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Exhibit 10.3 Addendum No. 3 to the Casualty Excess Of Loss Reinsurance Agreement No. TC988A,
B with Swiss Reinsurance America Corporation effective January 1, 2003





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ADDENDUM NO. 3

to the

CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. TC988A,B
(hereinafter referred to as the Agreement)

between

PHILADELPHIA CONSOLIDATED HOLDING CORPORATIONS
following member companies:
PHILADELPHIA INDEMNITY INSURANCE COMPANY
PHILADELPHIA INSURANCE COMPANY
both of Bala Cynwyd, Pennsylvania

and

SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
(hereinafter referred to as the Reinsurer)

It is understood and agreed that as respects policies in force at 12:01 a.m.,
Eastern Standard Time, January 1, 2003, and new and renewal policies becoming
effective on and after said date, this Agreement is amended as follows:

|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  |                                                                                                                                         
|-- |  | ------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|1. |  | Paragraph E. of Article I  Business Covered is amended as follows:
|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  |                                                                                                                                         
|   |  | E.                                                                  |  | Under this Agreement, the indemnity for reinsured loss applies
only to the following Classes of Insurance and Line of Business as
classified in the Companys Annual Statement, except as excluded under
Article VIII  Exclusions of this Agreement.
|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  |                                                                                                                                         
|   |  |                                                                     |  | CLASSES OF INSURANCE                                                                                                                                                                                                                                 
|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  |                                                                                                                                         
|   |  |                                                                     |  | 1.                                                                                                                                                                                                                                                    |  | Automobile Liability:                                                                                                                   
|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  |                                                                                                                                         
|   |  |                                                                     |  |                                                                                                                                                                                                                                                       |  | Bodily Injury Liability, Property Damage Liability, Medical
Payments, Uninsured Motorists, Underinsured Motorists and No-Fault
Coverage.



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

1.

TC



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|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | ----------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                               |  | 2.                                                                                                                                                                                                                                            |  | Liability Other Than Automobile:                                                                                                                                                                                                                                                                                                                                                                 
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  | Bodily Injury Liability, Property Damage Liability, Personal and
Advertising Injury Liability, and Medical Payments Coverage when
written as part of a Commercial or Personal Package Policy or on a
monoline basis. However, Kidnap and Ransom Liability shall only
apply to this Agreement when written as part of a Commercial
Package Policy or a Commercial General Liability Coverage Form.
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                               |  | 3.                                                                                                                                                                                                                                            |  | Professional Liability:                                                                                                                                                                                                                                                                                                                                                                          
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  | Employment Related Practices, Errors and Omission Liability and
Directors and Officers Liability.                                                                                                                                                                                                                                                                                                
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                               |  | 4.                                                                                                                                                                                                                                            |  | NAIC                                                                                                                                                                                                                                                                                                                                                                                             
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  | CODE: LINE OF BUSINESS:                                                                                                                                                                                                                                                                                                                                                                          
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  | 05 Commercial Multiple Peril (Section I only)                                                                                                                                                                                                                                                                                                                                                    
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|2. |  | Article II  Effective Date and Termination is amended to read as
follows:   
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  | ARTICLE II  EFFECTIVE DATE AND TERMINATION                                  
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  | A.                                                                            |  | This Agreement shall apply to losses occurring within the period
commencing 12:01 a.m., Eastern Standard Time, January 1, 2003, and
ending 12:01 a.m., Eastern Standard Time, January 1, 2004.                                               
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  | B.                                                                            |  | Upon termination of this Agreement, the Reinsurer shall be liable
for losses occurring prior to the date of termination; however, the
Reinsurer shall have no liability for losses occurring subsequent to
the termination of this Agreement.
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|3. |  | Paragraphs B. and D. of Article V  Ultimate Net Loss are amended as
follows:
|   |  |                                                                               |  |                                                                                                                                                                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  | B.                                                                            |  | The term Ultimate Net Loss shall include 90% of Extra
Contractual Obligations, as defined herein, but only as respects
business covered under this Agreement.                                                                              



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

2.

TC



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|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ----------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | D.                                                                                  |  | Declaratory Judgment Expenses is defined below and the Reinsurer
shall be liable for such expenses in accordance with the following:                                                                                                                                                                                                                                                                                                                                                                          
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  |                                                                                     |  | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | The term Declaratory Judgment Expenses shall mean all
legal expenses, incurred in the representation of the Company in
litigation brought to determine the Companys defense and/or
indemnification obligations, that are allocable to any specific
claim or loss covered by Policies reinsured under this Agreement.
In addition, the Company shall promptly notify the Reinsurer of
any Declaratory Judgment Expenses subject to this Agreement.
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  |                                                                                     |  | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Declaratory Judgment Expenses shall be recoverable in
accordance with the provisions set forth in Paragraph C. of this
Article and shall be further limited to the lesser of one times
the original policy limit or $1,000,000.                                                                                                                                                                                                                     
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. |  | Paragraph A. of Article VI  Loss In Excess of Policy Limits is amended
as follows:
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | A.                                                                                  |  | In the event the Company is liable to a policy holder as the
result of a settlement or judgment rendered against the policyholder
which is in excess of the Policy limit, 90% of that portion of the
award made to the third party claimant which is in excess of the
Companys Policy limit shall be added to the amount of the Companys
Policy limit and the sum thereof shall be considered one loss, subject
to the provision in Paragraph B. below and all other provisions set
forth in this Agreement.
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5. |  | The following exclusions are added to Article VIII  Exclusions:                   
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | Exclusion No. 9 of Paragraph A. is added to as follows:                            
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | 9.                                                                                  |  | Terrorism Exclusion Clause  Reinsurance (Casualty) which is
attached and made part of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                        
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | Exclusions 12., 13. and 14. of Paragraph B. are added as follows:                  
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | 12.                                                                                 |  | Homeowners and Mobilehomeowners  Section 1 (Property).                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | 13.                                                                                 |  | Auto Physical Damage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |  |                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |  | 14.                                                                                 |  | GAPP when written as part of the Companys Rental and Leasing
Program or as such.                                                                                                                                                                                                                                                                                                                                                                                                                             



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

3.

TC



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|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|-- |  | --------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|6. |  | Paragraphs A. and B. of Article X  Reinsurance Premium are amended to
read as follows:
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|   |  | A.                                                                                      |  | The Company shall pay to the Reinsurer a premium for the
reinsurance provided at a rate of .18%. Such rate shall be applied to
the Companys Subject Earned Premium during the term of this
Agreement. The Companys estimated Subject Earned Premium for the
business covered hereunder during the term of this agreement is
$575,095,542.                                                                                                                                                                                                                                              
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|   |  | B.                                                                                      |  | A deposit premium of $1,035,172 shall be payable by the Company
to the Reinsurer in twelve equal installments of $86,264 each due on
the 1st of every month. As promptly as possible after the termination
of this Agreement, the Company shall render a statement to the
Reinsurer showing the actual reinsurance premiums due hereunder. If
such premium calculations differ from the deposit previously paid, the
debtor party shall pay the outstanding balance as soon as practicable.
However, in no event shall the adjusted premium be less than the
minimum premium of $828,138.
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|7. |  | Paragraph B. of Article XI  Reports and Remittances is deleted in its
entirety.       
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|8. |  | Article XXIII  Reinstatement is added to this Agreement as follows:                   
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|   |  | A.                                                                                      |  | Each claim hereunder reduces the amount of indemnity from the
time of occurrence of the loss by the sum paid, but any amount so
exhausted is hereby reinstated from the time the Loss Occurrence
commences hereon.                                                                                                                                                                                                                                                                                                                                                                       
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|   |  | B.                                                                                      |  | There shall be one reinstatement, of which the Company agrees to
pay an additional premium calculated at 100% of the reinsurance
premium hereon.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |  |                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|   |  | C.                                                                                      |  | Nevertheless, the Reinsurers liability hereunder shall never
exceed $5,000,000 in respect of any one Loss Occurrence and shall be
further limited in all during the term of this Agreement to
$10,000,000.                                                                                                                                                                                                                                                                                                                                                                              

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

4.

TC



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IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
by their duly authorized representatives as of the following dates:

In Bala Cynwyd, Pennsylvania, this 12th day of September, 2003.

|                     |  |                                                    |  |                            
|-------------------- |  | -------------------------------------------------- |  | ---------------------------
|ATTEST:              |  | PHILADELPHIA
CONSOLIDATED HOLDING    CORPORATIONS
|                     |  |                                                    |  | following member companies:
|                     |  | PHILADELPHIA
INDEMNITY INSURANCE    COMPANY       
|                     |  | PHILADELPHIA INSURANCE COMPANY                    
|                     |  |                                                    |  |                            
|Florence R. McCallum |  | Christopher J. Maguire                            
|                     |  |                                                   

And in Armonk, New York, this 5th day of September, 2003.

|                        |  |                                      
|----------------------- |  | -------------------------------------
|ATTEST:                 |  | SWISS REINSURANCE AMERICA CORPORATION
|                        |  |                                      
|Peter Thomson           |  | Michael Taxter                       
|                        |  |                                      
|Member of Management    |  | Member of Senior Management          
|                       
|FC: jh
dsPHIL988A, B-A3 |  |                                      



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

5.

TC



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TERRORISM EXCLUSION CLAUSE  REINSURANCE (CASUALTY)

Notwithstanding any provision to the contrary within this Agreement or any
endorsement thereto, this reinsurance Agreement does not cover any liability,
loss, cost or expense of whatsoever nature directly or indirectly caused by,
resulting from, arising out of or in connection with any act of terrorism
regardless of any other cause contributing concurrently or in any other
sequence to the liability, loss, cost or expense.

For the purpose of this exclusion, terrorism means any actual or threatened
violent act or act harmful to human life, tangible or intangible property or
infrastructure, directed towards or having the effect of (a) influencing or
protesting against any de jure or de facto government or policy thereof or (b)
intimidating, coercing or putting in fear a civilian population or section
thereof.

In any action, suit or other proceedings where the reinsurer alleges that by
reason of this exclusion a liability, loss, cost or expense is not covered by
this reinsurance Agreement, the burden of proving that such liability, loss,
cost or expense is covered shall be upon the reinsured.
TERR-CAS



| |  | No. TC988A, B
Addendum No. 3
| |  | ----------------------------

6.

TC