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                                                                    Exhibit 10.5

                  REINSURANCE COMMUTATION AND RELEASE AGREEMENT

This Reinsurance Commutation and Release Agreement (hereinafter referred to as
the "Agreement"), is entered into by and between Philadelphia Insurance Company,
Philadelphia Indemnity Insurance Company, both of Bala Cynwyd, Pennsylvania, and
any and all other companies which are now or may hereafter become member
companies of Philadelphia Consolidated Holding Corporation (hereinafter referred
to collectively as the "Company") and Federal Insurance Company, Warren, New
Jersey, through Chubb Re, Inc., Bernardsville, New Jersey, and Harbor Point
Services, Inc. on behalf of Federal Insurance Company (hereinafter referred to
as "Chubb Re"). The Company and Chubb Re are sometimes referred to individually
as a "Party" and collectively as the "Parties."

WHEREAS, the Company and Chubb Re entered into the Whole Account Net Quota Share
Reinsurance Contract, effective April 1, 2003 and Addendum No. 1 thereto,
effective January 1, 2004 (hereinafter referred to collectively as the
"Treaty");

WHEREAS, the Company ceded and Chubb Re assumed a 45.0% share in the terms and
conditions under the Treaty for the period January 1, 2004 through December 31,
2004 (the "2004 Contract Year");

WHEREAS, the Company and Chubb Re have agreed to cancel and commute the 2004
Contract Year as of January 1, 2006, fully and finally settle, commute and
discharge any and all of their respective obligations and liabilities under the
2004 Contract Year, and enter into mutual releases relating thereto;

NOW THEREFORE, in consideration of the covenants, assumptions, promises,
payments, agreements and other good and valuable consideration recited as set
forth herein, the sufficiency of which is acknowledged, the Parties agree to the
following:

ARTICLE I - CONSIDERATION

In consideration for commuting the 2004 Contract Year, the Company shall receive
a commutation profit commission of $17,511,566.70 which shall be deemed to equal
45.0% of the balance of the Funds Withheld Account associated with the 2004
Contract Year under the provisions of the Treaty. Chubb Re shall retain 45.0% of
the Reinsurer's Expense Allowance paid under the 2004 Contract Year (being 45.0%
of 3.80% of the 2004 Contract Year Ceded Net Written Premium). Such amounts
shall be deemed to be fully earned by Chubb Re. Further, the Company
acknowledges that receipt of such commutation profit commission constitutes a
full and final settlement of all obligations of Chubb Re to the Company under
the 2004 Contract Year, and that no further amounts are or will be owed to the
Company by Chubb Re for the 2004 Contract Year.

ARTICLE II - MUTUAL RELEASE

Each Party hereto, on behalf of itself and its predecessors, successors,
assigns, affiliates and subsidiaries, and their past, present and future
officers, directors, shareholders, employees, agents, receivers, trustees,
attorneys, and legal representatives hereby releases, acquits, and

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forever discharges the other Party, its predecessors, successors, assigns,
affiliates and subsidiaries, and their past, present and future officers,
directors, shareholders, employees, agents, receivers, trustees, attorneys, and
legal representatives from any and all claims, loss debts, demands, causes of
action, liabilities, obligations, costs, disbursements, fees, attorneys' fees,
expenses, damages, and injuries of every kind, nature and description based on,
relating to, or arising out of the 2004 Contract Year, whether grounded in law
or in equity, in contract or in tort, including, but not limited to, any
common-law or statutory claims for fraud and misrepresentation, or statutory
RICO claims, whether or not now known, suspected, reported, or claimed whether
fixed or contingent, currently existing or arising in the future.

ARTICLE III - REPRESENTATIONS AND WARRANTIES

Both Parties to this Agreement hereby represent and warrant that:

1.   All judicial, statutory, regulatory, administrative, and/or ministerial
     actions necessary for the execution, delivery, and performance of this
     Agreement by each Party have been or will be duly taken, and that no
     further action, consent or approval of any person, entity, court or other
     governmental authority is required by either Party for the lawful execution
     or delivery of this Agreement or the lawful performance and consummation of
     the transactions contemplated herein, nor will such transactions violate
     any provision of any law or conflict with any order, writ, injunction, or
     decree of any court or other governmental authority.

2.   The individual executing this Agreement on behalf of each Party has the
     full legal right, power, and authority to execute and deliver this
     Agreement on behalf of such Party.

3.   The Parties represent each to the other that they have not assigned to
     third parties any claims intended to be released by this Agreement. The
     Parties are not aware of any third party who might assert some interest in
     any claims intended to be released hereunder.

4.   The Company and Chubb Re further agree and stipulate that they have
     completely read, fully understood, and voluntarily accepted the terms of
     this Agreement, and that:

     a.   By entering into this Agreement, neither the Company nor Chubb Re is
          making any representations as to any fact or circumstance other than
          those contained within this Agreement;

     b.   Neither the Company nor Chubb Re is relying upon the other, nor upon
          any person, third party, or anything other than its own independent
          knowledge and judgment and the advice of its own counsel in entering
          into this Agreement; and

     c.   Both Parties acknowledge that there is a risk that subsequent to
          execution of this Agreement certain facts, circumstances, or legal
          decisions may be discovered, established or adjudicated which were
          different from, less than, or greater than that believed or known by
          one of the Parties hereto at the time of the execution of this
          Agreement. It is further understood that the Parties hereby assume
          such risk and agree that this Agreement shall apply under any such
          different, unknown, or unanticipated conditions.

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ARTICLE IV - CONFIDENTIALITY AND NONDISCLOSURE

The Company and Chubb Re hereby expressly agree that the terms and conditions of
this Agreement shall be CONFIDENTIAL between Parties and shall not be disclosed
by either Party without the prior written consent of the other, except to the
broker of record of the Treaty, or where required by Order of a court,
administrative tribunal, regulatory body, arbitration panel or where required by
applicable law or regulation. In the event disclosure is to be made pursuant to
this Article, the disclosing Party shall use its best efforts to preserve the
confidentiality of such information, including giving prior written notice to
the other Party, specifying the information to be disclosed, the manner of
disclosure, and to whom disclosure is to be made. The other, non-disclosing
Party shall be provided a reasonable opportunity to oppose such disclosure.

ARTICLE V - GENERAL CONDITIONS

A.   This Agreement is binding on and shall inure to the benefit of all Parties
     hereto and their representative officers, directors, employees, agents,
     attorneys, shareholders, predecessors, parents, affiliates, subsidiaries,
     successors and assigns (including without limitation, any receiver,
     conservator, rehabilitator, liquidator, provisional liquidator, trustee or
     other statutory successor or quasi-statutory successor) upon its execution.

B.   The Parties specifically agree and acknowledge that the consideration for
     the commutation is being paid to the Company in good faith and constitutes
     fair consideration for the discharge of amounts allegedly owing now or
     potentially owing in the future by Chubb Re to the Company for the 2004
     Contract Year.

C.   This Agreement constitutes the entire understanding by and between the
     Parties hereto, superseding all negotiations, prior discussions,
     representations, promises, and understandings, oral or written, expressed
     or implied, made prior to or contemporaneous with its execution. This
     Agreement may only be modified or amended by written agreement, entered
     into subsequent to the date of this commutation and duly executed by the
     Parties hereto.

D.   The failure of the Parties to enforce any provision of this Agreement shall
     not be construed as a waiver of such provision or any other provision of
     this Agreement. No waiver of any provision of this Agreement shall be
     deemed a waiver of any of its other terms, nor shall such waiver constitute
     a continuing waiver.

E.   This Agreement may be executed and delivered in multiple counterparts, each
     of which, when so executed and delivered, shall be an original, but such
     counterparts shall together constitute but one of the same instrument and
     Agreement.

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F.   This Agreement shall be interpreted, construed, and enforced in accordance
     with the laws of the State of New York (without giving effect to conflicts
     of law principles).

IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized
representatives have executed this Agreement as of the dates undermentioned at:

Bala Cynwyd, Pennsylvania, this 26th day of January in the year 2006.


                                        Christopher J. Maguire,
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                                        Executive Vice President and
                                        Chief Underwriting Officer
                                        Philadelphia Insurance Company
                                        Philadelphia Indemnity Insurance Company

Bernardsville, New Jersey, this 27th day of January in the year 2006.


                                        Brian Hegarty,
                                        ----------------------------------------
                                        Managing Director
                                        Harbor Point Services, Inc. (for and on
                                        behalf of Federal Insurance Company)

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