Exhibit 18

March 21, 1995

The Board of Directors
Fund American Enterprises Holdings, Inc.


Note 5 of Notes to the consolidated financial statements of Fund American
Enterprises Holdings, Inc., incorporated by reference in its Form 10-K for the
year December 31, 1994, describes a change in the method of accounting for the
purchased mortgage servicing rights asset by Source One Mortgage Services
Corporation, the Company's subsidiary. The new accounting methodology measures
the asset's impairment on a disaggregated basis and discounts the asset's cash
flows using a current market rate.  Previously, the Company measured the asset's
impairment on a disaggregated basis including a cost of capital charge for
estimating the asset's cash flows.  Management has advised us that they believe
the change is to a preferable method in the circumstances because it represents
a more informative financial statement presentation of the purchased mortgage
servicing rights asset and is consistent with the recent comment letters by the
SEC Staff and trends within the industry.

There are no authoritative criteria for determining a preferable method of
accounting for purchased mortgage servicing rights assets; however, based on the
particular circumstances, we conclude that the change in the method of
accounting for the purchased mortgage servicing rights asset is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.



                                                Very truly yours,

                                                Ernst & Young LLP