Document:

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                                                                   EXHIBIT 10.23

                              DEVELOPMENT AGREEMENT

                                 BY AND BETWEEN

                     AMERICAN INTERNATIONAL COMPANY LIMITED

                                       AND

                       ALLIED WORLD ASSURANCE COMPANY, LTD

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                                        1

      This AGREEMENT (the "Agreement") has been made and entered into this 12th
day of March, 2004, by and between AMERICAN INTERNATIONAL COMPANY LIMITED, a
company incorporated under the laws of the Islands of Bermuda (hereinafter
called the "Landlord"), of the one part and ALLIED WORLD ASSURANCE COMPANY, LTD,
a company incorporated under the laws of the Islands of Bermuda (hereinafter
called the "Tenant"), of the other part.

WHEREAS:

a)    The Landlord is the owner in fee simple of the land located at 29 Richmond
      Road in the City of Hamilton in the said Islands shown outlined in red on
      the plan hereto annexed (hereinafter called the "Land").

b)    The Landlord intends to erect on the Land a commercial office building
      (hereinafter called the "Building") substantially in accordance with the
      plans and specifications more particularly described in Exhibit A annexed
      hereto (hereinafter called the "Specifications").

c)    The Landlord will obtain all necessary planning permissions,
      authorizations, certificates, consents, building permits, approvals and
      licenses (hereinafter called the "Permissions") of and from all competent
      authorities in the said Islands to erect the Building on the Land, and the
      Tenant has agreed to enter into a lease with the Landlord for the major
      part of the Building comprising a total rentable floor area of at least
      56,114 square feet of rental space on the top four floors and one half of
      the second floor (hereinafter called the "Rental Premises").

d)    Upon completion of the construction of the Building the Landlord and the
      Tenant have agreed to enter into a Lease for the Rental Premises
      substantially in accordance with the draft lease annexed hereto as Exhibit
      B (hereinafter called the "Lease").

e)    The parties recognise and acknowledge that the actual square footage of
      the Rental Premises may vary slightly upon actual completion of the
      Building.

NOW IT IS HEREBY AGREED that in consideration of the sum of Ten dollars
(US$10.00) paid by the Landlord to the Tenant (the receipt of which is hereby
acknowledged) and in consideration of the covenants and agreements herein
contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged:

1. The Landlord will by its servants, agents and contractors and other duly
authorised persons obtain the Permissions and proceed with all due diligence and
dispatch to complete the construction of the Building in a good and workman-like
manner substantially in accordance with the Specifications, and unless prevented
or delayed by force majeure or other unavoidable cause or accident beyond the

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Landlord's control shall cause the Building to be completed and a Certificate of
Occupancy to be issued by the Department of Planning for the Rental Premises no
later than the 31st day of December, 2006.

2. In consideration of the Landlord performing its obligations under Clause 1
hereof, the Tenant shall on the issuance of the Certificate of Occupancy for the
Rental Premises (or any part thereof) by the Department of Planning enter into
the Lease for the Rental Premises with the Landlord commencing not later than
the 1st April, 2007 (rent to commence on the 1st August, 2007), upon the terms
and in substantially the form of the draft Lease hereto annexed with such
changes as the Landlord and Tenant may mutually and reasonably agree.

3. The Tenant covenants and agrees that it will not assign this Agreement or its
interest in the Lease without having first received the express written consent
of the Landlord, which the Landlord may withhold for any reason.

4. The following conditions (the "Conditions Precedent") are to be satisfied
prior to execution of the Lease:-

      A.    All representations and warranties made herein shall be true and
            correct in all material respects on the date of such execution.

      B.    Substantial Completion (hereinafter defined) shall have occurred.

      a)    As used herein, the term "Substantial Completion" means completion
            of construction of the core and shell components of the Building
            substantially in accordance with the Specifications, as such
            Specifications may hereafter be altered by mutual agreement of the
            parties hereto, such that when, after such Substantial Completion,
            the Tenant improvement and fit out work to be undertaken by and at
            the expense of Tenant in order properly to prepare the Building for
            the conduct by the Tenant of its business therein shall have been
            completed, the Tenant may occupy, for business purposes, the space
            to be demised to it pursuant to the Lease. Substantial Completion
            shall be evidenced by a certification thereof by the Building
            Control Department of the Bermuda Government, the architect for the
            Project or another architect reasonably acceptable to the Tenant and
            Landlord.

      b)    The Landlord will consult with Tenant from time to time concerning
            the status of construction and coordination of completion of the
            work to be performed by the Landlord with the work to be performed
            by Tenant.

      c)    Construction may be considered to be complete for purposes hereof
            even though there shall remain outstanding "punch list" items,
            provided that the completion of performance of Tenant's tenant
            improvement and fit out work or otherwise does not substantially
            interfere with Tenant's use of the premises. It is understood and
            agreed that Substantial Completion will be

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            considered to have occurred even if the so-called "skin" of the
            Building shall not have been completed, provided that the Building,
            at the time of such Substantial Completion, shall be water-tight and
            the continued work by Landlord to apply such "skin" does not
            unreasonably interfere with the undertaking of Tenant work.

5. Without prejudice to its obligations hereunder, the Landlord shall use its
reasonable best efforts to ensure that its building contractor makes good all
snagging list items as soon as reasonably practicable.

6. The Tenant shall have the right for itself, its contractors, agents,
surveyors or other duly authorised persons at all reasonable times and after
reasonable prior notice to the building manager or other designated
representative of the Landlord (hereinafter called the "Landlord's
Representative") during the construction and erection of the Building to enter
into the Building at the Tenant's own risk and expense in company with the
Landlord's Representative subject to complying with his proper and reasonable
requirements as to safety to view the state and progress of the Building works
and the materials used, and the Tenant shall refer all matters whether of
complaint or otherwise to the Landlord's Representative and not to the
Landlord's contractors, their agents or workmen whether on the site of the
Building or otherwise PROVIDED ALWAYS that if no complaint of any defect is made
by the Tenant to the Landlord's Representative during the progress of the
Building works or if a reasonable complaint of a defect is made and such defect
is reasonably remedied the Building shall be deemed as between the Landlord and
the Tenant to be properly constructed.

7. The Landlord shall allow the Tenant and the Tenant's contractors, interior
designers and employees full access to the Building, or any part or parts
thereof at the Tenant's own risk and expense, from the date or dates of the
Certificate(s) of Occupancy for each floor of the Rental Premises (or earlier if
reasonably possible) to enable the Tenant to complete its fit out work of the
Rental Premises.

8. The Tenant shall obtain the Landlord's prior written consent to its fit out
and alterations (such consent not to be unreasonably withheld or delayed) and
shall complete its fit out with all due diligence and dispatch in a good and
workman-like manner with sound materials without causing damage to the Building
or obstructing or interfering with the work being carried out by the Landlord's
contractors.

9. The Tenant shall commence the payment of rent after the execution of and in
accordance with the terms of the Lease or from the grant of the occupancy
certificate for each individual floor, if later.

10. In the event of the Landlord undertaking to carry out at the Tenant's
request and at the Tenant's expense any additional work or modification to the
Building or to the Rental Premises, including any alteration of the alarm and/or
sprinkler system or the security system hereinafter referred to as "Additional

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Works" the Landlord shall provide an estimate of the cost of the Additional
Works which shall be agreed in writing by the Tenant prior to the commencement
thereof. The Additional Works shall be carried out by the Landlord's contractors
in a good and workman-like manner, and the Tenant shall, as soon as the
Additional Works are completed and the final costs thereof notified to it, pay
to the Landlord the costs of the Additional Works.

11. The Landlord shall as soon as reasonably practicable and without cost to the
Tenant, and before the execution of the Lease or Tenant fit out, procure that
adequate water and electric power shall be laid on to the Building and the
Rental Premises for the supply of such services.

12.   (a)   The Tenant shall be entitled to terminate this Agreement without
            penalty in the event that construction of the Building has not
            commenced on or before the 15th day of November 2004; PROVIDED THAT,
            before terminating this Agreement, the Tenant shall by notice in
            writing addressed to and served upon the Landlord notify the
            Landlord of the Tenant's intention to terminate this Agreement 30
            days from the delivery of such notice and thereby affording to the
            Landlord a period of 30 days within which to commence construction
            and if such construction commences within such 30-day period the
            notice of intent to terminate shall become null and void.

      (b)   The Tenant shall be entitled to terminate this Agreement without
            penalty in the event that access to the Building or any part thereof
            as set out in Clause 7 hereof to enable the Tenant to commence its
            fit out is not provided by the 31st day of March, 2007 (the
            "Handover Date") unless such delay is as a result of fire,
            lightning, explosion, storm, tempest, flood, earthquake, aircraft
            and other aerial devices or articles dropped therefrom, or as a
            result of labour disputes, unusual delay in deliveries, riot and
            civil commotion, unavoidable casualties or other acts of God or
            force majeure reasonably beyond the Landlord's control; PROVIDED
            THAT, if the Landlord shall undertake to construct any Additional
            Works (as hereinbefore defined in Clause 10), the Handover Date
            shall be extended by the time allowed to the Landlord to effect
            completion of the Additional Works as the Landlord's architect in
            his or her absolute discretion shall certify as being the period by
            which the construction of the Additional Works shall have reasonably
            delayed the Handover Date and, PROVIDED THAT, before terminating
            this Agreement pursuant to this clause, the Tenant shall by notice
            in writing addressed to and served upon the Landlord notify the
            Landlord of the Tenant's intention to terminate this Agreement 30
            days from the delivery of such notice and

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            thereby affording to the Landlord a period of 30 days within which
            to effect completion and if completion is effected within such 30-
            day period the notice of intent to terminate shall become null and
            void.

      (c)   If construction is not commenced as per Clause 12(a) or completion
            shall not be effected as per Clause 12(b) within the said 30-day
            notice period, then this Agreement shall terminate at the expiration
            of the said 30-day notice period, but should construction commence
            or completion be achieved within the said 30-day notice period, then
            the Tenant shall continue to perform the Tenant's obligations under
            this Agreement.

13. Landlord shall maintain, during the term of this Agreement, comprehensive
general liability insurance against claims for bodily injury, death or property
damage occurring upon, in or about the Building, including any and all
buildings, structures or other improvements at any time situated thereon. Such
insurance shall have a single limit of not less than US$1,000,000 and an
aggregate limit of not less than US$2,000,000. Such insurance policy shall be
maintained with a responsible insurance company authorised to do business in
Bermuda. Furthermore, Landlord will cause the Building, during the course of
construction, to be insured against loss or damage caused by any peril typically
covered by a contractor's all risk insurance policy.

14. Unless terminated earlier pursuant to Clause 12 hereof, this Agreement will
terminate upon the execution of the Lease; provided, however, that Clauses 15,
18, 19, 20, 21 and 22 shall survive the termination hereof.

15. Execution of the Lease by Landlord and Tenant shall constitute the
acknowledgement of the parties so executing that the Conditions Precedent have
been satisfied, including, without limitation, the Substantial Completion by the
Landlord of the work required to be performed by it subject only to completion
of the punch-list items described above, which items shall be identified in
writing by Tenant to Landlord no later than 14 days following execution of the
Lease.

16. Until the actual grant of the Lease, this Agreement shall not operate or be
deemed to operate as a demise of the Rental Premises nor shall the Tenant have
or be entitled to any estate right or interest in the Rental Premises or any
part of them or in any materials in or upon them other than such equitable
interest as is created by and such rights as are granted by this Agreement.

17. Each of the parties hereto recognises that the other of them has undertaken
substantial commitments in reliance upon each such party's obligation hereunder
to execute the Lease. Accordingly, in addition to all other remedies at law and
in equity, each party acknowledges that an action in specific performance to
execute the Lease may appropriately be brought and pursued in the event that
either party fails to execute the Lease as appropriate.

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18. Any notices required to be served in accordance with the provisions of this
Agreement shall be in writing and shall be sufficiently served if delivered or
sent by registered post addressed to the Landlord at the Landlord's registered
office or if delivered at or sent by registered post to the Tenant at its
registered office. Any notice sent by post shall be deemed to be given at the
time when in due course it would be delivered at the address to which it is
sent.

19. This Agreement shall be governed by and construed in accordance with the
laws of the Islands of Bermuda, as the same may from time to time exist.

20. Each party acknowledges and agrees that its rights and obligations hereunder
may not be assigned without the express written consent of the other of them.
Without derogating from the foregoing, however, the terms hereof shall be
binding upon their successors and assigns.

21. If any dispute or question whatsoever shall arise between the parties to
this Agreement with respect to the construction or effect of this Agreement, the
matter in dispute shall be submitted to three arbitrators, one to be appointed
by each of the parties hereto, and the third arbitrator to be appointed by the
other two arbitrators, such appointment to be made within 30 days of
notification of the decision being taken to refer to arbitration, and such
submission shall be considered a reference to arbitration within the meaning of
the Arbitration Act 1986 or any act for the time being in force amending or
replacing the such Arbitration Act.

22. If any term or provision of this Agreement, or the application thereof to
any person or circumstance shall, to any extent, be invalid or enforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and be enforced to the fullest extend permitted by
law.

                           [SIGNATURE PAGE TO FOLLOW]

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                                        7

IN WITNESS WHEREOF the parties hereto have caused their Common Seals to be
hereto affixed as of the day month and year first before written.

THE COMMON SEAL of AMERICAN            )
INTERNATIONAL COMPANY LIMITED          )
was hereunto affixed                   )
in the presence of:

                                       )
Director/Secretary                     )
                                       )
Director                               )

THE COMMON SEAL of ALLIED WORLD        )
ASSURANCE COMPANY, LTD                 )
was hereunto affixed in                )
the presence of:

                                       )
Director/Secretary                     )
                                       )
Director                               )<PAGE>
                                                                   EXHIBIT 10.24

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

                                 PLACEMENT SLIP

COMPANY:           Allied World Assurance Company, Ltd., Hamilton, Bermuda;
                   Allied World Assurance Company (Europe) Ltd.
                   Allied World Assurance Company (Reinsurance) Ltd.

EFFECTIVE:         Continuous and to take effect March 1st, 2004, 12:01 a.m.
                   Atlantic Standard Time as respects new and renewal business.

CANCELLATION:      Any March 1st 12:01 a.m. standard time by either party via 90
                   days prior written notice. Run-off to policy expiration or
                   renewal date, whichever comes first. Following cancellation,
                   Reinsurer's liability will continue in the event any extended
                   reporting period options are exercised in accordance with
                   claims made or occurrence reported policies and/or in the
                   event Company is bound by statute or regulation to continue
                   coverage with respect to policies attaching after the
                   effective date of this agreement and prior to the effective
                   date of Notice of Cancellation.

BUSINESS
COVERED:           All policies underwritten by the Company's General Casualty
                   staff and classified by the Company as Excess General
                   Casualty Insurance. Maximum policy period 12 months, plus odd
                   time not to exceed 18 months in all; with the exception of
                   single project construction risks.

EXCLUSIONS:        As attached.

TERRITORY:         To follow the companies policies.

LIMIT &
RETENTION:         SECTION A

                   10% quota share on policies of up to USD/EUROS 25,000,000 or
                   GBP 15,000,000 or USD currency equivalent, each policy, each
                   occurrence, each occurrence reported, or claim made in excess
                   of a minimum original attachment of USD/EUROS/GBP 10,000,000.

                   The maximum limit of liability under this Agreement will be
                   the Reinsurer's share of USD/EUROS 25,000,000 or GBP
                   15,000,000 each policy, each occurrence, each occurrence
                   reported, or claim made, (subject to reinstatement and
                   aggregate provisions, if any, in reinsured policies).

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                   Loss expense will be in addition to the above limit of
                   liability as set forth in the Loss Adjustment Expense Section
                   below, and ECO/ELL will also be in addition to said limit of
                   liability, subject, however to one additional Treaty limit.

                   The Company warrants it will retain net and unreinsured
                   USD/EUROS 22,500,000 or GBP 13,500,000 each policy, each
                   occurrence, each occurrence reported or claim made.

                   SECTION B

                   To accept a Variable Quota Share cession on policies in
                   excess of USD/EUROS 25,000,000 or GBP 15,000,000 in an amount
                   proportional to the Company's Share, whereby the Company
                   retains USD/EUROS 25,000,000 or GBP 15,000,000 each policy,
                   each occurrence, each occurrence reported or claim made, and
                   the Reinsurer receives up to a maximum cession hereunder of
                   USD/EUROS 25,000,000 or GBP 15,000,000 part of USD/EUROS
                   50,000,000 or GBP 30,000,000 or USD currency equivalent, each
                   policy, each occurrence, each occurrence reported or claim
                   made in excess of a minimum original attachment of USD/EUROS
                   25,000,000 or GBP 15,000,000.

                   The maximum limit of liability under this Agreement will be
                   the Reinsurer's share of USD/EUROS 25,000,000 or GBP
                   15,000,000 part of USD/EUROS 50,000,000 or GBP 30,000,000
                   each policy, each occurrence, each occurrence reported, or
                   claim made, (subject to reinstatement and aggregate
                   provisions, if any, in reinsured policies). Loss expense will
                   be in addition to the above limit of liability as set forth
                   in the Loss Adjustment Expense Section below, and ECO/ELL
                   will also be in addition to said limit of liability, subject,
                   however to one additional Treaty limit

                   The Company warrants it will retain net and unreinsured
                   USD/EUROS 25,000,000 or GBP 15,000,000 each policy, each
                   occurrence, each occurrence reported or claim made.

WARRANTY           The Company warrants that the maximum limit of liability
                   across both Section A and B for any one insured will be
                   USD/EUR 50,000,000 or GBP 30,000,000

LOSS ADJUSTMENT
EXPENSE:           Pro rata in addition to Reinsurers' limit of liability,
                   unless all loss expense is included within the limit of
                   liability of reinsured policies.

PREMIUM:           The Reinsurer's pro rata share of net subject written
                   premium. "Net subject written premium" shall mean the gross
                   written premium of the Company for the classes of business
                   reinsured hereunder as specified in the Coverage Article,
                   including any premium paid by original insureds

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                   in respect of any extended reporting periods or discovery
                   periods and any reinstatement premium payable by original
                   insureds, less returned premium for cancellations and
                   reductions, and less premium for reinsurance as set forth in
                   the Other Reinsurance Article.

CEDING
COMMISSION:        Section A: Flat Rate of 25% of ceded premium.
                   Section B: Flat rate of 22.5% of ceded premium

REPORTS AND
REMITTANCES:       Reports and remittances due within 45 days following the end
                   of each month. Loss settlements due monthly 45 days after
                   receipt of the report from the Company.

                   Detailed per risk information on accounts written including
                   original insured name, limits, attachment, premium,
                   applicable reinsurance and claim information by Insured on a
                   monthly basis.

GOVERNING
LAW:               Governing law will be New York Law, without regard to the
                   principles of conflicts of laws thereunder. Notwithstanding
                   the foregoing, as to rules regarding credit for reinsurance,
                   the rules of all applicable states or other jurisdictions
                   will pertain thereto.

OTHER
PROVISIONS:        Reinsurers will be subject to the same terms, rates,
                   conditions, interpretations, waivers, modifications, and
                   alterations as the respective policies of the Company to
                   which this Agreement applies.
                   Agency Clause - as attached
                   Access to Records Clause - as attached
                   Arbitration Clause - as attached
                   Confidentiality Agreement Clause - as attached
                   Currency Revaluation Clause - USD$- as attached
                   Errors and Omissions Clause - as attached
                   Entire Agreement, Interpretation Clause - as attached
                   Extra Contractual Obligations and Excess Limits Liability
                   (100% with one additional Treaty limit) - as attached
                   Follow the Fortunes Clause - subject to all terms
                     conditions and exclusions contained herein - as attached
                   Foreign Exchange Clause - as attached
                   Insolvency Clause - applies severally to each reinsured
                     entity- as attached
                   Loss and Loss Adjustment Expense Clause - as attached
                   Notice of Loss and Loss Settlements Clause - as attached
                   Offset Clause - as attached
                   Service of Suit Clause - in Bermuda - as attached
                   Special Termination or settlement Clause - as attached

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INFORMATION:       Estimated Gross Applicable Premium Income:
                   Section A - USD 125,000,000
                   Section B - USD 125,000,000

The Reinsurer's obligations under this Agreement are several and not joint and
are limited solely to the extent of their individual participations. The
Reinsurers are not responsible for the participation of any co-subscribing
Reinsurer who for any reason does not satisfy all or part of its obligations.

REINSURED WITH:

<TABLE>
<CAPTION>
        COMPANY NAME                      SECTION A        SECTION B
        ------------                      ---------        ---------
<S>                                       <C>              <C>
National Union Fire Insurance                30%              10%
Company of Pittsburgh, PA
</TABLE>

Assuming that you find everything in order, please indicate your acceptance and
approval by signing and returning this Final Placement Slip.

ACCEPTED &
APPROVED:  /s/ M Zeller
           ------------

REFERENCE
NUMBER:  ____________________________________________   DATED: 12/13/04

(FOR PROCESSING PURPOSES IT IS IMPORTANT THAT YOU PROVIDE YOUR COMPANY'S
REFERENCE NUMBER FOR THIS PROGRAM.)

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                                   EXCLUSIONS

       This Agreement does not apply to and specifically excludes the following:

1.    Liability assumed by the Company under any form of treaty reinsurance.

2.    Loss or liability excluded by the Insolvency Funds Exclusion Clause.

3.    Loss or liability excluded by the Nuclear Incident Exclusion Clauses
      Reinsurance USA and Canada NMA 1590 and Nuclear Energy Risks Exclusion
      Clause (Reinsurance) (1994) NMA 1979a, NMA 1975a (Japanese Amendment).

4.    Nuclear Incident Exclusion Clauses, Reinsurance USA and Canada, NMA 1166,
      NMA 1251

5.    Loss caused directly or indirectly by war, whether or not declared, civil
      war, insurrection, rebellion or revolution or any act or condition
      incidental to any of the foregoing. This exclusion will not be more
      limiting than the war exclusion in any policy issued by the Company that
      is subject to this Agreement provided however that such exclusion is not
      in conflict with the December 2003 Underwriting Guidelines.

6.    Loss or liability from First Party Product Recall.

7.    Loss or liability arising out of integrated and/or batch occurrence in
      respect of auto manufacturers and critical auto parts manufacturers.
      Critical auto parts defined as brakes and component parts, alternators,
      engine and engine control parts, clutch set, axle/joint, fuel/gas tanks
      and component parts, ignition parts, shock/strut, steering/suspension,
      electrical switches, transmission/gearbox, wheels/tires, seatbelts, door
      latches and airbags.

8.    Secondary product recall for companies involved with the manufacture of
      automobiles or critical automobile products as specified in 7 above.

9.    Cessions attaching below USD/EURO/GBP10,000,000 per occurrence or USD
      currency equivalent for Section A and USD/EUROS25,000,000 or GBP15,000,000
      or USD currency equivalent per occurrence or equivalent for Section B.

10.   Directors and Officers Liability.

11.   Errors and Omissions and Professional Liability coverage, except for
      incidental exposure. Incidental exposure is defined as an insured's
      operations for which there are no identifiable and dedicated third party
      revenues associated with the exposure. This exclusion shall not apply to
      resultant Bodily Injury or Personal Injury or Property Damage arising out
      of the operations of an Insured.

      Additionally, this exclusion does not apply to Druggist Liability.

12.   Loss or liability arising out of Multi-Year policies (the Term "Multi-Year
      Policies" to be defined to mean policies issued for periods greater than
      12 months plus odd time not exceeding 18 months in all; with the exception
      of single project construction risks).

13.   Business derived directly as a member of any Pool, Association or
      Syndicate.

                                     - 5 -
<PAGE>

14.   Surety / Fidelity / Credit / Financial Guarantee and Insolvency losses.

15.   Medical Malpractice. This exclusion will not apply to "In-House Medical
      Professionals" such as Nurses or Physicians who treat fellow employees at
      an Insured's premises while in the course of their employment with that
      Insured.

16.   Business classified as "Environmental Impairment Liability Insurance",
      when written as such.

17.   Asbestos, except as per XL 004 Policy Form (or similar occurrence reported
      forms).

18.   Aviation Liability, unless such coverage pertains to an incidental part of
      the original insured's overall operations. Additionally, Aircraft Products
      Liability will not be covered when the original policy is issued to a
      concern principally engaged in the manufacture of aircraft, aircraft
      engines or aircraft propellers. This exclusion does not apply to fuel or
      other fluids and lubricants utilized for Aircraft.

19.   Employment Practices Liability, when written as such.

20.   Methyl tertiary-butyl ether (MTBE). However, as respects liability or
      alleged liability for other pollutants that may involve or include MTBE,
      coverage hereon shall not be excluded as long as such liability or alleged
      liability for that portion of the discharge is not based on a MTBE
      Pollutants Claim.

21.   Loss or liability from Enron, Arthur Anderson, World Com, and the
      terrorist attacks that took place in the United States on September 11th,
      2001, including but not limited to losses either directly or indirectly
      caused by the hijacking and the crashes of the four passenger aircraft and
      any subsequent losses related to these incidents and all other
      circumstances that are publicly and/or generally known that may give rise
      to a claim hereon at the effective date of this agreement.

22.   Pure Financial Loss.

The Company may submit in writing to the Reinsurers, for special acceptance
hereunder, business not covered by this Agreement. If said business is accepted
in writing by the Reinsurers, it will be subject to the terms of this Agreement,
except as such terms are modified by such acceptance.

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<PAGE>

ACCESS TO RECORDS

            The Reinsurers, or their duly authorized representative, will have
free access at all reasonable times during and after the currency of this
Agreement, to books and records maintained by any of the division, department
and branch offices of the Company which are involved in the subject matter of
this Agreement and which pertain to the reinsurance provided hereunder and all
claims made in connection therewith.

AGENCY

            For purposes of sending and receiving notices and payments required
by this Agreement, the reinsured company that is set forth first in the
definition of "Company" in the Preamble to this Agreement will be deemed the
agent of all other reinsured companies referenced in the Preamble. In no event,
however, will any reinsured company be deemed the agent of another with respect
to the terms of the Insolvency Article.

ARBITRATION

A.    Any and all disputes arising under or relating to this policy, including
      its formation and validity, shall be finally and fully determined in
      Hamilton, Bermuda under the provisions of The Bermuda International
      Conciliation and Arbitration Act of 1993 (exclusive of the Conciliation
      Part of such Act), as may be amended and supplemented, by a Board composed
      of three arbitrators to be selected for each controversy as follows:

      In the event of a dispute, controversy or claim, any party may notify the
      other party or parties to such dispute, controversy or claim of its desire
      to arbitrate the matter, and at the time of such notification the party
      desiring arbitration shall notify any other party or parties of the name
      of the arbitrator selected by it. The other party who has been so notified
      shall within thirty (30) calendar days thereafter select an arbitrator and
      notify the party desiring arbitration of the name of such second
      arbitrator. If the party notified of a desire for arbitration shall fail
      or refuse to nominate the second arbitrator within thirty (30) calendar
      days following receipt of such notification, the party who first served
      notice of a desire to arbitrate shall, within an additional period of
      thirty (30) calendar days, apply to the Supreme Court of Bermuda for the
      appointment of a second arbitrator and in such a case the arbitrator
      appointed by such court shall be deemed to have been nominated by the
      party or parties who failed to select the second arbitrator. The two
      arbitrators, chosen as above provided, shall within thirty (30) calendar
      days after the appointment of the second arbitrator choose a third
      arbitrator. In the event of the failure of the first two arbitrators to
      agree on a third arbitrator within said thirty (30) calendar day period,
      either of the parties may within thirty (30) calendar days thereafter,
      after notice to the other party or parties, apply to a the Supreme Court
      of Bermuda for the appointment of a third arbitrator and in such case the
      person so appointed shall be deemed and shall act as the third arbitrator.
      Upon acceptance of the appointment by said third arbitrator, the Board of
      Arbitration for the controversy in question shall be deemed fixed.

                                     - 7 -
<PAGE>

B.    All claims, demands, denials of claims and notices pursuant to this
      Article shall be given in writing and given by hand, prepaid express
      courier, airmail or telecopier properly addressed to the appropriate party
      and shall be deemed as having been effected only upon actual receipt.

C.    The Board of Arbitration shall fix, by a notice in writing to the parties
      involved, a reasonable time and place for the hearing and may prescribe
      reasonable rules and regulations governing the course and conduct of the
      arbitration proceeding, including without limitation discovery by the
      parties. The Board will be relieved of all judicial formality and will not
      be bound by the strict rules of procedure evidence. The Board will
      interpret this Agreement as if it were an honorable engagement rather than
      as merely a legal obligation.

D.    The Board shall, within ninety (90) calendar days following the conclusion
      of the hearing, render its decision on the matter or matters in
      controversy in writing and shall cause a copy thereof to be served on all
      the parties thereto. In case the Board fails to reach a unanimous
      decision, the decision of the majority of the members of the Board shall
      be deemed to be the decision of the Board. Such decision shall be a
      complete defense to any attempted appeal or litigation of such decision of
      the Board of Arbitration by, any court or other body to the fullest extent
      permitted by applicable law.

E.    Any order as to the costs of the arbitration shall be in the sole
      discretion of the Board, who may direct to whom and by whom and in what
      manner they shall be paid.

F.    All awards made by the Arbitration Board shall be final and no right of
      appeal shall lie from any award rendered by the Arbitration Board. The
      parties agree that the Supreme Court of Bermuda: (1) shall not grant leave
      to appeal any award based upon a question of law arising out of the award;
      (ii) shall not grant leave to make an application with respect to an
      award; and (iii) shall not assume jurisdiction upon any application by a
      party to determine any issue of law arising in the course of the
      arbitration proceeding, including but not limited to whether a party has
      been guilty of fraud.

      All awards made by the Arbitration Board may be enforced in the same
      manner as a judgment or order from the Supreme Court of Bermuda and
      judgment may be entered pursuant to the terms of the award by leave from
      the Supreme Court of Bermuda.

G.    If the Company and more than one Reinsurer are involved in the same
      dispute(s) or difference(s) arising out of this Agreement, and the Company
      requests consolidated arbitration with those Reinsurers in an initial
      notice of arbitration or response, then those Reinsurers will constitute
      and act as one Party for purposes of the arbitration and thus will select
      a single party-appointed arbitrator among them. If the Company requests
      consolidation in its notice of arbitration, then both parties will elect
      their party-appointed arbitrators within 45 days of the commencement of
      the arbitration proceeding. If the Company requests consolidation in its
      response, then (i) that response will be appended to the Company's notice
      of arbitration to the additional Reinsurer(s) joined in the proceeding,
      (ii) any arbitral appointment made before that response will be of not
      effect, and (iii) the Reinsurers will select their arbitrator within 45
      days of their receipt of those

                                     - 8 -
<PAGE>

      pleadings. For purposes of this paragraph, any instance in which two or
      more Reinsurers have not paid their proportional shares of the same
      balance claimed due by the Company will be deemed to involve the "same
      dispute(s) or difference(s) arising out of this Agreement." Communications
      will be made by the Company to each of the Reinsurers constituting one
      party. Nothing in this paragraph will impair the rights of Reinsurers to
      assert several rather than joint defenses or claims, change their
      liability under this Agreement from several to joint, or impair their
      rights to retain separate counsel in connection with the arbitration.

H.    This Contract, and any dispute, controversy or claim arising out of or
      relating to this Contract, shall be governed by and construed in
      accordance with the Law of the State of New York.

I.    Unless prohibited by law, the Supreme Court of Bermuda will have exclusive
      jurisdiction over any and all court proceedings that either party may
      initiate in connection with the arbitration, including proceedings to
      compel, stay, or enjoin arbitration or to confirm, vacate, modify, or
      correct an arbitration award.

J.    This article will survive the expiration or termination of this Agreement.

CONFIDENTIALITY

            All terms and conditions of this Agreement and any materials
provided in the course of inspection will be kept confidential by the Reinsurer
as against third parties, unless the disclosure is required pursuant to process
of law or unless the disclosure is to Reinsurer's retrocessionaires, financial
auditors or governing regulatory bodies. Disclosing or using this information
for any purpose beyond the scope of this Agreement, or beyond the exceptions set
forth above, is expressly forbidden without the prior consent of the Company.

CURRENCY REVALUATION

            It is agreed that underwriting to contractual and/or underlying
limits for currencies other than USD/EUROS/GBP will be done in terms of United
States (U.S.) dollar equivalent on the basis of exchange rates supplied by AIG
at the start of each month and used by the Company in their own books of account
and also applicable to any subsequent adjustments of premium thereto. In the
event there is a reduction in parity value of the U.S. dollar from that existing
at the time the risk was written which results in the contractual and/or
underlying limits being exceeded, the Company will be held covered for such
excess until next renewal of the risk, at which time underwriting will then
conform to the contractual and/or underlying U.S. dollar limits in effect at the
time.

ERRORS AND OMISSIONS

            Any inadvertent delay, omission or error will not relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, provided such delay, omission or
error is rectified immediately upon discovery.

                                     - 9 -
<PAGE>

ENTIRE AGREEMENT, INTERPRETATION

A.    With respect to the business being reinsured hereunder, (i) this Agreement
      constitutes the entire agreement between the parties, and (ii) there are
      no understandings or agreements between the parties other than those
      expressed in this Agreement. Any change to or modification of this
      Agreement will be made by written amendment to this Agreement and signed
      by the parties hereto.

B.    This Agreement is between sophisticated parties, each of which has
      reviewed the Agreement and is fully knowledgeable about its terms and
      conditions. The parties therefore agree that this Agreement will be
      construed without regard to the authorship of the language and without any
      presumption or rule of construction in favor of either of them.

EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS LIABILITY

            This Agreement will extend to cover any claims-related extra
contractual obligations and/or excess limits liability arising because of, but
not limited to, the following:

A.    Failure of the Company to agree to pay a claim within the policy limits or
      to provide a defense against such claims.

B.    Actual or alleged bad faith, fraud, or negligence in investigating or
      handling a claim or in rejecting an offer of settlement.

C.    Negligence or breach of duty in the preparation of the defense or the
      conduct of a trial or the preparation or prosecution of any appeal and/or
      subrogation and/or any subsequent action resulting there from.

            "Extra contractual obligations" as used in this Agreement will mean
those liabilities not covered under any other provision of this Agreement for
which the Company is liable to its insured or a third-party claimant, or that
the Company paid as its share of a claims-related extra contractual obligation
awarded against one or more of its co-insurers.

            "Excess limits liability" as used in this Agreement will mean any
amount for which the Company would have been contractually liable to pay had it
not been for the limits of the reinsured policy.

            There will be no recovery hereunder where the extra contractual
obligation or excess limits liability has been incurred due to fraud committed
by a member of the board of directors or a corporate officer of the Company,
acting individually, collectively, or in collusion with a member of the board of
directors, a corporate officer, or a partner of any other corporation,
partnership, or organization involved in the defense or settlement of a claim on
behalf of the Company.

                                     - 10 -
<PAGE>

            The date on which any extra contractual obligations and/or excess
limits liability is incurred by the Company will be deemed, in all
circumstances, to be the date of the original loss. Nothing in this Article will
be construed to create a separate or distinct loss apart from the original
covered loss that gave rise to the extra contractual obligations and/or excess
limits liability discussed in the preceding paragraphs. The Reinsurers'
liability as respects extra contractual obligations and/or excess limits
liability under this Agreement will be in addition to the Reinsurers'
indemnification coverage set forth in the Coverage Article, however, such
additional liability will not exceed one Agreement limit in the aggregate.

FOLLOW THE FORTUNES

A.    The Reinsurer's liability will attach simultaneously with that of the
      Company and will be subject in all respects to the same risks, terms,
      conditions, interpretations, waivers, modifications, alterations, and
      cancellations as the respective insurances (or reinsurances) of the
      Company, the true intent of this Agreement being that the Reinsurer will,
      subject to the terms, conditions, and limits of this Agreement, follow the
      fortunes of the Company.

B.    Nothing will in any manner create any obligations or establish any rights
      against the Reinsurer in favor of any third parties or any persons not
      parties to this Agreement.

FOREIGN EXCHANGE

A.    All premium and loss payments hereunder will be in United States currency
      for all risks.

B.    Premiums due hereunder in other than United States currency will be paid
      by the Company in United States dollars at the rates of exchange used by
      the Company in their own books of account and also applicable to any
      subsequent adjustments of premium thereto.

C.    The amounts recoverable for losses in other than United States will be
      converted into United States dollars at the same rates of exchange used by
      the Company in their own books either at the time of the settlement and
      also applicable to any subsequent adjustments of premium thereto.

INSOLVENCY

      This article will apply severally to each reinsured company referenced
      within the definition of the "company' in the Preamble to this Agreement.
      Further, this Article and the laws of the domiciliary state will apply in
      the event of the insolvency of any company intended to be covered
      hereunder. In the event of a conflict between any provision of this
      Article and the laws of the domiciliary state of any company intended to
      be covered hereunder, that domiciliary state's laws will prevail.

                                     - 11 -
<PAGE>

A.    In the event of the insolvency of the Company, this reinsurance will be
      payable directly to the Company, or to its liquidator, receiver,
      conservator or statutory successor immediately upon demand on the basis of
      the liability of the Company without diminution because of the insolvency
      of the Company or because the liquidator, receiver, conservator or
      statutory successor of the Company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the Company will give written notice
      to the Reinsurers of the pendency of a claim against the Company which
      would involve a possible liability on the part of the Reinsurers,
      indicating the policy or bond reinsured, within a reasonable time after
      such claim is filed in the conservation or liquidation proceeding or in
      the receivership. It is further agreed that during the pendency of such
      claim the Reinsurers may investigate such claim and interpose, at their
      own expense, in the proceeding where such claim is to be adjudicated, any
      defense or defenses that they may deem available to the Company or its
      liquidator, receiver, conservator, or statutory successor. The expense
      thus incurred by the Reinsurers will be chargeable, subject to the
      approval of the Court, against the Company as part of the expense of
      conservation or liquidation to the extent of a pro rata share of the
      benefit which may accrue to the Company solely as a result of the defense
      undertaken by the Reinsurers.

B.    Where two or more Reinsurers are involved in the same claim and a majority
      interest elect to interpose defense to such claim, the expense will be
      apportioned in accordance with the terms of the Agreement as though such
      expense had been incurred by the Company.

C.    The reinsurance will be payable by the Reinsurers to the Company or to its
      liquidator, receiver, conservator, or statutory successor, except as
      provided by Section 4118(a)(1) (A) and 1114 (c) of the New York Insurance
      Law or except (a) where the Agreement specifically provides another payee
      of such reinsurance in the event of the insolvency of the Company, or (b)
      where the Reinsurers with the consent of the direct insured or insureds
      have voluntarily assumed such policy obligations of the Company as direct
      obligations of the Reinsurers to the payees under such policies and in
      substitution for the obligations of the Company to the payees. Then, and
      in that event only, the Company, with the prior approval of the
      certificate of assumption on New York risks by the Superintendent of
      Insurance of the State of New York, is entirely released from its
      obligation and the Reinsurers pay any loss directly to payees under such
      policy.

D.    Notwithstanding clauses A, B, and C, where the Company is authorized under
      the Insurance Companies Act (Canada) to insure in Canada risks, in the
      event of the insolvency of the Company, reinsurance payable in respect of
      the insurance business in Canada of the Company will be payable to the
      Chief Agent in Canada of the Company or to the liquidator, receiver,
      conservator or statutory successor appointed in Canada in respect of the
      insurance business in Canada of the Company without diminution because of
      the insolvency of the Company or because the Company or a liquidator,
      receiver, conservator or statutory successor of the Company has failed to
      pay all or any portion of any claim. All other terms and conditions of
      clauses A, B, and C remain in effect and apply to this clause D which will
      prevail if there is a conflict or inconsistency.

                                     - 12 -
<PAGE>

LOSS AND LOSS ADJUSTMENT EXPENSE

A.    The Company alone and at its full discretion will adjust, settle or
      compromise all claims and losses. All such settlements, compromises, and
      adjustments, whether involving coverage issues or otherwise, will be
      binding on the Reinsurer in proportion to its participation. The Company
      will likewise at its sole discretion commence, continue, defend,
      compromise, settle or withdraw from actions, suits or proceedings and
      generally do all such matters and things relating to any claim or loss as
      in its judgment may be beneficial or expedient, and all payments made and
      costs and expenses incurred in connection therewith or in taking legal
      advice therefore (including those which are the result of actions and/or
      disputes between the insured and the Company and including the pro rata
      share, according to the time occupied in adjusting such loss, of salaries
      and expenses of the Company's field employees and salaried adjusters who
      have no administrative duties, including but not limited to charges and/or
      expenses incurred through the use of third party claim services and/or
      technical services, and expenses of the Company's officials incurred in
      connection with the loss but excluding salaries of the Company's officials
      and regular office employees and office expenses of the Company) will be
      shared by the Reinsurer proportionately. The Reinsurer will, on the other
      hand, benefit proportionately from all reductions of losses by salvage,
      compromise or otherwise.

B.    If the amount due to the Company for loss or losses recoverable under this
      Agreement for any one loss occurrence is in excess of $7,500,000, the
      Reinsurer will, upon demand and receipt of reinsurance proofs of loss,
      forthwith remit the amount due; otherwise losses will be carried to
      account as otherwise provided herein.

NOTICE OF LOSS AND LOSS SETTLEMENTS

A.    In the event of a loss which either results in or appears to be of serious
      enough nature to result in the involvement of this Agreement, the Company
      will give notice as soon as reasonably practicable to the Reinsurer and
      the Company will keep the Reinsurer advised of all subsequent developments
      in connection therewith.

B.    All settlements, compromises, and adjustments made by the Company, whether
      involving coverage issues or otherwise, will be binding on the Reinsurer.
      Such settlements, compromises, or adjustments will be considered
      satisfactory proofs of loss, and amounts falling to the share of the
      Reinsurer will be immediately payable to the Company upon presentation of
      reasonable evidence of the amount paid or due and payable by the Company.

SERVICE OF SUIT

            (This Article applies to Reinsurers unauthorized in any jurisdiction
that has authority over the Company and in which a subject suit has been
instituted. This Article is not intended to conflict with or override the
parties obligation to arbitrate their disputes in accordance with the
Arbitration Article)

                                     - 13 -
<PAGE>

In the event any Reinsurer hereon fails to pay any amount claimed due hereunder
such Reinsurer, at the request of the Company, will submit to the jurisdiction
of a court of competent jurisdiction within England or Bermuda and will comply
with all requirements necessary to give that court jurisdiction.

OFFSET

            Each party hereto will have, and may exercise at any time and from
time to time, the right to offset any undisputed balance or balances, whether on
account of premiums or on account of losses or otherwise, due from such party to
the other (or, if more than one, any other) party hereto under this Agreement or
under any other reinsurance agreement heretofore or hereafter entered into by
and between them, and may offset the same against any undisputed balance or
balances due to the former from the latter under the same or any other
reinsurance agreement between them, and the party asserting the right of offset
will have and may exercise such right whether the undisputed balance or balances
due to such party from the other are on account of premiums or on account of
losses or otherwise and regardless of the capacity, whether as assuming insurer
or as ceding insurer, in which each party acted under the agreement or, if more
than one, the different agreements involved, provided, however, that, in the
event of the insolvency of a party hereto, offsets will only be allowed in
accordance with the provisions of Section 7427 of the Insurance Law of the State
of New York.

            Where the Company is authorized under the Insurance Companies Act
(Canada) to insure in Canada risks, for the purpose of this Article, the branch
of a Company in Canada will be considered as a party separate and distinct from
the Company and the right of offset provided for in this Article will belong to
and be applied against that branch as though it were a separate and distinct
party.

                                     - 14 -
<PAGE>

SPECIAL TERMINATION OR SETTLEMENT

(Applicable separately as between the Company and each Reinsurer)

Section I.

A.    Either party may terminate this Agreement upon 45 days notice in the event
      that the other party should at any time (whether voluntarily or otherwise)
      become insolvent, or suffer any impairment of capital, or become the
      subject of any liquidation, rehabilitation, receivership, supervision,
      conservation, or bankruptcy action or proceeding (whether judicial
      otherwise) or of a proposed Scheme of Arrangement, or be acquired or
      controlled (whether directly or indirectly) by any other company or
      organization.

B.    The Company may terminate this Agreement forthwith in the event that:

      1.    The Reinsurer ceases writing reinsurance; or

      2.    The Reinsurer at any time (i) has a Standard & Poor's (S&P) Insurer
            Financial Strength Rating of lower that "A-"; or (ii) ceases to have
            any S&P Insurer Financial Strength Rating (including a designation
            of "not rated" or "NR") after having had an S&P rating at or after
            the inception of this Agreement; or

      3.    The Reinsurer at any time (i) has a Best Rating, as provided by A.M.
            Best Company, of lower than "A-"; or (ii) ceases to have any Best
            Rating (including a designation of "not rated" or "NR") after having
            had a Best Rating at or after the inception of this Agreement; or

      4.    Over any period not exceeding twelve months, the policyholders;
            surplus of the Reinsurer, as reported in such financial statements
            of the Reinsurer as designated by the Company, drop by 20% or more;
            or

      5.    (Applicable to Reinsurers domiciled in the United States)

            Upon application of the NAIC Insurance regulatory Information System
            (IRIS) tests to the Reinsurers most recent statutory Annual
            Statement (which the Reinsurer hereby agrees to furnish to the
            Company upon request), it is found that four (4) or more of the
            Reinsurers IRIS financial ratio values are outside of the usual
            range established in the IRIS system.

            Not withstanding the above, subparts 4 and 5 will not apply to any
            Reinsurer having at all times both S&P Insurer Financial Strength
            and Best Rating of "A" or higher.

C.    Termination under Part A. or B. of this Section will be effected by
      written notice. The Company will elect whether the termination will be on
      a run-off basis or a clean-cut basis with an immediate settlement of all
      present and future obligations under this Agreement. If the Company
      initially elects a run-off basis, within 15 days of receiving notice of
      the Company's election, the Reinsurer will secure all such obligations
      through a trust account or a clean, unconditional, irrevocable, and
      evergreen letter of credit from a financial
<PAGE>

      institution acceptable to the Company. However, even if such security is
      requested by the Company and/or provided by the Reinsurer, it is agreed
      that the Company will retain the right to require an immediate settlement
      of all present and future obligations at any subsequent date.

Section II.

A.    After the expiration or termination of this Agreement for any reason other
      than a Special Termination governed by Section I., above, if the Reinsurer
      has any remaining present or future obligations to the Company and any of
      the six events described in Part B. of Section I should occur, the Company
      (i) may require an immediate settlement of all present and future
      obligations under this Agreement, or (ii) may require the Reinsurer to
      secure all such obligations through a trust account or a clean,
      unconditional, irrevocable, and evergreen letter of credit from a
      financial institution acceptable to the Company.

B.    If the Company initially requires security under Part A. of this Section,
      it will notify the Reinsurer in writing and the Reinsurer will provide
      such trust account or letter of credit within 15 days. However, even if
      such security is requested by the Company and/or provided by the
      Reinsurer, it is agreed that the Company will retain the right to require
      an immediate settlement of all present and future obligations at any
      subsequent date.

Section III.

A.    For purposes of this Article, "all present and future obligations" means
      outstanding losses (including IBNR), return of unearned premiums, and all
      other present or future balances, obligations, or amounts due the Company
      or Reinsurer under this Agreement.

B.    In no event will this Article be construed to limit the amount of, or the
      rights and obligations of the parties with respect to, any security
      withheld or required in accordance with the Reserve Deposit Article hereof
      (if applicable).

C.    In the event of an immediate settlement of all present and future
      obligations, upon receipt of final payment, the Company and the Reinsurer
      will execute a full and final commutation and mutual release of their
      respective liabilities under the Agreement.

D.    When requested by either party an appraisal of IBNR will be made by a
      disinterested actuary.

E.    Settlements under this Article will be adjusted for net present value.

F.    In the event of any conflict between this Article and any other Article of
      this Agreement, the terms of this Article will control.

This Article will survive the expiration or termination of this Agreement.

                                     - 2 -
<PAGE>

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

                                 PLACEMENT SLIP

COMPANY:            Allied World Assurance Company, Ltd., Hamilton, Bermuda;
                    Allied World Assurance Company (Europe) Ltd.
                    Allied World Assurance Company (Reinsurance) Ltd.

EFFECTIVE:          Continuous and to take effect March 1st, 2005, 12:01 a.m.
                    Atlantic Standard Time as respects new and renewal business.

CANCELLATION:       Any March 1st 12:01 a.m. standard time by either party via
                    90 days prior written notice. Run-off to policy expiration
                    or renewal date, whichever comes first. Following
                    cancellation, Reinsurer's liability will continue in the
                    event any extended reporting period options are exercised in
                    accordance with claims made or occurrence reported policies
                    and/or in the event Company is bound by statute or
                    regulation to continue coverage with respect to policies
                    attaching after the effective date of this agreement and
                    prior to the effective date of Notice of Cancellation.

BUSINESS COVERED:   All policies underwritten by the Company's General Casualty
                    staff and classified by the Company as Excess General
                    Casualty Insurance. Maximum policy period 12 months, plus
                    odd time not to exceed 18 months in all; with the exception
                    of single project construction risks.

EXCLUSIONS:         As attached.

TERRITORY:          To follow the companies policies.

LIMIT & RETENTION:  SECTION A

                    10% quota share on policies of up to USD/EUROS 25,000,000 or
                    GBP 15,000,000 or USD currency equivalent, each policy, each
                    occurrence, each occurrence reported, or claim made in
                    excess of a minimum original attachment of USD/EUROS/GBP
                    10,000,000.

                    The maximum limit of liability under this Agreement will be
                    the Reinsurer's share of USD/EUROS 25,000,000 or GBP
                    15,000,000 each policy, each occurrence, each occurrence
                    reported, or claim made, (subject to reinstatement and
                    aggregate provisions, if any, in reinsured policies).

                    Loss expense will be in addition to the above limit of
                    liability as set forth in the Loss Adjustment Expense
                    Section below,

<PAGE>

                    and ECO/ELL will also be in addition to said limit of
                    liability, subject, however to one additional Treaty limit.

                    The Company warrants it will retain net and unreinsured
                    USD/EUROS 22,500,000 or GBP 13,500,000 each policy, each
                    occurrence, each occurrence reported or claim made.

                    SECTION B

                    To accept a Variable Quota Share cession on policies in
                    excess of USD/EUROS 25,000,000 or GBP 15,000,000 in an
                    amount proportional to the Company's Share, whereby the
                    Company retains USD/EUROS 25,000,000 or GBP 15,000,000 each
                    policy, each occurrence, each occurrence reported or claim
                    made, and the Reinsurer receives up to a maximum cession
                    hereunder of USD/EUROS 25,000,000 or GBP 15,000,000 part of
                    USD/EUROS 50,000,000 or GBP 30,000,000 or USD currency
                    equivalent, each policy, each occurrence, each occurrence
                    reported or claim made in excess of a minimum original
                    attachment of USD/EUROS 25,000,000 or GBP 15,000,000.

                    The maximum limit of liability under this Agreement will be
                    the Reinsurer's share of USD/EUROS 25,000,000 or GBP
                    15,000,000 part of USD/EUROS 50,000,000 or GBP 30,000,000
                    each policy, each occurrence, each occurrence reported, or
                    claim made, (subject to reinstatement and aggregate
                    provisions, if any, in reinsured policies). Loss expense
                    will be in addition to the above limit of liability as set
                    forth in the Loss Adjustment Expense Section below, and
                    ECO/ELL will also be in addition to said limit of liability,
                    subject, however to one additional Treaty limit

                    The Company warrants it will retain net and unreinsured
                    USD/EUROS 25,000,000 or GBP 15,000,000 each policy, each
                    occurrence, each occurrence reported or claim made.

WARRANTY            The Company warrants that the maximum limit of liability
                    across both Section A and B for any one insured will be
                    USD/EUR 50,000,000 or GBP 30,000,000

LOSS ADJUSTMENT     Pro rata in addition to Reinsurers' limit of liability,
EXPENSE:            unless all loss expense is included within the limit of
                    liability of reinsured policies.

PREMIUM:            The Reinsurer's pro rata share of net subject written
                    premium. "Net subject written premium" shall mean the gross
                    written premium of the Company for the classes of business
                    reinsured

                                     - 2 -
<PAGE>

                    hereunder as specified in the Coverage Article, including
                    any premium paid by original insureds in respect of any
                    extended reporting periods or discovery periods and any
                    reinstatement premium payable by original insureds, less
                    returned premium for cancellations and reductions, and less
                    premium for reinsurance as set forth in the Other
                    Reinsurance Article.

CEDING COMMISSION:  Section A:  Flat Rate of 25% of ceded premium.
                    Section B:  Flat rate of 22.5% of ceded premium.

REPORTS AND         Reports and remittances due within 45 days following the end
REMITTANCES:        of each month. Loss settlements due monthly 45 days after
                    receipt of the report from the Company.

                    Detailed per risk information on accounts written including
                    original insured name, limits, attachment, premium,
                    applicable reinsurance and claim information by Insured on a
                    monthly basis.

GOVERNING LAW:      Governing law will be New York Law, without regard to the
                    principles of conflicts of laws thereunder. Notwithstanding
                    the foregoing, as to rules regarding credit for reinsurance,
                    the rules of all applicable states or other jurisdictions
                    will pertain thereto.

OTHER PROVISIONS:   Agency Clause - as attached
                    Access to Records Clause - as attached
                    Arbitration Clause - as attached
                    Confidentiality Agreement Clause - as attached
                    Currency Revaluation Clause - USD$ - as attached
                    Delays, Errors or Omissions Clause - as attached
                    Entire Agreement, Interpretation Clause - as attached
                    Extra Contractual Obligations and Excess Limits Liability
                    (100% with one additional Treaty limit) - as attached
                    Follow the Fortunes Clause - subject to all terms conditions
                      and exclusions contained herein - as attached
                    Foreign Exchange Clause - as attached
                    Insolvency Clause - applies severally to each reinsured
                      entity - as attached
                    Loss and Loss Adjustment Expense Clause - as attached
                    Notice of Loss and Loss Settlements Clause - as attached
                    Offset Clause - as attached
                    Service of Suit Clause - in Bermuda - as attached
                    Special Termination or settlement Clause - as attached
                    Aon Re Inc. Intermediary Clause - as attached.

                                     - 3 -
<PAGE>

BROKERAGE:          2.5% on net applicable premium income ceded to Reinsurer
                    after deductions for Ceding Commission.

The Reinsurer's obligations under this Agreement are several and not joint and
are limited solely to the extent of their individual participations. The
Reinsurers are not responsible for the participation of any co-subscribing
Reinsurer who for any reason does not satisfy all or part of its obligations.

Assuming that you find everything in order, please indicate your acceptance and
approval by signing and returning this Final Placement Slip to Aon Re Inc.

ACCEPTED &
APPROVED: ______________________________________________________________________

REFERENCE
NUMBER:       A970000042                       DATED: 9/27/2005

(For processing purposes it is important that you provide your Company's
reference number for this program.)

                                     - 4 -
<PAGE>

                                   EXCLUSIONS

This Agreement does not apply to and specifically excludes the following:

A.    Liability assumed by the Company under any form of treaty reinsurance.

B.    Loss or liability excluded by the Insolvency Funds Exclusion Clause, as
      attached to this Agreement.

C.    Loss or liability excluded by the Nuclear Incident Exclusion
      Clause--Liability--Reinsurance and Nuclear Energy Risks Exclusion Clause
      (Reinsurance) (1994), NMA 1975a (Japanese Amendment), as attached to this
      Agreement.

D.    Loss or liability excluded by the following Nuclear Exclusion Clauses,
      which are attached to this Agreement:

      1.    Nuclear Incident Exclusion Clause--Physical Damage--Reinsurance
            (U.S.A. and Canada) and;

      2.    Nuclear Incident Exclusion Clause--Physical Damage and Liability
            (Boiler and Machinery Policies)--Reinsurance (U.S.A. and Canada).

E.    Loss caused directly or indirectly by war, whether or not declared, civil
      war, insurrection, rebellion or revolution or any act or condition
      incidental to any of the foregoing. This exclusion will not be more
      limiting than the war exclusion in any Policy issued by the Company that
      is subject to this Agreement provided however that such exclusion is not
      in conflict with the December 2003 Underwriting Guidelines.

F.    Loss or liability from First Party Product Recall.

G.    Loss or liability arising out of integrated and/or batch occurrence in
      respect of auto manufacturers and critical auto parts manufacturers.
      Critical auto parts defined as brakes and component parts, alternators,
      engine and engine control parts, clutch set, axle/joint, fuel/gas tanks
      and component parts, ignition parts, shock/strut, steering/suspension,
      electrical switches, transmission/gearbox, wheels/tires, seatbelts, door
      latches and airbags.

H.    Secondary product recall for companies involved with the manufacture of
      automobiles or critical automobile products as specified in G. above.

I.    Cessions attaching below:

      1.    $10,000,000, (euro)10,000,000, or (pound)10,000,000 (or $10,000,000
            United States dollar equivalent as respects currencies other than
            those referenced herein) as respects business subject to Section A.
            of the Coverage Article; or

                                     - 5 -
<PAGE>

      2.    $25,000,000, (euro)25,000,000, or (pound)15,000,000 (or $25,000,000
            United States dollar equivalent as respects currencies other than
            those referenced herein) as respects business subject to Section B.
            of the Coverage Article.

J.    Directors and Officers Liability.

K.    Errors and Omissions and Professional Liability coverage, except for
      incidental exposure. Incidental exposure is defined as an insured's
      operations for which there are no identifiable and dedicated third party
      revenues associated with the exposure. This exclusion shall not apply to
      resultant Bodily Injury or Personal Injury or Property Damage arising out
      of the operations of an Insured. Additionally, this exclusion does not
      apply to Druggist Liability.

L.    Loss or liability arising out of Multi-Year Policies, other than Single
      Project Construction Risks, (the Term "Multi-Year Policies" to be defined
      to mean Policies issued for periods greater than 12 months plus odd time
      not exceeding 18 months in all). Single Project Construction Risk is
      defined to mean policies issued for periods of up to 60 months (or to be
      agreed) plus odd time not exceeding an additional 6 months.

M.    Business derived directly as a member of any Pool, Association or
      Syndicate.

N.    Surety / Fidelity / Credit / Financial Guarantee and Insolvency Losses.

O.    Medical Malpractice. This exclusion will not apply to "In-House Medical
      Professionals" such as Nurses or Physicians who treat fellow employees at
      an Insured's premises while in the course of their employment with that
      Insured.

P.    Business classified as Environmental Impairment Liability Insurance.

Q.    Asbestos, except as per XL 004 Policy Form (or similar Occurrence Reported
      forms).

R.    Aviation Liability, unless such coverage pertains to an incidental part of
      the original insured's overall operations. Additionally, Aircraft Products
      Liability will not be covered when the original Policy is issued to a
      concern principally engaged in the manufacture of aircraft, aircraft
      engines or aircraft propellers. This exclusion does not apply to fuel or
      other fluids and lubricants utilized for Aircraft.

S.    Employment Practices Liability, when written as such.

T.    Methyl tertiary-butyl ether (MTBE). However, as respects liability or
      alleged liability for other pollutants that may involve or include MTBE,
      coverage hereon shall not be excluded as long as such liability or alleged
      liability for that portion of the discharge is not based on a MTBE
      Pollutants Claim.

U.    Loss or liability from Enron, Arthur Anderson, World Corn, and the
      terrorist attacks that took place in the United States on September 11th,
      2001, including but not limited to Losses either directly or indirectly
      caused by the hijacking and the crashes of the four passenger aircraft and
      any subsequent Losses related to these incidents and all other

                                     - 6 -
<PAGE>

      circumstances that are publicly and/or generally known that may give rise
      to a claim hereon at the effective date of this Agreement.

V.    Pure financial Loss.

W.    Cessions greater than USD/EURO 25,000,000 / GBP 15,000,000 in respect of
      Major Pharmaceutical Manufacturers. This exclusion will not apply to
      nutraceutical companies, over-the-counter (non-ethical) drug companies or
      diversified manufacturers, whose ethical pharmaceutical revenues are less
      than 20% of total corporate revenue.

            The Company may submit in writing to the Reinsurers, for special
acceptance hereunder, business not covered by this Agreement. If said business
is accepted in writing by the Reinsurers, it will be subject to the terms of
this Agreement, except as such terms are modified by such acceptance.

ACCESS TO RECORDS

            The Reinsurers, or their duly authorized representative, will have
free access at all reasonable times during and after the currency of this
Agreement, to books and records maintained by any of the division, department
and branch offices of the Company which are involved in the subject matter of
this Agreement and which pertain to the reinsurance provided hereunder and all
claims made in connection therewith.

AGENCY

            For purposes of sending and receiving notices and payments required
by this Agreement, the reinsured company that is set forth first in the
definition of "Company" in the Preamble to this Agreement will be deemed the
agent of all other reinsured companies referenced in the Preamble. In no event,
however, will any reinsured company be deemed the agent of another with respect
to the terms of the Insolvency Article.

ARBITRATION

A.    Any and all disputes arising under or relating to this Agreement,
      including its formation and validity, will be finally and fully determined
      in Hamilton, Bermuda under the provisions of The Bermuda International
      Conciliation and Arbitration Act of 1993 (exclusive of the Conciliation
      Part of such Act), as may be amended and supplemented, by a Board composed
      of three arbitrators to be selected for each controversy as follows:

      In the event of a dispute, controversy or claim, any party may notify the
      other party or parties to such dispute, controversy or claim of its desire
      to arbitrate the matter, and at the time of such notification the party
      desiring arbitration will notify any other party or parties of the name of
      the arbitrator selected by it. The other party who has been so notified
      will within thirty (30) calendar days thereafter select an arbitrator and
      notify the party desiring arbitration of the name of such second
      arbitrator. If the party notified of a desire for arbitration will fail or
      refuse to nominate the second arbitrator within thirty (30)

                                     - 7 -
<PAGE>

      calendar days following receipt of such notification, the party who first
      served notice of a desire to arbitrate will, within an additional period
      of thirty (30) calendar days, apply to the Supreme Court of Bermuda for
      the appointment of a second arbitrator and in such a case the arbitrator
      appointed by such court will be deemed to have been nominated by the party
      or parties who failed to select the second arbitrator. The two
      arbitrators, chosen as above provided, will within thirty (30) calendar
      days after the appointment of the second arbitrator choose a third
      arbitrator. In the event of the failure of the first two arbitrators to
      agree on a third arbitrator within said thirty (30) calendar day period,
      either of the parties may within thirty (30) calendar days thereafter,
      after notice to the other party or parties, apply to a the Supreme Court
      of Bermuda for the appointment of a third arbitrator and in such case the
      person so appointed will be deemed and will act as the third arbitrator.
      Upon acceptance of the appointment by said third arbitrator, the Board of
      Arbitration for the controversy in question will be deemed fixed.

B.    All claims, demands, denials of claims and notices pursuant to this
      Article will be given in writing and given by hand, prepaid express
      courier, airmail or telecopier properly addressed to the appropriate party
      and will be deemed as having been effected only upon actual receipt.

C.    The Board of Arbitration will fix, by a notice in writing to the parties
      involved, a reasonable time and place for the hearing and may prescribe
      reasonable rules and regulations governing the course and conduct of the
      arbitration proceeding, including without limitation discovery by the
      parties. The Board will be relieved of all judicial formality and will not
      be bound by the strict rules of procedure evidence. The Board will
      interpret this Agreement as if it were an honorable engagement rather than
      as merely a legal obligation.

D.    The Board will, within ninety (90) calendar days following the conclusion
      of the hearing, render its decision on the matter or matters in
      controversy in writing and will cause a copy thereof to be served on all
      the parties thereto. In case the Board fails to reach a unanimous
      decision, the decision of the majority of the members of the Board will be
      deemed to be the decision of the Board. Such decision will be a complete
      defense to any attempted appeal or litigation of such decision of the
      Board of Arbitration by, any court or other body to the fullest extent
      permitted by applicable law.

E.    Any order as to the costs of the arbitration will be in the sole
      discretion of the Board, who may direct to whom and by whom and in what
      manner they will be paid.

F.    All awards made by the Arbitration Board will be final and no right of
      appeal will lie from any award rendered by the Arbitration Board. The
      parties agree that the Supreme Court of Bermuda: (1) will not grant leave
      to appeal any award based upon a question of law arising out of the award;
      (ii) will not grant leave to make an application with respect to an award;
      and (iii) will not assume jurisdiction upon any application by a party to
      determine any issue of law arising in the course of the arbitration
      proceeding, including but not limited to whether a party has been guilty
      of fraud.

                                     - 8 -
<PAGE>

      All awards made by the Arbitration Board may be enforced in the same
      manner as a judgment or order from the Supreme Court of Bermuda and
      judgment may be entered pursuant to the terms of the award by leave from
      the Supreme Court of Bermuda.

G.    If the Company and more than one Reinsurer are involved in the same
      dispute(s) or difference(s) arising out of this Agreement, and the Company
      requests consolidated arbitration with those Reinsurers in an initial
      notice of arbitration or response, then those Reinsurers will constitute
      and act as one Party for purposes of the arbitration and thus will select
      a single party-appointed arbitrator among them. If the Company requests
      consolidation in its notice of arbitration, then both parties will elect
      their party-appointed arbitrators within 45 days of the commencement of
      the arbitration proceeding. If the Company requests consolidation in its
      response, then (i) that response will be appended to the Company's notice
      of arbitration to the additional Reinsurer(s) joined in the proceeding,
      (ii) any arbitral appointment made before that response will be of not
      effect, and (iii) the Reinsurers will select their arbitrator within 45
      days of their receipt of those pleadings. For purposes of this paragraph,
      any instance in which two or more Reinsurers have not paid their
      proportional shares of the same balance claimed due by the Company will be
      deemed to involve the "same dispute(s) or difference(s) arising out of
      this Agreement." Communications will be made by the Company to each of the
      Reinsurers constituting one party. Nothing in this paragraph will impair
      the rights of Reinsurers to assert several rather than joint defenses or
      claims, change their liability under this Agreement from several to joint,
      or impair their rights to retain separate counsel in connection with the
      arbitration.

H.    This Agreement, and any dispute, controversy or claim arising out of or
      relating to this Agreement, will be governed by and construed in
      accordance with the law of the state of New York.

I.    Unless prohibited by law, the Supreme Court of Bermuda will have exclusive
      jurisdiction over any and all court proceedings that either party may
      initiate in connection with the arbitration, including proceedings to
      compel, stay, or enjoin arbitration or to confirm, vacate, modify, or
      correct an arbitration award.

J.    This article will survive the expiration or termination of this Agreement.

CONFIDENTIALITY

            All terms and conditions of this Agreement and any materials
provided in the course of inspection will be kept confidential by the Reinsurer
as against third parties, unless the disclosure is required pursuant to process
of law or unless the disclosure is to Reinsurer's retrocessionaires, financial
auditors or governing regulatory bodies. Disclosing or using this information
for any purpose beyond the scope of this Agreement, or beyond the exceptions set
forth above, is expressly forbidden without the prior consent of the Company.

CURRENCY REVALUATION

            It is understood and agreed that currencies other than United States
dollars, euros, or British pounds, will be converted in terms of United States
(U.S.) dollar equivalent on the

                                     - 9 -
<PAGE>

basis of exchange rates supplied by AIG at the start of each month and used by
the Company in their own books of account and also applicable to any subsequent
adjustments of premium thereof. In the event there is a reduction in parity
value of the U.S. dollar from that existing at the time the Risk was written
which results in the contractual and/or underlying limits being exceeded, the
Company will be held covered for such excess until next renewal of the Risk, at
which time underwriting will then conform to the contractual and/or underlying
U.S. dollar limits in effect at the time.

DELAYS, ERRORS or OMISSIONS

            Any inadvertent delay, omission or error will not relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, provided such delay, omission or
error is rectified immediately upon discovery.

ENTIRE AGREEMENT, INTERPRETATION

A.    With respect to the business being reinsured hereunder, (i) this Agreement
      constitutes the entire agreement between the parties, and (ii) there are
      no understandings or agreements between the parties other than those
      expressed in this Agreement. Any change to or modification of this
      Agreement will be made by written amendment to this Agreement and signed
      by the parties hereto.

B.    This Agreement is between sophisticated parties, each of which has
      reviewed the Agreement and is fully knowledgeable about its terms and
      conditions. The parties therefore agree that this Agreement will be
      construed without regard to the authorship of the language and without any
      presumption or rule of construction in favor of either of them.

EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS LIABILITY

      This Agreement will extend to cover any claims-related extra contractual
      obligations and/or excess limits liability arising because of, but not
      limited to, the following:

A.    Failure of the Company to agree to pay a claim within the policy limits or
      to provide a defense against such claims.

B.    Actual or alleged bad faith, fraud, or negligence in investigating or
      handling a claim or in rejecting an offer of settlement.

C.    Negligence or breach of duty in the preparation of the defense or the
      conduct of a trial or the preparation or prosecution of any appeal and/or
      subrogation and/or any subsequent action resulting there from.

      "Extra contractual obligations" as used in this Agreement will mean those
      liabilities not covered under any other provision of this Agreement for
      which the Company is liable to its insured or a third-party claimant, or
      that the Company paid as its share of a claims-related extra contractual
      obligation awarded against one or more of its co-insurers.

                                     - 10 -
<PAGE>

      "Excess limits liability" as used in this Agreement will mean any amount
      for which the Company would have been contractually liable to pay had it
      not been for the limits of the reinsured policy.

      There will be no recovery hereunder where the extra contractual obligation
      or excess limits liability has been incurred due to fraud committed by a
      member of the board of directors or a corporate officer of the Company,
      acting individually, collectively, or in collusion with a member of the
      board of directors, a corporate officer, or a partner of any other
      corporation, partnership, or organization involved in the defense or
      settlement of a claim on behalf of the Company.

      The date on which any extra contractual obligations and/or excess limits
      liability is incurred by the Company will be deemed, in all circumstances,
      to be the date of the original loss. Nothing in this Article will be
      construed to create a separate or distinct loss apart from the original
      covered loss that gave rise to the extra contractual obligations and/or
      excess limits liability discussed in the preceding paragraphs. The
      Reinsurers' liability as respects extra contractual obligations and/or
      excess limits liability under this Agreement will be in addition to the
      Reinsurers' indemnification coverage set forth in the Coverage Article,
      however, such additional liability will not exceed one Agreement limit in
      the aggregate.

FOLLOW THE FORTUNES

A.    The Reinsurer's liability will attach simultaneously with that of the
      Company and will be subject in all respects to the same risks, terms,
      conditions, interpretations, waivers, modifications, alterations, and
      cancellations as the respective insurances (or reinsurances) of the
      Company, the true intent of this Agreement being that the Reinsurer will,
      subject to the terms, conditions, and limits of this Agreement, follow the
      fortunes of the Company.

B.    Nothing will in any manner create any obligations or establish any rights
      against the Reinsurer in favor of any third parties or any persons not
      parties to this Agreement.

FOREIGN EXCHANGE

A.    All premium and loss payments hereunder will be in United States currency
      for all risks.

B.    Premiums due hereunder in other than United States currency will be paid
      by the Company in United States dollars at the rates of exchange used by
      the Company in their own books of account and also applicable to any
      subsequent adjustments of premium thereto.

C.    The amounts recoverable for losses in other than United States will be
      converted into United States dollars at the same rates of exchange used by
      the Company in their own books either at the time of the settlement and
      also applicable to any subsequent adjustments of premium thereto.

                                     - 11 -
<PAGE>

INSOLVENCY

      This article will apply severally to each reinsured company referenced
      within the definition of the "company" in the Preamble to this Agreement.
      Further, this Article and the laws of the domiciliary state will apply in
      the event of the insolvency of any company intended to be covered
      hereunder. In the event of a conflict between any provision of this
      Article and the laws of the domiciliary state of any company intended to
      be covered hereunder, that domiciliary state's laws will prevail.

A.    In the event of the insolvency of the Company, this reinsurance will be
      payable directly to the Company, or to its liquidator, receiver,
      conservator or statutory successor immediately upon demand on the basis of
      the liability of the Company without diminution because of the insolvency
      of the Company or because the liquidator, receiver, conservator or
      statutory successor of the Company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the Company will give written notice
      to the Reinsurers of the pendency of a claim against the Company which
      would involve a possible liability on the part of the Reinsurers,
      indicating the policy or bond reinsured, within a reasonable time after
      such claim is filed in the conservation or liquidation proceeding or in
      the receivership. It is further agreed that during the pendency of such
      claim the Reinsurers may investigate such claim and interpose, at their
      own expense, in the proceeding where such claim is to be adjudicated, any
      defense or defenses that they may deem available to the Company or its
      liquidator, receiver, conservator, or statutory successor. The expense
      thus incurred by the Reinsurers will be chargeable, subject to the
      approval of the Court, against the Company as part of the expense of
      conservation or liquidation to the extent of a pro rata share of the
      benefit which may accrue to the Company solely as a result of the defense
      undertaken by the Reinsurers.

B.    Where two or more Reinsurers are involved in the same claim and a majority
      interest elect to interpose defense to such claim, the expense will be
      apportioned in accordance with the terms of the Agreement as though such
      expense had been incurred by the Company.

C.    The reinsurance will be payable by the Reinsurers to the Company or to its
      liquidator, receiver, conservator, or statutory successor, except as
      provided by Section 4118(a) (1) (A) and 1114 (c) of the New York Insurance
      Law or except (a) where the Agreement specifically provides another payee
      of such reinsurance in the event of the insolvency of the Company, or (b)
      where the Reinsurers with the consent of the direct insured or insureds
      have voluntarily assumed such policy obligations of the Company as direct
      obligations of the Reinsurers to the payees under such policies and in
      substitution for the obligations of the Company to the payees. Then, and
      in that event only, the Company, with the prior approval of the
      certificate of assumption on New York risks by the Superintendent of
      Insurance of the State of New York, is entirely released from its
      obligation and the Reinsurers pay any loss directly to payees under such
      policy.

D.    Notwithstanding clauses A, B, and C, where the Company is authorized under
      the Insurance Companies Act (Canada) to insure in Canada risks, in the
      event of the

                                     - 12 -
<PAGE>

      insolvency of the Company, reinsurance payable in respect of the insurance
      business in Canada of the Company will be payable to the Chief Agent in
      Canada of the Company or to the liquidator, receiver, conservator or
      statutory successor appointed in Canada in respect of the insurance
      business in Canada of the Company without diminution because of the
      insolvency of the Company or because the Company or a liquidator,
      receiver, conservator or statutory successor of the Company has failed to
      pay all or any portion of any claim. All other terms and conditions of
      clauses A, B, and C remain in effect and apply to this clause D which will
      prevail if there is a conflict or inconsistency.

INTERMEDIARY

            Aon Re Inc., an Illinois corporation, or one of its affiliated
corporations duly licensed as a reinsurance intermediary, is hereby recognized
as the Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premiums,
return premiums, commissions, taxes, losses, loss expenses, salvages, and loss
settlements) relating to this Agreement will be transmitted to the Company or
the Reinsurers through the Intermediary. Payments by the Company to the
Intermediary will be deemed payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.

LOSS AND LOSS ADJUSTMENT EXPENSE

A.    The Company alone and at its full discretion will adjust, settle or
      compromise all claims and losses. All such settlements, compromises, and
      adjustments, whether involving coverage issues or otherwise, will be
      binding on the Reinsurer in proportion to its participation. The Company
      will likewise at its sole discretion commence, continue, defend,
      compromise, settle or withdraw from actions, suits or proceedings and
      generally do all such matters and things relating to any claim or loss as
      in its judgment may be beneficial or expedient, and all payments made and
      costs and expenses incurred in connection therewith or in taking legal
      advice therefore (including those which are the result of actions and/or
      disputes between the insured and the Company and including the pro rata
      share, according to the time occupied in adjusting such loss, of salaries
      and expenses of the Company's field employees and salaried adjusters who
      have no administrative duties, including but not limited to charges and/or
      expenses incurred through the use of third party claim services and/or
      technical services, and expenses of the Company's officials incurred in
      connection with the loss but excluding salaries of the Company's officials
      and regular office employees and office expenses of the Company) will be
      shared by the Reinsurer proportionately. The Reinsurer will, on the other
      hand, benefit proportionately from all reductions of losses by salvage,
      compromise or otherwise.

B.    If the amount due to the Company for loss or losses recoverable under this
      Agreement for any one loss occurrence is in excess of $7,500,000, the
      Reinsurer will, upon demand and receipt of reinsurance proofs of loss,
      forthwith remit the amount due; otherwise losses will be carried to
      account as otherwise provided herein.

                                     - 13 -
<PAGE>

NOTICE OF LOSS AND LOSS SETTLEMENTS

A.    In the event of a loss which either results in or appears to be of serious
      enough nature to result in the involvement of this Agreement, the Company
      will give notice as soon as reasonably practicable to the Reinsurer and
      the Company will keep the Reinsurer advised of all subsequent developments
      in connection therewith.

B.    All settlements, compromises, and adjustments made by the Company, whether
      involving coverage issues or otherwise, will be binding on the Reinsurer.
      Such settlements, compromises, or adjustments will be considered
      satisfactory proofs of loss, and amounts falling to the share of the
      Reinsurer will be immediately payable to the Company upon presentation of
      reasonable evidence of the amount paid or due and payable by the Company.

SERVICE OF SUIT

            (This Article applies to Reinsurers unauthorized in any jurisdiction
that has authority over the Company and in which a subject suit has been
instituted. This Article is not intended to conflict with or override the
parties obligation to arbitrate their disputes in accordance with the
Arbitration Article)

In the event any Reinsurer hereon fails to pay any amount claimed due hereunder
such Reinsurer, at the request of the Company, will submit to the jurisdiction
of a court of competent jurisdiction within England or Bermuda and will comply
with all requirements necessary to give that court jurisdiction.

OFFSET

            Each party hereto will have, and may exercise at any time and from
time to time, the right to offset any undisputed balance or balances, whether on
account of premiums or on account of losses or otherwise, due from such party to
the other (or, if more than one, any other) party hereto under this Agreement or
under any other reinsurance agreement heretofore or hereafter entered into by
and between them, and may offset the same against any undisputed balance or
balances due to the former from the latter under the same or any other
reinsurance agreement between them, and the party asserting the right of offset
will have and may exercise such right whether the undisputed balance or balances
due to such party from the other are on account of premiums or on account of
losses or otherwise and regardless of the capacity, whether as assuming insurer
or as ceding insurer, in which each party acted under the agreement or, if more
than one, the different agreements involved, provided, however, that, in the
event of the insolvency of a party hereto, offsets will only be allowed in
accordance with the provisions of Section 7427 of the Insurance Law of the State
of New York.

            Where the Company is authorized under the Insurance Companies Act
(Canada) to insure in Canada risks, for the purpose of this Article, the branch
of a Company in Canada will be considered as a party separate and distinct from
the Company and the right of offset provided for in this Article will belong to
and be applied against that branch as though it were a separate and distinct
party.

                                     - 14 -
<PAGE>

SPECIAL TERMINATION OR SETTLEMENT

(Applicable separately as between the Company and each Reinsurer)

Section I.

A.    Either party may terminate this Agreement upon 45 days notice in the event
      that:

                  The other party should at any time (whether voluntarily or
                  otherwise) become insolvent, or suffer any impairment of
                  paid-up capital, or become the subject of any liquidation,
                  rehabilitation, receivership, supervision, conservation, or
                  bankruptcy action or proceeding (whether judicial or
                  otherwise) or of a proposed Scheme of Arrangement, or be
                  acquired or controlled (whether directly or indirectly) by any
                  other company or organization; or

B.    The Company may terminate this Agreement forthwith in the event that:

      1.    The Reinsurer ceases writing reinsurance; or

      2.    The Reinsurer at any time (i) has a Standard & Poor's (S&P) Insurer
            Financial Strength Rating of lower than "A-"; or (ii) ceases to have
            any S&P Insurer Financial Strength Rating (including a designation
            of "not rated" or "NR") after having had an S&P rating at or after
            the inception of this Agreement; or

      3.    The Reinsurer at any time (i) has a Best Rating, as provided by A.M.
            Best Company, of lower than "A-"; or (ii) ceases to have any Best
            Rating (including a designation of "not rated" or "NR") after having
            had a Best Rating at or after the inception of this Agreement; or

      4.    Over any period not exceeding twelve months, the policyholders
            surplus' of the Reinsurer, as reported in such financial statements
            of the Reinsurer as designated by the Company, drop by 20% or more;
            or

      5.    As respects Reinsurers domiciled in the United States only, upon
            application of the NAIC Insurance regulatory Information System
            (IRIS) tests to the Reinsurer's most recent statutory Annual
            Statement (which the Reinsurer hereby agrees to furnish to the
            Company upon request), it is found that four or more of the
            Reinsurer's IRIS financial ratio values are outside of the usual
            range established in the IRIS system.

      Notwithstanding the above, subparts 4. and 5. will not apply to any
      Reinsurer having at all times both S&P Insurer Financial Strength and Best
      Rating of "A" or higher.

C.    Termination under Part A. or B. of this Article will be effected by
      written notice. The Company will elect whether the termination will be on
      a run-off basis or a clean-cut basis with an immediate settlement of all
      present and future obligations under this Agreement. If the Company
      initially elects a run-off basis, within 15 days of receiving notice of
      the Company's election, the Reinsurer will secure all such obligations
      through a

                                     - 15 -
<PAGE>

      trust account or a clean, unconditional, irrevocable, and evergreen letter
      of credit from a financial institution acceptable to the Company. However,
      even if such security is requested by the Company and/or provided by the
      Reinsurer, it is agreed that the Company will retain the right to require
      an immediate settlement of all present and future obligations at any
      subsequent date.

Section II.

A.    After the expiration or termination of this Agreement for any reason other
      than a Special Termination governed by Section I, above, if the Reinsurer
      has any remaining present or future obligations to the Company and any of
      the five events described in Part B. of Section I should occur, the
      Company (i) may require an immediate settlement of all present and future
      obligations under this Agreement, or (ii) may require the Reinsurer to
      secure all such obligations through a trust account or a clean,
      unconditional, irrevocable, and evergreen letter of credit from a
      financial institution acceptable to the Company.

B.    If the Company initially requires security under Part A of this Section,
      it will notify the Reinsurer in writing and the Reinsurer will provide
      such trust account or letter of credit within 15 days. However, even if
      such security is requested by the Company and/or provided by the
      Reinsurer, it is agreed that the Company will retain the right to require
      an immediate settlement of all present and future obligations at any
      subsequent date.

Section III.

A.    For purposes of this Article, "all present and future obligations" means
      outstanding Losses (including IBNR), return of unearned premiums, and all
      other present or future balances, obligations, or amounts due the Company
      or Reinsurer under this Agreement.

B.    In no event will this Article be construed to limit the amount of, or the
      rights and obligations of the parties with respect to, any security
      withheld or required in accordance with the Reserves and Funding Article
      hereof (if applicable).

C.    In the event of an immediate settlement of all present and future
      obligations, upon receipt of final payment, the Company and the Reinsurer
      will execute a full and final commutation and mutual release of their
      respective liabilities under the Agreement.

D.    When requested by either party an appraisal of IBNR will be made by a
      disinterested actuary.

E.    Settlements under this Article will be adjusted for net present value.

F.    In the event of any conflict between this Article and any other Article of
      this Agreement, the terms of this Article will control.

This Article will survive the expiration or termination of this Agreement.

                                     - 16 -
<PAGE>

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT
                                   ADDENDUM #1
                                     TO THE
                                 PLACEMENT SLIP

 COMPANY:              Allied World Assurance Company, Ltd., Hamilton, Bermuda;
                       Allied World Assurance Company (Europe) Ltd.
                       Allied World Assurance Company (Reinsurance) Ltd.

 EFFECTIVE DATE:       Continuous and to take effect March 1st, 2005, 12:01 a.m.
                       Atlantic Standard Time as respects new and renewal
                       business.

 COMPANY REFERENCE:    AR15724

 REINSURER REFERENCE:  A970000042

IT IS HEREBY AGREED that as of the Effective Date shown above, the Placement
Slip referenced above is amended as follows:

1.    On page 1, under "LIMIT & RETENTION," the first sentence under SECTION A
      is hereby deleted in its entirety and replaced with the following:

            "12% quota share on policies of up to USD/EUROS 25,000,000 or GBP
            15,000,000 or USD currency equivalent, each policy, each occurrence,
            each occurrence reported, or claim made in excess of a minimum
            original attachment of USD/EUROS/GBP 10,000,000."

2.    On page 4, the section titled "BROKERAGE," is hereby deleted in its
      entirety.

3.    On page 4, under "ACCEPTED & APPROVED," the following is added:

<TABLE>
<CAPTION>
                 Reinsurer's Percentage
                  Participation Of 100%
                   Quota Share Of The        Reinsurer's Percentage
                Interests And Liabilities     Participation Of The
  Treaty         On The Subject Policies            Cession                 Limits:
-----------     -------------------------    ----------------------    -------------------
<S>             <C>                          <C>                       <C>
Section A                   3%                      25.00000%          USD/EUROS 750,000
                                                                       GBP 450,000
Section B                  10%                      11.76471%          USD/EUROS 2,500,000
                                                                       GBP 1,500,000
</TABLE>

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
by their duly authorized representatives.

             ALLIED WORLD ASSURANCE COMPANY, LTD., HAMILTON BERMUDA;
                  ALLIED WORLD ASSURANCE COMPANY (EUROPE) LTD.
                ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD.

Signed at:       Hamilton Bermuda

Signature:       Frank N. D'Orazio            Title: Sr. V.P.

Printed Name:    /s/ Frank N. D'Orazio        Date: 11/28/2005

Attest:          /s/ Mike Hoffman

Attest Printed Name: Mike Hoffman

                    NATIONAL UNION FIRE COMPANY OF PITTSBURGH

Signed at:       New York, New York

Signature:       /s/ R. Ruggiano              Title: Richard Ruggiano
                                                     Senior Reinsurance Officer

Printed Name:    Richard Ruggiano             Date: 1/5/2006

Attest:____________________

Attest Printed Name: _______________________

                                      - 2-

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