May 5, 1998

Ron Sandler, Chief Executive Lloyd's One Lime Street EC3M 7HA London, England

Dear Mr. Sandler:

Pursuant to the provisions of subdivision (g)(2) of Regulation 41(11 NYCRR, Part 27), promulgated on an emergency basis on March 18, 1998, and upon application by Lloyd's, the New York Insurance Department has determined that each syndicate of Lloyd's doing excess line business in the State of New York is required to maintain in trust an amount equal to fifty percent (50%) of such syndicate's United States excess and surplus lines liabilities for business written on and after August 1, 1995. This determination is based on the following:

1. 1. Lloyd's agrees that it will cause to be deposited and maintained in the Lloyd's American Surplus or Excess Line Insurance Joint Asset Trust Fund, jointly for the benefit of United States excess line policyholders, the sum of US$100.000.000 in addition to the amount required to be maintained by subdivision (g)(1)(I) of Regulation 41:
2. 2. Lloyd's agreement to continue to furnish this Department with financial statements, including Statements of Actuarial Opinion of each syndicate's gross US situs excess and surplus lines liabilities and net worldwide total liabilities, in a form acceptable to the New York Insurance Department : and
3. That notwithstanding the amount of funds which would otherwise be necessary to satisfy the 50% US situs excess and surplus lines funding requirement, in no event shall the total amount of funds held in trust in the Lloyd's United States Situs Surplus Lines Trust Funds be less than US$600.000.000.

It is understood that the transfer of any funds presently held in the Lloyd's United States Situs Surplus Lines Trust Funds in excess of the greater of %50 of United States excess and surplus lines liabilities or US$600.000.000, and the deposit of the additional US$100.000.000 into the Lloyd's American Surplus or Excess Line insurance Joint Asset Trust Fund, will occur simultaneously.

It is further understood that the New York Insurance Department may review this determination at any time, and may modify the amount of funds required to be maintained in trust by any or all Lloyd's syndicates based upon such factors and information as the Department deems relevant. In particular, any change in the regulatory framework in the United States, for Lloyd's on the trusts referenced above, will cause this Department to immediately review all financial requirements provided for in New York statute and regulations.

Kindly indicate your understanding and acceptance of the foregoing by returning a copy of this letter signed by an authorized representative of Lloyd's. Further, please notify this Department of the date when the transfer of funds will take place, and the amount of such transfer.

Very truly yours,

Neil D. Levin Superintendent of Insurance

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