AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of

February 28, 2005, by and among PROASSURANCE CORPORATION, a Delaware corporation

("PRA"), NCP MERGER CORPORATION, a Delaware corporation and a wholly-owned

subsidiary of PRA ("NEWCO"), and NCRIC GROUP, INC., a Delaware corporation

("NCRIC").

WITNESSETH:

WHEREAS, PRA is an insurance holding company which provides, through

its insurance subsidiaries, medical professional liability insurance and

personal lines insurance; and

WHEREAS, NCRIC is an insurance holding company which provides, through

its subsidiaries, medical professional liability insurance and practice

management and financial services to physicians and other health care providers;

and

WHEREAS, the Boards of Directors of PRA, NEWCO and NCRIC have

determined that it is in the best interests of their respective companies and

stockholders for PRA to acquire NCRIC through the consummation of the business

combination transaction provided for in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants,

representations, warranties and agreements contained in this Agreement, and

intending to be legally bound by this Agreement, the parties to this Agreement

agree as follows:

ARTICLE 1

THE MERGER

1.1 MERGER. Subject to the terms and conditions of this Agreement and in

accordance with the Delaware General Corporation Law, as amended (the "DGCL"),

at the Effective Time (as defined in Section 1.2 of this Agreement), NCRIC shall

merge with and into NEWCO (the "MERGER"). NEWCO shall be the surviving

corporation in the Merger, and shall continue its corporate existence under the

laws of the State of Delaware. Upon consummation of the Merger, the separate

corporate existence of NCRIC shall terminate.

1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, and in

connection with the Closing, a certificate of merger (the "CERTIFICATE OF

MERGER") will be filed with the Secretary of State of Delaware pursuant to

Section 252 of the DGCL. The parties will make all other filings or recordings

as may be required under the DGCL, and the Merger will become effective when the

Certificate of Merger is filed in the office of the Secretary of State of

Delaware, or at such later date or time as PRA and NCRIC agree and specify in

the Certificate of Merger (the time the Merger comes effective being the

"EFFECTIVE TIME").

1.3 EFFECTS OF MERGER. At and after the Effective Time, the Merger shall

have the effects set forth in this Agreement, the Certificate of Merger and the

DGCL. At the Effective Time, (i) all rights, franchises, licenses and interests

of NCRIC in and to every type of property, real, personal and mixed, and all

choses in action of NCRIC shall continue unaffected and uninterrupted by the

Merger and shall accrue to NEWCO; (ii) all rights, franchises, licenses and

interests of NEWCO in and to every type of property, real, personal and mixed,

and all choses in action of NEWCO shall continue unaffected and uninterrupted by

the Merger and shall accrue to NEWCO; (iii) all obligations and liabilities of

NEWCO then outstanding shall remain obligations of NEWCO; (iv) all obligations

and liabilities of NCRIC then outstanding shall become and be obligations of

NEWCO; and (v) no action or proceeding then pending and to which NCRIC or NEWCO

is a party shall be abated or discontinued but may be prosecuted to final

judgment by NEWCO.

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1.4 NEWCO SHARES. At the Effective Time, all of the shares of NEWCO Common

Stock (as defined in Section 4.3(b) of this Agreement) issued and outstanding

prior to the Effective Time shall remain an issued and outstanding share of

common stock of NEWCO and shall not be affected by the Merger. It is the

intention of the parties that, immediately after the Effective Time, PRA shall

own all of the issued and outstanding shares of Common Stock of NEWCO as the

surviving corporation of the Merger.

1.5 CONVERSION OF NCRIC COMMON STOCK.

(a) Except as otherwise provided in this Agreement, and subject to the

Market Adjustment pursuant to Section 1.5(b) hereof, each holder of record of

the shares of the common stock, $0.01 par value per share, of NCRIC ("NCRIC

COMMON STOCK") as of the Effective Time shall have the right to receive 0.25

(the "EXCHANGE RATIO") of a share of common stock of PRA, par value $0.01 per

share ("PRA COMMON STOCK") for each share of NCRIC Common Stock (the "MERGER

CONSIDERATION").

(b) The Exchange Ratio shall be subject to adjustment if the MARKET

VALUE (herein defined) of a share of PRA Common Stock is greater than $44.00 or

less than $36.00. In each event, the Exchange Ratio shall be adjusted (the

"MARKET ADJUSTMENT") so that each holder of the shares of NCRIC Common Stock as

of the Effective Time shall have the right to receive such number of shares or

fraction of a share (in ten thousandths; i.e., four decimal places) of PRA

Common Stock in accordance with the following (references to the Exchange Ratio

shall include the Exchange Ratio calculated to reflect the Market Adjustment, if

any):

(i) If the Market Value is greater than $44.00, the Exchange

Ratio shall be such fraction of a share of PRA Common Stock as shall

equal $11.00 divided by the Market Value; or

(ii) If the Market Value is less than $36.00, the Exchange Ratio

shall be such number of shares or fraction of a share as shall equal

$9.00 divided by the Market Value.

(iii) The term "MARKET VALUE" shall refer to an amount equal to

the arithmetic average of the last reported sale prices of one share

of PRA Common Stock as reported on the New York Stock Exchange the ten

(10) trading days ending on the date preceding the Effective Time.

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(c) Each share of NCRIC Common Stock that is owned by NCRIC or any

NCRIC Subsidiary shall automatically be cancelled and retired and shall cease to

exist, and no Merger Consideration shall be delivered in exchange therefore.

1.6 NO FRACTIONAL SHARES. No certificates or scrip representing a

fractional share of PRA Common Stock shall be issued upon the surrender of NCRIC

Common Stock certificates for exchange; no dividend or distribution with respect

to PRA Common Stock shall be payable on or with respect to any fractional share;

and such fractional share interests shall not entitle the owner thereof to vote

or to any other rights of a stockholder of PRA. In lieu of any such fractional

share, PRA shall pay to each former holder of NCRIC Common Stock who otherwise

would be entitled to receive a fractional share of PRA Common Stock an amount in

cash determined by multiplying the fractional share of PRA Common Stock to which

such holder would otherwise be entitled by whichever of the following is

applicable: (i) $40.00 if there is no Market Adjustment; or (ii) the Market

Value if there is a Market Adjustment to the Exchange Ratio.

1.7 STOCK OPTIONS.

(a) Section 1.7 of the NCRIC Disclosure Schedule (as defined in Article 3

of this Agreement) lists (i) all stock options to purchase NCRIC Common Stock

issued by NCRIC pursuant to the Stock Option Plan and the 2003 Stock Option Plan

(the "NCRIC OPTION PLANS") that are outstanding on the date of this Agreement

(collectively, the "NCRIC STOCK OPTIONS"), and (ii) all awards of shares of

NCRIC Common Stock that are to be issued by NCRIC pursuant to its 2003 Stock

Award Plan (the "NCRIC AWARD PLAN") that are outstanding on the date hereof

("NCRIC STOCK AWARDS"). Section 1.7 of the NCRIC Disclosure Schedule also sets

forth, with respect to each NCRIC Stock Option, the option exercise price, the

number of shares subject to the option, the date granted, vesting, and

expiration of the option and indicates whether the option is either an incentive

or a nonqualified stock option. Section 1.7 of the NCRIC Disclosure Schedule

also sets forth with respect to each NCRIC Stock Award the number of shares

subject to the Stock Awards and the date granted and the vesting schedule of the

award. All NCRIC Stock Options are exercisable as of the date of this Agreement.

(b) Each unexercised NCRIC Stock Option that is issued and outstanding at

the Effective Time (a "CONTINUING NCRIC STOCK OPTION") shall be assumed by PRA

and, except as provided in this Section 1.7(b), shall be continued in accordance

with its terms and conditions as in effect immediately prior to the Effective

Time. The holder of each Continuing NCRIC Stock Option shall have the election

to either:

(i) exchange his or her Continuing Stock Option for the right to

acquire a number of shares of PRA Common Stock at the Effective Time on the

following terms and conditions:

(A) Each share of NCRIC Common Stock subject to a Continuing

NCRIC Stock Option so exchanged shall be converted into shares of PRA

Common Stock using the Exchange Ratio. The number of shares subject to

each Continuing NCRIC Stock Option so exchanged shall be multiplied by

said Exchange Ratio to determine the number of shares of PRA Common

Stock subject to said Continuing NCRIC Stock Option; provided,

however, that all fractional shares resulting from such determination

shall be eliminated;

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(B) The exercise price for the shares of PRA Common Stock subject

to a Continuing NCRIC Stock Option so exchanged shall be determined by

dividing the Exchange Ratio into the exercise price of the shares of

NCRIC Common Stock subject to said Continuing NCRIC Stock Option

immediately prior to the Effective Time;

(C) The NCRIC Option Plans shall be amended at the Effective Time

to reserve for issuance pursuant to the Continuing NCRIC Stock

Options, the number of shares of PRA Common Stock subject to the NCRIC

Stock Options after the Effective Time, and to allow former members of

the Board of Directors of NCRIC to continue to participate under the

NCRIC Option Plans with respect to their Continuing NCRIC Stock

Options during the term of the Consulting Agreement executed by the

directors pursuant to Section 1.12 hereof; or

(ii) surrender his or her Continuing NCRIC Stock Option at the

Effective Time in exchange for a cash payment equal to the greater of

either (A) the amount by which the Adjusted NCRIC Share Value (herein

defined) exceeds the unadjusted exercise price for each share of NCRIC

Common Stock subject to the Continuing Stock Option so surrendered as shown

in Section 1.7(a) of the Disclosure Schedule or (B) $1.00 for each share of

NCRIC Common Stock subject to the Continuing NCRIC Stock Option so

surrendered. The term "ADJUSTED NCRIC SHARE VALUE" shall mean (i) that

amount that is equal to 0.25 times the Market Value; (ii) $11.00 if there

is a Market Adjustment because the Market Value is greater than $44.00; or

(iii) $9.00 if there is a Market Adjustment because the Market Value is

less than $36.00. A holder of a Continuing NCRIC Stock Option may elect to

receive cash for any or all of his or her Continuing NCRIC Stock Options.

Each holder of a Continuing NCRIC Stock Option shall make his or her cash

election on an election form to be provided by PRA at least twenty (20)

days prior to the Effective Time. The right to make an election to receive

a cash payment for the shares of NCRIC Common Stock subject to a Continuing

NCRIC Stock Option shall terminate on the Effective Time.

(c) Each NCRIC Stock Award that is outstanding at the Effective Time

("CONTINUING NCRIC STOCK AWARD") shall be assumed by PRA and shall be continued

in accordance with its terms as in effect immediately prior to the Effective

Time. Each Continuing NCRIC Stock Award shall give the holder thereto the right

to acquire a number of shares of PRA Common Stock to be determined by

multiplying the Exchange Ratio by the number of shares of NCRIC Common Stock

subject to a Continuing NCRIC Stock Award; provided that all fractional shares

resulting therefrom shall be eliminated.

1.8 MERGER TAX CONSEQUENCES. It is intended (i) that the Merger shall

constitute a reorganization within the meaning of Section 368(a)(1)(A) of the

Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) that this

Agreement shall constitute a "plan of reorganization" for the purposes of

Section 368 of the Code.

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1.9 NEWCO CERTIFICATE OF INCORPORATION. Subject to the terms and conditions

of this Agreement, at the Effective Time, the Certificate of Incorporation of

NEWCO then in effect shall be, and shall continue in effect as, the Certificate

of Incorporation of NEWCO, as the surviving corporation in the Merger, until

amended in accordance with applicable law; provided, however, that in connection

with and as a result of the consummation of the Merger, the Certificate of

Incorporation of NEWCO then in effect shall be amended so as to change the name

of NEWCO to "NCRIC Corporation."

1.10 NEWCO BYLAWS. Subject to the terms and conditions of this Agreement,

at the Effective Time, the Bylaws of NEWCO then in effect shall be, and shall

continue in effect as, the Bylaws of NEWCO, as the surviving corporation in the

Merger, until amended in accordance with applicable law.

1.11 NEWCO MANAGEMENT AND OFFICERS. At the Effective Time, the directors

and officers of NEWCO, as the surviving corporation in the Merger, shall

continue as the Board of Directors and Officers of NEWCO until their successors

are elected and qualified.

1.12 ADVISORY COMMITTEES.

(a) PRA shall offer to each Person who, as of the date of this

Agreement, is a member of the Board of Directors of NCRIC a Consulting and

Noncompetition Agreement in form a substance reasonably acceptable to PRA (each

a "CONSULTING AGREEMENT"), substantially in the form attached hereto as EXHIBIT

A. Pursuant to his or her Consulting Agreement, each such Person shall be paid a

monthly consulting fee of $2,500 through December 31, 2006; provided, however,

that no fees of any type shall be paid to such Person unless he or she shall

have executed a Consulting Agreement. PRA shall cause each Person who executes a

Consulting Agreement to be appointed to an advisory committee maintained by PRA

or its Subsidiaries. The Advisory Committee shall provide advice as to the

transition of NCRIC's business after the Merger.

(b) It is the intention of the parties, subject to operating

constraints, to maintain the NCRIC physician underwriting/claims committee that

NCRIC has in the District of Columbia, Delaware, and Virginia (collectively, the

"NCRIC ADVISORY COMMITTEES"). The members of the NCRIC Advisory Committees shall

consist of those persons who are members thereof at the Effective Time and such

other persons who are appointed to the NCRIC Advisory Committees thereafter. The

NCRIC Advisory Committees shall provide advice as to underwriting and claims

matters regarding medical professional liability insurance. Except for

compensation pursuant to consulting agreements described in subparagraph (a)

above, PRA shall fix the compensation of, and may change the membership of, the

NCRIC Advisory Committees.

1.13 PRA COMMON STOCK. At and after the Effective Time, each share of PRA

Common Stock issued and outstanding immediately prior thereto shall remain an

issued and outstanding share of common stock of PRA and shall not be affected by

the Merger.

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1.14 PRA STOCK OPTIONS. At and after the Effective Time, each stock option

granted by PRA to purchase shares of PRA Common Stock which is outstanding and

unexercised immediately prior thereto shall continue to represent a right to

acquire shares of PRA Common Stock and shall remain an issued and outstanding

option to purchase from PRA shares of PRA Common Stock in the same amount and at

the same exercise price subject to the terms of the PRA stock option plans under

which they were issued and the agreements evidencing grants thereunder, and

shall not be affected by the Merger.

1.15 PRA CERTIFICATE OF INCORPORATION. Subject to the terms and conditions

of this Agreement, at the Effective Time, the Certificate of Incorporation of

PRA then in effect shall be, and shall continue in effect as, the Certificate of

Incorporation of PRA until thereafter amended in accordance with applicable law.

1.16 PRA BYLAWS. Subject to the terms and conditions of this Agreement, at

the Effective Time, the Bylaws of PRA then in effect shall be, and shall

continue in effect as, the Bylaws of PRA until thereafter amended in accordance

with applicable law.

1.17 PRA MANAGEMENT. The directors and officers of PRA shall be the Board

of Directors and officers of PRA to serve until their successors are duly

elected and qualified.

1.18 INSURANCE OPERATIONS. It is the intention of the parties, subject to

operating constraints, to maintain the NCRIC home office as a PRA regional

office with a substantial number of staff positions for the conduct of insurance

operations in the mid-Atlantic states after the Merger. PRA may, after the

Closing Date, modify or change the operating structure in the exercise of its

business judgment.

1.19 ANTI-DILUTION PROVISIONS. In the event PRA changes (or establishes a

record date for changing) the number of, or provides for the exchange of, shares

of PRA Common Stock issued and outstanding prior to the Effective Time as a

result of a stock split, stock dividend, recapitalization, reclassification, or

similar transaction with respect to the outstanding PRA Common Stock and the

record date therefore shall be on or prior to the Effective Time, the Exchange

Ratio (and the related collars of the Market Adjustment) shall be

proportionately and appropriately adjusted, to reflect the economic substance of

the event, in a manner that is mutually acceptable; provided, however, that no

such adjustment shall be made with regard to PRA Common Stock if PRA issues

additional shares of Common Stock and receives fair market value consideration

for such shares.

ARTICLE 2

EXCHANGE PROCEDURES

2.1 EXCHANGE AGENT. Prior to the mailing of the Proxy Statement (as defined

in Section 3.5(c) of this Agreement), PRA shall appoint a bank or trust company

to act as an exchange agent who shall be reasonably acceptable to NCRIC (the

"EXCHANGE AGENT") for the payment of the Merger Consideration. PRA shall pay the

charges and expenses of the Exchange Agent.

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2.2 EXCHANGE PROCEDURES.

(a) Prior to the Effective Time, PRA shall deposit with the Exchange Agent

(or otherwise make available to the reasonable satisfaction of NCRIC and the

Exchange Agent), for the benefit of the holders of shares of NCRIC Common Stock,

for exchange through the Exchange Agent, the certificates representing shares of

PRA Common Stock for the Merger Consideration (such shares of PRA Common Stock

together with any dividends or distributions with respect to such shares with a

record date after the Effective Time and any cash payable in lieu of any

fractional shares pursuant to this Agreement being hereinafter referred to as

the "EXCHANGE FUND") issuable pursuant to this Agreement in exchange for

outstanding shares of NCRIC Common Stock.

(b) Promptly after the Effective Time, but no later than five (5) business

days following the Effective Time, PRA will send or cause to be sent to each

person who was a record holder of NCRIC Common Stock immediately before the

Effective Time transmittal materials for exchanging the certificates

representing NCRIC Common Stock ("OLD CERTIFICATES") for certificates

representing PRA Common Stock ("NEW CERTIFICATES"). Upon surrender of the Old

Certificate for cancellation to the Exchange Agent, together with the duly

executed transmittal materials, and such other documents as the Exchange Agent

may reasonably require, the holder of such Old Certificate shall be entitled to

receive in exchange therefore a certificate representing that number of New

Certificates which such holder has the right to receive in respect of the Old

Certificates surrendered pursuant to the provisions of this Section 2.2 (after

taking into account all shares of NCRIC Common Stock then held by such holder)

and any check in respect of dividends or distributions or for fractional shares

that the holder will be entitled to receive (without interest), and the Old

Certificates so surrendered shall forthwith be cancelled. Neither PRA nor the

surviving corporation of the Merger shall be obligated to deliver the Merger

Consideration to which any former record holder of NCRIC Common Stock is

entitled as a result of the Merger until such record holder surrenders his or

her certificate or certificates representing the shares of NCRIC Common Stock

for exchange as provided in this Section 2.2.

(c) At the Effective Time, the stock transfer books of NCRIC shall be

closed as to holders of NCRIC Common Stock immediately prior to the Effective

Time, and no transfer of NCRIC Common Stock by any such record holder shall

thereafter be made or recognized. Until surrendered for exchange in accordance

with the provisions of this Section 2.2, each certificate theretofore

representing shares of NCRIC Common Stock shall from and after the Effective

Time represent for all purposes only the right to receive the Merger

Consideration provided in this Agreement in exchange therefore. To the extent

permitted by law, former stockholders of record of NCRIC Common Stock shall be

entitled to vote after the Effective Time at any meeting of the PRA stockholders

the number of shares of PRA Common Stock into which their respective shares of

NCRIC Common Stock are converted, regardless of whether such holders have

exchanged their certificates for NCRIC Common Stock for certificates

representing the PRA Common Stock.

(d) Any other provision of this Agreement notwithstanding, none of PRA, the

surviving corporation of the Merger, and the Exchange Agent shall be liable to a

holder of NCRIC Common Stock for any amounts paid or property delivered in good

faith to a public official pursuant to any applicable abandoned property law.

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2.3 LOST OR STOLEN CERTIFICATES. If any holder of NCRIC Common Stock

convertible into the right to receive shares of the PRA Common Stock is unable

to deliver the certificate which represents such shares, the Exchange Agent, in

the absence of actual notice that any such shares have been acquired by a bona

fide purchaser, shall deliver to such holder the Merger Consideration to which

the holder is entitled for such shares upon presentation of the following: (i)

evidence to the reasonable satisfaction of the Exchange Agent and PRA that any

such certificate has been lost, wrongfully taken or destroyed; (ii) such

security or indemnity as may be reasonably requested by the Exchange Agent or

PRA to indemnify and hold PRA and the Exchange Agent harmless; and (iii)

evidence satisfactory to the Exchange Agent and PRA that such person is the

owner of the shares theretofore represented by each certificate claimed by the

holder to be lost, wrongfully taken or destroyed and that the holder is the

person who would be entitled to present such certificate for exchange pursuant

to this Agreement.

2.4 DIVIDENDS AND OTHER DISTRIBUTIONS. Whenever a dividend or other

distribution is declared on the PRA Common Stock, the record date for which is

at or after the Effective Time, the declaration shall include dividends or other

distributions on all shares of the PRA Common Stock issuable to holders of NCRIC

Common Stock under this Agreement. Notwithstanding the preceding sentence, any

person holding any certificate for NCRIC Common Stock after the Effective Time

shall not be entitled to receive any dividend or other distribution payable

after the Effective Time to holders of the PRA Common Stock, which dividend or

other distribution is attributable to such person's NCRIC Common Stock until

such person surrenders said certificate for NCRIC Common Stock for exchange as

provided in Section 2.2 of this Agreement. However, upon surrender of such

certificate, the PRA Common Stock certificate (together with all such

undelivered dividends or other distributions, without interest) shall be

delivered and paid (without interest) with respect to each share represented by

such certificate for NCRIC Common Stock.

2.5 EXCHANGE FUND. Any portion of the Exchange Fund that remains

undistributed to the holders of NCRIC Common Stock for six months after the

Effective Time shall be delivered to PRA, upon demand, and any holders of NCRIC

Common Stock who have not theretofore complied with this Agreement shall

thereafter look only to PRA for payment of their claim for any shares of PRA

Common Stock, any cash in lieu of fractional shares and any dividends or

distributions with respect to PRA Common Stock.

2.6 WITHHOLDING. PRA or the Exchange Agent will be entitled to deduct and

withhold from the consideration otherwise payable pursuant to this Agreement or

the transactions contemplated thereby to any holder of NCRIC Common Stock such

amounts as PRA (or any Affiliate thereof) or the Exchange Agent are required to

deduct and withhold with respect to the making of such payment under the Code,

or any applicable provision of U.S. federal, state, local or non-U.S. tax law.

To the extent that such amounts are properly withheld by PRA or the Exchange

Agent, such withheld amounts will be treated for all purposes of this Agreement

as having been paid to the holder of the NCRIC Common Stock in respect of whom

such deduction and withholding were made by PRA or the Exchange Agent.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF NCRIC

NCRIC represents and warrants to PRA that the statements contained in

this Article 3 are correct and complete as of the date of this Agreement and

will be correct and complete as of the Closing Date (as though made then and as

though the Closing Date was substituted for the date of this Agreement

throughout this Article), except (i) as set forth in the disclosure schedule

delivered by NCRIC to PRA on the date hereof and initialed by the parties (the

"NCRIC DISCLOSURE SCHEDULE"), or (ii) for any changes to the NCRIC Disclosure

Schedule that are disclosed by NCRIC to PRA in accordance with Section 6.9(b) of

this Agreement, or (iii) to the extent such representations and warranties speak

as of an earlier date. Nothing in the NCRIC Disclosure Schedule shall be deemed

adequate to disclose an exception to a representation or warranty made herein

unless the NCRIC Disclosure Schedule identifies the exception with reasonable

particularity. The NCRIC Disclosure Schedule will be arranged in paragraphs

corresponding to the lettered and numbered paragraphs contained in this Article;

provided, however, (i) that each exception set forth in the NCRIC Disclosure

Schedule shall be deemed disclosed for purposes of all representations and

warranties if such exception is contained in a section of the NCRIC Disclosure

Schedule corresponding to a Section in this Article 3, and (ii) the mere

inclusion of an exception in the NCRIC Disclosure Schedule shall not be deemed

an admission by NCRIC that such exception represents a material fact, event or

circumstance or would result in a material adverse effect or material adverse

change.

3.1 CORPORATE ORGANIZATION. NCRIC is a corporation duly organized, validly

existing and in good standing under the laws of the State of Delaware. NCRIC has

the corporate power and authority to own or lease all of its properties and

assets and to carry on its business as it is now being conducted, and is duly

licensed or qualified to do business in each jurisdiction in which the nature of

the business conducted by it or the character or location of the properties and

assets owned or leased by it makes such licensing or qualification necessary,

except where the failure to be so licensed or qualified would not have a

Material Adverse Effect (as defined in Section 9.18(a) of this Agreement) on

NCRIC.

3.2 SUBSIDIARIES.

(a) Section 3.2(a) of the NCRIC Disclosure Schedule sets forth the name and

state of incorporation or organization of each Subsidiary (as defined in Section

9.18(a) of this Agreement) of NCRIC (the "NCRIC SUBSIDIARIES"). Each NCRIC

Subsidiary (i) is duly organized and validly existing as a corporation under the

laws of its jurisdiction of organization, (ii) is duly qualified to do business

and in good standing in all jurisdictions (whether federal, state, local or

foreign) where its ownership or leasing of property or the conduct of its

business requires it to be so qualified and in which the failure to be so

qualified would have a Material Adverse Effect on NCRIC, and (iii) has all

requisite corporate power and authority to own or lease its properties and

assets and to carry on its business as now conducted.

(b) Section 3.2(b) of the NCRIC Disclosure Schedule identifies the NCRIC

Subsidiaries that offer insurance and the states or other jurisdictions in which

they are authorized or licensed to conduct business, and the type of insurance

products that they are authorized or licensed to offer in each such state (the

"NCRIC INSURANCE SUBSIDIARIES"). No NCRIC Insurance Subsidiary offers any

insurance products in any jurisdiction where it is neither authorized nor

licensed to offer such insurance products. The business of each NCRIC Insurance

Subsidiary has been and is being conducted in compliance with all of its

licenses in all material respects. All of such licenses are in full force and

effect and there is no proceeding or investigation pending or, to the knowledge

of NCRIC, threatened which would reasonably be expected to lead to the

revocation, amendment, failure to renew, limitation, suspension or restriction

of such license.

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(c) Except as set forth in Section 3.2(c) of the NCRIC Disclosure Schedule,

NCRIC is, directly or indirectly, the record and beneficial owner of all of the

outstanding shares of capital stock of each of the NCRIC Subsidiaries. There are

no irrevocable proxies granted by NCRIC or any NCRIC Subsidiary with respect to

such shares. There are no equity securities of any of the NCRIC Subsidiaries

that are or may become required to be issued by reason of any option, warrants,

scrip, rights, to subscribe to, calls or commitments of any character whatsoever

relating to, or securities or rights convertible into or exchangeable for,

shares of any capital stock of any of the NCRIC Subsidiaries except shares of

the NCRIC Subsidiaries issued to other wholly owned NCRIC Subsidiaries. There

are no contracts, commitments, understandings or arrangements by which any of

the NCRIC Subsidiaries is bound to issue additional shares of its capital stock

or options, warrants or rights to purchase or acquire any additional shares of

its capital stock or securities convertible into or exchangeable for such

shares. All of the shares of the NCRIC Subsidiaries described in the first

sentence of this Section 3.2(c) are validly issued, fully paid and nonassessable

and free of preemptive rights, and are owned by NCRIC or a NCRIC Subsidiary free

and clear of any and all Liens (as defined in Section 9.18(a) of this Agreement)

and free and clear of any claim, right or option to acquire any such shares.

(d) No NCRIC Subsidiary is the record or beneficial owner of any shares of

NCRIC Common Stock.

3.3 CORPORATE AFFAIRS.

(a) NCRIC has made available to PRA correct and complete copies of the

Certificate of Incorporation and Bylaws of NCRIC and each of the NCRIC

Subsidiaries (as amended to date). NCRIC has made available to PRA all of the

minute books containing the records of the meetings of the stockholders, the

board of directors and any committee of the board of directors of NCRIC and each

of the NCRIC Subsidiaries (except for confidential portions of such minutes

relating to the Merger, but provided that the availability of such information

is subject to Section 6.3 of this Agreement). The minute books of NCRIC and the

NCRIC Subsidiaries reflect all of the material actions taken by each of their

respective Boards of Directors (including each committee thereof) and

stockholders. NCRIC has made available to PRA all of the stock ledgers of NCRIC

and the NCRIC Subsidiaries.

(b) The books and records of NCRIC and each of the NCRIC Subsidiaries (i)

are and have been properly prepared and maintained in form and substance

adequate for preparing audited consolidated financial statements, in accordance

with generally accepted accounting principles in the United States consistently

applied ("GAAP") and any other applicable legal and accounting requirements,

(ii) reflect only actual transactions, and (iii) fairly and accurately reflect

all assets and liabilities of NCRIC and each of the NCRIC Subsidiaries and all

contracts and other transactions to which NCRIC or any of the NCRIC Subsidiaries

is or was a party or by which NCRIC or any of the NCRIC Subsidiaries or any of

their respective businesses or assets is or was affected.

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(c) The minute books and stock ledgers of NCRIC accurately and completely

list and describe all issuances, transfers and cancellations of shares of

capital stock of NCRIC. The minute books and stock ledgers of each NCRIC

Subsidiary accurately and completely list and describe all issuances, transfers

and cancellations of shares of capital stock of such NCRIC Subsidiary.

3.4 CAPITALIZATION.

(a) The authorized capital stock of NCRIC consists of 13,000,000 shares,

with said shares divided into two classes. One class of said shares consists of

1,000,000 shares of preferred stock and the other class of said shares consists

of 12,000,000 shares of NCRIC Common Stock. As of December 31, 2004, no shares

of such preferred stock and 6,892,517 shares of NCRIC Common Stock were issued

and outstanding and no shares of such preferred stock and 56,134 shares of NCRIC

Common Stock were held in treasury. All of the issued and outstanding shares of

NCRIC Common Stock have been duly authorized and validly issued and are fully

paid, nonassessable and free of preemptive rights with no personal liability

attaching to the ownership thereof. As of the date of this Agreement, and except

pursuant to the terms of this Agreement, the NCRIC Options Plans and the 2003

NCRIC Award Plan, NCRIC does not have and is not bound by any outstanding

subscriptions, options, warrants, calls, commitments or agreements of any

character calling for the purchase or issuance of any shares of NCRIC Common

Stock or any other equity securities of NCRIC or any securities representing the

right to purchase or otherwise receive any shares of NCRIC Common Stock or any

other equity securities of NCRIC. As of December 31, 2004 no shares of NCRIC

Common Stock were reserved for issuance, except for 427,838 shares reserved for

issuance upon the exercise of NCRIC Stock Options outstanding under the NCRIC

Option Plans. Since January 1, 2005, NCRIC has not issued any shares of NCRIC

Common Stock or other equity securities of NCRIC, or any securities convertible

into or exercisable for any shares of NCRIC Common Stock or other equity

securities of NCRIC, other than as contemplated by this Agreement or pursuant to

the exercise of stock options issued under the NCRIC Option Plans granted prior

to such date.

(b) Section 3.4(b) of the NCRIC Disclosure Schedule sets forth a complete

list of (i) the officers and directors of NCRIC and each NCRIC Subsidiary, (ii)

the percentage of the outstanding voting stock of such NCRIC Subsidiary owned or

controlled, directly or indirectly, by NCRIC, and (iii) the percentage of the

outstanding voting stock of such NCRIC Subsidiary owned or controlled, directly

or indirectly, by one or more of the other Subsidiaries of NCRIC. Except as set

forth in Section 3.4(b) of the NCRIC Disclosure Schedule, NCRIC does not have

any direct or indirect equity or ownership interest in any other business or

entity and does not have any direct or indirect obligation or any commitment to

invest any funds in any corporation or other business or entity, other than for

investment purposes in the ordinary course of business in accordance with past

practices.

3.5 AUTHORITY; NO VIOLATION; CONSENTS AND APPROVALS.

(a) NCRIC has full corporate power and authority to execute and deliver

this Agreement and to consummate the transactions contemplated by this

Agreement. The execution and delivery of this Agreement and the consummation of

the transactions contemplated by this Agreement have been duly and validly

approved by the Board of Directors of NCRIC. The Board of Directors of NCRIC has

directed that this Agreement and the transactions contemplated by this Agreement

be submitted to the stockholders of NCRIC for approval at a meeting of such

stockholders and, except for the adoption of this Agreement by the affirmative

vote of the holders of a majority of the outstanding shares of NCRIC Common

Stock, no other corporate proceedings on the part of NCRIC are necessary to

approve this Agreement and to consummate the transactions contemplated by this

Agreement. This Agreement has been duly and validly executed and delivered by

NCRIC and (assuming due authorization, execution and delivery by NEWCO and PRA

and the receipt of all Requisite Regulatory Approvals (as defined in Section

7.1(d) of this Agreement)) constitutes a valid and binding obligation of NCRIC,

subject to applicable bankruptcy, insolvency and similar laws affecting

creditors' rights generally, and subject, as to enforceability, to general

principles of equity. On or prior to the date of this Agreement, the Board of

Directors of NCRIC received the oral opinion of Sandler, O'Neil & Partners, L.P.

that the Merger Consideration is fair to the stockholders of NCRIC from a

financial point of view.

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(b) Neither the execution and delivery of this Agreement by NCRIC nor the

consummation by NCRIC of the transactions contemplated by this Agreement, nor

compliance by NCRIC with any of the terms or provisions of this Agreement, will

(i) violate any provision of the Certificate of Incorporation or Bylaws of NCRIC

or (ii) assuming that all Requisite Regulatory Approvals and all of the consents

and approvals referred to in Section 3.5(c) of this Agreement are duly obtained,

(x) violate any statute, code, ordinance, rule, regulation, judgment, order,

writ, decree or injunction applicable to NCRIC or any of its properties or

assets, or (y) violate, conflict with, result in a breach of any provision of or

the loss of any benefit under, constitute a default (or an event which, with

notice or lapse of time, or both, would constitute a default) under, result in

the termination of or a right of termination or cancellation under, accelerate

the performance required by, or result in the creation of any Lien upon any of

the properties or assets of NCRIC under, any of the terms, conditions or

provisions of any note, bond, mortgage, indenture, deed of trust, license,

lease, agreement or other instrument or obligation to which NCRIC is a party, or

by which it or any of its properties or assets may be bound or affected, except

(in the case of clause (y) above) as set forth in Section 3.5(b)(ii)(y) of the

NCRIC Disclosure Schedule, or for such violations, conflicts, breaches or

defaults which, either individually or in the aggregate, would not have a

Material Adverse Effect on NCRIC.

(c) Except for (i) the filing of applications, notices and forms with, and

the obtaining of approvals from, the Insurance Regulators (as defined in Section

9.18(a) of this Agreement) pursuant to the Insurance Laws (as defined in Section

9.18(a) of this Agreement), with respect to the transactions contemplated by

this Agreement, (ii) the filing with the Securities and Exchange Commission (the

"SEC") of a proxy statement in definitive form relating to the meeting of

stockholders of NCRIC to be held in connection with this Agreement and the

transactions contemplated by this Agreement (the "PROXY STATEMENT") and the

registration statement on Form S-4 in which the Proxy Statement will be included

as a prospectus (the "S-4"), (iii) the filing of the Certificate of Merger with

the Secretary of State of Delaware pursuant to the DGCL, (iv) the filing of a

notification and report form (the "HSR ACT REPORT") with the Pre-Merger

Notification Office of the Federal Trade Commission and with the Antitrust

Division of the Department of Justice (collectively, the "PRE-MERGER

NOTIFICATION AGENCIES") pursuant to the Hart-Scott-Rodino Anti-Trust

Improvements Act, as amended, and the rules and regulations thereunder

(collectively, the "HSR ACT"), (v) any consents, authorizations, orders and

approvals required under the Securities Act of 1933, as amended, and the rules

and regulations thereunder (collectively, the "SECURITIES Act"), the Securities

Exchange Act of 1934, as amended, and the rules and regulations thereunder

(collectively, the "EXCHANGE ACT"), and the HSR Act, (vi) any consents,

authorizations, approvals, filings or exemptions in connection with compliance

with the applicable provisions of federal and state securities laws relating to

the regulation of broker-dealers or investment advisers, and federal commodities

laws relating to the regulation of futures commission merchants and the rules

and regulations thereunder and of any applicable industry self-regulatory

organization (including, without limitation, the National Association of

Insurance Regulators (the "NAIC"), the New York Stock Exchange, the National

Association of Securities Dealers, Inc. (the "NASD") and the Nasdaq National

Market) (each, an "SRO"), or which are required under the Insurance Laws and

other similar laws, (vii) such filings and approvals as are required to be made

or obtained under the securities or "Blue Sky" laws of various states in

connection with the issuance of the shares of PRA Common Stock pursuant to this

Agreement, and (viii) the approval of this Agreement by the requisite votes of

the stockholders of NCRIC and the stockholder of NEWCO, no consents or approvals

of or filings or registrations with any Governmental Authority (as defined in

Section 9.18(a) of this Agreement), or with any other Person (as defined in

Section 9.18(a) of this Agreement) are necessary in connection with the

execution and delivery by NCRIC of this Agreement or the consummation by NCRIC

of the transactions contemplated by this Agreement.

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(d) No stockholder of NCRIC or any NCRIC Subsidiary shall have any

pre-emptive rights under applicable law with respect to, or as a result of, the

transactions contemplated by this Agreement (including the Merger).

3.6 INSURANCE REPORTS.

(a) "NCRIC SAP STATEMENTS" means (i) the annual statutory statements of

each of the NCRIC Insurance Subsidiaries filed with any Insurance Regulator for

each of the years ended December 31, 2003, 2002 and 2001 and each calendar year

ending after December 31, 2003, (ii) the quarterly statutory statements of each

of the NCRIC Insurance Subsidiaries filed with any Insurance Regulator for each

quarterly period in 2004 and for each quarterly period ending after the date of

this Agreement, and (iii) all exhibits, interrogatories, notes, schedules and

any actuarial opinions, affirmations or certifications or other supporting

documents filed in connection with such annual statutory statements and

quarterly statutory statements.

(b) All such NCRIC SAP Statements were and will be prepared (i) in

conformity with statutory accounting practices prescribed or permitted by the

Insurance Regulators consistently applied ("SAP") and (ii) in accordance with

the books and records of NCRIC and the NCRIC Insurance Subsidiaries. The NCRIC

SAP Statements, when read in conjunction with the notes thereto and any

statutory audit reports relating thereto, present, and will present, fairly in

all material respects the statutory financial condition and results of

operations of the NCRIC Insurance Subsidiaries for the dates and periods

indicated and are consistent with the books and records of the NCRIC Insurance

Subsidiaries (which books and records are correct and complete in all material

respects). The annual statutory balance sheets and income statements included in

the NCRIC SAP Statements have been, and will be, where required by Insurance

Laws, audited by an independent accounting firm of recognized national

reputation. In accordance with Section 3.6(b) of the NCRIC Disclosure Schedule,

NCRIC has made available to PRA true and complete copies of all of the NCRIC SAP

Statements and all audit opinions related thereto.

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(c) Since December 31, 2000 NCRIC and each NCRIC Subsidiary (i) have filed

or submitted with all applicable Insurance Regulators, all registration

statements, notices and reports, together with all exhibits and amendments

thereto under the Insurance Laws applicable to insurance holding companies (the

"NCRIC HOLDING COMPANY ACT Reports"), (ii) have filed all NCRIC SAP Statements,

(iii) have filed all other reports and statements, together with all amendments

and supplements thereto, required to be filed with any Insurance Regulator under

the Insurance Laws, and (iv) have paid all fees and assessments due and payable

by them under the Insurance Laws. Section 3.6(c) to the NCRIC Disclosure

Schedule sets forth a list of, and NCRIC has made available to PRA, accurate and

complete copies of, all NCRIC SAP Statements, NCRIC Holding Company Act Reports

and all other reports and statements filed by NCRIC or any of the NCRIC

Subsidiaries with any Insurance Regulator for periods ending and events

occurring, after December 31, 2000 and prior to the Closing Date (as defined in

Section 9.1 of this Agreement), and the latest requests for approval of a rate

increase in each state or other jurisdiction that a NCRIC subsidiary writes

insurance. All such NCRIC SAP Statements, NCRIC Holding Company Act Reports and

other reports and statements complied with the Insurance Laws when filed and, as

of their respective dates, contained all information required under the

Insurance Laws and did not contain any false statements or material

misstatements of fact or omit to state any material facts necessary to make the

statements set forth therein not materially misleading in light of the

circumstances in which such statements were made. No deficiencies have been

asserted by any Governmental Authority with respect to such NCRIC SAP

Statements, NCRIC Holding Company Act Reports and other reports and statements.

(d) Except for normal examinations conducted by a Governmental Authority in

the regular course of the business of NCRIC and its Subsidiaries, and except as

set forth in Section 3.6(d) of the NCRIC Disclosure Schedule, no Governmental

Authority has initiated any proceeding or investigation into the business or

operations of NCRIC, any NCRIC Subsidiary, or any director or officer of NCRIC

or any NCRIC Subsidiary, since December 31, 2000. There is no unresolved

violation, criticism, or exception by any Governmental Authority with respect to

any examinations of NCRIC or any of its Subsidiaries.

(e) Section 3.6(e) of the NCRIC Disclosure Schedule lists all financial

examinations that any Insurance Regulator has conducted with respect to NCRIC or

any of the NCRIC Insurance Subsidiaries since December 31, 2000. NCRIC has made

available to PRA correct and complete reports issued by the applicable Insurance

Regulator with respect to such financial examinations. There are no regulatory

examinations of NCRIC or any of the NCRIC Insurance Subsidiaries currently in

process.

(f) Neither NCRIC nor any NCRIC Subsidiary has received from any Person any

Notice on Form A or such other form as may be prescribed under applicable law

indicating that such Person intends to make or has made a tender offer for or a

request or invitation for tenders of, or intends to enter into or has entered

into any agreement to exchange securities for, or intends to acquire or has

acquired (in the open market or otherwise), any voting security of NCRIC, if

after the consummation thereof such Person would directly or indirectly be in

control of NCRIC.

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3.7 SEC REPORTS; FINANCIAL STATEMENTS.

(a) NCRIC has on a timely basis filed all forms, reports and documents

required to be filed by it with the SEC since January 1, 2001. Section 3.7(a) of

the NCRIC Disclosure Schedule lists, and NCRIC has delivered to PRA (except to

the extent available in full without redaction on the SEC's web site through the

Electronic Data Gathering, Analysis and Retrieval System ("EDGAR") two days

prior to the date of this Agreement) copies in the form filed with the SEC of

(i) NCRIC's Regulation Statement on Form S-1 effective May 14, 2003 (SEC File

No. 333-104023); (ii) NCRIC's Annual Reports on Form 10-K for each fiscal year

of NCRIC commencing after December 31, 2000, (iii) its Quarterly Reports on Form

10-Q for each of the first three fiscal quarters in each of the fiscal years of

NCRIC commencing after January 1, 2001, (iv) all proxy statements relating to

NCRIC's meetings of stockholders (whether annual or special) held, and all

information statements relating to stockholder consents, since January 1, 2001,

(v) all certifications and statements required by (x) the SEC's Order dated June

27, 2002 pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), and

(y) Rule 13a-14 or 15d-14 under the Exchange Act or (z) 18 U.S.C. ss.1350

(Section 906 of the Sarbanes-Oxley Act of 2002 ("SOX")) with respect to any

report referred to in clause (i) or (ii) of this sentence, (vi) all other forms,

reports, registration statements and other documents (other than preliminary

materials if the corresponding definitive materials have been provided to PRA

pursuant to this Section 3.7(a)) filed by NCRIC with the SEC since January 1,

2001 (the forms, reports, registration statements and other documents referred

to in causes (i), (ii), (iii), (iv) and (v) of this sentence are, collectively,

the "NCRIC SEC REPORTS" and, to the extent available in full without redaction

on the SEC's web site through EDGAR two days prior to the date of this

Agreement, are, collectively, the "NCRIC FILED SEC REPORTS"), and (vi) all

comment letters received by NCRIC from the Staff of the SEC since January 1,

2001 and all responses to such comment letters by or on behalf of NCRIC.

(b) Except as set forth in Section 3.7(b) of the NCRIC Disclosure Schedule,

the NCRIC SEC Reports (i) were or will be prepared in accordance with the

requirements of the Securities Act and the Exchange Act, as the case may be, in

all material respects, and (ii) did not at the time they were filed with the

SEC, or will not at the time they are filed with the SEC, contain any untrue

statement of a material fact or omit to state a material fact required to be

stated therein or necessary in order to make the statements made therein, in the

light of the circumstances under which they were made, not misleading. No

Subsidiary of NCRIC is or has been required to file any form, report,

registration statement or other document with the SEC. As used in this Section

3.7, the term "file" shall be broadly construed to include any manner in which a

document or information is furnished, supplied or otherwise made available to

the SEC.

(c) NCRIC has established and maintains disclosure controls and procedures

(as such term is defined in Section 13(b)(2)(B) and Rules 13a-15(e) and

15d-15(e) under the Exchange Act). Such disclosure controls and procedures: (i)

are designed to ensure that material information relating to NCRIC and its

Subsidiaries is made known to NCRIC's chief executive officer and its chief

financial officer by others within those entities, particularly during the

periods in which NCRIC's reports and filings under the Exchange Act are being

prepared, (ii) have been evaluated for effectiveness as of the end of the most

recent annual period reported to the SEC, and (iii) are effective to perform the

functions for which they were established. Neither the auditors of NCRIC nor the

Audit Committee of the Board of Directors of NCRIC have been advised of: (x) any

significant deficiencies or material weaknesses in the design or operation of

the internal controls over financial reporting (as such term is defined in

Section 13(b)(2)(B) and Rules 13d-15(d) and 15d-15(d) of the Exchange Act) of

NCRIC and its Subsidiaries which could adversely affect NCRIC's ability to

record, process, summarize and report financial data, and (y) any fraud, whether

or not material, that involves management or other employees who have a role in

the internal controls over financial reporting of NCRIC and its Subsidiaries.

Since the date of the most recent evaluation of such internal controls over

financial reporting and procedures, there have been no significant changes in

internal controls over financial reporting or in other factors that could

significantly affect such internal controls over financial reporting, including

any corrective actions with regard to significant deficiencies and material

weaknesses.

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(d) The financial statements of NCRIC and its Subsidiaries included in the

NCRIC SEC Reports (including the related notes) (i) did or will comply as to

form, as of their respective dates of filing with the SEC, in all material

respects with applicable accounting requirements and the published rules and

regulations of the SEC with respect thereto (including, without limitation,

Regulation S-X), (ii) were or will be prepared in accordance with GAAP (except,

in the case of unaudited statements, to the extent permitted by Regulation S-X

for Quarterly Reports on Form 10-Q) applied on a consistent basis during the

periods and at the dates involved (except as may be indicated in the notes

thereto), and (iii) did or will fairly present the consolidated financial

condition of NCRIC and its Subsidiaries at the dates thereof and the

consolidated results of operations and cash flows for the periods then ended

(subject, in the case of unaudited statements, to notes and normal year-end

audit adjustments that were not, or with respect to any such financial

statements contained in any NCRIC SEC Reports to be filed subsequent to the date

hereof are not reasonably expected to be, material in amount or effect). Except

(x) as reflected in NCRIC's unaudited balance sheet at September 30, 2004, or

liabilities described in any notes thereto (or liabilities for which neither

accrual nor footnote disclosure is required pursuant to GAAP), (y) as reflected

in NCRIC's unaudited draft of the consolidated balance sheet at December 31,

2004 included in Section 3.7(d) of the Disclosure Schedule (the "2004 NCRIC

BALANCE SHEET"), or (z) for liabilities incurred in the ordinary course of

business since December 31, 2004 consistent with past practice or in connection

with this Agreement or the transactions contemplated hereby, neither NCRIC nor

any NCRIC Subsidiary has any material liabilities or obligations of any nature.

(e) Since July 31, 2002, each NCRIC Filed SEC Report which included

financial statements was accompanied by the certifications of NCRIC's chief

executive officer and chief financial officer as required under Sections 302 and

906 of SOX.

(f) Section 3.7(f) of the NCRIC Disclosure Statement lists, and NCRIC has

delivered to PRA copies of the documentation creating or governing, all

securitization transactions and "off-balance sheet arrangements" (as defined in

Item 303(c) of Regulation S-K of the SEC) effected by NCRIC or its Subsidiaries

since December 31, 1999.

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(g) Deloitte & Touche LLP, which has expressed its opinion with respect to

the financial statements of NCRIC and its subsidiaries included in NCRIC SEC

Reports (including the related notes), is and has been throughout the periods

covered by such financial statements (with respect to (i) and (ii) below, for

the periods required by SOX) (i) a registered public accounting firm (as defined

in Section 2(a)(12) of SOX), (ii) "independent" with respect to NCRIC within the

meaning of Regulation S-X, and (iii) in compliance with subsections (g) through

(l) of Section 10A of the Exchange Act and the Public Company Accounting

Oversight Board. Section 3.7(g) of the NCRIC Disclosure Schedule lists all

non-audit services performed by Deloitte & Touche LLP for NCRIC and each NCRIC

Subsidiary for each year commencing after December 31, 2002.

(h) NCRIC and each NCRIC Subsidiary maintains accurate books and records

reflecting its assets and liabilities and maintains proper and adequate internal

accounting controls over financial reporting which provide assurance that (i)

transactions are executed with management's authorization; (ii) transactions are

recorded as necessary to permit preparation of the consolidated financial

statements of NCRIC and to maintain accountability for the consolidated assets

of NCRIC; (iii) access to assets is permitted only in accordance with

management's authorization; (iv) the reporting of assets is compared with

existing assets at regular intervals; and (v) accounts, notes and other

receivables and inventory are recorded accurately, and proper and adequate

procedures are implemented to effect the collection thereof on a current and

timely basis.

3.8 ACCOUNTS RECEIVABLE. All accounts receivable of NCRIC and each NCRIC

Subsidiary are reflected properly on their respective books and records, are

valid receivables subject to no set offs or counterclaims, are presently current

and collectible, and will be collected in accordance with their terms at the

recorded amounts, subject only to a reasonable reserve for bad debts.

3.9 BROKER'S FEES. Except as set forth in Section 3.9 of the NCRIC

Disclosure Schedule, none of NCRIC, the NCRIC Subsidiaries and their respective

officers and directors, has employed any broker or finder or incurred any

liability for any broker's fees or commissions, or investment banker fees or

commissions, or finder's fees in connection with the transactions contemplated

by this Agreement.

3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS.

(a) Except for (i) those liabilities and obligations that are fully

reflected or reserved against on the 2004 NCRIC Balance Sheet, (ii) those

liabilities and obligations incurred in the ordinary course of business

consistent with past practice since December 31, 2004, and (iii) coverage and

other claims (other than bad faith claims) made with respect to insurance

policies issued by any NCRIC Insurance Subsidiary for which adequate claims

reserves have been established, or otherwise disclosed in Section 3.10(a) of the

NCRIC Disclosure Schedule, neither NCRIC nor any of its Subsidiaries has

incurred any liability or obligation of any nature whatsoever (whether absolute,

accrued, contingent or otherwise and whether due or to become due), that, either

individually or in the aggregate, would have a Material Adverse Effect on NCRIC,

and, there is no existing condition, situation or set of circumstances that

would be reasonably expected to result in such a liability or obligation. Except

as disclosed in the NCRIC SEC Reports filed prior to the date of this Agreement,

since December 31, 2004, NCRIC and its Subsidiaries have carried on their

respective businesses in all material respects in the ordinary and usual course

theretofore conducted.

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(b) Since December 31, 2004, and except as set forth in Section 3.10(b) of

the NCRIC Disclosure Schedule, neither NCRIC nor any of its Subsidiaries has

(except as required by applicable law): (i) increased the wages, salaries,

compensation, pension, or other fringe benefits or perquisites payable to any

executive officer, employee, or director from the amount thereof in effect as of

December 31, 2004, (ii) granted any stock options or severance or termination

pay, entered into any contract to make or grant any stock options or severance

or termination pay, or paid any bonuses, or (iii) suffered any strike, work

stoppage, slowdown, or other labor disturbance.

(c) Since September 30, 2004, and except as set forth in Section 3.10(c) of

the NCRIC Disclosure Schedule, there has not been: (i) any change in the

financial condition, assets, liabilities, prospects (financial and otherwise) or

business of NCRIC or any NCRIC Subsidiary, which, either individually or in the

aggregate, has had or would have a Material Adverse Effect on NCRIC; (ii) any

material change in any method of accounting or accounting principals or practice

by NCRIC or any NCRIC Subsidiary, except as required by GAAP or SAP and

disclosed in the notes to the unaudited financial statements of NCRIC and the

NCRIC Subsidiaries; (iii) any material change in the actuarial, investment,

reserving, underwriting or claims administration policies, practices,

procedures, methods, assumptions or principles of NCRIC or any NCRIC Insurance

Subsidiary; (iv) any damage, destruction or loss, whether or not covered by

insurance, materially and adversely affecting the properties or business of

NCRIC or any NCRIC Subsidiary; (v) any declaration or payment of any dividends

or distribution of any kind in respect of any of the capital stock of NCRIC or

any NCRIC Subsidiary; (vi) any direct or indirect redemption, purchase or other

acquisition by NCRIC or any NCRIC Subsidiary of any of the capital stock of

NCRIC or any NCRIC Subsidiary; (vii) any discharge or cancellation, whether in

part or in whole, of any indebtedness owed by NCRIC or any NCRIC Subsidiary to

any Person, except reimbursement to employees of ordinary business expenses or

other debts arising in the ordinary course of business; (viii) any sale or

transfer or cancellation of any of the assets, properties, or claims of NCRIC or

any NCRIC Subsidiary, except in the ordinary course of business; (ix) any sale,

assignment or transfer of any trademarks, trade names, or other intangible

assets of NCRIC or any NCRIC Subsidiary; (x) except as set forth in Section

3.10(c) of the NCRIC Disclosure Schedule, any material amendment to or

termination of any material contract, agreement, instrument or license to which

NCRIC or any NCRIC Subsidiary is a party; or (xi) any other event or condition

of any character materially and adversely affecting the business or properties

of NCRIC or any NCRIC Subsidiary.

3.11 LEGAL PROCEEDINGS AND JUDGMENTS.

(a) Except as set forth in Section 3.11(a) of the NCRIC Disclosure

Schedule, neither NCRIC nor any NCRIC Subsidiary is a party to any, and there

are no pending or, to the knowledge of NCRIC, threatened, legal, administrative,

arbitral or other inquiries, proceedings, claims (whether asserted or

unasserted), actions or governmental or regulatory or SRO investigations of any

nature (including noncontractual claims, bad faith claims and claims against any

directors or officers of NCRIC or any NCRIC Subsidiary, but excluding coverage

and other claims made with respect to insurance policies issued by any NCRIC

Insurance Subsidiary for which adequate claims reserves have been established)

against NCRIC, any NCRIC Subsidiary, any of their respective businesses or

assets, any assets of any other Person which are used in any of the business or

operations of NCRIC or any NCRIC Subsidiary, any directors or officers of NCRIC

or any NCRIC Subsidiary, or the transactions contemplated by this Agreement, or

challenging the validity or propriety of the transactions contemplated by this

Agreement, and to the knowledge of NCRIC Subsidiaries there is no basis for any

such proceedings, claims, actions or investigations.

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(b) Except for the 2004 Judgment and as set forth in Section 3.11(b) of the

NCRIC Disclosure Schedule, there is no injunction, order, judgment, decree, or

regulatory restriction (including noncontractual claims, bad faith claims and

claims against any directors or officers of NCRIC or any NCRIC Subsidiary, but

excluding coverage and other claims made with respect to insurance policies

issued by any NCRIC Insurance Subsidiary for which adequate claims reserves have

been established) imposed upon NCRIC, any NCRIC Subsidiary or the assets of

NCRIC or any NCRIC Subsidiary.

(c) Except as set forth in Section 3.11(c) of the NCRIC Disclosure

Schedule, no breach of contract, breach of fiduciary duties under ERISA, bad

faith, breach of warranty, tort, negligence, infringement, fraud,

discrimination, wrongful discharge or other claim of any nature has been

asserted or, to the knowledge of NCRIC, threatened against NCRIC or any NCRIC

Subsidiary, nor is there any basis for any such claim.

(d) As to each matter (if any) described on Section 3.11(c) of the NCRIC

Disclosure Schedule, accurate and complete copies of all relevant pleadings,

judgments, orders and correspondence have been made available to PRA.

(e) Except for each matter (if any) described on Section 3.11(d) of the

NCRIC Disclosure Schedule, no legal, administrative, arbitral or other

inquiries, proceedings, claims, actions or governmental or regulatory or SRO

investigations alleging violations of Federal securities laws (including the

Securities Act and the Exchange Act) have been filed against NCRIC, any NCRIC

Subsidiary or any director or officer of NCRIC or any NCRIC Subsidiary and not

dismissed with prejudice.

3.12 INSURANCE.

(a) Except as set forth in Section 3.12(a) of the NCRIC Disclosure

Schedule, NCRIC and the NCRIC Subsidiaries maintain policies of general

liability, fire and casualty, automobile, directors and officers, errors and

omissions, fiduciary, and other forms of insurance (the "NCRIC INSURANCE

POLICIES") in such amounts, with such deductibles and against such risks and

losses as are reasonable for the business and assets of NCRIC and the NCRIC

Subsidiaries. All such policies are in full force and effect, all premiums due

and payable thereon have been paid (other than retroactive or retrospective

premium adjustments that are not yet, but may be, required to be paid with

respect to any period ending prior to the Closing Date under comprehensive

general liability and workmen's compensation insurance policies), and no notice

of cancellation or termination has been received with respect to any such policy

which has not been replaced on substantially similar terms prior to the date of

such cancellation. To the knowledge of NCRIC, the activities and operations of

NCRIC and the NCRIC Subsidiaries have been conducted in a manner so as to

conform in all material respects to all applicable provisions of such insurance

policies.

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(b) No issuer of the NCRIC Insurance Policies has issued a

reservation-of-rights letter, or entered into a nonwaiver agreement, or

otherwise denied or limited coverage (in whole or in part), under any of the

NCRIC Insurance Policies, and no declaratory judgment has been sought by any

Person or entered by any court of competent jurisdiction that denies or limits

coverage (in whole or in part) under any of the NCRIC Insurance Policies.

3.13 TAXES AND TAX RETURNS.

(a) As used in this Agreement: "TAX" or "TAXES" means all federal, state,

county, local, and foreign income, excise, gross receipts, gross income,

profits, franchise, license, ad valorem, profits, gains, capital, sales,

transfer, use, payroll, employment, severance, withholding, duties, intangibles,

franchise, backup withholding, stamp, occupation, premium, social security (or

similar), unemployment, disability, real property, personal property, sales,

use, registration, alternative or add on minimum, estimated, and other taxes,

charges, levies or like assessments together with all penalties and additions to

tax and interest thereon). "TAX RETURN" or "TAX RETURNS" means any and all

returns, declarations, claims for refunds, reports, information returns and

information statements (including, without limitation, Form 1099, Form W-2 and

W-3, Form 5500, and Form 990) with respect to Taxes filed, or required to be

filed, by any Person or any Subsidiary of such Person with the IRS or any other

Governmental Authority or tax authority or agency, whether domestic or foreign

(including consolidated, combined and unitary tax returns).

(b) NCRIC and the NCRIC Subsidiaries have duly filed all Tax Returns

required to be filed by them on or prior to the date of this Agreement (all such

Tax Returns being accurate and complete in all material respects) and has duly

paid or made sufficient provisions for the payment of all Taxes shown thereon as

owing on or prior to the date of this Agreement (including, if and to the extent

applicable, those due in respect of their properties, income, business, capital

stock, premiums, franchises, licenses, sales and payrolls) other than Taxes

which are not yet delinquent or are being contested in good faith and have not

been finally determined for which adequate reserves have been made on the

financial statements described in Section 3.6(a) of this Agreement. Neither

NCRIC nor any NCRIC Subsidiary has waived any statute of limitations in respect

of Taxes or agreed to any extension of time with respect to a Tax Return or tax

assessment or deficiency other than extensions that are automatically granted by

the taxing authorities upon filing on application therefore. The unpaid Taxes of

NCRIC and the NCRIC Subsidiaries do not exceed the reserve for tax liability set

forth on the 2004 NCRIC Balance Sheet as adjusted for the passage of time

through the Closing Date in accordance with past custom and practice of NCRIC in

filing its returns. No claim has been made since December 31, 1999 by an

authority in a jurisdiction where NCRIC or any NCRIC Subsidiary does not file

Tax Returns that it is or may be subject to taxation by that jurisdiction.

(c) There is no claim, audit, action, suit, proceeding or investigation now

pending or, to the knowledge of NCRIC, threatened against or with respect to

NCRIC or any NCRIC Subsidiary in respect of any material Tax. NCRIC and each

NCRIC Subsidiary in connection with amounts paid or owed to any employee,

independent contractor, creditor, stockholder or other third party have complied

with applicable tax withholding in all material respects. NCRIC and each NCRIC

Subsidiary have reported such withheld amounts to the appropriate taxing

authority and to each such employee, independent contractor, creditor,

stockholder or other third party as required by applicable law.

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(d) There are no Tax Liens upon any property or assets of NCRIC or its

Subsidiaries except Liens for current Taxes not yet due. Neither NCRIC nor any

NCRIC Subsidiary has been required to include in income any adjustment pursuant

to Section 481 of the Code by reason of a voluntary change in accounting method

initiated by NCRIC or any NCRIC Subsidiary, and the IRS has not initiated or

proposed any such adjustment or change in accounting method. Except as set forth

in the financial statements described in Section 3.7(a) of this Agreement,

neither NCRIC nor any NCRIC Subsidiary has entered into a transaction which is

being accounted for as an installment obligation under Section 453 of the Code.

Neither NCRIC nor any NCRIC Subsidiary is a party to or bound by any tax

indemnity, tax sharing or tax allocation agreement (other than such agreements

as exist by and among themselves). Neither NCRIC nor any NCRIC Subsidiary has

ever been a member of an affiliated group of corporations within the meaning of

Section 1504 of the Code other than as a common parent corporation. Neither

NCRIC nor any NCRIC Subsidiary is liable for the Taxes of any person under

Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,

local or foreign Tax law) or by contract, as a successor or otherwise. During

the five (5) year period ending on the date hereof, neither NCRIC nor any NCRIC

Subsidiary was a distributing corporation or a controlled corporation in a

transaction intended to be governed by Section 355 of the Code. Neither NCRIC

nor any NCRIC Subsidiary is a party to any joint venture, partnership or other

arrangement or contract that could be treated as a partnership for federal

income tax purposes. NCRIC's basis and excess loss account, if any, in each

NCRIC Subsidiary is set forth in Section 3.13(d) of the NCRIC Disclosure

Schedule.

(e) Except as set forth in Section 3.13(e) of the NCRIC Disclosure

Schedule, any amount that is reasonably likely to be received (whether in cash

or property or the vesting of property) as a result of any of the transactions

contemplated by this Agreement by any employee, officer or director of NCRIC or

any of its affiliates who is a "Disqualified Individual" (as such term is

defined in proposed Treasury Regulation Section 1.280G-1) under any employment,

severance or termination agreement, other compensation arrangement or NCRIC

Benefit Plan (as defined in Section 3.14 of this Agreement) currently in effect

will not be characterized as an "excess parachute payment" (as such term is

defined in Section 280G(b)(1) of the Code).

(f) There has been no disallowance of a deduction under Section 162(m) of

the Code for employee remuneration of any amount paid or payable by NCRIC or any

NCRIC Subsidiary under any contract, plan, program, arrangement or

understanding.

(g) To the knowledge of NCRIC, there is no dispute or claim concerning any

tax liability of NCRIC or any NCRIC Subsidiary except as disclosed in Section

3.13(g) of the NCRIC Disclosure Schedule. Section 3.13(g) of the NCRIC

Disclosure Schedule identifies the last Tax Returns that have been audited by

the taxing authority with whom they were filed, and indicates those Tax Returns

that currently are the subject of an audit procedure or that NCRIC or any NCRIC

Subsidiary has received notice will be subject to an audit procedure. NCRIC has

made available to PRA correct and complete copies of all federal income tax

returns (including amendments thereto) of, all examination reports of, and

statements of deficiencies assessed against or agreed to by, NCRIC or any NCRIC

Subsidiary since December 31, 1999.

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3.14 EMPLOYEE PLANS; LABOR MATTERS.

(a) Section 3.14(a) of the NCRIC Disclosure Schedule sets forth a true and

complete list of all of the Employee Plans (as defined in Section 9.18) for

employees of NCRIC and any NCRIC Subsidiary ("NCRIC EMPLOYEE PLANS"). Except

with respect to the NCRIC Employee Plans, neither NCRIC nor any NCRIC Subsidiary

sponsors, maintains or contributes to, or has any ongoing obligation or

liability whatsoever with respect to: (i) any employee benefit plan as defined

in Section 3(3) of the Employee Retirement Income Security Act of 1974, as

amended ("ERISA"), or (ii) any other program, plan, trust agreement or

arrangement for any bonus, severance, hospitalization, vacation, sick pay,

deferred compensation, pension, profit sharing, post-employment, retirement,

payroll savings, stock option, stock purchase, group insurance, self insurance,

death benefit, fringe benefit, welfare or any other employee benefit plan or

fringe benefit arrangement of any nature whatsoever including those for the

benefit of former employees. Neither NCRIC nor any NCRIC Subsidiary has any

agreement, arrangement, commitment, or understanding, whether legally binding or

not, to create any additional NCRIC Employee Plan or to continue, modify,

change, or terminate, in any material respect, any NCRIC Employee Plan. PRA may

modify, amend and/or terminate any NCRIC Employee Plan after the Effective Time,

subject to applicable law and the terms of such NCRIC Employee Plan.

(b) NCRIC has heretofore delivered or made available to PRA true and

complete copies of each NCRIC Employee Plan and certain related documents,

including: (i) the plan document and the related trust agreement or annuity

contract for such NCRIC Employee Plan; (ii) the summary plan description and

material employee communication document for such NCRIC Employee Plan; (iii) the

actuarial report for such NCRIC Employee Plan (if applicable) for each of the

last two years; (iv) all determination letters from the IRS (if applicable) for

such NCRIC Employee Plan; (v) all insurance policies relating thereto and any

written materials used by NCRIC to describe employee benefits to employees of

NCRIC and the NCRIC Subsidiaries; (vi) the most recent annual return on Form

5500 (including all schedules thereto along with the accompanying auditor's

opinion, if applicable) and tax return (Form 990) for such NCRIC Employee Plan;

(vii) the most current actuarial, valuation, and trustee's reports (as

applicable) for such NCRIC Employee Plan; and (viii) all material communications

with any governmental entity or agency (including the Department of Labor, the

Internal Revenue Service, the Pension Benefit Guaranty Corporation, and the

Securities and Exchange Commission) with respect to such NCRIC Employee Plan.

Each such actuarial or valuation report correctly shows the value of the assets

of such NCRIC Employee Plan as of the date thereof, the total accrued and vested

liabilities, all contributions by NCRIC and the NCRIC Subsidiaries, and the

assumptions on which the calculations are based.

(c) Except as set forth in Section 3.14(c) of the NCRIC Disclosure

Schedule, each of the NCRIC Employee Plans has been operated and administered in

all material respects in compliance with applicable laws, including, but not

limited to, ERISA and the Code. To the knowledge of NCRIC, there has not been

any material violation of the reporting and disclosure provisions of the Code

and ERISA. There has not been any termination or partial termination (including

any termination or partial termination attributable to the transactions

contemplated by this Agreement) of such plans. Neither NCRIC nor any NCRIC

Subsidiary nor any of their respective ERISA affiliates, nor any predecessor

thereof, contributes to, or has within the past six years contributed to, any

multiemployer plans, as defined in Section 3(37) of ERISA, or any multiple

employer welfare arrangements, as defined in Section 3(40) of ERISA. Neither

NCRIC nor any NCRIC Subsidiary nor any of their respective ERISA affiliates, nor

any predecessor thereof, sponsors, participates in, or contributes to, or has at

any time in the past sponsored, participated in, or contributed to (i) any plan

which is subject to the funding standards or requirements described in Section

412 of the Code, or (ii) any plan which is subject to any of the requirements,

obligations, and liabilities imposed by Title IV of ERISA.

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(d) Each NCRIC Employee Plan which is intended to be qualified under

Section 401(a) of the Code is so qualified and has received a favorable

determination letter or has pending or has time remaining in which to file, an

application for such determination from the IRS, and NCRIC is not aware of any

reason why any such determination letter should be revoked or not be reissued,

and any related trust is exempt from taxation under Section 501(a) of the Code.

NCRIC has made available to PRA copies of the most recent Internal Revenue

Service determination letters with respect to each such NCRIC Employee Plan (if

applicable). Except as set forth in Section 3.14(d) of the NCRIC Disclosure

Schedule, each NCRIC Employee Plan has been maintained in material compliance

with its terms and with the requirements prescribed by any and all applicable

laws and regulations, including but not limited to ERISA and the Code. No

prohibited transaction within the meaning of Section 406 of ERISA or Section

4975 of the Code, or breach of fiduciary duty under Title I of ERISA has

occurred with respect to any NCRIC Employee Plan or with respect to NCRIC or any

NCRIC Subsidiary. No events have occurred with respect to any NCRIC Employee

Plan that could result in payment or assessment by or against Parent or any of

its Subsidiaries of any material excise taxes under Sections 4972, 4975, 4976,

4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.

(e) There has been no amendment to, written interpretation or announcement

(whether or not written) by NCRIC or any of its affiliates relating to, or

change in employee participation or coverage under, any NCRIC Employee Plan

which would increase materially the expense of maintaining NCRIC Employee Plans

above the level of the expense incurred in respect thereof for the fiscal year

ended December 31, 2003. No event has occurred or circumstances exist that could

result in a material increase in the premium costs of NCRIC Employee Plans that

are insured, or a material increase in benefit costs of the NCRIC Employee Plans

that are self-insured.

(f) Except as set forth in Section 3.14(f) of the NCRIC Disclosure

Schedule, there is no action, suit, investigation, audit or proceeding pending

against or involving or, to the knowledge of NCRIC, threatened against or

involving any NCRIC Employee Plan before any court or arbitrator or any state,

federal or local governmental body, agency or official, except as would not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect on NCRIC. Other than claims for benefits submitted by

participants or beneficiaries, no claim against, or legal proceeding involving,

any NCRIC Employee Plan is pending or threatened.

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(g) Except as described in Section 3.14(g) of the NCRIC Disclosure

Schedule, neither the execution and delivery of this Agreement nor the

consummation of the transactions contemplated by this Agreement will (i) result

in any material payment (including severance, unemployment compensation, golden

parachute or otherwise) becoming due to any director or employee of NCRIC or any

of its Subsidiaries from NCRIC or any of its Subsidiaries under any NCRIC

Employee Plan or otherwise; (ii) materially increase any benefits otherwise

payable under any NCRIC Employee Plan; (iii) result in any acceleration of the

time of payment or vesting of any such benefits to any material extent (in each

case under clauses (i), (ii) or (iii) whether or not such payment or benefit

would constitute a parachute payment within the meaning of Section 280G of the

Code); or (iv) constitute a prohibited transaction within the meaning of Section

406 of ERISA or Section 4975 of the Code, or breach of fiduciary duty under

Title I of ERISA.

(h) Neither NCRIC nor any NCRIC Subsidiary has any direct or indirect

material liability or obligation under any NCRIC Employee Plan other than as

described in the terms of such NCRIC Employee Plans. There are no circumstances

arising out of the sponsorship of any NCRIC Employee Plan which will result in

any direct or indirect material liability to NCRIC or any NCRIC Subsidiary,

other than liability for contributions, benefit payments, administrative costs

and liabilities incurred in accordance with the terms of the NCRIC Employee

Plans consistent with past practice.

(i) NCRIC and each NCRIC Subsidiary have made all payments and

contributions due from them to each NCRIC Employee Plan. There are no funded

benefit obligations under any NCRIC Employee Plan for which contributions have

not been made or properly accrued, and there are no unfunded benefit obligations

that have not been accounted for by reserves, or otherwise properly footnoted in

accordance with generally accepted accounting principles on the financial

statements of NCRIC and each NCRIC Subsidiary.

(j) Each NCRIC Employee Plan which is an "employee pension benefit plan"

within the meaning of Section 3(2) of ERISA that is not qualified under Section

401(a) or 403(a) of the Code is exempt from Parts 2, 3, and 4 of Title I of

ERISA as an unfunded plan that is maintained primarily for the purpose of

providing deferred compensation for a select group of management or highly

compensated employees, pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of

ERISA. Except as set forth in Section 3.14(j) of the NCRIC Disclosure Schedule,

no assets of NCRIC or any NCRIC Subsidiary are allocated to or held in a "rabbi

trust" or similar funding vehicle.

(k) Each NCRIC Employee Plan that is a "group health plan" (as defined in

Section 607(1) of ERISA or Section 5001(b)(1) of the Code) has been operated at

all times in compliance with the provisions of Section 4980B of the Code and

Part 6 of Subtitle B of Title I of ERISA ("COBRA"), with the provisions of the

Code and ERISA enacted by the Health Insurance Portability and Accountability

Act of 1996 ("HIPAA"), and with the provisions of any applicable similar state

law.

(l) Except as set forth in Section 3.14(l) of the NCRIC Disclosure

Schedule, no NCRIC Employee Plan provides benefits to current or former

employees beyond their retirement or other termination of service (other than

coverage mandated by COBRA, the cost of which is fully paid by the current or

former employee or his or her dependents).

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3.15 EMPLOYEES.

(a) NCRIC has made available to PRA a true and correct list of the names of

the employees of NCRIC and the NCRIC Subsidiaries, their birth dates, hire

dates, compensation rates, name of employer and capacity in which employed, and

accrued vacation and sick leave, if any, all as of December 31, 2004. Except as

limited by any employment agreements and severance agreements listed on Section

3.15(a) of the NCRIC Disclosure Schedule, and except for any limitations of

general application which may be imposed under applicable employment laws, NCRIC

and the NCRIC Subsidiaries have the right to terminate the employment of any of

their respective employees at will and without payment to such employees.

(b) NCRIC and the NCRIC Subsidiaries are in compliance, in all material

respects, with all applicable ordinances or other laws, orders, and regulations

regarding labor and employment and the compensation therefore, labor and

employment matters, discrimination in employment, terms and conditions of

employment, wages, hours and occupational safety and health, and employment

practices, whether state or federal (including, without limitation, wage and

hour laws; workplace safety laws; workers' compensation laws; equal employment

opportunity laws; equal pay laws; civil rights laws; the Occupational Safety and

Health Act of 1970, as amended; the Equal Employment Opportunity Act, as

amended; the Americans With Disabilities Act, 42 U.S.C. ss. 12101 et seq., as

amended; the Fair Labor Standards Act, 29 U.S.C. ss. 201 et seq., as amended;

the Equal Pay Act, 29 U.S.C. ss. 206d, as amended, the Portal-to-Portal Pay Act

of 1947, 29 U.S.C. ss. 255 et seq., as amended; Title VII of the Civil Rights

Act of 1964, 42 U.S.C. ss. 2000e, as amended and 42 U.S.C. ss. 1981, as amended;

Rehabilitation Act of 1973, as amended; the Vietnam-Era Veterans' Readjustment

Assistance Act of 1974, as amended; the Immigration Reform and Control Act, 8

U.S.C. ss. 1324A et seq., as amended; the Employee Polygraph Protection Act of

1988, as amended; the Veterans Re-employment Act - Handicap Bias, 38 U.S.C. ss.

2027 et seq., as amended; the Civil Rights Act of 1991, as amended; the Family

and Medical Leave Act of 1993, as amended; the Religious Freedom Restoration Act

of 1993, as amended; and the Age Discrimination and Employment Act of 1967, as

amended). No action or investigation has been instituted or, to the knowledge of

NCRIC, is threatened to be conducted by any state or federal agency regarding

any potential violation by NCRIC or any NCRIC Subsidiary of any laws, orders,

ordinances and regulations regarding labor and employment or the compensation

therefore (including, without limitation, any of the aforementioned statutes)

during the past five (5) years.

(c) Neither NCRIC nor any NCRIC Subsidiary has ever been a party to or

bound by any union or collective bargaining contract, nor is any such contract

currently in effect or being negotiated by NCRIC or any NCRIC Subsidiary. NCRIC

does not know of any activities or proceedings of any labor union to organize

any employees of NCRIC or any NCRIC Subsidiary. Since December 31, 2004, no

executive officer of NCRIC or any NCRIC Subsidiary has indicated to the Chief

Executive Officer of NCRIC an intention to terminate his or her employment.

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(d) NCRIC and each NCRIC Subsidiary have complied with all applicable

notice provisions of and have no material obligations under the Consolidated

Omnibus Budget Reconciliation Act of 1985 with respect to any former employees

or qualifying beneficiaries thereunder. There is no action, claim, cause of

action, suit or proceeding pending or, to the knowledge of NCRIC, threatened, on

the part of any employee, independent contractor or applicant for employment,

including any such action, claim, cause of action, suit or proceeding based on

allegations of wrongful termination or discrimination on the basis of age, race,

religion, sex, sexual preference, or mental or physical handicap or disability.

All sums due from NCRIC or any NCRIC Subsidiary for employee compensation

(including, without limitation, wages, salaries, bonuses, relocation benefits,

stock options and other incentives) have been paid, accrued or otherwise

provided for, and all employer contributions for employee benefits, including

deferred compensation obligations, and all benefits under any NCRIC Employee

Plan have been duly and adequately paid or provided for in accordance with plan

documents. To the knowledge of NCRIC, no person treated as an independent

contractor by NCRIC or any NCRIC Subsidiary is an employee as defined in Section

3401(c) of the Code, nor has any employee been otherwise improperly classified,

as exempt, nonexempt or otherwise, for purposes of federal or state income tax

withholding or overtime laws, rules, or regulations.

(e) Since September 30, 2004, neither NCRIC nor any NCRIC Subsidiary has

effectuated (i) a "plant closing" (as defined in the Worker Adjustment and

Retraining Notification Act (the "WARN ACT")) affecting any site of employment

or one or more facilities or operating units within any site of employment or

facility of NCRIC or any NCRIC Subsidiary; (ii) a "mass layoff" (as defined in

the WARN Act); or (iii) such other transaction, layoff, reduction in force or

employment terminations sufficient in number to trigger application of any

similar foreign, state or local law.

3.16 COMPLIANCE WITH APPLICABLE LAW.

(a) NCRIC and the NCRIC Subsidiaries hold all licenses, franchises, permits

and authorizations necessary for the lawful conduct of their respective

businesses under and pursuant to, and have complied in all material respects

with, and are not in default in any respect under any, and have maintained and

conducted their respective businesses in all respects in compliance with, all

applicable laws, statutes, orders, rules, regulations, policies and/or

guidelines.

(b) Neither NCRIC nor any NCRIC Subsidiary is subject to any

cease-and-desist or other order issued by, or is a party to any written

agreement, consent agreement or memorandum of understanding with, or is a party

to any commitment letter or similar undertaking to, or is subject to any order

or directive by, or has been a recipient of any supervisory letter from, or

since that date, has adopted any board resolutions at the request of any

Governmental Authority that: (i) limits the ability of NCRIC or any NCRIC

Insurance Subsidiary to conduct any line of business, (ii) require any

investments of NCRIC or any NCRIC Insurance Subsidiary to be treated as

non-admitted assets, (iii) require divestiture of any investments of NCRIC or

any NCRIC Insurance Subsidiary, (iv) in any manner imposes any requirements on

NCRIC or any NCRIC Insurance Subsidiary in respect of risk based capital

requirements that add to or otherwise modify the risk based capital requirements

imposed under the Insurance Laws, (v) in any manner relate to the ability of

NCRIC or any NCRIC Insurance Subsidiary to pay or declare dividends or

distributions, or (vi) restricts in any material respect the conduct of the

business, credit policies or management of NCRIC or any NCRIC Subsidiary (each,

whether or not set forth in the NCRIC Disclosure Schedule, a "NCRIC REGULATORY

AGREEMENT"), nor has NCRIC or any of its Subsidiaries been advised by any

Governmental Authority that it is considering issuing or requesting any such

NCRIC Regulatory Agreement. Neither NCRIC nor any NCRIC Insurance Subsidiary,

directly or indirectly, engages in any activity prohibited by applicable law.

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(c) Except as set forth in Section 3.16(c) of the NCRIC Disclosure

Schedule, there is no pending or, to the knowledge of NCRIC, threatened charge

by any Governmental Authority that NCRIC or any NCRIC Insurance Subsidiary has

violated any applicable laws, rules or regulations (including any Insurance

Laws), nor any pending or, to the knowledge of NCRIC, threatened investigation

by any Governmental Authority with respect to possible violations of any

applicable laws, rules or regulations (including any Insurance Laws).

(d) There are no contracts (other than contracts relating to employment),

real estate leases, loans, guarantees or other arrangements or transactions of

any nature between NCRIC or any NCRIC Subsidiary, on the one hand, and any of

their respective officers, directors, or affiliates (as such term is defined in

Rule 405 of the SEC), on the other hand. NCRIC has not, since July 30, 2002,

extended or maintained credit, arranged for the extension of credit, or renewed

an extension of credit, in the form of a personal loan to or for any director or

executive officer (or equivalent thereof) of NCRIC or any NCRIC Subsidiary.

Section 3.16(d) of the NCRIC Disclosure Schedule identifies each loan or

extension of credit maintained by NCRIC or any NCRIC Subsidiary to which the

second sentence of Section 13(k)(1) of the Exchange Act applies.

(e) NCRIC is, or will timely be, in all material respects, in compliance

with all current and proposed listing and corporate governance requirements of

the NASD and the Nasdaq National Market.

(f) Each of NCRIC, its directors and its executive officers has consulted

with NCRIC's independent auditors and outside counsel with respect to, and (to

the extent applicable to NCRIC) is familiar in all material respects with all of

the requirements of SOX. NCRIC is in compliance with the provisions of SOX

applicable to it as of the date hereof and has implemented such programs and has

taken reasonable steps, upon the advice of NCRIC's independent auditors and

outside counsel, respectively, to ensure NCRIC's future compliance (not later

than the relevant statutory and regulatory deadlines therefore) with all

provisions of SOX which shall become applicable to NCRIC after the date of this

Agreement.

(g) None of NCRIC, the NCRIC Subsidiaries, any of their respective current

directors or officers, and, to the knowledge of NCRIC, any of their respective

former officers or directors or current or former employees, agents or

representatives have: (i) used any corporate funds for any illegal

contributions, gifts, entertainment or other unlawful expenses relating to

political activity, (ii) used any corporate funds for any direct or indirect

unlawful payments to any foreign or domestic government officials or employees,

(iii) violated any provision of the Foreign Corrupt Practices Act of 1977, (iv)

established or maintained any unlawful or unrecorded fund of corporate monies or

other assets, (v) made any false or fictitious entries on the books and records

of NCRIC or any NCRIC Subsidiary, (vi) made any bribe, rebate, payoff, influence

payment, kickback or other unlawful payment of any nature, or (vi) made any

material favor or gift which is not deductible for federal income tax purposes.

To the knowledge of NCRIC: (x) no director or officer of NCRIC or any NCRIC

Subsidiary has engaged in any "insider trading" in violation of applicable law

with respect to any security issued by NCRIC or any NCRIC Subsidiary; and (y) no

such director or officer has made any false certifications or statements under

(i) the SEC's Order dated June 27, 2002 pursuant to Section 21(a)(1) of the

Exchange Act (File No. 4-460), (ii) Rule 13a-14 or 15d-14 under the Exchange Act

or (iii) 18 U.S.C. ss.1350 (Section 906 of SOX) with respect to any NCRIC SEC

Report.

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3.17 CERTAIN CONTRACTS.

(a) The documents listed in Item 15(c) in NCRIC's Annual Report on Form

10-K for the year ended December 31, 2003 and the documents listed on Section

3.17(a) of the NCRIC Disclosure Schedule set forth all contracts, agreements,

arrangements, commitments, or understandings (whether written or oral) to which

NCRIC or a NCRIC Subsidiary is a party to or bound by: (i) with respect to the

employment of any directors, officers or employees; (ii) which, upon the

consummation of the transactions contemplated by this Agreement will (either

alone or upon the occurrence of any additional acts or events) result in any

payment (whether of severance pay or otherwise) becoming due from NCRIC, PRA,

NEWCO, or any of their respective Subsidiaries to any director, officer or

employee thereof; (iii) which is a "material contract" (as such term is defined

in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date

of this Agreement that has not been filed or incorporated by reference in the

NCRIC SEC Reports; (iv) that concerns a partnership or joint venture that is not

consolidated with NCRIC for financial reporting purposes; (v) the purpose of

which is to limit the ability of NCRIC or any NCRIC Subsidiary to compete with

respect to any product, service or territory; (vi) that is in the nature of a

collective bargaining agreement, employment agreement, consulting agreement or

severance agreement that is not cancelable by NCRIC or any NCRIC Subsidiary

without penalty or compensation on thirty (30) days notice or less; (vii) that

provides for the payment to an employee of NCRIC or any NCRIC Subsidiary any

incentive or bonus compensation based on the productivity or performance of such

employee or of NCRIC or any NCRIC Subsidiary; (viii) that is with any Insurance

Regulator and restricts (A) distributions or other payments to the stockholders

of NCRIC or any NCRIC Subsidiary, (B) the continued operation of NCRIC or any

NCRIC Subsidiary, or (C) any other matter relating to NCRIC or any NCRIC

Subsidiary and its affairs; or (ix) (including any stock option plan, stock

appreciation rights plan, restricted stock plan or stock purchase plan) any of

the benefits of which will be increased, or the vesting of the benefits of which

will be accelerated, by the occurrence of any of the transactions contemplated

by this Agreement, or the value of any of the benefits of which will be

calculated on the basis of any of the transactions contemplated by this

Agreement. NCRIC has previously made available to PRA true and correct copies of

all employment and deferred compensation agreements which are in writing and to

which NCRIC or any NCRIC Subsidiary is a party. Each contract, agreement,

arrangement, commitment, or understanding (whether written or oral) of the type

described in Sections 3.17(a), (b) and (c) of this Agreement, whether or not set

forth in the NCRIC Disclosure Schedule, is referred to in this Agreement as a

"NCRIC Contract", and neither NCRIC nor any NCRIC Subsidiary knows of, or has

received notice of, any violation of any NCRIC Contract by any of the other

parties thereto.

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(b) Section 3.17(b) of the NCRIC Disclosure Schedule sets forth a list of,

and NCRIC has made available to PRA correct and complete copies of, all written

arrangements (or group of related written arrangements) from or to third

parties, for the furnishing of services to, or receipt of services by, NCRIC or

any NCRIC Subsidiary (including without limitation, legal and accounting

services, risk management services, agency agreements, managing general agent

agreements, reinsurance intermediary agreements and other distribution

agreements, and agreements relating to the sale or servicing of medical

professional liability insurance products offered by NCRIC or any NCRIC

Subsidiary) under which payments were made during any calendar year since

December 31, 2001 in excess of $250,000 or that has a non-cancelable term in

excess of one year (as to the latter, which is still in effect).

(c) With respect to each NCRIC Contract: Such NCRIC Contract is in full

force and effect (except for contracts that have expired pursuant to the terms

thereof) and is legally valid, binding and enforceable in accordance with its

terms (except as may be limited by bankruptcy, insolvency, moratorium,

reorganization or similar laws affecting the rights of creditors generally and

the availability of equitable remedies). There are no material defaults by NCRIC

or any NCRIC Subsidiary, or, to the knowledge of NCRIC, any other party, under

such NCRIC Contract. Neither NCRIC nor any NCRIC Subsidiary has received notice

of any default, offset, counterclaim or defense under such NCRIC Contract. No

condition or event has occurred which with the passage of time or the giving of

notice or both would constitute a default or breach by NCRIC or any NCRIC

Subsidiary, or, to the knowledge of NCRIC, any other party under the terms of

such NCRIC Contract. All security deposits, reserve funds, and other sums and

charges that have become due and payable under such NCRIC Contract have been

paid in full. No party has repudiated any provision of such NCRIC Contract.

3.18 INVESTMENTS AND INTEREST RATE RISK MANAGEMENT INSTRUMENTS.

(a) Except as set forth in Section 3.18(a) of the NCRIC Disclosure

Schedule, NCRIC and each NCRIC Subsidiary have good and marketable title to all

securities held by it (except securities sold under repurchase agreements or

held in any fiduciary or agency capacity), free and clear of any Lien, except to

the extent such securities are pledged in the ordinary course of business

consistent with prudent business practices to secure obligations of NCRIC or any

NCRIC Subsidiary. Such securities are permissible investments under all

applicable laws and are valued on the books of NCRIC in accordance with GAAP and

SAP. None of the securities are in default in the payment of principal, interest

or dividends or is impaired to any extent. NCRIC has provided to PRA a copy of

the investment policies of NCRIC and the NCRIC Subsidiaries as of December 31,

2004. There has been no material change in investment policy of NCRIC and the

NCRIC Subsidiaries or in the composition of the investments of NCRIC and the

NCRIC Subsidiaries since December 31, 2004.

(b) All interest rate swaps, caps, floors and option agreements and other

interest rate risk management arrangements entered into for the account of NCRIC

or its Subsidiaries were entered into in the ordinary course of business and, to

the best knowledge of NCRIC, in accordance with prudent business practice and

applicable rules, regulations and policies of any Governmental Authority and

with counterparties believed to be financially responsible at the time. All of

such interest rate swaps, caps, floors and option agreements and other interest

rate risk management arrangements are legal, valid and binding obligations of

NCRIC or its Subsidiaries enforceable in accordance with their terms (except as

may be limited by bankruptcy, insolvency, moratorium, reorganization or similar

laws affecting the rights of creditors generally and the availability of

equitable remedies), and are in full force and effect. NCRIC and each NCRIC

Subsidiary have duly performed in all material respects all of their material

obligations thereunder to the extent that such obligations to perform have

accrued; and, to the best knowledge of NCRIC, there are no material breaches,

violations or defaults or allegations or assertions of such by any party

thereunder.

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3.19 INTELLECTUAL PROPERTY.

(a) NCRIC or a NCRIC Subsidiary owns or has the right to use, pursuant to

license, sublicense, agreement or permission, all Intellectual Property

necessary for the operation of the businesses of NCRIC and the NCRIC

Subsidiaries as presently conducted and as presently proposed to be conducted.

As used in this Agreement, "INTELLECTUAL PROPERTY" means all trademarks, service

marks, logos, domains and domain names, trade names and corporate names and

registrations and applications for registration thereof, copyrights and

registrations and applications for registration thereof, computer software

(including computer software used in insurance operations or for accounting

operations), data and documentation, trade secrets and confidential business

information (including financial, marketing and business data, pricing and cost

information, business and marketing plans, and customer and supplier lists and

information), other proprietary rights, and copies and tangible embodiments

thereof (in whatever form or medium). Section 3.19(a) of the NCRIC Disclosure

Schedule lists all trademarks, service marks, logos, domains and domain names,

trade names and corporate names owned by NCRIC and each NCRIC Subsidiary.

(b) To the knowledge of NCRIC: Neither NCRIC nor any NCRIC Subsidiary has

interfered with, infringed upon, misappropriated or otherwise come into conflict

with any Intellectual Property of third parties. None of NCRIC, the NCRIC

Subsidiaries, and any of the directors, officers or employees with

responsibility for intellectual property matters of NCRIC or any NCRIC

Subsidiary has ever received any charge, complaint, claim or notice alleging any

such interference, infringement, misappropriation or violation. No third party

has interfered with, infringed upon, misappropriated or otherwise come into

conflict with any intellectual property rights of NCRIC or any NCRIC Subsidiary.

(c) Section 3.19(c) of the NCRIC Disclosure Schedule identifies each item

of Intellectual Property that any third party owns and that NCRIC or any NCRIC

Subsidiary uses, or intends to use, pursuant to license, sublicense, agreement,

or permission. NCRIC has made correct and complete copies of all such licenses,

sublicenses, agreements and permissions (as amended to date) available to PRA.

With respect to each such item of such Intellectual Property: (i) the license,

sublicense, agreement or permission covering the item is legal, valid, binding,

enforceable and in full force and effect; (ii) except as set forth in Section

3.5(b)(ii)(y) of the NCRIC Disclosure Schedule, the license, sublicense,

agreement or permission will continue to be legal, valid, binding and

enforceable and in full force and effect on identic