Document:

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                                                                    Exhibit 10.1

                                 October 7, 2002

Mr. Weston M. Hicks
56 Twin Oak Road
Short Hills, New Jersey  07078

Dear Wes:

            This will confirm the terms of your employment with Alleghany
Corporation, a Delaware corporation ("Alleghany"), commencing October 7, 2002.

            Position: Commencing October 7, 2002, you will serve as Executive
Vice President of Alleghany and will report directly to the President. As
Executive Vice President, you will perform the duties and exercise the powers
usually incident to such office and/or such other duties and powers as may be
assigned to you from time to time by the Board of Directors, the Chairman of the
Board or the President of Alleghany.

            Base Salary: Alleghany will pay you an initial base salary at an
annual rate of $600,000, subject to normal withholding and other taxes, to be
paid in accordance with Alleghany's normal payroll practices. Your base salary
will be reviewed annually commencing December 2002 and for calendar year 2004
shall be at an annual rate of not less than $700,000.

            Short-Term Incentive: Your annual bonus for 2002 will be $450,000
payable in March 2003, provided that you have not theretofore terminated your
employment with Alleghany. For 2003, you will participate in Alleghany's
Management Incentive Plan, with a target bonus opportunity of 50% of your annual
base salary.

            Long Term Incentive: In December 2002, you will receive a grant of
performance shares under the Alleghany Corporation 2002 Long-Term Incentive Plan
(the "Plan") for a four-year award period ending December 31, 2006, which will
have a market value, as of the date or dates used by the Alleghany Compensation
Committee to set performance share awards to other officers, equal to 150% of
your 2003 annual base salary. These performance shares will have the same terms
as those granted to other officers for the four-year award period ending
December 31, 2006.

            Additional Long-Term Incentive: The Compensation Committee has
granted you an award of 3,168.3 performance shares under the Plan for the
three-year award period ending December 31, 2005 (the "EVP Performance Shares")
effective
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October 7, 2002, representing a number of performance shares equal to $600,000
divided by $189.375, being the fair market value (mean of high and low sales
price on NYSE) of one share of Alleghany common stock on such date. The EVP
Performance Shares will entitle you to payouts upon achievement of performance
measures comparable to those assigned to performance shares granted to other
officers for the award period ending December 31, 2005, as set forth on Exhibit
A hereto.

            Challenge Grant: The Compensation Committee has awarded you,
effective October 7, 2002, a challenge grant of 30,000 performance-based
restricted shares of Alleghany common stock under the Plan pursuant to a
restricted stock award agreement in the form of Exhibit B hereto. In the event
that you are elected chief executive officer of Alleghany, you will receive at
the time of such election a second challenge grant of 25,000 performance-based
restricted shares of Alleghany common stock under the Plan, which will have
comparable terms and conditions as the first challenge grant, except that
performance measurement periods will commence at the time of the second
challenge grant.

            Matching Grant: The Compensation Committee has awarded you,
effective October 7, 2002, a restricted stock unit matching grant under the Plan
pursuant to a restricted stock unit matching grant agreement in the form of
Exhibit C hereto.

            Severance Protection: If your employment is terminated by Alleghany
other than for Cause or other than in the case of your Total Disability, or if
you are not elected chief executive officer of Alleghany by December 31, 2005
and a decision is made by you or Alleghany to terminate your employment with
Alleghany, Alleghany will continue to pay your base salary after such
termination until such payments aggregate $1,000,000 on a gross basis. Such
payments will be subject to normal withholding and other taxes, and will be paid
in accordance with Alleghany's normal payroll practices. For purposes of this
letter agreement, "Cause" shall mean conviction of a felony; willful failure to
implement reasonable directives of the President, Chairman or the Board of
Directors of Alleghany after written notice, which failure is not corrected
within ten days following notice thereof; or gross misconduct in connection with
the performance of any of your duties; and "Total Disability" shall mean your
inability to discharge your duties hereunder due to physical or mental illness
or accident for one or more periods totaling six months during any consecutive
twelve-month period.

            Other Benefits: You will be eligible to participate in Alleghany's
Executive Retirement Plan and, effective January 1, 2003, Alleghany's Deferred
Compensation Plan, as well as all other employee benefit plans, programs,
practices or other arrangements in which other senior executives of Alleghany
are generally eligible to participate from time to time. In addition, you will
be entitled to all fringe benefits and perquisites which are generally made
available by Alleghany to its senior executives.

            This letter agreement and the exhibits hereto contain the entire
understanding of you and Alleghany with respect to the subject matter hereof and
thereof and, except as specifically provided herein or therein, cancel and
supersede any and all

                                      -2-
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other agreements between you and Alleghany with respect to the subject matter
hereof and thereof. Any amendment or modification of this letter agreement shall
not be binding unless in writing and signed by you and Alleghany.

            This letter agreement shall be governed by and enforceable in
accordance with the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.

            If the foregoing accurately expresses our mutual understanding,
please execute the enclosed copy of this letter in the space provided below, and
return it to me.

                                                     Sincerely yours,

                                                     ALLEGHANY CORPORATION

                                                     By:   /s/John J. Burns, Jr.
                                                           ---------------------
                                                           John J. Burns, Jr.

Attachments

AGREED AND ACCEPTED:

/s/Weston M. Hicks
------------------
Weston M. Hicks

                                      -3-
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Exhibit A

                         TERMS AND PROVISIONS GOVERNING
               EVP PERFORMANCE SHARES AWARDED TO MR. WESTON HICKS

1. AWARDS

      Award will be paid out in full or in part, on the basis of the Earnings
Per Share of Alleghany Corporation, a Delaware corporation (the "Company"), over
the three-year period 2003-05 (the "Award Period").

2. RIGHT TO PAYMENTS ON ACCOUNT OF AWARDS

      The percentage of the EVP Performance Shares awarded to Mr. Weston Hicks
with respect to which he shall be entitled to payment shall be dependent upon
the average annual compound growth in Earnings Per Share achieved by the Company
during the Award Period, measured from a base of $10.45, and taking into
consideration the Earnings Per Share in each year of the Award Period, as
follows (with appropriate interpolation):

<TABLE>
<CAPTION>
  Average Annual
 Compound Growth
 in the Company's                               Percentage
Earnings Per Share                               Payment
------------------                               -------
<S>                                             <C>
        8% or less                                     0
        9%                                            25
       10%                                            50
       11%                                            75
       12% or more                                   100
</TABLE>

3. FORM AND TIMING OF PAYMENT

      (a) Provided that the requirements set forth herein and in any applicable
rules and regulations adopted by the Compensation Committee (the "Committee") of
the Company's Board of Directors have been met, Mr. Hicks shall be entitled to
payment on account of the EVP Performance Shares in an amount equal to the Fair
Market Value on the payment date of a number of shares of the Company's common
stock, par value $1.00 per share (the "Common Stock"), equal to the

                                      -4-
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percentage of the EVP Performance Shares (rounded to the nearest whole
Performance Share) with respect to which Mr. Hicks is entitled to payment.

      (b) Payments to Mr. Hicks in respect of the EVP Performance Shares shall
be made in such combination of cash and shares of the Company's Common Stock
(valued at their Fair Market Value on the payment date), or all in cash or all
in stock, as the Committee shall determine. Notwithstanding the foregoing, if
Mr. Hicks has elected to defer any payments with respect to EVP Performance
Shares under the Alleghany Corporation Deferred Compensation Plan, he shall as
of the payment date only be entitled to receive cash with respect thereto.
Payments with respect to EVP Performance Shares shall be made by the Company as
soon as practicable after the completion of its audited financial statements for
the last year of the Award Period. Shares of Common Stock delivered on account
of EVP Performance Shares may be treasury shares, authorized and unissued
shares, or both.

      (c) Except as the Committee may otherwise determine, payment of Mr. Hicks'
EVP Performance Shares in full shall be conditional upon Mr. Hicks' remaining
continuously in the employ of the Company, or a successor, subsidiary or
controlled company thereof, throughout the Award Period. In the event of service
in such capacity or capacities for less than the entire Award Period, Mr. Hicks'
payment (i) shall be reduced on a pro rata basis to reflect the portion of the
Award Period in which his service continued, (ii) shall be based upon the
average annual compound growth in Earnings Per Share during such portion of the
Award Period, as determined in good faith by the Committee (which determination
shall be conclusive and binding upon Mr. Hicks), and (iii) shall be made as
promptly as practicable after the termination of such service.

4. DILUTION AND OTHER ADJUSTMENTS

      (a) In the event of any subdivision or combination of the outstanding
shares of Common Stock, stock dividend, capital reorganization, liquidation,
reclassification of shares, merger, consolidation or sale, lease or transfer of
substantially all the assets of the Company, the Committee shall make such
equitable adjustments as it may deem appropriate in the number of EVP
Performance Shares, the base from which growth in Earnings Per Share is to be
measured, the Earnings Per Share growth requirements, the length of the Award
Period, and the making of payment on account of the EVP Performance Shares.

      (b) The Committee may provide for such increases or reductions in the cash
and/or stock to be paid with respect to the EVP Performance Shares as it may
deem advisable in order to adjust for the effect upon Earnings Per Share of

                                      -5-
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transactions of an extraordinary, unusual or nonrecurring nature, capital gains,
or any purchase, pooling of interests, disposal or discontinuance of any
operations, change in accounting rules or practices, retroactive restatement of
earnings, or the like. Such increases or reductions may be provided for by the
Committee at any time or times prior to the payment date.

5. MISCELLANEOUS PROVISIONS

      (a) As used herein, the following terms shall have the following meanings:

            (i) "Earnings Per Share" shall mean the net earnings per share of
            the Company and its consolidated subsidiaries, determined, except as
            otherwise herein provided, on the basis of the same accounting
            principles used in the preparation of the Company's consolidated
            statement of earnings for the fiscal year in question which is
            included in the Company's Annual Report to Stockholders for such
            fiscal year; provided that net gains and losses on transactions in
            investment securities (other than strategic investments) shall be
            included only to the extent of 20 percent thereof, 100 percent of
            net gains and losses on transactions in investment securities which
            constitute strategic investments shall be included, 100 percent of
            unrealized gains and losses as at the end of the relevant
            measurement period on investment securities which constitute
            strategic investments shall be included, subject to the right of the
            Compensation Committee, in its sole discretion, to exclude all or
            any part of such unrealized gains, and all costs resulting from
            awards under the Company's 1993 Long-Term Incentive Plan and 2002
            Long-Term Incentive Plan (including the EVP Performance Shares)
            shall be excluded.

            Except as provided in section 3(c) hereof, Earnings Per Share and
            average annual compound growth in Earnings Per Share shall be
            determined by the Committee, on the basis of the Company's
            statements of earnings included in its Annual Reports to
            Stockholders, with such adjustments as the Committee may deem to be
            required or permitted by the provisions hereof; and the
            determination of the Committee with respect thereto shall be final
            and binding.

            (ii) "Strategic investments" shall include the Company's and its
            subsidiaries' investment in Burlington Northern Santa Fe
            Corporation, and such other investments approved by the Board of

                                      -6-
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            Directors as having been made by the Company and its subsidiaries
            for long-term strategic investment purposes and not for short-term
            trading purposes.

            (iii) "Fair Market Value" of a share of Common Stock of the Company
            on a payment date shall mean the mean between the high and low
            prices of such stock on that date as reported on the New York Stock
            Exchange Composite Tape.

      (b) The terms, construction and performance of the foregoing provisions,
and the rights conferred thereby, shall be governed in all respects by the
provisions of the Company's 2002 Long-Term Incentive Plan and, in the event of
any inconsistency, the provisions of such Plan shall be controlling.

                                      -7-<PAGE>
                                                                    Exhibit 10.2

                              ALLEGHANY CORPORATION

                        Restricted Stock Award Agreement

            Restricted Stock Award Agreement (this "Agreement"), dated as of
October 7, 2002, between Alleghany Corporation, a Delaware corporation
("Alleghany"), and Weston M. Hicks (the "Participant").

            Section 1. Restricted Stock Award. Alleghany hereby grants to the
Participant, on the terms and conditions hereinafter set forth, a restricted
stock award of 30,000 shares of the common stock, par value $1.00 per share (the
"Common Stock") of Alleghany (the "Restricted Shares"). This grant has been made
by the Compensation Committee of the Board of Directors of Alleghany (the
"Committee") pursuant to the terms of the Alleghany Corporation 2002 Long-Term
Incentive Plan (the "Plan") and is intended to qualify as "performance-based
compensation" for purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended. The applicable terms of the Plan are incorporated herein by
reference. Any terms used but not defined herein shall have the meanings
ascribed thereto in the Plan. Any ambiguity between any term used in this
Agreement and a term used in the Plan shall be resolved in favor of and in
accordance with the term used in the Plan. Any interpretation, determination or
decision made or taken by the Committee regarding the Plan or this Agreement
shall be final and binding upon Alleghany and the Participant.

            Section 2. Vesting of Restricted Shares. Subject to Section 3
hereof, the Restricted Shares shall vest and become nonforfeitable as follows:

            (a)   If Alleghany achieves average annual compound growth in
                  Stockholders' Equity Per Share equal to 10% or more as
                  measured over a calendar year period commencing January 1,
                  2003 and ending on December 31, 2006, 2007, 2008 or 2009, the
                  Restricted Shares will vest and become nonforfeitable upon the
                  certification by the Committee that such performance goal has
                  been met.

            (b)   If the performance goal set forth in (a) above has not been
                  achieved as of December 31, 2009, the Restricted Shares will
                  vest and become nonforfeitable when Alleghany achieves average
                  annual compound growth in Stockholders' Equity Per Share equal
                  to 7% or more as measured over a calendar year period
                  commencing January 1, 2003 and ending on December 31, 2010,
                  2011 or 2012 and upon the certification by the Committee that
                  such performance goal has been met.

            (c)   If the performance goals provided above are not achieved as of
                  December 31, 2012, the Participant will forfeit all of the
                  Restricted Shares.

            (d)   "Stockholders' Equity Per Share" shall mean the stockholders'
                  equity per share of Common Stock of Alleghany, determined,
                  except
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                  as otherwise herein provided, on the basis of the same
                  accounting principles used in the preparation of Alleghany's
                  consolidated balance sheet for the calendar year in question
                  which is included in Alleghany's Annual Report to Stockholders
                  for such calendar year. Stockholders' Equity Per Share shall
                  be determined and certified in writing by the Committee, with
                  such adjustments as the Committee shall deem to be required to
                  take account of the effects on Stockholders' Equity Per Share
                  of any stock dividend, unusual cash distributions, spin-off,
                  stock split, recapitalization, merger, consolidation or other
                  similar event and will also be automatically adjusted to
                  reflect reinvestment of the value of dividends and
                  distributions other than stock dividends. The Committee's
                  determination with respect to any such adjustments shall be
                  final and binding.

            Section 3. Custody and Delivery of Shares. Alleghany shall hold the
certificate or certificates representing the Restricted Shares subject to this
Award until such Restricted Shares have vested pursuant to Section 2 hereof.
Contemporaneous with the execution of this Agreement, the Participant shall
execute and deliver to Alleghany one or more irrevocable stock powers related
thereto to facilitate the transfer of the Restricted Shares subject to this
Award to Alleghany (or its assignee or nominee) if such Restricted Shares are
forfeited pursuant hereto. Upon the vesting of the Restricted Shares subject to
this Award pursuant to Section 2 hereof, Alleghany shall deliver or cause to be
delivered the certificate or certificates representing such Restricted Shares to
the Participant, shall destroy the related stock power or powers, and shall pay
all original issue or transfer taxes and all fees and expenses incident to such
delivery.

            Section 4. Termination of Employment. If the Participant's
employment with Alleghany is terminated for any reason prior to the occurrence
of any otherwise applicable vesting date provided in Section 2 hereof, the
Participant shall (i) forfeit his interest in any Restricted Shares that have
not yet become vested, (ii) assign, transfer, and deliver any certificates
evidencing ownership of such Restricted Shares to Alleghany, and (iii) cease for
all purposes to be a stockholder with respect to such Restricted Shares;
provided, however, that if, subsequent to December 31, 2004, Alleghany
terminates the Participant's employment other than for Cause or other than in
the case of Total Disability, and, as of the calendar year end immediately
preceding such termination, the performance goal set forth in Section 2(b) has
been satisfied in all respects except for the passage of the required period of
time, the following number of Restricted Shares shall vest and become
nonforfeitable upon written certification by the Committee that such pro rated
performance goal has been achieved: 30,000 multiplied by a fraction the
numerator of which is the number of full calendar years beginning January 1,
2003 and ending on or before the date of such termination, and the denominator
of which is ten. For purposes hereof, "Cause" shall mean conviction of a felony;
willful failure to implement reasonable directives of the President, Chairman or
the Board of Directors of Alleghany after written notice, which failure is not
corrected within ten days following notice thereof; or gross misconduct in
connection with the performance of any of Participant's duties; and "Total
Disability" shall mean Participant's inability to discharge his duties due to
physical or

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mental illness or accident for one or more periods totaling six months during
any consecutive twelve-month period.

            Section 5. Rights as a Stockholder. Subject to the otherwise
applicable provisions of the Plan and this Agreement, the Participant will have
all rights of a stockholder of the shares of Common Stock in respect of which
the Restricted Shares are granted to the Participant hereunder, including the
right to vote the shares and receive all dividends and other distributions paid
in respect thereof; provided, however, that Alleghany shall retain all cash
dividends or other cash distributions on the Restricted Shares until they vest,
using such cash to purchase shares of Common Stock at the Fair Market Value
thereof on the date paid, and the Participant shall deliver any stock dividends
or other non-cash distributions on the Restricted Shares until they vest
(including, without limitation, shares of any corporation distributed in a
spin-off), together with appropriate stock transfer or other assignment
documents, to Alleghany. The Common Stock acquired with the cash dividends or
other cash distributions on the Restricted Shares or distributed as a stock
dividend and any other non-cash distributions on the Restricted Shares (the
"Distribution Amounts") shall be held by Alleghany until the Restricted Shares
in respect of which such Distribution Amounts were paid vest and become
nonforfeitable, at which time such Distribution Amounts shall also vest and
become nonforfeitable, and the certificates or other evidence of the
Distribution Amounts shall be delivered, or caused to be delivered, by
Alleghany. Alleghany shall also destroy the related stock power or powers, and
shall pay all original issue or transfer taxes and all fees and expenses
incident to such delivery. To the extent that any Restricted Shares are
forfeited pursuant to the terms of this Agreement, the Distribution Amounts paid
in respect thereof shall also be forfeited.

            Section 6. Restrictions on Transfer. Neither this Agreement nor any
Restricted Shares covered hereby or dividends or other distributions paid in
respect thereof may be sold, assigned, transferred, encumbered, hypothecated or
pledged by the Participant, other than to Alleghany as a result of forfeiture of
the Restricted Shares and dividends or other distributions as provided herein,
or unless such Restricted Shares and dividends or other distributions have
vested and become nonforfeitable in accordance herewith. Any such disposition by
the Participant shall be made in compliance with all applicable securities laws.
The Participant hereby represents and warrants to Alleghany that the Restricted
Shares are being acquired for investment and not with a view to the distribution
thereof, and not with any present intention of distributing the same.

            Section 7. Tax Withholding. Alleghany's obligation to deliver the
Restricted Shares to the Participant pursuant to Section 3 hereof and any
Distribution Amount is subject to the Participant's making provision for the
payment or withholding of any taxes required to be paid or withheld pursuant to
any applicable law in respect of the receipt of, or lapse of forfeiture
restrictions with respect to, such Restricted Shares and the payment or delivery
of any Distribution Amounts. At the written election of Participant, and upon
the approval of the Committee, any such required withholding payments may be
made in Restricted Shares or Distribution Amounts, in each case valued at Fair
Market Value on the date of payment.

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            Section 8. No Right of Employment. Nothing in this Agreement shall
confer upon the Participant any right to continue as an employee of Alleghany or
to interfere in any way with the right of Alleghany to terminate the
Participant's employment at any time.

            Section 9. Entire Agreement. This Agreement, the letter agreement
dated as of October 7, 2002 and the Restricted Stock Unit Matching Grant
Agreement dated as of October 7, 2002 contain the entire understanding of
Alleghany and the Participant with respect to the subject matter hereof and
thereof and, except as specifically provided herein or therein, cancel and
supersede any and all other agreements between Alleghany and the Participant
with respect to the subject matter hereof and thereof. Any amendment or
modification of this Agreement shall not be binding unless in writing and signed
by Alleghany and the Participant.

            Section 10. Governing Law. This Agreement shall be governed by and
enforceable in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.

            IN WITNESS WHEREOF, the Participant has duly executed this Agreement
and Alleghany has duly caused this Agreement to be executed in its name and on
its behalf, all as of October 7, 2002.

                              ALLEGHANY CORPORATION

                              By: /s/ John J. Burns, Jr.
                              ------------------------------
                                      John J. Burns, Jr.
                                      President

                              PARTICIPANT

                              /s/ Weston M. Hicks
                              ------------------------------
                              Weston M. Hicks

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