NYMAGIC, INC.

                               PHANTOM STOCK PLAN

     Section 1. Establishment of Plan; Definitions.

     1.1  Establishment  of  Plan.   NYMAGIC,   Inc.,  a  New  York  corporation
("Employer") hereby establishes the NYMAGIC Inc. Phantom Stock Plan (the "Plan")
effective as of January 1, 1999.

     1.2  Definitions.  For purposes of this Plan, the following  terms have the
following meanings:

          "1934 Act" means the Securities  Exchange Act of 1934.  (References to
     specific  provisions  of law  shall be  deemed  to  include  references  to
     amendments  or  supplements  thereto  or  subsequent  provisions  of law of
     similar import.)

          "Cause"  means:  (a) the willful and  material  neglect of duties by a
     Participant, (b) a Participant's conviction of, or plea of no contest to, a
     felony, (c) a Participant's commission of theft (other than an isolated act
     or acts  relating to objects of nominal  value) or common law fraud against
     the Company or its customers,  or (d) any other wrongful act committed by a
     Participant  that  has  a  material  adverse  effect  on  the  business  or
     reputation of the Company.  For the purposes of the previous  sentence,  no
     act or failure to act on the  Participant's  part shall be deemed "willful"
     unless done,  or omitted to be done, by the  Participant  not in good faith
     and without reasonable belief that the Participant's action or omission was
     in the best interest of the Company.

          "Change of  Control"  means,  with  respect to the  Employer,  any (i)
     issuance,  sale,  assignment,  transfer  or  other  disposition  of  equity
     interests,  (ii) exercise or conversion of equity  interests which entitles
     the  registered  owner  thereof to vote in an election of  Directors of the
     Employer ("Voting Stock"), or (iii) issuance, sale, assignment, transfer or
     other  disposition  of  any  other  security,  right,  option,  warrant  or
     agreement, convertible or exercisable into equity interests or Voting Stock
     (collectively  "Voting  Securities"),  or any  series of such  transactions
     described in Clause (i),  (ii),  and/or  (iii),  which,  in the  aggregate,
     results in a Person (or a group of Persons under Rule 13d promulgated under
     the 1934 Act other than Employer or any of its affiliates  being the record
     owner or  "beneficial  owner" (as such term is defined for purposes of Rule
     13d-3  promulgated  under the 1934 Act) of Voting  Securities and/or Voting
     Stock  entitled to elect (in the  aggregate,  without regard to limitations
     imposed by staggered  Directorships)  more than fifty  percent (50%) of the
     Directors of the Employer or of the  surviving  entity in a merger  between
     the Employer and such surviving  entity, or such other Person (or group) in
     fact elects or appoints a majority of the Directors of the Employer or such
     surviving  entity.  Notwithstanding  the  foregoing,  and for  avoidance of
     doubt, no Change of control shall be deemed to have occurred solely by


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     reason  of any of John  N.  Blackman,  Jr.,  Mark W.  Blackman,  Louise  B.
     Tollefson and their respective  heirs,  executors and assigns and any trust
     formed  by any of them  for the  purpose  of  estate  and/or  tax  planning
     (including the Louise B. Tollefson  Florida  Intangible Tax Trust) (each, a
     "Blackman Shareholder") being considered the beneficial owner of any Voting
     Stock or Voting  Securities  held by any  other  Blackman  Shareholder  for
     purposes of Rule 13d-3 under the 1934 Act.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Date of  Grant"  means the  effective  date of the grant of shares of
     Phantom Stock by the Committee.

          "Employer" means NYMAGIC, Inc. and its subsidiaries.

          "Employer Stock" means the $1.00 par value common stock of Employer.

          "Fair Market Value" means the mean of the high and low prices at which
     shares of Employer  Stock are reported to have traded on the relevant  date
     in all markets on which  trading in the Employer  Stock is reported,  or if
     there is no reported sale of the Employer  Stock on the relevant  date, the
     mean of the highest reported bid price and lowest reported asked priced for
     the Employer Stock on the relevant date,  provided that in the event that a
     share of  Phantom  Stock is  being  exercised  after  the  occurrence  of a
     Triggering  Event,  the Fair Market Value shall be, if the Triggering Event
     resulted  from  a  Sale  of  Stock  or a  Sale  of  Assets,  the  aggregate
     consideration  paid in connection with such transaction (less the aggregate
     amount payable under this Plan to  Participants),  divided by the number of
     then  outstanding  shares of Employer Stock adjusted as necessary for other
     classes of Employer Stock that may be outstanding on a fully diluted basis,
     but treating shares of Phantom Stock as not being outstanding. For purposes
     of measuring the Fair Market Value in connection  with a Triggering  Event,
     the date as of which Fair  Market  Value shall be  determined  shall be the
     effective date of the transaction giving rise to the Triggering Event.

          "Measurement Value" means, in respect of a share of Phantom stock, the
     value established by the Committee pursuant to Section 5.3.

          "Participants" has the meaning set forth in Section 4 below.

          "Person"  means and includes a natural  person,  corporation,  limited
     partnership,  general partnership,  joint stock company,  business trust or
     other organization or entity, whether or not a legal entity.

          "Phantom  Stock" means the rights to payment from Employer  granted to
     Participants pursuant to the terms of the Plan. Quantities of Phantom stock
     are expressed in "shares" corresponding to shares of Employer Stock.


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          "Sale of Assets" means the sale,  transfer or the  disposition  by the
     Employer of all or substantially all of its assets.

          "Sale of Stock" means, with respect to Employer, the sale, transfer or
     disposition for value by the equity owners to an  unaffiliated  third party
     of an amount of equity  interests  such that,  after giving  effect to such
     sale,   transfer  or  other  disposition,   a  change  of  Control  results
     (regardless of the form of the transaction, including without limitation, a
     cash-out merger or a merger, recapitalization or consolidation).

          "Triggering  Event"  means  the first to occur of a Sale of Stock or a
     Sale of Assets.

     Section 2. Purpose of Plan.  The purpose of the Plan is to build and retain
a  capable,  experienced  long-term  management  team  and to  retain  the  best
personnel of the Employer and its subsidiaries by providing incentive and reward
to a limited  group of key  executives,  management  employees  and personnel to
promote the success of the Employer and its stockholders.  Employer expects that
it will benefit from the added flexible  incentive which these persons will have
in the  welfare of the  Employer as a result of their  benefits  under this Plan
being  determined by reference to the  appreciation in the value of the Employer
Stock.

     Section 3. Administration of the Plan.

     3.1  Committee.  The Plan shall be  administered  by those members  (herein
referred to as the "Committee") of the Stock Option and  Compensation  committee
of the Board of  Directors  of the  Employer  who  qualify as (a)  "Non-Employee
Directors,"  as that term is defined  in  subparagraph  (b)(3)(i)  of Rule 16b-3
promulgated under 1934 Act, and (b) "outside  directors,"  within the meaning of
Section 162(m) of the Code.

     3.2  Authority  of  Committee.  The  Committee  shall  have full  power and
authority,  subject  to  the  provisions  of the  Plan:  (a)  to  designate  the
individuals who may participate in the Plan, (b) to determine the terms of their
participation in the Plan, (c) to determine the terms,  timing and conditions of
the granting of shares of Phantom  Stock under the Plan,  (d) to  interpret  and
construe the provisions of the Plan, (e) to supervise the  administration of the
Plan, (f) to promulgate, amend and rescind rules and regulations relating to the
Plan, (g) to take all actions in connection  with or relating to or interpreting
the Plan as the committee deems to be necessary or  appropriate.  All decisions,
interpretations  and  designations  of the  Committee  shall be  conclusive  and
binding on all persons.  No members of the Committee shall be liable for any act
or omission in connection with the administration of the Plan unless it resulted
from the Committee member's willful misconduct.

     Section 4. Eligibility.  Key employees of the Employer,  including officers
(each such individual participating in the Plan, a "Participant" and
collectively, the "Participants"),


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who are responsible for the management, growth and protection of the business of
the Employer and its subsidiaries as determined by the Committee are eligible to
be granted awards of shares of Phantom Stock under the Plan. It is intended that
this plan  qualify  as an  unfunded  "top hat" plan for the  benefit of a select
group of management  or highly  compensated  employees,  as described in Section
201(2) of the Employee  Retirement  Security Act of 1974, and that the Committee
limit participation in the Plan accordingly.

     Section 5. Shares of Phantom Stock.

     5.1 In  General.  Each  share  of  Phantom  Stock  granted  under  the Plan
constitutes a right to receive in cash the appreciation in the Fair Market Value
of one share of Employer  Stock, as determined as of the date of the exercise of
such share of Phantom Stock, over the Measurement Value of such share of Phantom
Stock.  The  Measurement  Value  shall be stated in the  grant as  described  in
Section  5.3 below and shall be subject to  adjustment  as provided in Section 8
below.

     5.2 Number of Shares of Phantom Stock Subject to Grant. The total number of
shares  of  Phantom  Stock  that  may be  granted  under  the  Plan is  shall be
determined by the  committee.  If any shares of Phantom Stock shall be forfeited
or otherwise  expire  without  being  exercised or be retired by Employer,  such
shares of Phantom Stock shall not again be granted under the Plan.

     5.3 Grant of Phantom Stock. The Committee,  in its sole  discretion,  shall
from  time to  time  prior  to the  termination  of the  Plan,  determine  which
individuals, from among those eligible, shall be granted shares of Phantom Stock
under the Plan. As promptly as  practicable  after an employee is granted shares
of Phantom Stock,  the Committee shall send the  participant a document  setting
forth the terms of the grant,  including the Date of Grant.  The Committee shall
establish or cause to be established a bookkeeping  account for each participant
and shall record or cause to be recorded  the number of shares of Phantom  Stock
granted to each  Participant  pursuant to each grant,  the Date of Grant and the
Measurement Value of such shares of Phantom Stock.


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     Section 6. Vesting and Exercise.

     6.1 Vesting. (a) Except as provided otherwise by the Committee, and subject
to the provisions of this Section 6 and Section 8 below, a  Participant's  right
to payment for any shares of Phantom Stock granted to him or her shall vest, and
thereby become  exercisable,  in the following  percentages of shares of Phantom
Stock awarded to such Participant on the following  anniversaries of the Date of
Grant of such shares of Phantom Stock.

         Percentage of Phantom Stock         Anniversary
           Awarded to Participant                of
              which are Vested              Date of Grant
         ---------------------------        -------------

                   20%                          First
                   40%                          Second
                   60%                          Third
                   80%                          Fourth
                  100%                          Fifth

Notwithstanding the foregoing, for vesting purposes alone, the shares of Phantom
Stock initially  granted under this Plan as set forth in Schedule 1 hereto shall
be deemed to have been  granted on (and the Date of Grant with  respect  thereto
shall be) December 3, 1998. all shares of Phantom Stock, including vested shares
of Phantom  Stock,  shall be  subject  to  termination  in  accordance  with the
provisions of this Plan.

     (b)  Termination.  Shares  of  Phantom  Stock  shall  cease  to  vest  if a
Participant's  employment  with the Employer is terminated.  All of
such participant's unvested shares of Phantom Stock shall thereupon be forfeited
without any payment being due.

     6.2  Exercise.  Upon  vesting  of  shares of  Phantom  Stock  awarded  to a
Participant, the Participant may, by a written notice to the Company, specifying
the number of shares of Phantom  Stock being  exercised,  cause the  Employer to
promptly  redeem said shares of Phantom Stock in exchange for a payment by check
or bank  deposit  for the account of the  Participant  in the amount of the Fair
Market Value of such shares of Phantom Stock,  as of the date of exercise,  over
the Measurement Value of such shares,  subject,  however, to the limitations set
forth in this  Section 6. No  exercise  may be made later than 10 years from the
date of the grant of any  shares of Phantom  Stock nor more than 6 months  after
termination  of employment of the  Participant.  In the event an exercise  would
result in the payment to a Participant of amounts in excess of those  deductible
pursuant to Code  Section  162(m),  such excess  amounts  will be payable to the
participant in the following calendar year.

     6.3  "Golden  Parachute"   Limitations  on  Payment.   Notwithstanding  the
provisions  of Section  6.2,  in the event that an exercise of shares of Phantom
Stock by a Participant  would, in the reasonable  judgment of the Committee,  be
considered a "parachute payment" within the meaning


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of Code  Section  280G,  the  Participant's  aggregate  entitlement  to  receive
payments  under this Plan shall be  limited so that such  participant  shall not
receive any amount in respect of exercised shares of Phantom Stock to the extent
such payments would equal or exceed 3 times of such participant's  "base amount"
as defined in Code Section 280G.

     6.4  Interpretation  by Committee.  The time of cessation of employment and
the extent of the vesting period  provided under Section 6.1 shall be determined
by the Committee.

     6.5  Withholding  and Other Tax  Matters.  The Employer  shall  include all
payments  made  pursuant  to  the  Plan  in   determining   each   Participant's
compensation  for  services  rendered  and  shall  reflect  such  amount in such
Participant's  Form W-2 or 1099,  as  applicable.  From all such  payments,  the
Employer shall withhold all taxes as required by Federal, state and local income
tax laws.

     6.6  Source of  Payments.  All  payments  under the Plan  shall be from the
general  assets of the  Employer,  and no  special  or  separate  fund  shall be
established  or  segregated  to  assure  or  otherwise  guaranty  such  payments
hereunder.  Participants shall have no rights greater than those of an unsecured
creditor  of the  Company  with  respect to any  vested  Phantom  Stock  granted
hereunder.

     Section 7.  Beneficiaries.  Designation  of  beneficiaries  to receive  any
amounts payable under the Plan subsequent to the death of a Participant shall be
made in  writing  and filed  with the  Employer  in such form and  manner as the
Committee  may from  time to time  prescribe.  Beneficiary  designations  may be
changed by a Participant  or former  Participant  in the same manner at any time
prior to death, and may thereafter,  with respect to the interest of a surviving
beneficiary  eligible  to receive a payment,  be  designated  or changed by such
surviving   beneficiary  unless  a  successor   beneficiary  to  such  surviving
beneficiary has been designated by the Participant,  former Participant or prior
beneficiary.  If a Participant,  former  Participant or beneficiary  eligible to
receive any payment under the Plan dies without a surviving  beneficiary  having
been designated, or with his or her estate or a trust designated as beneficiary,
his or her shares of Phantom  Stock,  which shall remain subject to the exercise
and vesting  limitations  set forth in this Plan,  shall be  distributed  to the
legal  representative of his or her estate, or to the trustee of any such trust,
in the manner  provided for in Section 6.1 as soon as  practicable  after his or
her death.


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     Section 8. Changes in  Capitalization;  Adjustments to  Measurement  Value.

     8.1 Changes in Capitalization. In the event there is a change in the number
of shares of Employer Stock as a result of a distribution, split, reverse split,
subdivision,   recapitalization,  merger,  consolidation  (whether  or  not  the
Employer is a surviving  entity),  combination or exchange of equity  interests,
reorganization  or liquidation or similar event, the maximum aggregate number of
shares of  Phantom  Stock  which may be  granted  under the Plan,  the number of
shares of Employer Stock underlying outstanding shares of Phantom Stock, and the
determination  of Fair Market Value and the  Measurement  Value of any shares of
Phantom Stock may, at the discretion of the Committee, be appropriately adjusted
to give effect to such change.

     8.2 Trigger  Event -  Acceleration  of Vesting.  In the event a  Triggering
Event occurs,  all unvested shares of Phantom Stock issued pursuant to this Plan
as of the  effective  date of any such  Triggering  Event,  shall  accelerate in
vesting and be deemed  vested as of the  effective  date of any such  Triggering
Event.

     8.3 Determination by Committee. The Committee shall make all determinations
under this Section 8, and all such determinations,  absent manifest error, shall
be conclusive and binding.

     Section 9.  Amendment and  Termination of Plan. No further grants of shares
of Phantom  Stock may be made after  December 3, 2003.  Prior to such date,  the
Committee,  in its sole  discretion  and at any time,  may terminate the Plan or
adopt such  written  amendments  or  modifications  of the Plan and any award of
shares of Phantom  Stock under the Plan as it may deem  advisable,  effective at
any date the Committee determines;  provided, however, that no such termination,
amendment  or   modification   shall,   without  the  consent  of  the  affected
participants, deprive any Participant of any right or benefit to which he or she
has previously become entitled under the Plan.

     Section 10. Miscellaneous Provisions.

     10.1  Limitation of Rights.  No employee or any other person shall have any
claim or right to be granted any shares of Phantom Stock under the Plan. Nothing
herein is intended or shall be  interpreted to give any employee or other person
participating  in the Plan the right to be employed,  reemployed or continued to
be employed by the Employer or any of its subsidiaries or will interfere with or
restrict  in any way the rights of the  Employer or any of its  subsidiaries  to
discharge  any employee at any time for any reason  whatsoever,  with or without
Cause.  Nothing  herein shall confer any right or benefit or any  entitlement to
any benefit on any  Participant  unless and until a benefit is  actually  vested
pursuant to the Plan.  The  adoption  and  maintenance  of the Plan shall not be
deemed to constitute a contract of employment or otherwise  between the Employer
or any of its  subsidiaries  and any employee,  or to be a consideration  for an
inducement or condition


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of any employment.

     10.2 No Trust  Created.  Neither the  provisions of the Plan nor any action
taken by the Employer or the  Committee  pursuant to the  provisions of the Plan
shall be deemed to create  any  trust,  express  or  implied,  or any  fiduciary
relationship  between or among the Employer,  the  Committee,  any member of the
Committee, or any Participant, former Participant or beneficiary of either.

     10.3 Voting and Distribution Rights. No Participant,  former Participant or
beneficiary  of either  shall be  entitled to any voting  rights,  any rights to
receive  any  distributions  in respect of Employer  Stock,  or any right to any
other attribute of equity ownership provided for by applicable state law.

     10.4 Non-Alienation of Benefits. No right or benefits under this Plan shall
be subject to  alienation,  transfer,  sale,  assignment,  pledge,  encumbrance,
charge,  security interest,  hypothecation,  levy,  attachment or execution of a
judgment  of any  kind,  otherwise  than  by will or the  laws  of  descent  and
distribution to the extent provided  herein.  No right or benefit under the Plan
shall in any manner be liable for or subject to the debts,  contract liabilities
or torts of any Participant, former participant or beneficiary of either.

     10.5  Applicable  State Law. All questions  pertaining to the Plan shall be
determined  under  the  laws of the  State of New York  without  regard  to such
State's conflicts of law principles.


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