Agreement

This Agreement Subject to Arbitration

by American Physicians Service Group, Inc.
April 15th, 1997



                                                                 EXHIBIT 10.29


                      THIS AGREEMENT SUBJECT TO ARBITRATION

                              Reinsurance Agreement
                            Effective March 27, 1997
                  (hereinafter referred to as the "Agreement")

                                     between

                   FLORIDA PHYSICIANS INSURANCE COMPANY, INC.
                              Jacksonville, Florida
                   (hereinafter referred to as the "Company")

                                       and

                     AMERICAN PHYSICIANS INSURANCE EXCHANGE
                                  Austin, Texas
                  (hereinafter referred to as the "Reinsurer")



         WHEREAS,  Company has appointed agents approved by Reinsurer to produce
business  under  certain  programs  covering  all standard  medical  malpractice
insurance  written  by  Company  in Texas  and  which  is  described  with  more
particularity on Addendum 2 hereto (hereafter "APS Program"); and

         WHEREAS,  all insurance policies that are the subject of this Agreement
(the  "Policies")  are  managed for  Company by  American  Physicians  Insurance
Agency, Inc., a Texas Managing General Agency (hereafter "Agent"); and

         WHEREAS, the Company desires to cede all of its liabilities
arising from  the Policies; and

         WHEREAS, the Reinsurer desires to accept all of the liability
from  the Policies, which the Company desires to reinsure;

         NOW, THEREFORE,  in consideration of the premiums,  terms,  conditions,
limitations and other  consideration  set forth in this  Agreement,  the parties
agree as follows:


ARTICLE I - CLASSES OF BUSINESS REINSURED

A.       Unless otherwise agreed on policies on a facultative basis,
         the Company hereby cedes on a 100% quota share basis with
         Reinsurer,  and Reinsurer hereby accepts the cession on such
         basis, all liability under medical professional liability
         policies issued or renewed on behalf of all Texas health care
         providers issued by Company on or after the effective date of
         this Agreement.  Company and Reinsurer anticipate that Company
         will retain larger portions of the business ceded to Reinsurer
         during the term of this Agreement.  Business ceded hereunder
         shall include every rewrite, renewal or extension (whether

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         before  or after  termination  of this  Agreement)  of any  policy  the
         liability for which has already been ceded  hereunder by the Company to
         the  Reinsurer,  including  the  liability  associated  with  any  such
         rewrite,  renewal or extension  that may be required by a state statute
         or by any rule or regulation of a state Insurance Department,  or other
         authority having competent jurisdiction.

B.       It is understood that the classes of business reinsured under
         this Agreement are deemed to include:

         Coverage for standard medical professional liability insurance in Texas
         written by Company.

C.       "Net liability" as used herein is defined as the Company's
         gross liability assumed from business produced by authorized
         agents of Company in the APS Program.

D.       The liability of the Reinsurer with respect to each cession
         hereunder shall commence obligatorily and simultaneously with
         that of the Company as regards the APS Program.  The liability
         of the Reinsurer shall follow the Company in respect to all of
         the provisions of the Policies and any endorsements thereon or
         changes made thereto.  In every case, the Reinsurer shall be
         deemed to have reinsured the risk on the same terms,
         conditions and limitations as those of the original policies,
         it being the intent of this Agreement that the Reinsurer shall
         follow the insurance fortunes of the Company in all matters
         falling under this reinsurance.


ARTICLE II - COMMENCEMENT AND TERMINATION

A.       This  Agreement  shall become  effective on March 27, 1997, as of 12:01
         a.m.  Central Time, with respect to policies with effective dates on or
         after this time, and shall continue in force thereafter for a period of
         eight (8) years, unless sooner terminated as provided herein.

B.       Unless  earlier  terminated,  this  Agreement  shall  automatically  be
         renewed for a renewal  term of five (5) years,  unless  either party to
         this Agreement  provides  written notice to the other party at least 18
         months  before the  expiration  of the initial term that the party does
         not desire to continue this Agreement.

C.       The Reinsurer  retains the  exclusive  right and control to the book of
         business to be produced  under the APS Program and may, upon  agreement
         of  termination,  elect to find a different  direct writing  company to
         produce this reinsured business.  Reinsurance  hereunder on business in
         force on the effective date of  termination  shall remain in full force
         and effect

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         until the  natural  expiration,  cancellation  or rewrite  of  Policies
         constituting such business in force.

D.       Termination.  The term of this Agreement shall expire and this
         Agreement shall terminate upon the occurrence of any of the
         following events:

         1.       Upon  the  effective  date of the  suspension,  revocation  or
                  termination of either party's license necessary to perform its
                  obligations under this Agreement by appropriate  authority and
                  after   exhausting  any  appeals  to  which  either  party  is
                  entitled.

         2.       The insolvency of either party, the inability to pay
                  debts as they mature, the making of an assignment for the
                  benefit of creditors, the dissolution of either party,
                  the appointment of a receiver or liquidator for either
                  party or for a substantial part of either party's
                  property, or the institution of bankruptcy,
                  reorganization, arrangement, insolvency or similar
                  proceedings by or against either party under the laws of
                  any jurisdiction.

         3.       Misappropriation  of funds or  property  of  Company  or funds
                  received  for it by  Reinsurer;  the failure of  Reinsurer  to
                  remit to  Company  the funds due  promptly  upon  demand;  the
                  commission  by Reinsurer of any fraud  against  Company or any
                  conduct injurious to Company's standing or good name.

         4.       Misappropriation  of funds or property of  Reinsurer  or funds
                  received for it by Company; the failure of Company to remit to
                  Reinsurer the funds due promptly upon demand;  the  commission
                  by  Company  of any fraud  against  Reinsurer  or any  conduct
                  injurious to Reinsurer's standing or good name.

         5.       Default  or  material  breach of this  Agreement  which is not
                  cured by the  defaulting or breaching  party within 30 days of
                  written  notice  from  the  non-defaulting  or non-  breaching
                  party,  such  termination  to take  effect on the same date as
                  termination of the Managing  General Agency  Contract  between
                  Agent and Company.

         6.       Either party may terminate this Agreement at any time if
                  the Stock Purchase and Stock Option Agreement between
                  American Physicians Service Group, Inc., and Florida
                  Physicians Insurance Company, Inc. is not closed in
                  accordance with its terms.

 E.      Accounting for premiums and losses shall be done on an
         accident year basis, using the same conventions that are used
         in the NAIC annual statement blanks for Schedule P.

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ARTICLE III - TERRITORY

The  liability  of the  Reinsurer  shall be limited to Policies  issued to risks
located in Texas under Policies  issued by Company to insureds  domiciled in the
State of Texas at the time of issuance; however, this limitation shall not apply
to losses of Company if the  Policies  provide  coverage  outside the  aforesaid
territorial limits.


ARTICLE IV - RETENTION AND LIMIT

As respects  business  subject to this Agreement,  the Company shall cede to the
Reinsurer  and the  Reinsurer  agrees to accept 100% of the  premiums and losses
attached to the Policies produced under the APS Program.


ARTICLE V - LOSS IN EXCESS OF POLICY LIMITS

A.       Loss in excess of policy limits shall mean any amount the
         Company pays or is held liable to pay in excess of its policy
         limits, but otherwise within the terms of its policy, together
         with any legal costs and expenses incurred in connection
         therewith or any punitive, exemplary, compensatory or
         consequential damages, other than loss in excess of policy
         limits (hereinafter called "extra contractual obligations")
         because of alleged or actual bad faith or negligence on its
         part in rejecting a settlement within policy limits, or in
         discharging its duty to defend or prepare the defense in the
         trial of          an action against its policyholder, or in
         discharging its duty to prepare or prosecute an appeal
         consequent upon such an action, or in otherwise handling a
         claim under a policy subject to this Agreement, 100% of the
         loss in excess of Policy limits and/or 100% of the extra
         contractual obligations shall be added to Company's loss, if
         any, under the policy involved and be covered under this
         Agreement.

B.       Any loss in excess of limits or extra contractual obligation
         shall be deemed to have occurred on the same date as the loss
         covered or alleged to be covered under the policy.

C.       Recoveries from any excess insurance or reinsurance  which protects the
         Company  against claims that are subject to this Agreement  shall inure
         to the benefit of this  Agreement only to the extent that the Reinsurer
         has paid for such excess insurance or reinsurance.



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ARTICLE VI - CEDING COMMISSION

The Reinsurer shall pay the Company a ceding  commission equal to the sum of the
following:

1.       The commissions allowed to the producing agents and managing
         general agent under their contracts with Company as authorized
         by its MGA, American Physicians Insurance Agency, Inc.  On all
         return premiums, the Company shall return to the Reinsurer at
         the same rate of advanced commission as paid by Company to
         producing agents.  The Company and Reinsurer may mutually
         agree to have commissions, at agreed upon rates, paid directly
         from the Reinsurer to the producing agents, with the Reinsurer
         acting as the processing agent on Company's behalf.

2.       The costs for all brokerage, taxes, board, exchange or bureau
         assessments, and for all other bureau or regulatory body
         expenses, excepting loss adjustment expense.  The provision
         for taxes shall be estimated at 2.5% of net premiums written
         and adjusted annually to actual taxes paid.  The difference
         between actual and estimated taxes shall be paid by the owing
         party to the other as soon as practicable after the close of
         each calendar year.  In the event that return premiums exceed
         gross premiums written during any one calendar year, and in
         the further event that the Company is not able to recover
         premium taxes from the State of Texas on the resulting net
         return premiums, the Reinsurer agrees to reimburse the Company
         for any premium tax deduction made by the Reinsurer in the
         monthly accountings to the Company for the calendar year
         involved.

3.       A fee as outlined in Addendum No. 1 attached hereto and
         incorporated herein for all purposes.


ARTICLE VII - REPORTS AND REMITTANCES

A.       In lieu of the Company furnishing the Reinsurer with
         bordereaux showing the particulars of all reinsurances ceded
         hereunder, the Reinsurer shall furnish, or cause to be
         furnished, the Company as soon as practicable, but in no event
         later than sixty days, after the close of each of the
         respective periods indicated below (on forms agreeable to both
         parties hereto) with monthly, quarterly and annual reports
         showing the following statistical data in respect of the
         business reinsured hereunder.

         1.       Quarterly, with the data segregated by major classes:

                  (a)      Net premiums written (i.e., gross less returns
                           during the quarter).


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                  (b)      Net losses paid (i.e., gross losses less salvages
                           and other recoveries) during the quarter.

                  (c)      Net adjusting expenses paid during the quarter.

                  (d)      Other related expenses.
                  (e)      Original premiums, and the unearned premiums thereon,
                           on  business in force  hereunder  at the close of the
                           quarter  year,  segregated by term and month and year
                           of expiration.

                  (f)  Estimated outstanding losses, with the data
                           segregated by major classes.

                  (g)      Other related expenses.

         2.       Annually, with the data segregated by major classes.

                  Annual summaries of net premiums written, net losses paid, net
                  adjusting  expenses  paid  during  the year and other  related
                  expenses  in such form so as to enable  the  Company to record
                  such data in its  convention  annual  statement.  In force and
                  unearned premium  segregated as to advance premiums,  premiums
                  running 12 months or less from inception  date of policy,  and
                  premiums  running more than 12 months from  inception  date of
                  policy in such form as to enable the  Company  to record  such
                  data in its statutory annual statement.

         3.       Such other reasonable reports or information from time to
                  time as reasonably requested by Company.

B.       Monthly, within 45 days of the end of each calendar month, the
         Company shall remit the balance of the following to the
         Reinsurer provided the Company has collected the gross net
         written premium:

         1.       Ceded gross net written premium for the month; less

         2.       Ceding commissions and other expenses referenced in
                  Article VI of this Agreement.

Any amount  shown to be due the Company  shall be remitted by the  Reinsurer  as
promptly as possible after receipt and  verification of the Company's  report by
the Reinsurer.


ARTICLE VIII - ORIGINAL CONDITIONS

A.       All reinsurance under the Agreement shall be subject to the
         same rates, terms, conditions and waivers, and to the same
         modifications as the respective policies of the Company which

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         shall be approved by Reinsurer.  The  Reinsurer  shall be credited with
         its exact proportion of the original  premiums received by the Company,
         as specified in Article IV.

B.       Nothing herein shall in any manner create any obligations or
         establish any rights against the Reinsurer in favor of any
         third party or any persons not parties to this Agreement.


ARTICLE IX - ASSIGNMENTS AND ASSESSMENTS

A.       The  provisions  of  Article  IV shall  apply to risks  assumed  by the
         Company under any Assigned Risk Plan if, in the opinion of the Company,
         such risks were assumed by the Company because of the business  written
         and reinsured hereunder.

B.       The provisions of Article IV shall also apply to a proportion
         of any assessments or credits imposed or allowed on Company by
         law, including any credits against premium taxes, pursuant to
         those laws and regulations creating obligatory funds
         [including, to the extent applicable to the Policies, the
         Texas Property Casualty Guaranty Association or other guaranty
         association pools; the Texas Medical Liability Insurance
         Underwriting Association ("JUA"); FAIR plans and similar
         plans], said proportion to be the proportion of Company's APS
         Program premiums causing the assessment which were or are
         subject to this Agreement.

C.       In the event this  Agreement  is  terminated,  the  provisions  of this
         Article  shall  continue  to apply for as long as Company is subject to
         assignments  and/or  assessments  because  of  the  business  reinsured
         hereunder.


ARTICLE X - CLAIMS SETTLEMENT

A.       All loss settlements made by the Company under the terms of
         this Agreement shall be unconditionally binding upon the
         Reinsurer in proportion to its participation, and the
         Reinsurer shall benefit proportionately in all salvage and
         recoveries.  The Reinsurer shall bear its proportionate share
         of all expenses incurred by the Company in investigation,
         adjustment, appraisals or defense of all claims under policies
         issued by the Company and reinsured hereunder (excluding,
         however, office expense and salaries of officials of the
         Company), and shall receive its proportionate share of any
         recovery of such expense.  However, the Company hereby
         authorizes the Reinsurer to negotiate loss settlements, and to
         handle all such other matters as are necessary for the
         adjustment or defense of claims arising under Policies as
         previously defined, under the supervision of the Company.


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 B.      It is understood  that the Company is not  required,  nor will it carry
         any  excess  of  loss   coverage  that  might  arise  from  any  single
         catastrophe  or  catastrophes,  and  that  the  Reinsurer  will,  if it
         desires,  provide  catastrophe  coverage  in the  amount or  amounts it
         considers sufficient.


ARTICLE XI - OFFSET

The  Company  and the  Reinsurer  shall have the right to offset any  balance or
amounts due from one party to the other under the terms of this  Agreement.  The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses, or otherwise.


ARTICLE XII - ACCESS TO RECORDS

Each party shall have access during normal  business hours to all records of the
other party which pertain to the reinsurance  hereunder.  Requests shall be made
at least 72 hours in advance of the access date.


ARTICLE XIII - ERRORS AND OMISSIONS

Inadvertent  delays,  errors or omissions made in connection with this Agreement
or any  transaction  hereunder shall not relieve either party from any liability
which would have  attached  had such  delay,  error or  omission  not  occurred,
provided  always  that  such  error or  omission  will be  rectified  as soon as
possible  after  discovered  and  brought  to the  attention  of  the  Company's
management.


ARTICLE XIV - CURRENCY

A.       Whenever the word "dollars" or the "$" sign appears in this  Agreement,
         they  shall  be  construed  to  mean  United  States  dollars  and  all
         transactions under this Agreement shall be in United States dollars.

B.       Amounts paid or received by the Company in any other currency
         shall be converted to United States dollars at the rate of
         exchange at the date such transaction is entered on the books
         of the Company.


ARTICLE XV - SECURITY PROVIDED BY REINSURER

A.       The Reinsurer agrees to fund its share of the Company's
         unearned premium and outstanding loss and loss adjustment

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         expense  reserves on the APS Program,  as described in Article XV, Part
         C, so as to allow the Company to take credit for reserves  ceded in its
         statutory annual statement as follows  (Determination of reserves shall
         be made by Agent and Reinsurer):

         1.       Clean,  irrevocable and unconditional letters of credit issued
                  and confirmed,  if  confirmation  is required by the insurance
                  regulatory  authorities  involved,  by a bank or banks meeting
                  the NAIC  Securities  Valuation  Office  credit  standards for
                  issuers of letters of credit and  acceptable to said insurance
                  regulatory authorities; and/or

         2.       Escrow accounts for the benefit of the Company and/or

         3.       Cash advances;

                  if, without such funding a penalty would accrue to the Company
                  on any  financial  statement  it is  required to file with the
                  insurance  regulatory  authorities  involved  in the states in
                  which the APS Program business is written.  The Reinsurer,  at
                  its sole option, may fund in other than cash if its method and
                  form of funding are  acceptable  to the  insurance  regulatory
                  authorities involved.

B.       With regard to funding in whole or in part by letters of
         credit, it is agreed that each letter of credit will be in a
         form acceptable to insurance regulatory authorities involved,
         will be issued for a term of at least one year and will
         include an "evergreen clause", which automatically extends the
         term for at least one additional year at each expiration date
         unless written notice of non-renewal is given to the Company
         not less than 30 days prior to said expiration date.  The
         Company and the Reinsurer further agree, notwithstanding
         anything to the contrary in this Agreement, that said letters
         of credit may be drawn upon by the Company or its successors
         in interest at any time, without diminution because of the
         insolvency of the Company or the Reinsurer, but only for one
         or more of the following purposes:

         1.       To reimburse itself for the Reinsurer's share of unearned
                  premiums returned to insureds on account of policy
                  cancellations, unless paid in cash by the Reinsurer;

         2.       To reimburse itself for the Reinsurer's share of losses
                  and/or loss adjustment expense paid under the terms of
                  policies reinsured hereunder, unless paid in cash by the
                  Reinsurer;


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         3.       To reimburse itself for the Reinsurer's share of any
                  other amounts claimed to be due hereunder, unless paid in
                  cash by the Reinsurer;

         4.       To fund a cash account in an amount equal to the
                  Reinsurer's share of any ceded unearned premium and/or
                  outstanding loss and loss adjustment expense reserves
                  including incurred but not reported loss reserves funded
                  by means of a letter of credit which is under non-renewal
                  notice, if said letter of credit has not been renewed or
                  replaced by the Reinsurer 10 days prior to its expiration
                  date;

         5.       To refund  to the  Reinsurer  any sum in excess of the  actual
                  amount required to fund the Reinsurer's share of the Company's
                  ceded  unearned  premium  and/or  outstanding  loss  and  loss
                  adjustment expense reserves, if so requested by the Reinsurer.

         In the event the amount drawn by the Company on any letter of credit is
         in excess of the actual amount  required for B(1),  B(2) or B(4), or in
         the case of B(3),  the actual amount  determined to be due, the Company
         shall  return  to the  Reinsurer  within 45 days the  excess  amount so
         drawn.

C.       Reinsurer agrees that for the first two years after issuance
         of any policy reinsured under this Agreement, the amount of
         security shall be the greater of (1) the direct written
         premiums or (2) the Company's unearned premium and outstanding
         loss and loss adjustment expense reserves; such losses and
         loss adjustment expense reserves to be established by mutual
         agreement of the Company and Reinsurer (the "Case Reserves").
         After the first two years after issuance of any policy
         reinsured under this Agreement, the amount of security
         required from the Reinsurer shall be the Company's unearned
         premium reserves and  the Case Reserves.


ARTICLE XVI - INSOLVENCY

A.       In the event of the insolvency of the Company, this
         reinsurance shall be payable directly to the Company or to its
         liquidator, receiver, conservator or statutory successor
         immediately upon demand, with reasonable provision for
         verification, on the basis of the liability of the Company
         without diminution because of the insolvency of the Company or
         because the liquidator, receiver, conservator or statutory
         successor of the Company has failed to pay all or a portion of
         any claim.  It is agreed, however, that the liquidator,
         receiver, conservator or statutory successor of the Company
         shall give written notice to the Reinsurer of the pendency of
         a claim against the Company indicating the policy or bond

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         reinsured which claim would involve a possible liability on the part of
         the Reinsurer within a reasonable time after such claim is filed in the
         conservation or liquidation proceeding or in the receivership, and that
         during the pendency of such claim,  the Reinsurer may investigate  such
         claim and interpose,  at its own expense,  in the proceeding where such
         claim is to be  adjudicated,  any defense or defenses  that it may deem
         available to the Company or its  liquidator,  receiver,  conservator or
         statutory  successor.  The expense thus incurred by the Reinsurer shall
         be  chargeable,  subject  to the  approval  of the Court,  against  the
         Company as part of the expense of  conservation  or  liquidation to the
         extent  of a pro rata  share of the  benefit  which  may  accrue to the
         Company solely as a result of the defense undertaken by the Reinsurer.

B.       Where  two or more  reinsurers  are  involved  in the same  claim and a
         majority  in interest  elect to  interpose  defense to such claim,  the
         expense  shall be  apportioned  in  accordance  with the  terms of this
         Agreement as though such expense had been incurred by the Company.

C.       It is further understood and agreed that, in the event of the
         insolvency of the Company, the reinsurance under this
         Agreement shall be payable directly by the Reinsurer to the
         Company or to its liquidator, receiver or statutory successor,
         or except (1) where this Agreement specifically provides
         another payee of such reinsurance in the event of the
         insolvency of the Company or (2) where the Reinsurer with the
         consent of the direct insured or insureds has assumed in
         writing such policy obligations of the Company as direct
         obligations of the Reinsurer to the payees under such policies
         and in substitution for the obligations of the Company to such
         payees.


ARTICLE XVII - ARBITRATION

A.       Resolution of Disputes by Arbitration

         The parties agree that all controversies or disputes arising out of, in
         connection with, or which relate to this Agreement or performance under
         this Agreement,  which cannot be resolved by mutual agreement, shall be
         submitted to arbitration for resolution, as herein provided.

B.       Selection of Arbitrators

         Arbitration shall be by a panel of three neutral  arbitrators,  each of
         which  shall  be  an  active  or  former  officer  of an  insurance  or
         reinsurance company, including a Lloyd's company, which, at the time of
         the demand for  arbitration,  issues or has recently issued policies of
         insurance of the type covered

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         by this Reinsurance Agreement.  In addition, each arbitrator shall meet
         the  requirements  of, and shall agree to act in accordance  with,  the
         Code of Ethics for Arbitrators in Commercial  Disputes sponsored by the
         American  Bar  Association  and the American  Arbitration  Association,
         except  to  the  extent  that  conduct   prohibited  by  such  Code  is
         specifically permitted by the terms of this provision.

         Within thirty (30) days after receipt of a demand for arbitration, each
         party shall  designate its arbitrator.  The  designation  shall contain
         information   sufficient   to  allow  the  other  party  to  judge  the
         qualifications of the person designated as arbitrator. Thereafter, each
         party  shall  have  fifteen  (15)  days  within  which  to  accept  the
         arbitrator   designated   by  the  other  party  or  to  challenge  the
         qualifications of the arbitrator so designated.

         The  arbitrators so designated and accepted  shall,  within thirty (30)
         days after  acceptance,  select the third  arbitrator.  Arbitrators may
         consult with the party  nominating them as to  acceptability of persons
         under consideration for appointment by them as third arbitrator. If the
         third   arbitrator  has  not  been  selected  within  that  time,  each
         arbitrator  shall,  within fifteen (15) days,  nominate three qualified
         individuals to serve as the third arbitrator.  The American Arbitration
         Association shall appoint a third arbitrator from the persons nominated
         who meet the qualifications described in this Agreement.

         If either  party  refuses or neglects to appoint an  arbitrator  within
         thirty  (30)  days  after  receipt  of a demand  for  arbitration,  the
         demanding party may appoint two (2) arbitrators.

C.       Arbitration Procedure

         Arbitration  shall  begin  upon the  filing by one of the  parties of a
         written demand for  arbitration.  Such demand shall contain a statement
         setting forth the nature of the dispute,  the amount involved,  if any,
         and the remedy sought. Such demand shall be served upon the other party
         by certified mail, return receipt requested, at the place designated by
         this  Agreement  for the  service  of  notices  in  Article  II of this
         Agreement.

         Within sixty (60) days after the arbitration  panel has been finalized,
         the parties shall submit their dispute or  controversy  to the panel of
         arbitrators for decision. The site for the arbitration hearing shall be
         Dallas,  Texas or as mutually agreed by the parties.  The rules for the
         gathering of evidence, taking of discovery or depositions,  if any, and
         the conduct of the hearing shall be such rules as are included

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         in  the  Commercial  Arbitration  Rules  of  the  American  Arbitration
         Association,  to the  extent  not  inconsistent  with the terms of this
         provision.  The parties may agree to use modified rules to expedite the
         arbitration  process.  The formal rules of evidence need not apply,  in
         the arbitrators' discretion, to the hearing.

         All arbitrators  shall  participate in the deliberations and a decision
         on any matter shall be by a majority of the arbitrators.

         The final  decision  of the  arbitration  panel shall be  submitted  in
         writing, in such form as the arbitrators determine,  within thirty (30)
         days after the conclusion of the arbitration  hearing.  The decision of
         the arbitrators shall be final, except that an appeal may be taken only
         for one or more of the  reasons  assigned  for  vacating  an  award  as
         provided  by the  Federal  Arbitration  Act,  which law shall apply and
         govern the arbitration process  contemplated  hereunder,  to the extent
         not inconsistent with this provision.

         Insofar as the panel looks to  substantive  law, it shall  consider the
         laws of the State of Texas.

D.       Costs of Arbitration Proceeding

         Each party shall bear the cost of its own arbitrator.  The costs of the
         arbitration  proceeding,  including  the fees of the third  arbitrator,
         shall be borne  equally by the parties,  unless the  arbitration  panel
         orders otherwise.  The panel, in its discretion,  may also allocate and
         award other reasonable  out-of-pocket  costs of the parties,  including
         reasonable  attorney's  fees, as it deems fair and equitable  under the
         circumstances.

E.       Confidentiality

         The parties agree, and the appointed arbitrators shall agree as part of
         their acceptance of nomination,  to keep  confidential and not disclose
         to  persons  not  connected  with the  arbitration  the  details of the
         arbitration  and  all  information   received  by  them  in  connection
         therewith, except as may be required by process of law.


ARTICLE XVIII - HOLD HARMLESS AGREEMENT

In  consideration of the Company having delegated to the Reinsurer and to Agent,
the duty of performing the day-to-day policy underwriting,  clerical, processing
and claims functions on policies reinsured hereunder (with the Company retaining
the general and ultimate authority in such matters),  the Reinsurer hereby holds
the

                                       13





Company  harmless  from and shall  reimburse  the  Company for any and all loss,
costs,  damage or expense  of  whatever  kind or  character  (including  but not
limited to all legal fees and expenses  incurred by the Company in asserting its
rights  under this  Agreement)  as a result of the  Company's  having  made such
delegation  whether or not such loss, costs,  damage or expenses fall within the
terms of Policies written and reinsured hereunder.


ARTICLE XIX - PROCESSING AND HANDLING OF BUSINESS

It is specifically  understood and agreed to by the Company and Reinsurer , that
all  issuance,  maintenance  and  servicing  of  Policies,  claims and any other
documents  arising out of business  written by Company in the APS Program  under
this Agreement will be performed by Agent. This includes, but is not limited to,
application processing,  policy issuance, cash handling, billings,  collections,
cancellations, reinstatements, agency commission payments (including information
return  reporting on behalf of the Company) and  collections,  claims  handling,
adjusting,  payments,  litigation,  subrogation, all financial reporting records
and requirements,  and any other operational functions normally performed in the
course of writing automobile business.


ARTICLE XX - EXCLUSIVE AGREEMENT

Company  agrees  that  Reinsurer  will act as its  exclusive  reinsurer  for all
standard medical  professional  liability  insurance in Texas during the term of
this Agreement.


ARTICLE XXI - MISCELLANEOUS

A.       This Agreement shall bind and inure to the sole benefit of the
         Company and the Reinsurer and their respective successors and
         assigns and shall not confer any benefit on any other person.

B.       The provisions of this Agreement shall not create any right or
         legal relationship between Reinsurer and any insured and/or
         policyholder of Company.

C.       This Agreement may be executed in one or more counterparts,
         each of which is deemed to be an original, and all of which
         taken together shall constitute one and the same instrument.

D.       This Agreement sets forth the entire agreement and understanding of the
         parties with respect to the subject  matter hereof and  supersedes  any
         prior understandings, whether written or oral, with respect thereto.


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E.       This Agreement may be amended from time to time by a written instrument
         validly executed by the duly authorized  representatives of each of the
         parties  hereto.  No waiver of any of the terms or  conditions  of this
         Agreement by any party shall be  considered as creating a waiver of the
         same terms or conditions in any subsequent transaction or occurrence.

F.       This Agreement shall be construed under the laws of the State
         of Texas.

G.       This Agreement shall be considered as an honorable  undertaking made in
         good  faith and shall be  subject  to a  liberal  construction  for the
         purpose of giving effect to the good faith and honorable  intentions of
         the Company and Reinsurer.



The Company by its duly authorized representative has executed this Agreement as
of the date undermentioned:

This 27th day of March, 1997.


                   FLORIDA PHYSICIANS INSURANCE COMPANY, INC.



                          By __________________________


                          Its ________________________




The Reinsurer by its duly authorized  representative has executed this Agreement
as of the date undermentioned at:

Austin, Texas, this 27th day of March, 1997.


                     AMERICAN PHYSICIANS INSURANCE EXCHANGE




                        By _____________________________


                        Its _____________________________



                                       15





The Agent by its duly authorized  representative  has executed this Agreement as
of the date undermentioned at:

Austin, Texas, this 27th day of March, 1997.


                   AMERICAN PHYSICIANS INSURANCE AGENCY, INC.



                        By _____________________________


                        Its _____________________________


                                       16







                                 ADDENDUM NO. 1

                            TO REINSURANCE AGREEMENT
                            Effective March 27, 1997

                                    issued to

                   FLORIDA PHYSICIANS INSURANCE COMPANY, INC.
                              Jacksonville, Florida

                                       by

                     AMERICAN PHYSICIANS INSURANCE EXCHANGE
                                  Austin, Texas




It is agreed that a fee shall be allowed by the Reinsurer to the Company at four
percent of direct premiums  written for the first year that this Agreement is in
effect.  Thereafter the fee allowed by the Reinsurer to the Company shall be the
greater of (i) four percent of direct premiums written, or (ii) $240,000.



                                    COMPANY:



                                    -------------------------------------
                      By:__________________________________
                      Title:_______________________________


                                    REINSURER:



                                    ------------------------------------
                      By:_________________________________
                      Title:______________________________

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                                 ADDENDUM NO. 2

                            TO REINSURANCE AGREEMENT
                            Effective March 27, 1997

                                    issued to

                   FLORIDA PHYSICIANS INSURANCE COMPANY, INC.
                              Jacksonville, Florida

                                       by

                     AMERICAN PHYSICIANS INSURANCE EXCHANGE
                                  Austin, Texas



Specialties

Medical Doctors (M.D.)
Osteopaths (D.O.)
Chiropractors (D.C.)
Podiatrists (D.P.M.)
Certified Nursing Assistant
Dental Hygienist
Dietitian/Nutritionist
Heart/Lung Perfusionist
Medical Laboratory Technician
Nurse Anesthetist
Nurse Midwife
Nurse Practitioner
  (Including Obstetrical N.P., Pediatric/Family N.P.
   Psychiatric N.P.
   Surgical N.P.)
Nurse - Critical Care
Nurse - Emergency Room
Nurse - LPN, LVN, Aide,
        1st year RN Nurse - General Duty Nurse - Obstetrical Nurse - Scrub Nurse
OR Technician  (Hospital)  Optician  Optometrist  Paramedic  Pharmacist Physical
Therapist Physicians Assistant  Psychotherapist  Respiratory  Therapist Surgeons
Assistant Other - Allied Health
  Care N.O.C.



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