Exhibit 10.3               

TRANSATLANTIC HOLDINGS, INC.

ANNUAL BONUS PLAN

          1.          Purpose. The purpose of the Transatlantic Holdings, Inc.
Annual Bonus Plan (the “Plan”) is to enhance the ability of Transatlantic
Holdings, Inc. and its subsidiaries (the “Company”) to attract, motivate,
reward, and retain key employees, to strengthen their commitment to the success
of the Company and to align their interests with those of the Company’s
shareholders by providing additional compensation to designated key employees of
the Company based on the achievement of performance objectives. To this end, the
Plan provides a means of rewarding participants based on the annual performance
of the Company in succeeding fiscal years, beginning with the Fiscal year ending
on December 31, 2006. (the “Fiscal Year”).

          2.          Administration. The Plan shall be administered by the
Committee. The Committee shall have full authority to establish the rules and
regulations relating to the Plan, to interpret the Plan and those rules and
regulations, to select Participants in the Plan, to determine the performance
objectives of the Company and corresponding Award opportunities for each
Participant for each Fiscal Year, to approve all Awards, to decide the facts in
any case arising under the Plan and to make all other determinations and to take
all other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate.
The Committee shall have the power to decrease the amount payable to any
Participant.

          3.          Eligible Employees. Those employees of the Company
selected by the Committee shall participate in the Plan for the Fiscal Year.

          4.          Payment of Awards. As soon as practicable after the close
of the Fiscal Year and prior to the payment of any Award, the Committee shall
review the Company’s performance and certify in writing the extent to which the
applicable performance objectives have been achieved. Each Award to the extent
earned shall be paid in a single lump sum cash payment, less applicable
withholding taxes, in March of the year immediately following the end of the
Fiscal Year.

          5.          Awards. A Participant may earn an Award up to a percentage
of Target Bonus as determined by the Committee based upon achievement of
performance goals determined by the Committee. Notwithstanding anything to the
contrary in the Plan, the aggregate amount that can be paid pursuant to Awards
for the Fiscal Year cannot exceed 150% of the aggregate of the Target Bonuses
for all Participants.

          6.          Termination of Employment. Subject to the Committee’s
discretion, no Award for the Fiscal Year shall be payable to any Participant
unless he or she is employed by the Company or one of its subsidiaries on the
payment date for Awards unless the Participant’s employment was terminated
because of his or her (i) death, (ii) permanent disability or (iii) retirement,
if such termination occurs after the end of the Fiscal Year and prior to the
payment date of the Award otherwise payable in respect of the Fiscal Year. For
this purpose “permanent disability” has the meaning defined in the American
International Group, Inc. Long-Term Insurance Policy (applicable to TRH
employees) as in effect on the relevant date (or, if none, will be determined by
the Committee in its sole discretion).

          7.          Designation of Beneficiary. In the event of a
Participant’s death prior to full payment of any Award hereunder, unless such
Participant shall have designated a beneficiary or beneficiaries in accordance
with this Section 7, payment of any Award due under the Plan shall be made to
the beneficiary or beneficiaries designated by the Participant under the
Company’s basic life insurance program, or if no beneficiary has been designated
under the basic life insurance program, or if the Participant’s designated
beneficiary dies prior to receiving any payment of an Award or if such
designation shall for any reason be illegal or ineffective, Awards payable under
the Plan shall be paid to the Participant’s estate. A beneficiary designation
under this Plan, or revocation of a prior beneficiary designation, will be
effective only if it is made in writing on a form provided by the Company,
signed by the Participant and received by the Benefits Department of the
Company. If a beneficiary has been designated under this Plan and such
beneficiary dies prior to receiving any payment of an Award or if such
designation shall for any reason be illegal or ineffective, Awards payable under
the Plan shall be paid to the Participant’s estate.

          8.          Amendment or Termination. The Committee may amend or
terminate the Plan at any time in its discretion.

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          9.          Miscellaneous Provisions

                       (a)          Neither the establishment of this Plan, nor
any action taken hereunder, shall be construed as giving any Participant any
right to be retained in the employ of the Company or any of its subsidiaries.

                       (b)          A Participant’s rights and interests under
the Plan may not be assigned or transferred, except as provided in Section 7,
and any attempted assignment or transfer shall be null and void and shall
extinguish, in the Company’s sole discretion, the Company’s obligation under the
Plan to pay Awards with respect to the Participant.

                       (c)          The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund, or to make any
other segregation of assets, to assure payment of Awards.

                       (d)          The Company shall have the right to deduct
from Awards paid any taxes or other amounts required by law to be withheld.

                       (e)          Nothing contained in the Plan shall limit or
affect in any manner or degree the normal and usual powers of management,
exercised by the officers and the Board or committees thereof, to change the
duties or the character of employment of any employee of the Company or any of
its subsidiaries or to remove the individual from the employment of the Company
or any of its subsidiaries at any time, all of which rights and powers are
expressly reserved.

          10.        Definitions.

                       (a)          “Award” shall mean the cash incentive award
for which a Participant is eligible under the Plan for the Fiscal Year.

                       (b)          “Base Salary” shall mean the Participant’s
base salary paid by the Company and/or any of its subsidiaries and received by
the Participant during the Fiscal Year. Annual base salary does not include
(i) Awards under the Plan, (ii) long-term incentive awards, (iii) signing
bonuses or any similar bonuses, (iv) imputed income from such programs as
executive life insurance, or (v) nonrecurring earnings such as moving expenses,
and is based on salary earnings before reductions for such items as
contributions under Sections 125 or 401(k) of the Code or pursuant to any
nonqualified deferred compensation plan or agreement.

                       (c)          “Board” shall mean the Board of Directors of
the Company.

                       (d)          “Code” shall mean the Internal Revenue Code
of 1986, as amended.

                       (e)          “Committee” shall mean the Compensation
Committee of the Board or such other committee appointed by the Board from time
to time to administer the Plan and to perform the functions set forth herein.

                       (f)           “Maximum Target Combined Ratio” shall mean
the Combined Ratio, excluding the impact of Catastrophes, set as the maximum
target as determined by the Committee.

                       (g)          “Maximum Target Earnings Per Share” shall
mean the earnings per share amount set as the maximum target as determined by
the Committee.

                       (h)          “Officer” shall mean any officer of the
Company or any of its subsidiaries.

                       (i)           “Participant” shall mean those individuals
selected by the Committee to participate in the Plan.

                       (j)           “Target Bonus” shall mean the percentage of
a Participant’s Base Salary as determined by the Committee.

                       (k)          “Target Combined Ratio” shall mean the
Combined Ratio, excluding the impact of Catastrophes, set as the target as
determined by the Committee.

                       (l)           “Target Earnings Per Share” shall mean the
earnings per share amount set as the target as determined by the Committee.

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                       (m)          “Threshold Target Combined Ratio” shall mean
the Combined Ratio, excluding the impact of Catastrophes, set as the threshold
as determined by the Committee.

                       (n)           “Threshold Target Earnings Per Share” shall
mean the earnings per share amount set as the threshold as determined by the
Committee.

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