SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

                Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                                 August 18, 1998
                Date of Report (Date of earliest event reported)

                    FUND AMERICAN ENTERPRISES HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                     1-8993              94-2708455
(State or other jurisdiction of      (Commission         (I.R.S. Employer
 incorporation or organization)      file number)        Identification No.)

               80 South Main Street, Hanover, New Hampshire 03755
                    (Address of principal executive offices)

                                 (603) 643-1567
              (Registrant's telephone number, including area code)






Item 2.         Acquisition or Disposition of Assets.

(1)  Pursuant to a Stock Purchase Agreement dated July 1, 1998 (the
     "Agreement"), on August 18, 1998 Fund American Enterprises Holdings, Inc.
     (the "Company" and collectively with its wholly-owned subsidiaries "Fund
     American") acquired the remaining 50% interest in Folksamerica Holding
     Company, Inc. ("Folksamerica") that it did not previously own. Folksamerica
     owns Folksamerica Reinsurance Company, a multi-line broker-market
     reinsurance company, which in 1997 and 1996 had net written premiums of
     $232.4 million and $171.9 million, respectively. At December 31, 1997 and
     1996, Folksamerica had total assets $1.2 billion and $1.0 billion,
     respectively, and shareholders' equity of $255.0 million and $167.6
     million, respectively.

     Pursuant to the Agreement, Fund American acquired 8,483,907 outstanding
     shares of Folksamerica common stock from five European mutual insurance
     companies (the "Sellers") for $169.1 million. The transaction was valued
     based on arm's length negotiations among Fund American and the Sellers. In
     addition, pursuant to an Assignment and Assumption Agreement dated August
     18, 1998 (the "Assumption Agreement"), Fund American assumed $55.6 million
     of Folksamerica's existing indebtedness. As a result of this transaction,
     Fund American now owns 100% of the capital stock of Folksamerica.

     Fund American and the Sellers had no material pre-existing relationship
     other than being joint owners of Folksamerica. Fund American and
     Folksamerica had no material pre-existing relationships, except that Mr.
     Steven E. Fass, President and Chief Executive Officer of Folksamerica,
     serves as a director of one of Fund American's subsidiary Boards of
     Directors and that Messrs. K. Thomas Kemp and Terry L. Baxter, Executive
     Officers of Fund American, serve as directors on Folksamerica's Board of
     Directors.

     The Agreement and the Assumption Agreement are filed herewith as Exhibit
     10(a) and Exhibit 10(b), respectively, and are incorporated herein by
     reference. The source of funds used to acquire Fund American's additional
     interest in Folksamerica was derived from borrowings under Fund American's
     existing credit facility and sales of short-term investments.

(2)  The assets acquired by Fund American, as a result of the foregoing
     transaction, did not involve the purchase of a material dollar amount of
     plant, property, equipment or other physical property.






Item 7.         Financial Statements and Exhibits.

(a)  Financial Statements of Businesses Acquired. The financial statements
     required by part (a) of Item 7 relating to Folksamerica are not currently
     available. Fund American will provide the requisite financial statements,
     prepared in accordance with Regulation S-X, in an amendment to this report.

(b)  Pro Forma Financial Information. The pro forma financial information
     required by part (b) of Item 7 relating to Folksamerica is not currently
     available. Fund American will provide the requisite financial information,
     prepared in accordance with Regulation S-X, in an amendment to this report.

(c)  Exhibits. The following exhibits are filed herewith:

     Exhibit No.                     Description
     -----------    -----------------------------------------------------------
(3)     10 (a)      Stock Purchase Agreement dated as of July 1, 1998, by and
                    among Fund American Enterprises Holdings, Inc., White
                    Mountains Holdings, Inc. and the Sellers (as defined
                    therein).

        10 (b)      Assignment and Assumption Agreement dated as of August 18,
                    1998, by and among Folksam Omsesidig Sakforsakring, Samvirke
                    Skadeforsikring AS and Fund American Enterprises Holdings,
                    Inc.










                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     FUND AMERICAN ENTERPRISES HOLDINGS, INC.

Dated:  August 18, 1998              By: /S/
                                        -----------------------------------
                                          Michael S. Paquette
                                          Senior Vice President and
                                            Controller





                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made as of July 1,
1998, by and among Fund American Enterprises Holdings, Inc., a Delaware
corporation ("Fund American"), and White Mountains Holdings, Inc., a New
Hampshire corporation ("White Mountains"; Fund American and White Mountains
being collectively referred to herein as "Buyer"), and each of the parties
listed on Schedule A hereto (each a "Seller" and collectively the "Sellers").
All obligations of Buyer hereunder or in respect hereof shall be joint and
several obligations of Fund American and White Mountains.

         WHEREAS, each Seller desires to sell to Buyer, and Buyer desires to
purchase from each Seller, certain shares of Common Stock, par value $.01 per
share ("Common Stock"), of Folksamerica Holding Company, Inc., a New York
corporation (the "Company"), owned by such respective Seller; and

         WHEREAS, the Sellers and Buyer are entering into this Agreement to
provide for such purchase and sale of shares of Common Stock, upon the terms and
subject to the conditions hereinafter set forth;

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                           SALE OF STOCK; CLOSING

         Section 1.1. Purchase and Sale. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth herein, at the Closing (as defined herein), each
Seller, severally and not jointly, will sell to Buyer, and Buyer will purchase
from each Seller, the number of shares of Common Stock set forth opposite the
name of such Seller on Schedule A hereto (collectively the "Shares") at a price
equal to $169,058,812 in the aggregate for all Sellers (or $19.927 per Share),
reduced by the amount of any dividends or distributions paid between the date
hereof and the Closing (the "Purchase Price"). The Purchase Price shall be
allocated among the Sellers as set forth on Schedule A hereto

         Section 1.2. The Closing; Deliveries.

                  (a) The closing of the purchase by Buyer of the Shares (the
"Closing") shall take place at the offices of Winthrop, Stimson, Putnam &
Roberts, One Battery Park Plaza, New York, New York, on August 15, 1998; such
other location or date as the parties may mutually agree (the "Closing Date").

                  (b) At the Closing, (i) Buyer will deliver to each Seller,
severally and not jointly, the aggregate Purchase Price for the shares set forth
opposite such Seller's name on Schedule A




hereto, by wire transfer of immediately available funds to the account specified
by such Seller or such other method of payment as shall be mutually agreed upon
by such Seller and Buyer, and Buyer will deliver to Sellers all documents
required hereunder to be delivered by Buyer at the Closing, against (ii)
delivery by such Seller to Buyer of certificates for the Shares being sold by
such Seller hereunder, with all requisite documentary or stock transfer tax
stamps affixed and with duly executed instruments of transfer attached, properly
signed, authorizing Buyer or a nominee of Buyer, designated in writing to
Sellers not later than two business days prior to the Closing Date, to be
registered as the owner of such Shares, together with all other documents
required hereunder to be delivered by Sellers at the Closing.

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF SELLERS

         Each Seller hereby represents and warrants, severally and not jointly,
to Buyer that: (i) such Seller is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was organized and has
all requisite power and authority, corporate and otherwise, to execute, deliver
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; (ii) this Agreement has been duly and validly
executed and delivered by such Seller, and (assuming due execution and delivery
by Buyer) constitutes the legal, valid and binding obligation of such Seller,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally or by general equitable principles; (iii)
the Shares held by such Seller as set forth on Schedule A constitute the only
securities of the Company owned by such Seller and such Seller has now and will
have at all times prior to the Closing good and valid title to the Shares being
sold by it hereunder, free and clear of any and all claims, liens, pledges,
charges, security interests and other encumbrances (except for restrictions on
transfer under federal and state securities laws) and, upon delivery by such
Seller to Buyer of the certificates representing the Shares as contemplated by
Section 1.2 of this Agreement, such Seller will transfer to Buyer good and valid
title to the Shares, free and clear of any and all claims, liens, pledges,
charges, security interests and other security interests except for restrictions
on transfer under federal and state securities laws; (iv) the execution,
delivery and performance of this Agreement will not conflict with or violate the
charter, by-laws or other similar organizational documents of such Seller or any
law, rule, regulation, order, judgment, decree, permit, license, contract or
agreement applicable to such Seller, or by or to which any of its properties
(including any Shares) are bound or affected; (v) no consent, approval, waiver,
license or authorization or other action or filing with any governmental
authority or third party is required in connection with the execution, delivery
and performance by such Seller of this Agreement; (vi) there is no pending or,
to the knowledge of such Seller, threatened claim, litigation or proceeding
involving such Seller seeking to prevent, challenge or change any of the
transactions contemplated hereby; and (vii) no person will be entitled to any
broker, finder, investment banking or other similar fees as a result of the
transactions contemplated hereby pursuant to any agreement or arrangement to
which such Seller is a party.

                                       2


                                  ARTICLE III

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to each Seller severally that: (i)
Fund American and White Mountains are duly organized, validly existing and in
good standing under the laws of the States of Delaware and New Hampshire,
respectively, and have all requisite power and authority, corporate and
otherwise, to execute, deliver and perform their obligations under this
Agreement and to consummate the transactions contemplated hereby; (ii) this
Agreement has been duly and validly executed and delivered by Buyer, and
(assuming due execution and delivery by each Seller) constitutes the legal,
valid and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally or by
general equitable principles; (iii) the execution, delivery and performance of
this Agreement will not conflict with or violate the charter or by-laws of Fund
American or White Mountains or any law, rule, regulation, order, judgment,
decree, permit, license, contract or agreement applicable to Fund American or
White Mountains, or by or to which any of its properties are bound or affected;
(iv) no consent, approval, waiver, license or authorization or other action or
filing with any governmental authority or third party is required in connection
with the execution, delivery and performance by Fund American or White Mountains
of this Agreement; (v) Buyer is acquiring the Shares for investment and not with
a view toward, or for the purpose of, the resale or distribution thereof; (vi)
there is no pending or, to the knowledge of Buyer, threatened claim, litigation
or proceeding involving Buyer seeking to prevent, challenge or change any of the
transactions contemplated hereby; and (vii) no person will be entitled to any
broker, finder, investment banking or other similar fees as a result of the
transactions contemplated hereby pursuant to any agreement or arrangement to
which Buyer is a party.

                                   ARTICLE IV

                              COVENANTS AND WAIVERS

         Section 4.1. Cooperation and Reasonable Efforts. Subject to the terms
and conditions hereof, (a) each of the parties hereto shall reasonably cooperate
with the other parties, and shall cause the Company to reasonably cooperate with
the parties hereto, in connection with consummating the transactions
contemplated by this Agreement, and (b) each of the parties hereto agrees to,
and shall cause the Company to, use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. For purposes of this Section 4.1,
the covenant of the parties to use their "reasonable efforts" shall not require
any party to (i) incur any unreasonable expenses, (ii) agree to materially limit
or adversely affect in any material respect the conduct of its business or (iii)
divest itself of any material assets or properties, in each case except as
otherwise contemplated hereunder.

         Section 4.2. Loan Guaranties. Pursuant to an Assignment and Assumption
Agreement in the form attached hereto as Schedule B, from and after the Closing
Fund American shall assume all obligations under, and indemnify Samvirke (as
defined below), Folksam Mutual (as defined below) and their respective
affiliates, successors and assigns against all liabilities in

                                       3


connection with (i) the guarantee by Samvirke Skadeforsikring AS ("Samvirke")
dated November 12, 1991, as confirmed by a reconfirmation letter dated November
25, 1995, as reduced by a letter dated November 6, 1997, of obligations under
the loan agreement dated as of November 12, 1991, as amended, between Swedbank
(Sparbanken Sverige AB (publ)) and the Company (the "Loan Agreement") (the
"Samvirke Guarantee") and (ii) the guarantee by Folksam Mutual dated as of
November 12, 1991, as confirmed by a reconfirmation letter dated as of March 26,
1996, as further modified by a letter dated November 6, 1997, of obligations
under the Loan Agreement (the "Folksam Guarantee" and together with the Samvirke
Guarantee, the "Swedbank Loan Guarantees"). On or before six months after the
Closing Date, Fund American shall cause the Swedbank Loan Guarantees to be
released and discharged in full (it being understood that Fund American shall
cause all obligations under the Loan Agreement to be repaid if necessary in
order to cause the Swedbank Loan Guarantees to be released on or before such
date). Each of Samvirke and Folksam Mutual shall comply with its obligations
under Section 9 of the Fund American Shareholders Agreement until the earlier of
(i) the release and discharge in full of the Swedbank Loan Guarantees and (ii)
six months after the Closing Date (the "Guarantee Termination Date"). Until the
Guarantee Termination Date, each of Samvirke and Folksam Mutual General
Insurance Company ("Folksam Mutual") shall pay to Fund American the amount of
the Loan Guaranty Fee paid to such Seller pursuant to the Guarantee Fee
Agreement (as defined below) to the extent that such Loan Guaranty Fee has been
paid by the Company. In order to facilitate the foregoing, Samvirke, Folksam
Mutual and their respective affiliates hereby assign to Fund American all right,
title and interest in and to, and the right to receive directly from the
Company, the Loan Guaranty Fees payable pursuant to this Section 4.2.

         Section 4.3. Waiver of Certain Rights. Each of the Sellers hereby
irrevocably and unconditionally waives its rights under Section 6 of the Amended
and Restated Investor Stockholders' Agreement dated as of June 19, 1996, as
amended November 6, 1997, by and among the Company and the Sellers (the
"European Shareholders Agreement"), solely with respect to the purchase and sale
of Shares under this Agreement.

         Section 4.4. Termination of Certain Agreements. Upon the consummation
of the Closing by Buyer and all of the Sellers, (i) the European Shareholders
Agreement and (ii) all obligations of the parties (other than section 9) under
the Shareholders Agreement by and among Buyer, the Sellers and the Company,
dated as of March 6, 1996, as amended November 6, 1997 (the "Fund American
Shareholders Agreement") shall terminate and be of no further force or effect.
Upon the Guarantee Termination Date, all obligations of Samvirke and of Folksam
Mutual and Folksam International Insurance Co., Ltd. (Publ) ("Folksam
International") under Section 9 of the Fund American Shareholders Agreement and
the Guarantee Fee Agreement shall terminate and be of no further force or
effect. Upon the release and discharge in full of the Swedbank Loan Guarantees,
the rights of Samvirke and of Folksam Mutual and Folksam International under the
Guarantee Fee Agreement shall terminate and be of no further force and effect.

         Section 4.5. License. To the extent that Folksam Mutual, Folksam
International, or any of their affiliates has any rights in or to the corporate
name "Folksamerica" or the use thereof, Folksam Mutual on behalf of itself and
its affiliates hereby irrevocably and

                                       4


unconditionally grants to the Company a perpetual, royalty free, worldwide and
unlimited right to use such corporate name.

                                   ARTICLE V

                    CONDITIONS TO BUYER'S OBLIGATION TO CLOSE

         The Buyer's obligation to consummate the Closing is subject to the
satisfaction at or prior to the Closing of all of the following conditions:

         Section 5.1. Representations and Warranties of Sellers. The
representations and warranties of each Seller contained in this Agreement or in
any other certificate or documents delivered to Buyer pursuant hereto shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.

         Section 5.2. No Injunction. At the Closing, there shall be no
injunction, restraining order or decree of any nature of any court or government
authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated hereby.

         Section 5.3. Bringdown Certificate. Each Seller shall have delivered to
Buyer a certificate, signed by an executive officer of such Seller, certifying
as to the fulfillment of the conditions set forth above in this Article.

         Section 5.4. Legal Opinion. Buyer shall have received an opinion from
counsel to the Sellers, in form and substance reasonably acceptable to Buyer,
solely as to the enforceability of this Agreement against the Sellers (it being
understood that such counsel may assume that the Agreement has been duly
authorized, executed and delivered by, and is within the corporate power and
authority of, and does not violate any law or agreement applicable to, the
Sellers).

                                   ARTICLE VI

                 CONDITIONS TO EACH SELLER'S OBLIGATION TO CLOSE

         Each Seller's obligation to consummate the Closing is subject to the
satisfaction at or prior to the Closing of all of the following conditions:

         Section 6.1. Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in this Agreement or in any
other certificate or documents delivered to Sellers pursuant hereto shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.

         Section 6.2. No Injunction. At the Closing, there shall be no
injunction, restraining order or decree of any nature of any court or government
authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated hereby.

                                       5


         Section 6.3. Bringdown Certificate. Buyer shall have delivered to each
Seller a certificate, signed by an executive officer of Buyer, certifying as to
the fulfillment of the conditions set forth above in this Article.

         Section 6.4. Legal Opinion. The Sellers shall have received an opinion
from counsel to Buyer, in form and substance reasonably acceptable to Folksam
Mutual, solely as to the enforceability of this Agreement against Buyer (it
being understood that such counsel may assume that the Agreement has been duly
authorized, executed and delivered by, and is within the corporate power and
authority of, and does not violate any law or agreement applicable to, the
Buyer).

                                  ARTICLE VII

                                   TERMINATION

         Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing (a) by the mutual consent in writing of the parties hereto;
(b) by the Required Percentage of the Sellers (as defined in the European
Shareholders Agreement), on the one hand, or by Buyer, on the other hand, upon
written notice to the other party or parties, if the Closing has not occurred by
the close of business on September 30, 1998; or (c) by the Required Percentage
of the Sellers (as defined in the European Shareholders Agreement), on the one
hand, or by Buyer, on the other hand, upon written notice to the other parties,
if there has been a material breach or default hereunder on the part of any
other party which breach or default is not curable or, if curable, is not cured
within thirty (30) business days after such party becomes aware of the breach or
default; provided, however, that no party shall have the right to terminate this
Agreement under clause (b) or (c) of this Agreement if such party is then in
material breach or default of its representations, warranties or obligations
hereunder.

         Section 7.2. Procedure and Effect of Termination. In the event of
termination of this Agreement pursuant to Section 7.1, no party shall have
liability or further obligations to any other party under this Agreement;
provided, however, that such termination shall not relieve any party hereto of
any liability for any breach of this Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section 8.1. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto may assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of the other parties hereto, except that Buyer shall be
permitted to assign its rights hereunder to purchase the Shares to any wholly
owned subsidiary of Buyer without such prior written consent (in which event,
Buyer shall remain liable for its obligations hereunder and shall irrevocably
and unconditionally guarantee the performance by such subsidiary of Buyer's
obligation hereunder to purchase the Shares).

                                       6


         Section 8.2. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same Agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.

         Section 8.3. Headings. The headings of the sections of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the meaning or interpretation of this Agreement.

         Section 8.4. Amendments and Waiver. No amendment, modification or
alteration of the terms or provisions of this agreement shall be binding unless
the same shall be in writing and duly executed by Buyer and each of the Sellers.
Any of the terms or conditions of this Agreement may be waived in writing at any
time by the party which is entitled to the benefits thereof. No waiver or any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
such provisions at any time in the future or a waiver of any other provisions
hereof.

         Section 8.5. Expenses. Except as set forth herein, all legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, except that Samvirke and Folksam Mutual shall each pay, severally
and not jointly, their respective pro rata shares (i.e. 8% for Samvirke and 92%
for Folksam Mutual) of the fees and expenses (including, without limitation
banking fees and charges and reasonable attorneys' fees and disbursements)
incurred or payable by the Company in connection with any refinancing of the
Swedbank Loan Agreement completed on or before the first anniversary of the
Closing Date, provided that such amount so payable by Samvirke shall not exceed
$32,000 and such amount payable by Folksam Mutual shall not exceed $368,000. All
sales, transfer, deed, duties, stamp, notary public and other similar taxes,
duties and transfer fees applicable to the transactions contemplated by this
Agreement, including fees to record assignments, shall be borne by Sellers.

         Section 8.6. Notices. Any notice, request, instruction, consent or
other document to be given hereunder by any party hereto to any other party
shall be in writing and delivered personally, by telecopy or sent by registered
or certified mail, postage prepaid, as follows:

         If to Buyer:

                  White Mountains Holdings, Inc.
                  80 South Main Street
                  Hanover, New Hampshire  03755
                  Attention:  Terry Baxter
                  Telecopy:  (603) 643-4562

                                       7


                  with a copy to:

                  Brobeck, Phleger & Harrison, LLP
                  Two Embarcadero Place
                  2200 Geng Road
                  Palo Alto, CA  94303-0913
                  Attn:  Curtis L. Mo, Esq.
                  Telecopy: (650) 496-2715

         If to any Seller, to the address set forth for such Seller on the
signature page hereof, with a copy to:

                  Winthrop, Stimson, Putnam & Roberts
                  One Battery Park Plaza
                  New York, NY 10004
                  Attention: David W. Ambrosia, Esq.
                  Telecopy: (212) 858-1500

or such other address for any party hereto as shall be specified in writing by
that party.

         Section 8.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
reference to the choice of laws principles thereof.

         Section 8.8. Further Assurances. Each of the parties hereto will use
its reasonable best efforts to satisfy the conditions to Closing hereunder and
from time to time after the Closing, each of the parties hereto will use its
reasonable best efforts to consummate the transactions contemplated hereby. The
Sellers will not, directly or indirectly, engage in any discussion or enter into
any arrangements for the sale of any of the Shares to any third party.

         Section 8.9. Survival. The representations and warranties of the
parties contained in this Agreement and in any certificate delivered pursuant
hereto and all rights and obligations of the parties in respect thereof shall
survive the Closing until the expiration of the applicable statute of
limitations with respect to claims for a breach thereof, except that the
representations and warranties contained in Clause (iii) of Article II shall
survive forever.

         Section 8.10. Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach or default under this
Agreement, the other parties hereto would be irreparably and immediately harmed
and may not be made whole by monetary damages. Each of the parties hereto
accordingly agrees that (i) it will waive, in any action, suit or proceeding for
specific performance or other relief related to this Agreement, the defense of
adequacy of money damages or a remedy at law, and (ii) each other party hereto
will be entitled, in addition to any other remedy to which such party may be
entitled at law or in equity, to compel specific performance of this Agreement
or to obtain a temporary restraining order, preliminary and performance
injunction or other equitable relief or remedy in any action, suit or proceeding
instituted in any state or federal court located in New York, New York.

                                       8


         Section 8.11. Consent to Jurisdiction; Service of Process. Any action,
suit or proceeding arising out of or relating to this Agreement may be
instituted in any United States Federal court or any state court located in New
York, New York, and each of the parties hereto agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that it may now or hereafter have that it is not subject personally to the
jurisdiction of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each of the parties hereto irrevocably submits to the jurisdiction
of such court in any such action, suit or proceeding, and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement from which no appeal has been taken or is available. Each of the
Sellers and Buyer hereby appoints CT Corporation System (or counsel reasonably
acceptable to the parties hereto) at its principal place of business in New
York, New York, or its office at such other address in New York, New York as it
may furnish to the parties, as its authorized agent to accept and acknowledge on
its behalf service of any and all process that may be served in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against any other party
hereto if given personally or by registered or certified mail, returned receipt
requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided, or by personal service on such
authorized agent with a copy of such process mailed to such party by first class
mail or registered or certified mail, postage prepaid and return receipt
requested. Nothing contained herein shall be deemed to affect the right of any
party hereto to serve process in any manner permitted by law.

                                       9




         IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the first above written.

                                   FUND AMERICAN ENTERPRISES HOLDINGS, INC.

                                   By:________________________________
                                      Name:
                                      Title:

                                   WHITE MOUNTAINS HOLDINGS, INC.

                                   By:________________________________
                                      Name:
                                      Title:

                                   FOLKSAM MUTUAL
                                   GENERAL INSURANCE COMPANY

                                   By: ________________________________
                                      Name:
                                      Title:

                                   By: ________________________________
                                      Name:
                                      Title:

                                   Address for Notices:

                                   Folksam Mutual General Insurance Company
                                   S-106 60 Stockholm, Sweden
                                   Attention:  Mr. Anders Henrikson
                                   Telecopy No.:  011-46-8-714-7611

                                       10


                                   FOLKSAM INTERNATIONAL INSURANCE CO. 
                                   LTD. (Publ)

                                   By: ________________________________
                                      Name:
                                      Title:

                                   By: ________________________________
                                      Name:
                                      Title:

                                   WIENER STAEDTISCHE ALLGEMEINE VERISCHRUNG AG

                                   By: ________________________________
                                      Name:
                                      Title:

                                   By: ________________________________
                                      Name:
                                      Title:

                                   Address for Notices:

                                   Wiener Staedtische Allegmeine Versicherung AG
                                   Schottenring 30
                                   A-1010 Vienna, Austria
                                   Attention:  Mr. Karl Fink
                                   Telecopy No.:  011-43-1-531-39-31-36

                                   P&V ASSURANCES S.C.

                                   By: ________________________________
                                      Name:
                                      Title:

                                       11


                                   Address for Notices:

                                   P&V Assurances S.C.
                                   Rue Royal 151
                                   1030 Brussels, Belgium
                                   Attention:  Mr. Jacques Forest
                                   Telecopy No.:  011-32-2-250-9140

                                   SAMVIRKE SKADEFORSIKRING A.S.

                                   By: ________________________________
                                      Name:
                                      Title:

                                   Address for Notices:

                                   Samvirke Skadeforsikring AS
                                   Henrik Ibsengate 9
                                   0106 Oslo, Norway
                                   Attention:  Mr. Ole Groterud
                                   Telecopy No.:  011-47-23-066-201


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                                   SCHEDULE A

Name of Seller Number of Shares Sold Purchase Price(1) -------------- --------------------- ----------------- Folksam Mutual General Insurance Company 3,285,000 $ 65,460,195 Folksam International Insurance Co. LTD. (publ) 300,075 5,979,594 Wiener Staedtische Allgemeine Versicherung AG 2,257,663 44,988,450 P&V Assurances S.C 1,877,618 37,415,293 Samvirke Skadeforsikring AS 763,551 15,215,280 ------------ ------------ Total 8,483,907 $169,058,812 ------------ ------------ ------------ ------------
(1) Subject to reduction by the amount of any dividends paid between the date hereof and the Closing. TABLE OF CONTENTS
Page ---- ARTICLE I SALE OF STOCK; CLOSING Section 1.1. Purchase and Sale........................................... 1 Section 1.2. The Closing; Deliveries..................................... 1 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER ARTICLE IV COVENANTS AND WAIVERS Section 4.1. Cooperation and Reasonable Efforts.......................... 3 Section 4.2. Loan Guaranties............................................. 3 Section 4.3. Waiver of Certain Rights.................................... 4 Section 4.4. Termination of Certain Agreements........................... 4 Section 4.5. License..................................................... 4 ARTICLE V CONDITIONS TO BUYER'S OBLIGATION TO CLOSE Section 5.1. Representations and Warranties of Sellers................... 5 Section 5.2. No Injunction............................................... 5 Section 5.3. Bringdown Certificate....................................... 5 Section 5.4. Legal Opinion............................................... 5
ARTICLE VI CONDITIONS TO EACH SELLER'S OBLIGATION TO CLOSE Section 6.1. Representations and Warranties of Buyer..................... 5 Section 6.2. No Injunction............................................... 5 Section 6.3. Bringdown Certificate....................................... 6 Section 6.4. Legal Opinion............................................... 6 ARTICLE VII TERMINATION Section 7.1. Termination................................................. 6 Section 7.2. Procedure and Effect of Termination......................... 6 ARTICLE VIII MISCELLANEOUS Section 8.1. Successors and Assigns...................................... 6 Section 8.2. Counterparts................................................ 7 Section 8.3. Headings.................................................... 7 Section 8.4. Amendments and Waiver....................................... 7 Section 8.5. Expenses.................................................... 7 Section 8.6. Notices..................................................... 7 Section 8.7. Governing Law............................................... 8 Section 8.8. Further Assurances.......................................... 8 Section 8.9. Survival.................................................... 8 Section 8.10. Specific Performance........................................ 8 Section 8.11. Consent to Jurisdiction; Service of Process................. 9
15


                                                                      Schedule B

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

                  ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated
as of August 18, 1998, by and among Folksam Omsesidig Sakforsakring, an entity
organized under the laws of Sweden ("Folksam"), Samvirke Skadeforsikring AS, a
corporation organized under the laws of the Kingdom of Norway ("Samvirke" and,
collectively with Folksam, the "Assignors") and Fund American Enterprises
Holdings, Inc., a Delaware corporation (the "Assignee").

                  WHEREAS, the Assignors and the Assignee are parties to that
certain Stock Purchase Agreement, dated as of July 1, 1998, by and among the
Assignee, White Mountains Holdings, Inc., a New Hampshire corporation ("White
Mountains"), Assignors and each of the other parties listed on Schedule A to
such Stock Purchase Agreement (the "Stock Purchase Agreement") relating to
certain shares of Common Stock of Folksamerica Holding Company, Inc., a
corporation organized under the laws of the State of New York, owned by Sellers;
and

                  WHEREAS, as contemplated by Section 4.2 of the Stock Purchase
Agreement, from and after the Closing, the Assignors have agreed to assign to
the Assignee, and the Assignee has agreed to assume, all of the Assignor's
obligations and liabilities in, to and under the Swedbank loan guarantees,
copies of which attached are hereto (the "Swedbank Loan Guaratees"), to the same
extent as if the Assignee had been an original party to the Swedbank Loan
Guarantees;

                  NOW, THEREFORE, in consideration of the foregoing, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, each intending to be legally bound, hereby
agree as follows:

                  Section 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Stock Purchase Agreement.

                  Section 2. Assignment of Obligations and Liabilities under the
Swedbank Loan Guarantees. The Assignors hereby assign, transfer and convey to
the Assignee, and its successors and permitted assigns, all of their duties,
obligations and liabilities in, to and under the Swedbank Loan Guarantees. From
and after the date hereof, and as between the Assignors and the Assignee, the
Assignee shall be deemed to be the guarantor under each of the Swedbank Loan
Guarantees and shall be obligated to comply with all of the covenants,
agreements, obligations, undertakings and conditions of the Swedbank Loan
Guarantees as if the Assignee were an original party thereto.




                  Section 3. Assumption of Swedbank Loan Guarantees. The
Assignee hereby accepts the assignment set forth in Section 2 and
unconditionally assumes all of the covenants, agreements, obligations and
undertakings of the Assignors in, to and under the Swedbank Loan Guarantees. The
Assignee hereby agrees to be bound by all of the terms, covenants and conditions
of the Swedbank Loan Guarantees and accepts all of the Assignors' duties,
obligations and liabilities thereunder.

                  Section 4. Indemnification. The Assignee agrees to indemnify
and hold harmless the Assignors and each of their respective affiliates,
successors and assigns from and against any and all losses, damages,
deficiencies or liabilities caused by, resulting or arising from or otherwise
relating to (a) any failure by the Assignee to perform or otherwise fulfill or
comply with any undertaking or other agreement or obligation to be performed,
fulfilled or complied with by the Assignee hereunder or under the Swedbank Loan
Guarantees and (b) any and all actions, suits, proceedings, claims, liabilities,
demands, assessments, judgments, costs and expenses, including reasonable
attorneys' fees, costs and expenses incident to any of the foregoing or such
indemnification (including attorney's fees, costs and expenses incurred in
connection with the enforcement by Assignors and their respective affiliates,
successors, and assigns of the obligations of Assignee hereunder).

                  Section 5. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York
(without regard to principles of conflicts of laws thereof), including all
matters of construction, validity and performance.

                  Section 6. Counterparts. This Agreement may be executed in one
or more counterparts and each such counterpart shall be deemed to be an
original.

                  Section 7. Parties in Interest. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any person not a party to this Agreement any rights
or remedies under or by reason of this Agreement.

                  Section 8. Entire Agreement. This Agreement, together with the
Stock Purchase Agreement, contains the entire understanding of the parties
hereto with respect to the subject matter contained herein, and supersedes and
cancels all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such subject matter.

                  Section 9. Service and Jurisdiction. Any action, suit or
proceeding arising out of or relating to this Agreement may be instituted in any
United States Federal court or any state court located in New York, New York,
and each of the parties hereto agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim that it
may now or hereafter have that it is not subject personally to the jurisdiction
of such court, that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
Each of the parties hereto irrevocably submits to the jurisdiction of such court
in any such action, suit or proceeding, and irrevocably agrees to be bound by
any final 

                                       2



judgment rendered thereby in connection with this Agreement from which no appeal
has been taken or is available. Each of the parties hereto hereby appoints CT
Corporation System (or counsel reasonably acceptable to the parties hereto) at
its principal place of business in New York, New York, or its office at such
other address in New York, New York as it may furnish to the parties, as its
authorized agent to accept and acknowledge on its behalf service of any and all
process that may be served in any such action, suit or proceeding. Any and all
service of process and any other notice in any such action, suit or proceeding
shall be effective against any other party hereto if given personally or by
registered or certified mail, returned receipt requested, or by any other means
of mail that requires a signed receipt, postage prepaid, mailed to such party as
provided in the Stock Purchase Agreement, or by personal service on such
authorized agent with a copy of such process mailed to such party by first class
mail or registered or certified mail, postage prepaid and return receipt
requested. Nothing contained herein shall be deemed to affect the right of any
party hereto to serve process in any manner permitted by law.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.


                            FUND AMERICAN ENTERPRISES
                             HOLDINGS, INC.


                            By:
                               -----------------------------------
                               Name:
                               Title:


                            FOLKSAM MUTUAL GENERAL INSURANCE
                             COMPANY


                            By:
                               -----------------------------------
                               Name:
                               Title:


                            By:
                               -----------------------------------
                               Name:
                               Title:


                            SAMVIRKE SKADEFORSIKRING AS


                            By:
                               -----------------------------------
                               Name:
                               Title:


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