice
President, Treasurer and a director of Crum & Forster
Holding Inc. since 1999. Ms. Robertson formerly served as
Managing Principal and Chief Financial Officer of Global Markets
Access Limited from 1998 to 1999, and Senior Vice President and
Chief Financial Officer of Capsure Holdings Corp. from 1993 to
1997. Ms. Robertson is also a director of Russell
Corporation.
Dennis J. Hammer
is
our Controller. Mr. Hammer, who has been with Crum &
Forster since 1979, has been the Controller of our operating
subsidiaries since 1993.
Valerie J. Gasparik
is our Corporate Secretary. Ms. Gasparik has been the
Corporate Secretary of our operating subsidiaries since 1996.
Ms. Gasparik joined Crum & Forster in 1988.
67
Winslow W. Bennett
is a member of our board of directors. Mr. Bennett has been
President of Winwood Holdings Ltd., a private investment
company, for the past six years. He is a director of Fairfax and
its various operating subsidiaries.
Anthony F. Griffiths
is a member of our board of directors. Since 1993,
Mr. Griffiths has been an independent business consultant
and corporate director. Mr. Griffiths became the Chairman
of Mitel Corporation, a telecommunications company, in 1987 and
also assumed the positions of President and Chief Executive
Officer in addition to that of Chairman from 1991 to 1993. He is
currently a director of various operating subsidiaries of
Fairfax and of Alliance Atlantis Communications Inc., Leitch
Technology Company, QLT Inc. and Russel Metals Inc.
Robbert Hartog
is a
member of our board of directors. Mr. Hartog has been
President of Robhar Investments Limited, a private investment
company, for the past six years. He is a director of Fairfax and
various of its operating subsidiaries and Russel Metals Inc.
Audit Committee
Our board of directors has established an audit
committee comprised of directors who are independent of our
management and are free of any relationship that, in the opinion
of the board of directors, would interfere with their exercise
of independent judgment as committee members. The audit
committee's primary responsibilities include: engaging
independent accountants; appointing the chief internal auditor;
approving independent audit fees; reviewing quarterly and annual
financial statements, audit results and reports, including
management comments and recommendations thereto; reviewing our
system of controls and policies, including those covering
conflicts of interest and business ethics; evaluating reports of
actual or threatened litigation; considering significant changes
in accounting practices; and examining improprieties or
suspected improprieties, with the authority to retain outside
counsel or experts. Our audit committee is composed of
Messrs. Bennett, Griffiths and Hartog.
Compensation Committee
Our board of directors has established a
compensation committee comprised of directors who are
independent of our management and are free of any relationship
that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as committee
members. The compensation committee's primary
responsibilities include reviewing and making recommendations to
our board of directors regarding our equity incentive plan and
annual incentive plan and compensation to our officers. The
compensation committee also establishes and reviews general
policies relating to compensation and benefits of our employees.
Our compensation committee is composed of Messrs Bennett,
Griffiths and Hartog.
Compensation Committee Interlocks and Insider
Participation
V. Prem Watsa, Chairman of our board of
directors, is also the Chairman and Chief Executive Officer of
Fairfax Financial Holdings Limited.
Nikolas Antonopoulos, our President, is a
director of US Fire, North River, CF Insurance, CF Indemnity and
CF Underwriters, each of which Bruce A. Esselborn, one of our
directors, is Chairman of the Board and Chief Executive Officer.
Mr. Antonopoulos is also a director of CF Specialty,
Seneca, Seneca Specialty Insurance Company and Sen-Tech
International Holdings, Inc., of which Mr. Esselborn is a
director.
Mary Jane Robertson, our Executive Vice President
and Treasurer, is a director of US Fire, North River, CF
Insurance, CF Indemnity and CF Underwriters, each of which Bruce
A. Esselborn is Chairman of the Board and Chief Executive
Officer. Ms. Robertson is also a director of CF Specialty,
Seneca, Seneca Specialty Insurance Company and Sen-Tech
International Holdings, Inc., of which Mr. Esselborn is a
director.
Dennis Hammer, our Controller, is a director of
US Fire, CF Indemnity and Seneca, of which Bruce
A. Esselborn is Chairman of the Board and Chief Executive
Officer.
68
No member of our compensation committee has at
any time been an officer or employee of Crum & Forster.
Compensation of Directors
Our three independent
directors,                     ,
are compensated annually in the amount of
$                    ,
plus
$          per
board meeting attended and their reasonable expenses of each
attendance. In addition, serve on our audit and compensation
committees and receive
$          per
committee meeting attended if held separately from the board
meeting.
Executive Compensation
The following table sets forth compensation
information for our Chief Executive Officer and the four other
most highly compensated executive officers, referred to as our
named executive officers, during the year ended
December 31, 2001:
Summary Compensation Table
Long Term
Annual Compensation
Compensation
Other Annual
Restricted
All Other
Salary
Bonus
Compensation
Stock Awards
Compensation
Name and Principal Position
Year
($)
($)
($)(1)
($)
($)
Bruce A. Esselborn
Chief Executive Officer
2001
$
$
$
$
$
Nikolas Antonopoulos
President
2001
Mary Jane Robertson
Senior Executive Vice
	President and Chief Financial Officer
2001
Dennis J. Hammer
Controller
2001
Valerie J. Gasparik
Corporate Secretary
2001
(1)
As required by regulation, perquisites and other
	personal benefits, securities or property are only included in
	the "Other Annual Compensation" column where items
	exceed the lesser of $50,000 or 10% of an executive
	officer's salary and bonus.
Employment Agreements
We intend to enter into employment agreements
with key employees in connection with the initial public
offering.
Equity-Based and Other Compensation
Plans
We intend to adopt an equity incentive plan
providing for equity-based awards, an employee stock option
plan, an employee stock purchase plan, and an annual bonus
compensation plan in connection with our initial public
offering. The terms of these plans will be finalized prior to
the completion of this offering.
Profit Sharing Plans
Our employees participate in The Individual
Retirement Plan of United States Fire Insurance Company, which
is a defined contribution plan that is intended to qualify under
sections 401(a), 401(k) and 501(a) of the Code. Under the
plan, each participant is eligible to enter into a written
salary reduction agreement with
69
us whereby a participant's salary will be
reduced by a whole percentage from 1% to 12%, as elected by the
participant, on either a before-tax or after-tax basis in
accordance with the rules governing cash or deferred
arrangements under section 401(k) of the Code, provided,
however, that the aggregate amount of before-tax and after-tax
contributions cannot exceed 12% of a participant's salary.
The amount deferred by a participant is contributed to the trust
fund for the plan and invested in accordance with the election
of the participant from among investment funds established under
the trust agreement. It is anticipated that after the completion
of this offering a common stock fund will be added to the other
investment funds available under the trust agreement. We make
matching contributions to the trust fund equal to 50% of a
participant's pre-tax and after-tax contributions.
Contributions by a participant in excess of 6% of base salary
are not matched. We may, at our discretion, also make a
supplemental profit sharing contribution to a participant's
account. In addition, we make a basic contribution to the plan
trust fund equal to 3% of a participant's salary regardless
of whether the participant elects to make pre-tax or after-tax
contributions. We may, at our discretion, also make a
supplemental profit sharing basic contribution to a
participant's account. All contributions by a participant
are 100% vested at all times. A participant is 100% vested at
all times in all basic and additional basic contributions made
by us. With respect to matching contributions made by us, a
participant becomes 20% vested after one year of service, 40%
after two years of service, 60% after three years of service,
80% after four years of service, and 100% after five years of
service. At the election of a participant, the
participant's account under the plan will be distributed
after termination of employment or remain in the plan segregated
from active participant accounts. The Code imposes various
limits on the amounts that can be contributed to the plan by or
for any participant each year. During the year ended
December 31, 2001, the following matching contributions
were made on behalf of the named executive officers:
Mr. Esselborn,
$                    ,
Mr. Antonopoulous,
$                    ,
Ms. Robertson,
$                    ,
Mr. Hammer,
$                    ,
and Ms. Gasparik,
$                    .
To the extent that a participant's
contributions and our matching contributions are affected by
such Code limitations, compensating benefits are provided for
eligible employees under the Supplemental Individual Retirement
Plan of United States Fire Insurance Company.
Participants in the plan who have annual
compensation at or in excess of the annual compensation
limitations imposed by the Code may participate in the
Supplemental Individual Retirement Plan of United States Fire
Insurance Company, which provides benefits that would have been
available to eligible employees under the plan but for the
limitations imposed under the Code. Participant contributions to
the plan and the supplemental plan are limited to a combined
maximum of 12% of base salary, and matching contribution to a
maximum of 6% of base salary. Matching contributions under the
supplemental plan are subject to the same vesting schedule as
set forth in the plan. During the year ended December 31,
2001, the following matching contributions were made on behalf
of the named executive officers: Mr. Esselborn,
$                    ,
Mr. Antonopoulous,
$                    ,
Ms. Robertson,
$                    ,
Mr. Hammer,
$                    and
Ms. Gasparik,
$                    .
The supplemental plan is not tax qualified under
the Code and is unfunded.
70
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Fairfax and some of its affiliates have engaged
in certain transactions, and are parties to certain
arrangements, with us and with our affiliates. Some of these
transactions and arrangements are material and are expected to
continue after the completion of this offering.
Recapitalization and Corporate
Structure
In connection with the completion of this
offering, we will make a payment to Fairfax Inc. consisting
of                     shares
of our common stock and a
$                     million
term note.
Upon the completion of this offering, public
stockholders will
own                      shares,
or           %,
of our outstanding common stock, and Fairfax Inc. will
own                      shares,
or           %,
of our outstanding common stock
(approximately           %
if the underwriters' over-allotment option is exercised in
full).
Inter-Corporate Debt
In conjunction with the completion of this
offering, we will issue a
$                     million            year
term note to Fairfax Inc. The note will pay interest quarterly
at a rate of  basis points over the three month LIBOR.
Under the terms of the note, we will retain the right to repay
the note at any time without bonus or penalty. The term note
will contain certain covenants, which may include, among other
things, restrictions on our ability to incur indebtedness and
liens and restrictions on our ability to enter into a merger.
Registration Rights
Prior to the consummation of this offering, we
will enter into a registration rights agreement with Fairfax
Inc. The registration rights agreement will include rights to
require us to register the offer and sale of shares of our
common stock held by Fairfax Inc. on up to three different
occasions. Fairfax may also require us to file registration
statements on Form S-3 once we become eligible to use that
form. The registration rights agreement also will include the
right to require us to include our common stock held by Fairfax
in up to three future registration statements that we file with
the Securities and Exchange Commission. We also will provide
Fairfax with the right to participate in any securities
offerings by us in order to maintain its percentage ownership.
These rights are subject to various conditions and limitations.
We will bear all expenses incurred in connection
with these registrations, other than any underwriting discounts
and commissions. Registration of shares of common stock upon the
exercise of these registration rights would result in such
shares becoming freely tradable without restriction under the
Securities Act.
Investment Agreements
Our operating subsidiaries have each entered into
an investment management agreement with Hamblin Watsa Investment
Counsel Ltd., authorizing Hamblin Watsa to manage an investment
account on a continuous basis in accordance with our investment
objectives. Under the agreements, the annual base fee payable to
Hamblin Watsa is 0.10% of the total assets managed, calculated
at the end of each quarter based upon the average market value
of the assets under management for the three preceding months,
and payable on a quarterly basis. In addition, Hamblin Watsa
receives an annual incentive fee relating to the management of
our equity securities accounts equal (subject to an annual
maximum) to 10% of every percentage point of return in the
equities account achieved in the relevant year in excess of the
Standard & Poor's 500 Index return plus 200 basis
points, if the equities account has achieved such an excess on a
cumulative basis from the inception of Hamblin Watsa's
management. The maximum annual fee for equity securities,
including base fee and incentive fee, is subject to an annual
maximum of 1.75% of the total assets managed, while the base fee
is subject to an aggregate maximum of 0.25% of assets managed.
Either party may terminate the agreement on thirty days'
written notice.
Our operating subsidiaries have each entered into
an investment administration agreement with Fairfax, pursuant to
which Fairfax agrees to provide specified investment
administration services in return for an
71
annual fee of 0.10% of the total assets managed
under the investment management agreements described above,
calculated and payable quarterly.
These investment management and investment
administration agreements may be terminated by either party on
30 days' notice. For the year ended December 31,
2001, total fees of $4.43 million were paid by us for
services under the investment management and investment
administration agreements.
Benefit Claims Payment Agreement
US Fire participates in a program of employee
welfare benefits that has been established by Fairfax Inc.,
including dental and medical plans for employees and designated
retirees. US Fire has entered into a benefit claims payment
agreement effective January 1, 2001 with Fairfax wherein US
Fire has agreed to fund one or more accounts as directed by
Fairfax in amounts sufficient to cover disbursements by the
plans' service provider and US Fire's proportionate
share of plan-related expenses. The agreement is for a term of
one year with automatic successive renewal terms of one year
each unless terminated by either party on sixty days'
written notice.
Fairfax Insurance Coverage
Fairfax has purchased an insurance policy from
Lloyd's of London and various other insurance companies
covering comprehensive crime insurance, insurance companies
professional liability insurance, directors' and
officers' liability and company reimbursement insurance,
employment practices liability insurance and fiduciary liability
insurance. Fairfax's coverage under the policy is subject
to an overall aggregate limit of $250 million combined
during the policy period which runs from May 31, 2000 to
May 31, 2003, subject to various single loss limits,
deductibles, retentions, and other exclusions, adjustments and
limitations. The comprehensive crime insurance portion of the
policy covers specified losses sustained by Fairfax and certain
entities, including us, in which more than 50% of the
outstanding voting shares are owned directly or indirectly by
Fairfax, and other entities in which Fairfax maintains an
ownership interest. The professional liability insurance,
directors' and officers' liability and company
reimbursement insurance, employment practices liability
insurance and fiduciary liability insurance portion of the
policy cover specified losses sustained by Fairfax and its
subsidiaries, including us, and officers and directors of
Fairfax and its subsidiaries, including us, in respect of claims
first made during the policy period. Coverage includes directors
and officers and company liability coverage, employment
practices coverage, fiduciary liability coverage, and errors and
omissions coverage. Our share of the premiums for this coverage
was $1,000,000, which was paid to Fairfax in December 2000.
Information Technology Services
Agreement
Under an agreement effective September 1,
2001, US Fire has agreed to obtain certain information
technology services on a non-exclusive basis from Fairfax
Information Technology Services, Inc., a wholly owned subsidiary
of Fairfax. The agreement requires US Fire to make monthly
payments based on a mutually agreed annual budget, which
payments amounted to $5.3 million in 2001 for capital and
operating expenditures. Under the agreement, Fairfax Information
Technology is the prime contractor in overseeing, managing and
providing information technology services including software
application development, voice support, arranging for third
party licenses, capacity planning, manpower, data protection,
and asset lifecycle management. The initial term of the
agreement is five years commencing September 1, 2001 and US
Fire has the option of extending the initial term for any number
of successive one year periods on the same terms on ninety
days' written notice prior to the end of the then current
term. The agreement is renewable at the option of Fairfax
Information Technology, subject to agreement upon pricing and
other terms and conditions. The agreement is terminable by US
Fire at any time in whole or in part on 180 days' written
notice.
72
Tax Sharing Arrangements
Following this offering, we will continue to be
included in the consolidated federal income tax returns of
Fairfax Inc. (the "Fairfax Inc. Group"), as well as
the consolidated or combined state income or franchise tax
returns of Fairfax Inc. Subject to the tax sharing agreement
discussed in this paragraph, every member of the Fairfax Inc.
Group will continue to be jointly and severally liable for the
federal income tax liabilities of the Fairfax Inc. Group, and
may be liable under similar rules for state income or franchise
taxes of the entire group. Prior to the completion of this
offering, we will enter into an amended tax sharing agreement
with Fairfax Inc. that will require us to make payments to
Fairfax Inc. equal to the amount of federal and state income and
franchise taxes that would be paid by us, subject to some
adjustments, if we and our subsidiaries included in the Fairfax
Inc. Group were to file our own separate, combined or
consolidated, federal and state income or franchise tax returns.
Subject to the immediately preceding sentence, Fairfax Inc. will
be responsible for filing and paying taxes with respect to all
consolidated, or combined returns which include both Fairfax
Inc. and us. Fairfax Inc. and the other member of the Fairfax
Group will be solely responsible, and will indemnify and hold us
harmless, for any taxes that are attributable to Fairfax Inc.
and such other members of the Fairfax Group.
Master Repurchase Agreements
US Fire, CF Indemnity, and CF Underwriters have
each entered into a master securities repurchase agreement with
Fairfax effective July 1, 2000. Each agreement provides for
the repurchase of securities that are transferred to Fairfax
from time to time in order to provide liquidity in the event
that we are required to pay claims or other corporate
obligations. Under each agreement we are obligated to repurchase
from Fairfax the securities that are transferred for this
purpose at a price equal to the amount initially raised from
their sale plus the stated interest rate of each security
pursuant to its initial sale. During the time that such
securities are transferred to Fairfax, we are entitled to
receive the income payable in respect of such securities.
Administrative Services Agreement
US Fire has entered into an administrative
services agreement with Fairfax Information Technology effective
January 1, 2001 pursuant to which US Fire provides certain
management and general services. In return for these services,
Fairfax Information Technology has agreed to make monthly
payments to US Fire reflecting the actual cost to US Fire of
providing such services. The services to be provided by US Fire
relate to corporate communications and public relations, audit,
executive, legal, personnel, benefit and benefits plans,
financial services including accounting and tax, technology
services and facilities management. The agreement may be
terminated by either party on 180 days' written notice.
Claims Services and Management
Arrangements
US Fire and CF Indemnity have each entered into a
services agreement, effective January 1, 2000, with TIG
Insurance Company, a wholly owned subsidiary of Fairfax, to
obtain certain services relating to issuing policies and
handling claims in return for payments reflecting the actual
cost of providing such services. The agreement was renewed on
January 1, 2001 for one year, and will be automatically
extended for successive one year terms unless terminated by
either party on 180 days' written notice.
Under an agreement effective as of July 1,
2000, US Fire appointed RiverStone Claims Management LLC, a
wholly owned subsidiary of Fairfax, as its claims manager to
handle certain claims, including environmental, asbestos,
tobacco, firearms and construction defect claims, referred to
RiverStone by US Fire within the full policy limits and to
recommend the amount of loss reserves to be established for each
claim. The agreement provides for an annual service fee of
$2.1 million, subject to annual adjustments. In 2001, we
paid $2.4 million to RiverStone in respect of the
agreement. The agreement is terminable by either party on
60 days' written notice.
Under an annually renewable agreement effective
March 1, 1999, our operating subsidiaries, except Seneca,
have agreed to obtain loss adjusting services from Cunningham
Lindsay U.S., Inc., a wholly owned
73
subsidiary of Fairfax, for property losses that
result from catastrophes, including windstorms, hailstorms,
hurricanes, earthquakes, and certain specialty lines including
environmental losses. US Fire has agreed to a schedule of fees
that delineates the amounts due for particular claims based on
the type of catastrophe and the full cost of repair. Fees paid
by us amounted to $258,000 in 2001.
Reinsurance Arrangements
We have numerous reinsurance agreements in effect
which include Odyssey Re Holdings Corp., an affiliate of
Fairfax, and its subsidiaries as parties. Under these
arrangements Odyssey Re participates in varying layers of our
risk across most of our lines of business, including property
and fidelity, umbrella, workers' compensation,
directors' and officers' liability, environmental
liability and errors and omissions. The majority of these
agreements may be terminated on 60 days' notice. For
the year ended December 31, 2001, we ceded
$3.5 million in premiums to Odyssey Re.
Under an agreement effective March 1, 1999,
we have agreed to cede and Ranger Insurance Company, a wholly
owned subsidiary of Fairfax, has agreed to reinsure 100% of
direct written premiums for all business in effect or commencing
on or after March 1, 1999 that is arranged or brokered
through Ranger Insurance Managers, Inc., a wholly owned
subsidiary of Ranger, that is classified as excess liability for
public entities and that incepts, renews, has an anniversary
date or comes into effect on or after March 1, 1999. This
contract provides a 23% ceding commission. We may terminate the
agreement at any time with ninety days prior written notice.
Under an agreement effective November 15,
1999, we have agreed to cede and Ranger agreed to reinsure 100%
of direct written premiums for all new and renewal business that
is arranged or brokered through Ranger Insurance Managers that
is classified as Ranger Self Storage Warehouse Program Business.
The agreement provides a 33.5% ceding commission. We may
terminate the agreement at any time with ninety days' prior
written notice.
Under an agreement effective January 1,
2001, we have agreed to reinsure, and Lombard General Insurance
Company of Canada has agreed to cede, 100% of the surety
business of Lombard. The agreement provides a 10% ceding
commission. This is a continuous term agreement that can be
cancelled by either party with sixty days' prior written
notice.
Our operating subsidiaries, excluding Seneca,
have agreed to reinsure and TIG Insurance Company, a Fairfax
subsidiary, has agreed to cede 100% of the surety bond business
written by TIG through the surety bond division of US Fire,
under an agreement effective as of January 1, 2001. The
agreement allows a ceding commission to TIG of 7.35% of ceded
premiums plus an amount equal to any commissions paid by TIG to
an agent or sub-producer of the subject policies. The agreement
is for an unspecified term and will continue until terminated by
either party on 60 days' written notice.
We have a 24.5% participation in a
$102 million property catastrophe reinsurance cover through
Odyssey America for calendar years 2001 and 2002. Odyssey Re
receives a ceding commission of acquisition cost plus 7.5%.
Lease
Our principal offices are located in space leased
by us in Morristown, New Jersey. The lease covers approximately
201,887 square feet of office space at 305 Madison Avenue. The
term of the lease ends November 30, 2009, and provides for
up to six consecutive additional terms of five years each at our
option, which must be exercised not less than 330 days
prior to the expiration of the then-existing term.
Seneca's principal offices are located in
space leased by Seneca. The lease covers approximately 21,500
square feet of office space at 160 Water Street. The term of the
lease ends in 2007.
74
PRINCIPAL STOCKHOLDERS
The following table sets forth information with
respect to the beneficial ownership of our capital stock
immediately prior to the completion of this offering and as
adjusted to reflect the sale of common stock by us and Fairfax
Inc. in this offering by:
•
all those known by us to be beneficial owners of
	more than five percent of the outstanding shares of common stock;
•
our named executive officers;
•
each of our directors; and
•
all executive officers and directors as a group.
Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission that
deem shares to be beneficially owned by any person or group who
has or shares voting or investment power with respect to such
shares. Unless otherwise indicated, the persons named in this
table have sole voting and investment control with respect to
all shares beneficially owned.
Shares Beneficially
Shares Beneficially
Owned Prior to
Owned After
Offering
Offering
Number of
Name
Number
Percent
Shares Offered
Number
Percent
Fairfax Inc.
(1)
%
%
Bruce A. Esselborn
Chief Executive Officer
Nikolas Antonopoulos
President
Mary Jane Robertson
Senior Executive Vice
	President and Chief Financial Officer
Dennis J. Hammer
Controller
Valerie J. Gasparik
Corporate Secretary
Directors
Directors and Executive Group
Subtotal
Total
(1)
Fairfax Inc. is a subsidiary of Fairfax. The
	principal office address of Fairfax Inc. is
	305 Madison Avenue, Morristown, New Jersey 07962. The
	Sixty Two Investment Company Limited, a company controlled
	by V. Prem Watsa, Chairman of our board of directors, owns
	subordinated and multiple voting shares representing 55.8% of
	the total votes attached to all classes of shares of Fairfax.
	Mr. Watsa himself beneficially owns and controls additional
	subordinate voting shares which, together with the shares owned
	by Sixty Two, represent 56.3% of the total votes attached
	to all classes of Fairfax's shares.
75
DESCRIPTION OF CAPITAL STOCK
Our amended and restated certificate of
incorporation authorizes the issuance of up to
200,000,000 shares of common stock, par value $.01 per
share, and up to 100,000,000 shares of preferred stock, par
value $.01 per share, the rights and preferences of which may be
established from time to time by our board of directors.
Immediately prior to the consummation of this
offering,                     shares
of common stock and no shares of preferred stock will be
outstanding.
Common Stock
Holders of record of common stock are entitled to
one vote per share on all matters upon which stockholders have
the right to vote. The rights attached to the shares of common
stock do not provide for cumulative voting rights or preemptive
rights. Therefore, holders of more than 50% of the shares of
common stock are able to elect all our directors eligible for
election each year. All issued and outstanding shares of our
common stock are, and the common stock to be sold in this
offering, when issued and paid for, will be, validly issued,
fully paid and non-assessable. Holders of our common stock are
entitled to such dividends as may be declared from time to time
by our board of directors out of funds legally available for
that purpose. Upon dissolution, holders of our common stock are
entitled to share pro rata in the assets of our company
remaining after payment in full of all our liabilities and
obligations, including payment of the liquidation preference, if
any, or any preferred stock then outstanding. There are no
redemption or sinking provisions applicable to the common stock.
Preferred Stock
The board of directors is authorized, subject to
Delaware law, without stockholder approval, from time to time to
issue up to an aggregate of 100,000,000 shares of preferred
stock in one or more series. The board of directors can fix the
rights, preferences and privileges of the shares of each series
and any qualifications, limitations or restrictions. Issuance of
preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to
acquire, a majority of our outstanding voting stock. After the
closing of this offering, no shares of preferred stock will be
outstanding. We have no present plans to issue any shares of
preferred stock.
Registration Rights
We have granted certain registration rights to
Fairfax Inc. For a discussion of these registration rights see
"Certain Relationships and Related Transactions —
Registration Rights."
Delaware Anti-Takeover Statute and Charter
Provisions
Under Delaware law, we may not engage in a
"business combination," which includes a merger or
sale of more than 10% of our assets, with any "interested
stockholder," namely, a stockholder who owns 15% or more of
our outstanding voting stock, as well as affiliates and
associates of any of these persons, for three years following
the time that stockholder became an interested stockholder
unless:
•
the transaction in which the stockholder became
	an interested stockholder is approved by our board of directors
	prior to the time the interested stockholder attained that
	status;
•
upon completion of the transaction that resulted
	in the stockholder becoming an interested stockholder, the
	interested stockholder owned at least 85% of our voting stock
	outstanding at the time the transaction commenced, excluding
	those shares owned by persons who are directors and also
	officers; or
•
at or after the time the stockholder became an
	interested stockholder the business combination is approved by
	the board of directors and authorized at an annual or special
	meeting of stockholders by the affirmative vote of at least
	two-thirds of the outstanding voting stock which is not owned by
	the interested stockholder.
76
The authorization of undesignated preferred stock
in our charter makes it possible for our board of directors to
issue preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control
of us. These and other provisions may have the effect of
deterring hostile takeovers or delaying changes in control or
management of us.
Limitations on Liability and Indemnification
of Officers and Directors
Our certificate of incorporation limits the
liability of directors to the fullest extent permitted by
Delaware law. In addition, the certificate of incorporation and
bylaws provide that we will indemnify our directors and officers
to the fullest extent permitted by Delaware law. We believe that
the provisions in our certificate of incorporation and bylaws
are necessary to attract and retain qualified persons as
directors and officers.
Transfer Agent
The transfer agent and registrar for our common
stock
is                     .
77
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this
offering,                      shares
of our common stock will be outstanding. Subject to the lock-up
agreements described below, all of the shares sold in this
offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, as amended,
unless these shares are purchased by our affiliates, or persons
who directly or indirectly control, are controlled by or are
under common control with us. Shares held by affiliates
generally may only be sold in compliance with the limitations of
Rule 144 of the Securities Act.
Lock-up Agreements
We, and each of our officers and Fairfax, have
agreed, subject to limited exceptions, for a period of
180 days after the date of this prospectus, not to, without
the prior written consent of Banc of America Securities LLC:
•
directly, or indirectly, sell, offer, contract or
	grant any option to sell (including without limitation any short
	sale), pledge, transfer, establish an open "put equivalent
	position" within the meaning of Rule 16a-1(h) under
	the Securities Exchange Act of 1934, as amended, or otherwise
	dispose of any share of common stock or any securities
	exercisable or exchangeable for or convertible into shares of
	common stock currently or hereafter owned either of record or
	beneficially (as defined in Rule 13d-3 under the Securities
	Exchange Act); or
•
enter into any swap or other arrangement that
	transfers all or a portion of the economic consequences
	associated with the ownership of any common stock.
Either of the foregoing transfer restrictions
will apply regardless of whether a covered transaction is to be
settled by the delivery of common stock of such other
securities, in cash or otherwise. In addition, during this
180-day period, we have also agreed not to file any registration
statement for, and each of our officers and Fairfax has agreed
not to make any demand for, or exercise any right of, the
registration of any shares of common stock of any securities
convertible into or exercisable or exchangeable for common stock
without the prior written consent of Banc of America
Securities LLC.
Rule 144
In general, under Rule 144 as currently in
effect, a person who has beneficially owned shares of our common
stock for a least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the
greater of:
•
1% of the number of shares of our common stock
	then outstanding, which will equal
	approximately                    shares
	immediately after this offering; or
•
the average weekly trading volume of our common
	stock
	on                                              during
	the four calendar weeks preceding the filing of a notice on
	Form 144 concerning that sale.
Sales under Rule 144 are also subject to
manner of sale provisions and notice requirements and to the
availability of current public information about Crum &
Forster.
Under Rule 144(k) as currently in effect, a
person who has not been one of our affiliates at any time during
the 90 days preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an
affiliate, is entitled to sell those shares without complying
with the manner of sale, public information, volume limitation
or notice provisions of Rule 144. Therefore, unless
otherwise restricted, Rule 144(k) shares may be sold
immediately upon the completion of this offering.
Registration Rights
After the completion of this offering, Fairfax
Inc., the holder
of                    shares
of our common stock, will be entitled to registration rights.
See "Certain Relationships and Related
Transactions — Registration
78
Rights" for more information regarding these
rights. Registration of these shares would result in such shares
becoming freely tradable without restriction under the
Securities Act. These sales could have a material adverse effect
on the trading price of our common stock.
Stock Options
Shortly after this offering, we intend to file a
registration statement on Form S-8 covering the shares of
common stock reserved for issuance under our equity incentive
plan and our employee stock option plan that will provide for
awards of restricted shares of our common stock and stock
options to purchase our common stock.
79
CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS OF COMMON
STOCK
General
The following is a general discussion of the
principal U.S. federal income and estate tax consequences
of the ownership and disposition of our common stock that may be
relevant to you if you are a non-U.S. holder. For purposes
of this discussion, you are a non-U.S. holder if you are a
beneficial owner of common stock that is any of the following
for U.S. federal income tax purposes:
•
a nonresident alien individual;
•
a foreign corporation;
•
a foreign estate, the income of which is not
	subject to U.S. federal income taxation regardless of its
	source;
•
a trust that is not subject to the supervision of
	a court within the United States and the control of one or more
	U.S. persons and that does not have a valid election in
	effect under the applicable U.S. treasury regulations to be
	treated as a U.S. person;
•
a foreign partnership.
Special rules may apply to certain
non-U.S. holders such as "controlled foreign
corporations," "passive foreign investment
companies," "foreign personal holding companies"
and corporations that accumulate earnings to avoid
U.S. federal income tax, that are subject to special tax
treatment under the Internal Revenue Code. Such entities should
consult their own tax advisors to determine the
U.S. federal, state, local and other tax consequences that
may be relevant to them.
The discussion does not address all aspects of
U.S. federal income and estate taxation that may be
relevant to you in light of your particular circumstances, and
does not address any foreign, state or local tax consequences.
Furthermore, this discussion is based on provisions of the
Internal Revenue Code, Treasury regulations and administrative
and judicial interpretations as of the date of this prospectus.
All of these are subject to change, possibly with retroactive
effect, or different interpretations. If you are considering
buying our common stock you should consult your own tax advisor
about current and possible future tax consequences of holding
and disposing of our common stock in your particular situation.
If a partnership holds our common stock, the tax
treatment of a partner will generally depend on the status of
the partner and the activities of the partnership. If you are a
partner in a partnership holding our common stock, you should
consult your own tax advisor.
Distributions
If distributions are paid on the shares of our
common stock, these distributions generally will constitute
dividends for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and
profits, as determined under U.S federal income tax
principles. To the extent these distributions exceed those
earnings and profits, the distributions will constitute a return
of capital that is applied against, and will reduce, your basis
in our common stock, but not below zero, and then will be
treated as gain from the sale of stock. Dividends that are not
effectively connected with a U.S. trade or business by you
will be subject to U.S. withholding tax at a 30% rate or,
if a tax treaty applies, a lower rate specified by the treaty.
For purposes of withholding, we will determine the amount of
distribution subject to withholding based on a reasonable
estimate made by us of our accumulated and current earnings and
profits. To receive a reduced treaty rate, you must furnish to
us or our paying agent a duly completed Form W-8BEN,
W-8IMY, or similar appropriate documentation, or substitute form
certifying your qualification for the reduced rate. If you are
eligible for a reduced rate of U.S. withholding tax under
an income tax treaty, you may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund along
with the required information with the Internal Revenue Service.
80
Dividends that are effectively connected with the
conduct or a trade or business within the United States and, if
a tax treaty applies, are attributable to a U.S. permanent
establishment, are exempt from U.S. federal withholding
tax, provided that you furnish to us or our paying agent a duly
completed Form W-8ECI, or similar appropriate
documentation, or substitute form certifying the exemption.
However, dividends exempt from U.S. withholding because
they are effectively connected or they are attributable to a
U.S. permanent establishment are subject to
U.S. federal income tax on a net income basis at the
applicable graduated U.S. federal income tax rates. In
addition, if you are a foreign corporation, under certain
circumstances, you may be subject to an additional "branch
profits tax" at a 30% rate or a lower rate specified by an
applicable income tax treaty.
Gain on Disposition of Common Stock
You generally will not be subject to
U.S. federal income tax with respect to gain recognized on
a sale or other disposition of our common stock unless one of
the following applies:
•
The gain is effectively connected with a trade or
	business conducted by you in the United States and, if a tax
	treaty applies, the gain is attributable to a
	U.S. permanent establishment, in which case you would be
	taxed on the net gain derived from the sale or other disposition
	under applicable graduated U.S. federal income tax rates.
	If you are a foreign corporation, you may be subject to an
	additional "branch profits tax" at a rate of 30% or a
	lower rate specified by an applicable income tax treaty.
•
You are an individual, hold our common stock as a
	capital asset and are present in the United States for 183 or
	more days in the taxable year of the sale or other disposition,
	and other conditions are met, in which case you will be subject
	to a flat 30% tax on the gain derived from the sale or other
	disposition, which may be offset by certain U.S. capital
	losses (even though you are not considered to be a resident of
	the United States).
•
We are or have been a "U.S. real
	property holding corporation" for U.S. federal income
	tax purposes at any time during the shorter of the five-year
	period ending on the date of the disposition or the period
	during which you held the common stock in which case you will be
	taxed on the gain from the sale pursuant to the effectively
	connected rules above. We believe that we never have been, are
	not currently and do not anticipate becoming a U.S. real
	property holding corporation for U.S. federal income tax
	purposes. If we were to become a U.S. real property holding
	corporation, you still would not be subject to U.S. tax if
	the shares of our common stock are considered to be
	"regularly traded on an established securities market"
	and if you do not own, actually or constructively, at any time
	during the shorter of the periods described above, more than
	five percent of our common stock.
Federal Estate Tax
If you are an individual who is not a citizen or
resident, as defined for U.S. estate tax purposes, of the
United States at the time of death, the shares of common stock
held by you will be included in your gross estate for
U.S. federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
Tax
Under U.S. Treasury regulations, we must
report annually to the Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to that holder
and the tax withheld with respect to those dividends. These
information reporting requirements apply even if withholding was
not required because the dividends were effectively connected or
withholding was reduced or eliminated by an applicable income
tax treaty. Pursuant to an applicable tax treaty, that
information may also be made available to the tax authorities in
the country in which the non-U.S. holder resides.
U.S. federal backup withholding generally is
a withholding tax imposed at the rate of 30%, subject to
reduction in future years followed by a possible increase
beginning in 2010, on specified payments, including dividends,
to persons that fail to furnish required information.
81
As a general matter, information reporting and
backup withholding will not apply to a payment by or through a
foreign office of a foreign broker of the proceeds of a sale of
our common stock effected outside the U.S. However,
information reporting requirements, but not backup withholding,
will apply to a payment by or through a foreign office of a
broker of the proceeds of a sale of our common stock effected
outside the U.S. if that broker:
•
is a U.S. person;
•
is a foreign person that derives 50% or more of
	its gross income for specified periods from the conduct of a
	trade or business in the U.S.;
•
is a "controlled foreign corporation"
	as defined in the Internal Revenue Code; or
•
is a foreign partnership with certain specified
	U.S. connections.
Information reporting requirements will not apply
in the above cases if the broker has documentary evidence in its
records that the beneficial owner is a non-U.S. holder and
specified conditions are met or the beneficial owner otherwise
establishes an exemption.
Payment by or through a U.S. office of a
broker of the proceeds of a sale of our common stock is subject
to both backup withholding and information reporting unless the
holder certifies to the payor in the manner required as to its
non-U.S. status under penalties of perjury or otherwise
establishes an exemption.
Amounts withheld under the backup withholding
rules do not constitute a separate U.S. federal income tax.
Rather, any amounts withheld under the backup withholding rules
will be refunded or allowed as a credit against the
holder's U.S. federal income tax liability, if any,
provided the required information or appropriate claim for
refund is filed with the Internal Revenue Service.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE
PRINCIPAL TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER
DISPOSITION OF OUR COMMON STOCK BY NON-U.S. HOLDERS FOR
U.S. FEDERAL INCOME AND ESTATE TAX PURPOSES. YOU ARE URGED
TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR
TAX CONSEQUENCES TO YOU OF OWNERSHIP AND DISPOSITION OR OUR
COMMON STOCK, INCLUDING THE EFFECT OF ANY STATE, LOCAL, FOREIGN
OR OTHER TAX LAWS.
82
UNDERWRITING
Subject to the terms and conditions of an
underwriting agreement among Crum & Forster, Fairfax Inc.
and each of the underwriters named below, dated the date of this
prospectus, each of the underwriters named below, who are
represented by Banc of America Securities LLC, have severally
agreed to purchase and Crum & Forster and Fairfax Inc. have
severally agreed to sell the respective number of shares of
common stock shown opposite its name below.
Number
Underwriters
of Shares
Banc of America Securities LLC
Total
The underwriting agreement provides that the
obligations of the several underwriters to purchase shares of
common stock offered in this offering are subject to approval of
certain legal matters and to specified conditions precedent. The
underwriters are committed to purchase all of the shares, other
than those shares covered by the over-allotment option described
below, if any are purchased.
The underwriters propose to initially offer some
of the shares of common stock directly to the public at the
public offering price on the cover page of this prospectus and
some of the shares to dealers at the public offering price less
a concession not in excess of
$          per
share. The underwriters may allow, and these dealers may
re-allow, a concession not in excess of
$          per
share on sales to other dealers. After the initial offering of
the shares to the public, the representatives of the
underwriters may change the public offering price and such
concessions. The underwriters do not intend to confirm sales to
any accounts over which they exercise discretionary authority.
The following table shows the public offering
price, underwriting discount and proceeds before expenses to us
and to Fairfax. The information assumes either no exercise or
full exercise by the underwriters of the over-allotment option
granted to them by Fairfax.
Total
Total
Without
With
Per Share
Option
Option
Public offering price
$
$
$
Underwriting discount
$
$
$
Proceeds, before expenses, to us
$
$
$
Proceeds, before expenses, to Fairfax
$
$
$
We estimate that the total expenses of this
offering, excluding underwriting discounts and commissions, will
be approximately
$                     million.
Fairfax has granted to the underwriters an
option, exercisable for 30 days after the date of the
underwriting agreement, to purchase up
to                     additional
shares of common stock at the initial public offering price less
the underwriting discount. The underwriters may exercise this
option solely to cover over-allotments, if any, made in
connection with this offering. To the extent that the
underwriters exercise this option, each underwriter will become
obligated, subject to various conditions, to purchase a number
of additional shares proportionate to such underwriter's
initial public commitment.
The underwriters are offering the shares, subject
to prior sale, when, as and if issued to and accepted by them,
subject to approval of legal matters by their counsel, including
the validity of the shares, and other conditions contained in
the underwriting agreement, such as receipt by the underwriters
of officers' certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
83
We have agreed to indemnify the underwriters
against various civil liabilities, including liabilities under
the Securities Act, or to contribute the payments that the
underwriters may be required to make in respect of these
liabilities.
We and each of our officers and Fairfax have
agreed, subject to limited exceptions, for a period of
180 days after the date of this prospectus, not to, without
the prior written consent of Banc of America Securities LLC:
•
directly or indirectly, sell, offer, contract or
	grant any option to sell (including without limitation any short
	sale), pledge, transfer, establish an open "put equivalent
	position" within the meaning of Rule 16a-1(h) under
	the Securities Exchange Act of 1934, as amended, or otherwise
	dispose of any shares of common stock or any securities
	exercisable or exchangeable for or convertible into shares of
	common stock currently or hereafter owned either of record or
	beneficially (as defined in Rule 13d-3 under the Securities
	Exchange Act); or
•
enter into any swap or other arrangement that
	transfers all or a portion of the economic consequences
	associated with the ownership of any common stock.
Either of the foregoing transfer restrictions
will apply regardless of whether a covered transaction is to be
settled by the delivery of common stock or such other
securities, in cash or otherwise. In addition, during this
180-day period, we have also agreed not to file any registration
statement for, and each of our officers and Fairfax has agreed
not to make any demand for, or exercise any right of, the
registration of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock
without the prior written consent of Banc of America Securities
LLC.
Prior to this offering, there has been no
established trading market for our common stock. The initial
public offering price for the shares of common stock offered by
this prospectus will be determined by negotiations among us and
the representatives of the underwriters. The factors to be
considered in determining the initial public offering price
include:
•
the history of and the prospects for the industry
	in which we compete;
•
our past and present operations;
•
our historical results of operations;
•
our prospects for future earnings;
•
the recent market prices of securities of
	generally comparable companies; and
•
the general condition of the securities markets
	at the time of the offering.
Our common stock has been approved for listing
on                     ,
subject to notice of issuance. In order to meet one of the
requirements for listing our common stock
on                     ,
Banc of America Securities LLC has undertaken to sell 100 or
more shares of our common stock to a minimum of 2,000 beneficial
holders.
Other than in the United States, no action has
been taken by us or the underwriters that would permit a public
offering of the shares of common stock included in this offering
in any jurisdiction that requires action for that purpose. The
shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other
offering material or advertisements in connection with the offer
and sale of any of these shares be distributed or published in
any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that
jurisdiction. We advise persons who receive this prospectus to
inform themselves about and to observe any restrictions relating
to the offering of the common stock and the distribution of this
prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy any shares of our common stock
included in this offering in any jurisdiction where such an
offer or a solicitation would not be permitted or legal.
A prospectus in electronic form may be made
available on the web sites maintained by one or more of the
underwriters participating in this offering. Other than the
prospectus in electronic format, the information on any such web
site, or accessible through any such web site, is not part of
the prospectus.
84
In connection with this offering, some
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the common stock. Specifically,
the underwriters may over-allot this offering, creating a
syndicate short position. The underwriters may bid for and
purchase shares of our common stock in the open market to cover
syndicate short positions or to stabilize the price of the
common stock. The underwriting syndicate may reclaim selling
concessions if the syndicate repurchases previously distributed
common stock in syndicate covering transactions, in
stabilization transactions or in some other way or if Banc of
America Securities LLC receives a report that indicates clients
of such syndicate members have "flipped" the common
stock. These activities may stabilize or maintain the market
price of the common stock above independent market levels. The
underwriters are not required to engage in these activities, and
may end any of these activities at any time.
Banc of America Securities LLC and its affiliates
have provided credit and other banking and investment banking
services to Fairfax and other of our affiliates, for which
services they have received customary fees, and they anticipate
providing such services to us and our affiliates in the future.
LEGAL MATTERS
The validity of the shares of our common stock
offered hereby and other legal matters related to this offering
will be passed upon for us and Fairfax Inc. by Shearman &
Sterling, New York, New York. Legal matters relating to this
offering will be passed upon for the underwriters by Simpson
Thacher & Bartlett, New York, New York.
EXPERTS
The consolidated financial statements as of
December 31, 2000 and 2001, and for each of the years in
the three-year period ended December 31, 2001, included in
this prospectus have been so included in reliance upon the
reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and
accounting.
85
AVAILABLE INFORMATION
We have filed with the Securities and Exchange
Commission a Registration Statement (of which this prospectus is
a part and which term shall encompass all amendments, exhibits
and schedules thereto) on Form S-1 under the Securities Act
of 1933 with respect to the shares of our common stock offered
hereby. This prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are
omitted from this prospectus in accordance with the rules and
regulations of the Commission. For further information about us
and the securities offered hereby, reference is made to the
Registration Statement. Statements made in this prospectus as to
the contents of any contract, agreement or other document
referred to are not necessarily complete and, in each instance,
reference is made to the copy of such contract, agreement or
other document filed as an exhibit to the Registration
Statement, each such statement being qualified in its entirety
by such reference.
Upon completion of this offering, we will be
subject to the information and reporting requirements of the
Exchange Act and in accordance therewith, will be required to
file reports, proxy statements and other information with the
Commission. The Registration Statement, reports, proxy
statements and other information filed by us with the
Commission, maybe inspected and copied at the public reference
facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional office of the Commission located at
CiticorpCenter, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at
http://www.sec.gov.
86
GLOSSARY OF SELECTED INSURANCE TERMS
Accident year
The annual accounting period in which loss events
	occurred, regardless of when the losses are actually reported,
	recorded or paid.
Admitted assets
Assets of an insurer permitted by a state to be
	taken into account in determining the insurer's financial
	condition for statutory purposes.
Admitted insurer
A company authorized to transact insurance
	business within a state.
A.M. Best
A.M. Best Company, Inc. is a rating agency and
	publisher for the insurance industry.
Assume
To accept from the primary insurer or reinsurer
	all or a portion of the liability underwritten by such primary
	insurer or reinsurer.
Assumed reinsurance
Insurance liabilities acquired from a ceding
	company through reinsurance.
Assumption reinsurance
A transaction whereby the ceding company
	transfers its entire obligation under the policy to the
	reinsurer, who becomes liable for all obligations under the
	policy, including collecting premiums and paying benefits.
Attachment point
The amount of losses above which excess of loss
	reinsurance becomes operative.
Broker
One who negotiates contracts of insurance or
	reinsurance, receiving a commission from the insurer or
	reinsurer for placement and other services rendered.
Calendar year
The calendar year in which loss events were
	recorded, regardless of when the losses are actually reported or
	paid.
Capacity
The percentage of surplus, or the dollar amount
	of exposure, that an insurer or reinsurer is willing or able to
	place at risk. Capacity may apply to a single risk, a program, a
	line of business or an entire book of business. Capacity may be
	constrained by legal restrictions, corporate restrictions or
	indirect restrictions.
Case reserves
Loss reserves established with respect to
	outstanding, individually reported claims.
Casualty insurance
Insurance which is primarily concerned with the
	losses caused by injuries to third persons (i.e., not the
	insured) and the legal liability imposed on the insured
	resulting therefrom. It includes, but is not limited to,
	employers' liability, workers' compensation, public
	liability, automobile liability, personal liability and aviation
	liability insurance. It excludes certain types of losses that by
	law or custom are considered as being exclusively within the
	scope of other types of insurance, such as fire or marine.
Catastrophe
A severe event triggering a claim, which could
	involve natural risks such as fire, earthquake, windstorm,
	explosion and other similar events or unnatural events such as
	terrorist acts, riots, crashes, derailments and other similar
	events.
Catastrophe loss
Loss and directly identified loss expenses from
	catastrophes.
Catastrophe reinsurance
A form of excess of loss property reinsurance
	which, subject to a specified limit, indemnifies the ceding
	company for the amount of loss in excess of a specified
	retention with respect to an accumulation of
G-1
losses resulting from a catastrophic event. The
	actual reinsurance document is called a "catastrophe
	cover."
Cede; ceding company
When an insurer reinsures its liability with
	another insurer (a "cession"), it "cedes"
	business and is referred to as the "ceding company."
Claim
Request by an insured for indemnification by an
	insurance company for loss incurred from an insured peril.
Combined ratio
The sum of the loss and loss expense ratio, the
	underwriting expense ratio and the dividend ratio, each
	determined in accordance with GAAP or SAP, as applicable. A
	combined ratio under 100% generally indicates an underwriting
	profit. A combined ratio over 100% generally indicates an
	underwriting loss.
Commercial lines
The various kinds of insurance which are written
	for businesses.
Deductible
The amount of loss that an insured retains.
Direct premiums written
The amounts charged by a primary insurer to
	insureds in exchange for coverages provided in accordance with
	the terms of an insurance contract generally excluding any
	assumed reinsurance premiums.
Dividend ratio
Relationship of policyholder dividends to net
	premiums earned.
Excess liability
Additional casualty coverage above the first
	layer.
Excess of loss reinsurance
Reinsurance that indemnifies the reinsured
	against all or a specified portion of losses under reinsured
	policies in excess of a specified dollar amount or
	"retention."
Expense ratio
See "underwriting expense ratio."
Facultative reinsurance
The reinsurance of all or a portion of the
	insurance provided by a single policy. Each policy reinsured is
	separately negotiated.
Fidelity and surety programs
Insurance which guarantees performance of an
	obligation or indemnifies for loss due to embezzlement or
	wrongful abstraction of money, securities or other property.
Generally accepted accounting principles (GAAP)
The method of accounting used for reporting to
	shareholders as defined by the American Institute of Certified
	Public Accountants or the Financial Accounting Standards Board.
Gross premiums written
The sum of direct premiums written and
	reinsurance premiums assumed during a given period.
Guaranteed cost products
An insurance policy where the premiums charged
	will not be adjusted for actual loss experience during the
	covered period.
Guaranty fund
State-regulated mechanism which is financed by
	assessing insurers doing business in those states. Should
	insolvencies of an insurer occur, these funds are available to
	meet some or all of the insolvent insurer's obligations to
	policyholders.
High or large deductible policy
An insurance policy where the customer assumes at
	least $25,000 or more of each loss.
G-2
Incurred but not reported (IBNR) claims
Claims under policies that have been incurred but
	have not yet been reported to the insurer by the insured.
Incurred but not reported (IBNR) reserves
Reserves for estimated losses and loss expenses
	which have been incurred but not yet reported to the insurer.
Indemnity reinsurance
A transaction whereby the reinsurer agrees to
	indemnify the ceding company against all or part of the loss
	that the latter may sustain under the policies it issued that
	are being reinsured. The ceding company remains primarily liable
	as the direct insurer on all risks ceded.
Inland marine
A broad type of insurance generally covering
	articles that may be transported from one place to another, as
	well as bridges, tunnels and other instrumentalities of
	transportation. It includes goods in transit (generally other
	than transoceanic) and may include policies for movable objects
	such as personal effects, personal property, jewelry, furs, fine
	arts and others.
Insurance Regulatory Information System
	("IRIS") ratios
Financial ratios calculated by the NAIC to assist
	state insurance departments in monitoring the financial
	condition of insurance companies.
Known loss costs
Loss and loss adjustment expenses commonly
	expected for a given type of risk based on historical and
	projected experience. In a highly competitive market, an
	underwriter may price a policy unprofitably, i.e. with an
	insufficient provision for known loss costs, in order to
	maintain or increase market share.
Loss
An occurrence that is the basis for submission
	and/or payment of a claim and the costs of indemnification of
	such a claim. Losses may be covered, limited or excluded from
	coverage, depending on the terms of the policy.
Loss and loss expense
Ratios
The ratio of incurred losses and loss expenses to
	net premiums earned.
Loss and loss expense
Reserves
A balance sheet liability for unpaid losses and
	loss expenses which represents estimates of amounts needed to
	pay losses and expenses, including legal fees and the expense of
	administering the claims adjustment process, both on claims
	which have been reported but have not yet been resolved and on
	claims which have occurred but have not yet been reported.
Loss expenses
The expenses of settling claims, including legal
	and other fees and the portion of internal operating expenses
	allocated to claim settlement costs.
Loss reserves
Liabilities established by insurers and
	reinsurers to reflect the estimated cost of claims incurred that
	the insurer or reinsurer will ultimately be required to pay in
	respect of insurance or reinsurance it has written. Reserves are
	established for losses and consist of case reserves and IBNR
	reserves.
Losses and loss expenses
The sum of losses and loss expenses incurred.
G-3
Losses incurred
The total losses sustained by an insurance
	company under a policy or policies, whether paid or unpaid.
	Losses incurred include a provision for IBNR.
Multi-peril policies
Refers to policies which cover both property and
	third party liability exposures.
National Association of Insurance Commissioners
	(NAIC)
An organization of the insurance commissioners or
	directors of all 50 states and the District of Columbia
	organized to promote consistency of regulatory practice and
	statutory accounting standards throughout the United States.
Net premiums earned
The portion of premiums written that is
	recognized for accounting purposes as revenue during a period,
	i.e., the portion of premiums written allocable to the expired
	portion of policies after the assumption and cessation of
	reinsurance.
Net premiums written
Gross premiums written less premiums ceded to
	reinsurers.
Novation
The substitution of one insurer (assuming
	company) for the original issuing insurer (ceding company) under
	an insurance policy, whereby the assuming company accepts all of
	the rights and liabilities of the insurer under the policy from
	the effective date of the novation and the ceding company is
	relieved of any further obligation under the novated policy.
Policyholders' surplus
As determined under SAP, the amount remaining
	after all liabilities, including loss reserves, are subtracted
	from all admitted assets. Policyholder surplus is also referred
	to as "statutory surplus," "surplus" or
	"surplus as regards policyholders" for statutory
	accounting purposes.
Pool
An organization of insurers or reinsurers through
	which particular types of risks are underwritten with premiums,
	losses and expenses being shared in agreed percentages.
Premiums
The amount charged during the year on policies
	and contracts issued, renewed or reinsured by an insurance
	company.
Probable maximum loss (PML)
PML is the underwriter's estimate of the
	largest loss expected to occur and is important in considering
	reinsurance needs.
Property insurance
Insurance that provides coverage to a person with
	an insurable interest in tangible property for that
	person's property loss, damage or loss of use.
Quota share reinsurance
Reinsurance wherein the insurer cedes an agreed
	fixed percentage of liabilities, premiums and losses for each
	policy covered on a pro rata basis.
Rate of renewal/retention ratio
Current period renewal accounts or policies as a
	percentage of the prior period accounts or policies.
Rates
Amounts charged per unit of insurance.
Redundancy (deficiency)
Estimates in reserves change as more information
	becomes known about the frequency and severity of claims for
	each year. A redundancy (deficiency) exists when the
	liability is less (greater) than the posted reserves. The
	cumulative redundancy (deficiency) is the aggregate net change
	in estimates over time subsequent to establishing the original
	liability estimate.
G-4
Reinsurance
The practice whereby one insurer, called the
	reinsurer, in consideration of a premium paid to such insurer,
	agrees to indemnify another insurer, called the ceding company,
	for part or all of the liability assumed by the ceding company
	under one or more policies or contracts of insurance which it
	has issued.
Reinsurance agreement
A contract specifying the terms of a reinsurance
	transaction.
Reserves or loss reserves
Estimated liabilities established by an insurer
	to reflect the estimated costs of claims payments that the
	insurer will ultimately be required to pay with respect to
	insurance it has written.
Residual market (involuntary
Business)
Insurance market which provides coverage for
	risks with respect to which prospective insured parties are
	unable to purchase insurance in the voluntary market either
	because the risk is too great or rate inadequacy has reduced the
	supply of insurance. Residual markets are frequently created by
	state legislation either because of lack of available coverage
	such as property coverage in a windstorm prone area or
	protection of the accident victim as in the case of
	workers' compensation. The costs of the residual market are
	usually charged back to the direct insurance carriers in
	proportion to the carriers' voluntary market shares for the
	type of coverage involved.
Retention
The amount of exposure an insurance company
	retains on any one risk or group of risks.
Retrospective premiums
Premiums related to retrospectively rated
	policies.
Retrospective rating
A plan or method which permits adjustment of the
	final premium or commission on the basis of actual loss
	experience, subject to certain minimum and maximum limits.
Risk retention
The amount or portion of a risk an insurer
	retains for its own account after ceded reinsurance. Losses
	above the stated retention level are collectible from the
	reinsurer. The retention level may be stated as a percentage or
	dollar amount.
Salvage
The amount of money an insurer recovers through
	the sale of property transferred to the insurer as a result of a
	loss payment.
Servicing carrier
An insurance company that provides, for a fee,
	various services including policy issuance, claims adjusting and
	customer service for insureds in a reinsurance pool.
Standard & Poor's (S & P)
Standard & Poor's Ratings Group is a
	rating agency and publisher for the business and corporate
	industry. It is a division of McGraw-Hill Companies, Inc.
Statutory accounting practices (SAP)
The accounting principles required by statute,
	regulation, or rule, or permitted by specific approval by the
	insurance department in the company's state of domicile for
	recording transactions and preparing financial statements.
Statutory surplus
As determined under SAP, the amount remaining
	after all liabilities, including loss reserves, are subtracted
	from all admitted assets. This sum is regarded as financial
	protection to policyholders in the event an insurance company
	suffers unexpected or catastrophic losses.
G-5
Structured settlements
Periodic payments to an injured person or
	survivor for a determined number of years or for life, typically
	in settlement of a claim under a liability policy.
Subrogation
A principle of law incorporated in insurance
	policies, which enables an insurance company, after paying a
	loss to its insured, to recover the amount of the loss from
	another who is legally liable for it.
Surplus (Unassigned funds)
The undistributed and unappropriated amount of
	policyholder surplus.
Tabular reserving
A method of setting reserves for a class of risk
	among a given population of insureds, based on a table
	evaluating the likelihood and magnitude of the relevant loss
	among that population.
Third party liability
A liability owed to a claimant (or "third
	party") who is not one of the two parties to the insurance
	contract. Insured liability claims are referred to as third
	party claims.
Umbrella coverage
A form of insurance protection against losses in
	excess of amounts covered by other liability insurance policies
	or amounts not covered by the usual liability policies.
Underwriter
An individual who examines, accepts or rejects
	risks and classifies accepted risks in order to charge an
	appropriate premium for each accepted risk. The underwriter is
	expected to select business that will produce an average risk of
	loss no greater than that anticipated for the class of business.
Underwriting
The insurer's or reinsurer's process of
	reviewing applications for insurance coverage, and the decision
	whether to accept all or part of the coverage and determination
	of the applicable premiums; also refers to the acceptance of
	such coverage.
Underwriting expense ratio
The ratio of underwriting, acquisition and other
	insurance expenses incurred to net premiums earned. (For
	statutory purposes, the ratio of underwriting expenses incurred
	to net premiums written.)
Underwriting expenses
All costs associated with acquiring and servicing
	business, including commissions, premium taxes, general and
	administrative expenses.
Underwriting profit or
underwriting loss results
The pre-tax profit or loss experienced by a
	property and casualty insurance company after deducting loss and
	loss adjustment expenses, underwriting expenses and policyholder
	dividends from net earned premiums. This profit or loss
	calculation includes reinsurance assumed and ceded but excludes
	investment income.
Unearned premium
The portion of premiums written that is allocable
	to the unexpired portion of the policy term.
Voluntary market
The market in which a person seeking insurance
	obtains coverage without the assistance of residual market
	mechanisms.
Workers' compensation
A system (established under state laws) under
	which employers provide insurance for benefit payments to their
	employees for work-related injuries, deaths and diseases,
	regardless of fault.
G-6
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS
Documents
Page
Report of PricewaterhouseCoopers LLP
F-2
Consolidated Balance Sheet as of
	December 31, 2000 and 2001
F-3
Consolidated Statement of Operations and
	Comprehensive Income for the Years Ended December 31, 1999,
	2000 and 2001
F-4
Consolidated Statement of Stockholder's
	Equity for the Years Ended December 31, 1999, 2000 and 2001
F-5
Consolidated Statement of Cash Flows for the
	Years Ended December 31, 1999, 2000 and 2001
F-6
Notes to Consolidated Financial Statements
F-7
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Crum & Forster Holding Inc. and Subsidiaries:
In our opinion, the accompanying consolidated
balance sheet and the related consolidated statements of
operations and comprehensive income, of stockholder's
equity and of cash flows present fairly, in all material
respects, the financial position of Crum & Forster Holding
Inc. and its subsidiaries at December 31, 2001 and 2000,
and the results of their operations and their cash flows for
each of the three years in the period ended December 31,
2001 in conformity with accounting principles generally accepted
in the United States of America. These financial statements are
the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally
accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, New York
March 6, 2002
F-2
CRUM & FORSTER HOLDING INC.
CONSOLIDATED BALANCE SHEET
December 31,
(In thousands, except share amounts)
2000
2001
ASSETS
Investments:
Fixed income securities, at fair value (amortized
	cost $2,449,127 and $1,991,551, respectively)
$
2,282,549
$
1,851,343
Equity securities, at fair value (cost $135,130
	and $140,075, respectively)
145,209
153,214
Total investments
2,427,758
2,004,557
Cash and cash equivalents
89,275
273,586
Accrued investment income
28,620
23,522
Premium receivables
221,723
218,852
Other receivables
15,413
16,512
Reinsurance recoverables
1,611,010
2,131,698
Prepaid reinsurance premiums
40,723
42,354
Deferred income taxes
235,512
293,917
Deferred policy acquisition costs
31,398
42,320
Other assets
94,240
100,641
Total assets
$
4,795,672
$
5,147,959
LIABILITIES
Unpaid losses and loss adjustment expenses
$
3,306,741
$
3,423,793
Unearned premiums
300,370
343,300
Dividends to policyholders
20,793
13,698
Deferred income on retroactive reinsurance
—
134,613
Funds held under reinsurance treaties
120,623
254,652
Accounts payable and other liabilities
245,653
258,298
Total liabilities
3,994,180
4,428,354
STOCKHOLDER'S EQUITY
Common stock, $1 par value; 1,000 shares
	authorized; 1,000 issued and outstanding
1,000
1,000
Additional paid-in capital
738,351
747,424
Accumulated other comprehensive loss, net of tax
(100,414
)
(84,865
)
Retained earnings
162,555
56,046
Total stockholder's equity
801,492
719,605
Total liabilities and stockholder's equity
$
4,795,672
$
5,147,959
The accompanying notes are an integral part of
the consolidated financial statements.
F-3
CRUM & FORSTER HOLDING INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE INCOME
Years Ended December 31,
(In thousands, except share amounts)
1999
2000
2001
REVENUE
Gross premiums written
$
744,888
$
679,803
$
843,161
Ceded premiums written
(145,750
)
(173,330
)
(236,063
)
Net premiums written
599,138
506,473
607,098
Decrease (increase) in unearned premiums
80,511
16,243
(41,298
)
Net premiums earned
679,649
522,716
565,800
Net investment income
157,711
142,586
119,171
Net realized investment gains (losses)
(7,103
)
224
(5,358
)
Other income, net
9,041
6,305
4,321
Total revenue
839,298
671,831
683,934
EXPENSES
Losses and loss adjustment expenses
556,864
391,102
641,748
Policy acquisition costs
109,411
98,503
90,385
Other underwriting expenses
115,709
113,558
119,358
Dividends to policyholders
10,709
5,991
2,493
Total expenses
792,693
609,154
853,984
Income (loss) before income taxes
46,605
62,677
(170,050
)
Income tax expense (benefit):
Current
(2,585
)
(29,309
)
3,267
Deferred
12,715
20,406
(66,808
)
Total income tax expense (benefit)
10,130
(8,903
)
(63,541
)
NET INCOME (LOSS)
$
36,475
$
71,580
$
(106,509
)
Average shares outstanding
1,000
1,000
1,000
Basic earnings (loss) per share
$
36,475
$
71,580
$
(106,509
)
COMPREHENSIVE INCOME (LOSS)
Net income (loss)
$
36,475
$
71,580
$
(106,509
)
Other comprehensive income (loss), net of tax
(224,465
)
141,374
15,549
Comprehensive income (loss)
$
(187,990
)
$
212,954
$
(90,960
)
The accompanying notes are an integral part of
the consolidated financial statements.
F-4
CRUM & FORSTER HOLDING INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S
EQUITY
Years Ended December 31,
(In thousands, except share amounts)
1999
2000
2001
COMMON STOCK
Balance, beginning and end of year
$
1,000
$
1,000
$
1,000
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year
679,000
679,000
738,351
Capital contribution
—
59,351
9,073
Balance, end of year
679,000
738,351
747,424
ACCUMULATED OTHER COMPREHENSIVE LOSS,
	NET OF TAX
Balance, beginning of year
(17,323
)
(241,788
)
(100,414
)
Unrealized investment (losses) gains
(227,591
)
143,324
18,824
Foreign currency translation
3,126
(1,950
)
(3,275
)
Balance, end of year
(241,788
)
(100,414
)
(84,865
)
RETAINED EARNINGS
Balance, beginning of year
111,165
147,640
162,555
Net income (loss)
36,475
71,580
(106,509
)
Dividends paid
—
(56,665
)
—
Balance, end of year
147,640
162,555
56,046
TOTAL STOCKHOLDER'S EQUITY
$
585,852
$
801,492
$
719,605
COMMON SHARES OUTSTANDING
Balance, beginning and end of year
1,000
1,000
1,000
The accompanying notes are an integral part of
the consolidated financial statements.
F-5
CRUM & FORSTER HOLDING INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
(In thousands)
1999
2000
2001
OPERATING ACTIVITIES:
Net income (loss)
$
36,475
$
71,580
$
(106,509
)
Adjustments to reconcile net income (loss) to net
	cash used in operating activities:
Net realized investment gains (losses)
7,103
(224
)
5,358
Depreciation and amortization
(120
)
(4,950
)
(3,873
)
Changes in:
Accrued investment income
1,176
2,794
5,098
Premium receivables
63,519
23,885
2,871
Other receivables
(829
)
(657
)
(1,099
)
Reinsurance recoverables
(193,161
)
(246,337
)
(520,688
)
Prepaid reinsurance premiums
4,110
(9,353
)
(1,631
)
Deferred policy acquisition costs
(9,164
)
2,041
(10,922
)
Other assets
(3,537
)
10,585
(6,401
)
Unpaid losses and loss adjustment expenses
(104,905
)
(263,940
)
117,052
Unearned premiums
(84,621
)
(6,890
)
42,930
Dividends to policyholders
(224
)
(3,763
)
(7,095
)
Deferred income on retroactive reinsurance
—
—
134,613
Funds held under reinsurance treaties
68,863
44,520
134,029
Other liabilities
(43,814
)
(22,532
)
21,804
Deferred income tax expense (benefit)
12,715
20,406
(66,808
)
Net accretion of discount on fixed income
	securities
(25,599
)
(21,209
)
(24,948
)
Total adjustments
(308,488
)
(475,624
)
(179,710
)
Net cash used in operating activities
(272,013
)
(404,044
)
(286,219
)
INVESTING ACTIVITIES:
Purchases of fixed income securities
(575,748
)
(116,070
)
(53,401
)
Proceeds from sales of fixed income securities
1,059,200
517,650
526,288
Proceeds from maturities of fixed income
	securities
9,045
3,405
5,310
Purchases of equity securities
(215,540
)
(29,940
)
(10,704
)
Proceeds from sales of equity securities
46,192
79,340
728
Payment for the purchase of Sen-Tech
	International Holdings, Inc. — net of cash and cash
	equivalents acquired
—
(20,137
)
—
Payment for the purchase of Crum & Forster
	Specialty Insurance Company — net of cash and cash
	equivalents acquired
—
(11,684
)
—
Purchase of fixed assets
(14,997
)
(11,256
)
(6,764
)
Net cash provided by investing activities
308,152
411,308
461,457
FINANCING ACTIVITIES:
Capital contributions
—
59,351
9,073
Dividends to parent
—
(56,665
)
—
Net cash provided by financing activities
—
2,686
9,073
Net increase in cash and cash equivalents
36,139
9,950
184,311
Cash and cash equivalents, beginning of year
43,186
79,325
89,275
Cash and cash equivalents, end of year
$
79,325
$
89,275
$
273,586
Supplemental Cash Flow Information:
Income taxes (paid to) received from parent
$
(79
)
$
9,972
$
(2,861
)
The accompanying notes are an integral part of
the consolidated financial statements.
F-6
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
1.  Organization and Basis of
Presentation
Crum & Forster Holding Inc. (the
"Company" or "Crum & Forster") is a
Delaware holding company. The Company is 100% owned by Fairfax
Inc., a Wyoming holding company. Fairfax Inc. is in turn wholly
owned by Fairfax Financial Holdings Limited
("Fairfax"), a Canadian financial services holding
company which is publicly traded on the Toronto Stock Exchange.
The Company, through its various subsidiaries, provides a full
range of commercial property and casualty insurance distributed
through an independent producer force located across the United
States.
The consolidated financial statements are
prepared in accordance with accounting principles generally
accepted in the United States of America and include the
accounts of the Company and its wholly owned subsidiaries,
United States Fire Insurance Company ("US Fire"), The
North River Insurance Company ("North River"), Crum
& Forster Indemnity Company, Crum and Forster Insurance
Company, and Crum & Forster Underwriters Co. of Ohio. US
Fire owns 100% of the stock of Crum & Forster Specialty
Insurance Company ("Specialty"). North River owns 100%
of the stock of Sen-Tech International Holdings, Inc.
("Seneca") and its subsidiaries. Material intercompany
accounts and transactions are eliminated in consolidation. See
Note 10 — Related Party Transactions.
The preparation of the consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions, which could differ from actual
results, that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent
assets and liabilities.
2.  Summary of Significant
Accounting Policies
Significant accounting policies followed by the
Company are summarized below:
Investments
The Company's fixed income securities and
equity securities are categorized as "available for
sale", and are recorded at their fair value based primarily
on quoted market prices. Unrealized gains or losses on the
Company's fixed income and equity securities, net of
applicable income taxes, are included in other comprehensive
income. Unrealized losses which are deemed other than temporary
are charged to operations. Factors considered in evaluating
whether a decline in value is other than temporary include:
1) periodic assessment of the changes in intrinsic value of
investments relative to declines in market values in determining
whether the underlying valuation fluctuations are other than
temporary; 2) the Company's ability and intent to
retain the investment for a period of time sufficient to allow
for an anticipated recovery in value; and 3) the financial
condition, credit analysis, and future prospects of the issuer.
Realized investment gains or losses are
determined on the basis of average cost. Investment income is
recorded as earned.
Cash and Cash Equivalents
The Company considers highly liquid debt
instruments purchased with an original maturity of three months
or less to be cash equivalents.
Deferred Policy Acquisition Costs
Certain costs, consisting of commissions and
premium taxes incurred in acquiring insurance premiums, are
deferred and amortized over the period in which the related
premiums are earned. Deferred policy acquisition costs are
limited to their estimated realizable value which considers
anticipated losses and loss adjustment
F-7
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
expenses and estimated remaining costs of
servicing the contracts. Realizability is determined without
consideration of investment income.
Goodwill
The purchase price in excess of net assets
acquired ("goodwill") and net assets acquired in
excess of purchase price ("negative goodwill") are
amortized on a straight-line basis over 10 years and are
included in other income, net. Goodwill is included in other
assets and negative goodwill is included in other liabilities on
the consolidated balance sheet.
Unpaid Losses and Loss Adjustment
	Expenses
The reserves for unpaid losses and loss
adjustment expenses are based on claim adjusters'
evaluations and other estimates, including those for incurred
but not reported (IBNR) losses, and future salvage and
subrogation recoveries. The reserves are reviewed continually
during the year and changes in estimates are reflected currently
in operating results. Accordingly, losses and loss adjustment
expenses are charged to income as incurred.
The reserves for unpaid losses and loss
adjustment expenses are estimates of amounts needed to pay
reported and unreported claims and related loss adjustment
expenses. The estimates are based on assumptions related to the
ultimate cost to settle such claims. Management believes that
reserves for unpaid losses and loss adjustment expenses are
adequate.
Dividends to Policyholders
Dividends to policyholders are declared in
accordance with the insurance contract and approved by the
Company's Board of Directors. Dividends are charged to
operations as the related premiums are earned.
Reinsurance
The Company reinsures, in the ordinary course of
business, certain risks with other insurance and reinsurance
companies. These arrangements provide the means for greater
diversification of business and serve to limit the net loss
potential of unusually severe or frequent losses. The ceding of
insurance does not discharge the original insurer from its
primary liability to its policyholder; however, the insurance
company that accepted the risk assumes an obligation to the
original insurer. The ceding insurer retains a contingent
liability with respect to reinsurance ceded to the extent that a
reinsuring company may not be able to meet its obligations.
Reinsurance recoverables include balances due from reinsurance
companies for paid and unpaid losses and loss adjustment
expenses that will be recovered from reinsurers, based on
contracts in force. A reserve for uncollectible reinsurance has
been determined based upon a review of the financial condition
of the reinsurers and an assessment of other available
information. Prepaid reinsurance premiums represent the portion
of premiums ceded to reinsurers applicable to the unexpired
terms of the reinsurance contracts in force.
For retroactive reinsurance contracts, the amount
by which liabilities associated with the reinsured policies
exceed the amount paid for reinsurance coverage is deferred and
amortized as a reduction to losses and loss adjustment expenses
using the interest method.
Funds Held Under Reinsurance
	Treaties
Premiums withheld from reinsurers under
reinsurance contracts are included in funds held under
reinsurance treaties. Interest generally accrues on withheld
funds in accordance with contract terms and is included in net
investment income.
F-8
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
Income Taxes
The Company and its subsidiaries are included in
the consolidated federal income tax return filed by Fairfax Inc.
The consolidated federal income tax provision is allocated to
each of the companies in the consolidated group, pursuant to a
written agreement, on a separate return basis.
Deferred income taxes are provided for temporary
differences between the financial statement and tax bases of
assets and liabilities. Such differences relate principally to
net operating loss carryforwards, unpaid losses and loss
adjustment expenses, deferred income on retroactive reinsurance,
unrealized net depreciation of investments, unearned premiums,
and deferred policy acquisition costs. A valuation allowance for
deferred tax assets is recorded if it is more likely than not
that all or some portion of the benefits related to deferred tax
assets will not be realized.
Premiums
Insurance premiums are earned over the terms of
the related policies. Unearned premium reserves are established
for the unexpired portion of policy premiums. Premiums are
accrued for retrospectively rated policies and policies subject
to audit on an estimated basis throughout the contract or policy
term. Prepaid reinsurance premiums are reported as assets. The
reserve for uncollectible premiums is determined principally on
the basis of past collection experience. As of December 31,
2000 and 2001, the reserve was $18,855 and $21,259, respectively.
Bail bond premiums are recorded upon issuance of
the bond based upon filed premium rates. Estimated losses,
commissions and premium taxes related to bail bond premiums are
recorded at the time the premiums are earned.
Earnings Per Share
Basic earnings per share are calculated by
dividing net income by the weighted average number of common
shares outstanding. The Company has no securities outstanding
that would result in the potential issuance of additional common
shares.
New Accounting Pronouncements
Statement of Financial Accounting Standards
("SFAS") No. 133 ("SFAS No. 133"),
Accounting for Derivative Instruments and Hedging
Activities,
was issued in June 1998 and amended by SFAS
No. 138, issued in June 2000. The requirements of SFAS
No. 133, as amended, were effective for the Company in the
first quarter of the fiscal year beginning January 1, 2001.
The standard establishes accounting and reporting standards for
derivative instruments embedded in other contracts and for
hedging activities. Under the standard, certain contracts that
were not formerly considered derivatives may now meet the
definition of a derivative. The Company has determined SFAS
No. 133 to have no impact on the Company's financial
position and results of operations because the Company has no
derivative activity.
In June 2001, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 141,
Business
Combinations
. SFAS No. 141 requires that the Company
account for all business combinations in the scope of the
statement using the purchase method. SFAS No. 141 is
effective for business combinations initiated after
June 30, 2001 and for business combinations accounted for
using the purchase method for which the date of acquisition is
July 1, 2001 or later. The acquisition of the Company by
Fairfax in 1998 resulted in the recognition of negative goodwill
as a result of net assets acquired in excess of the purchase
price of $97,800. Prior to adoption of SFAS No. 141, the
unamortized balance of negative goodwill was $74,591 and $64,809
at December 31, 2000 and 2001, respectively, and is
included in other liabilities in the consolidated balance sheet.
Under SFAS No. 141, the
F-9
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
remaining unamortized negative goodwill of
$64,809 at December 31, 2001 will be recognized as an
extraordinary item on the statement of operations in 2002.
Amortization of the negative goodwill of $9,782 is included in
other income, net for each of the years ended December 31,
1999, 2000 and 2001, which, upon adoption of SFAS No. 141,
will no longer be recognized.
In June 2001, the FASB issued SFAS No. 142,
Goodwill and Other Intangible Assets
which addresses
accounting and reporting for intangible assets, except for those
acquired in a business combination. SFAS No. 142 presumes
that goodwill and certain intangible assets have indefinite
useful lives. Accordingly, goodwill will not be amortized but
rather will be tested at least annually for impairment. SFAS
No. 142 is effective for the Company on January 1,
2002. The Company has not yet completed its assessment of the
impact of SFAS No. 142 on its financial statements.
In August 2001, the FASB issued SFAS
No. 144,
Accounting for the Impairment or Disposal of
Long-lived Assets
. SFAS No. 144 establishes a single
accounting model for long-lived assets to be disposed of by
sale. A long-lived asset classified as held for sale is to be
measured at the lower of its carrying amount or fair value less
cost to sell. Depreciation (amortization) is to cease.
Impairment is recognized only if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash
flows and is measured as the difference between the carrying
amount and fair value of the asset. Long-lived assets to be
abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off are considered held and used
until disposed of. Accordingly, discontinued operations are no
longer to be measured on a net realizable value basis, and
future operating losses are no longer recognized before they
occur. The Company will adopt SFAS No. 144 effective
January 1, 2002. The provisions of the new standard are
generally to be applied prospectively and are not expected to
significantly affect the Company's results of operations,
financial condition or liquidity.
3.  Acquisitions
On August 31, 2000, the Company acquired,
for cash consideration, all of the outstanding common stock of
Seneca. This acquisition was accounted for as a purchase. The
purchase price of $65,314 has been allocated to assets acquired
and liabilities assumed based on estimated fair market value at
the date of acquisition with the balance of $6,014 recorded as
goodwill. The goodwill of $5,821 and $5,212 at December 31,
2000 and 2001, respectively, is reflected in other assets in the
consolidated balance sheet, while the related amortization of
the goodwill acquired on a straight-line basis over
10 years of $193 and $609 for the years ended
December 31, 2000 and 2001, respectively, is included in
other income, net in the consolidated statement of operations.
The operating results of Seneca have been included in the
consolidated statement of operations from the date of
acquisition.
On December 21, 2000, the Company acquired,
for cash consideration, all of the outstanding common stock of
Specialty (formerly Transnational Insurance Company). This
acquisition was accounted for as a purchase. The purchase price
of $17,400 has been allocated to assets acquired and liabilities
assumed based on estimated fair market value at the date of
acquisition with the balance of $2,344 recorded as goodwill. The
goodwill of $2,334 and $2,099 at December 31, 2000 and
2001, respectively, is reflected in other assets in the
consolidated balance sheet and is being amortized on a
straight-line basis over 10 years. Amortization of goodwill
of $10 and $235 for the years ended December 31, 2000 and
2001, respectively, is included in other income, net in the
consolidated statement of operations. The operating results of
Specialty have been included in the consolidated statement of
operations from the date of acquisition.
F-10
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
The following unaudited pro forma consolidated
results of operations for the year ended December 31, 1999
and 2000 assume the Seneca acquisition occurred as of
January 1, 1999:
1999
2000
(unaudited)
(unaudited)
Net premium earned
$
767,301
$
590,696
Net investment income
163,808
146,682
Net realized investment losses
(7,191
)
(3,301
)
Other income, net
8,679
5,917
Total revenue
932,597
739,994
Losses and loss adjustment expenses
610,278
434,502
Other operating expenses
269,864
244,257
Total losses and expenses
880,142
678,759
Income before income taxes
52,455
61,235
Income tax expense (benefit)
11,357
(9,515
)
Net income
$
41,098
$
70,750
Basic/ diluted earnings per share
$
41,098
$
70,750
The results for Specialty were immaterial for
1999 and 2000.
4.  Investments
The composition of the investment portfolio,
which is carried at fair value, as of December 31, 2000
follows:
Cost or
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Fixed income securities:
Bonds
United States government and government agencies
	and authorities
$
1,136,988
$
2,289
$
69,084
$
1,070,193
States, municipalities and political subdivisions
11,540
287
103
11,724
Foreign governments
947
50
—
997
Public utilities
384,263
291
18,209
366,345
All other corporate
915,389
674
82,773
833,290
Total fixed income securities
2,449,127
3,591
170,169
2,282,549
Equity securities:
Common stocks
Banks, trusts and insurance companies
101,987
7,547
1,320
108,214
Industrial, miscellaneous and all other
33,143
5,804
1,952
36,995
Total common stocks
135,130
13,351
3,272
145,209
Total investments
$
2,584,257
$
16,942
$
173,441
$
2,427,758
F-11
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
The composition of the investment portfolio,
which is carried at fair value, as of December 31, 2001
follows:
Cost or
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Fixed income securities:
Bonds
United States government and government agencies
	and authorities
$
919,726
$
7,263
$
94,628
$
832,361
States, municipalities and political subdivisions
9,291
439
—
9,730
Foreign governments
953
84
—
1,037
Public utilities
331,667
511
8,240
323,938
All other corporate
729,914
2,596
48,233
684,277
Total fixed income securities
1,991,551
10,893
151,101
1,851,343
Equity securities:
Common stocks
Banks, trusts and insurance companies
98,192
3,080
47
101,225
Industrial, miscellaneous and all other
41,883
11,073
967
51,989
Total common stocks
140,075
14,153
1,014
153,214
Total investments
$
2,131,626
$
25,046
$
152,115
$
2,004,557
The amortized cost and fair value of fixed income
securities as of December 31, 2001, by contractual
maturity, are shown below. Actual maturities may differ from
maturities shown below due to the existence of call features or
put features. At December 31, 2001, total securities
subject to call represent 1.8% of total fair value and total
securities containing a put feature represent 44.8% of total
fair value.
Amortized
Fair
Cost
Value
Due in one year or less
$
16,548
$
16,944
Due after one year through five years
198,459
198,668
Due after five years through ten years
116,244
113,127
Due after ten years
1,660,300
1,522,604
Total fixed income
$
1,991,551
$
1,851,343
F-12
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
The components of net investment income for the
years ended December 31, 1999, 2000 and 2001 follow:
1999
2000
2001
Interest on fixed income securities
$
162,290
$
143,431
$
122,088
Dividends on equity securities
1,304
4,686
4,815
Interest on cash and cash equivalents
4,894
6,840
9,930
Other
3,169
2,104
2,192
Gross investment income
171,657
157,061
139,025
Investment expenses
(8,668
)
(5,666
)
(5,276
)
Interest on funds held under reinsurance treaties
(5,278
)
(8,809
)
(14,578
)
Net investment income
$
157,711
$
142,586
$
119,171
The components of gross and net realized
investment gains (losses) for the years ended December 31,
1999, 2000 and 2001 follow:
1999
2000
2001
Fixed income securities:
Gains
$
2,148
$
2,074
$
65
Losses
(9,326
)
(12,257
)
(1,151
)
Net
(7,178
)
(10,183
)
(1,086
)
Equity securities:
Gains
—
11,133
121
Losses
—
—
(3,795
)
Net
—
11,133
(3,674
)
Other assets:
Gains
1,322
735
131
Losses
(1,247
)
(1,461
)
(729
)
Net
75
(726
)
(598
)
Total realized gains (losses):
Gains
3,470
13,942
317
Losses
(10,573
)
(13,718
)
(5,675
)
Net
$
(7,103
)
$
224
$
(5,358
)
Included in gross losses for the year ended
December 31, 2001, is $4,701 related to losses on other
than temporary impairments in investments.
Gains and losses on other assets relate to
partnerships and other assets which are included in other assets
on the consolidated balance sheet.
F-13
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
Changes in net unrealized gains (losses) on
investments, and the related tax effect, for the years ended
December 31, 1999, 2000 and 2001 follow:
1999
2000
2001
Fixed income securities
$
(331,950
)
$
191,632
$
26,370
Equity securities
(18,189
)
28,469
3,060
Other assets
—
—
(438
)
Subtotal
(350,139
)
220,101
28,992
Deferred income taxes expense (benefit)
122,548
(76,777
)
(10,168
)
Net change in net unrealized gains (losses) on
	investments reflected in stockholder's equity
$
(227,591
)
$
143,324
$
18,824
Fixed income securities and cash and cash
equivalents of $116,248 and $135,559 as of December 31,
2000 and 2001, respectively, were on deposit with various state
regulatory authorities as required by insurance laws.
Equity securities as of December 31, 2001
are primarily comprised of the Company's investments in TRG
Holding Corporation (27.5% owned by Fairfax and its affiliates,
including 5.2% owned by the Company), HUB International Limited
(36.8% owned by Fairfax and its affiliates, including 16.9%
owned by the Company), Zenith National Insurance Corp. (42.0%
owned by Fairfax and its affiliates, including 17.8% owned by
the Company), and ORCASIA Limited, which is carried at equity
(100.0% owned by Fairfax and its affiliates, including 20.3%
owned by the Company).
At December 31, 2000 and 2001, the
Company's investment in TRG Holding Corporation is carried
at $7,613 and $7,756, respectively; the Company's
investment in HUB International Limited is carried at $31,695
and $34,985, respectively; and the Company's investment in
Zenith National Insurance Corp. is carried at $97,150 and
$92,404, respectively. The investment in ORCASIA Limited,
acquired in December 2001, is carried at $10,704 at
December 31, 2001.
At December 31, 2001, no investments, other
than investments in United States government securities and the
investment in Zenith National Insurance Corp., exceeded 10% of
stockholder's equity.
Included in fixed income securities at
December 31, 2001 is the Company's investment of
$17,500 in debentures issued by HUB International Limited. At
the option of the holder and at any time preceding their
maturity, these bonds are convertible into HUB International
Limited common shares at seventeen Canadian dollars per share.
The Company has a securities lending program
administered by its custodial bank whereby securities are loaned
to third parties, primarily major brokerage firms. Company
policy requires a minimum of 102 percent of market value of
the loaned securities to be separately maintained as collateral
for the loan. In addition, the Company maintains full ownership
rights to the securities loaned including the collection of
associated investment income and the ability to sell the
securities. The Company is not permitted to sell or repledge any
collateral and therefore does not record the amount of
collateral held. The loaned securities remain a recorded asset
of the Company. The collateral value retained by the
Company's custodial bank amounted to $357,202 and $61,295
as of December 31, 2000 and 2001, respectively.
F-14
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
5.  Unpaid Losses and Loss
Adjustment Expenses
Activity in the liability for unpaid losses and
loss adjustment expenses follows:
1999
2000
2001
Gross unpaid losses and loss adjustment expenses,
	beginning of year
$
3,597,341
$
3,492,436
$
3,306,741
Less ceded unpaid losses and loss adjustment
	expenses
1,105,466
1,304,908
1,570,108
Net unpaid losses and loss adjustment expenses,
	beginning of year
2,491,875
2,187,528
1,736,633
Acquisition of Seneca — net unpaid loss
	and loss adjustment expenses
—
45,457
—
Losses and loss adjustment expenses incurred
	related to:
Current year
541,782
358,946
458,675
Prior years
15,082
32,156
183,073
Total losses and loss adjustment expenses incurred
556,864
391,102
641,748
Total losses and loss adjustment expenses paid
	related to:
Current year
196,750
139,801
163,792
Prior years
664,461
747,653
667,134
Total losses and loss adjustment expenses paid
861,211
887,454
830,926
Net unpaid losses and loss adjustment expenses,
	end of year
2,187,528
1,736,633
1,547,455
Add ceded unpaid losses and loss adjustment
	expenses
1,304,908
1,570,108
1,876,338
Gross unpaid losses and loss adjustment expenses,
	end of year
$
3,492,436
$
3,306,741
$
3,423,793
Reserves were strengthened based on the latest
actuarial estimates, reflecting adverse emergence primarily in
the other liability, commercial auto liability, workers'
compensation and commercial multi-peril lines of business.
The Company uses tabular reserving for
workers' compensation indemnity reserves and discounts such
reserves using an interest rate of 5%. The amount of the related
discount was $101,546 and $107,133 at December 31, 2000 and
2001, respectively. Accretion of the discount is immaterial to
the statement of operations.
The Company has exposure to the
September 11, 2001 terrorist attacks, with claims expected
to arise primarily from business interruption, business personal
property and workers' compensation insurance coverages. The
Company has performed a detailed analysis of contracts believed
to be exposed to this event and, as of December 31, 2001,
the Company recorded loss and loss adjustment expenses for
claims arising from the terrorist attacks of
$167.5 million, before ceded reinsurance, and
$1.5 million net of reinsurance. While this is the
Company's best estimate at this time, it could change as
more information becomes available.
6.  Asbestos and Environmental Loss
and Loss Adjustment Expenses
The Company has exposure to asbestos and
environmental pollution claims arising from the sale of general
liability, commercial multi-peril and umbrella insurance
policies, the predominance of which were written for accident
years 1985 and prior.
Estimation of ultimate liabilities for these
exposures is unusually difficult due to issues such as whether
or not coverage exists, definition of an occurrence,
determination of ultimate damages and allocation of such damages
to financially responsible parties.
F-15
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
The Company's asbestos and environmental
reserve development, gross and net of reinsurance, for the years
ended December 31, 1999, 2000 and 2001 is set forth in the
table below:
1999
2000
2001
Asbestos
Gross unpaid losses and loss adjustment expenses,
	beginning of year
$
242,951
$
254,493
$
236,200
Less ceded unpaid losses and loss adjustment
	expenses
100,080
90,119
62,076
Net unpaid losses and loss adjustment expenses,
	beginning of year
142,871
164,374
174,124
Net losses and loss adjustment expenses incurred
38,739
39,335
69,254
Net paid losses and loss adjustment expenses
17,236
29,585
15,232
Net unpaid losses and loss adjustment expenses,
	end of year
164,374
174,124
228,146
Add ceded unpaid losses and loss adjustment
	expenses
90,119
62,076
33,325
Gross unpaid losses and loss adjustment expenses,
	end of year
$
254,493
$
236,200
$
261,471
1999
2000
2001
Environmental
Gross unpaid losses and loss adjustment expenses,
	beginning of year
$
215,131
$
192,027
$
170,595
Less ceded unpaid losses and loss adjustment
	expenses
27,607
24,855
25,171
Net unpaid losses and loss adjustment expenses,
	beginning of year
187,524
167,172
145,424
Net losses and loss adjustment expenses incurred
(167
)
(2,982
)
2,032
Net paid losses and loss adjustment expenses
20,185
18,766
22,690
Net unpaid losses and loss adjustment expenses,
	end of year
167,172
145,424
124,766
Add ceded unpaid losses and loss adjustment
	expenses
24,855
25,171
26,937
Gross unpaid losses and loss adjustment expenses,
	end of year
$
192,027
$
170,595
$
151,703
The Company also maintains reserves for other
latent exposures such as those associated with chemical and lead
exposure, construction defects and tobacco products, net of
reinsurance, of $55,928, $31,093 and $27,314 as of
December 31, 1999, 2000 and 2001, respectively.
F-16
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
7.  Reinsurance
The components of the Company's net premiums
written and net premiums earned for each of the three years
ended December 31 follow:
1999
2000
2001
Premiums written:
Direct
$
730,297
$
666,245
$
801,268
Assumed from other companies, pools or
	associations
14,591
13,558
41,893
Ceded to other companies, pools or associations
(145,750
)
(173,330
)
(236,063
)
Net premiums written
$
599,138
$
506,473
$
607,098
Premiums earned:
Direct
$
812,040
$
671,277
$
761,490
Assumed from other companies, pools or
	associations
17,424
14,973
39,060
Ceded to other companies, pools or associations
(149,815
)
(163,534
)
(234,750
)
Net premiums earned
$
679,649
$
522,716
$
565,800
The components of the Company's total
reinsurance recoverables at December 31, 2000 and 2001
follow:
2000
2001
Reinsurance receivable on paid losses and loss
	adjustment expenses
$
40,902
$
47,618
Reinsurance recoverable on unpaid losses and loss
	adjustment expenses
1,570,108
2,084,080
Total reinsurance recoverables
$
1,611,010
$
2,131,698
Reinsurance recoverables are net of a reserve for
uncollectible reinsurance of $41,200 and $38,316 at
December 31, 2000 and 2001, respectively.
The Company actively monitors and evaluates the
financial condition of its reinsurers and prepares estimates of
the uncollectible amounts due from troubled reinsurers. The
evaluation focuses on financial and other available data such as
whether or not the reinsurer is in rehabilitation or in
liquidation proceedings and provides an estimate of the amount
that will be ultimately collected from these troubled
reinsurers. In addition to the reinsurers' ability to pay
claims, from time to time disputes arise over amounts and
reinsurance coverage. The Company pursues its remedies in these
cases and recognizes the impact of developments in these
situations as the disputes are resolved. At December 31,
2000 and 2001, the Company's top ten reinsurers represented
69.8% and 72.7%, respectively, of the gross reinsurance
recoverable on paid and unpaid losses. At December 31,
2001, the Company's two largest reinsurers, Inter-Ocean
Reinsurance Company Ltd. and Swiss Re and subsidiaries,
represented 17.8% and 13.4%, respectively, of the reinsurance
recoverable on paid and unpaid losses and loss adjustment
expenses. Management believes the reinsurance recoverables, net
of the reserve for uncollectible reinsurance, are valid and
collectible.
During 2001, the Company entered into adverse
development contracts with two reinsurers. One provided for
$400,000 reinsurance coverage for accident years 2000 and prior
at a cost of $80,500, which is included in funds held under
reinsurance treaties. The other contract provided the Company
with $19,248 of adverse development coverage for accident years
prior to August 13, 1998 at a cost of $7,925. Both of these
contracts are recorded as retroactive reinsurance with the
future recovery of adverse development reflected on the balance
sheet as deferred income, which is being amortized under the
interest method. As of December 31, 2001, the amount of
deferred income on retroactive reinsurance was $134,613. The
Company amortized $1,924 in 2001, which is included in losses
and loss adjustment expenses in the statement of operations.
F-17
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
8.  Income Taxes
The components of income tax expense (benefit)
for the years ended December 31, 1999, 2000 and 2001 follow:
1999
2000
2001
Income tax expense (benefit):
Current
$
(2,585
)
$
(29,309
)
$
3,267
Deferred
12,715
20,406
(66,808
)
Total income tax expense (benefit)
$
10,130
$
(8,903
)
$
(63,541
)
Deferred income taxes reflect the tax impact of
temporary differences between the amount of assets and
liabilities for financial reporting purposes and such amounts as
measured by tax laws and regulations. Components of deferred
income tax assets and liabilities as of December 31, 2000
and 2001 follow:
2000
2001
Deferred tax assets:
Operating losses
$
59,404
$
104,722
Unpaid losses and loss adjustment expenses
81,237
55,939
Deferred income on retroactive reinsurance
—
47,115
Unrealized net depreciation of investments
54,465
46,060
Unearned premiums
18,398
21,418
Employee benefit plans
8,819
8,628
Leasehold accruals
9,326
8,328
Investments
1,192
6,348
Allowance for doubtful accounts
4,192
5,033
Policyholder dividends
5,286
4,028
Capital losses
983
1,019
Others
10,913
9,364
Deferred tax assets before valuation allowance
254,215
318,002
Valuation allowance
2,179
2,179
Deferred tax assets after valuation allowance
252,036
315,823
Deferred tax liabilities:
Deferred policy acquisition costs
10,990
14,812
Workers compensation audit premiums
2,783
3,213
Others
2,751
3,881
Deferred tax liabilities
16,524
21,906
Total deferred tax assets
$
235,512
$
293,917
As of December 31, 2000 and 2001, based on
limitations imposed by Section 382 of the Internal Revenue
Code related to a previous change in control of Seneca, and
future expiration of its net operating loss carryforwards,
management believes that it is more likely than not that a
portion of the net deferred tax asset
F-18
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
related to Seneca's net operating loss
carryforward will not be realized and has recorded a valuation
allowance of $2,179 for 2000 and 2001.
Based on projections of estimated future
operations, management has assessed that the deferred income tax
asset is expected to be recovered from future profitable
operations.
At December 31, 2001, the Company has net
operating loss carryforwards of approximately $299,204 of which
$11,519 expires in 2004. The remainder will expire in years 2019
through 2021. Capital loss carryforwards of $2,913 expire in
2005.
The following table reconciles income taxes at
the statutory federal income tax rate to the Company's tax
expense (benefit) for the years ended December 31, 1999,
2000 and 2001:
1999
2000
2001
% of
% of
% of
Pre-tax
Pre-tax
Pre-tax
Amount
Income
Amount
Income
Amount
Income
Income taxes computed on pre-tax operating income
	(loss)
$
16,312
35.0
%
$
21,936
35.0
%
$
(59,517
)
(35.0
)%
Increase (decrease) in income taxes resulting
	from:
Dividend received deduction and tax-exempt income
(413
)
(0.9
)
(1,106
)
(1.8
)
(1,160
)
(0.7
)
Goodwill
(3,424
)
(7.4
)
(3,353
)
(5.3
)
(3,129
)
(1.8
)
Prior year provision adjustment
—
—
(26,250
)
(41.9
)
—
—
Others, net
(2,345
)
(5.0
)
(130
)
(0.2
)
265
0.1
Total income tax expense (benefit)
$
10,130
21.7
%
$
(8,903
)
(14.2
)%
$
(63,541
)
(37.4
)%
In 2000, the Company recorded an adjustment to
current income tax of $26,250 related to the resolution of the
deductibility of certain reinsurance premiums. Under its tax
sharing agreements the Company paid income taxes to Fairfax of
$79 and $2,861 in 1999 and 2001, respectively, and received
$9,972 from Fairfax in 2000.
Under federal tax regulation, in the event the
Company ceases to be included in the Fairfax Inc. consolidated
tax return, the Company's recorded deferred tax asset could
be adjusted. As of December 31, 2001, the estimated effect
of such tax deconsolidation would result in a reduction in the
net operating loss carryforward and the recorded deferred tax
asset of $58,247 and $20,386, respectively.
F-19
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
9.  Accumulated Other Comprehensive
Loss
The following table shows the components of the
change in accumulated other comprehensive loss for years ending
December 31, 2000 and 2001:
2000
2001
Beginning balance of accumulated other
	comprehensive loss, net of tax
$
(241,788
)
$
(100,414
)
Beginning balance of net unrealized losses on
	securities
(244,792
)
(101,468
)
Ending balance of net unrealized losses on
	securities
(101,468
)
(82,644
)
Current period change in net unrealized losses on
	securities
143,324
18,824
Beginning balance of foreign currency translation
	adjustments
3,004
1,054
Ending balance of foreign currency translation
	adjustments
1,054
(2,221
)
Current period change in foreign currency
	translation adjustments
(1,950
)
(3,275
)
Current period change in accumulated other
	comprehensive loss
141,374
15,549
Ending balance of accumulated other comprehensive
	loss, net of tax
$
(100,414
)
$
(84,865
)
The components of comprehensive income (loss) for
the periods ending December 31, 1999, 2000 and 2001 are
shown in the following table:
1999
2000
2001
Net income (loss)
$
36,475
$
71,580
$
(106,509
)
Other comprehensive income, before tax
Unrealized gains (losses) on securities arising
	during the period
(350,139
)
220,101
28,992
Foreign currency translation
4,809
(3,001
)
(5,037
)
Other comprehensive income (loss), before tax
(345,330
)
217,100
23,955
Tax benefit (expense) from unrealized gains
	(losses) arising during the period
122,548
(76,777
)
(10,168
)
Tax benefit (expense) from foreign currency
	translation
(1,683
)
1,051
1,762
Total tax benefit (expense)
120,865
(75,726
)
(8,406
)
Other comprehensive income (loss), net of tax
(224,465
)
141,374
15,549
Comprehensive income (loss)
$
(187,990
)
$
212,954
$
(90,960
)
F-20
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
10. Related Party Transactions
The Company and its subsidiaries have entered
into various reinsurance arrangements with their affiliates. The
approximate amounts included or deducted from income, expense,
assets and liabilities in the accompanying consolidated
financial statements, with respect to reinsurance assumed and
ceded follow:
1999
2000
2001
Statement of operations:
Premiums written — assumed
$
—
$
177
$
5,243
—
	ceded
8,345
10,059
49,317
Premiums earned  — assumed
—
41
3,896
—
	ceded
4,224
8,255
48,575
Losses and loss adjustment expenses
493
1,331
1,579
Balance sheet:
Reinsurance receivable on paid losses and loss
	adjustment expenses
$
—
$
4,374
Reinsurance recoverable on losses and loss
	adjustment expenses
353
797
Unpaid losses and loss adjustment expenses
5,161
3,108
Reinsurance balances payable
102
741
Reinsurance recoverable on unpaid losses and loss
	adjustment expenses
205,393
240,108
Prepaid reinsurance premiums — assumed
136
1,348
—
	ceded
5,925
6,667
The Company is the beneficiary of a blended
aggregate stop loss reinsurance agreement effective
January 1, 2000 through December 31, 2002. A domestic
third party reinsurer was the sole subscribing reinsurer for the
2000 contract year. This reinsurance agreement was interceded
during 2000 by such reinsurer to ORC Re Limited, a wholly owned
subsidiary of Fairfax, and for the years 2001 and 2002 the sole
subscribing reinsurer is ORC Re Limited. The Company retains an
ultimate net loss up to 73% in 2001 and 70% in 2002 of the
subject net earned premium income. Both terms are subject to a
per term maximum recovery of $150,000. Pursuant to the
agreement, the Company ceded premiums of 5% of the subject net
earned premium income or $31,398 in 2001. Reinsurance
recoverable on unpaid losses and loss adjustment expenses
amounted to $39,097 at December 31, 2001.
The Company is party to an adverse development
contract with Ridge Re Limited, providing $233,750 of coverage
for accident years 1992 and prior. The Company has fully
utilized the limits of this contract and has a reinsurance
recoverable from Ridge Re Limited at December 31, 2001 of
$233,750. This reinsurance was retroceded to ORC Re Limited
during 1998 after the acquisition of the Company by Fairfax.
This reinsurance recoverable is fully collateralized by trust
agreements.
A former parent of the Company required the
transfer of a number of policies and related assets and
liabilities among insurance companies controlled by the Parent,
effective through assumption and indemnity reinsurance
arrangement. The assuming parties were required to seek novation
of certain policies. As of December 31, 2000 and 2001,
reinsurance recoverable from related parties included $194,658
and $184,662, from International Insurance Company as a result
of certain policies not yet accepted for novation.
The Company has several reinsurance agreements in
the normal course of business in effect with Odyssey
Re Holdings Corp. ("Odyssey Re"), an
affiliate of Fairfax, and its subsidiaries as parties. Under
these agreements, a subsidiary of Odyssey Re participates
in varying layers of risk for lines of business pertaining to
F-21
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
property, including per risk and catastrophe,
fidelity and umbrella. For the year ended December 31,
2001, the Company ceded $3,498 in premiums to this subsidiary.
Investment management agreements have been
entered into between the Company and its subsidiaries and
Hamblin Watsa Investment Counsel, Ltd. ("Hamblin
Watsa"), a wholly owned subsidiary of Fairfax. Pursuant to
the agreements, basic and incentive fees, based upon total
assets under management, are paid to Hamblin Watsa. For the
years ended December 31, 1999, 2000 and 2001, $2,942,
$2,348 and $2,216, respectively, of such fees are included in
investment expenses.
The Company paid investment administrative fees
to Fairfax for services provided to the Company. For the years
ended December 31, 1999, 2000 and 2001, $4,164, $2,348 and
$2,216, respectively, for administrative fees were included in
investment expenses.
A Master Repurchase Agreement between the Company
and Fairfax, effective July 1, 2000, provides for the
repurchase of securities transferred to Fairfax in order to
provide liquidity. The Company is obligated to repurchase from
Fairfax securities transferred at a price equal to the amount
initially raised from their sale plus the stated interest rate
of each security pursuant to its initial sale. In December 2000,
the Company transferred securities with a market value of
$25,000 to Fairfax in exchange for $25,000 in cash.
Subsequently, in December 2000 the Company repurchased the
securities from Fairfax for $25,000 in cash. There were no
outstanding repurchase transactions at December 31, 2000
and 2001.
Fairfax has purchased an insurance policy from
Lloyd's of London and various other insurance companies
covering comprehensive crime insurance, insurance companies
professional liability insurance, directors' and
officers' liability and company reimbursement insurance,
employment practices liability insurance and fiduciary liability
insurance. The Company's share of the expense incurred for
this coverage, which runs from May 31, 2000 to May 31,
2003, was $194 and $333 for the years ended December 31,
2000 and 2001, respectively, and is included in losses and loss
adjustment expenses and other underwriting expenses.
Under an agreement effective September 1,
2001, a subsidiary of the Company has agreed to obtain certain
information technology services on a non-exclusive basis from
Fairfax Information Technology Services, Inc.
("FITS"), a wholly owned subsidiary of Fairfax. The
expense incurred for these services was $1,829 for the year
ended December 31, 2001, and is included in losses and loss
adjustment expenses and other underwriting expenses. In
addition, FITS entered into an agreement with a subsidiary of
the Company effective January 1, 2001 pursuant to which
FITS is provided certain management and general services. No
amounts were billed under this agreement during the year ended
December 31, 2001.
The Company entered into a services agreement,
effective January 1, 2000, with TIG Insurance Company,
a wholly owned subsidiary of Fairfax, to obtain certain services
relating to issuing policies and handling claims. Expenses
incurred for these services were $2,200 and $1,765 for the years
ended December 31, 2000 and 2001, respectively, and are
included in losses and loss adjustment expenses and other
underwriting expenses.
Under an agreement effective July 1, 2000,
the Company appointed Riverstone Claims Management LLC, a
wholly owned subsidiary of Fairfax, as its claims manager to
handle certain claims, including environmental, asbestos,
tobacco, firearms and construction defects. Expenses incurred
for these services were $700 and $2,100 for the years ended
December 31, 2000 and 2001, respectively.
Under an annually renewable agreement effective
March 1, 1999, the Company agreed to obtain loss adjusting
services from Cunningham Lindsay U.S., Inc., a wholly owned
subsidiary of Fairfax, for property losses that result from
catastrophes, including windstorms, hailstorms, hurricanes,
earthquakes, and certain specialty lines including environmental
losses. Expenses incurred for these services were $653, $656 and
$258 for the
F-22
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
years ended December 31, 1999, 2000 and
2001, respectively, and are included in losses and loss
adjustment expenses.
Included in other assets on the consolidated
balance sheet are amounts receivable from Fairfax affiliates of
$378 and $11,997 as of December 31, 2000 and 2001,
respectively, and payable to parent, subsidiaries and affiliates
of $2,099 as of December 31, 2000, including amounts due to
parent for income taxes of $353 and $325 as of December 31,
2000 and 2001, respectively.
Management believes that the revenues and
expenses related to the transactions with affiliated entities
would not be materially different if such transactions were with
unaffiliated entities.
11. Employee Benefits
The Company sponsors a qualified defined
contribution plan pursuant to sections 401(k) and 401(a) of
the Internal Revenue Code, for which all employees are eligible
after completing one year of service. The Company makes an
annual contribution equal to 3% of base salary and a matching
contribution equal to one-half of each employee's
contribution up to the first 6% of base salary. Certain
employees also have the opportunity to participate in a
non-qualified plan that permits contributions which would
otherwise be limited by IRS regulations. Total defined
contribution plan expense was $4,402, $3,013 and $3,199 for the
years ended December 31, 1999, 2000 and 2001, respectively.
F-23
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
The Company provides postretirement health care
and life insurance benefits for certain retired employees.
Medical benefits are provided to employees who were at least age
50 on January 1, 1994 and upon retirement are at least
age 55 and have at least 15 years of service. Company
contributions to the retiree medical plan are capped at the
Company's incurred claims cost in 1995. Employees hired
before August 1, 1990 are eligible for retiree life
insurance coverage based on defined age, service and salary
criteria. The following tables provide a reconciliation of the
changes in the postretirement plans, benefit obligations and
fair value of assets for the years ended December 31, 2000
and 2001, and a statement of the funded status at
December 31, 2000 and 2001:
2000
2001
Changes in benefit obligation:
Benefit obligation at beginning of year
$
26,476
$
21,038
Service cost
22
12
Interest cost
1,490
1,447
Plan participants' contribution
836
949
Actuarial (gain) loss
(4,465
)
(4,764
)
Benefits paid
(3,321
)
(2,493
)
Benefit obligation at end of year
$
21,038
$
16,189
Change in fair value of assets:
Fair value of assets at beginning of year
$
—
$
—
Employer contributions
2,485
1,544
Plan participants' contribution
836
949
Benefits paid
(3,321
)
(2,493
)
Fair value of assets at end of year
$
—
$
—
Funded status:
Funded status
$
(21,038
)
$
(16,189
)
Unrecognized net actuarial gain (loss)
708
(4,064
)
Unrecognized transition obligation
9,171
8,354
Accrued benefit cost
$
(11,159
)
$
(11,899
)
1999
2000
2001
Components of net periodic benefit cost:
Service cost
$
29
$
22
$
12
Interest cost
1,451
1,561
1,447
Amortization of transition obligation
817
817
817
Recognized net actuarial loss
—
8
8
Net periodic benefit cost
$
2,297
$
2,408
$
2,284
The weighted average discount rate used in
determining the accumulated postretirement benefit obligation
was 7.25% at December 31, 2000 and 2001.
For purposes of measuring the accumulated
postretirement benefit obligation at December 31, 2001, the
health care cost trend rates for the period 2002 through 2008
are 8.0% for participants under age 65 and 10.5%
F-24
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
for participants over age 65, and both of
these rates decline gradually to 5.25% in the year 2009 and
thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated
postretirement benefit obligation at December 31, 2001 by
$1,679, and the aggregate of the service and interest cost
components of net periodic postretirement benefit expense for
2001 by $169. Conversely, decreasing the assumed health care
cost trend rates by one percentage point in each year would
decrease the accumulated postretirement benefit obligation at
December 31, 2001 by $1,250, and the aggregate of the
service and interest cost components of net periodic
postretirement benefit expense for 2001 by $127.
12. Commitments and
Contingencies
The Company and its subsidiaries lease office
space and furniture and equipment under long-term leases
expiring through the year 2009. Minimum annual rentals follow:
2002
$
12,815
2003
12,385
2004
9,225
2005
7,484
2006
3,990
2007 and thereafter
3,690
Total
$
49,589
The amounts above are reduced by space subleased
to other companies providing for an aggregate minimum rental
recovery of $6,627.
Rental expense, before sublease income, under
these operating leases was $12,864, $11,608 and $14,952 in 1999,
2000 and 2001, respectively. The Company recognized $1,466,
$1,375 and $2,055 in 1999, 2000 and 2001, respectively, from
subleases. These amounts included $317 and $204 in 2000 and
2001, respectively, from related parties.
Included in the total minimum annual rentals
above is $14,571 resulting from a sale-leaseback transaction
entered into in 1984 involving our office space at 305 Madison
Avenue, Morristown, New Jersey. The minimum annual rentals do
not include possible future adjustments based on inflation. The
lease terminates November 30, 2009, and provides for up to
six consecutive additional terms of five years each at our
option, which must be exercised not less than 330 days
prior to the expiration of the then-existing term. The sale was
financed in part by a purchase money note secured by the
building with a carrying value of $14,479 and $15,522 at
December 31, 2000 and 2001, respectively, which is included
in other receivables in the consolidated balance sheet.
F-25
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
Effective October 12, 2000, the Company
entered into an information technology services agreement with
American International Technology Enterprises, Inc. The
agreement has an initial term of five years and a renewal
provision which extends the initial term by additional periods
of one year each. Under the agreement, the Company pays baseline
charges for mainframe usage and production system support with
adjustments based on actual activity. Services utilized by the
Company under the agreement totaled $20,916 in 2001. As of
December 31, 2001, future estimated minimum payments
required under the agreement are summarized below:
2002
$
4,284
2003
4,284
2004
4,284
2005
3,570
Total
$
16,422
Upon 180 days prior written notice and
payment of early termination fees, the Company may terminate the
mainframe usage portion of the agreement at any time and
production system support after eighteen months. The mainframe
usage and production system support early termination fees,
which decrease over the initial term of the agreement, are
$1,712 and $4,075 at the earliest termination date of
June 30, 2002.
The Company has purchased structured settlement
annuities from various companies in order to settle certain
claim liabilities. Should these other companies become unable to
make the annuity payments, the Company would be liable. The
value of these annuities at December 31, 2000 and 2001 was
$171,420 and $163,059, respectively, and is included in
reinsurance recoverables in the consolidated balance sheet.
The Company has been named as defendant in
various litigation in the ordinary course of business. In
management's opinion, the outcome of these suits,
individually or collectively, is not likely to result in
judgments which would be material to the financial condition or
results of operations or cash flows of the Company.
13.
Dividend Restrictions, Statutory Information
	and Capitalization
The Company, through its subsidiaries, is subject
to state regulatory restrictions which limit the maximum amount
of dividends payable. The restrictions limit the payment of
dividends based on the net income and policyholders'
surplus of each insurance company, and these regulations vary by
state. The Company has U.S. insurance subsidiaries
domiciled in the states of New York, New Jersey, Ohio and
Arizona. Generally, the payment of dividends must be from the
earned policyholders' surplus of the insurance company. Any
payment of dividends above the regulatory limits is subject to
the approval of the Insurance Commissioner in the state of
domicile.
In 2000, the Company paid a dividend to its
parent of $56,665. The Company cannot pay dividends in 2002
without the prior approval of the Insurance Commissioners of New
York, New Jersey and Ohio.
The following is the combined statutory basis net
income (loss) and policyholders' surplus of Crum &
Forster's insurance subsidiaries for the years ended as of
December 31, 1999, 2000 and 2001:
1999
2000
2001
Net income (loss)
$
(19,715
)
$
72,761
$
(63,725
)
Policyholders' surplus
689,601
769,483
708,388
The principal differences between statutory
policyholders' surplus and stockholder's equity,
determined in accordance with accounting principles generally
accepted in the United States of America, are deferred income
F-26
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
taxes, deferred policy acquisition costs,
unrealized gains (losses) on investment securities, and deferred
gains on retroactive reinsurance.
Accounting principles generally accepted in the
United States of America differ in certain respects from the
statutory accounting practices prescribed or permitted by
insurance regulatory authorities for the Company's
insurance subsidiaries. Prescribed statutory accounting
practices include state laws, regulations, and general
administrative rules, as well as a variety of publications of
the National Association of Insurance Commissioners
("NAIC"). Permitted statutory accounting practices
encompass all accounting practices that are not prescribed; such
practices differ from state to state, may differ from company to
company within a state, and may change in the future.
In 1998, the NAIC adopted the Codification of
Statutory Accounting Principles ("Codification") which
replaced the Accounting Practices and Procedures manual
effective January 1, 2001. The New York, New Jersey, Ohio
and Arizona Insurance Departments have substantially adopted
Codification as of January 1, 2001. The effect of adoption
resulted in a net increase to policyholders' surplus of
approximately $10,259, primarily as a result of the
admissibility of a portion of deferred income taxes.
The Company owns in excess of 10% of the
outstanding shares of Zenith National Insurance Corp.
("Zenith"), which requires it to be valued as an
affiliate under Codification. In 2001, the Company submitted a
filing for non-control of Zenith, which was approved by the
Insurance Department of the State of New York. The valuation of
Zenith as a non-affiliated investment is a permitted accounting
practice approved by the Insurance Department in the State of
New York. As of December 31, 2001, this permitted valuation
increased statutory surplus by $13,777 over what it would have
been had prescribed accounting practice been followed. The
Company has no other material permitted accounting practices
from state insurance departments.
14. Earnings per share
Net income per common share has been computed in
the following table based upon weighted average common shares
outstanding:
1999
2000
2001
Net income (loss) (in thousands)
$
36,475
$
71,580
$
(106,509
)
Weighted average common shares outstanding
Weighted average shares outstanding —
	Basic and diluted
1,000
1,000
1,000
Net income (loss) per common share:
Basic/ diluted
$
36,475
$
71,580
$
(106,509
)
F-27
CRUM & FORSTER HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(In thousands, except share amounts)
15. Segment Reporting
The Company operates in commercial property and
casualty insurance business. The net earned premiums for the
Company's lines of business for the years ended
December 31, 1999, 2000 and 2001 are as follows:
1999
2000
2001
Property
$
38,990
$
32,357
$
55,622
Commercial multi-peril
225,560
178,703
104,401
Commercial auto
176,591
100,659
98,223
General liability
105,360
80,723
93,894
Workers' compensation
126,493
104,930
136,309
Surety
6,655
25,344
77,351
Total
$
679,649
$
522,716
$
565,800
Information on the losses and loss adjustment
expenses and loss and loss adjustment expense ratios of the
Company's lines of business for the years ended
December 31, 1999, 2000 and 2001 is as follows:
1999
2000
2001
Amount
Ratio
Amount
Ratio
Amount
Ratio
Property
$
10,618
27.2%
$
14,234
44.0%
$
18,005
32.4%
Commercial multi-peril
190,602
84.5%
144,650
80.9%
116,746
111.6%
Commercial auto
153,681
87.0%
97,372
96.7%
126,692
129.0%
General liability
71,451
67.8%
35,515
44.0%
188,528
201.2%
Workers' compensation
126,803
100.2%
89,058
84.9%
143,772
105.5%
Surety
3,709
55.7%
10,273
40.5%
48,005
62.1%
Total
$
556,864
81.9%
$
391,102
74.8%
$
641,748
113.4%
The Company does not allocate investment results,
policy acquisition costs or other underwriting expenses for
purposes of evaluating financial performance of each line of
business.
16. Subsequent Events
In March 2002, the Board of Directors of
Fairfax authorized the sale of the Company's common stock
to Crum & Forster Holdings Corp.
("Holdings"), a newly formed holding company. In
addition, the Board of Directors of Fairfax authorized the sale
of shares of common stock of Holdings in an initial public
offering. Terms of these transactions will be finalized prior to
the completion of the offering. Following the completion of the
offering, the accompanying financial statements of the Company
will become the historical financial statements of Holdings.
F-28
Shares
CRUM & FORSTER HOLDINGS CORP.
Common Stock
Prospectus
,
2002
Banc of America Securities LLC
Until                     ,
2002, all dealers that buy, sell or trade the common stock may
be required to deliver a prospectus, regardless of whether they
are participating in the offering. This is in addition to the
dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.
SEC registration fee
$
9,200
NASD filing fee
$
10,500
listing fee
*
Blue Sky fees and expenses
*
Printing and engraving expenses
*
Attorneys' fees and expenses
*
Accountants' fees and expenses
*
Transfer agent's and registrar's fees
	and expenses
*
Miscellaneous
*
Total
$
*
The amounts set forth above are estimates except
for the SEC registration fee and the NASD filing fee.
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
Section 145 of the Delaware General
Corporation Law provides, in summary, that directors and
officers of Delaware corporations are entitled, under certain
circumstances, to be indemnified against all expenses and
liabilities (including attorney's fees) incurred by them as
a result of suits brought against them in their capacity as a
director or officer, if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to our best
interests, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their
conduct was unlawful; provided that no indemnification may be
made against expenses in respect of any claim, issue or matter
as to which they shall have been adjudged to be liable to us,
unless and only to the extent that the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, they are fairly and reasonably
entitled to indemnity for such expenses which the court shall
deem proper. Any such indemnification may be made by us only as
authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is
proper because the indemnitee has met the applicable standard of
conduct.
Our certificate of incorporation and by-laws
provide for indemnification of our directors and officers to the
fullest extent permitted by Delaware law, as the same may be
amended from time to time.
In addition, we maintain liability insurance for
our directors and officers.
Reference is made to the form of Indemnification
Agreement to be entered into between the registrant and each of
its directors and officers filed as Exhibit 10.56 to this
Registration Statement pursuant to which we will agree to
indemnify such directors and officers to the fullest extent
permitted by Delaware law, as the same may be amended from time
to time.
ITEM 15. RECENT SALES OF UNREGISTERED
SECURITIES.
The registrant has not made any sales of
unregistered securities within the past three years.
II-1
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES.
(a) Exhibits.
Exhibit
Number
Description of Exhibit
1.1*
Form of Underwriting Agreement.
3.1*
Amended and Restated Certificate of Incorporation
	of the Registrant.
3.2*
Amended and Restated By-Laws of the Registrant.
4.1*
Specimen Certificate representing Common Stock.
5.1*
Opinion of Shearman & Sterling as to the
	legality of the Common Stock.
10.1
Information Technology Services Agreement between
	US Fire and Fairfax Information Technology Services, Inc.
	effective from September 1, 2001.
10.2*
Information Technology Services Agreement between
	US Fire and American International Technology Enterprises, Inc.,
	as amended.
10.3
Benefit Claims Payment Agreement between Fairfax
	Inc. and US Fire effective as of January 1, 2001.
10.4
Claims Service and Management Agreement between
	US Fire and Riverstone Claims Management LLC effective as of
	July 1, 2000.
10.5*
Catastrophe Agreement between US Fire and Lindsay
	Morden Claim Services, Inc. effective as of
	March 1, 1999.
10.6
Investment Administration Agreement between
	Fairfax and CF Insurance effective as of
	August 13, 1998.
10.7
Investment Administration Agreement between
	Fairfax and CF Indemnity effective as of
	August 13, 1998.
10.8
Investment Administration Agreement between
	Fairfax and CF Underwriters effective as of
	August 13, 1998.
10.9
Investment Administration Agreement between
	Fairfax and North River effective as of
	August 13, 1998.
10.10
*
Investment Administration Agreement between
	Fairfax and Seneca effective as
	of           .
10.11
Investment Administration Agreement between
	Fairfax and Transnational Insurance Company effective as of
	December 21, 2000.
10.12
Investment Administration Agreement between
	Fairfax and US Fire effective as of August 13, 1998.
10.13
Investment Management Agreement between Hamblin
	Watsa and CF Insurance effective as of August 13, 1998.
10.14
*
Investment Management Agreement between Hamblin
	Watsa and CF Underwriters effective as of
	August 13, 1998.
10.15
Investment Management Agreement between Hamblin
	Watsa and North River effective as of August 13, 1998.
10.16
Investment Management Agreement between Hamblin
	Watsa and US Fire effective as of August 13, 1998.
10.17
*
Investment Management Agreement between Hamblin
	Watsa and Seneca effective as of      .
10.18
Investment Management Agreement between Hamblin
	Watsa and CF Indemnity effective as of August 13, 1998.
10.19
Investment Management Agreement between Hamblin
	Watsa and Transnational Insurance Company effective as of
	December 21, 2000.
10.20
*
Tax Allocation Agreement between Fairfax Inc. and
	Crum & Forster and Odyssey Re Holdings, Inc. and
	RiverStone Group, LLC and TIG Holdings, Inc. effective as of
	January 1, 2000.
II-2
Exhibit
Number
Description of Exhibit
10.21
*
Intercompany Tax Allocation Agreement between
	Fairfax Inc. and US Fire and CF Indemnity and Seneca effective
	as of December 15, 2000.
10.22
*
Master Repurchase Agreement between CF Indemnity
	and Fairfax effective as of July 1, 2000.
10.23
*
Master Repurchase Agreement between US Fire and
	Fairfax effective as of July 1, 2000.
10.24
Master Repurchase Agreement between CF
	Underwriters and Fairfax effective as of July 1, 2000.
10.25
Services Agreement between TIG Insurance Company
	and CF Indemnity effective as of January 1, 2000.
10.26
Administrative Services Agreement between US Fire
	and Fairfax Information Technology Services, Inc. effective as
	of January 1, 2001.
10.27
*
Services Agreement between TIG Insurance Company
	and US Fire effective as of January 1, 2000.
10.28
*
Sale/Leaseback Agreement between Crostex
	Associates Limited Partnership and Crum & Forster
	Corporation in relation to 305 Madison Avenue, Morristown, New
	Jersey dated March 1, 1985.
10.29
*
The Individual Retirement Plan of US Fire as
	amended and restated effective August 13, 1998.
10.30
*
Supplemental Individual Retirement Plan of US
	Fire effective August 13, 1998.
10.31
*
Trust Agreement between US Fire and AMVESCAP
	National Trust Company relating to The Individual Retirement
	Plan of US Fire effective April 30, 2001.
10.32
*
Employment Agreement among Douglas Libby,
	Crum & Forster, Sen-Tech International Holdings, Inc.
	and Seneca effective as of April 26, 2000.
10.33
*
Intentionally left blank.
10.34
*
Umbrella/ Excess Per Risk Excess of Loss
	Reinsurance Contract between the insurance subsidiaries of
	Crum & Forster and various reinsurers effective as of
	January 1, 2000.
10.35
*
Property and Fidelity First, Second, Third and
	Fourth Risk Excess Per Loss Reinsurance Contract between the
	insurance subsidiaries of Crum & Forster and various
	reinsurers effective as of January 1, 2001.
10.36
*
Property Catastrophe Excess of Loss Reinsurance
	Contract between the insurance subsidiaries of Crum &
	Forster and various reinsurers effective as of
	April 15, 2001.
10.37
Reinsurance Agreement between Lombard General
	Insurance Company of Canada and US Fire effective as of
	January 1, 2001.
10.38
*
Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of March 1, 1999.
10.39
*
Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of
	November 15, 1999.
10.40
*
Aggregate Excess of Loss Reinsurance Agreement
	among US Fire, Ridge Reinsurance Limited and Xerox Financial
	Services, Inc. effective as of December 31, 1992.
10.41
*
Springing First Aggregate Excess of Loss
	Reinsurance Agreement among US Fire, Ridge Reinsurance Limited
	and Xerox Financial Services, Inc. effective as of
	December 31, 1992.
10.42
*
Intentionally left blank.
10.43
*
Environmental Liability Excess of Loss Cover
	between Crum & Forster and various reinsurers effective
	as of March 15, 2001.
10.44
*
Environmental Liability Quota Share Reinsurance
	Contract between Crum & Forster and various reinsurers
	effective as of January 1, 2002.
10.45
*
Property Catastrophe Non-Obligatory Quota Share
	Contract between Odyssey America Reinsurance Corporation and US
	Fire effective as of January 1, 2001.
10.46
*
Intentionally left blank.
10.47
*
Intentionally left blank.
10.48
*
Surety Bond Quota Share Reinsurance Agreement
	between TIG Insurance Company and US Fire effective as of
	January 1, 2001.
II-3
Exhibit
Number
Description of Exhibit
10.49
*
Intentionally left blank.
10.50
*
Intentionally left blank.
10.51
*
Assumption and Indemnity Reinsurance Agreement
	between US Fire and various assuming reinsurers effective as of
	January 1, 1993.
10.52
*
Form of Registration Rights Agreement between
	Fairfax Inc. and Crum & Forster Holdings Corp.
10.53
*
Form of Term Note.
10.54
*
Plan, as amended.
10.55
*
Form of Exchange Agreement among Fairfax Inc. and
	Crum & Forster Holdings Corp.
10.56
*
Form of Indemnification Agreement among
	Crum & Forster Holdings Corp. and each of its directors
	and officers.
21.1
List of the Registrant's Subsidiaries.
23.1*
Consent of Shearman & Sterling (included
	in its opinion in Exhibit 5.1).
23.2
Consent of PricewaterhouseCoopers LLP.
23.3*
Intentionally left blank.
24.1
Powers of Attorney (included on the signature
	page of this Registration Statement).
99.1*
Schedule I — Summary of
	Investments — Other Than Investments in Related
	Parties.
99.2*
Schedule II — Condensed Financial
	Information of Crum & Forster Holding Inc.
99.3*
Schedule III — Supplementary
	Insurance Information.
99.4*
Schedule IV — Reinsurance.
99.5*
Schedule V — Valuation and
	Qualifying Accounts.
99.6*
Schedule VI — Supplemental
	Information Concerning Property-Casualty Insurance.
99.7*
Report of PricewaterhouseCoopers LLP regarding
	Schedules 99.1 to 99.6 herein dated March 6, 2001.
*
To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any
	liability under the Securities Act of 1933, the information
	omitted from the form of prospectus filed as part of this
	registration statement in reliance upon Rule 430A and
	contained in a form of prospectus filed by the registrant
	pursuant to Rule 424(b)(1) or (4) or 497(h) under the
	Securities Act of 1933 shall be deemed to be part of this
	registration statement as of the time it was declared effective.
II-4
(2) For the purposes of determining any
	liability under the Securities Act of 1933, each post-effective
	amendment that contains a form of prospectus shall be deemed to
	be a new registration statement relating to the securities
	offered therein, and the offering of such securities at that
	time shall be deemed to be the initial bona fide offering
	thereof.
The undersigned registrant hereby undertakes to
provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such name as required by the underwriters to
permit prompt delivery to each purchaser.
II-5
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has duly caused
the Registration Statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of New York in the State of New York on
March 8, 2002.
CRUM & FORSTER HOLDINGS CORP.
By:
/s/ BRUCE A. ESSELBORN
Name: Bruce A. Esselborn
Title:  Chief Executive Officer
II-6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints, jointly
and severally, V. Prem Watsa, Bruce A. Esselborn and
Mary Jane Robertson, his or her true and lawful
attorneys-in-fact and agents, each of whom may act alone, with
full powers of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and
to sign any related registration statement that is to be
effective upon filing pursuant to Rule 462(b) promulgated
under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do
in person, and hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the date indicated.
Signature
Title
Date
/s/ BRUCE A. ESSELBORN
Bruce A. Esselborn
Director and Principal
Executive Officer
March 8, 2002
/s/ MARY JANE ROBERTSON
Mary Jane Robertson
Principal Financial and Accounting Officer
March 8, 2002
/s/ V. PREM WATSA
V. Prem Watsa
Director
March 8, 2002
/s/ WINSLOW W. BENNETT
Winslow W. Bennett
Director
March 8, 2002
Anthony F. Griffiths
Director
Robbert Hartog
Director
II-7
INDEX OF EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
Sequentially
Exhibit
Numbered
Number
Description of Exhibit
Pages
1.1*
Form of Underwriting Agreement.
3.1*
Amended and Restated Certificate of Incorporation
	of the Registrant.
3.2*
Amended and Restated By-Laws of the Registrant.
4.1*
Specimen Certificate representing Common Stock.
5.1*
Opinion of Shearman & Sterling as to the
	legality of the Common Stock.
10.1
Information Technology Services Agreement between
	US Fire and Fairfax Information Technology Services, Inc.
	effective from September 1, 2001.
10.2*
Information Technology Services Agreement between
	US Fire and American International Technology Enterprises, Inc.,
	as amended.
10.3
Benefit Claims Payment Agreement between Fairfax
	Inc. and US Fire effective as of January 1, 2001.
10.4
Claims Service and Management Agreement between
	US Fire and Riverstone Claims Management LLC effective as of
	July 1, 2000.
10.5*
Catastrophe Agreement between US Fire and Lindsay
	Morden Claim Services, Inc. effective as of
	March 1, 1999.
10.6
Investment Administration Agreement between
	Fairfax and CF Insurance effective as of
	August 13, 1998.
10.7
Investment Administration Agreement between
	Fairfax and CF Indemnity effective as of
	August 13, 1998.
10.8
Investment Administration Agreement between
	Fairfax and CF Underwriters effective as of
	August 13, 1998.
10.9
Investment Administration Agreement between
	Fairfax and North River effective as of
	August 13, 1998.
10.10
*
Investment Administration Agreement between
	Fairfax and Seneca effective as
	of           .
10.11
Investment Administration Agreement between
	Fairfax and Transnational Insurance Company effective as of
	December 21, 2000.
10.12
Investment Administration Agreement between
	Fairfax and US Fire effective as of August 13, 1998.
10.13
Investment Management Agreement between Hamblin
	Watsa and CF Insurance effective as of August 13, 1998.
10.14
*
Investment Management Agreement between Hamblin
	Watsa and CF Underwriters effective as of
	August 13, 1998.
10.15
Investment Management Agreement between Hamblin
	Watsa and North River effective as of August 13, 1998.
10.16
Investment Management Agreement between Hamblin
	Watsa and US Fire effective as of August 13, 1998.
10.17
*
Investment Management Agreement between Hamblin
	Watsa and Seneca effective as of      .
10.18
Investment Management Agreement between Hamblin
	Watsa and CF Indemnity effective as of August 13, 1998.
10.19
Investment Management Agreement between Hamblin
	Watsa and Transnational Insurance Company effective as of
	December 21, 2000.
II-8
Sequentially
Exhibit
Numbered
Number
Description of Exhibit
Pages
10.20
*
Tax Allocation Agreement between Fairfax Inc. and
	Crum & Forster and Odyssey Re Holdings, Inc. and
	RiverStone Group, LLC and TIG Holdings, Inc. effective as of
	January 1, 2000.
10.21
*
Intercompany Tax Allocation Agreement between
	Fairfax Inc. and US Fire and CF Indemnity and Seneca effective
	as of December 15, 2000.
10.22
*
Master Repurchase Agreement between CF Indemnity
	and Fairfax effective as of July 1, 2000.
10.23
*
Master Repurchase Agreement between US Fire and
	Fairfax effective as of July 1, 2000.
10.24
Master Repurchase Agreement between CF
	Underwriters and Fairfax effective as of July 1, 2000.
10.25
Services Agreement between TIG Insurance Company
	and CF Indemnity effective as of January 1, 2000.
10.26
Administrative Services Agreement between US Fire
	and Fairfax Information Technology Services, Inc. effective as
	of January 1, 2001.
10.27
*
Services Agreement between TIG Insurance Company
	and US Fire effective as of January 1, 2000.
10.28
*
Sale/Leaseback Agreement between Crostex
	Associates Limited Partnership and Crum & Forster
	Corporation in relation to 305 Madison Avenue, Morristown, New
	Jersey dated March 1, 1985.
10.29
*
The Individual Retirement Plan of US Fire as
	amended and restated effective August 13, 1998.
10.30
*
Supplemental Individual Retirement Plan of US
	Fire effective August 13, 1998.
10.31
*
Trust Agreement between US Fire and AMVESCAP
	National Trust Company relating to The Individual Retirement
	Plan of US Fire effective April 30, 2001.
10.32
*
Employment Agreement among Douglas Libby,
	Crum & Forster, Sen-Tech International Holdings, Inc.
	and Seneca effective as of April 26, 2000.
10.33
*
Intentionally left blank.
10.34
*
Umbrella/ Excess Per Risk Excess of Loss
	Reinsurance Contract between the insurance subsidiaries of
	Crum & Forster and various reinsurers effective as of
	January 1, 2000.
10.35
*
Property and Fidelity First, Second, Third and
	Fourth Risk Excess Per Loss Reinsurance Contract between the
	insurance subsidiaries of Crum & Forster and various
	reinsurers effective as of January 1, 2001.
10.36
*
Property Catastrophe Excess of Loss Reinsurance
	Contract between the insurance subsidiaries of Crum &
	Forster and various reinsurers effective as of
	April 15, 2001.
10.37
Reinsurance Agreement between Lombard General
	Insurance Company of Canada and US Fire effective as of
	January 1, 2001.
10.38
*
Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of March 1, 1999.
10.39
*
Reinsurance Agreement between Ranger Insurance
	Company and North River effective as of
	November 15, 1999.
10.40
*
Aggregate Excess of Loss Reinsurance Agreement
	among US Fire, Ridge Reinsurance Limited and Xerox Financial
	Services, Inc. effective as of December 31, 1992.
10.41
*
Springing First Aggregate Excess of Loss
	Reinsurance Agreement among US Fire, Ridge Reinsurance Limited
	and Xerox Financial Services, Inc. effective as of
	December 31, 1992.
II-9
Sequentially
Exhibit
Numbered
Number
Description of Exhibit
Pages
10.42
*
Intentionally left blank.
10.43
*
Environmental Liability Excess of Loss Cover
	between Crum & Forster and various reinsurers effective
	as of March 15, 2001.
10.44
*
Environmental Liability Quota Share Reinsurance
	Contract between Crum & Forster and various reinsurers
	effective as of January 1, 2002.
10.45
*
Property Catastrophe Non-Obligatory Quota Share
	Contract between Odyssey America Reinsurance Corporation and US
	Fire effective as of January 1, 2001.
10.46
*
Intentionally left blank.
10.47
*
Intentionally left blank.
10.48
*
Surety Bond Quota Share Reinsurance Agreement
	between TIG Insurance Company and US Fire effective as of
	January 1, 2001.
10.49
*
Intentionally left blank.
10.50
*
Intentionally left blank.
10.51
*
Assumption and Indemnity Reinsurance Agreement
	between US Fire and various assuming reinsurers effective as of
	January 1, 1993.
10.52
*
Form of Registration Rights Agreement between
	Fairfax Inc. and Crum & Forster Holdings Corp.
10.53
*
Form of Term Note.
10.54
*
Plan, as amended.
10.55
*
Form of Exchange Agreement among Fairfax Inc. and
	Crum & Forster Holdings Corp.
10.56
*
Form of Indemnification Agreement among
	Crum & Forster Holdings Corp. and each of its directors
	and officers.
21.1
List of the Registrant's Subsidiaries.
23.1*
Consent of Shearman & Sterling (included
	in its opinion in Exhibit 5.1).
23.2
Consent of PricewaterhouseCoopers LLP.
23.3*
Intentionally left blank.
24.1
Powers of Attorney (included on the signature
	page of this Registration Statement).
99.1*
Schedule I — Summary of
	Investments — Other Than Investments in Related
	Parties.
99.2*
Schedule II — Condensed Financial
	Information of Crum & Forster Holding Inc.
99.3*
Schedule III — Supplementary
	Insurance Information.
99.4*
Schedule IV — Reinsurance.
99.5*
Schedule V — Valuation and
	Qualifying Accounts.
99.6*
Schedule VI — Supplemental
	Information Concerning Property-Casualty Insurance.
99.7*
Report of PricewaterhouseCoopers LLP regarding
	Schedules 99.1 to 99.6 herein dated March 6, 2001.
*
To be filed by amendment.
II-10