Exhibit 10.4

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December 31, 2010

John Gressier

[address]

Dear John:

We are delighted that you have decided to continue your service with AXIS
Specialty Limited, a Bermuda corporation (the “Company”) and wholly owned,
direct subsidiary of AXIS Capital Holdings Limited, a Bermuda company (the
“Parent”). We thought it would be useful to lay out the terms and conditions of
our agreement in this letter agreement (this “Agreement”).

 

1) Employment

 

  a) Position and Duties. Commencing on January 1, 2011, the Company shall
employ you in the position of Chairman of AXIS Insurance of the Parent or in
such other position as is mutually agreeable to you and the Company. Your duties
and responsibilities will include oversight of the insurance business of the
Parent and its direct and indirect subsidiaries (collectively, the “Parent
Group”). You will report directly and exclusively to the Chief Operating Officer
of the Parent, at the discretion of the Chief Executive Officer. You will be
expected to devote your full business time and energy, attention, skills and
ability to the performance of your duties and responsibilities to the Parent
Group on an exclusive basis, including service to subsidiaries and affiliates of
the Parent, on a basis consistent with your position with the Parent, as
requested by the Chief Operating Officer, Chief Executive Officer and President
or the Board of Directors of the Parent (the “Board”), and shall faithfully and
diligently endeavor to promote the business and best interests of the Company
and its subsidiaries and affiliates. Anything herein to the contrary
notwithstanding, nothing shall preclude you from (i) upon the written approval
of the Parent’s Board, serving on the board of directors of another corporation
or a trade association; (ii) serving on the board of charitable organizations,
(iii) engaging in charitable, community and other business affairs, and
(iv) managing your personal investments and affairs; provided such activities do
not, in the reasonable judgment of the Company, materially interfere with the
proper performance of your responsibilities and duties hereunder.

 

  b) Place of Performance. In connection with your employment during the
Employment Term (as defined in Section 3(a)), you shall be based at the Parent’s
offices in Bermuda, except for necessary travel on Company business. You will
cooperate with the Parent to become and remain eligible under applicable law to
work in Bermuda at all times during the Employment Term. To your knowledge, you
are eligible under applicable law to work in Bermuda, and you agree that you
will promptly notify the Company if you become aware that you are not eligible
or are no longer eligible under applicable law to work in Bermuda.

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2) Compensation and Benefits

 

  a) During the Employment Term, your annual base salary shall be no less than
$910,000 (the base salary as may be increased from time to time referred to as
“Base Salary”) and shall be paid pursuant to the Company’s customary payroll
practices.

 

  b) In addition to the Base Salary, in each fiscal year of the Parent ending
during the Employment Term, you will be eligible to earn an annual cash bonus
(“Annual Bonus”). Your target Annual Bonus is 125% of your then current Base
Salary if the Parent achieves certain performance objectives and subject to your
individual performance pursuant to the Parent’s annual bonus plan. Except as
provided in Section 4 below, the Annual Bonus for each period will be paid only
if you are actively employed with the Company on the date of disbursement. Any
Annual Bonus payable hereunder shall be paid in the calendar year following the
applicable fiscal year of the Parent, after it has been determined by the
Compensation Committee of the Parent.

 

  c) You will be eligible to participate in the Parent’s 2007 Long-Term Equity
Compensation Plan as it may be amended from time to time (or a successor plan)
with an annual target of 35,000 Restricted Shares, subject to an award agreement
in such form as the Compensation Committee of the Parent may determine from time
to time.

 

  d) During the Employment Term, you will be eligible to participate in or
receive benefits under any company sponsored retirement plan, medical and dental
benefits plan, life insurance plan, short-term and long-term disability plans,
supplemental and/or incentive compensation plans, or any other employee benefit
or fringe benefit plan, generally made available by the Parent to senior
executives in accordance with the eligibility requirements of such plans and
subject to the terms and conditions set forth in this Agreement.

 

  e) During the Employment Term, you will be entitled to 25 days of paid
vacation per calendar year (prorated for any partial years of employment),
subject to the applicable vacation policies and procedures on usage and carry
over.

 

  f)

During the Employment Term, the Company will reimburse you for all reasonable
business expenses incurred by you in the course of performing your duties under
this Agreement which are consistent with the Company’s policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company’s requirements with respect to reporting and
documentation of expenses. Reimbursements will be paid promptly after submission
and review of appropriate documentation, but in any event no later than 2 1/2
months after the end of the calendar year in which the expense was incurred.

 

  g)

During the Employment Term, you will be paid by the Company a housing allowance
of up to $15,000 per month, provided, however, the Company shall have no other
obligations to you relating to any of your housing expenses including, but not
limited to, the costs of utilities and maintenance. Such amounts will be paid no
later than 2 1/2 months after the end of the calendar year in which the expense
was incurred.

 

  h) During the Employment Term, you will be reimbursed in an amount up to
$110,000 per calendar year for return trips home to be used by you and your
family.

 

  i)

In the event of termination of your Employment in conformity with this
Agreement, then provided you relocate from Bermuda to the United Kingdom within
six months following said termination, the Company will reimburse you on an
after-tax basis for the reasonable

 

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costs that you actually incur during said six months for your relocation from
Bermuda to the United Kingdom (including the costs of transportation and moving
furniture and personal and household items). Reimbursements under this
subparagraph will be paid promptly after submission and review of appropriate
documentation, but in any event no later than 2 1/2 months after the end of the
calendar year in which the expense was incurred.

 

3) Term of Employment

 

  a) The employment period shall commence on January 1, 2011, and shall
terminate on December 31, 2013 (the “Employment Term”), unless earlier
terminated as provided in this Section 3. Your employment hereunder may be
terminated by the Company or by you, as applicable, without any breach of this
Agreement under the following circumstances:

 

  (i) Death. Your employment shall automatically terminate upon your death.

 

  (ii) Disability. The Company shall be entitled to terminate your employment
if, as a result of your incapacity due to physical or mental illness or injury,
you shall have been unable to perform your duties hereunder for a period of 181
days in any twelve-month period (your “Disability”).

 

  (iii) Cause. The Company may terminate your employment at any time for Cause
which, for purposes of this Agreement, shall mean (i) any act or omission which
constitutes a material breach by you of the terms of this Agreement, the
employment policies of the Parent Group, or applicable law governing the Parent
Group or your employment, (ii) the conviction of a felony or commission of any
act which would rise to the level of a felony, (iii) the conviction (or
commission of any act which would rise to the level of) a lesser crime or
offense that adversely impacts or potentially could impact upon the business or
reputation of the Parent Group in a material way, (iv) your willful violation of
specific lawful and material directives of the Parent that are not contrary to
this Agreement, (v) commission of a dishonest or wrongful act involving fraud,
misrepresentation or moral turpitude causing damage or potential damage to the
Company, its parent and/or affiliates and subsidiaries, (vi) the willful failure
to perform a substantial part of your substantial job functions after written
notice from the Board requesting such performance, or (vii) breach of fiduciary
duty.

 

  (iv) Without Cause. The Company may terminate your employment at any time
without Cause; provided, however, that the Company provides you with notice of
its intent to terminate at least thirty (30) days in advance of the date of
termination.

 

  (v) Voluntary Resignation. You may voluntarily terminate your employment
hereunder; provided, however, that in the event you are not terminating for Good
Reason pursuant to subparagraphs (vi) and (vii) below, you provide the Company
with notice of your intent to terminate at least twelve (12) months in advance
of the date of termination.

 

  (vi)

Good Reason. You may terminate your employment for Good Reason if (i) (A) the
scope of your position, authority or duties is materially adversely changed
(except for changes during a Notice Period as

 

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authorized under Section 3(c) below), (B) your compensation under this Agreement
is not paid or your Base Salary or your Target Bonus is reduced below the levels
specified in Sections 2(a) and (b) or there is a material adverse change in your
employee benefits (excluding changes in any benefits plan where such changes
apply generally to participants in the plan), (C) you are notified by the
Company that you are required to relocate to a place outside of Bermuda, (D) you
are assigned duties that are materially inconsistent with your position with the
Company/Parent, (E) you are required to report to anyone other than the Parent’s
Chief Operating Officer, Chief Executive Officer or the Board; (ii) you give the
Company written notice of your intent to terminate your employment as a result
of such event and provide the specific reasons therefore within thirty (30) days
of such event occurring; (iii) the Company does not make the necessary
corrections within thirty (30) days of receipt of your written notice; and
(iv) you terminate employment no later than ten (10) days following the end of
such thirty (30) day period.

 

  (vii) Good Reason following a Change in Control. You may terminate your
employment for Good Reason if (i) during the twenty-four (24) month period
immediately following a Change in Control (A) the scope of your position,
authority or duties is materially adversely changed (except for changes during a
Notice Period as authorized under Section 3 (c) below), (B) your compensation
under this Agreement is not paid or your Base Salary or your Target Bonus is
reduced below the levels specified in Sections 2(a) and (b) or there is a
material adverse change in your employee benefits (excluding changes in any
benefits plan where such changes apply generally to participants in the plan),
(C) you are notified by the Company that you are required to relocate to a place
outside of Bermuda, (D) you are assigned duties that are materially inconsistent
with your position with the Company/Parent, (E) you are required to report to
anyone other than the Parent’s Chief Operating Officer, Chief Executive Officer
or the Board, or (F) in the event that any other person or entity acquires all
or substantially all of the Parent Group’s business, the Company fails to obtain
the assumption of this Agreement by the successor; (ii) you give the Company
written notice of your intent to terminate your employment as a result of such
event and provide the specific reasons therefore within thirty (30) days of your
knowledge of such event occurring; (iii) the Company does not make the necessary
corrections within thirty (30) days of receipt of your written notice; and
(iv) you terminate employment no later than ten (10) days following the end of
such thirty (30) day period. For purposes of this Agreement, the “Change in
Control” will be deemed to have occurred as of the first day any of the
following events occur:

 

  1.

Any person or entity is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the U.S. Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Parent representing 50% or more of the combined
voting power of the Parent’s then outstanding voting securities entitled to vote
generally in the election of directors (the “Outstanding Parent Voting
Securities”); provided, however, that for purposes of this Section 3(a)(vii)(1),
the following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Parent, (B) any acquisition by the Parent, (C) any
acquisition by any employee

 

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benefit plan (or related trust) sponsored or maintained by the Parent or any
affiliate of the Parent or (D) any acquisition by any entity pursuant to a
transaction which complies with clauses (A), (B) and (C) of Section 3(a)(vii)(3)
hereof;

 

  2. Individuals who, as of the date of this Agreement, constitute the Board
(hereinafter referred to as the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Parent’s stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered a member of the Incumbent Board, excluding any individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person or entity other than the Board;

 

  3.

Consummation of a reorganization, merger, share exchange, amalgamation,
recapitalization, consolidation or similar transaction by and among the Parent
and another person or entity, including, for this purpose, a transaction as a
result of which another person or entity owns the Parent or all or substantially
all of the Parent’s assets, either directly or through one or more subsidiaries
(a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Parent Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors (or equivalent management personnel) of the entity resulting from such
Business Combination or that, as a result of such Business Combination, owns the
Parent or all or substantially all of the Parent’s assets, either directly or
through one or more subsidiaries, in substantially the same proportions as their
ownership of the Outstanding Parent Voting Securities immediately prior to such
Business Combination; (B) no person or entity (excluding any entity resulting
from such Business Combination, or that, as a result of such Business
Combination, owns the Parent or all or substantially all of the Parent’s assets,
either directly or through one or more subsidiaries, or any employee benefit
plan (or related trust) of the foregoing) beneficially owns, directly or
indirectly, 50% or more of the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors (or equivalent management personnel) of
the entity resulting from such Business Combination or that, as a result of such
Business Combination, owns the Parent or all or substantially all of the
Parent’s assets, either directly or through one or more subsidiaries, except to
the extent that such ownership existed with respect to the Parent prior to the
Business Combination; and (C) at least a majority of the members of the board of
directors (or equivalent management personnel) of the entity resulting from such
Business Combination or that, as a result of such Business

 

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Combination, owns the Parent or all or substantially all of the Parent’s assets,
either directly or through one or more subsidiaries, were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, pursuant to which such Business Combination is effected or
approved; or

 

  4. Approval by the shareholders of the Parent of a complete liquidation or
dissolution of the Parent or the sale or other disposition of all or
substantially all of the Parent’s assets.

 

  b) Any termination of your employment by the Company or by you under this
Section 3 (other than termination pursuant to Section 3(a)(i)) shall be
communicated by a written notice to the other party hereto indicating the
specific termination provision in this Agreement relied upon and specifying a
date of termination.

 

  c) The period between the date notice of termination is provided and your
termination date shall be referred to as the “Notice Period.” During any Notice
Period, the Company may, in its absolute discretion (i) require you to perform
only such portion of your normal duties as it may allocate to you from time to
time, (ii) require you not to perform any of your duties, (iii) require you not
to have any contact with customers or clients of the Company nor any contact
(other than purely social contact) with such employees of the Company as the
Company shall determine, (iv) exclude you from any premises of the Company,
and/or (v) require you to resign from all directorships and other offices that
you hold in connection with your employment with the Company (including any
directorships with subsidiaries or other affiliates of the Company) effective as
of any date during the Notice Period. If the Company elects to take any such
action, such election shall not constitute a breach by the Company of this
Agreement or Good Reason for you to terminate your Employment under Sections
3(a)(vi) or (vii) and you shall not have any claim against the Company in
connection therewith so long as, during the Notice Period, the Company continues
to pay to you your Base Salary, Annual Bonus and all of the other amounts
described in Section 2 of this Agreement.

 

4) Severance Payments and Other Benefits Following Termination of Employment

 

  a) In the event that your employment with the Company shall terminate for any
reason, and except as otherwise set forth in this Agreement, the Company’s sole
obligation under this Agreement shall be to pay to you any accrued but unpaid
Base Salary for services rendered to the date of termination, any bonus awarded
by the Compensation Committee in respect of a prior year’s target Annual Bonus
but not yet paid as of the date of termination, any accrued but unpaid expenses
required to be reimbursed under this Agreement, any unused vacation accrued to
the date of termination, any unpaid housing allowance accrued to the date of
termination, and comply with Section 2(i) relating to relocation benefits, if
applicable. For the sake of clarity, this Section 4(a) does not limit any rights
you may have under the Company’s retirement or welfare plans.

 

  b) Death. In the event your employment is terminated due to your death
pursuant to Section 3(a)(i), then in addition to the amounts provided under
Section 4(a) above:

 

  i) Your beneficiary will be paid a pro-rata portion of your Annual Bonus that
you would have been entitled to receive for the calendar year in which your
termination occurs, based on the number of days you were employed by the Parent
Group during such year and calculated as if all targets were met, to be paid in
a lump sum no later than sixty (60) days following your termination; and

 

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  ii) All outstanding and unvested restricted shares of the Common Stock of
Parent pursuant to the 2007 Long-Term Equity Compensation Plan as it may be
amended from time to time, or any successor plan, unless prohibited by such
successor plan (“Restricted Shares”), shall immediately vest upon said
termination.

 

  c) Disability. In the event that the Company terminates your employment due to
your disability, pursuant to Section 3(a)(ii), then in addition to the amounts
provided under Section 4(a) above:

 

  i) You will be paid a pro-rata portion of your Annual Bonus that you would
have been entitled to receive for the calendar year in which your termination
occurs, based on the number of days you were employed by the Parent Group during
such year and calculated as if all targets were met, to be paid in a lump sum no
later than sixty (60) days following your termination; and

 

  ii) All outstanding and unvested Restricted Shares shall immediately vest upon
said termination.

 

  d) Termination by the Company without Cause. In the event that the Company
terminates your employment without Cause in accordance with the provisions of
Section 3(a)(iv) hereof, and conditioned on your compliance with this Agreement
during the Notice Period (but not for any other reason, including without
limitation under Sections 3(a)(i), (ii), (iii), or (v)), then in addition to any
amounts you have received during the Notice Period and any other amounts
provided in Section 4(a), but subject to your timely satisfaction of the
condition precedent in Section 4(i) below, the following will be provided to you
following the termination of the Notice Period:

 

  (i) You will be paid a lump sum amount equal to one year’s Base Salary at the
rate in effect immediately prior to said termination, to be paid no later than
sixty (60) days following your termination;

 

  (ii) With respect to the Annual Bonus for the calendar year prior to the
calendar year in which your termination occurs, you will be excused from the
requirement in Section 2(b) that you must be actively employed with the Company
on the date of disbursement in order to receive the Bonus;

 

  (iii) You will be paid an amount equal to the Annual Bonus that you would have
been entitled to receive for the calendar year in which your termination occurs,
calculated as if all targets were met, to be paid in a lump sum no later than
sixty (60) days following your termination;

 

  (iv) You will be paid a pro-rata portion of your Annual Bonus that you would
have been entitled to receive for the calendar year in which your termination
occurs, based on the number of days you were employed by the Parent Group during
such year and calculated as if all targets were met, to be paid in a lump sum no
later than sixty (60) days following your termination;

 

  (v)

Unless the Company determines in its reasonable discretion that it would violate
applicable law or would be treated as discriminatory under applicable law, then
with respect to the medical insurance coverage in effect for you as of the date
of termination under the applicable group health insurance plan provided by the
Company, if you elect to exercise

 

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any rights provided under said plan to purchase continued medical insurance
coverage or to convert your medical insurance coverage under said plan to an
individual policy, the Company will pay the premiums for said coverage at the
level comparable to the coverage provided during your employment, for the period
ending on the earlier of (i) the last day of the 12-month period beginning on
your last day of employment, or (ii) the date on which you become eligible for
other group health coverage; and

 

  (vi) In the event that the Company terminates your employment without Cause in
accordance with the provisions of Section 3(a)(iv), then for so long as you
shall remain in full compliance with the obligations set forth in Sections 7, 8,
and 10 below, and conditioned on such continued compliance, all Restricted
Shares previously granted to you which have not vested as of the date of your
termination, if any, shall continue to vest on the applicable dates set forth in
the applicable award agreements granting such Restricted Shares.

 

  e) Termination by the Company without Cause Following Change in Control. In
the event that within 24 months following a Change in Control as defined in
Section 3(a)(vii) (1 – 4) hereof the Company terminates your employment without
Cause, (but not for any other reason, including without limitation under
Sections 3(a)(i), (ii), (iii), or (v)) then in addition to any amounts you have
received during the Notice Period and any other amounts provided in
Section 4(a), but subject to your timely satisfaction of the condition precedent
in Section 4(i) below, the following will be provided to you following the
termination of the Notice Period:

 

  (i) You will be paid a lump sum amount equal to one year’s Base Salary at the
rate in effect immediately prior to said termination, to be paid no later than
sixty (60) days following your termination;

 

  (ii) With respect to the Annual Bonus for the calendar year prior to the
calendar year in which your termination occurs, you will be excused from the
requirement in Section 2(b) that you must be actively employed with the Company
on the date of disbursement in order to receive the Bonus;

 

  (iii) You will be paid an amount equal to two times the Annual Bonus that you
would have been entitled to receive for the calendar year in which your
termination occurs, calculated as if all targets were met, to be paid in a lump
sum no later than sixty (60) days following your termination;

 

  (iv) You will be paid a pro-rata portion of your Annual Bonus that you would
have been entitled to receive for the calendar year in which your termination
occurs, based on the number of days you were employed by the Parent Group during
such year and calculated as if all targets were met, to be paid in a lump sum no
later than sixty (60) days following your termination;

 

  (v)

Unless the Company determines in its reasonable discretion that it would violate
applicable law or would be treated as discriminatory under applicable law, then
with respect to the medical insurance coverage in effect for you as of the date
of termination under the applicable group health insurance plan provided by the
Company, if you elect to exercise

 

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any rights provided under said plan to purchase continued medical insurance
coverage or to convert your medical insurance coverage under said plan to an
individual policy, the Company will pay the premiums for said coverage at the
level comparable to the coverage provided during your employment, for the period
ending on the earlier of (i) the last day of the 12-month period beginning on
your last day of employment, or (ii) the date on which you become eligible for
other group health coverage; and

 

  (vi) All outstanding and unvested Restricted Shares shall immediately vest
upon said termination.

 

  f) Termination by You for Good Reason. In the event that you terminate for
Good Reason in accordance with the provisions of Section 3(a)(vi) hereof, (but
not for any other reason, including without limitation under Sections 3(a)(i),
(ii), (iii), or (v)) then in addition to the amounts provided in Section 4(a),
but subject to your timely satisfaction of the condition precedent in
Section 4(i) below, the following will be provided to you:

 

  (i) You will be paid a lump sum amount equal to one year’s Base Salary at the
rate in effect immediately prior to said termination, to be paid no later than
sixty (60) days following your termination;

 

  (ii) With respect to the Annual Bonus for the calendar year prior to the
calendar year in which your termination occurs, you will be excused from the
requirement in Section 2(b) that you must be actively employed with the Company
on the date of disbursement in order to receive the Bonus;

 

  (iii) You will be paid a pro-rata portion of your Annual Bonus that you would
have been entitled to receive for the calendar year in which your termination
occurs, based on the number of days you were employed by the Parent Group during
such year and calculated as if all targets were met, to be paid in a lump sum no
later than sixty (60) days following your termination;

 

  (iv) You will be paid an amount equal to the Annual Bonus that you would have
been entitled to receive for the calendar year in which your termination occurs,
calculated as if all targets were met, to be paid in a lump sum no later than
sixty (60) days following your termination;

 

  (v) Unless the Company determines in its reasonable discretion that it would
violate applicable law or would be treated as discriminatory under applicable
law, then with respect to the medical insurance coverage in effect for you as of
the date of termination under the applicable group health insurance plan
provided by the Company, if you elect to exercise any rights provided under said
plan to purchase continued medical insurance coverage or to convert your medical
insurance coverage under said plan to an individual policy, the Company will pay
the premiums for said coverage at the level comparable to the coverage provided
during your employment, for the period ending on the earlier of (i) the last day
of the 12-month period beginning on your last day of employment, or (ii) the
date on which you become eligible for other group health coverage; and

 

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  (vi) In the event that you terminate for Good Reason in accordance with the
provisions of Section 3(a)(vi), then for so long as you shall remain in full
compliance with the obligations set forth in Sections 7, 8, 9 and 10 below, and
conditioned on such continued compliance, all Restricted Shares previously
granted to you which have not vested as of the date of your termination, if any,
shall continue to vest on the applicable dates set forth in the applicable award
agreements granting such Restricted Shares.

 

  g) Termination by You for Good Reason Following Change in Control. In the
event that within 24 months following a Change of Control as defined in
Section 3(a)(vii) (1 – 4) hereof you terminate for Good Reason in accordance
with the provisions of Section 3(a)(vii) hereof, (but not for any other reason,
including without limitation under Sections 3(a)(i), (ii), (iii), or (v)) then
in addition to the amounts provided in Section 4(a), but subject to your timely
satisfaction of the condition precedent in Section 4(i) below, the following
will be provided to you:

 

  (i) You will be paid a lump sum amount equal to one year’s Base Salary at the
rate in effect immediately prior to said termination, to be paid no later than
sixty (60) days following your termination;

 

  (ii) With respect to the Annual Bonus for the calendar year prior to the
calendar year in which your termination occurs, you will be excused from the
requirement in Section 2(b) that you must be actively employed with the Company
on the date of disbursement in order to receive the Bonus;

 

  (iii) You will be paid a pro-rata portion of your Annual Bonus that you would
have been entitled to receive for the calendar year in which your termination
occurs, based on the number of days you were employed by the Parent Group during
such year and calculated as if all targets were met, to be paid in a lump sum no
later than sixty (60) days following your termination;

 

  (iv) You will be paid an amount equal to two times the Annual Bonus that you
would have been entitled to receive for the calendar year in which your
termination occurs, calculated as if all targets were met, to be paid in a lump
sum no later than sixty (60) days following your termination;

 

  (v) Unless the Company determines in its reasonable discretion that it would
violate applicable law or would be treated as discriminatory under applicable
law, then with respect to the medical insurance coverage in effect for you as of
the date of termination under the applicable group health insurance plan
provided by the Company, if you elect to exercise any rights provided under said
plan to purchase continued medical insurance coverage or to convert your medical
insurance coverage under said plan to an individual policy, the Company will pay
the premiums for said coverage at the level comparable to the coverage provided
during your employment, for the period ending on the earlier of (i) the last day
of the 12-month period beginning on your last day of employment, or (ii) the
date on which you become eligible for other group health coverage; and

 

  (vi) All outstanding and unvested Restricted Shares shall immediately vest
upon said termination.

 

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  h) Company Decision Not to Employ You After Expiration of Employment Term.
Upon the expiration of the January 1, 2011 - December 31, 2013 Employment Term,
and not for any other reason, then if the Company does not offer you a written
agreement for the period January 1, 2014 through December 31, 2014 on terms and
conditions at least as favorable as specified in this Agreement (excluding this
Section 4(h)), the following will be provided to you upon any termination of
your employment, other than for Cause, that occurs prior to January 31, 2014, as
set forth below:

 

  (i) You will be paid a lump sum amount equal to one year’s Base Salary at the
rate in effect immediately prior to said termination, to be paid no later than
sixty (60) days following your termination;

 

  (ii) With respect to the Annual Bonus for the 2013 calendar year, you will be
excused from the requirement in Section 2(b) that you must be actively employed
with the Company on the date of disbursement in order to receive the Bonus;

 

  (iii) You will be paid an amount equal to your target Annual Bonus for the
calendar year 2013 (in addition to the payment under Section 4(h)(i) above),
calculated as if all targets were met, to be paid in a lump sum no later than
sixty (60) days following your termination;

 

  (iv) Unless the Company determines in its reasonable discretion that it would
violate applicable law or would be treated as discriminatory under applicable
law, then with respect to the medical insurance coverage in effect for you as of
the date of termination under the applicable group health insurance plan
provided by the Company, if you elect to exercise any rights provided under said
plan to purchase continued medical insurance coverage or to convert your medical
insurance coverage under said plan to an individual policy, the Company will pay
the premiums for said coverage at the level comparable to the coverage provided
during your employment, for the period ending on the earlier of (i) the last day
of the 12-month period beginning on your last day of employment, or (ii) the
date on which you become eligible for other group health coverage; and

 

  (v) For so long as you shall remain in full compliance with the obligations
set forth in Sections 7, 8, 9 and 10 below, and conditioned on such continued
compliance, all Restricted Shares previously granted to you which have not
vested as of the date of your termination, if any, shall continue to vest on the
applicable dates set forth in the applicable award agreements granting such
Restricted Shares.

 

  i)

No severance benefits or payments provided pursuant to this Section 4, other
than the amounts described in Section 4(a), will be provided to you unless you
execute a waiver and release in the form specified in Exhibit A hereto (with
such changes as may be required due to change in applicable law or regulation)
within forty-five (45) days following your employment termination date and do
not revoke such release. To the extent required to avoid penalty taxes under
Section 409A of the Code, any payment or benefit payment hereunder shall
commence on the 60th day following your termination, including any payments that
would otherwise have been made prior to such date.

 

  j)

In the event of any termination of your Employment by the Company, or by you in
conformity with this Agreement, you shall be under no obligation to seek other

 

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employment, and there shall be no offset against amounts due you under this
Agreement on account of any remuneration attributable to any subsequent
employment you may obtain. Any amounts due under this Section 4 are considered
to be reasonable by the Company and not in the nature of a penalty.

 

5) Resignation from Directorships and Other Offices

In addition, upon your termination of employment with the Company for any
reason, you agree to resign from all directorships and other offices that you
hold in connection with your employment with the Company (including any
directorships with subsidiaries or other affiliates of the Company).

 

6) Conflict of Interest

During employment with the Company, you may not use your position, influence,
knowledge of Confidential Information or Trade Secrets or the Company’s assets
for personal gain. A direct or indirect financial interest (excluding
investments in mutual funds or other similar investment vehicles), including
joint ventures in or with a supplier, vendor, customer or prospective customer
without disclosure and the express written approval of the Chief Executive
Officer of the Parent is strictly prohibited during employment with the Company.

 

7) Confidential Information

 

  a)

As an executive of the Company, you will learn or have access to, or may assist
in the development of, highly confidential and sensitive information and trade
secrets about the Company, its operations, its subsidiaries and affiliates, its
employees, and its customers, which are the property of the Company. Such
Confidential Information and Trade Secrets include but are not limited to:
(i) financial and business information relating to the Company, such as
information with respect to costs, commissions, fees, profits, expenses, sales,
markets, mailing lists, strategies and plans for future business, new business,
product or other development, potential acquisitions or divestitures, and new
marketing ideas; (ii) product and technical information relating to the Company,
such as product formulations, new and innovative product ideas, methods,
procedures, devices, machines, equipment, data processing programs, software,
software codes, computer models, and research and development projects;
(iii) customer information, such as the identity of the Company’s customers, the
names of representatives of the Company’s customers responsible for entering
into contracts with the Company, the amounts paid by such customers to the
Company, specific customer needs and requirements, specific customer risk
characteristics, policy expiration dates, policy terms and conditions,
information regarding the markets or sources with which insurance is placed, and
leads and referrals to prospective customers; (iv) personnel information, such
as the identity and number of the Company’s other employees, their salaries,
bonuses, benefits, skills, qualifications, and abilities; (v) any and all
information in whatever form relating to any client or prospective customer of
the Company, including but not limited to, its business, employees, operations,
systems, assets, liabilities, finances, products, and marketing, selling and
operating practices; (vi) any information not included in (i) or (ii) above
which you know or should know is subject to a restriction on disclosure or which
you know or should know is considered by the Company or the Company’s customers
or prospective customers to be confidential, sensitive, proprietary or a trade
secret or is not readily available to the public; and (vii) intellectual
property, including inventions and copyrightable works. Confidential Information
and Trade Secrets are not generally known or available to the general public,
but have been developed, compiled or acquired by the Company at its great effort
and expense. Confidential Information and Trade Secrets can be in any form:
oral, written or machine readable, including electronic files,

 

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but shall not included any information known generally to the public or within
the Company’s industry.

 

  b) You acknowledge and agree that the Company is engaged in a highly
competitive business and that its competitive position depends upon its ability
to maintain the confidentiality of the Confidential Information and Trade
Secrets which were developed, compiled and acquired by the Company at its great
effort and expense. You further acknowledge and agree that any disclosing,
divulging, revealing, or using of any of the Confidential Information and Trade
Secrets, other than in connection with the Company’s business or as appropriate
to carry out your duties for the Parent Group, will be highly detrimental to the
Company and cause it to suffer serious loss of business and pecuniary damage.

 

  c) Accordingly, you agree that you will not, while associated with the Company
and for so long thereafter as the pertinent information or documentation remains
confidential, for any purpose whatsoever, directly or indirectly use,
disseminate or disclose to any other person, organization or entity Confidential
Information or Trade Secrets, except as appropriate to carry out your duties as
an executive of the Parent and except (i) as expressly authorized by the Chief
Executive Officer of the Company, (ii) appropriate to enforce the terms of this
Agreement, or (iii) required by law or legal process; provided, that you give
notice to the Company promptly on becoming aware of any obligations to disclose
such information under this provision, and not less than ten days prior to
making any such disclosure.

 

  d) Immediately upon the termination of employment with the Company for any
reason, or at any time the Company so requests, you will return to the Company:
(i) any originals and all copies of all files, notes, documents, slides
(including transparencies), computer disks, printouts, reports, lists of the
Company’s clients or leads or referrals to prospective clients, and other media
or property in Employee’s possession or control which contain or pertain to
Confidential Information or Trade Secrets; and (ii) all property of the Company,
including, but not limited to, supplies, keys, access devices, books,
identification cards, computers, telephones and other equipment.

 

8) Intellectual Property

 

  a) You agree that all inventions, improvements, products, designs,
specifications, trademarks, service marks, discoveries, formulae, processes,
software or computer programs, modifications of software or computer programs,
data processing systems, analyses, techniques, trade secrets, creations, ideas,
work product or contributions thereto, and any other intellectual property,
regardless of whether patented, registered or otherwise protected or
protectable, and regardless of whether containing or constituting Trade Secrets
or Confidential Information as defined in this Agreement (referred to
collectively as “Intellectual Property”), that were conceived, developed or made
by you during the period of your employment by the Company and that relate
directly to the Company’s insurance and reinsurance business and any other
business in which the Company was engaged as of the date of your termination of
employment with the Company (the “Proprietary Interests”), shall belong to and
be the property of the Company.

 

  b)

You further covenant and agree that you will: (i) promptly disclose such
Intellectual Property to the Company; (ii) make and maintain for the Company,
adequate and current written records of your innovations, inventions,
discoveries and improvements; (iii) assign to the Company, without additional
compensation, the entire rights to Intellectual Property for the United States
and all foreign countries; (iv) execute assignments and all

 

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other papers and do all acts necessary to carry out the above, including
enabling the Company to file and prosecute applications for, acquire, ascertain
and enforce in all countries, letters patent, trademark registrations and/or
copyrights covering or otherwise relating to Intellectual Property and to enable
the Company to protect its proprietary interests therein; and (v) give
testimony, at the Company’s expense, in any action or proceeding to enforce
rights in the Intellectual Property.

 

  c) You further covenant and agree that it shall be conclusively presumed as
against you that any Intellectual Property related to the Proprietary Interests
described by you in a patent, service mark, trademark, or copyright application,
disclosed by you in any manner to a third person, or created by you or any
person with whom you have any business, financial or confidential relationship,
within one (1) year after cessation of your employment with the Company, was
conceived or made by you during the period of employment by the Company and that
such Intellectual Property be the sole property of the Company.

 

  d) Nothing in this Section 8 shall be construed as granting or implying any
right to you under any patent or unpatented intellectual property right of the
Company, or your right to use any invention covered thereby.

 

  e) In the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena or similar
process) to disclose any information protected by Sections 7 and 8
(collectively, “Restricted Material,”) you agree to provide the Company with
prompt notice of such request(s) so that the Company may seek an appropriate
protective order or other appropriate remedy and/or waive your compliance with
the provisions of this Agreement. In the event that such protective order or
other remedy is not obtained, or that the Company grants a waiver hereunder, you
may furnish that portion (and only that portion) of the Restricted Material
which you are legally compelled to disclose and will exercise your reasonable
best efforts to obtain reliable assurance that confidential treatment will be
accorded any Restricted Material so furnished.

 

9) Non-Competition

 

  a) You acknowledge and agree that the Company is engaged in a highly
competitive business and that by virtue of your senior executive position and
responsibilities with the Company and your access to the Confidential
Information and Trade Secrets, engaging in any business which is directly
competitive with the Company during the 12-month period following the
termination of your employment will cause it great and irreparable harm.

 

  b) Accordingly, you covenant and agree that so long as you are employed by the
Company and for a period of twelve (12) months after such employment ends for
any reason whatsoever, other than a termination without Cause pursuant to
Section 3(a)(iv), whether voluntarily or involuntarily, you will not, without
the express written consent of the Chief Executive Officer of the Parent,
directly or indirectly, own, manage, operate or control, or be employed in the
same or substantially the same position or duties as the position(s) held by you
with the Company or the Parent, by any company or entity engaged in the
insurance or reinsurance business in which the Company is engaged or has
announced an intention to become engaged as of the date of termination of
employment, and for which you had responsibility or about which you had
knowledge of or access to Confidential Information and Trade Secrets. In
recognition of the global nature of the Company’s business which includes the
sale of its products and services around the world, and in nature of your senior
executive position, this restriction shall apply throughout the United States
and Bermuda.

 

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10) Non-Solicitation of Employees

 

  a) You acknowledge and agree that solely as a result of employment with the
Company, and in light of the broad responsibilities of such employment which
include working with other employees of the Company, you have and will come into
contact with and acquire Confidential Information and Trade Secrets regarding
other employees of the Company, and will develop relationships with those
employees.

Accordingly, you covenant and agree that for so long as you are employed by the
Company and for a period of twelve (12) months after such employment ends,
whether voluntarily or involuntarily and whether with or without cause, you
shall not, either on your own account or on behalf of any person, company,
corporation, or other entity, directly or indirectly, solicit any employee of
the Company to leave employment with the Company. This restriction shall apply
to those employees of the Company with whom you came into contact or about whom
you obtained Confidential Information or Trade Secrets during the last two
(2) years of your employment with the Company.

 

11) Enforcement

 

  a) The parties acknowledge and agree that compliance with the covenants set
forth in this Agreement is necessary to protect the Confidential Information and
Trade Secrets, business and goodwill of the Company, and that any breach of this
Agreement will result in irreparable and continuing harm to the Company, for
which money damages may not provide adequate relief. Accordingly, in the event
of any breach or anticipatory breach of this Agreement by you, or your claim in
a declaratory judgment action that all or part of this Agreement is
unenforceable, the parties agree that the Company shall be entitled to the
following particular forms of relief as a result of such breach, in addition to
any remedies otherwise available to it at law or equity: (a) injunctions, both
preliminary and permanent, enjoining or restraining such breach or anticipatory
breach, and you consent to the issuance thereof forthwith and without bond by
any court of competent jurisdiction; and (b) recovery of all reasonable sums and
costs, including attorneys’ fees, incurred by the Company to defend or enforce
the provisions of this Agreement if you argue that such covenants are
unreasonable or unenforceable.

 

  b) The parties hereto hereby declare that it is impossible to measure in money
the damages that will accrue to the Company by reason of your failure to perform
any of your obligations under Sections 7, 8, 9, and 10. Accordingly, if the
Company institutes any action or proceeding to enforce the provisions hereof, to
the extent permitted by applicable law, you hereby waive the claim or defense
that the Company has an adequate remedy at law, and you shall not urge in any
such action or proceeding the defense that any such remedy exists at law. The
foregoing rights shall be in addition to any other rights and remedies available
to the Company under law or in equity.

 

  c) If any of the covenants contained in Sections 7, 8, 9, and 10, or any part
thereof, is construed to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portion(s). In addition, if any of the covenants
contained in Sections 7, 8, 9, and 10 hereof, or any part thereof, is held by
any person or entity with jurisdiction over the matter to be invalid or
unenforceable because of duration of such provision or the geographical area
covered thereby, the parties agree that such person or entity shall have the
power to reduce the duration and/or geographical area of such provision and, in
its reduced form, said provisions shall then be enforceable.

 

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  d) It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege contained in Sections 7, 8, 9, and 10
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
right, power or privilege contained in Sections 7, 8, 9, or 10.

 

  e) It is understood and agreed that references to the “Company” in the
foregoing Sections 7, 8, 9 and 10 include the Company, Parent and its
affiliates.

 

12) Disclosure of Agreement; Disclosure of New Employment

You agree that you will promptly disclose the existence of this Agreement and
the post-employment restrictions contained herein to all subsequent employers
until all such covenants have expired.

 

13) Confidential Information Belonging to Others

You affirm that you have informed the Company of any restrictive covenant or
other contract or agreement of any kind which would prohibit, restrict or limit
your employment with the Company. If you learn or become aware or are advised
that you are subject to an additional actual or alleged restrictive covenant or
other prior agreement which may prohibit or restrict employment by the Company,
you shall immediately notify the Company of the same. You agree that you shall
not disclose to the Company, use for the Company’s benefit, or induce the
Company to use any trade secret or confidential information you may possess or
any Intellectual Property belonging to any former employer or other third party.

 

14) Choice of Forum

The Parent is an international insurance company, and has subsidiaries that
conduct business in the United States (including New York) and other countries.
You and the Company are desirous of having any disputes resolved in a forum
having a substantial body of law and experience with the matters contained
herein. As a result, you and the Company have a strong interest in providing a
single forum and governing law for the convenience of you and the Company to
resolve any and all legal claims. In addition, you recognize that the Company’s
and the Parent’s savings from limiting the forum for legal claims allow them and
their affiliates to maintain lower business expenses, which help all of them
provide more cost effective and competitive insurance products and services. For
all of these reasons, you and the Company agree that any action or proceeding
brought in any court or other forum with respect to this Agreement and
Employee’s employment shall be brought exclusively in the Supreme Court of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York, or in any other court of competent
jurisdiction sitting in the County and State of New York, and the parties agree
to the personal jurisdiction thereof. The parties hereby irrevocably waive any
objection they may now or hereafter have to the laying of venue of any such
action in the said court(s), and further irrevocably waive any claim they may
now or hereafter have that any such action brought in said court(s) has been
brought in an inconvenient forum. The parties recognize that, should any dispute
or controversy arising from or relating to this agreement be submitted for
adjudication to any court or other third party, the preservation of the secrecy
of Confidential Information or Trade Secrets may be jeopardized. Consequently,
the parties agree that all issues of fact shall be tried without a jury.

 

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15) Governing Law

You and the Company agree that for the reasons recited in the foregoing
paragraph 14, this Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to its conflict of laws
provisions.

 

16) Section 409A

You and the Company understand and agree that certain payments contemplated by
this Agreement may be “nonqualified deferred compensation” for purposes of
Section 409A of the Code. In the event that Section 409A is applicable, no
nonqualified deferred compensation payable hereunder shall be paid or be subject
to acceleration or to any change in the specified time or method of payment,
except as otherwise provided under this Agreement and consistent with
Section 409A of the Code. Notwithstanding any other provision of this Agreement
to the contrary, and to the extent required by Section 409A of the Code (as
amended from time to time), in the event that payment of nonqualified deferred
compensation made pursuant to this Agreement is based upon or attributable to
your termination of employment and you are at the time of your termination a
“Specified Employee,” then any payment of nonqualified deferred compensation
otherwise required to be made to you shall be deferred and paid in a lump sum to
you on the day after the date that is six (6) months from the date of your
“Separation from Service” within the meaning of Section 409A of the Code;
provided, however, if you die prior to the expiration of such six (6) month
period, payment to your beneficiary shall be made as soon as practicable
following your death. You will be a “Specified Employee” for purposes of this
Agreement if, on the date of your Separation from Service, you are an individual
who is, under the method of determination adopted by the Company designated as,
or within the category of employees deemed to be, a “specified employee” within
the meaning and in accordance with Treasury Regulation Section 1.409A-1(i). The
Company shall determine in its sole discretion all matters relating to who is a
“Specified Employee” and the application of and effects of the change in such
determination.

 

17) Indemnification

The Parent shall indemnify you to the same extent and by the same means as
provided to other executive officers generally (excluding the Parent’s Chairman
and Chief Executive Officer).

 

18) Miscellaneous

 

  a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and shall be deemed to be
given when delivered personally or three days after it is mailed by registered
or certified mail, postage prepaid, return receipt requested or one day after it
is sent by a reputable overnight courier service and, in each case, addressed to
the relevant party at the address provided for such party on the first page
hereof, or to such other address as any party hereto may designate by notice to
the other in accordance with the foregoing.

 

  b) This Agreement constitutes the entire agreement among you and the Company,
the Parent and any affiliate with respect to your employment by the Company, and
supersedes and is in full substitution for any and all prior understandings or
agreements with respect to your employment including, but not limited to, the
Employment Agreement by and between you and the Company dated July 5, 2007. This
Agreement shall be binding upon execution by both parties.

 

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  c) This Agreement may be amended only by an instrument in writing signed by
the parties hereto, and any provision hereof may be waived only by an instrument
in writing signed by the party against whom or which enforcement of such waiver
is sought. Any amendment to this Agreement must comply with the requirements of
Section 409A of the Code.

 

  d) The Company shall withhold from any compensation and benefits payable under
this Agreement all applicable U.S. federal, state, local, or other taxes.

 

  e) Except as otherwise set forth herein, in the event of any contest or
dispute between you and the Company with respect to this Agreement, each of the
parties shall be responsible for their respective legal fees and expenses.

 

  f) If any term or provision of this Agreement is declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to
be enforceable, such term or provision shall immediately become null and void,
leaving the remainder of this Agreement in full force and effect.

 

  g) Except as otherwise provided in this Agreement, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. Your rights and benefits under
this Agreement are personal to you and no such right or benefit shall be subject
to voluntary or involuntary alienation, assignment or transfer; provided,
however, that nothing in this Section 17 shall preclude you from designating a
beneficiary or beneficiaries to receive any benefit payable on your death.

 

  h) The headings in this Agreement are inserted for convenience of reference
only and shall not be a part of or control or affect the meaning of any
provision hereof.

 

  i) Except as otherwise expressly set forth in this Agreement, to the extent
necessary to carry out the intentions of the parties hereunder, the respective
rights and obligations of the parties hereunder shall survive any termination of
your employment or expiration or termination of this Agreement.

 

  j) Nothing in this Agreement shall be construed as giving you any claim
against any specific assets of the Company, Parent or any affiliate or as
imposing any trustee relationship upon the Company in respect of you. The
Company shall not be required to establish a special or separate fund or to
segregate any of its assets in order to provide for the satisfaction of its
obligations under this Agreement. Your rights under this Agreement shall be
limited to those of an unsecured general creditor of the Company, Parent and its
affiliates;

 

  k) Both parties, through their respective counsel, have participated in the
preparation of this Agreement and its Exhibit A. Accordingly, both parties shall
be deemed to be the drafter of this Agreement or its Exhibit A for purposes of
construing their provisions. The language in all parts of this Agreement and its
exhibits shall be interpreted according to its fair meaning, and shall not be
interpreted for or against either of the Parties as the drafter of the language.

If the terms of this Agreement meet with your approval, please sign and return
one copy to the Company.

[signatures on following page]

 

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AXIS SPECIALTY LIMITED By:   /s/ Gordon McFadden Name:   Gordon McFadden Title:
  Executive Vice President

 

Accepted and Agreed

as of the date first set forth above:

/s/ John Gressier John Gressier

 

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