<PAGE>


                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of
the 1st day of January, 2002 (the "Effective Date"), between HCC INSURANCE
HOLDINGS, INC. ("HCC" or the "Company"), and Edward H. Ellis, Jr.

("Executive"), sometimes collectively referred to herein as the "Parties."

                                    RECITALS:

         WHEREAS, Executive is to be employed as Executive Vice President and
Chief Financial Officer;

         WHEREAS, it is the desire of the Board of Directors of HCC (the
"Board") to directly engage Executive as an officer of HCC and its subsidiaries;

         WHEREAS, Executive is desirous of committing himself to serve HCC on
the terms herein provided; and

         WHEREAS, Executive and HCC have previously entered into an Employment
Agreement dated effective January 5, 2000 (the "2000 Contract") which is to be
cancelled, terminated and be of no further force or effect;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:

         1. TERMINATION OF 2000 CONTRACT AND TERM. Effective as of the Effective
Date, the 2000 Contract shall be cancelled, terminated and be of no further
force or effect. The Company hereby agrees to employ Executive as Executive Vice
President and Chief Financial Officer, and Executive hereby agrees to accept
such employment, on the terms and conditions set forth herein, for the period
commencing on the Effective Date and expiring as of 11:59 p.m. on December 31,
2006 (the "Basic Term") (unless sooner terminated as hereinafter set forth).

         2. DUTIES.

          (a) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall, subject to the
supervision of the President of the Company, act as Executive Vice President and
Chief Financial Officer of HCC in the ordinary course of its business with all
such powers with respect to such management and control as may be reasonably
incident to such responsibilities. During normal business hours, Executive shall
devote his full time and attention to diligently attending to the business of
the Company during the Basic Term. During the Basic Term, Executive shall not
directly or indirectly render any services of a business, commercial, or
professional nature to any other person, firm, corporation, or organization,
whether for compensation or otherwise, without the



<PAGE>

prior written consent of the President of HCC. However, Executive shall have the
right to engage in such activities as may be appropriate in order to manage his
personal investments so long as such activities do not materially interfere or
conflict with the performance of his duties to the Company hereunder. The
conduct of such activity shall not be deemed to materially interfere or conflict
with Executive's performance of his duties until Executive has been notified in
writing thereof and given a reasonable period in which to cure the same.

          (b) OTHER DUTIES. If elected, Executive agrees to serve as a member of
such managerial Committees of HCC and of any of its subsidiaries and in one or
more executive offices of any of HCC's subsidiaries, provided Executive is
indemnified for serving in any and all such capacities in a manner acceptable to
the Company and Executive. If elected, Executive agrees that he shall not be
entitled to receive any compensation for serving as a director of HCC, or in any
capacities of HCC's subsidiaries other than the compensation to be paid to
Executive by the Company pursuant to this Agreement.

         3. COMPENSATION AND RELATED MATTERS.

          (a) BASE SALARY. Executive shall receive a base salary paid by the
Company as follows: $325,000 in the year 2002 and increasing by $25,000 per year
in each calendar year thereafter for the Basic Term in substantially equal
monthly installments. For purposes of this Agreement, "Base Salary" shall mean
the Executive's initial base salary or, if increased, then the increased base
salary.

          (b) BONUS PAYMENTS AND OPTIONS.

               (i) Bonus Payments. Executive shall be eligible to receive, in
addition to the Base Salary, an annual cash and/or stock bonus payment in
amount, which may be zero, to be determined at the sole discretion of the
Compensation Committee.

               (ii) Options: Executive shall receive options to acquire 100,000
shares of the Company's common stock. Such options shall vest in five (5) equal
annual installments commencing on the first anniversary of the Effective Date.
Such options shall expire on the sixth anniversary of the Effective Date. The
options shall be granted pursuant to the Company's existing Stock Option Plans.

          (c) EXPENSES. During the Basic Term, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established by the Board for the
Company's senior executive officers) in performing services hereunder, provided
that Executive properly accounts therefor in accordance with Company policy.

          (d) OTHER BENEFITS. Executive shall be entitled to participate in or
receive benefits under any compensation, employee benefit plan, or other
arrangement made generally available by the Company now or in the future to its
senior executive officers, subject to and on a basis consistent with the terms,
conditions, and overall administration of such plan or arrangement. Nothing paid
to Executive under any plan or arrangement presently in effect or made available
in the future shall be deemed to be in lieu of the Base Salary payable to
Executive pursuant to Paragraph (a) of this

                                       2

<PAGE>

Section. The Company shall not make any changes in any employee benefit plans or
other arrangements in effect on the date hereof or subsequently in effect in
which Executive currently or in the future participates (including, without
limitation, each pension and retirement plan, supplemental pension and
retirement plan, savings and profit sharing plan, stock or unit ownership plan,
stock or unit purchase plan, stock or unit option plan, life insurance plan,
medical insurance plan, disability plan, dental plan, health and accident plan,
or any other similar plan or arrangement) that would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to executives of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to Executive as
compared with any other executive of the Company.

          (e) VACATIONS. Executive shall be entitled to twenty (20) paid
vacation days per year during the Basic Term. There shall be no carryover of
unused vacation from year to year. For purposes of this Paragraph, weekends
shall not count as vacation days, and Executive shall also be entitled to all
paid holidays given by the Company to its senior executive officers.

          (f) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits provided generally to an executive officer of
HCC in accordance with any practice established by the Board.

          (g) PRORATION. Any payments or benefits payable to Executive hereunder
in respect of any calendar year during which Executive is employed by the
Company for less than the entire year, unless otherwise provided in the
applicable plan or arrangement, shall be prorated in accordance with the number
of days in such calendar year during which he is so employed. Notwithstanding
the foregoing, any payments pursuant to Paragraph 4(c) or 4(d) this Agreement
shall not be subject to proration.

         4. TERMINATION.

          (a) DEFINITIONS.

               (1) "CAUSE" shall mean:

                    (i) Material dishonesty which is not the result of an
          inadvertent or innocent mistake of Executive with respect to the
          Company or any of its subsidiaries;

                    (ii) Willful misfeasance or nonfeasance of duty by Executive
          intended to injure or having the effect of injuring in some material
          fashion the reputation, business, or business relationships of the
          Company or any of its subsidiaries or any of their respective
          officers, directors, or employees;

                    (iii) Material violation by Executive of any material term
          of this Agreement;

                                       3

<PAGE>

                    (iv) Conviction of Executive of any felony, any crime
          involving moral turpitude or any crime other than a vehicular offense
          which could reflect in some material fashion unfavorably upon the
          Company or any of its subsidiaries.

          Executive may not be terminated for Cause unless and until there has
          been delivered to Executive written notice from the Board supplying
          the particulars of his acts or omissions that the Board believes
          constitute Cause, a reasonable period of time (not less than 30 days)
          has been given to Executive after such notice to either cure the same
          or to meet with the Board with his attorney if so desired by
          Executive, and following which the Board furnishes to Executive a
          written resolution specifying in detail its findings that Executive
          has been terminated for Cause as of the date set forth in the notice
          to Executive.

               (2) A "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                         (i) Any "person" or "group" (within the meaning of
          Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
          other than a trustee or other fiduciary holding securities under an
          employee benefit plan of the Company becomes the "beneficial owner"
          (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),
          directly or indirectly, of 50% or more of the Company's then
          outstanding voting common stock; or

                         (ii) The shareholders of the Company approve a merger
          or consolidation of the Company with any other corporation, other than
          a merger or consolidation (a) in which a majority of the directors of
          the surviving entity were directors of the Company prior to such
          consolidation or merger, or (b) which would result in the voting
          securities of the Company outstanding immediately prior thereto
          continuing to represent (either by remaining outstanding or by being
          changed into voting securities of the surviving entity) more than 50%
          of the combined voting power of the voting securities of the surviving
          entity outstanding immediately after such merger or consolidation; or

                         (iii) The shareholders approve a plan of complete
          liquidation of the Company or an agreement for the sale or disposition
          by the Company of all or substantially all of the Company's assets.

               (3) A "DISABILITY" shall mean the absence of Executive from
Executive's duties with the Company on a full-time basis for 180 consecutive
days, or 180 days in a 365-day period, as a result of incapacity due to mental
or physical illness which results in the Executive being unable to perform the
essential functions of his position, with or without reasonable accommodation.

               (4) A "GOOD REASON" shall mean any of the following (without
Executive's express written consent):

                    (i) Within six (6) months following a Change of Control,
          there is a material alteration in the nature or status of Executive's
          duties or responsibilities, or the

                                       4

<PAGE>

          assignment of duties or responsibilities inconsistent with,
          Executive's status, duties or responsibilities (a "Material
          Alteration");

                    (ii) A failure by the Company to continue in effect any
          employee benefit plan in which Executive was participating, or the
          taking of any action by the Company that would adversely affect
          Executive's participation in, or materially reduce Executive's
          benefits under, any such employee benefit plan, unless such failure or
          such taking of any action adversely affects the management of the
          Company generally;

                    (iii) Executive's relocation to any place, other than the
          executive offices as a result of the Company relocating its executive
          offices, exceeding a distance of fifty (50) miles from the Company's
          current executive office located in Houston, Texas, except for
          reasonably required travel by Executive on the Company's business;

                    (iv) Any material breach by the Company of any material
          provision of this Agreement; or

                    (v) Any failure by the Company to obtain the assumption and
          performance of this Agreement by any successor (by merger,
          consolidation, or otherwise) or assign of the Company.

However, Good Reason shall exist with respect to an above specified matter only
if (i) such matter relates to subparagraphs (ii), (iii), (iv) or (v) hereof, and
it is not corrected by the Company within thirty (30) days after the Company's
receipt of written notice of such matter from Executive or (ii) if there is a
Material Alteration and it relates to subparagraph (i) hereof, such matter is
not corrected after receipt of written notice by the later of thirty (30)days
following receipt of the written notice, or six months following the Change of
Control; and in no event shall a termination by Executive occurring more than
the later of ninety (90) days following the date of the event described above or
sixty (60) days after the end of the six months following a Change of Control be
a termination for Good Reason due to such event.

               (5) "TERMINATION DATE" shall mean the date Executive terminates
or is terminated for any reason pursuant to this Agreement.

          (b) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON: BENEFITS. In the
event there is a termination by the Company without Cause, or if Executive
terminates for Good Reason (a "Termination Event"), this Agreement shall
terminate and Executive shall be entitled to the following severance benefits:

               (1) For the remainder of the Basic Term after the Termination
     Date, Base Salary (as defined in Paragraph 3(a)), payable in a lump sum,
     appropriately discounted to take into consideration the lump sum early
     payment;

               (2) If there is a Termination Event, any stock options ("Stock
     Awards") which Executive has received under this Agreement or otherwise
     shall vest immediately and

                                       5

<PAGE>

     all such Stock Awards shall be exercisable for thirty (30) days from the
     date of such Termination Event or the remainder of their term, whichever is
     less;

               (3) To the extent not theretofore paid or provided, the Company
     shall timely pay or provide to Executive any other amounts or benefits
     required to be paid or provided or which Executive is eligible to receive
     under any plan, program, policy or practice, or contract or agreement of
     the Company and its affiliated companies for the period of time equal to
     the lesser of six months following Executive's Termination or the date
     Executive begins new employment. The Company, at its sole expense, shall
     continue to provide (through its own plan and/or individual policies)
     Executive (and Executive's dependents) with health benefits no less
     favorable than the group health plan benefits provided generally during
     such period to the senior executive officers of the Company or any
     affiliated company (to the extent any such coverage or benefits are taxable
     to Executive by reason of being provided under a self-insured health plan
     of the Company or an affiliate, the Company shall make Executive "whole"
     for the same on an after-tax basis), provided, however, such coverage shall
     be secondary to any group health plan coverage Executive (or his
     dependents) receive from another employer, (such other amounts and benefits
     shall be hereinafter referred to as the "Other Benefits");

               (4) All accrued compensation and unreimbursed expenses through
     the Termination Date. Such amounts shall be paid to Executive in a lump sum
     in cash within thirty (30) days after the Termination Date; and

               (5) Executive shall be free to accept other employment during
     such period, and there shall be no offset of any employment compensation
     earned by Executive in such other employment during such period against
     payments due Executive under this Paragraph (4), and there shall be no
     offset in any compensation received from such other employment against the
     Base Salary set forth above.

          (c) TERMINATION IN EVENT OF DEATH: BENEFITS. If Executive's employment
is terminated by reason of Executive's death during the Basic Term, this
Agreement shall terminate without further obligation to Executive's legal
representatives under this Agreement, other than for payment of all accrued
compensation, unreimbursed expenses, the timely payment or provision of Other
Benefits through the date of death. Such amounts shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within ninety (90)
days after the date of death. In addition, Executive's legal representatives
shall receive, at the same time as if Executive were still an employee,
Executive's Base Salary for the lesser of one (1) year or the date this
Agreement would otherwise have terminated. With respect to the provision of
Other Benefits, the term Other Benefits as used in this Paragraph 4(c) shall
include, without limitation, and Executive's estate and/or beneficiaries shall
be entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company to the estates and beneficiaries of other executive
level employees of the Company under such plans, programs, practices, and
policies relating to death benefits, if any, as in effect with respect to other
executives and their beneficiaries at any time during the 120-day period
immediately preceding the date of death. Additionally, all Stock Awards shall be
vested immediately

                                       6

<PAGE>

and shall be exercisable for the later of one year after the date of such
vesting or the remaining term of such option.

          (d) TERMINATION IN EVENT OF DISABILITY: BENEFITS. If Executive's
employment is terminated by reason of Executive's Disability during the Basic
Term, this Agreement shall terminate but the Company shall continue to pay the
Base Salary for a period of three (3) months and thereafter shall make such
additional payment for the Term so that the after tax effect of Executive's
compensation is the same as before the Disability. Executive shall, not be
entitled to any subsequent cash or stock bonuses. In addition, all outstanding
Stock Awards shall vest immediately upon such termination due to Disability and
shall be exercisable for one year after the date of such vesting. Executive's
Benefits shall continue to the end of the Basic Term.

          (e) VOLUNTARY TERMINATION BY EMPLOYEE AND TERMINATION FOR CAUSE:
BENEFITS. Executive may terminate his employment with the Company without Good
Reason by giving written notice of his intent and stating an effective
Termination Date at least ninety (90) days after the date of such notice;
provided, however, that the Company may accelerate such effective date by paying
Executive through the proposed Termination Date and also vesting awards that
would have vested but for this acceleration of the proposed Termination Date.
Upon such a termination by Executive or upon termination for Cause by the
Company, this Agreement shall terminate and the Company shall pay to Executive
all accrued compensation, unreimbursed expenses and the Other Benefits through
the Termination Date. Such amounts shall be paid to Executive in a lump sum in
cash within thirty (30) days after the date of termination. In addition, all
unvested stock options shall terminate and all vested options will terminate
fifteen (15) days after the Termination Date.

          (f) DIRECTOR POSITIONS. Executive agrees that upon termination of
employment, for any reason, at the request of the Chairman of the Board,
Executive will immediately tender his resignation from any and all Board
positions held with the Company and/or any of its subsidiaries and affiliates.

         5. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Executive
recognizes and agrees that the benefit of not being employed at-will, is
provided in consideration for, among other things, the agreements contained in
this Section, as well as the Stock Awards granted to Executive pursuant to this
Agreement. The Company agrees that while employed pursuant to this Agreement,
Executive will be provided with confidential information of Company; specialized
training on how to perform his duties; and contact with the Company's customers
and potential customers.

          (a) NON-COMPETITION DURING EMPLOYMENT. Executive agrees that during
the Basic Term, he will not compete with the Company by engaging in the
conception, design, development, production, marketing, or servicing of any
product or service that is substantially similar to the products or services
which the Company provides, and that he will not work for, in any capacity,
assist, or become affiliated with as an owner, partner, etc., either directly or
indirectly, any individual or business which offers or performs services, or
offers or provides products substantially similar to the services and products
provided by Company, provided, Executive shall not be prevented from owning no
more than 2% of any Company whose stock is publicly traded.

                                       7

<PAGE>

          (b) CONFLICTS OF INTEREST. Executive agrees that during the Basic
Term, he will not engage, either directly or indirectly, in any activity (a
"Conflict of Interest") which might adversely affect the Company or its
affiliates, including ownership of a material interest in any supplier,
contractor, distributor, subcontractor, customer or other entity with which the
Company does business or accepting any material payment, service, loan, gift,
trip, entertainment, or other favor from a supplier, contractor, distributor,
subcontractor, customer or other entity with which the Company does business,
and that Executive will promptly inform the President of the Company as to each
offer received by Executive to engage in any such activity. Executive further
agrees to disclose to the Company any other facts of which Executive becomes
aware which in Executive's good faith judgment could reasonably be expected to
involve or give rise to a Conflict of Interest or potential Conflict of
Interest.

          (c) NON-COMPETITION AFTER TERMINATION. Executive agrees that Executive
shall not, at any time during the period of two (2) years after the later of
termination of the Basic Term for any reason, within any of the markets in which
the Company has sold products or services or formulated a plan to sell products
or services into a market during the last twelve (12) months of Executive's
employ or which the Company enters into within three (3) months thereafter,
engage in or contribute Executive's knowledge to any work which is competitive
with or similar to a product, process, apparatus, service, or development on
which Executive worked or with respect to which Executive had access to
Confidential Information while employed by the Company. Following the expiration
of said two (2) year period, Executive shall continue to be obligated under the
Confidential Information Paragraph of this Agreement not to use or to disclose
Confidential Information of the Company so long as it shall not be publicly
available. It is understood that the geographical area set forth in this
covenant is divisible so that if this clause is invalid or unenforceable in an
included geographic area, that area is severable and the clause remains in
effect for the remaining included geographic areas in which the clause is valid.

          (d) CONFIDENTIAL INFORMATION. Executive further agrees that he will
not, except as the Company may otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or otherwise disclose to any third
party any Confidential Information or proprietary information of the Company, or
authorize anyone else to do these things at any time either during or subsequent
to his employment with the Company. This Section shall continue in full force
and effect after termination of Executive's employment and after the termination
of this Agreement. Executive's obligations under this Paragraph with respect to
any specific Confidential Information and proprietary information shall cease
when that specific portion of the Confidential Information and proprietary
information becomes publicly known, in its entirety and without combining
portions of such information obtained separately. It is understood that such
Confidential Information and proprietary information of the Company include
matters that Executive conceives or develops, as well as matters Executive
learns from other employees of Company. Confidential Information is defined to
include information: (1) disclosed to or known by the Executive as a consequence
of or through his employment with the Company; (2) not generally known outside
the Company; and (3) which relates to any aspect of the Company or its business,
finances, operation plans, budgets, research, or strategic development.
"Confidential Information" includes, but is not limited to the Company's trade
secrets, proprietary information, financial documents, long range plans,
customer lists, employer compensation, marketing strategy, data bases, costing
data, computer software

                                       8

<PAGE>

developed by the Company, investments made by the Company, and any information
provided to the Company by a third party under restrictions against disclosure
or use by the Company or others.

          (e) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings, records, and
other documents and things comprising, containing, describing, discussing,
explaining, or evidencing any Confidential Information, and all equipment,
components, parts, tools, and the like in Executive's custody or possession that
have been obtained or prepared in the course of Executive's employment with the
Company shall be the exclusive property of the Company, shall not be copied
and/or removed from the premises of the Company, except in pursuit of the
business of the Company, and shall be delivered to the Company, without
Executive retaining any copies, upon notification of the termination of
Executive's employment or at any other time requested by the Company. The
Company shall have the right to retain, access, and inspect all property of
Executive of any kind in the office, work area, and on the premises of the
Company upon termination of Executive's employment and at any time during
employment by the Company to ensure compliance with the terms of this Agreement.

          (f) REAFFIRM OBLIGATIONS. Upon termination of his employment with the
Company, Executive, if requested by Company, shall reaffirm in writing
Executive's recognition of the importance of maintaining the confidentiality of
the Company's Confidential Information and proprietary information, and reaffirm
any other obligations set forth in this Agreement.

          (g) PRIOR DISCLOSURE. Executive represents and warrants that he has
not used or disclosed any Confidential Information he may have obtained from
Company prior to signing this Agreement, in any way inconsistent with the
provisions of this Agreement.

          (h) CONFIDENTIAL INFORMATION OF PRIOR COMPANIES. Executive will not
disclose or use during the period of his employment with the Company any
proprietary or Confidential Information or Copyright Works which Executive may
have acquired because of employment with an employer other than the Company or
acquired from any other third party, whether such information is in Executive's
memory or embodied in a writing or other physical form.

          (i) BREACH. Executive agrees that any breach of Paragraphs 5(a) or (c)
above cannot be remedied solely by money damages, and that in addition to any
other remedies Company may have, Company is entitled to obtain injunctive relief
against Executive. Nothing herein, however, shall be construed as limiting
Company's right to pursue any other available remedy at law or in equity,
including recovery of damages and termination of this Agreement and/or any
payments that may be due pursuant to this Agreement.

          (j) RIGHT TO ENTER AGREEMENT. Executive represents and covenants to
Company that he has full power and authority to enter into this Agreement and
that the execution of this Agreement will not breach or constitute a default of
any other agreement or contract to which he is a party or by which he is bound.

          (k) ENFORCEABILITY. The agreements contained in this Section 5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any

                                       9

<PAGE>

of its obligations outside of this Paragraph do not excuse Executive from
complying with the agreements contained herein.

               (l) SURVIVABILITY. The agreements contained in Paragraphs
..A.5(c)-(d) shall survive the termination of this Agreement for any reason.

         6. ASSIGNMENT. This Agreement cannot be assigned by Executive. The
Company may assign this Agreement only to a successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company provided such
successor expressly agrees in writing reasonably satisfactory to Executive to
assume and perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession and assignment
had taken place. Failure of the Company to obtain such written agreement prior
to the effectiveness of any such succession shall be a material breach of this
Agreement.

         7. BINDING AGREEMENT. Executive understands that his obligations under
this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.

         8. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as set forth below,
or by delivering the same in person to such party, or by transmission by
facsimile to the number set forth below (which shall not constitute notice).
Notice deposited in the United States Mail, mailed in the manner described
hereinabove, shall be effective upon deposit. Notice given in any other manner
shall be effective only if and when received:

                  If to Executive:            Edward H. Ellis, Jr.
                                              182 Castlerock
                                              Houston, Texas  77090
                                              Fax:  (281) 397-6440

                  If to Company:              HCC Insurance Holdings, Inc.
                                              13403 Northwest Freeway
                                              Houston, Texas  77040
                                              Attn:  General Counsel
                                              Fax:  (713) 744-9648

                  with a copy (which shall    Arthur S. Berner, Esq.
                  not constitute notice) to:  Haynes and Boone, LLP
                                              1000 Louisiana Street,
                                              Suite 4300
                                              Houston, Texas  77002-5012
                                              Fax:  (713) 236-5652


                                       10

<PAGE>

         9. WAIVER. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.

         10. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect.

         11.  ENTIRE AGREEMENT. The terms and provisions contained herein
shall constitute the entire agreement between the parties with respect to
Executive's employment with Company during the time period covered by this
Agreement. This Agreement replaces and supersedes any and all existing
Agreements entered into between Executive and the Company relating generally to
the same subject matter, if any, and shall be binding upon Executive's heirs,
executors, administrators, or other legal representatives or assigns.

         12. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Executive and
an officer or other authorized executive of Company.

         13.  UNDERSTAND AGREEMENT. Executive represents and warrants that
he has read and understood each and every provision of this Agreement, and
Executive understands that he has the right to obtain advice from legal counsel
of choice, if necessary and desired, in order to interpret any and all
provisions of this Agreement, and that Executive has freely and voluntarily
entered into this Agreement.

         14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

         15. JURISDICTION AND VENUE. With respect to any litigation regarding
this Agreement, Executive agrees to venue in the state or federal courts in
Harris County, Texas, and agrees to waive and does hereby waive any defenses
and/or arguments based upon improper venue and/or lack of personal jurisdiction.
By entering into this Agreement, Executive agrees to personal jurisdiction in
the state and federal courts in Harris County, Texas.

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         IN WITNESS WHEREOF, the Parties have executed this Agreement in
multiple copies, effective as of the date first written above.

EXECUTIVE                                         COMPANY

                                                  HCC INSURANCE HOLDINGS, INC.


/s/ EDWARD H. ELLIS, JR.                          By: /s/ JOHN N. MOLBECK, JR.
-----------------------------                        ---------------------------
Edward H. Ellis, Jr.                                  John N. Molbeck,
                                                      President

Dated:     2/02/02                                Dated:  1/21/02
      -----------------------                           ------------------------





                    [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]


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