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                                                                  EXHIBIT 10.3

                                SERVICE AGREEMENT

     AGREEMENT, made and entered into as of November 20, 2001 (the "EFFECTIVE
DATE") by and between Axis Specialty Limited, a Bermuda corporation (together
with its successors and assigns, the "COMPANY"), and Robert J. Newhouse, Jr.
(the "EXECUTIVE").

     WHEREAS, the Company wishes the Executive to serve as Chairman of the
Company's Board of Directors (the "BOARD"), and as Chairman of the Executive
Committee of the Board (the "EXECUTIVE COMMITTEE"), under the terms and
conditions of this Agreement;

     WHEREAS, the Executive is willing to serve in such positions under such
terms and conditions;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Company and
the Executive (the "PARTIES") agree as follows:

     1.   TERM OF SERVICE. The Executive's term of service under this Agreement
(the "TERM") shall commence as of the Effective Date and shall continue through
the close of business on the third anniversary of the Effective Date, subject to
earlier termination as provided in Section 8 below. Thereafter, UNLESS either
Party gives notice in writing to the other at least 90 days prior to the
then-scheduled expiration date that the Term is not to be extended, the Term
shall automatically be extended for successive one-year periods, such extended
Term to remain subject to termination prior to its then-scheduled expiration
date as provided in Section 8 below.

     2.   POSITIONS, DUTIES AND RESPONSIBILITIES.

          (a)     GENERAL. The Executive shall serve throughout the Term as
Chairman of the Board and of the Executive Committee, with all responsibilities
and authorities normally associated with those positions. The Executive's
services under this Agreement shall be performed outside the United States. The
amount of time the Executive spends in Bermuda and Europe shall be such time as
is reasonably appropriate to perform his responsibilities and services
hereunder, except for the amount of time necessary for him to attend meetings of
the Board and of committees of the Board of which he is a member. It is
understood that the Executive will not redomicile to Bermuda. The Executive
shall devote such time as he reasonably deems appropriate to performing his
responsibilities and services hereunder.

          (b)     PERMITTED ACTIVITIES. Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from (i) serving on the
boards of directors of a reasonable

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number of other corporations or the boards of a reasonable number of trade
associations and/or charitable organizations, (ii) engaging in charitable,
community and other business affairs and (iii) managing his personal investments
and affairs, provided such activities do not, in his reasonable judgment,
materially interfere with the proper performance of his responsibilities and
services hereunder.

     3.   BASE FEE. The Executive shall, during the Term, be paid a Base Fee by
the Company at an annual rate of US$350,000, payable in accordance with the
regular payroll practices applicable to senior executives of the Company, but no
less frequently than monthly; PROVIDED, that, only for purposes of calculating
the Base Fee payable hereunder, the Term shall be deemed to have commenced as of
October 1, 2001. Such Base Fee shall be subject to review for increase at the
discretion of the Board (or a committee thereof). The Base Fee may not be
decreased, at any time or for any purpose, during the Term.

     4.   ANNUAL BONUS. In addition to the Base Fee provided for in Section 3
above, the Executive may be awarded such annual bonuses as may be determined by
the Board (or a committee thereof), based on whatever incentive plans or
programs have been adopted by the Company for its senior executives as well as
on the performance of the Executive and of the Company; PROVIDED, HOWEVER, in no
event shall the annual bonus be less than 75% of the annual Base Fee hereunder.
Any such annual bonus shall, unless otherwise required under a plan or program
applying to senior executives generally, be paid in cash in a lump sum promptly
following determination thereof.

     5.   EQUITY AWARDS.

          (a)     INITIAL AWARDS. Concurrently with the execution of this
Agreement, the Company and the Executive shall enter into a Share Purchase
Option Agreement, covering 15,000 voting common shares of the Company, par value
US$0.10 (the "COMMON STOCK"), in the form attached hereto as Exhibit A (the
"OPTION AGREEMENT") and a Share Grant Agreement, covering 10,000 shares of
Common Stock, in the form attached hereto as Exhibit B (the "SHARE AGREEMENT").

          (b)     SUBSEQUENT AWARDS. Beginning in calendar year 2002, the
Executive shall be eligible during the Term to receive additional equity grants
and awards as determined by the Board (or a committee thereof) in its
discretion, with all such grants and awards to be made on the same terms and
conditions as the initial awards in Section 5(a) above (except that the exercise
price for any options shall be at the market price on the date of grant or such
lesser price as determined by the Board (or a committee thereof)).

     6.   EMPLOYEE BENEFIT PROGRAMS. During the Term, the Executive shall be
entitled to participate in all employee benefit plans and programs (the "BENEFIT
PROGRAMS"), other than

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(a) fringe benefits (such as cars, housing and relocation expenses, and
education subsidies) associated with establishing residency outside the United
States and (b) pension plans and programs in which senior executives of the
Company are eligible to participate. To the extent that the Executive is not
eligible to participate in any Benefit Program, other than as provided in
clauses (a) and (b) of the preceding sentence, he shall be provided with the
after-tax economic equivalent of the coverages and benefits provided under such
program in which he is unable to participate. In addition, if necessary, the
Executive shall be provided interim coverage until such time as the Company has
adopted a program of employee benefit coverages. Interim coverage may be
provided through purchase of separate insurance contracts, through
self-insurance or, to the extent the Executive is permitted to continue to
maintain on a contributory basis the benefits he presently receives from other
sources, by reimbursing the Executive for the cost thereof on a basis that keeps
the Executive whole after taxes.

     7.   EXPENSE REIMBURSEMENT, FRINGE BENEFITS AND SURVIVOR BENEFITS.

          (a)     EXPENSE REIMBURSEMENT. The Company shall promptly reimburse
the Executive for all reasonable out-of-pocket travel expenses, entertainment
expenses and other expenses incurred by him in connection with performing
services under this Agreement, such reimbursement to be paid promptly after he
submits reasonable documentation with respect to such expenses. This shall
include, without limitation, reimbursement of any such expenses for air fare
(which the Executive shall be entitled to on a first-class basis (including
flights on the Concorde, if available)), hotel accommodations and meals. The
Company shall also promptly reimburse the Executive for all costs and expenses
(including, without limitation, attorneys' fees and other charges of counsel)
incurred in connection with negotiating and documenting this Agreement and
related arrangements.

          (b)     FRINGE BENEFITS. In addition to compensation and benefits as
set forth elsewhere in this Agreement, the Executive shall be entitled to
participate during the Term in any and all of the fringe benefits made available
to senior executives of the Company in accordance with the terms and conditions
then applicable to participating senior executives generally. In all events, the
Executive shall be entitled during the Term to the following:

                  (i)     reimbursement or payment of the cost (including
     initiation fees and annual dues) of membership in two clubs in Bermuda,

                  (ii)    reimbursement or payment of air fare for up to 14
     round-trip first-class non-business trips per year by the Executive or
     members of his family between New York, New York, Newark, New Jersey or
     Nantucket, Massachusetts and Bermuda or New York, Newark, Nantucket, or
     Bermuda and London, England (the benefit under this Section 7(b)(ii) being
     in addition to any reimbursement of airfare described in Section 7(a)
     above), and

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                  (iii)   reimbursement or payment of the cost of financial and
     tax planning, and of tax return preparation, such reimbursement not to
     exceed US$10,000 per year.

          (c)     Upon the Executive's death, whether it occurs during or after
the Term, his spouse shall receive payments at the rate of US$175,000 per year
(or, if greater, at a rate equal to one half of the Base Fee in effect in
accordance with Section 3 above immediately prior to the expiration of the
Term), for a period of 36 months after the date of his death, paid in equal
monthly installments. In the event the Executive's spouse does not survive him
or dies during the period of such payments, such payments shall thereafter be
made to the beneficiary designated by the Executive or, in the absence of such
designation, to the estate or other legal representative of the Executive.

     8.   TERMINATION OF SERVICE.

          (a)     TERMINATION DUE TO DEATH.

          (i)     In the event that the Executive dies during the Term, the Term
     shall expire as of the date of his death and the Executive's spouse, if she
     survives him, in addition to the benefit provided in Section 7(c) above,
     shall be entitled to receive the Executive's Base Fee, at the rate in
     effect immediately prior to his death, through the end of the month in
     which the Executive dies. In the event that the Executive's spouse does not
     survive him, the beneficiary designated by the Executive (or, in the
     absence of such a designation, the estate or other legal representative of
     the Executive) shall be entitled to receive the Base Fee at the rate in
     effect immediately prior to his death, through the end of the month in
     which the Executive dies. In addition to the above, the beneficiary
     designated by the Executive (or, in the absence of such a designation, the
     estate or other legal representative of the Executive) shall be entitled
     to:

                  (A)     a Separation bonus for the year of death (with the
          term "SEPARATION BONUS" meaning an amount no less than the greater of
          (x) US$350,000 and (y) the highest amount awarded to the Executive as
          an annual bonus for any of the three years (or such lesser number of
          years he has then been employed) immediately preceding the year in
          which termination occurs);

                  (B)     the rights under the Option Agreement, and the Share
          Agreement, in accordance with the terms thereof;

                  (C)     vesting and exercisability, as the case may be, for
          all other equity awards, including any restricted shares or stock
          options, in accordance with Section 5(b) above; and

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                  (D)     any other benefits described in Section 8(f) below.

          (b)     TERMINATION DUE TO DISABILITY.

          (i)     Either Party may terminate the Executive's service under this
     Agreement prior to the then-scheduled expiration of the Term due to his
     Disability by providing 15 days' prior written notice to the other party,
     in which event the Term shall expire and the Executive shall be entitled
     to:

                  (A)     the Base Fee, at the rate in effect immediately prior
          to the date of termination, through the end of the month in which the
          Executive's service terminates due to Disability;

                  (B)     a lump sum amount equal to one year's Base Fee at the
          rate in effect immediately prior to such termination;

                  (C)     a Separation Bonus for the year of termination;

                  (D)     the rights under the Option Agreement, and the Share
          Agreement, in accordance with the terms thereof;

                  (E)     vesting and exercisability, as the case may be, for
          all other equity awards, including any restricted shares or stock
          options, in accordance with Section 5(b) above;

                  (F)     disability benefits in accordance with any applicable
          Company plans, programs, policies or agreements;

                  (G)     continued coverage for 12 months under all Benefit
          Programs (or their equivalent as provided in Section 6 above) in which
          the Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service; and

                  (H)     any other benefits described in Section 8(f) below.

     For purposes of this Agreement, "DISABILITY" shall mean that the Executive
     has been unable to substantially perform his duties hereunder, due to
     physical or mental incapacity, for 180 consecutive days.

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          (c)     TERMINATION FOR CAUSE.

                  (i)     The service of the Executive under this Agreement, and
     the Term, may be terminated by the Board for Cause prior to the
     then-scheduled expiration of the Term. For this purpose, "CAUSE" shall
     mean:

                  (A)     conviction of the Executive of a felony involving
          moral turpitude, or

                  (B)     the Executive, in carrying out his duties for the
          Company under this Agreement, has been guilty of gross neglect or
          gross misconduct resulting, in either case, in material economic harm
          to the Company; PROVIDED, HOWEVER, that no act, or failure to act, by
          the Executive shall constitute Cause if the Executive believed in good
          faith that such act, or failure to act, was in, or not opposed to, the
          interests of the Company.

     Anything herein to the contrary notwithstanding, the Executive shall not be
     terminated for "Cause," within the meaning of clause (B) of this Section
     8(c)(i), unless written notice stating the basis for the termination is
     provided to the Executive and he is given 15 days to cure the neglect or
     conduct that is the basis of such claim and, if he fails to cure such
     neglect or conduct, the Executive has an opportunity to be heard before the
     full Board of the Company within 15 days following the end of such cure
     period and, within five (5) days after such hearing, there is a unanimous
     vote of all disinterested members of the Board to terminate him for Cause.

                  (ii)    In the event of a termination for Cause in accordance
     with Section 8(c)(i) above, the Executive shall be entitled only to (A) the
     Base Fee, at the rate in effect immediately prior to the date of
     termination, through the date on which termination for Cause occurs, (B)
     the rights under the Option Agreement, and the Share Agreement, in
     accordance with the terms thereof, (C) vesting and exercisability, as the
     case may be, for all other equity awards, including any restricted shares
     or stock options, in accordance with Section 5(b) above and (D) any other
     benefits described in Section 8(f) below.

          (d)     TERMINATION WITHOUT CAUSE OR WITH GOOD REASON.

                  (i)     Anything in this Agreement to the contrary
     notwithstanding, the Executive's service under this Agreement may be
     terminated, by prior written notice by the terminating party to the other
     party, prior to the then-scheduled expiration of the Term by the Company
     without Cause, or by the Executive with "GOOD REASON" (as defined in
     Exhibit C), as provided in this Section 8(d), in which event the Term shall
     expire. A termination due to Disability in accordance with Section 8(b)
     above, or for

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     Cause in accordance with Section 8(c) above, shall not be deemed a
     termination without Cause or with Good Reason to which this Section 8(d)
     applies.

                  (ii)    Except in certain circumstances in connection with a
     Change in Control as provided in Section 8(d)(iii) below, in the event that
     the Executive's service is terminated prior to the then-scheduled
     expiration of the Term (x) by the Company without Cause or (y) by the
     Executive with Good Reason, the Term shall expire and the Executive shall
     be entitled to:

                  (A)     the Base Fee through the date of termination at the
          rate in effect immediately prior to the date of termination;

                  (B)     a lump sum amount equal to two years' Base Fee at the
          rate in effect immediately prior to such termination;

                  (C)     a Separation Bonus for the year of termination;

                  (D)     an amount no less than the greater of (x) US$350,000
          and (y) the highest amount awarded to the Executive as an annual bonus
          for any of the three years (or such lesser number of years he has then
          been employed) immediately preceding the year in which termination
          occurs;

                  (E)     the rights under the Option Agreement, and the Share
          Agreement, in accordance with the terms thereof;

                  (F)     vesting and exercisability, as the case may be, for
          all other equity awards, including any restricted shares or stock
          options, in accordance with Section 5(b) above; and

                  (G)     continued coverage for 12 months under all Benefit
          Programs (or their equivalent as provided in Section 6 above) in which
          the Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service; and

                  (H)     any other benefits described in Section 8(f) below.

                  (iii)   In the event that the Executive's service herein is
     terminated by the Company without Cause, or by the Executive for Good
     Reason, in either case in

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     anticipation of, or within the 12-month period following, a Change in
     Control (as defined in Exhibit D), the Term shall expire and the Executive
     shall be entitled to:

                  (A)     the benefits described in Section 8(d)(ii)(A), (C),
          (E), (F) and (H) above;

                  (B)     a lump sum amount equal to two year's Base Fee at the
          rate in effect immediately prior to such termination;

                  (C)     an amount no less than two (2) times the greater of
          (x) US$350,000 and (y) the highest amount awarded to the Executive as
          an annual bonus for any of the three years (or such lesser number of
          years he has then been employed) immediately preceding the year in
          which a Change in Control occurs; and

                  (D)     continued coverage for 24 months under all Benefit
          Programs (or their equivalent as provided in Section 6 above) in which
          the Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service.

          (e)     VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
voluntarily terminate his service under this Agreement, by prior written notice
to the Company, before the then-scheduled expiration of the Term, in which event
(x) the Term shall expire as of the date specified by the Executive in writing
and (y) the Executive shall receive the same rights and benefits as applicable
to a termination by the Board for Cause in accordance with Section 8(c) above. A
voluntary termination under this Section 8(e) shall not be deemed a breach of
this Agreement. Neither a termination of the Executive's service due to
Disability in accordance with Section 8(b) above, nor a termination of the
Executive's service by the Executive for "Good Reason" in accordance with
Section 8(d) above, shall be deemed to be a voluntary termination within the
meaning of this Section 8(e).

          (f)     MISCELLANEOUS.

                  (i)     On any termination of the Term, the Executive shall be
     entitled to:

                  (A)     the balance of any annual, long-term or other
          incentive award earned (but not yet paid) prior to such termination;

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                  (B)     reimbursement of any business or other expenses
          pursuant to Section 7 above; and

                  (C)     any other rights, compensation and/or benefits as may
          be due the Executive in accordance with the terms and provisions of
          any agreements, plans or programs of the Company, including this
          Agreement (but in no event shall the Executive be entitled to
          duplicative rights, compensation and/or benefits).

                  (ii)    All amounts due under this Section 8 shall be paid in
     a lump sum promptly following the date of termination.

                  (iii)   For purposes of this Agreement, in the event there is
     a reduction in Base Fee that would constitute the basis for a termination
     for Good Reason pursuant to Section 8(d) above, then "Base Fee" shall mean
     the Base Fee in effect immediately prior to any such reduction.

          (g)     NO MITIGATION; NO OFFSET. In the event of any termination of
his service under this Agreement, the Executive shall be under no obligation to
seek other employment, and there shall be no offset against amounts due the
Executive under this Agreement or otherwise on account of any remuneration
attributable to any subsequent employment that he may obtain or any claim that
the Company or any Affiliates (an "AFFILIATE" of any person means any person
that controls, is controlled by, or is under common control with, such person)
may have against him. Any amounts due under this Section 8 are considered to be
reasonable by the Company and not in the nature of a penalty.

          (h)     NOTICE PROVISIONS. In the event written notice of termination
has been given under this Section 8, no subsequent notice of termination,
whether written or otherwise, shall become effective until and unless the prior
notice ceases to be effective, PROVIDED, HOWEVER, that (i) in the case of a
notice of termination for Cause, such notice shall be deemed to cease to be
effective upon cure or a failure to terminate upon a unanimous vote of all
disinterested members of the Board as provided in Section 8(c) above and (ii) in
the case of a notice of a voluntary termination by the Executive, such notice
shall be deemed to cease to be effective 30 days following notice of such
termination.

     9.   NONCOMPETITION, NONSOLICITATION, CONFIDENTIALITY AND
          NON-DISPARAGEMENT.

          (a)     NONCOMPETITION. For a period of 12 months after termination of
his service hereunder, the Executive shall not, directly or indirectly, whether
as an employee, consultant, partner, principal, agent, distributor,
representative or stockholder (except as a less than one percent stockholder or
other equity holder of a publicly traded entity or a less than five percent
stockholder or other equity holder of a privately held entity), engage in any
activities within the United States or Bermuda if such activities involve, to a
material extent, insurance or

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reinsurance of United States-based entities or exposures that are materially
competitive with the businesses that (i) are then being conducted by the Company
or any subsidiary and (ii) were during the Term either being conducted by, or
being actively developed by, the Company or any subsidiary. Notwithstanding the
foregoing, none of the following activities shall be deemed to violate the
prohibition in the immediately preceding sentence: (x) the Executive's service
as a director (or equivalent) of any entity in the insurance, reinsurance or
related businesses; (y) the Executive's continuing to perform services as a
consultant pursuant to any relationship that exists as of the Effective Date;
and (z) any other activity that is approved by the Board (which approval shall
not be unreasonably withheld or delayed).

          (b)     NONSOLICITATION. For a period of 12 months after termination
of his service hereunder, the Executive shall not, except in connection with
carrying out his duties for the Company or any subsidiary or otherwise at the
written request of the Company, (i) encourage any employee of the Company or any
subsidiary to leave the employ of the Company or any subsidiary, (ii) hire or
use the services of any employee of the Company or any subsidiary, and (iii)
solicit or cause another person or entity to solicit any customers or brokers of
the Company or any subsidiary to terminate or otherwise adversely modify their
relationship with the Company or any such subsidiary; PROVIDED that clause (i)
and clause (ii) of this Section 9(b) shall only apply to individuals employed by
the Company or any subsidiary at any point during the one-year period
immediately preceding the date of termination of Executive. Nothing in this
Section 9(b) shall prevent the Executive from providing employment references
for such employees.

          (c)     CONFIDENTIALITY. The Executive covenants that he shall not,
without the prior written consent of the Board or of a person authorized by the
Board, disclose to any person, other than in connection with performing his
duties for the Company, any confidential proprietary information about the
Company or its business, unless and until such information has become known to
the public generally or within any industry in which the Company conducts
business (other than as a result of unauthorized disclosure by the Executive) or
unless (i) such disclosure is in confidence to an attorney for the purpose of
obtaining legal advice, (ii) such disclosure is in connection with any
litigation, arbitration or mediation involving this Agreement or other
agreements or arrangements involving the Parties, including, but not limited to,
the enforcement of this Agreement or such other agreements or arrangements or
(iii) the Executive is required to disclose such information (whether or not in
connection with a disclosure required in clause (ii)) by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order the Executive to disclose
or make accessible any information.

          (d)     NON-DISPARAGEMENT:. The Executive shall not willfully or
knowingly make any public statement that would disparage or defame the Company.
The Company shall

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not, and shall cause each of the executives and directors of the Company not to,
willfully or knowingly make any public statement that would disparage or defame
the Executive. Notwithstanding the foregoing, nothing in this Section 9(d) shall
prevent any person from (i) responding publicly to any incorrect, disparaging or
defamatory public statement to the extent reasonably necessary to correct or
refute such public statement or (ii) making any truthful statement to the extent
(x) such disclosure is in confidence to an attorney for the purpose of obtaining
legal advice, (y) such disclosure is in connection with any litigation,
arbitration or mediation involving this Agreement or other agreements or
arrangements involving the Parties, including, but not limited to, the
enforcement of this Agreement or such other agreements or arrangements or (z)
the Executive is required to disclose such information (whether or not in
connection with a disclosure required in clause (y)) by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction.

          (e)     SCOPE. For purposes of this Section 9, the Company shall be
deemed to include any entity that (i) is an Affiliate both during the Term and
at the time in question and (ii) is an Affiliate organized after the Term for
the purpose of holding the assets owned by the Company during the Term and/or
operating the business of the Company conducted during the Term. The covenants
set forth in this Section 9, except as provided in Section 9(a) and (b) above,
shall be without limitation as to time and geographic application.

     10.  INDEMNIFICATION.

          (a)     During the Term and at all times thereafter, if the Executive
is made a party, is threatened to be made a party, or reasonably anticipates
being made a party, to any Proceeding by reason of the fact that he is or was a
director, officer, member, employee, agent, manager, trustee, consultant or
representative of the Company or any Affiliate or is or was serving at the
request of the Company or any Affiliates, or in connection with his service
hereunder, as a director, officer, member, employee, agent, manager, trustee,
consultant or representative of another Person, or if any Claim is made, is
threatened to be made, or is reasonably anticipated to be made, that arises out
of or relates to the Executive's service in any of the foregoing capacities,
then the Executive shall promptly be indemnified and held harmless to the
fullest extent permitted or authorized by the Bye-laws of the Company, or if
greater, by applicable law, against any and all costs, expenses, liabilities and
losses (including, without limitation, attorneys' fees, judgments, interest,
expenses of investigation, penalties, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) incurred or suffered by the Executive
in connection therewith or in connection with seeking to enforce his rights
under this Section 10(a), and such indemnification shall continue as to the
Executive even if he has ceased to be a director, officer, member, employee,
agent, manager, trustee, consultant or representative of the Company or other
Person, without limitation in time, and shall inure to the benefit of the

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Executive's heirs, executors and administrators. The Executive shall be entitled
to prompt advancement of any and all costs and expenses (including, without
limitation, attorneys' fees and other charges of counsel) incurred by him in
connection with any such Proceeding or Claim, or in connection with seeking to
enforce his rights under this Section 10(a), any such advancement to be made
within 15 days after he gives written notice, supported by reasonable
documentation, requesting such advancement. Such notice shall include, to the
extent required by applicable law, an undertaking by the Executive to repay the
amount advanced, on an after-tax basis (that is, net of any applicable taxes),
if he is ultimately determined not to be entitled to indemnification against
such costs and expenses. Nothing in this Agreement shall operate to limit or
extinguish any right to indemnification, advancement of expenses, or
contribution that the Executive would otherwise have (including, without
limitation, by agreement or under applicable law). For purposes of this
Agreement, "CLAIM" shall mean any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information, "PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, board, committee,
agency, body, employee benefit plan or other person or entity and "PROCEEDING"
shall mean any actual, threatened, or reasonably anticipated, action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate,
formal, informal or other.

          (b)     Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Executive under Section 10(a) that indemnification of
the Executive is proper because he has met the applicable standard of conduct,
nor a determination by the Company (including its board of directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.

          (c)     The Executive shall, during his service for the Company,
including as a director, and for at least six years thereafter, be covered by a
directors' and officers' liability insurance policy (or policies) on terms and
conditions no less favorable to him in any respect than those then applying to
any other present or former director or officer of the Company, but in all
events, the minimum aggregate coverage obtained by the Company, under which the
Executive is a covered person, shall be in an amount no less than US$50,000,000.

     11.  EXCISE TAX ADJUSTMENT PAYMENTS.

          (a)     PAYMENTS. In the event that any payment or benefit provided to
or for the benefit of the Executive in connection with this Agreement, any other
agreement or arrangement to which he and the Company are parties, his services
for the Company, or the termination of such services, other than any payment
pursuant to this Section 11(a) (a "PAYMENT"), would be

                                       12
<Page>

subject to (x) the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor to such Section or (y)
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the "EXCISE TAX"), then the Executive shall be entitled to
receive from the Company, within 15 days following the determination described
in Section 1l(b) below and no later than such Excise Tax is due to be paid,
through withholding or otherwise, an additional payment ("EXCISE TAX ADJUSTMENT
PAYMENT") in an amount such that after payment by the Executive of all
applicable U.S. Federal, state, local and other taxes and all applicable
non-U.S. taxes (each computed at the maximum marginal rates and including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Excise Tax Adjustment Payment, the Executive retains an
amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payment.

          (b)     DETERMINATIONS. All determinations required to be made under
this Section 11, including whether an Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be promptly made by
a "big five" accounting firm (the "ACCOUNTING FIRM"), selected by the Company
with the Executive's approval (which approval shall not be unreasonably withheld
or delayed). The Accounting Firm shall provide detailed supporting calculations
to the Company and the Executive within 15 business days of the date of the
Payment to which the Excise Tax Adjustment Payment relates. As a result of the
uncertainty in the application of Section 4999 of the Code (or any successor to
such Section) at the time of any initial determination hereunder, it is possible
that (x) certain Excise Tax Adjustment Payments will not have been made that
should have been made (an "UNDERPAYMENT"), or (y) certain Excise Tax Adjustment
Payments will have been made that should not have been made (an "OVERPAYMENT"),
consistent with the calculations required to be made hereunder. In the event of
an Underpayment, such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive. In the event of an Overpayment, such
Overpayment shall be promptly repaid to the Company on an after-tax basis.

     12.  RESOLUTION OF DISPUTES. Any dispute between the Parties, including,
without limitation, any dispute arising out of or relating to this Agreement or
any other agreement or arrangement to which the Executive and the Company are
parties, the Executive's service with the Company, or the termination of such
service, shall be resolved by confidential arbitration in New York City in
accordance with the Commercial Arbitration Rules (and not the National Rules for
Resolution of Employment Disputes) of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. All costs associated with any such
arbitration, including all attorneys' fees and other legal expenses, shall be
paid by the Company.

                                       13
<Page>

     13.  WITHHOLDING. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive shall be subject to tax withholding to the extent required by
applicable law, treaty or regulation. In lieu of withholding such amounts, in
whole or in part, the Company may accept, in its sole discretion, such other
provision for payment of required tax withholding as the Executive may
reasonably request.

     14.  REPRESENTATIONS.

          (a)     The Company represents and warrants that (i) it is fully
authorized by action of its Board (and of any other person or body whose action
is required) to enter into this Agreement and to perform its obligations under
it, (ii) the Board has approved or, prior to March 15, 2002, will approve (A)
the transfer of (x) all or any portion of the Option (as defined in the Option
Agreement) as permitted pursuant to Paragraph (i) of the Option Agreement and
(y) all or any of the Shares (as defined in the Share Agreement) as permitted
pursuant to Paragraph (d) of the Share Agreement and (B) upon exercise of the
Option (or any portion thereof) or the transfer of the Shares, as the case may
be, the registration of the shares in the name of such transferee, (iii) the
officer signing this Agreement on its behalf is duly authorized to do so, (iv)
the execution, delivery and performance of this Agreement by it does not violate
any applicable law, regulation, order, judgment or decree or any agreement,
plan, bye-law, charter provision or corporate governance document to which it is
a party or by which it is bound and (v) upon the execution and delivery of this
Agreement by the Parties, this Agreement shall be a valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.

          (b)     The Executive represents and warrants that, to the best of his
knowledge and belief, (i) delivery and performance of this Agreement by him does
not violate any applicable law, regulation, order, judgment or decree or any
agreement to which the Executive is a party or by which he is bound and (ii)
upon the execution and delivery of this Agreement by the Parties, this Agreement
shall be a valid and binding obligation of the Executive, enforceable against
him in accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.

     15.  ENTIRE AGREEMENT. This Agreement, together with its Exhibits (which
form a part of this Agreement for all purposes), contains the entire agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto; PROVIDED,
HOWEVER, that the Executive's entitlements as a founder of the Company shall be
understood not in any way to be affected by the provisions of this Agreement. In
the event of any inconsistency between any provision of this Agreement and any
provision of

                                       14
<Page>

any plan, program, policy, arrangement, bye-law, charter document, corporate
governance document, or agreement of the Company or any of its Affiliates, the
provisions of this Agreement shall control to the extent that they are more
favorable to the Executive unless the Executive otherwise agrees in a writing
that expressly refers to the provision of this Agreement whose control he is
waiving.

     16.  ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors, heirs
and assigns. No rights or obligations of the Executive under this Agreement may
be assigned or transferred by the Executive other than his rights to
compensation and benefits hereunder, which may be transferred by will or
operation of law subject to the limitations of this Agreement. The Parties
recognize that the Executive also may transfer his rights under the Option
Agreement and Share Agreement to the extent therein provided. No rights or
obligations of the Company under this Agreement may be assigned or transferred
by the Company except that such rights or obligations may be assigned or
transferred pursuant to an amalgamation, reconstruction, merger or consolidation
in which Company is not the continuing entity, or a sale or liquidation of all,
or substantially all, of the business and assets of the Company, provided that
the assignee or transferee is the successor to all, or substantially all, of the
business and assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law.

     17.  AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is agreed to in writing, signed by the Executive and by a
duly authorized officer of the Company. No waiver by any person of any breach of
an other person of any condition or provision of this Agreement shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by, or on
behalf of, the waiving person.

     18.  NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given (a) when
delivered personally or (b) on the second business day after the day on which it
is sent by recognized courier with delivery acknowledged by written receipt or
(c) on the fifth business day after it is sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may
subsequently by similar process give notice of:

If to the Company:              AXIS Specialty Limited
                                106 Pitts Bay Road
                                Pembroke, HM 08, Bermuda
                                Attn: Andrew Cook

                                       15
<Page>

If to the Executive:            Robert J. Newhouse, Jr.
                                5 North Pond Drive
                                Short Hills, New Jersey 07078

With a copy to                  Law Offices of Joseph E. Bachelder
                                780 Third Avenue, 29th Floor
                                New York, NY 10017
                                Attn: Joseph E. Bachelder, Esq.

     19.  SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.

     20.  SURVIVORSHIP. The respective rights and obligations of the Parties
shall survive any termination of the Executive's service under this Agreement to
the extent necessary to the intended preservation of such rights and
obligations.

     21.  BENEFICIARIES/REFERENCES. The Executive shall be entitled, to the
extent permitted under applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executive's death by giving the Company written notice thereof. In the event of
the Executive's death or a judicial determination of his incompetence,
references in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiaries, estate or other legal
representative.

     22.  GOVERNING LAW. This Agreement shall be governed, construed and
enforced in accordance with its express terms, and otherwise in accordance with
the laws of the State of New York without reference to the principles of
conflicts of law.

     23.  HEADINGS. The headings of the Sections of this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.

     24.  COUNTERPARTS AND FASCIMILE. This Agreement may be executed in one or
more counterparts. Signatures delivered by facsimile shall be deemed effective
for all purposes to the extent permitted under applicable law.

                                       16
<Page>

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.

                              AXIS SPECIALTY LIMITED

                              By: /s/ John R. Charman
                                 ------------------------------------
                              Name:  JOHN R. CHARMAN
                                   ----------------------------------
                              Title: PRESIDENT
                                    ---------------------------------

                              THE EXECUTIVE

                                  /s/ Robert J. Newhouse, Jr.
                              ---------------------------------------
                                  Robert J. Newhouse, Jr.

                                       17

<Page>

                                AMENDMENT ONE TO
                                SERVICE AGREEMENT

     AGREEMENT, made and entered into as of September 19, 2002 (the "EFFECTIVE
DATE") by and between Axis Specialty Limited, a Bermuda corporation (together
with its successors and assigns, the "COMPANY") and Robert J. Newhouse, Jr. (the
"EXECUTIVE") (together, the "PARTIES").

     WHEREAS, effective November 20, 2001, the Parties entered in an agreement
(the "SERVICE AGREEMENT") under which the Executive agreed to serve as Chairman
of the Company's Board of Directors (the "BOARD"), and as Chairman of the
Executive Committee of the Board (the "EXECUTIVE COMMITTEE"), under the terms
and conditions of the Service Agreement;

     WHEREAS, the Parties wish to amend the Service Agreement such that the
Executive will cease, as of the Effective Date, to serve as Chairman of the
Board but will continue to serve as Chairman of the Executive Committee and as a
member of the Board and will serve as a Member of Senior Management of the
Company;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Parties
agree as follows:

     1.   Effective as of the Effective Date, the first sentence of Section 2(a)
of the Service Agreement is amended to read as follows in its entirety:

          The Executive shall serve throughout the Term as Chairman of
          the Executive Committee, a member of Senior Management and a
          member of the Board, with all responsibilities and
          authorities normally associated with those positions.

     2.   Effective as of the Effective Date, Paragraph (i)(C) of Exhibit C of
the Service Agreement is amended to delete the words "Chairman of the Board and
Chairman of the Executive Committee" and replace them with the words "Chairman
of the Executive Committee, a Member of Senior Management and a member of the
Board".

     3.   In all other respects, the Service Agreement remains unchanged and is
hereby reaffirmed.

                                        1
<Page>

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.

                                   AXIS SPECIALTY LIMITED

                                   By:   /s/ John R. Charman
                                      ------------------------------------
                                   John R. Charman
                                   Chief Executive Officer

                                   THE EXECUTIVE

                                         /s/ Robert J. Newhouse, Jr.
                                   ---------------------------------------
                                      Robert J. Newhouse, Jr.

                                        2

<Page>

                                                                       EXHIBIT A

                       NONQUALIFIED STOCK OPTION AGREEMENT

     This STOCK OPTION AGREEMENT (the "AGREEMENT"), effective as of December
31, 2002 (the "EFFECTIVE DATE"), is made by and between AXIS Capital Holdings
Limited, a Bermuda company (the "COMPANY"), and Robert J. Newhouse, Jr. (the
"OPTIONEE").

     WHEREAS, AXIS Specialty Limited ("SPECIALTY") and the Optionee entered
into an agreement (the "SERVICE AGREEMENT") effective as of November 20,
2001, pursuant to which the Optionee was to serve Specialty as Chairman of
its Board of Directors and as Chairman of the Executive Committee of that
board; and

     WHEREAS, Specialty granted to the Optionee the option to purchase 30,000
shares of Specialty's voting common stock, par value US $0.10 per share
("SPECIALTY SHARES"), at an exercise price of US $100.00 per share;

     WHEREAS, Specialty granted to the Optionee a second option to purchase
15,000 Specialty Shares at an exercise price of US $116.00 per share;

     WHEREAS, Specialty and its subsidiaries became wholly owned subsidiaries
of the Company pursuant to an exchange offer consummated on December 31, 2002
(the "EXCHANGE OFFER");

     WHEREAS, in connection with the Exchange Offer, the above options were
assumed by the Company and converted into options to acquire voting common
shares of the Company, par value US $0.10 per share ("SHARES"); and

     WHEREAS, the Company desires to set forth all rights of the Optionee has
with respect to such converted options in a single agreement that reflects
the consummation of the Exchange Offer and supercedes all prior agreements.

     NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the Company
and the Optionee agree as follows:

     1.  OPTIONS SUBJECT TO AGREEMENT.  Subject to the terms and conditions set
forth herein, the Company and the Optionee acknowledge the prior grant of the
following options:

     (a)  An option (the "FIRST OPTION") to purchase from the Company up to
30,000 Shares.

     (b)  An option (the "SECOND OPTION") to purchase from the Company up to
15,000 Shares.

<Page>

The First Option and the Second Option (each an "OPTION") are not intended to
be "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE").

     2.  PRICE.  The price to be paid for the Shares subject to the First
Option (the "FIRST OPTION PRICE") shall be US $100.00 per Share.  The price
to be paid for the Shares subject to the Second Option (the "SECOND OPTION
PRICE") shall be US $116.00 per Share.  The First Option Price and the Second
Option Price (each an "OPTION PRICE") shall be subject to adjustment as set
forth in Section 8 hereof.

     3.  TERM.  The First Option shall expire on January 2, 2012, unless
earlier fully exercised.  The Second Option shall expire on November 12,
2012, unless earlier fully exercised.  Options shall be fully exercisable at
all times during their terms.

     4.  EXERCISE OF OPTION.

         (a)  Options shall be fully vested, exercisable, and non-forfeitable
as of the date of grant.  An Option shall not expire upon termination of the
Optionee's services to the Company, for whatever reason.  Options shall be
exercisable by the Optionee, or in the event of the Optionee's death or his
judicially determined incompetence, by his estate or other legal
representative, or, to the extent an Option is transferred, in whole or in
part, in accordance with the provisions of Section 9(a) hereof, by a
transferee of the Option.  As hereinafter used, the term "Optionee" shall
include the Optionee's estate, legal representative, or transferee, as
appropriate.

         (b)  An Option shall be exercised by the delivery of a written
notice of exercise to the Company or its designee, setting forth the number
of Shares with respect to which the Option is to be exercised.  A condition
of the issuance of the Shares as to which an Option shall be exercised shall
be the payment of the aggregate Option Price.  The Option Price shall be
payable to the Company in full either: (i) in cash or its equivalent, (ii) by
tendering (either by actual delivery or attestation) previously acquired
Shares having an aggregate fair market value (as determined in good faith by
the Board of Directors of the Company (the "BOARD")) ("FAIR MARKET VALUE") at
the time of exercise equal to the Option Price (provided that the Shares that
are tendered must have been held by the Optionee for at least six months
prior to their tender to satisfy the Option Price or have been purchased on
the open market), (iii) by broker-assisted cashless exercise as permitted
under the Federal Reserve Board's Regulation T (subject to applicable
securities law restrictions), (iv) by a combination of (i), (ii) and/or
(iii), or (v) by any other method approved by the Board in its sole
discretion.

         (c)  Subject to any governing rules or regulations, as soon as
practicable after receipt of written notification of exercise and full
payment (including satisfaction of any applicable tax withholding), the
Company shall deliver

                                        2
<Page>

to the Optionee Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option.

         (d)  Notwithstanding the foregoing, if any law or applicable
regulation of the Securities and Exchange Commission or other public
regulatory authority shall require the Company or the Optionee to register or
qualify under the Securities Act of 1933, as amended, any similar federal
statute then in force or any other applicable law regulating the sale of
securities, any Shares with respect to which notice of intent to exercise
shall have been delivered to the Company or to take any other action in
connection with such Shares, the delivery of the certificate or certificates
for such Shares shall be postponed until completion of the necessary action,
which the Company shall promptly take in good faith at its own expense. In
the event that the Optionee exercises an Option in part, the Company shall
make note of such partial exercise on the Company's books and records.

     5.  STATUS OF PURCHASED SHARES.  Shares purchased pursuant to the exercise
of an Option shall, upon delivery to the Optionee, be equal in all respects
with other Shares, but shall not carry any option or other right to subscribe
for additional Shares.

     6.  RIGHTS AS A SHAREHOLDER.  The Optionee shall not, by virtue of the
Option, be entitled to any rights of a shareholder of the Company, either at
law or at equity, and the grant of an Option shall not confer on the Optionee
any right with respect to the continuance of his service with the Company,
nor shall such grant interfere in any way with the right of the Company to
terminate the Optionee's service at any time.  Notwithstanding the foregoing,
if the Optionee purchases Shares pursuant to the exercise of an Option, the
Optionee shall enjoy, with respect to such Shares, "tag along" rights, "put"
rights, exchange rights, registration rights, and other comparable rights on
the most favorable basis provided for each such right to any other
shareholder.

     7.  CALL RIGHT AND RIGHT OF FIRST REFUSAL.  During such time that the
Shares are not listed on a national securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation System, any
Shares purchased pursuant to the exercise of an Option shall be subject to
the following:

         (a)  CALL RIGHT.  The Company shall have the right to purchase from
the Optionee any Shares obtained pursuant to exercise of an Option for a cash
purchase price equal to the Fair Market Value thereof as of the date on which
the Company provides written notice to the Optionee of its offer to purchase
such Shares, such notice to be given upon or at any time within 30 days after
the occurrence of any of the following:

              (i)    The Optionee becoming subject to voluntary or involuntary
bankruptcy or insolvency proceedings under federal or state law;

                                        3
<Page>

              (ii)   The Optionee attempting to assign his or her interest in
such Shares for the benefit of his or her creditors;

              (iii)  The appointment of a custodian to conduct the Optionee's
affairs;

              (iv)   The foreclosure or attempted foreclosure or levy on any
such shares by a creditor of the Optionee;

              (v)    The Optionee becoming a party to a divorce proceeding
involving his or her marriage; and

              (vi)   Termination of the Optionee's service with the Company
and any subsidiary thereof for whom the Optionee is an employee; provided
that, in the case of this paragraph (vi), the Company shall have the right to
exercise its call right pursuant to this Section 7(a) by giving written
notice upon or at any time within 30 days after the later of (A) termination
of the Optionee's service with the Company and any subsidiary thereof for
whom the Optionee is an employee and (B) exercise of an Option to the extent
such exercise occurs on or after termination of the Optionee's employment
with the Company and any subsidiary thereof for whom the Optionee is an
employee.

RIGHT OF FIRST REFUSAL.  No Optionee may sell or otherwise transfer any
Shares obtained pursuant to exercise of an Option without first (i) providing
the Company with a written offer to sell such Shares to the Company on the
same terms as were offered to the Optionee by a third party (a copy of which
third party offer shall be attached to the Optionee's offer to sell such
Shares to the Company) for a sale price equal to that set forth in the third
party's purchase offer, and (ii) waiting 30 days from the date of the
Company's receipt of such offer.  If the Company shall accept the Optionee's
offer in writing within such 30-day period, the Optionee and the Company
shall promptly effect such transaction.  If the Company does not accept the
Optionee's offer in writing within such 30-day period, the Optionee shall
thereupon be entitled to accept such third party's offer and to effect such
transaction with such third party.

     8.   CHANGES IN CAPITALIZATION AND ADJUSTMENTS.  In the event of any
change in capitalization of the Company, including, but not limited to, a
stock split, stock dividend, merger, recapitalization, share exchange,
amalgamation, consolidation, reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code), separation, including a spin-off or other distribution of stock or
property of the Company, or any partial or complete liquidation of the
Company, such adjustment shall be made to the number, kind and/or Option
Price of Shares subject to an

                                        4
<Page>

Option, as may be determined to be appropriate and equitable by the Board, in
its sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to an Option shall always be
rounded to the nearest whole number, with one-half (1/2) of a Share rounded
up to the next higher number.

     9.  RESTRICTIONS ON TRANSFER.

         (a)  An Option may not be assigned or otherwise transferred,
disposed of, or encumbered by the Optionee, in whole or in part, except: (i)
by will or the laws of descent and distribution or (ii) by the Optionee to
members of the Optionee's immediate family, to a trust established for the
exclusive benefit of one or more members of the Optionee's immediate family
and/or the Optionee, or to a partnership pursuant to which the only partners
are one or more members of the Optionee's immediate family and/or the
Optionee.  For purposes of this Section, the phrase "Optionee's immediate
family" shall mean the Optionee's children, stepchildren, grandchildren,
parents, spouse, siblings (including half brothers and sisters), and inlaws,
and includes relationships arising because of legal adoption.  The Company
represents and warrants that the Board has approved the transfer of all or
any portion of the Option to and the exercise thereof by the Optionee's
immediate family or trust or partnership as permitted by this Section and the
registration of any Shares to be delivered upon exercise of the Option in the
name of any Optionee to whom the Option may be transferred pursuant to this
Section.

         (b)  Shares purchased pursuant to the exercise of an Option may not
be sold, assigned, pledged, hypothecated, encumbered, or in any other manner
transferred or disposed of, in whole or in part, except in compliance with
the terms, conditions, and restrictions as set forth in the Shareholders
Agreement and Bye-Laws of the Company, applicable federal securities laws or
other applicable laws or regulations, and the terms and conditions of this
Agreement.  Each certificate for Shares purchased pursuant to the exercise of
an Option shall, unless at the time of exercise such Shares are registered
under the Securities Act of 1933, bear such legend as the Company reasonably
deems appropriate.  If, in the opinion of the Company and its counsel, any
legend placed on a stock certificate representing Shares sold under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.

         (c)  The Optionee represents and agrees that the Shares to be
acquired upon exercising an Option will be acquired for investment for such
Optionee's own account, not as a nominee or agent, and not with a view to the
sale, resale or distribution of any part thereof.  By executing this
Agreement, the Optionee represents that such Optionee does not have any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or grant participations to any person or entity with respect
to the Options or Shares.

         (d)  In the event that the sale of Shares is not registered under
the Securities Act but an exemption is available which requires an investment
representation or other representation, the Optionee shall represent and
agree at the

                                        5
<Page>

time of exercise that the Shares being acquired upon exercising this Option
are being acquired for investment for such Optionee's own account, not as a
nominee or agent, and not with a view to the sale, resale or distribution of
any portion thereof, and shall make such other representations as are deemed
necessary or appropriate by the Company and its counsel.  By executing this
Agreement, the Optionee represents that such Optionee does not have any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or grant participations to any person or entity with respect
to the Options or Shares.

     10.   RESERVATION OF SHARES.  The Company agrees that it shall at all
times maintain authorized and unissued Shares sufficient to fulfill all of
its obligations under this Agreement.

     11.   COMMUNICATIONS.  All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested, postage prepaid, or if sent by
overnight courier, or sent by written telecommunication, as follows:

     If to the Company, to:

          AXIS Capital Holdings Limited
          106 Pitts Bay Road
          Pembroke, HM 08, Bermuda
          Attention:  Andrew Cook

     If to the Optionee, to:

          Robert J. Newhouse, Jr.
          5 North Pond Drive
          Short Hills, New Jersey 07078

Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, on the second business day after
delivery acknowledged by written receipt, (c) if mailed, five business days
after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.

     12.  TAX WITHHOLDING.  The Optionee agrees to make appropriate
arrangements acceptable to the Company to satisfy any applicable tax
withholding requirements, or similar requirements, arising out of this
Agreement, prior to the delivery of any certificate or certificates
evidencing Shares.

     13.  GOVERNING LAW.  This Agreement shall be governed by, and construed
in accordance with, the laws of Bermuda.

                                        6
<Page>

     14.  COUNTERPARTS.  This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute the same instrument.

     15.  ENTIRE AGREEMENT.  This Agreement contains the entire agreement
between the Optionee, Specialty and the Company concerning the subject matter
hereof and supercedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Optionee,
Specialty and the Company with respect thereto entered into prior to the
Effective Date.

      16.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon any
successor or assign of either the Company or the Optionee, and upon any
executor, administrator, trustee, guardian, or other legal representative of
the Optionee.

     17.  MODIFICATION OR AMENDMENT.  This Agreement may only be modified or
amended by written agreement executed by the Optionee and the Company,
provided, however, that the adjustments described in Section 7 hereof may be
made without such written agreement.

     18.  SEVERABILITY.  If any provision of this Agreement shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Agreement, and this Agreement shall
be construed and enforced as if such illegal or invalid provision had not
been included.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as
of the Effective Date.

                         AXIS CAPITAL HOLDINGS LIMITED

                         By:         /s/ John R. Charman
                              ---------------------------------------
                                        John R. Charman

                                   /s/ ROBERT J. NEWHOUSE, JR.
                              ---------------------------------------
                                    Robert J. Newhouse, Jr.

                                        7
<Page>

                                                                       EXHIBIT B

                              STOCK GRANT AGREEMENT

     This STOCK GRANT AGREEMENT (the "AGREEMENT"), effective as of December
31, 2002 (the "EFFECTIVE DATE"), is made by and between AXIS Capital Holdings
Limited, a Bermuda company (the "COMPANY"), and Robert J. Newhouse, Jr. (the
"GRANTEE").

     WHEREAS, AXIS Specialty Limited ("SPECIALTY") and the Grantee entered
into an agreement (the "SERVICE AGREEMENT") effective as of November 20,
2001, pursuant to which the Grantee was to serve Specialty as Chairman of its
Board of Directors and as Chairman of the Executive Committee of that board;
and

     WHEREAS, Specialty granted to the Grantee 15,000 shares of Specialty's
voting common stock, par value US $0.10 per share ("SPECIALTY SHARES");

     WHEREAS, Specialty granted to the Grantee an additional 10,000 Specialty
Shares;

     WHEREAS, Specialty and its subsidiaries became wholly owned subsidiaries
of the Company pursuant to an exchange offer consummated on December 31, 2002
(the "EXCHANGE OFFER");

     WHEREAS, in connection with the Exchange Offer, Specialty Shares were
exchanged for voting common shares of the Company, par value US $0.10 per
share ("SHARES"); and

     WHEREAS, the Company desires to set forth all rights of the Grantee has
with respect to such grants in a single agreement that reflects the
consummation of the Exchange Offer and supercedes all prior agreements.

     NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the Company
and the Grantee agree as follows:

     1.  GRANTS SUBJECT TO AGREEMENT.  Subject to the terms and conditions set
forth herein, the Company and the Grantee acknowledge the prior grant to the
Grantee of 15,000 Shares on January 2, 2002 and 10,000 Shares on December 12,
2002.

     2.  STATUS OF SHARES.  Shares which are the subject of this Agreement
shall, upon delivery to the Grantee, be equal in all respects with other
Shares.  The Shares shall be fully paid and non-assessable and shall be free
and clear of any and all liens, encumbrances, charges and other third party
rights except to the extent

                                        6
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otherwise provided in Section 3 hereof or in the Shareholders Agreement or
Bye-Laws of the Company.

     3.  RIGHTS AS A SHAREHOLDER.  The Grantee shall enjoy with respect to
Shares subject to this Agreement "tag-along" rights, "put" rights, exchange
rights, and other comparable rights on the most favorable basis provided for
each such right to any other shareholder, except that registration rights
shall be provided on the same basis as provided other minority investors.

     4.  CHANGES IN CAPITALIZATION AND ADJUSTMENTS.  In the event of any
change in capitalization of the Company, including, but not limited to, a
stock split, stock dividend, merger, recapitalization, share exchange,
amalgamation, consolidation, reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Internal Revenue Code of 1986, as amended), separation, including a spin-off
or other distribution of stock or property of the Company, or any partial or
complete liquidation of the Company, such adjustment shall be made to the
number and/or kind of Shares subject to this Agreement, as may be determined
to be appropriate and equitable by the Board of Directors of the Company (the
"BOARD"), in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to this
Agreement shall always be rounded to the nearest whole number, with one-half
(1/2) of a Share rounded up to the next higher number.

     5.  RESTRICTIONS ON TRANSFER.

         (a)   Shares subject to this Agreement may not be assigned or
otherwise transferred, disposed of, or encumbered by the Grantee, in whole or
in part, except: (i) by will or the laws of descent and distribution or (ii)
by the Grantee to members of the Grantee's immediate family, to a trust
established for the exclusive benefit of one or more members of the Grantee's
immediate family and/or the Grantee, or to a partnership pursuant to which
the only partners are one or more members of the Grantee's immediate family
and/or the Grantee.  For purposes of this Section, the phrase "Grantee's
immediate family" shall mean the Grantee's children, stepchildren,
grandchildren, parents, spouse, siblings (including half brothers and
sisters), and inlaws, and includes relationships arising because of legal
adoption.  The Company represents and warrants that the Board has approved
the transfer of Shares subject to this Agreement to the Grantee's immediate
family or trust or partnership as permitted by this Section and the
registration of any Shares to be delivered in the name of any person to whom
such Shares may be transferred pursuant to this Section.

         (b)   Shares subject to this Agreement may not be sold, assigned,
pledged, hypothecated, encumbered, or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the terms,
conditions, and

                                        2
<Page>

restrictions as set forth in the Shareholders Agreement and Bye-Laws of the
Company, applicable federal securities laws or other applicable laws or
regulations, and the terms and conditions of this Agreement.  Each
certificate for Shares subject to this Agreement shall, unless at the time of
exercise such Shares are registered under the Securities Act of 1933, bear
such legend as the Company reasonably deems appropriate.  If, in the opinion
of the Company and its counsel, any legend placed on a stock certificate
representing Shares subject to this Agreement is no longer required, the
holder of such certificate shall be entitled to exchange such certificate for
a certificate representing the same number of Shares but without such legend.

      6.  COMMUNICATIONS.  All notices and communications regarding the
subject matter hereof shall be in writing or by written telecommunication,
and shall be deemed to have been duly given if delivered personally or if
mailed by certified mail, return receipt requested, postage prepaid, or if
sent by overnight courier, or sent by written telecommunication, as follows:

     If to the Company, to:

          AXIS Capital Holdings Limited
          106 Pitts Bay Road
          Pembroke, HM 08, Bermuda
          Attention:  Andrew Cook

     If to the Grantee, to:

          Robert J. Newhouse, Jr.
          5 North Pond Drive
          Short Hills, New Jersey 07078

Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, on the second business day after
delivery acknowledged by written receipt, (c) if mailed, five business days
after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.

     7.  TAX WITHHOLDING.  The Grantee agrees to make arrangements acceptable
to the Company for satisfaction of any applicable tax withholding
requirements, or similar requirements, arising out of this Agreement.

     8.  GOVERNING LAW.  This Agreement shall be governed by, and construed
in accordance with, the laws of Bermuda.

     9.  COUNTERPARTS.  This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute the same instrument.

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<Page>

     10.   ENTIRE AGREEMENT.  This Agreement contains the entire agreement
between the Grantee, Specialty and the Company concerning the subject matter
hereof and supercedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Grantee,
Specialty and the Company with respect thereto entered into prior to the
Effective Date.

     11.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon any
successor or assign of either the Company or the Grantee, and upon any
executor, administrator, trustee, guardian, or other legal representative of
the Grantee.

     12.   MODIFICATION OR AMENDMENT.  This Agreement may only be modified or
amended by written agreement executed by the Grantee and the Company,
provided, however, that the adjustments described in Section 4 hereof may be
made without such written agreement.

     13.  SEVERABILITY.  If any provision of this Agreement shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Agreement, and this Agreement shall
be construed and enforced as if such illegal or invalid provision had not
been included.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as
of the Effective Date.

                         AXIS CAPITAL HOLDINGS LIMITED

                         By:       /s/  JOHN R. CHARMAN
                             ----------------------------------------
                                       John R. Charman

                                    /s/ Robert J. Newhouse, Jr.
                             ----------------------------------------
                                     Robert J. Newhouse, Jr.

                                        4<Page>

                                                                    EXHIBIT 10.4

                                SERVICE AGREEMENT

     AGREEMENT, made and entered into as of September 19, 2002 (the "EFFECTIVE
DATE") by and between Axis Specialty Limited, a Bermuda corporation (together
with its successors and assigns, the "COMPANY"), and Michael A. Butt (the
"EXECUTIVE").

     WHEREAS, the Company wishes the Executive to serve as Chairman of the
Company's Board of Directors (the "BOARD") under the terms and conditions of
this Agreement;

     WHEREAS, the Executive is willing to serve in such position under such
terms and conditions;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Company and
the Executive (the "PARTIES") agree as follows:

     1.   TERM OF SERVICE. The Executive's term of service under this Agreement
(the "TERM") shall commence as of the Effective Date and shall continue through
the close of business on October 1, 2005, subject to earlier termination as
provided in Section 8 below. Thereafter, UNLESS either Party gives notice in
writing to the other at least 90 days prior to the then-scheduled expiration
date that the Term is not to be extended, the Term shall automatically be
extended for successive one-year periods, such extended Term to remain subject
to termination prior to its then-scheduled expiration date as provided in
Section 8 below.

     2.   POSITIONS, DUTIES AND RESPONSIBILITIES.

          (a)  GENERAL. The Executive shall serve throughout the Term as
Chairman of the Board with all responsibilities and authorities normally
associated with such position. The Executive's services under this Agreement
shall be performed outside the United States. The amount of time the Executive
spends in Bermuda and Europe shall be such time as is reasonably appropriate to
perform his responsibilities and services hereunder, except for the amount of
time necessary for him to attend meetings of the Board and of committees of the
Board of which he is a member. It is understood that the Executive will be
domiciled in Bermuda. The Executive shall devote such time as he reasonably
deems appropriate to performing his responsibilities and services hereunder.

          (b)  PERMITTED ACTIVITIES. Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other corporations or the boards
of a reasonable number of trade associations and/or charitable organizations,
(ii) engaging in charitable, community and other business affairs and

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(iii) managing his personal investments and affairs, provided such activities do
not, in his reasonable judgment, materially interfere with the proper
performance of his responsibilities and services hereunder.

     3.   BASE FEE. The Executive shall, during the Term, be paid a Base Fee by
the Company at an annual rate of US$500,000, payable in accordance with the
regular payroll practices applicable to senior executives of the Company, but no
less frequently than monthly; PROVIDED, that, only for purposes of calculating
the Base Fee payable hereunder, the Term shall be deemed to have commenced as of
October 1, 2002. Such Base Fee shall be subject to review for increase at the
discretion of the Board (or a committee thereof). The Base Fee may not be
decreased, at any time or for any purpose, during the Term.

     4.   ANNUAL BONUS. In addition to the Base Fee provided for in Section 3
above, the Executive may be awarded such annual bonuses as may be determined by
the Board (or a committee thereof), based on whatever incentive plans or
programs have been adopted by the Company for its senior executives as well as
on the performance of the Executive and of the Company; PROVIDED, HOWEVER, in no
event shall the aggregate annual bonuses for the 15-month period commencing
October 1, 2002 be less than $312,500, representing 50% of the Base Fee payable
hereunder for such 15-month period. Any such annual bonus shall, unless
otherwise required under a plan or program applying to senior executives
generally, be paid in cash in a lump sum promptly following determination
thereof.

     5.   EQUITY AWARDS.

          (a)  INITIAL AWARDS. As of October 1, 2002, the Company and the
Executive shall enter into a Share Purchase Option Agreement, covering 10,000
voting common shares of the Company, par value US$0.10 (the "COMMON STOCK"), in
the form attached hereto as Exhibit A (the "OPTION AGREEMENT") and a Restricted
Share Grant Agreement, covering 10,000 shares of Common Stock, in the form
attached hereto as Exhibit B (the "SHARE AGREEMENT").

          (b)  SUBSEQUENT AWARDS. Beginning in calendar year 2003, the Executive
shall be eligible during the Term to receive additional equity grants and awards
as determined by the Board (or a committee thereof) in its discretion, with all
such grants and awards to be made on the same terms and conditions as the
initial awards in Section 5(a) above (except that the exercise price for any
options shall be at the market price on the date of grant or such lesser price
as determined by the Board (or a committee thereof)).

     6.   EMPLOYEE BENEFIT PROGRAMS. During the Term, the Executive shall be
entitled to participate in all employee benefit plans and programs (the "BENEFIT
PROGRAMS") that may from time to time be made available to other senior
executives of the Company generally. To the extent that the Executive is not
eligible to participate in any such Benefit Program, he shall be

                                        2
<Page>

provided with the after-tax economic equivalent of the coverages and benefits
provided under such program in which he is unable to participate. In addition,
if necessary, the Executive shall be provided interim coverage until such time
as the Company has adopted a program of employee benefit coverages. Interim
coverage may be provided through purchase of separate insurance contracts,
through self-insurance or, to the extent the Executive is permitted to continue
to maintain on a contributory basis the benefits he presently receives from
other sources, by reimbursing the Executive for the cost thereof on a basis that
keeps the Executive whole after taxes.

     7.   EXPENSE REIMBURSEMENT, FRINGE BENEFITS AND SURVIVOR BENEFITS.

          (a)  EXPENSE REIMBURSEMENT. The Company shall promptly reimburse the
Executive for all reasonable out-of-pocket travel expenses, entertainment
expenses and other expenses incurred by him in connection with performing
services under this Agreement, such reimbursement to be paid promptly after he
submits reasonable documentation with respect to such expenses. This shall
include, without limitation, reimbursement of any such expenses for air fare
(which the Executive shall be entitled to on a first-class basis (including
flights on the Concorde, if available)), hotel accommodations and meals. The
Company shall also promptly reimburse the Executive for all costs and expenses
(including, without limitation, attorneys' fees and other charges of counsel)
reasonably incurred by him in connection with negotiating and documenting this
Agreement and related arrangements.

          (b)  FRINGE BENEFITS. In addition to compensation and benefits as set
forth elsewhere in this Agreement, the Executive shall be entitled to
participate during the Term in any and all of the fringe benefits made available
to senior executives of the Company in accordance with the terms and conditions
then applicable to participating senior executives generally. In all events, the
Executive shall be entitled during the Term to the following:

               (i)   reimbursement or payment of the cost (including initiation
     fees and annual dues) of membership in two clubs in Bermuda,

               (ii)  reimbursement or payment of air fare for up to four
     round-trip first-class non-business trips per year by the Executive or
     members of his family between Bermuda and Europe (the benefit under this
     Section 7(b)(ii) being in addition to any reimbursement of airfare
     described in Section 7(a) above), and

               (iii) reimbursement or payment of the cost of financial and tax
     planning, and of tax return preparation, such reimbursement not to exceed
     US$10,000 per year.

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<Page>

     8.   TERMINATION OF SERVICE.

          (a)  TERMINATION DUE TO DEATH.

          (i)  In the event that the Executive dies during the Term, the Term
     shall expire as of the date of his death and the Executive's spouse, if she
     survives him, shall be entitled to receive the Executive's Base Fee, at the
     rate in effect immediately prior to his death, through the end of the month
     in which the Executive dies. In the event that the Executive's spouse does
     not survive him, the beneficiary designated by the Executive (or, in the
     absence of such a designation, the estate or other legal representative of
     the Executive) shall be entitled to receive the Base Fee at the rate in
     effect immediately prior to his death, through the end of the month in
     which the Executive dies. In addition to the above, the beneficiary
     designated by the Executive (or, in the absence of such a designation, the
     estate or other legal representative of the Executive) shall be entitled
     to:

               (A)   a Separation Bonus for the year of death (with the term
          "SEPARATION BONUS" meaning an amount no less than the greater of (x)
          US$500,000 and (y) the highest amount awarded to the Executive as an
          annual bonus for any of the three years (or such lesser number of
          years he has then been employed) immediately preceding the year in
          which termination occurs);

               (B)   to the extent the awards referred to in Section 5(a) (the
          "INITIAL AWARDS") are not already vested and exercisable, immediate
          vesting and exercisability, as the case may be, as of the date of
          death, for all outstanding Initial Awards scheduled to vest on or
          before the first anniversary of such date, with the Option (as defined
          in the Option Agreement) to remain exercisable as to all shares for
          which it is then vested for the lesser of (x) one year following the
          date of death and (y) the remainder of its maximum stated term, after
          which the Option shall expire;

               (C)   vesting and exercisability, as the case may be, for other
          equity awards, including any restricted shares or stock options, in
          accordance with their terms; and

               (D)   any other benefits described in Section 8(f) below.

          (b)  TERMINATION DUE TO DISABILITY.

          (i)  Either Party may terminate the Executive's service under this
     Agreement prior to the then-scheduled expiration of the Term due to his
     Disability by providing 15 days' prior written notice to the other Party,
     in which event the Term shall expire and the Executive shall be entitled
     to:

                                        4
<Page>

               (A)   the Base Fee, at the rate in effect immediately prior to
          the date of termination, through the end of the month in which the
          Executive's service terminates due to Disability;

               (B)   a lump sum amount equal to one year's Base Fee at the rate
          in effect immediately prior to such termination;

               (C)   a Separation Bonus for the year of termination;

               (D)   to the extent the Initial Awards are not already vested and
          exercisable, immediate vesting and exercisability, as the case may be,
          as of the date of termination, for all outstanding Initial Awards
          scheduled to vest on or before the first anniversary of such date,
          with the Option (as defined in the Option Agreement) to remain
          exercisable as to all shares for which it is then vested for the
          lesser of (x) one year following the date of termination and (y) the
          remainder of its maximum stated term, after which the Option shall
          expire;

               (E)   vesting and exercisability, as the case may be, for other
          equity awards, including any restricted shares or stock options, in
          accordance with their terms;

               (F)   disability benefits in accordance with any applicable
          Company plans, programs, policies or agreements;

               (G)   continued coverage for 12 months under all Benefit Programs
          (or their equivalent as provided in Section 6 above) in which the
          Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service; and

               (H)   any other benefits described in Section 8(f) below.

     For purposes of this Agreement, "DISABILITY" shall mean that the Executive
     has been unable to substantially perform his duties hereunder, due to
     physical or mental incapacity, for 180 consecutive days.

          (c)  TERMINATION FOR CAUSE.

                                        5
<Page>

               (i)   The service of the Executive under this Agreement, and the
     Term, may be terminated by the Board for Cause prior to the then-scheduled
     expiration of the Term. For this purpose, "CAUSE" shall mean:

               (A)   conviction of the Executive of a felony involving moral
          turpitude, or

               (B)   the Executive, in carrying out his duties for the Company
          under this Agreement, has been guilty of gross neglect or gross
          misconduct resulting, in either case, in material economic harm to the
          Company; PROVIDED, HOWEVER, that no act, or failure to act, by the
          Executive shall constitute Cause if the Executive believed in good
          faith that such act, or failure to act, was in, or not opposed to, the
          interests of the Company.

     Anything herein to the contrary notwithstanding, the Executive shall not be
     terminated for "Cause," within the meaning of clause (B) of this Section
     8(c)(i), unless written notice stating the basis for the termination is
     provided to the Executive and he is given 15 days to cure the neglect or
     conduct that is the basis of such claim and, if he fails to cure such
     neglect or conduct, the Executive has an opportunity to be heard before the
     full Board within 15 days following the end of such cure period and, within
     five (5) days after such hearing, there is a unanimous vote of all
     disinterested members of the Board to terminate him for Cause.

               (ii)  In the event of a termination for Cause in accordance with
     Section 8(c)(i) above, the Executive shall be entitled only to (A) the Base
     Fee, at the rate in effect immediately prior to the date of termination,
     through the date on which termination for Cause occurs and (B) any other
     benefits described in Section 8(f) below.

          (d)  TERMINATION WITHOUT CAUSE OR WITH GOOD REASON.

               (i)   Anything in this Agreement to the contrary notwithstanding,
     the Executive's service under this Agreement may be terminated, by prior
     written notice by the terminating Party to the other Party, prior to the
     then-scheduled expiration of the Term by the Company without Cause, or by
     the Executive with "GOOD REASON" (as defined in Exhibit C), as provided in
     this Section 8(d), in which event the Term shall expire. A termination due
     to Disability in accordance with Section 8(b) above, or for Cause in
     accordance with Section 8(c) above, shall not be deemed a termination
     without Cause or with Good Reason to which this Section 8(d) applies.

               (ii)  Except in certain circumstances in connection with a Change
     in Control as provided in Section 8(d)(iii) below, in the event that the
     Executive's service is terminated prior to the then-scheduled expiration of
     the Term (x) by the Company

                                        6
<Page>

     without Cause or (y) by the Executive with Good Reason, the Term shall
     expire and the Executive shall be entitled to:

               (A)   the Base Fee through the date of termination at the rate in
          effect immediately prior to the date of termination;

               (B)   a lump sum amount equal to two years' Base Fee at the rate
          in effect immediately prior to such termination;

               (C)   a Separation Bonus for the year of termination;

               (D)   to the extent the Initial Awards are not already vested and
          exercisable, immediate vesting and exercisability, as the case may be,
          as of the date of termination, for all outstanding Initial Awards
          scheduled to vest on or before the first anniversary of such date,
          with the Option (as defined in the Option Agreement) to remain
          exercisable as to all shares for which it is then vested for the
          lesser of (x) one year following the date of termination and (y) the
          remainder of its maximum stated term, after which the Option shall
          expire;

               (E)   vesting and exercisability, as the case may be, for other
          equity awards, including any restricted shares or stock options, in
          accordance with their terms;

               (F)   continued coverage for 12 months under all Benefit Programs
          (or their equivalent as provided in Section 6 above) in which the
          Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service; and

               (G)   any other benefits described in Section 8(f) below.

               (iii) In the event that the Executive's service herein is
     terminated by the Company without Cause, or by the Executive for Good
     Reason, in either case in anticipation of, or within the 12-month period
     following, a Change in Control (as defined in Exhibit D), the Term shall
     expire and the Executive shall be entitled to:

               (A)   the benefits described in Section 8(d)(ii)(A), (B), (E),
          and (G) above;

                                        7
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               (B)   a lump sum amount equal to two (2) times a Separation Bonus
          for the year of termination;

               (C)   to the extent the Initial Awards are not already vested and
          exercisable, immediate vesting and exercisability, as the case may be,
          as of the date of termination, for all outstanding Initial Awards
          scheduled to vest on or before the third anniversary of such date,
          with the Option (as defined in the Option Agreement) to remain
          exercisable as to all shares for which it is then vested for the
          lesser of (x) one year following the date of termination and (y) the
          remainder of its maximum stated term, after which the Option shall
          expire; and

               (D)   continued coverage for 24 months under all Benefit Programs
          (or their equivalent as provided in Section 6 above) in which the
          Executive was participating immediately prior to the date of
          termination; PROVIDED, HOWEVER, that to the extent the Company is
          unable to continue such coverage, the Company shall provide the
          Executive with economically equivalent benefits determined on an
          after-tax basis and, PROVIDED FURTHER that any such continued coverage
          shall be offset by comparable coverage provided to the Executive in
          connection with subsequent employment or other service.

          (e)  VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
     voluntarily terminate his service under this Agreement, by prior written
     notice to the Company, before the then-scheduled expiration of the Term, in
     which event (x) the Term shall expire as of the date specified by the
     Executive in writing and (y) the Executive shall receive the same rights
     and benefits as applicable to a termination by the Board for Cause in
     accordance with Section 8(c) above. A voluntary termination under this
     Section 8(e) shall not be deemed a breach of this Agreement. Neither a
     termination of the Executive's service due to Disability in accordance with
     Section 8(b) above, nor a termination of the Executive's service by the
     Executive for "Good Reason" in accordance with Section 8(d) above, shall be
     deemed to be a voluntary termination within the meaning of this
     Section 8(e).

          (f)  MISCELLANEOUS.

               (i)   On any termination of the Term, the Executive shall be
     entitled to:

               (A)   the balance of any annual, long-term or other incentive
          award earned (but not yet paid) prior to such termination;

               (B)   reimbursement of any business or other expenses pursuant to
          Section 7 above; and

                                        8
<Page>

               (C)   any other rights, compensation and/or benefits as may be
          due the Executive in accordance with the terms and provisions of any
          agreements, plans or programs of the Company, including this Agreement
          (but in no event shall the Executive be entitled to duplicative
          rights, compensation and/or benefits).

               (ii)  All amounts due under this Section 8 shall be paid in a
     lump sum promptly following the date of termination.

               (iii) For purposes of this Agreement, in the event there is a
     reduction in Base Fee that would constitute the basis for a termination for
     Good Reason pursuant to Section 8(d) above, then "Base Fee" shall mean the
     Base Fee in effect immediately prior to any such reduction.

          (g)  NO MITIGATION; NO OFFSET. In the event of any termination of his
service under this Agreement, the Executive shall be under no obligation to seek
other employment, and there shall be no offset against amounts due the Executive
under this Agreement or otherwise on account of any remuneration attributable to
any subsequent employment that he may obtain or any claim that the Company or
any Affiliates (an "AFFILIATE" of any person means any person that controls, is
controlled by, or is under common control with, such person) may have against
him. Any amounts due under this Section 8 are considered to be reasonable by the
Company and not in the nature of a penalty.

          (h)  NOTICE PROVISIONS. In the event written notice of termination has
been given under this Section 8, no subsequent notice of termination, whether
written or otherwise, shall become effective until and unless the prior notice
ceases to be effective, PROVIDED, HOWEVER, that (i) in the case of a notice of
termination for Cause, such notice shall be deemed to cease to be effective upon
cure or a failure to terminate upon a unanimous vote of all disinterested
members of the Board as provided in Section 8(c) above and (ii) in the case of a
notice of a voluntary termination by the Executive, such notice shall be deemed
to cease to be effective 30 days following notice of such termination.

     9.   NONCOMPETITION, NONSOLICITATION, CONFIDENTIALITY AND
          NON-DISPARAGEMENT.

          (a)  NONCOMPETITION. For a period of 12 months after termination of
his service hereunder, the Executive shall not, directly or indirectly, whether
as an employee, consultant, partner, principal, agent, distributor,
representative or stockholder (except as a less than one percent stockholder or
other equity holder of a publicly traded entity or a less than five percent
stockholder or other equity holder of a privately held entity), engage in any
activities within the United States, the United Kingdom or Bermuda if such
activities involve, to a material extent, insurance or reinsurance of entities
or exposures that are materially competitive with the businesses that (i) are
then being conducted by the Company or any subsidiary and (ii) were

                                        9
<Page>

during the Term either being conducted by, or being actively developed by, the
Company or any subsidiary. Notwithstanding the foregoing, none of the following
activities shall be deemed to violate the prohibition in the immediately
preceding sentence: (x) the Executive's service as a director (or equivalent) of
any entity in the insurance, reinsurance or related businesses and (y) any other
activity that is approved by the Board (which approval shall not be unreasonably
withheld or delayed).

          (b)  NONSOLICITATION. For a period of 12 months after termination of
his service hereunder, the Executive shall not, except in connection with
carrying out his duties for the Company or any subsidiary or otherwise at the
written request of the Company, (i) encourage any employee of the Company or any
subsidiary to leave the employ of the Company or any subsidiary, (ii) hire or
use the services of any employee of the Company or any subsidiary, or (iii)
solicit or cause another person or entity to solicit any customers or brokers of
the Company or any subsidiary to terminate or otherwise adversely modify their
relationship with the Company or any such subsidiary; PROVIDED that clause (i)
and clause (ii) of this Section 9(b) shall only apply to individuals employed by
the Company or any subsidiary at any point during the one-year period
immediately preceding the date of termination of Executive. Nothing in this
Section 9(b) shall prevent the Executive from providing employment references
for such employees.

          (c)  CONFIDENTIALITY. The Executive covenants that he shall not,
without the prior written consent of the Board or of a person authorized by the
Board, disclose to any person, other than in connection with performing his
duties for the Company, any confidential proprietary information about the
Company or its business, unless and until such information has become known to
the public generally or within any industry in which the Company conducts
business (other than as a result of unauthorized disclosure by the Executive) or
unless (i) such disclosure is in confidence to an attorney for the purpose of
obtaining legal advice, (ii) such disclosure is in connection with any
litigation, arbitration or mediation involving this Agreement or other
agreements or arrangements involving the Parties, including, but not limited to,
the enforcement of this Agreement or such other agreements or arrangements or
(iii) the Executive is required to disclose such information (whether or not in
connection with a disclosure required in clause (ii)) by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order the Executive to disclose
or make accessible any information.

          (d)  NON-DISPARAGEMENT. The Executive shall not willfully or knowingly
make any public statement that would disparage or defame the Company. The
Company shall not, and shall cause each of the executives and directors of the
Company not to, willfully or knowingly make any public statement that would
disparage or defame the Executive. Notwithstanding the foregoing, nothing in
this Section 9(d) shall prevent any person from

                                       10
<Page>

(i) responding publicly to any incorrect, disparaging or defamatory public
statement to the extent reasonably necessary to correct or refute such public
statement or (ii) making any truthful statement to the extent (x) such
disclosure is in confidence to an attorney for the purpose of obtaining legal
advice, (y) such disclosure is in connection with any litigation, arbitration or
mediation involving this Agreement or other agreements or arrangements involving
the Parties, including, but not limited to, the enforcement of this Agreement or
such other agreements or arrangements or (z) the Executive is required to
disclose such information (whether or not in connection with a disclosure
required in clause (y)) by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with
apparent jurisdiction.

          (e)  SCOPE. For purposes of this Section 9, the Company shall be
deemed to include any entity that (i) is an Affiliate both during the Term and
at the time in question and (ii) is an Affiliate organized after the Term for
the purpose of holding the assets owned by the Company during the Term and/or
operating the business of the Company conducted during the Term. The covenants
set forth in this Section 9, except as provided in Section 9(a) and (b) above,
shall be without limitation as to time and geographic application.

     10.  INDEMNIFICATION.

          (a)  During the Term and at all times thereafter, if the Executive is
made a party, is threatened to be made a party, or reasonably anticipates being
made a party, to any Proceeding by reason of the fact that he is or was a
director, officer, member, employee, agent, manager, trustee, consultant or
representative of the Company or any Affiliate or is or was serving at the
request of the Company or any Affiliate, or in connection with his service
hereunder, as a director, officer, member, employee, agent, manager, trustee,
consultant or representative of another Person, or if any Claim is made, is
threatened to be made, or is reasonably anticipated to be made, that arises out
of or relates to the Executive's service in any of the foregoing capacities,
then the Executive shall promptly be indemnified and held harmless to the
fullest extent permitted or authorized by the Bye-laws of the Company, or if
greater, by applicable law, against any and all costs, expenses, liabilities and
losses (including, without limitation, attorneys' fees, judgments, interest,
expenses of investigation, penalties, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) incurred or suffered by the Executive
in connection therewith or in connection with seeking to enforce his rights
under this Section 10(a), and such indemnification shall continue as to the
Executive even if he has ceased to be a director, officer, member, employee,
agent, manager, trustee, consultant or representative of the Company or other
Person, without limitation in time, and shall inure to the benefit of the
Executive's heirs, executors and administrators. The Executive shall be entitled
to prompt advancement of any and all costs and expenses (including, without
limitation, attorneys' fees and other charges of counsel) incurred by him in
connection with any such Proceeding or Claim, or

                                       11
<Page>

in connection with seeking to enforce his rights under this Section 10(a), any
such advancement to be made within 15 days after he gives written notice,
supported by reasonable documentation, requesting such advancement. Such notice
shall include, to the extent required by applicable law, an undertaking by the
Executive to repay the amount advanced, on an after-tax basis (that is, net of
any applicable taxes), if he is ultimately determined not to be entitled to
indemnification against such costs and expenses. Nothing in this Agreement shall
operate to limit or extinguish any right to indemnification, advancement of
expenses, or contribution that the Executive would otherwise have (including,
without limitation, by agreement or under applicable law). For purposes of this
Agreement, "CLAIM" shall mean any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information, "PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, board, committee,
agency, body, employee benefit plan or other person or entity and "PROCEEDING"
shall mean any actual, threatened, or reasonably anticipated, action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate,
formal, informal or other.

          (b)  Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any Proceeding concerning payment of amounts claimed by the
Executive under Section 10(a) that indemnification of the Executive is proper
because he has met the applicable standard of conduct, nor a determination by
the Company (including its Board, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.

          (c)  The Executive shall, during his service for the Company,
including as a director, and for at least six years thereafter, be covered by a
directors' and officers' liability insurance policy (or policies) on terms and
conditions no less favorable to him in any respect than those then applying to
any other present or former director or officer of the Company, but in all
events, the minimum aggregate coverage obtained by the Company, under which the
Executive is a covered person, shall be in an amount no less than US$50,000,000.

     11.  EXCISE TAX ADJUSTMENT PAYMENTS.

          (a)  PAYMENTS. In the event that any payment or benefit provided to or
for the benefit of the Executive in connection with this Agreement, any other
agreement or arrangement to which he and the Company are parties, his services
for the Company, or the termination of such services, other than any payment
pursuant to this Section 1l(a) (a "PAYMENT"), would be subject to (x) the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor to such Section or (y) any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, being hereinafter collectively referred to as the
"EXCISE TAX"), then the Executive shall be entitled to

                                       12
<Page>

receive from the Company, within 15 days following the determination described
in Section 1l(b) below and no later than such Excise Tax is due to be paid,
through withholding or otherwise, an additional payment ("EXCISE TAX ADJUSTMENT
PAYMENT") in an amount such that after payment by the Executive of all
applicable U.S. Federal, state, local and other taxes and all applicable
non-U.S. taxes (each computed at the maximum marginal rates and including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Excise Tax Adjustment Payment, the Executive retains an
amount of the Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payment.

          (b)  DETERMINATIONS. All determinations required to be made under this
Section 11, including whether an Excise Tax Adjustment Payment is required and
the amount of such Excise Tax Adjustment Payment, shall be promptly made by a
"big five" accounting firm (the "ACCOUNTING FIRM"), selected by the Company with
the Executive's approval (which approval shall not be unreasonably withheld or
delayed). The Accounting Firm shall provide detailed supporting calculations to
the Company and the Executive within 15 business days of the date of the Payment
to which the Excise Tax Adjustment Payment relates. As a result of the
uncertainty in the application of Section 4999 of the Code (or any successor to
such Section) at the time of any initial determination hereunder, it is possible
that (x) certain Excise Tax Adjustment Payments will not have been made that
should have been made (an "UNDERPAYMENT"), or (y) certain Excise Tax Adjustment
Payments will have been made that should not have been made (an "OVERPAYMENT"),
consistent with the calculations required to be made hereunder. In the event of
an Underpayment, such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive. In the event of an Overpayment, such
Overpayment shall be promptly repaid to the Company on an after-tax basis.

     12.  RESOLUTION OF DISPUTES. Any dispute between the Parties, including,
without limitation, any dispute arising out of or relating to this Agreement or
any other agreement or arrangement to which the Executive and the Company are
parties, the Executive's service with the Company, or the termination of such
service, shall be resolved by confidential arbitration in New York City in
accordance with the Commercial Arbitration Rules (and not the National Rules for
Resolution of Employment Disputes) of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. All costs associated with any such
arbitration, including all attorneys' fees and other legal expenses, shall be
paid by the Company.

     13.  WITHHOLDING. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive shall be subject to tax withholding to the extent required by
applicable law, treaty or regulation. In lieu of withholding such amounts, in
whole or in part, the Company may accept, in its sole discretion, such other
provision for payment of required tax withholding as the Executive may
reasonably request.

                                       13
<Page>

     14.  REPRESENTATIONS.

          (a)  The Company represents and warrants that (i) it is fully
authorized by action of its Board (and of any other person or body whose action
is required) to enter into this Agreement and to perform its obligations under
it, (ii) the Board has approved or, prior to December 31, 2002, will approve (A)
the transfer of (x) all or any portion of the Option (as defined in the Option
Agreement) as permitted pursuant to Paragraph (i) of the Option Agreement and
(y) all or any of the Shares (as defined in the Share Agreement) as permitted
pursuant to Paragraph (e) of the Share Agreement and (B) upon exercise of the
Option (or any portion thereof) or the transfer of the Shares, as the case may
be, the registration of the shares in the name of such transferee, (iii) the
officer signing this Agreement on its behalf is duly authorized to do so, (iv)
the execution, delivery and performance of this Agreement by it does not violate
any applicable law, regulation, order, judgment or decree or any agreement,
plan, bye-law, charter provision or corporate governance document to which it is
a party or by which it is bound and (v) upon the execution and delivery of this
Agreement by the Parties, this Agreement shall be a valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.

          (b)  The Executive represents and warrants that, to the best of his
knowledge and belief, (i) delivery and performance of this Agreement by him does
not violate any applicable law, regulation, order, judgment or decree or any
agreement to which the Executive is a party or by which he is bound and (ii)
upon the execution and delivery of this Agreement by the Parties, this Agreement
shall be a valid and binding obligation of the Executive, enforceable against
him in accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.

     15.  ENTIRE AGREEMENT. This Agreement, together with its Exhibits (which
form a part of this Agreement for all purposes), contains the entire agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto. In the event
of any inconsistency between any provision of this Agreement and any provision
of any plan, program, policy, arrangement, bye-law, charter document, corporate
governance document, or agreement of the Company or any of its Affiliates, the
provisions of this Agreement shall control to the extent that they are more
favorable to the Executive unless the Executive otherwise agrees in a writing
that expressly refers to the provision of this Agreement whose control he is
waiving.

     16.  ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors, heirs
and assigns. No rights or

                                       14
<Page>

obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits hereunder,
which may be transferred by will or operation of law subject to the limitations
of this Agreement. The Parties recognize that the Executive also may transfer
his rights under the Option Agreement and Share Agreement to the extent therein
provided. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to an amalgamation, reconstruction,
merger or consolidation in which Company is not the continuing entity, or a sale
or liquidation of all, or substantially all, of the business and assets of the
Company, provided that the assignee or transferee is the successor to all, or
substantially all, of the business and assets of the Company and such assignee
or transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law.

     17.  AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is agreed to in writing, signed by the Executive and by a
duly authorized officer of the Company. No waiver by any person of any breach of
any other person of any condition or provision of this Agreement shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by, or on
behalf of, the waiving person.

     18.  NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given (a) when
delivered personally or (b) on the second business day after the day on which it
is sent by recognized courier with delivery acknowledged by written receipt or
(c) on the fifth business day after it is sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may
subsequently by similar process give notice of:

 If to the Company:             AXIS Specialty Limited
                                106 Pitts Bay Road
                                Pembroke, HM 08, Bermuda
                                Attn: Andrew Cook

If to the Executive:            Michael A. Butt
                                Leamington House
                                50 Harrington Sound Road
                                Hamilton Parish
                                Bermuda CR04

                                       15
<Page>

     19.  SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.

     20.  SURVIVORSHIP. The respective rights and obligations of the Parties
shall survive any termination of the Executive's service under this Agreement to
the extent necessary to the intended preservation of such rights and
obligations.

     21.  BENEFICIARIES/REFERENCES. The Executive shall be entitled, to the
extent permitted under applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executive's death by giving the Company written notice thereof. In the event of
the Executive's death or a judicial determination of his incompetence,
references in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiaries, estate or other legal
representative.

     22.  GOVERNING LAW. This Agreement shall be governed, construed and
enforced in accordance with its express terms, and otherwise in accordance with
the laws of the State of New York without reference to the principles of
conflict of laws.

     23.  HEADINGS. The headings of the Sections and subsections of this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

     24.  COUNTERPARTS AND FASCIMILE. This Agreement may be executed in one or
more counterparts. Signatures delivered by facsimile shall be deemed effective
for all purposes to the extent permitted under applicable law.

                                       16
<Page>

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.

                                AXIS SPECIALTY LIMITED

                                By: /s/ John R. Charman
                                   ----------------------------------
                                John R. Charman
                                President and Chief Executive Officer

                                THE EXECUTIVE

                                  /s/ Michael A. Butt
                                -------------------------------------
                                      Michael A. Butt

                                       17
<Page>

                                                                       EXHIBIT A

                         SHARE PURCHASE OPTION AGREEMENT

     AGREEMENT, made and entered into as of October 1, 2002 (the "GRANT DATE")
by and between Axis Specialty Limited, a Bermuda corporation (together with its
successors and assigns, the "COMPANY") and Michael A. Butt (the "OPTION
HOLDER").

     WHEREAS, the Company and the Option Holder (the "PARTIES") have as of
September 19, 2002 entered into an agreement (the "SERVICE AGREEMENT") pursuant
to which the Option Holder is to serve the Company as Chairman of its Board of
Directors; and

     WHEREAS, the Company has decided to grant the option described below to the
Option Holder as an inducement to accept such position and as a performance
incentive;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the Parties
agree as follows:

     (a)  GRANT. The Company hereby unconditionally grants to the Option Holder,
effective as of the Grant Date, the right and option to purchase 10,000 shares
(the "OPTION SHARES") of the voting common shares of the Company, par value US
$0.10 (the "COMMON STOCK"), on the terms and conditions hereinafter set forth
(the "OPTION").

     (b)  PURCHASE PRICE. Except as otherwise provided in Paragraph (h) below,
the purchase price of the Option Shares subject to the Option (the "OPTION
PRICE") shall be: US $100.00 per Share.

     (c)  TERM OF THE OPTION. The Option shall have a term commencing on the
Grant Date and continuing through the tenth anniversary of such date (the
"OPTION PERIOD") and shall be exercisable during the Option Period as provided
in Paragraph (d) below.

     (d)  VESTING AND EXERCISABILITY. The Option shall vest, and become
exercisable, as to one-third of the Option Shares on each of the first, second
and third anniversaries of the Grant Date, PROVIDED THAT the Option shall vest,
and become exercisable, on certain terminations of the Optionee's service with
the Company under the Service Agreement to the extent set forth in Section 8 of
the Service Agreement. Except to the extent otherwise provided in Section 8 of
the Service Agreement, the Option shall expire on any termination of the Option
Holder's service with the Company. The Option shall be exercisable by the Option
Holder, or in the event of his death or his judicially determined incompetence,
by his estate or other legal representative, or, to the extent the Option is
transferred, in whole or in part, in accordance with the provisions of Paragraph
(i) below, by a transferee of the Option (a "TRANSFEREE"). As hereinafter used,
the

                                       18
<Page>

term "OPTION HOLDER" shall include the Option Holder's estate, other legal
representative or Transferee, as appropriate.

     (e)  EXERCISE OF THE OPTION. In order to exercise the Option, the Option
Holder shall submit to the Company an instrument in writing specifying the
number of Option Shares in respect of which the Option is being exercised,
accompanied by payment, in a manner reasonably acceptable to the Company, of the
aggregate Option Price for the Option Shares in respect of which the Option is
being exercised. A share certificate, or certificates, representing the
purchased Option Shares shall then promptly be delivered to the Option Holder;
PROVIDED, HOWEVER, that the Company shall not be obligated to deliver any Option
Shares hereunder if the delivery of such Option Shares would violate the
provisions of any applicable law, in which event the Company shall, as soon as
practicable, take whatever action it reasonably can so that such Option Shares
may be delivered without resulting in such violation of law.

     (f)  STATUS OF OPTION SHARES. Option Shares purchased pursuant to any
exercise of the Option shall, upon delivery to the Option Holder, rank equally
in all respects with the other shares of the voting Common Stock, but shall not
carry any option or other right to subscribe for additional shares of Common
Stock.

     (g)  RIGHTS AS SHAREHOLDER. The Option Holder shall not, by virtue of the
Option, be entitled to any rights of a shareholder of the Company, either at law
or equity, and the grant of the Option shall not confer on the Option Holder any
right with respect to continuance of his service with the Company nor shall such
grant interfere in any way with the right of the Company to terminate the Option
Holder's service at any time. Notwithstanding the foregoing, in the event that
the Option Holder purchases Option Shares pursuant to an exercise of the Option,
the Option Holder shall enjoy, with respect to such Option Shares, "tag-along"
rights, "put" rights, exchange rights, registration rights, rights with respect
to securities of any "Designated Subsidiary" (as defined in the Company's
Bye-Laws) and other comparable rights on the most favorable basis provided for
each such right to any other holder of Common Stock.

     (h)  RECAPITALIZATIONS AND ADJUSTMENTS. In the event of any merger,
consolidation, reorganization, recapitalization, spin-off, split-up,
combination, reconstruction, amalgamation, share exchange, liquidation,
dissolution, share split, share dividend, other distribution of securities or
other property in respect of shares or other securities, or other change in
corporate structure or capitalization affecting the rights or value of the
securities then subject to this Option Agreement, the Company shall promptly
make appropriate adjustment(s) in the number and/or kind of securities subject
to this Option Agreement and/or in the Option Price and/or in other terms and
conditions of this Option Agreement, and/or the Company shall promptly make
appropriate provision(s) for supplemental payments of cash, securities and/or
other property, in each case so as to avoid dilution or enlargement of the
rights of the Option Holder and of the after-tax economic opportunity and value
represented by this Option Agreement. If an event

                                       19
<Page>

occurs that may require an adjustment (or other action) pursuant to the
preceding sentence, the Company shall promptly deliver to the Option Holder a
certificate that specifies (x) the event in question and (y) either the
action(s) being taken or the reasons why the Company believes no action is
needed.

     (i)  NONASSIGNABILITY AND TRANSFERABILITY. The Option may not be assigned
or otherwise transferred, disposed of or encumbered by the Option Holder, in
whole or in part, except: (i) by will or the laws of descent and distribution or
(ii) by the Option Holder to members of "the Option Holder's immediate family",
to a trust established for the exclusive benefit of one or more members of "the
Option Holder's immediate family" and/or the Option Holder, or to a partnership
pursuant to which the only partners are one or more members of "the Option
Holder's immediate family" and/or the Option Holder. For purposes of this
Agreement, "THE OPTION HOLDER'S IMMEDIATE FAMILY" shall mean the initial Option
Holder's children, stepchildren, grandchildren, parents, spouse, siblings
(including half brothers and sisters), and in-laws, and includes relationships
arising because of legal adoption. The Company represents and warrants that its
Board has approved the transfer of all or any portion of the Option to and the
exercise thereof by the Option Holder's immediate family or trust or partnership
as permitted by this Paragraph (i) and the registration of any Option Shares to
be delivered upon exercise of the Option in the name of any Option Holder to
whom the Option may be transferred pursuant to this Paragraph (i).

     (j)  OBLIGATIONS AS TO SHARE CAPITAL. The Company agrees that it shall at
all times maintain authorized and unissued share capital sufficient to fulfill
all of its obligations under this Agreement.

     (k)  RESTRICTIONS ON TRANSFER OF OPTION SHARES. Neither the Option Shares
nor any interest in them may be sold, assigned, pledged, hypothecated,
encumbered or in any other manner transferred or disposed of, in whole or in
part, except in compliance with the terms, conditions and restrictions as set
forth in the Bye-Laws of the Company, applicable United States federal and state
securities laws or any other applicable laws or regulations and the terms and
conditions of this Agreement. Each certificate for Option Shares delivered upon
exercise of the Option, unless at the time of exercise such Option Shares are
registered under the Securities Act of 1933, shall bear the following legend or
such other legend as the Company reasonably deems appropriate:

             "These securities have not been registered under the United
     States Securities Act of 1933, as amended. These securities
     cannot be offered, transferred or sold unless (i) a registration
     statement under such Act is in effect with respect to such
     securities or a written opinion from counsel reasonably
     acceptable to Axis Specialty Limited (the "Company") is obtained
     to the effect that no such registration is required, and (ii) the
     transferee is approved by

                                       20
<Page>

     applicable regulatory authorities, if such approval is required
     and (iii) simultaneously the appropriate number of shares of any
     Designated Subsidiary (as such term is defined in the Bye-Laws of
     the Company and only if the Board of Directors of the Company has
     constituted any entity a Designated Subsidiary) is offered,
     transferred or sold together with each share represented hereby
     that is proposed to be offered, transferred or sold. The Company
     reserves the right to refuse the transfer of such securities
     until such conditions have been fulfilled. Sections 68 through 70
     of the Company's Bye-Laws contain other significant restrictions
     on transfers of shares of the Company."

Any certificate delivered at any time in exchange or substitution for any
certificate bearing such legend or such other legend reasonably deemed
appropriate by the Company shall also bear such legend unless, in the opinion of
counsel for the Company, the securities represented thereby need no longer be
subject to the restriction contained herein. The provisions of this Paragraph
(k) shall be binding upon all subsequent holders of certificates bearing the
above legend.

     (l)  WITHHOLDING. The Option Holder agrees to make appropriate arrangements
with the Company for satisfaction of any applicable tax withholding
requirements, or similar requirements, arising out of this Agreement.

     (m)  INCORPORATION OF PROVISIONS. Sections 11, 12, 14, 15, 16 (first and
third sentences only), 17, 18, 19, 21 (second sentence only), 22, 23 and 24 of
the Service Agreement (relating, respectively, to excise tax adjustment
payments, resolution of disputes, representations, integration and
inconsistencies, assignability, amendments or waivers, notices, severability,
beneficiaries/references, governing law, headings and counterparts) shall be
deemed incorporated into this Agreement as if fully set forth herein, with all
references to the Executive in such Sections being deemed to be references to
the Option Holder. All capitalized terms not defined in this Share Purchase
Option Agreement shall have the meanings set forth in the Service Agreement.

                                       21
<Page>

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

                                AXIS SPECIALTY LIMITED

                                By: /s/ J.R CHARMAN
                                   ----------------------------------
                                Name: J.R CHARMAN.

                                Title: CEO & PRESIDENT.

                                THE OPTION HOLDER

                                   /s/ Michael A. Butt
                                -------------------------------------
                                       Michael A. Butt

                                       22
<Page>

                                                                       EXHIBIT B

                        RESTRICTED SHARE GRANT AGREEMENT

     AGREEMENT, made and entered into as of October 1, 2002 (the "GRANT DATE")
by and between Axis Specialty Limited, a Bermuda corporation (together with its
successors and assigns, the "COMPANY") and Michael A. Butt (the "GRANTEE").

     WHEREAS, the Company and the Grantee (the "PARTIES") have concurrently
entered into an agreement (the "SERVICE AGREEMENT") pursuant to which the
Grantee is to serve the Company as Chairman of its Board of Directors (the
"BOARD"); and

     WHEREAS, the Company has decided to grant the shares described below to the
Grantee as an inducement to accept such position and as a performance incentive;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the Parties
agree as follows:

     (a)  GRANT. Subject to the terms and conditions hereof, the Company hereby
grants to the Grantee, effective as of the Grant Date, a restricted stock award
(this "AWARD") in the aggregate amount of 10,000 shares (the "SHARES") of voting
common shares of the Company, par value US$0.10 (the "COMMON STOCK").

     (b)  VESTING OF SHARES. At the opening of business on the third anniversary
of the Grant Date, the Shares under this Award shall become fully vested and
nonforfeitable if the Grantee is then continuing to serve the Company under the
Service Agreement, PROVIDED THAT the Shares shall become fully vested and
nonforfeitable on certain terminations of the Grantee's service under the
Service Agreement, under certain circumstances, as set forth in Section 8 of the
Service Agreement. Except as otherwise provided in Section 8 of the Service
Agreement, the Shares shall be forfeited on any termination of the Grantee's
service under the Service Agreement that occurs prior to the third anniversary
of the Grant Date.

     (c)  HOLDING AND DELIVERY OF SHARE CERTIFICATES. Certificates representing
the Shares shall be held by the Company, along with one or more stock powers
executed by the Grantee in blank (which stock powers shall be used by the
Company solely to effect the forfeiture provisions of Paragraph (b)), until such
Shares have become vested as set forth above. Upon such Shares becoming vested,
one or more certificates representing the securities that then constitute such
Shares, together with any cash or property (other than securities) received in
respect of such Shares as provided in Paragraph (d), and any associated stock
powers, shall promptly be delivered to the Grantee (or permitted transferee
under Paragraph (e), if applicable). The Shares granted pursuant to this
Agreement shall, upon delivery to the Grantee, rank equally

                                       23
<Page>

in all respects with the other shares of the voting Common Stock. The Shares,
when delivered, shall be fully paid and non-assessable and shall be free and
clear of any and all liens, encumbrances, charges and other third party rights
except to the extent otherwise provided in Paragraph (e) below, or in the
Bye-Laws of the Company.

     (d)  RIGHTS AS STOCKHOLDER. Subject to the terms of this Agreement and
beginning as of the Grant Date, the Grantee shall have all the rights of a
stockholder of the Company with respect to all of the Shares under this Award,
including, without limitation, the right to vote all such Shares and to receive
dividends and other distributions thereon (including, without limitation, any
securities, cash or other property issued or delivered in respect of, in
exchange for, or on conversion of, any such Shares in connection with any
merger, consolidation, combination, reorganization, recapitalization, spin-off,
split-up, exchange of securities, liquidation, dissolution, share split, share
dividend, cash dividend, or other transaction or event), PROVIDED, HOWEVER, that
any dividend or other distribution made in respect of such Shares (x) shall be
deemed to be Shares received in substitution for, or in addition to and as part
of, the Shares in respect of which such dividend or other distribution is made
and (y) shall accordingly be subject to the same restrictions hereunder with
respect to vesting, transfer, forfeiture, and delivery upon vesting as to which
such Shares are subject.

     (e)  RESTRICTIONS ON TRANSFER OF SHARES. Neither the Shares granted
pursuant to this Agreement, nor any interest in them, may be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part, except in compliance with the terms, conditions and
restrictions as set forth in the Bye-Laws of the Company, applicable United
States federal and state securities laws or any other applicable laws or
regulations and the terms and conditions of this Agreement, except: (i) by will
or the laws of descent and distribution or (ii) by the Grantee to members of
"the Grantee's immediate family", to a trust established for the exclusive
benefit of one or more members of "the Grantee's immediate family" and/or the
Grantee, or to a partnership pursuant to which the only partners are one or more
members of "the Grantee's immediate family" and/or the Grantee. For purposes of
this Agreement, "THE GRANTEE'S IMMEDIATE FAMILY" shall mean the initial
Grantee's children, stepchildren, grandchildren, parents, spouse, siblings
(including half brothers and sisters), and in-laws, and includes relationships
arising because of legal adoption. The Company represents and warrants that its
Board has approved the transfer of all or any portion of the Shares to the
Grantee's immediate family or trust or partnership as permitted by this
Paragraph (e) and the registration of any Shares in the name of any person to
whom the Shares may be transferred pursuant to this Paragraph (e). Each
certificate for such Shares shall bear the following legend or such other legend
as the Company reasonably deems appropriate:

               "These securities have not been registered under the United
     States Securities Act of 1933, as amended. These securities cannot be
     offered, transferred or

                                       24
<Page>

     sold unless (i) a registration statement under such Act is in effect with
     respect to such securities or a written opinion from counsel reasonably
     acceptable to Axis Specialty Insurance Limited (the "Company") is obtained
     to the effect that no such registration is required, and (ii) the
     transferee is approved by applicable regulatory authorities, if such
     approval is required and (iii) simultaneously the appropriate number of
     shares of any Designated Subsidiary (as such term is defined in the
     Bye-Laws of the Company and only if the Board of Directors of the Company
     has constituted any entity a Designated Subsidiary) is offered, transferred
     or sold together with each share represented hereby that is proposed to be
     offered, transferred or sold. The Company reserves the right to refuse the
     transfer of such securities until such conditions have been fulfilled.
     Sections 68 through 70 of the Company's Bye-Laws contain other significant
     restrictions on transfers of shares of the Company."

Any certificate delivered at any time in exchange or substitution for any
certificate bearing such legend or such other legend reasonably deemed
appropriate by the Company shall also bear such legend unless, in the reasonable
opinion of counsel for the Company, the securities represented thereby need no
longer be subject to the restriction contained herein. The provisions of this
Paragraph (e) shall be binding upon all subsequent holders of certificates
bearing the above legend.

     (f)  SHAREHOLDER RIGHTS. Subject to the limitations set forth in Paragraph
(d), the Grantee shall enjoy with respect to the Shares that are the subject of
this Agreement, "tag along" rights, "put" rights, exchange rights, registration
rights and other comparable rights on the most favorable basis provided for each
such right to any other holder of Common Stock, except that registration rights
shall be provided on the same basis as provided other minority investors.

     (g)  WITHHOLDING. The Grantee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable tax withholding requirements, or
similar requirements, arising out of this Agreement.

     (h)  INCORPORATION OF PROVISIONS. Sections 11, 12, 14, 15, 16 (first and
third sentences only), 17, 18, 19, 20, 21 (second sentence only), 22, 23 and 24
of the Service Agreement (relating, respectively to excise tax adjustment
payments, resolution of disputes, representations, integration and
inconsistencies, assignability, amendments or waivers, notices, severability,
beneficiaries/references, governing law, headings and counterparts) shall be
deemed incorporated into this Agreement as if fully set forth herein, with all
references to the Executive in such Sections being deemed to be references to
the Grantee. All capitalized terms not defined in this Restricted Share Grant
Agreement shall have the meanings set forth in the Service Agreement.

                                       25
<Page>

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

                                AXIS SPECIALTY LIMITED

                                By:     /s/ J.R. CHARMAN
                                   ----------------------------------
                                Name:   J.R. CHARMAN

                                Title:  CEO & PRESIDENT.

                                THE GRANTEE

                                  /s/ Michael A. Butt
                                -------------------------------------
                                      Michael A. Butt

                                       26
<Page>

                                                                       EXHIBIT C

                                   GOOD REASON

     For purposes of this Agreement, "GOOD REASON" shall mean the occurrence of
any of the following (without the Executive's express prior written consent and
without full cure within ten days of the Executive giving written notice to the
Company or the Board, as the case may be, requesting cure):

     (i)   (A) The assignment to the Executive of duties materially inconsistent
           with the Executive's position and responsibilities as set forth in
           Section 2 of this Agreement; (B) any material reduction in the
           Executive's authorities or responsibilities; or (C) any removal of
           the Executive from, or any failure to elect or reelect the Executive
           to, the position of Chairman of the Board, except in connection with
           a termination of the Executive's service (w) by the Company (whether
           for Cause or without Cause), (x) by either Party for Disability, (y)
           by the Executive voluntarily or (z) as a result of the Executive's
           death;

     (ii)  (A) Any reduction in the Executive's Base Fee or (B) following any
           Change in Control, failure to pay the Executive an annual bonus in an
           amount no less than the greater of (x) US$500,000 and (y) the largest
           amount awarded to the Executive as an annual bonus for any of the
           three years (or such lesser number of years he has then been
           employed) immediately preceding the year in which a Change in Control
           occurs and, if applicable, failure to calculate such bonus in a
           manner as favorable to the Executive as that used to calculate the
           most recent annual bonus paid to the Executive prior to the Change in
           Control;

     (iii) The failure by the Company to obtain the specific assumption of this
           Agreement by any successor to, or assign of, the Company or any
           person acquiring all or substantially all of the Company's business
           or assets;

     (iv)  Any material breach by the Company or any of its Affiliates of any of
           its material obligations to the Executive or members of his family,
           under this Agreement or otherwise; or

     (v)   Requiring the Executive to be based at any office or location in
           violation of Section 2(a) of the Service Agreement, except for travel
           reasonably required in the performance of the Executive's duties.

                                       27
<Page>

                                                                       EXHIBIT D

                                CHANGE IN CONTROL

     "CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:

     (i)   any "PERSON," as such term is used as of the Effective Date in
           Sections 3(a)(9) and 13(d) of the United States Securities Exchange
           Act of 1934, becomes a "BENEFICIAL OWNER," as such term is used in
           Rule 13d-3 promulgated under that Act, of 30% or more of the Voting
           Stock of the Company, measured either by number of shares or by
           voting power;

     (ii)  the majority of the Board consists of individuals other than
           "INCUMBENT DIRECTORS," which term means the members of the Board on
           the Effective Date; provided that any person becoming a director
           subsequent to such date whose election or nomination for election was
           supported by two-thirds of the directors who then comprised the
           Incumbent Directors shall be considered to be an Incumbent Director;

     (iii) the Company adopts any plan of liquidation providing for the
           distribution of all or substantially all of its assets;

     (iv)  all or substantially all of the assets or business of the Company is
           disposed of pursuant to an amalgamation, merger, consolidation or
           other transaction (unless the shareholders of the Company immediately
           prior to such merger, consolidation or other transaction beneficially
           own, directly or indirectly, in substantially the same proportion as
           they owned the Voting Stock of the Company, all of the Voting Stock
           or other ownership interests of the entity or entities, if any, that
           succeed to the business of the Company); or

     (v)   the Company combines with another entity and is the surviving entity
           but, immediately after the combination, the shareholders of the
           Company immediately prior to the combination hold, directly or
           indirectly, 50% or less of the Voting Stock of the combined entity,
           measured either by number of shares or by voting power (there being
           excluded from the Voting Stock held by such shareholders, but not
           from the Voting Stock of the combined entity, any shares received by
           Affiliates of such other entity in exchange for Voting Stock of such
           other entity).

                                       28
<Page>

For purposes of the foregoing, "VOTING STOCK" shall mean capital stock of any
class or classes having general voting power under ordinary circumstances, in
the absence of contingencies, to elect members of a board of directors (or
equivalent governing person or body).

                                       29

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