<PAGE>

                                                                    EXHIBIT 10.2

                     DARWIN PROFESSIONAL UNDERWRITERS, INC.
                               STOCK AND UNIT PLAN
                            FOR NONEMPL0YEE DIRECTORS

1.    Introduction

            This Darwin Professional Underwriters, Inc. Stock and Unit Plan for
Nonemployee Directors (the "Plan") is intended to advance the interests of the
Company and its shareholders by paying part or all of the compensation of the
Company's nonemployee directors in the form of an economic equivalent of an
equity interest in the Company. The Plan provides for the conversion of at least
50 percent and up to 100 percent of the Director Fees otherwise payable each
year to a director into units of measurement relating to the value of the
Company's Common Stock, and for payment to the director of the value of such
units after five calendar years (or upon termination from service on the Board,
if earlier), so that a director will normally receive payment under the Plan
each successive year in respect of the fees originally converted into units in
the year preceding the fifth calendar year prior to the year of payment. The
Plan also provides for a one-time grant of Restricted Stock to each nonemployee
director serving on the Board at the time the Plan is adopted. The Plan shall
become effective with respect to Director Fees earned in 2006.

2.    Definitions

            (a) "Annual Meeting" means the Company's annual meeting of
shareholders.

            (b) "Board" means the Board of Directors of the Company.

            (c) "Common Stock" means the shares of common stock of the Company,
par value $0.01.

            (d) "Company" means Darwin Professional Underwriters, Inc., a
Delaware corporation.

            (e) "Conversion Date" means the first business day following the
conclusion of an Annual Meeting; provided that the initial Conversion Date under
the Plan shall be the first business day following the date the Plan is adopted.

            (f) "Director Fees" means the annual retainer fee or fees earned by
the Participant for his service on the Board.

            (g) "Fair Market Value" of Common Stock as of a given date means the
mean of the high and low sales prices of the Common Stock on the relevant date
as reported on the stock exchange or market on which the Common Stock are
primarily traded, or, if no sale is made on such date, then Fair Market Value is
the weighted average of the mean of the high and low sales prices of the Common
Stock on the next preceding day and the next succeeding day on

<PAGE>

which such sales were made as reported on the stock exchange or market on which
the Common Stock are primarily traded; provided, however, that the Fair Market
Value for the award of Restricted Stock or the conversion into Share Units
following the adoption of the Plan shall be based upon the offering price for
Common Stock in the Company's initial public offering.

            (h) "Mandatory Conversion" means the required conversion of 50
percent of a Participant's Director Fees into a Share Unit Award pursuant to
Section 6 hereof.

            (i) "Participant" means a member of the Board who is not an employee
of the Company, any of its affiliates or Alleghany Corporation.

            (j) "Realization Date" means, with respect to each Share Unit
allocated to a Participant's Share Unit Account, the first business day
following the earlier of (i) the first business day of the sixth calendar year
after such Share Unit is awarded to the Participant, or (ii) either upon the
date the Participant ceases to be a member of the Board or upon a change in
control.

            (k) "Restricted Stock" means Common Stock which are subject to
potential forfeiture and restrictions on transfer as provided in Section 5
hereof.

            (l) "Share Unit" means a non-voting unit of measurement based on the
value of a whole or a fraction of a share of Common Stock, which entitles a
participant to receive payment in accordance with the terms of the Plan.

            (m) "Share Unit Account" means a book account maintained by the
Company reflecting the Share Units allocated to a Participant pursuant to
Section 6 hereof as a result of the Participant's Mandatory Conversions and
Voluntary Conversions and such additional Share Units as shall be credited
thereto in respect of dividends paid on Common Stock.

            (n) "Share Unit Award" means an award under Section 6 hereof of
Share Units.

            (o) "Voluntary Conversion" means the conversion based on the
election of the Participant of all or part of a Participant's Director Fees
otherwise payable to the Participant in cash into a Share Unit Award pursuant to
Section 6 hereof.

3.    Common Stock Subject to the Plan

            (a) Number of Shares

            Subject to the following provisions of this Section 3, the aggregate
number of Common Stock that may be issued under the Plan is 130,000 shares of
Common Stock. The Common Stock to be delivered under the Plan will be made
available from authorized but unissued Common Stock or from reacquired shares.
To the extent that any Share Unit Award or award of Restricted Stock is
forfeited or terminated for any reason or is not paid in Common

                                      -2-
<PAGE>

Stock, the number of Common Stock covered thereby shall not be charged against
the foregoing maximum share limitation.

(b)   Adjustments

            If there shall occur any recapitalization, reclassification, share
dividend, share split, reverse share split, or other distribution with respect
to the Common Stock, or other change in corporate structure affecting the Common
Stock, the Board may, in the manner and to the extent that it deems appropriate
and equitable and consistent with the terms of this Plan, cause an adjustment to
be made in (i) the maximum number and kind of shares available for issuance
pursuant to Section 3(a) hereof and (ii) the Share Units allocated to
Participants' Share Unit Accounts in accordance with Section 6(e) hereof.

4.    Administration

            The Plan shall be administered by the Board. The Board shall have
full and final authority to administer the Plan, including the discretionary
authority to interpret and construe all provisions of the Plan, to resolve all
questions of fact arising under the Plan, and to adopt and amend such rules and
regulations for administering the Plan as it may deem necessary or appropriate.
Decisions of the Board shall be final and binding on all parties. The Board may
delegate administrative responsibilities under the Plan to appropriate officers
or employees of the Company. All expenses of the Plan shall be borne by the
Company.

5.    Restricted Share Awards

            Each Participant on the date the Plan is adopted (the "Grant Date"),
shall receive an award of Restricted Stock equal to that number of whole shares
of Common Stock (rounded up to the next whole share) as could be acquired with
$40,000, based upon the Fair Market Value of Common Stock. Awards of Restricted
Stock shall be subject to the terms of the Plan and otherwise evidenced by an
award agreement.

            (a) Each grant of Restricted Stock shall be issued for no
consideration but shall be forfeited to the Company (without the payment of any
consideration) if the Participant resigns from the Board (other than in
connection with a change in control, as such term is defined in the applicable
award agreement) prior to the first Annual Meeting next following the Grant
Date. In addition, Restricted Stock shall not be sold, assigned, pledged or
transferred to any person until the third anniversary of the Grant Date;
provided that the Restricted Stock shall automatically cease to be subject to
the foregoing restrictions on sale, assignment, pledge or transfer upon the
Participant's death or a change in control (as such term is defined in the
applicable award agreement) prior to such first Annual Meeting or, subsequent to
such first Annual Meeting, either upon the date the Participant ceases to be a
director for any reason or upon a change in control.

            (b) The Participant to whom Restricted Stock are issued will have
the customary rights of a shareholder with respect to such Restricted Stock,
including the right to vote the Restricted Stock and to receive cash dividends
paid thereon. Prior to the date the

                                      -3-
<PAGE>

Restricted Stock ceases to be subject to the restrictions on sale, assignment,
pledge or transfer in Section 5(a), dividends paid on such Common Stock in the
form of additional Common Stock or as securities or other non-cash property
shall be subject to the same risk of forfeiture and other restrictions as the
underlying Common Stock with respect to which the dividend was paid.

            (c) Any Restricted Stock issued under the Plan may be evidenced in
such manner as the Board in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or by the issuance of a
stock certificate or certificates. In the event any stock certificate is issued
in respect of Restricted Stock, such certificate shall be registered in the name
of the Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.

6.    Crediting of Share Units

            (a) Mandatory Conversions

            Effective as of each Conversion Date occurring while the Plan is in
effect, 50 percent of the aggregate dollar amount of a Participant's Director
Fees otherwise payable on such Conversion Date shall be converted into a Share
Unit Award pursuant to Section 6(c) hereof.

            (b) Voluntary Conversions

            Effective as of each Conversion Date occurring while the Plan is in
effect, a Participant may elect to convert all or any portion of his Director
Fees otherwise payable on such Conversion Date (in addition to those required to
be converted under Section 6(a) hereof) into a Share Unit Award pursuant to
Section 6(c) hereof. Each Voluntary Conversion shall be made on the basis of a
Participant's written election stating the amount of such Director Fees in
excess of those required to be converted under Section 6(a) hereof which shall
be converted to a Share Unit Award. Each such election shall be made in the form
required by the Board, shall be delivered to the Company no later than the
December 31 of the calendar year immediately preceding the calendar year in
which such Directors Fees would otherwise be payable; provided, however, that in
the year the Plan is adopted, such election shall be delivered to the Company no
later than the close of business on the date the Plan is adopted and in the case
of a member of the Board who first becomes a Participant during a year, the
election for such year must be made no later than the close of business on the
date on which the Participant is elected to the Board.

            (c) Share Unit Awards

            On each Conversion Date, a Participant shall receive a Share Unit
Award in respect of his Mandatory Conversion and any Voluntary Conversion
applicable to the Directors Fees which would otherwise be payable to the
Participant on such Conversion Date. Such Share Unit Award shall equal the
number of the Share Units determined by dividing (A) the aggregate dollar amount
of the Participant's Director Fees that are to be converted into a Share Unit

                                      -4-
<PAGE>

Award, including the Mandatory Conversion and any Voluntary Conversion, by (B)
the Fair Market Value of the Common Stock on the applicable Conversion Date.

            (d) Dividend Equivalents

            As of any date that cash dividends are paid with respect to the
Common Stock from time to time, each Participant's Share Unit Account shall be
credited with an additional number of Share Units determined by dividing (A) the
aggregate dollar amount of the cash dividends that would have been paid on the
Share Units credited to the Participant's Share Unit Account as of the record
date for such dividend had such Share Units been actual Common Stock by (B) the
Fair Market Value of the Common Stock on the dividend payment date.

7.    Distributions of Share Unit Awards

            (a) Valuation and Payment of Units

            Subject to Section 8 hereof, a Participant shall be entitled to a
benefit under the Plan with respect to each Share Unit Award upon the
Realization Date for such Share Unit Award. Such benefit shall be equal to the
amount determined by multiplying (A) the number of Share Units credited to the
Participant's Share Unit Account in respect of the Share Unit Award for which
the Realization Date has occurred by (B) the Fair Market Value of the Common
Stock on the Realization Date. Each such amount shall be paid within 30 days
after the applicable Realization Date, at the discretion of the Board, in cash
or in Common Stock, or in some combination thereof.

            (b) Payment of Additional Dividends

            Subject to Section 8 hereof, if, pursuant to Section 6(d) hereof,
additional Share Units are required to be credited to a Participant's Share Unit
Account in respect of Share Units that were held in the Participant's Share Unit
Account as of the record date for cash dividends paid on the Common Stock that
are paid after the payment to the Participant of a benefit in respect of such
Share Units, the Company shall pay to the Participant a cash amount in respect
of such dividends equal to the dollar amount of such dividends. Such amount
shall be paid to the Participant within 30 days after the dividend payment date.

8.    Forfeiture of Share Unit Awards

            Each Participant's Share Unit Account hereunder shall be
nonforfeitable, except that a Participant shall forfeit all rights to all
benefits hereunder in respect of Mandatory Conversions, Voluntary Conversions
and Share Units credited to the Participant's Share Unit Account if the
Participant's status as a director of the Company is terminated for "Cause," as
determined by the Board in its sole discretion.

                                      -5-
<PAGE>

9.    Certain Adjustments

            If there shall occur any recapitalization, reclassification, share
dividend, share split, reverse share split, or other distribution with respect
to the Common Stock, or other change in corporate structure affecting the Common
Stock, the Board may, in the manner and to the extent that it deems appropriate
and equitable to the Participants and consistent with the terms of this Plan,
cause an adjustment to be made to the number and kind of shares that may be
issued under the Plan and to the Participants' Restricted Stock and Share Unit
Accounts. It is intended that in making such adjustments to Share Unit Accounts,
the Board will seek to treat each Participant as if he were a shareholder of the
Common Stock of the number of Share Units credited to his Share Unit Account
(but without duplication of any benefits that may be provided under Section 6(d)
hereof). Except as is expressly provided in this Section, Participants shall
have no rights as a result of any such change in the Common Stock or other
event.

10.   Beneficiaries

            Any payment required to be made to a Participant hereunder that
cannot be made to the Participant because of his death shall be made to the
Participant's beneficiary or beneficiaries, subject to applicable law. Each
Participant shall have the right to designate in writing from time to time a
beneficiary or beneficiaries by filing a written notice of such designation with
the Board. In the event a beneficiary designated by the Participant does not
survive the Participant and no successor beneficiary is selected, or in the
event no valid designation has been made, such Participant's beneficiary shall
be such Participant's estate.

11.   Unfunded Status

            The Plan shall be unfunded, and Mandatory Conversions, Voluntary
Conversions, Share Units credited to each Participant's Share Unit Account and
all benefits payable to Participants under the Plan represent merely unfunded,
unsecured promises of the Company to pay a sum of money to the Participant in
the future.

12.   Transfers Prohibited

            No transfer (other than pursuant to Section 10 hereof) by a
Participant of any right to any payment hereunder, whether voluntary or
involuntary, by operation of law or otherwise, and whether by means of
alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge,
attachment, charge, or encumbrance of any kind, shall vest the transferee with
any interest or right, and any attempt to so alienate, sell, transfer, assign,
pledge, attach, charge, or otherwise encumber any such amount, whether presently
or thereafter payable, shall be void and of no force or effect.

13.   Limitation of Rights

            Except as provided in Section 5 hereof, nothing contained in the
Plan shall confer upon any Participant any right as a shareholder of the
Company. In addition, nothing contained

                                      -6-
<PAGE>

herein shall be deemed to create any obligation on the part of the Board to
nominate any director for re-election by the Company's shareholders or to limit
the rights of the shareholders to remove any director.

14.   Termination and Amendment

            The Plan may be terminated at any time by the Board. The Plan may be
amended by the Board from time to time in any respect; provided, however, that
no such
termination or amendment may reduce the number or the value of Share Units
theretofore credited or creditable to a Participant's Share Unit Account or
materially and adversely affect any rights or obligations with respect to any
Restricted Stock award made pursuant to Section 5 hereof without the affected
Participant's prior written consent.

15.   Choice of Law

            The Plan and all rights hereunder shall be subject to and
interpreted in accordance with the laws of the State of Delaware without giving
effect to principles of conflict of laws.

                                      -7-