PENN AMERICA GROUP INC
EXHIBIT 10.7 [IX] SERVICE AGREEMENT
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<TYPE>EX-10
<SEQUENCE>8
<FILENAME>exhibit10-7ix.txt
<DESCRIPTION>EXHIBIT 10.7 [IX] SERVICE AGREEMENT
<TEXT>


                          Service Agreement Amendment
                          ---------------------------

         Agreement effective January 1, 2003, by and between Penn Independent
Corporation, 420 S. York Road, Hatboro, Pennsylvania, 19040 ("PIC") and
Penn-America Group, Inc., 420 S. York Road, Hatboro, Pennsylvania, 19040
("PAGI").

         WHEREAS,  the parties hereto are parties to a Service  Agreement  dated
August  20,  1993,  as most  recently  amended  effective  January  1, 2002 (the
"Service Agreement"); and,

         WHEREAS,  the Service Agreement provides for the payment by PAGI to PIC
of a monthly expense  estimate,  which estimate  consists of PAGI's share of the
telephone,  insurance,  building  rental,  facilities  management  expenses  and
salaries  of the  Chairman of the Board,  Human  Resources  and Office  Services
personnel in connection with their services for PAGI; and,

         WHEREAS,  the  parties  to this  Amended  Service  Agreement  desire to
establish  the  amount  of the  monthly  expense  estimate  owed  by PAGI to PIC
effective January 1, 2003 through December 31, 2003;

         NOW,  THEREFORE,  in  consideration  of  the  foregoing,  the  parties,
intending  to be legally  bound,  agree that  effective  January 1, 2003 through
December  31,  2003,  PAGI  will  pay to PIC  $18,333.00  as a  monthly  expense
estimate,  which estimate  constitutes  PAGI's share of monthly expenses for the
telephone,  insurance,  building  rental,  facilities  management  expenses  and
salaries of the  Chairman of the Board,  Human  Resources,  and Office  Services
personnel.

         IN WITNESS WHEREOF,  the parties have entered into this Agreement as of
the date first above written.


PENN INDEPENDENT CORPORATION                PENN-AMERICA GROUP, INC.



BY: ____________________________            BY: ____________________________






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