ENDORSEMENT Attached to and forming part of PROPERTY AND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. 3154-0026 between PENN-AMERICA INSURANCE COMPANY, PENN-STAR INSURANCE COMPANY, both of Hatboro, Pennsylvania and PENN-PATRIOT INSURANCE COMPANY of Richmond, Virginia (hereinafter referred to as the `Company'), and AMERICAN RE-INSURANCE COMPANY, a Delaware Corporation with administrative offices in Princeton, New Jersey (hereinafter referred to as the "Reinsurer"). It is understood and agreed by the parties hereto, that effective 12:01 a.m., Eastern Standard Time, January 1, 2004, this Agreement is amended to read as follows: I. The "Slender Lady Program" is added as an exception to Exclusion C. 1 of the EXCLUSIONS Article and the exclusion reads as follows: 1. Professional Liability or Errors and Omissions Coverage other than for the following: a. "Beau-T-Pak"; b. Barbers; c. Opticians; d. Veterinarians that treat household pets; e. Morticians; f. Clergy; g. Employee Benefits Liability (E&O Coverage); h. Druggists; i. "Day Care Pak"; j. "Adult Day Care"; k. "Health Club Pak"; l. "Instructor Pak"; m. In-Home Day Care; n. "Pet Pak"; o. "Wellness Pak"; p. "Massage Program"; or q. "Slender Lady Program". II. Professional Liability maximum policy limits are added to Section 6, WARRANTY of EXHIBIT B, CASUALTY EXCESS OE LOSS, and Section 6 reads as follows: Section 6 --------- WARRANTY -------- The maximum limits of liability for any one policy of the Company shall be deemed not to exceed the following: No. 3154-026-E001 1. General Liability - $1,000,000 each occurrence and $2,000,000 general aggregate. a) As respects Products and Completed Operations - $1,000,000 in the aggregate. 2. Massage Program - - $2,000,000 each occurrence and $3,000,000 general aggregate. 3. Professional Liability -- $1,000,000 each occurrence and $2,000,000 general aggregate. 4. Professional Liability "Slender Lady Program" - $1,000,000 each occurrence and $3,000,000 general aggregate. IN WITNESS WHEREOF the parties hereto have caused this Endorsement to be executed in duplicate in Hatboro, Pennsylvania, this 10th day of September, 2004; ACCEPTED: PENN-AMERICA INSURANCE COMPANY PENN-STAR INSURANCE COMPANY PENN-PATRIOT INSURANCE COMPANY ----------------------------------- and in Princeton, New Jersey, this 9th Day of September 2004. AMERICAN RE-INSURANCE COMPANY ------------------------------- Vice President DATED: August 9, 2004 RG/rg