July 23, 1998 Merchants Mutual Insurance Company 250 Main Street Buffalo, New York 14202 Attn: Randall Clark, Chairman of the Board Re: Management Agreement made by and among Merchants Mutual Insurance Company ("Mutual"), Merchants Insurance Company...

EXHIBIT 99.1
                              MERCHANTS GROUP, INC.
                                 000 Xxxx Xxxxxx
                             Xxxxxxx, Xxx Xxxx 00000


                                                              July 23, 1998



Merchants Mutual Insurance Company
000 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000

Attn:  Xxxxxxx Xxxxx, Chairman of the Board

         Re:      Management Agreement made by and among Merchants
                  Mutual Insurance Company ("Mutual"), Merchants
                  Insurance Company of New Hampshire, Inc. ("MNH")
                  and Merchants Group, Inc. ("MGI") dated
                  as of September 29, 1986 (the "Management Agreement")

Dear Xxxxx:

                  MGI hereby gives notice that it is terminating  the Management
Agreement.  This notice, although given pursuant to the Management Agreement, in
no way is to be construed as a waiver of any rights that MGI may have concerning
the validity or enforceability  of the Management  Agreement or any part thereof
or of any of MGI's or MNH's rights thereunder.

                                    Very truly yours,

                                    MERCHANTS GROUP, INC.


                                    By: S/XXXXX  X. XXXXX
                                        Xxxxx X. Xxxxx, President