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TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT
 EFFECTIVE MARCH 1, 2007
  PHILADELPHIA INSURANCE COMPANY   PHILADELPHIA INDEMNITY INSURANCE COMPANY
 BALA CYNWYD, PENNSYLVANIA, USA
   VALIDUS REINSURANCE, LTD.
 HAMILTON, BERMUDA
  
  
  VALIDUS REINSURANCE, LTD.BY:

/s/
JEFF A. CLEMENTSTITLE:  EXECUTIVE VICE PRESIDENT




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PHILADELPHIA INSURANCE COMPANY
And
PHILADELPHIA INDEMNITY INSURANCE COMPANYBY:

/s/
CHRISTOPHER MAGUIRETITLE:  EXECUTIVE VICE PRESIDENT AND CHIEF UNDERWRITING OFFICER TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT
 EFFECTIVE MARCH 1, 2007
  PHILADELPHIA INSURANCE COMPANY   PHILADELPHIA INDEMNITY INSURANCE COMPANY
 BALA CYNWYD, PENNSYLVANIA, USA




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PHILADELPHIA INSURANCE COMPANY
And
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania, USA
 TERRORISM CATASTROPHE EXCESS OF LOSS
REINSURANCE CONTRACT
  Article I
    
    BUSINESS COVERED
    
    PAGE 1Article II
    
    COMMENCEMENT AND TERMINATION
    
    PAGE 2Article III
    
    REINSURANCE COVERAGE
    
    PAGE 2Article IV
    
    EXCLUSIONS
    
    PAGE 5Article V
    
    REINSURANCE PREMIUM
    
    PAGE 7Article VI
    
    DEFINITION  OF LOSS OCCURRENCE
    
    PAGE 8Article VII
    
    NET RETAINED LINES
    
    PAGE 8Article VIII
    
    REVIEW
    
    PAGE 9Article IX
    
    REPORTS, LOSS AND LOSS SETTLEMENTS
    
    PAGE 11Article X
    
    ORIGINAL CONDITIONS
    
    PAGE 12Article XI
    
    ERRORS AND OMISSIONS
    
    PAGE 12Article XII
    
    CURRENCY
    
    PAGE 13Article XIII
    
    FEDERAL EXCISE TAX AND OTHER TAXES
    
    PAGE 13Article XlV
    
    ACCESS TO RECORDS
    
    PAGE 13Article XV
    
    RESERVES
    
    PAGE 14Article XVI
    
    SERVICE OF SUIT
    
    PAGE 17Article XVIl
    
    ARBITRATION
    
    PAGE 18Article XVIll
    
    INSOLVENCY
    
    PAGE 22Article XlX
    
    CLAIMS COOPERATION
    
    PAGE 23Article XX
    
    CONFIDENTIALITY
    
    PAGE 23Article XXI
    
    LATE PAYMENTS
    
    PAGE 24Article XXIl
    
    OFFSET
    
    PAGE 25Article XXIll
    
    SPECIAL TERMINATION
    
    PAGE 25Article XXlV
    
    TERRORISM RECOVERY  TERRORISM RISK INSURANCE ACT OF 2002
    
    PAGE 28Article XXV
    
    VARIOUS OTHER TERMS
    
    PAGE 28Article XXVI
    
    INTERMEDIARY
    
    PAGE 30




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1. PHILADELPHIA INSURANCE COMPANY
And
PHILADELPHIA INDEMNITY INSURANCE COMPANY
Bala Cynwyd, Pennsylvania, USA
(hereinafter referred to as the Reinsured)
 TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT
(hereinafter referred to as the Contract)
 ARTICLE I  BUSINESS COVERED
   Check
    
    Line of Business
    
    Check
    
    Line of Business
    
    CheckInland Marine
    
    
    
    Other CasualtyCommercial Property
    
    x
    
    Professional
Liability
    
    xPersonal Lines;
    
    
    
    Wet Marinehowever, PersonalAutomobile shall beexcludedLiability
    
    x
    
    Other lines of
    
    
    
    Line of Businessbusiness
    
    
    
    (to be filled in asapplicable)Umbrella Liability
    
    x




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2. ARTICLE II  COMMENCEMENT AND TERMINATION
   ARTICLE III  REINSURANCE COVERAGE
 Part One  Acts of Terrorism
 Section I (applicable to Loss Occurrence covered in conjunction with TRIA/ TRIEA)




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3. Section II (applicable to Loss Occurrence not covered in conjunction with TRIA/ TRIEA)
   (i)
    
    involves violence against one or more persons; or(ii)
    
    involves damage to property; or(iii)
    
    endangers life other than that of the person committing the
action; or(iv)
    
    creates a risk to health or safety of the public or a section
of the public; or(v)
    
    involves physical loss, damage, cost, or expense caused by,
contributed to by, resulting from, or arising out of or in connection with any
action in directly responding to any Act of Terrorism; or(vi)
    
    are defined as such in any of the Reinsureds policy forms
that have been the subject of the Reinsurers express written prior review and
approval.




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4. Section III (Applicable to both Section I and Section II)
   Part Two  Reinsurance Loss




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5. ARTICLE IV  EXCLUSIONS
  1.
    
    An act committed as part of the course of a war declared by
the Congress of the United States of America as set forth in Section
102(1)(B)(i) of TRIA as amended by TREIA; or2.
    
    Seizure or illegal occupation; or3.
    
    Confiscation, requisition, detention, legal or illegal
occupation, embargo, quarantine, or an order of public or governmental
authority which deprives the insured of the use or value of the property, or
arising from acts of contraband or illegal transportation or illegal trade; or4.
    
    Contingent Business Interruption, written as such, unless
specially accepted by the Reinsurers hereon; or5.
    
    Workers Compensation and Employers Liability, written as
such; or6.
    
    Pollutants or contaminants whether directly or indirectly
arising from or as consequence of the discharge of pollutants or contaminants,
which pollutants and contaminants shall include but not be limited to any
solid, liquid, gaseous or thermal irritant, contaminant or toxic or hazardous
substance or any substance the presence, existence or release of which
endangers or threatens to endanger the health, safety or welfare of persons or
the environment; or7.
    
    Electronic attack, including computer hacking or the
introduction of any form of computer virus. Notwithstanding the foregoing,
this Contract will respond to a Loss Occurrence arising from attacks involving
the use of a mobile telephone, remote control, or radio controlled device or
any other electronic device or system or such like in the launch and/or
guidance system and/or firing mechanism and/or detonation of any explosive
bomb, weapon or missile subject always to the other terms and conditions of
this Contract; or8.
    
    Increased cost occasioned by any Public or Civil Authoritys
enforcement of any ordinance or law regulating the reconstruction, repair or
demolition of any property; or




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6. 9
    
    Cessation, fluctuation or variation in, or insufficiency of,
water, gas or electricity supplies and telecommunications of any type or
service; or10.
    
    Threat or hoax, in the absence of physical damage due to an
act or series of Acts of Terrorism; or11.
    
    Burglary, house  breaking, theft or larceny or caused by any
person taking part therein; or12.
    
    Extra Contractual Obligation. Extra Contractual Obligation
means liabilities, including Loss Excess of Policy Limits, that are not
covered under any other provision of this Contract and which arise from the
handling of any claim on Business Covered hereunder by reason of alleged or
actual negligence, gross negligence, fraud, or bad faith on the part of the
Company. As used herein, Loss Excess of Policy Limits means any amount of
loss, together with any legal costs and expenses incurred in connection
therewith, paid as damages or in settlement by the Reinsured in excess of its
Policy Limits, but otherwise within the coverage terms of the Policy, arising
from an allegation or claim of its insured, its insureds assignee, or other
third party, which alleges negligence, gross negligence, bad faith or other
tortuous conduct on the part of the Reinsured in the handling of a claim under
a Policy subject to this Contract, in rejecting a settlement within the Policy
Limits, in discharging a duty to defend or prepare the defense in the trial of
an action against its insured, or in discharging its duty to prepare or
prosecute an appeal consequent upon such an action. For the avoidance of
doubt, the decision by the Reinsured to settle a claim for an amount within
the coverage of the Policy but not within the Policy limit when the Reinsured
has reasonable basis to believe that it may have liability to its insured or
assignee or other third party on the claim will be deemed a Loss Excess of
Policy Limits.




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7.  ARTICLE V  REINSURANCE PREMIUM
 Part One  Premium
  Part Two  Reinstatement Premium
    Part Three  No Claims Bonus




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8.  ARTICLE VI  DEFINITION OF LOSS OCCURRENCE
   ARTICLE VII  NET RETAINED LINES




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9.   ARTICLE VIII  REVIEW
  1.
    
    Change in control of the Reinsured via a closing upon a
definitive agreement to sell or merge approved by the applicable regulatory
authorities including but not limited to (a) become merged with, acquired or
controlled by any company, corporation or individual(s) not controlling the
partys operations previously (though excluding transactions among entities
under common control); or2.
    
    a transfer by portfolio transfer of the Business Covered; or3.
    
    Material Change in the Reinsureds Underwriting Practices
that materially increases the Reinsureds underwriting exposure to a Loss
Occurrence arising from an Act of Terrorism. For the purpose of this
condition, a material change shall mean the following: (i) from inception, an
increase of 20% or USD20,000,000, whichever is greater, or more in the Total
Insured Values covered in those zip codes set forth in Schedule A, Target Area
zip codes (Target Area TIV Increase) or (ii) any material change to the
Reinsureds coverage forms concerning terrorism (Material Change), or (iii)
the commencement of the Reinsured offering terrorism coverage on a stand-alone
basis (Offering of Stand-Alone Terrorism).




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10. As used herein, the reference to a zip code or a Target Area zip code
shall mean that entire area encompassed by all zip codes within an area
described by reference only to the first three digits of a zip code.For example, an area made up of zip codes 89712, 89713, and 89714 will
be considered for the purposes of this Contract the zip code or Target
Area zip code of 897
   1.
    
    The Reinsurer shall have the right to review the impact of
any Material Change in the Reinsureds Underwriting Practices and either
accept the change or propose a modification to the terms of this Contract;2.
    
    In the event that: (i) the Material Change in the Reinsureds
Underwriting Practices is not reported to the Reinsurer in a timely fashion or
(ii) the Reinsured does not accept the Reinsurers proposal to modify the
terms of this Contract per sub-paragraph C1. above, then the following
conditions shall apply:
 a.
    
    In respect of a Material Change or Offering
of Stand-Alone Terrorism, no coverage shall be afforded hereunder for
that portion of Net Loss from a Loss Occurrence that occurs after the
date of the Material Change/Offering of Stand-Alone Terrorism that
directly results from such Material Change and/or Offering of
Stand-Alone Terrorism.b.
    
    In respect of a Target Area TIV Increase,
the Reinsurer shall have the option to reduce the contribution to Net
Loss in a Loss Occurrence from a Target Area according to the
following fraction:




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11.  *
 
 *
    
    In the event that USD20,000,000 is greater than 1.2 times
the Total Insured Value in the applicable Target Area at the inception of
this Contract, such amount shall be utilized rather than 1.2 times the
Total Insured Value in the applicable Target Area at the inception of this
Contract. ARTICLE IX  REPORTS, LOSS AND LOSS SETTLEMENTS
 Part One  Reinsured Exposures
   Part Two  Claim Reporting




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12.    ARTICLE X  ORIGINAL CONDITIONS
  ARTICLE XI  ERRORS AND OMISSIONS




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13. ARTICLE XII  CURRENCY
  ARTICLE XIII  FEDERAL EXCISE TAX AND OTHER TAXES
   ARTICLE XIV  ACCESS TO RECORDS




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14. ARTICLE XV  RESERVES
 (Unless otherwise required by law to obtain full credit for this Contract, in recognition of the
security in place under the Lloyds Credit for Reinsurance Trust, the provisions of this Article
shall not apply to participating Lloyds syndicates
   1.
    
    Clean, irrevocable, and unconditional evergreen letter(s) of
credit issued and confirmed, if confirmation is required by the applicable
insurance regulatory authorities, by a qualified United States financial
institution as defined under the Insurance Law of the Reinsureds domiciliary
state and acceptable to the Reinsured and to insurance regulatory authorities;2.
    
    A trust account meeting at least the standards of New Yorks
Insurance Regulation 114 and the Insurance Law of the Reinsureds domiciliary
state; or3.
    
    Cash advances or funds withheld or a combination of both,
which will be under the exclusive control of the Reinsured (Funds Deposit).
  1.
    
    The amount of the ceded unearned premium reserve for which
the Reinsurer is responsible to the Reinsured;




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15. 2.
    
    The amount of Net Loss and other amounts paid by the Reinsured for which
the Reinsurer is responsible to the Reinsured but has not yet paid;3.
    
    The amount of ceded reserves for Net Loss for which the
Reinsurer is responsible to the Reinsured;4.
    
    The amount of return and refund premiums paid by the
Reinsured for which the Reinsurer is responsible to the Reinsured but has not
yet paid.
  1.
    
    Established letter of credit (or subsequent cash deposit);2.
    
    Established trust account (or subsequent cash deposit); or3.
    
    Funds Deposit;
   1.
    
    To make payment to and reimburse the Reinsured for the
Reinsurers share of Net Loss and other amounts paid by the Reinsured under
its Policies and for which the Reinsurer is responsible under this Contract
that is due to the Reinsured but unpaid by the Reinsurer including but not
limited to the Reinsurers share of premium refunds and returns; and2.
    
    To obtain a cash advance of the entire amount of the
remaining balance under any letter of credit in the event that the Reinsured:
 a)
    
    has received notice of non-renewal or
expiration of the letter of credit or trust account;b)
    
    has not received assurances satisfactory to
the Reinsured of any required increase in the amount of the letter of
credit or trust account, or its replacement or other continuation of
the letter of credit or trust account at least thirty (30) days
before its stated expiration date;




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16. c)
    
    has been made aware that others may attempt to attach or otherwise
place in jeopardy the security represented by the letter of credit
or trust account; ord)
    
    has concluded that the trustee or issuing
(or confirming) banks financial condition is such that the security
represented by the letter of credit or trust account may be in
jeopardy;
 and under any of those circumstances where the Reinsurers entire Obligations, or
part thereof, under this Contract remain un-liquidated and un-discharged at least
thirty (30) days prior to the stated expiration date or at the time the Reinsured
learns of the possible jeopardy to the security represented by the letter of credit
or trust account.
  1.
    
    Upon the complete and final liquidation and discharge of all
of the Reinsurers Obligations to the Reinsured under this Contract; or2.
    
    In the event the Reinsurer subsequently provides alternate or
replacement security consistent with the terms hereof and acceptable to the
Reinsured.




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17.      ARTICLE XVI  SERVICE OF SUIT




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18.     ARTICLE XVII  ARBITRATION




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19.




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20.




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21.




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22.  ARTICLE XVIII  INSOLVENCY




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23.   ARTICLE XIX  CLAIMS COOPERATION
  ARTICLE XX  CONFIDENTIALITY




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24.  ARTICLE XXI  LATE PAYMENTS




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25.  ARTICLE XXII  OFFSET
  ARTICLE XXIII  SPECIAL TERMINATION
  1.
    
    The Reinsurer ceases active underwriting operations or a
State Insurance Department or other legal authority orders the Reinsurer to
cease writing business in all jurisdictions; or2.
    
    The Reinsurer has: a) become insolvent, b) been placed under
supervision (voluntarily or involuntarily), c) been placed into liquidation or
receivership, or d) had instituted against it proceedings for the appointment
of a supervisor, receiver, liquidator, rehabilitator, conservator or trustee
in bankruptcy, or other agent known by whatever name, to take possession of
its assets or control of its operations; or3.
    
    The Reinsurers (a) policyholders surplus (PHS) has been




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26. reduced by whichever is greater, (i) twenty percent (20%) of the amount of
PHS at the inception of this Contract or (ii) twenty percent (20%) of the
amount of PHS stated in its last filed quarterly or annual statutory
statement with its state of domicile; or (b) AM Bests insurer financial
strength rating becomes less than A- (N.B. as respects alien Reinsurers, a
Standard & Poors Insurance Rating of less than BBB will apply; as
respects Lloyds Syndicates where an AM Best insurer financial strength
rating is not available, a reduction of the Reinsurers S&P Lloyds
Syndicate Assessment (LSA) ranking from the LSA ranking that was in effect
at the inception of this Contract); or4.
    
    The Reinsurer has entered into a definitive agreement to (a)
become merged with, acquired or controlled by any company, corporation or
individual(s) not affiliated with or controlling the partys operations
previously; or (b) directly or indirectly assign all or essentially all of its
entire liability for Obligations (as defined in the Article entitled
Reserves) under this Contract to another party without the Reinsureds prior
written consent; or5.
    
    There is either (a) a severance or obstruction of free and
unfettered communication and/or normal commercial or financial intercourse
between the United States of America and the country in which the Reinsurer is
incorporated or has its principal office as a result of war, currency
regulations or any circumstances arising out of political, financial or
economic uncertainty; or (b) a severance (of any kind) of any two or more of
the following executives of the Reinsurer from active employment of the
Reinsurer during the most recent sixty (60) day period: President, Chief
Underwriting Officer, Chief Actuary, Chief Claims Officer or Chief Financial
Officer.




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27.




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28.  ARTICLE XXIV  TERRORISM RECOVERY  TERRORISM RISK INSURANCE ACT OF 2002
    ARTICLE XXV  VARIOUS OTHER TERMS




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29.




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30.    ARTICLE XXVI  INTERMEDIARY




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SCHEDULE A
 TARGET AREA ZIP CODES
 ZIP CODE
    
    US STATE
    
    US COUNTY10022
    
    NEW YORK
    
    NEW YORK89109
    
    NEVADA
    
    CLARK10017
    
    NEW YORK
    
    NEW YORK10036
    
    NEW YORK
    
    NEW YORK10019
    
    NEW YORK
    
    NEW YORK10020
    
    NEW YORK
    
    NEW YORK60606
    
    ILLINOIS
    
    COOK10001
    
    NEW YORK
    
    NEW YORK10038
    
    NEW YORK
    
    NEW YORK22102
    
    VIRGINIA
    
    FAIRFAX10004
    
    NEW YORK
    
    NEW YORK10021
    
    NEW YORK
    
    NEW YORK60603
    
    ILLINOIS
    
    COOK55402
    
    MINNESOTA
    
    HENNEPIN92618
    
    CALIFORNIA
    
    ORANGE23607
    
    VIRGINIA
    
    NEWPORT NEWS CITY90245
    
    CALIFORNIA
    
    LOS ANGELES (REST OF)60611
    
    ILLINOIS
    
    COOK94104
    
    CALIFORNIA
    
    SAN FRANCISCO90278
    
    CALIFORNIA
    
    LOS ANGELES (REST OF)92101
    
    CALIFORNIA
    
    SAN DIEGO