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                                                                    EXHIBIT 10.2

                                CLOSING AGREEMENT

      This Closing Agreement (the "Closing Agreement") is made and entered into
on May 3, 2004 by and among Darwin Group, Inc., a Delaware corporation ("Darwin
Group"), Aegis Holding Inc., a Delaware corporation ("Seller"), and Associated
Electric & Gas Insurance Services Limited, a mutual insurance company organized
under the laws of Bermuda and the sole stockholder of Seller ("Parent").

                              W I T N E S S E T H :

      WHEREAS, Alleghany Insurance Holdings LLC, a Delaware limited liability
company ("AIHL"), Seller and Parent entered into that certain Stock Purchase
Agreement dated as of January 30, 2004 and amended by letter agreement dated as
of April 28, 2004 (as so amended, the "Stock Purchase Agreement"), pursuant to
which Seller agreed to sell, and AIHL agreed to purchase, all of the outstanding
shares of common stock, par value $1.00 per share, of U.S. Aegis Energy
Insurance Company, a stock insurance company organized under the laws of
Delaware (the "Company"); and

      WHEREAS, pursuant to the Assignment and Assumption Agreement dated as of
April 29, 2004 (the "Assignment Agreement"), AIHL assigned to Darwin Group, a
wholly owned subsidiary of AIHL, and Darwin Group assumed from AIHL, all of
AIHL's rights and obligations under the Stock Purchase Agreement; and

      WHEREAS, Darwin Group, Seller and Parent (collectively, the "parties")
desire to confirm their mutual understanding and agreement with respect to
certain matters in connection with the consummation of the transactions
contemplated by the Stock Purchase Agreement;

      NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
agreements contained herein, intending to be bound legally hereby, the parties
hereto agree as follows:

      1.    Defined Terms. Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Stock Purchase Agreement.

      2.    Closing. The Closing shall take place on May 3, 2004 and shall be
given effect as of 12:01 a.m. on May 1, 2004.

      3.    The Closing Date Balance Sheet. The Closing Date Balance Sheet shall
be dated as of April 30, 2004.

      4.    Flow of Funds. Darwin Group and Seller agree that the Closing Date
Shareholder's Equity, as determined in accordance with Section 5.5 of the Stock
Purchase Agreement, is $17,085,765 and that the Purchase Price, as determined in
accordance with Section 2.2 of the Stock Purchase Agreement, is $20,385,765. At
the Closing, Darwin Group will pay to Seller by wire transfer the amount of
$20,335,765, representing payment of the Purchase Price less offset of $50,000
owed by Seller to

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Darwin Group in connection with the finder's fee referenced in Section 5.15 of
the Stock Purchase Agreement.

      5.    Third Party Reinsurance Endorsements. Seller shall obtain, no later
than 60 days after Closing, endorsements or amendments to the Surety Quota Share
Reinsurance Agreement effective as of September 1, 1998, eliminating the Company
as a reinsured entity thereunder. AIHL and Darwin Group will fully cooperate
with the Seller, to the extent such cooperation is reasonably requested by
Seller, in obtaining such endorsements and/or amendments.

      6.    New Mexico License. Seller and Parent will fully cooperate with the
Company and with Darwin Group, to the extent such cooperation is reasonably
requested by the Company or by Darwin Group, in obtaining renewal of the
Company's license to transact and issue policies of Property, Marine and
Transportation and Casualty and Surety in the State of New Mexico.

      7.    Certain Tax Matters. The parties intend that (i) Seller and Parent
shall be liable and responsible for all Taxes of the Company (other than United
States federal income Taxes) attributable to all Tax periods (or portions
thereof) ending on or before April 30, 2004, and for all the United States
federal income Taxes attributable to the taxable income of the Company for all
Tax periods ending on or prior to May 3, 2004; and (ii) Purchaser shall be
liable and responsible for all Taxes (other than United States federal income
Taxes) of the Company attributable to all Tax periods (or portions thereof)
beginning after April 30, 2004, and for the United States federal income Taxes
attributable to the taxable income of the Company for all taxable periods
beginning after May 3, 2004. To effectuate the foregoing, the following
provisions of the Stock Purchase Agreement shall be modified as follows:

            (a)   The term "Post-Closing Tax Period" in Section 5.3(g) of the
      Stock Purchase Agreement shall be interpreted consistently with the term
      "Post-Closing Period" (taking into account the interpretation of such term
      called for pursuant to Section 4(c) of this Closing Agreement, below);

            (b)   Except as otherwise specifically provided herein, references
      in the Stock Purchase Agreement to the "Closing" or the "Closing Date" for
      both United States federal income Tax purposes and all other Tax purposes
      shall mean May 3, 2004;

            (c)   For purposes of Sections 3.7(b)(viii), 5.3(d), 5.3(f), 5.3(g),
      5.3(i), and 5.4(a) of the Stock Purchase Agreement, when applying the
      terms "Closing" or "Closing Date," including as those terms are used in
      the definitions of "Pre-Closing Period," "Post-Closing Period," and
      "Straddle Period," (1) with respect to all Taxes other than United States
      federal income Taxes, the term "Closing" or "Closing Date" shall mean
      April 30, 2004, and (2) with respect to United States federal income
      Taxes, the term "Closing" or "Closing Date" shall mean May 3, 2004.

      8.    Representations. Seller and Parent hereby represent and warrant to
Darwin Group that (i) all actions contemplated by the Stock Purchase Agreement
to have

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taken place on or prior to the Closing Date were taken on or before April 30,
2004, other than satisfaction of closing conditions relating to any agreements
or other documents that were delivered in connection with the Closing on the
Closing Date, and (ii) during the period from May 1, 2004 through May 3, 2004,
the Company (x) has not made any payments and (y) has not taken any actions
outside of the ordinary course of business.

      9.    Miscellaneous.

            (a)   Amendments. This Closing Agreement may be amended or modified,
and the terms hereof may be waived, only by a writing signed by all parties
hereto or, in the case of a waiver, by the party entitled to the benefit of the
terms being waived.

            (b)   Assignment; Binding Effect. This Closing Agreement may not be
assigned or delegated, in whole or in part, by any party hereto without the
prior written consent of all other parties hereto. This Closing Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

            (c)   Governing Law. This Closing Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles regarding the choice of law.

            (d)   Reference to and Effect on the Stock Purchase Agreement. Upon
the effectiveness of this Closing Agreement, each reference in the Stock
Purchase Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import shall mean and be a reference to the Stock Purchase Agreement
giving effect to the modifications and amendments set forth in this Closing
Agreement.

            (e)   Counterparts. This Closing Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.

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      IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and year first above written.

                                      DARWIN GROUP, INC.

                                      By: /s/ John L. Sennott, Jr.
                                          --------------------------------------
                                      Name: John L. Sennott, Jr.
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                      AEGIS HOLDING INC.

                                      By: /s/ Mary Ellen Lenahan
                                          --------------------------------------
                                      Name: Mary Ellen Lenahan
                                      Title: Secretary

                                      ASSOCIATED ELECTRIC & GAS
                                      INSURANCE SERVICES LIMITED

                                      By: /s/ Mary Ellen Lenahan
                                          --------------------------------------
                                      Name: Mary Ellen Lenahan
                                      Title: Assistant Secretary

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