<PAGE>
                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 5th day
of January, 2000 (the "Effective Date"), between HCC INSURANCE HOLDINGS, INC.
("HCC" or "Company"), and JOHN N. MOLBECK, JR. ("Executive"), sometimes
collectively referred to herein as the "Parties."

                                R E C I T A L S:

      WHEREAS, Executive is to be employed as President of HCC, and, as an
integral part of its management who participates in the decision-making process
relative to short and long-term planning and policy for the Company, will serve
on the Company's Executive Management Committee;

      WHEREAS, it is the desire of the Board of Directors of HCC (the "Board")
to (i) directly engage Executive as an officer of HCC and its subsidiaries; and
(ii) directly engage, if elected, the services of Executive as a director 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 effective as of January 1, 1998 (the "1998 Contract") which is to be
cancelled, terminated and 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 1998 Contract and Term. Effective as of the Effective
Date, the 1998 Contract shall be cancelled, terminated and of no further force
or effect. The Company hereby agrees to employ Executive as its President, 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, 2002 (the "Basic Term") (unless sooner
terminated as hereinafter set forth). Until the Company retains the services of
a Chief Operating Officer ("COO"), Executive shall also serve as the COO.

      2. Duties.

            (a) Duties as Employee of the Company. Executive shall, subject to
the supervision of the Chief Executive Officer and Board, have general
management and control 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,
<PAGE>

corporation, or organization, whether for compensation or otherwise, without the
prior written consent of the Chairman of the Board. 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. Executive may perform his duties from time-to-time at his
residences in Colorado or Arizona during reasonable times when his absence from
the HCC Houston office would not effect the successful performance of his
duties.

            (b) Other Duties. At all times during the Basic Term, the Company
shall use its best efforts to cause Executive to be elected a director and to
serve on the Executive Committee and Senior Management Committee of HCC. Any
such failure to use its best efforts prior to a Change of Control shall be a
material breach of this Agreement for purposes of Paragraph 4(a)(iv). If
elected, Executive agrees to serve as a director and on the Executive Committee
and Senior Management Committee 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 (the "Base
Salary") paid by the Company at the annual rate of $600,000, payable not less
frequently than in substantially equal monthly installments.

            (b) Bonus Payments. Each year Executive shall be entitled to
receive, in addition to the Base Salary, an annual bonus payment of $150,000 if
HCC's annual net earnings per share increases by at least 10% from the net
earnings per share of the immediately proceeding year. For purposes of this
Agreement, net earnings per share is defined as HCC's consolidated net earnings
per share as reported in HCC's Annual Report on Form 10-K.

            (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 Compensation
Committee 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 compensatory employee benefit plan or other
arrangement made available by the Company now or in the future to its senior
executive officers and key management employees, subject to and on a basis
consistent with the terms, conditions, and overall administration of such


                                       2
<PAGE>

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
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 substantially all 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-five (25) 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 and personal days given by the Company to its senior executive
officers.

            (f) Perquisites. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to an executive officer of HCC in
accordance with any practice established by the Compensation Committee.
Notwithstanding, and in addition to, any perquisites to which Executive is
entitled pursuant to the preceding sentence, Executive shall: (i) have use of a
new Mercedes 500 SEL automobile, and the Company shall pay all expenses related
to Executive's use of such car, including gasoline, insurance, and maintenance;
(ii) be allowed to travel on business utilizing first class passage (whether
domestic or international); (iii) receive the membership fee and annual dues to
Shadow Hawk Country Club in addition to the golf and other clubs which Executive
is a member and for which Executive's fees and expenses are to be reimbursed,;
(iv) receive a total of $1,000,000 term life insurance (which shall be in
addition to the standard benefits provided to Executive under the Company's
group life insurance program that covers officers); (v) in addition to the other
benefits provided in this Agreement, Executive shall be entitled to receive
medical insurance as currently provided under the Company's group program, as
such group program may be changed from time-to-time in the future, and Executive
shall be entitled to continue to be covered by such group program or, if not
permitted under the terms of the group program, then the Company shall provide
Executive with a medical insurance policy providing substantially similar
benefits as to the group program, for the period ending on the date of the later
to die of Executive or, if Executive is married on the date of his death,
Executive's spouse or the date all of Executive's children complete college (as
defined in the Company's group program). Executive shall be entitled to receive
the medical benefits defined herein at no cost to the Executive. However,
Executive's rights pursuant to this subparagraph (v) shall be void if Executive
is terminated for Cause or if Executive voluntarily terminates his employment;
and (vi) HCC shall pay for Executive's preparation of estate planning and wealth
preservation documents during the course of Executive's employment with the
Company. Such estate planning and wealth preservation documents may be changed
from time-to-time at the Company's cost and expense, pursuant to Executive's
change in circumstances.


                                       3
<PAGE>

            (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 Paragraphs 4(c) or 4(d) of 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; or

                        (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 Executive's 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 by action of
not less than two-thirds of its members 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


                                       4
<PAGE>

                        (ii) At any time during the period of three (3)
      consecutive years (not including any period prior to the date hereof),
      individuals who at the beginning of such period constituted the Board (and
      any new director whose election by the Board or whose nomination for
      election by the Company's shareholders were approved by a vote of at least
      two-thirds of the directors then still in office who either were directors
      at the beginning of such period or whose election or nomination for
      election was previously so approved) cease for any reason to constitute a
      majority thereof; or

                        (iii) 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, and (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

                        (iv) 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) Following a Change of Control, a material alteration
      in the nature or status of Executive's title, duties or responsibilities,
      or the assignment of duties or responsibilities inconsistent with
      Executive's status, title, duties and responsibilities;

                        (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 senior members of corporate management of the
      Company generally to the same extent;

                        (iii) A relocation of the Company's principal executive
      offices, or Executive's relocation to any place other than the principal
      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;


                                       5
<PAGE>

                        (iv) Any material breach by the Company of any 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 such matter is not corrected by the Company within thirty (30)
      days of its receipt of written notice of such matter from Executive, and
      in no event shall a termination by Executive occurring more than ninety
      (90) days following the date of the event described above be a termination
      for Good Reason due to such event.

                  (5) "Termination Date" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.

            (b) Termination Without Cause or Termination For Good Reason:
Benefits. In the event there is a termination by the Company without Cause, or
if Executive terminates for Good Reason within ninety (90) days after a Change
of Control (a "Termination Event"), this Agreement shall terminate, except as
provided in Paragraph 6, and Executive shall be entitled to the following
severance benefits:

                  (1) For a period of twelve (12) months after the Termination
      Date (unless the remainder of the Basic Term is less than twelve (12)
      months in which case, for an amount of time equal to the remainder of the
      Basic Term), Base Salary (as defined in Paragraph 3(a)), at the rate, and
      payable quarterly unless such termination is by the Company without Cause,
      in which event such amount of Base Salary shall be paid in a lump sum
      within ten (10) days of the Termination Event.

                  (2) If there is a Change of Control or if there is a
      Termination Event, any stock options ("Stock Awards") which Executive has
      received under this Agreement shall vest immediately and, if there is a
      Termination Event, all such Stock Awards shall be exercisable for ten (10)
      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 remainder of the Basic Term (such other amounts and
      benefits shall be hereinafter referred to as the "Other Benefits").
      Without limiting the preceding sentence and without limiting any other
      provision of this Agreement, through December 31, 2002 the Company, at its
      sole expense, shall continue to provide (through its own plan and/or


                                       6
<PAGE>

      individual policies) Executive (and Executive's dependents) with health
      benefits no less favorable than the group health plan benefits provided
      during such period to any senior executive officer 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). In any event, the
      Other Benefits provided for pursuant to this Paragraph shall be secondary
      to any benefits and coverage Executive (or his dependents) receive from
      another employer.

                  (4) If Executive receives any payments whether or not pursuant
      to this Agreement which are subject to an excise tax imposed under Section
      4999 of the Internal Revenue Code of 1986, as amended, or any similar tax
      imposed under federal, state, or local law (collectively, "Excise Taxes"),
      the Company shall pay to Executive (on or before the date on which the
      Company is required to withhold such Excise Taxes), 1) an additional
      amount equal to all Excise Taxes then due and payable, and 2) the amount
      necessary to defray Executive's increased (federal, state, and local) tax
      liability arising due to payment of the amount specified in this
      Subsection (4) which shall include any costs and expenses, including
      penalties and interest incurred by Executive in connection with any audit,
      proceedings, etc. related to the payment of such Excise Taxes or this
      payment. For purposes of calculating the amount payable to Executive under
      this Paragraph, the federal and state income tax rates used shall be the
      highest marginal federal and state rates applicable to ordinary income in
      Executive's state of residence, taking into account any federal income tax
      deductions or credits available to Executive for state income taxes. The
      Company shall cause its independent auditors to calculate such amount and
      provide Executive a copy of such calculation at least ten (10) days prior
      to the date specified above for payment of such amount. It is the intent
      of the Parties that this Subsection (4) shall place Executive in the same
      net after-tax position Executive would have been in had no payment been
      subject to an Excise Tax and, notwithstanding anything herein to the
      contrary, it shall be construed to effectuate said result.

                  (5) 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

                  (6) 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 not
      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, except as provided in Paragraph 6, without
further obligation to Executive's legal representatives under this Agreement,
other than for payment of all accrued compensation, unreimbursed expenses,


                                       7
<PAGE>

the timely payment or provision of Other Benefits through the date of death,
and, if such death occurs on or after October 1 of any year, such cash or stock
bonus as Executive would otherwise have been awarded in such year if Executive's
death had not occurred. 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. 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 and
shall be exercisable for the greater 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 continue in full force for a period of one (1) year
following such Disability and if such Disability occurs on or after October 1 of
any year Executive shall be entitled to the same cash or stock bonus in such
year that Executive would have been awarded if such Disability had not occurred.
Following such one (1) year period, this Agreement shall continue in full force
except that (a) the Base Salary shall be reduced by 50% and (b) 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. If Executive's Disability occurs prior to the commencement of the
Consulting Period, defined below, in addition to the amounts provided for
herein, Executive shall receive the Consulting Fee, defined below, at such time
as it would have otherwise been earned, whether or not Executive can perform
Consulting Services, defined below. Additionally, all Stock Awards shall be
vested immediately and shall be exercisable for the greater of one year after
the date of such vesting or the remaining term of such option.

            (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 except as provided in Paragraph 6 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 ten (10) 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, he will
immediately tender his


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resignation from any and all Board positions held with the Company and/or any of
its subsidiaries and affiliates. If Executive remains as a director, after such
termination, Executive shall be compensated as an outside director.

      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. Furthermore, in the event Executive is terminated
without Cause, or terminates for Good Reason, and more than one (1) year remains
on the existing Basic Term, then Executive shall receive additional
consideration in an amount equal to the quotient of the Base Salary divided by
12, which shall thereupon be multiplied by the number of months remaining in the
Basic Term minus 12 months and which shall be paid in one lump sum within ten
(10) days of such termination.

      In consideration of all of the foregoing, Executive agrees as follows:

            (a) Non-Competition During Employment. Executive agrees during the
Basic Term and the Consulting Period 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.

            (b) Conflicts of Interest. Executive agrees that during the Basic
Term and the Consulting Period, 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 Chairman 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 might in Executive's good faith judgment
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
termination of the later of the Basic Term or the Consulting Period, 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


                                       9
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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; provided, however, this Paragraph (c)
shall not operate to prevent Executive from engaging in retail insurance or
re-insurance activities during such two-year period to the extent such
activities do not compete or permit any other person or entity to compete with
any business the Company or any of its subsidiaries or affiliated companies were
engaged in at the time of such termination or which the Company enters into
within three (3) months thereafter. 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) Non-Solicitation of Customers. Executive further agrees that for
a period of two (2) years after the termination of the Basic Term and the
Consulting Period, he will not solicit or accept any business from any customer
or client or prospective customer or client with whom Executive dealt or
solicited while employed by Company during the last twelve (12) months of his
employment.

            (e) Non-Solicitation of Employees. Executive agrees that for the
duration of the Basic Term, and for a period of two (2) years after the
termination of the Basic Term and the Consulting Period, he will not either
directly or indirectly, on his own behalf or on behalf of others, solicit,
attempt to hire, or hire any person employed by Company to work for Executive or
for another entity, firm, corporation, or individual.

            (f) 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


                                       10
<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.

            (g) 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.

            (h) 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.

            (i) 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.

            (j) 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.

            (k) Breach. Executive agrees that any breach of Paragraphs 5(a),
(c), (d), (e) or (f) 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.

            (l) 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.


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<PAGE>

            (m) Extension of Post-Employment Restrictions. In the event
Executive breaches Paragraphs 5(b), (d), or (e) above, the restrictive time
periods contained in those provisions will be extended by the period of time
Executive was in violation of such provisions.

            (n) Enforceability. The agreements contained in Section 5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any of its obligations outside of this Paragraph do
not excuse Executive from complying with the agreements contained herein.

            (o) Survivability. The agreements contained in Paragraphs 5(c)-(g)
shall survive the termination of this Agreement for any reason.

      6. Consulting Agreement. Effective upon Executive's termination of
employment for any reason other than Executive's termination by the Company for
Cause prior to the end of the Basic Term, HCC hereby retains Executive as a
consultant (an independent contractor and not as an employee) for a period of
ten (10) years (the "Consulting Period"). Termination of the Basic Term shall
not effect the Parties' rights and obligations under this Paragraph 6. Subject
to the following, Executive agrees to provide, if requested, a minimum of 200
hours of service per year, or, as requested by the Company, up to a total of 600
hours during any one year of the Consulting Period; provided, however, that the
total number of hours to be worked over the duration of the Consulting Period
shall not exceed 2,000 (the "Consulting Services"). The Consulting Services to
be provided shall be commensurate with Executive's training, background,
experience and prior duties with the Company. Executive agrees to make himself
reasonably available to provide such Consulting Services during the Consulting
Period; provided, however, the Company agrees that it shall provide reasonable
advance notice to Executive of its expected consulting needs and any request for
Consulting Services hereunder shall not unreasonably interfere with Executive's
other business activities and personal affairs as determined in good faith by
Executive. In addition, Executive shall not be required to perform any requested
Consulting Services which, in Executive's good faith opinion, would cause
Executive to breach any fiduciary duty or contractual obligation Executive may
have to another employer. Further, during the Consulting Period, Executive shall
not be subject to any non-competition provisions except for the two-year period
provided for in Paragraph 5(c). Unless waived by Executive, Executive shall not
be required to perform Consulting Services for more than four (4) days during
any week or for more than eight (8) hours during any day. Executive's travel
time shall constitute hours of Consulting Services for purposes of this
Paragraph 6. The Parties contemplate that, when appropriate, the Consulting
Services shall be performed at Executive's office, residence or at the Company's
executive offices in Houston, Texas and may be performed at such other locations
only as they may mutually agree upon. Executive shall be properly reimbursed for
all travel and other expenses reasonably incurred by Executive in rendering the
Consulting Services. HCC shall pay Executive $200,000 per year (the "Consulting
Fee") during the Consulting Period, payable monthly in arrears. In addition,
Executive shall receive, on an "as-is" basis, the automobile Executive was
utilizing at the commencement of the Consulting Period. Executive may elect to
delay payment for services but not the services themselves. Except as set forth
below and in Paragraphs 4(c) or 4(d) hereof, if Executive fails to provide the
hours requested by the Company in any 24-month period, Executive's rights to
receive any further Consulting Fee


                                       12
<PAGE>

shall immediately terminate. During the Consulting Period, except as otherwise
provided for herein, Executive shall receive no employment benefits from HCC. If
Executive dies or becomes Disabled during the Basic Term (or as an employee of
the Company following the Basic Term) or during the Consulting Period he (or, on
his death, his beneficiary or estate) shall receive or continue to receive as
the case may be the Consulting Fee during the remainder of the Consulting Period
as if such death or Disability had not occurred.

      7. 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.

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

      9. 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. 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:              John N. Molbeck, Jr.
                                          3424 Ella Lee Lane
                                          Houston, Texas 77027

            If to Company:                HCC Insurance Holdings, Inc.
                                          13403 Northwest Freeway
                                          Houston, Texas 77040
                                          Fax: (713) 462-2401

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

      10. 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.


                                       13
<PAGE>

      11. 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.

      12. Arbitration. In the event any dispute arises out of Executive's
employment with or by the Company, or separation/termination therefrom, whether
as an employee or as a consultant, which cannot be resolved by the Parties to
this Agreement, such dispute shall be submitted to final and binding
arbitration. The arbitration shall be conducted in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association ("AAA"). If the Parties cannot agree on an arbitrator, a list of
seven (7) arbitrators will be requested from AAA, and the arbitrator will be
selected using alternate strikes with Executive striking first. The cost of the
arbitration will be shared equally by Executive and Company ; provided, however,
the Company shall promptly reimburse Executive for all costs and expenses
incurred in connection with any dispute in an amount up to, but not exceeding 20
percent of Executive's Base Salary (or, if the dispute arises during the
Consulting Period, Executive's Base Salary as in effect immediately prior to the
beginning of the Consulting Period) unless such termination was for Cause in
which event Executive shall not be entitled to reimbursement unless and until it
is determined he was terminated other than for Cause. Arbitration of such
disputes is mandatory and in lieu of any and all civil causes of action and
lawsuits either party may have against the other arising out of Executive's
employment with Company, or separation therefrom. Such arbitration shall be held
in Houston, Texas.

      13. 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.

      14. 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.

      15. 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.

      16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.


                                       14
<PAGE>

      17. 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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<PAGE>

      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/ John N. Molbeck, Jr.                    /s/ Stephen L. Way
------------------------------------    By: ------------------------------------
JOHN N. MOLBECK, JR.                        STEPHEN L. WAY,
                                            Chief Executive Officer and
                                            Chairman of the Board


Dated: April 20, 2000                   Dated:  5/1/00
      ------------------------------          ----------------------------------

               [SIGNATURE PAGE TO MOLBECK EMPLOYMENT AGREEMENT]


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