Document:

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                                                                   Exhibit 10.16

                                OPTION AGREEMENT

NONE OF THE ST. PAUL OPTION (AS DEFINED BELOW) AND THE COMMON SHARES DELIVERABLE
UPON EXERCISE OF THE ST. PAUL OPTION HAVE BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933. NEITHER THE ST. PAUL OPTION, NOR ANY INTEREST THEREIN,
NOR ANY COMMON SHARES DELIVERABLE UPON EXERCISE THEREOF MAY BE ASSIGNED OR
OTHERWISE TRANSFERRED, DISPOSED OF OR ENCUMBERED EXCEPT FOLLOWING RECEIPT BY
PLATINUM UNDERWRITERS HOLDINGS, LTD. (THE "COMPANY") OF EVIDENCE SATISFACTORY TO
IT, WHICH MAY INCLUDE AN OPINION OF UNITED STATES COUNSEL, THAT SUCH TRANSFER
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS
AND UPON OBTAINMENT OF ANY REQUIRED GOVERNMENT APPROVALS. TRANSFER (AS DEFINED
IN THE COMPANY'S BYE-LAWS) OF THE ST. PAUL OPTION OR ANY INTEREST THEREIN, OR
ANY COMMON SHARES DELIVERABLE UPON EXERCISE THEREOF, MAY BE DISAPPROVED BY THE
BOARD OF DIRECTORS OF THE COMPANY IF, IN ITS REASONABLE JUDGMENT, IT HAS REASON
TO BELIEVE THAT SUCH TRANSFER MAY EXPOSE THE COMPANY, ANY SUBSIDIARY THEREOF,
ANY SHAREHOLDER OR ANY PERSON CEDING INSURANCE TO THE COMPANY OR ANY SUCH
SUBSIDIARY TO ADVERSE TAX OR REGULATORY TREATMENT IN ANY JURISDICTION. COMMON
SHARES OBTAINED UPON EXERCISE OF THE ST. PAUL OPTION ARE SUBJECT TO SUBSTANTIAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 5(C) OF THIS OPTION AGREEMENT.

         This OPTION AGREEMENT is made this [27th] day of [September] 2002
between PLATINUM UNDERWRITERS HOLDINGS, LTD., a company organized under the laws
of the Islands of Bermuda (the "Company"), and THE ST. PAUL COMPANIES, INC., a
company incorporated under the laws of the State of Minnesota in the United
States of America ("St. Paul").

                                R E C I T A L S :
                                -----------------

         WHEREAS, the Company is contemplating an initial public offering (the
"Public Offering") of its common shares of par value U.S. $0.01 per share (the
"Common Shares");

         WHEREAS, St. Paul and the Company have entered into a Formation and
Separation Agreement, dated as of [September 23,] 2002 (the "Formation and
Separation Agreement") in which St. Paul and the Company have set forth certain
terms of their continuing relationship following the Public Offering; and

         WHEREAS, as contemplated by the Formation and Separation Agreement,
contingent

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upon the consummation of the Public Offering, St. Paul will contribute cash and
certain assets to the Company, in consideration for which the Company intends to
issue to St. Paul or its nominees, a number of Common Shares determined as set
forth in the Formation and Separation Agreement and The St. Paul Option, as
defined below, exercisable under the circumstances specified in this Agreement.
         NOW, THEREFORE, in furtherance of the transactions contemplated by the
Formation and Separation Agreement, and in consideration of the mutual promises,
covenants and agreements set forth therein and herein, the receipt and
sufficiency of which are acknowledged, the parties hereby agree as follows:

1.       (a)      The Company grants St. Paul an option (the "St. Paul Option")
to purchase for cash up to __________________ Common Shares (the "St. Paul
Option Shares") following the completion of the Public Offering.

         (b)      The St. Paul Option is exercisable, at an exercise price per
Common Share equal to _____ percent of the initial public offering price per
Common Share (the "St. Paul Option Price"), in whole or in part at any time
prior to the tenth anniversary of the completion of the Public Offering (the
"Exercise Period").

         (c)      An "Exercise Date" is any day during an Exercise Period, other
than a Saturday, Sunday or other day on which banking institutions in New York
City or Bermuda are authorized or obligated by law or executive order to close
(a "Business Day"). A St. Paul Option may be exercised as provided herein until
12:01 A.M., New York City time, on the first day after the expiration of the
Exercise Period.

         (d)      Notwithstanding anything to the contrary in this Agreement,
St. Paul's beneficial ownership interest in the Common Shares may not at any
time and under any circumstances be equal to or exceed that percentage of the
Common Shares outstanding that would cause St. Paul to be a "United States 25%
Shareholder" as defined in the Company's bye-laws as in effect as of the
completion of the Public Offering. It is agreed and understood that, prior to
any exercise of the St. Paul Option, St. Paul shall, if necessary, dispose of
such number of Common Shares so that, immediately after any exercise of St. Paul
Option, St. Paul will not be a "United States 25% Shareholder".

         (e)      St. Paul Option Shares upon issue will rank equally in all
respects with the other Common Shares of the Company, but in no case will any
St. Paul Option Shares carry any option or other right to subscribe for further
additional shares.

         (f)      St. Paul is not, solely by virtue hereof, entitled to any
rights of a shareholder in the Company either at law or in equity.

         (g) Upon any merger, amalgamation, consolidation, scheme of arrangement
or similar transaction involving the Company and any third party that is not a
subsidiary of the

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Company, or any sale of all or substantially all the assets of the Company to
any third party that is not a subsidiary of the Company (each, a "Transaction")
in which all holders of Common Shares become entitled to receive, in respect of
such shares, any capital stock, rights to acquire capital stock or other
securities of the Company or of any other person, any cash or any other
property, or any combination of the foregoing (collectively, "Transaction
Consideration"), the St. Paul Option shall entitle St. Paul to receive all
Transaction Consideration that St. Paul would have been entitled to if it had
exercised the St. Paul Option in full immediately prior to the Transaction (to
the extent it remains unexercised and without regard to the limitations in
Section 1(d) hereof), in each case upon payment by St. Paul of the St. Paul
Option Price as in effect immediately prior to such time. In determining the
kind and amount of Transaction Consideration that St. Paul would be entitled to
receive in respect of any Transaction pursuant to this Section 1(g), St. Paul
shall be entitled to exercise any rights of election as to the kinds and amounts
of consideration receivable in such Transaction that are provided to holders of
Common Shares in such Transactions. Any adjustment in respect of a Transaction
pursuant to this Section 1(g) shall become effective immediately after the
effective time of such Transaction, retroactive to any record date therefor. The
Company shall take such action as is necessary to ensure that St. Paul shall be
entitled to receive Transaction Consideration upon the terms and conditions
provided in this Section 1(g). Notwithstanding the foregoing, if an adjustment
is made pursuant to this Section 1(g) in respect of a Transaction that involves
a Change of Control (as defined below), St. Paul shall be entitled to exercise
the St. Paul Option pursuant to this Section 1(g) without regard to Section 1(d)
hereof. A Transaction is deemed to have involved a "Change of Control" if the
beneficial owners of the outstanding Common Shares immediately prior to the
effective time of such Transaction are not the beneficial owners of a majority
of the total voting power of the surviving or acquiring entity in the
Transaction, as the case may be, immediately after such effective time.

2.       (a)      To exercise the St. Paul Option in accordance with Section
1(b) hereof, St. Paul shall provide written notice to the Company of its
intention to exercise all or a portion of the St. Paul Option at least ten (10)
Business Days prior to the intended Exercise Date (such notice must indicate the
number of the St. Paul Option Shares St. Paul intends to purchase upon exercise
of the St. Paul Option and must be in writing signed by or on behalf of St. Paul
and delivered or sent to the Company in accordance with Section 9 hereof).

         (b)      The Company shall issue and allot St. Paul Option Shares upon
exercise of the St. Paul Option and payment of the total price payable therefor.

         (c)      Concurrently with the issuance of the St. Paul Option Shares
pursuant to Section 2(b) above, St. Paul shall pay the St. Paul Option Price for
any exercise hereunder by wire transfer of immediately available funds to an
account specified at least five (5) Business Days in advance by the Company;
such St. Paul Option Price being an amount in U.S. dollars equal to the product
of (i) the number of St. Paul Option Shares that St. Paul intends to purchase
pursuant to any exercise of the St. Paul Option and (ii) the St. Paul Option
Price.

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         (d)      Notwithstanding anything to the contrary in this Agreement,
the St. Paul Option may not be exercised under this Agreement unless the
required regulatory approvals set forth in Section 5 shall have been obtained.

3.       (a)      In case the Company at any time after the date that the
number of Common Shares issuable pursuant to the Public Offering and the St.
Paul Investment has been determined:

                  (A)      declares or pays a dividend or makes any other
         distribution with respect to its capital stock in Common Shares such
         that the number of Common Shares outstanding is increased,

                  (B)      subdivides or splits-up its outstanding Common
         Shares, such that the number of Common Shares outstanding is increased,

                  (C)      combines its outstanding Common Shares into a smaller
         number of Common Shares or

                  (D)      effects any reclassification of the Common Shares
         other than a change in par value (including any such reclassification
         in connection with an amalgamation or merger in which the Company is
         the surviving entity or a reincorporation of the Company),

the number of Common Shares purchasable upon exercise of the St. Paul Option
shall be proportionately adjusted so that St. Paul will be entitled to receive
the kind and number of Common Shares or other securities of the Company which it
would have been entitled to receive after the happening of any of the events
described above if the St. Paul Option had been exercised immediately prior to
the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph 3(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.

         (b)      In case the Company issues rights, options or warrants to all
holders of its outstanding Common Shares entitling them to subscribe for or
purchase Common Shares at a price per share which is lower at the record date
mentioned below than the then Current Market Value (as defined in Section 3(d)),
the number of St. Paul Option Shares that St. Paul may purchase thereafter upon
the exercise of the St. Paul Option will be determined by multiplying the number
of St. Paul Option Shares theretofore purchasable upon exercise of the St. Paul
Option by a fraction, of which the numerator is the sum of (A) the number of
Common Shares outstanding on the record date for determining shareholders
entitled to receive such rights, options or warrants plus (B) the number of
additional Common Shares offered for subscription or purchase, and of which the
denominator shall be the sum of (A) the number of Common Shares outstanding on
the record date for determining shareholders entitled to receive such rights,
options or warrants plus (B) the number of shares which the aggregate offering
price of the total number of Common Shares so offered would purchase at the
Current Market Value (as defined

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below in Section 3(d)) per share of Common Shares at such record date. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights, options or
warrants.

         (c)      In the event the Company distributes to all holders of its
Common Shares any of the capital stock of any of its subsidiaries (each, a
"Subsidiary"), the St. Paul Option will upon such distribution be deemed to be
an option to purchase the kind and number of shares of the capital stock of the
Subsidiary which St. Paul would have been entitled to receive after such
distribution had the St. Paul Option been exercised immediately prior to such
distribution or any record date with respect thereto. The roll-over of the St.
Paul Option into an option to purchase shares of capital stock of the applicable
Subsidiary pursuant to this Section 3(c) will become effective immediately after
the effective date of the distribution of shares of the capital stock of the
applicable Subsidiary to shareholders of the Company described above.

         (d)      For the purpose of any computation under Section 3(b), the
"Current Market Value" of such Common Shares on a specified date is deemed to be
the average of the daily closing prices per share for the ten consecutive
Trading Days (as defined below) ending on the day before the applicable record
date. "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which the Common Shares are not traded on the applicable
securities exchange or on the applicable securities market. The closing price
for each day is the reported last sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market or, if the Common Shares are
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ National Market, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm reasonably selected from time to time by the Board of Directors of
the Company for that purpose.

         (e)      In the event the Company shall, in any calendar year, by
dividend or otherwise, distribute to all or substantially all holders of its
Common Shares (the "Current Distribution") (i) any dividend or other
distribution of cash, evidences of indebtedness, or any other assets or
properties (other than as described in Sections 3(a)-(c) above) or (ii) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing, with a fair value (as determined in good faith by the Company's Board
of Directors) per Common Share that, when combined with the aggregate amount per
Common Share paid in respect of all other such distributions to all or
substantially all holders of its Common Shares within such calendar year,
exceeds (1) for calendar year 2003, the Initial Dividend (as defined below) or
(2) for any subsequent calendar year, an amount equal to the Initial Dividend
increased at a rate of 10% per annum from January 1, 2003, compounded annually
on December 31 of each year commencing in 2003 (such excess

                                      -5-
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of the Current Distribution being herein referred to as the "Excess Distribution
Amount"), the per share St. Paul Option Price in effect immediately prior to the
close of business on the date fixed for such payment shall be reduced by the
Excess Distribution Amount, such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for such payment.
The "Initial Dividend" means the distributions described in items (i) and (ii)
above paid by the Company to all or substantially all holders of its Common
Shares during the 2003 calendar year as determined by the Company's Board of
Directors, up to a maximum of $0.44 per Common Share.

         (f)      Whenever the number of Common Shares purchasable by St. Paul
upon the exercise of the St. Paul Option is adjusted, as herein provided, the
St. Paul Option Price shall be adjusted by multiplying the St. Paul Option Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of St. Paul Option Shares purchasable upon the exercise of the St.
Paul Option immediately prior to such adjustment, and of which the denominator
shall be the number of St. Paul Option Shares purchasable immediately
thereafter.

         (e)      No adjustment in the number of St. Paul Option Shares
purchasable upon the exercise of the St. Paul Option need be made under Section
3(b) and (c) if the Company issues or distributes, pursuant to this Agreement,
to St. Paul the shares, rights, options, warrants, securities or assets referred
to in those paragraphs which St. Paul would have been entitled to receive had
the St. Paul Option been exercised prior to the happening of such event or the
record date with respect thereto. No adjustment need be made for a change in the
par value of the St. Paul Option Shares.

         (f)      For the purpose of this Section 3, the term "Common Shares"
shall mean (i) the class of stock consisting of the Common Shares of the
Company, or (ii) any other class of stock resulting from successive changes or
reclassification of such shares other than consisting solely of changes in par
value. In the event that at any time, as a result of an adjustment made pursuant
to Section 3 (a) above, St. Paul will become entitled to receive any securities
of the Company other than Common Shares, thereafter the number of such other
securities so receivable upon exercise of the St. Paul Option and the St. Paul
Option Price of such securities will be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the St. Paul Option Shares contained in paragraphs (a) through
(f), inclusive, above; PROVIDED, HOWEVER, that the St. Paul Option Price will at
no time be less than the aggregate par value of the Common Shares or other
securities of the Company obtainable upon exercise of the St. Paul Option.

         (g)      In the case of Section 3(b), upon the expiration of any
rights, options or warrants or if any thereof shall not have been exercised, the
St. Paul Option Price and the number of Common Shares purchasable upon the
exercise of the St. Paul Option shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may be)
as if (A) the only Common Shares so issued were the Common Shares, if any,
actually issued or sold

                                      -6-
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upon the exercise of such rights, options or warrants and (B) such Common
Shares, if any, were issued or sold for the consideration actually received by
the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options or warrants whether or not exercised; PROVIDED, FURTHER, that no
such readjustment may have the effect of increasing St. Paul Option Price or
decreasing the number of Common Shares purchasable upon the exercise of the St.
Paul Option by an amount in excess of the amount of the adjustment initially
made in respect to the issuance, sale or grant or such rights, options or
warrants.

         (h)      In the case of Section 3(b), on any change in the number of
Common Shares deliverable upon exercise of any such rights, options or warrants,
other than a change resulting from the antidilution provisions hereof, the
number of St. Paul Option Shares thereafter purchasable upon the exercise of the
St. Paul Option shall forthwith be readjusted to such number as would have been
obtained had the adjustment made upon the issuance of such rights, options or
warrants not converted prior to such change (or rights, options or warrants
related to such securities not converted prior to such change) been made upon
the basis of such change.

         (i)      The Company may at its option, at any time during the term of
the St. Paul Option, reduce the then current St. Paul Option Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company, including such reductions in the exercise price as the Company
considers to be advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.

4.       The Company undertakes to use commercially reasonable efforts to
increase its authorized share capital prior to the dates upon which the St. Paul
Option shall become exercisable to a level sufficient to satisfy any exercise of
the St. Paul Option.

5.       (a)      For so long as the St. Paul Option is exercisable hereunder,
each party hereto shall (i) use its commercially reasonable efforts to obtain
all authorizations, consents, orders and approvals of all governmental
authorities and officials that may be or become necessary for the performance of
its obligations pursuant to this Agreement and (ii) cooperate reasonably with
the other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals. The parties hereto agree to cooperate reasonably, complete
and file any joint applications for any authorizations from any governmental
authorities reasonably necessary or desirable to effectuate the transactions
contemplated by this Agreement. The parties hereto agree that they will keep
each other apprised of the status of matters relating to the exercise of the St.
Paul Option, including reasonably promptly furnishing the other with copies of
notices or other communications received by the Company or St. Paul, from all
third parties and governmental authorities with respect to the St. Paul Option.

         (b)      For so long as the St. Paul Option is exercisable, the Company
and St. Paul agree to reasonably promptly prepare and file, if necessary, any
filing under the Hart-Scott-Rodino

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Antitrust Improvements Act of 1976, as amended (the "HSR ACT") with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "DOJ") in order to enable St. Paul to exercise such St. Paul Option
pursuant to this Agreement. Each party hereby covenants to cooperate reasonably
with the other such party to the extent reasonably necessary to assist in making
reasonable supplemental presentations to the FTC or the DOJ, and, if requested
by the FTC or the DOJ, to reasonably promptly amend or furnish additional
information thereunder.

         (c)      Any reasonable out-of-pocket costs and expenses arising in
connection with actions taken pursuant to this Section 5 shall be borne by St.
Paul.

6.       (a)      The St. Paul Option and the St. Paul Option Shares may not
be assigned or otherwise transferred, disposed of or encumbered by St. Paul (or
any subsequent transferee) in whole or in part except as provided in this
Section 6.

         (b)      In the event of a merger of St. Paul into another person, or a
sale, transfer or lease to another person of all or substantially all the assets
of St. Paul, the St. Paul Option or the St. Paul Option Shares may be
transferred as part of such transaction to the other party to such transaction.

         (c)      On and after the date which is the second anniversary of the
closing date of the Public Offering, St. Paul may transfer the St. Paul Option
or the St. Paul Option Shares, in whole or in part, in one or more private
transaction(s) to up to three institutional accredited investors; PROVIDED,
HOWEVER, that any proposed transfer is conditioned upon

                  (i)      receipt by the Company of evidence satisfactory to
         it, which may include an opinion of United States counsel that such
         transfer would not require registration under the Securities Act or
         state securities laws and upon the obtainment of any required
         government approvals (which approvals the Company agrees to use
         commercially reasonable efforts to assist in obtaining); and

                  (ii)     the proposed transferee executing and delivering
         instruments reasonably acceptable to the Company acknowledging

                           (A)      that the St. Paul Option and the St. Paul
                  Option Shares have not been registered under the Securities
                  Act and, accordingly, the transferee may not offer, sell,
                  assign, pledge or otherwise transfer the St. Paul Option or
                  any St. Paul Option Shares except pursuant to an effective
                  registration statement under the Securities Act covering such
                  St. Paul Option Shares or pursuant to an available exemption
                  from the registration requirements of the Securities Act and
                  in compliance with all applicable state securities laws;

                           (B)      that the Company is entitled to decline to
                  register any transfer

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                  (as defined in the Company's bye-laws) of St. Paul Option
                  Shares, and any transfer of St. Paul Option and St. Paul
                  Option Shares shall be void, unless (i) such transfer is made
                  pursuant to and in accordance with Rule 144 (PROVIDED that the
                  Company (or its designated agent for such purpose) may request
                  a certificate satisfactory to it of compliance by the
                  transferor with the requirements of Rule 144), (ii) such
                  transfer is made pursuant to another available exemption from
                  the registration requirements of the Securities Act (PROVIDED
                  that, if not already a party hereto, the intended transferee
                  agrees to abide by the provisions of this Section 6(c)(ii),
                  and PROVIDED, FURTHER, that, if the Company requests, the
                  transferor first provides the Company (or such agent) with
                  evidence satisfactory to it, which may include an opinion of
                  U.S. counsel satisfactory to the Company, to the effect that
                  such transfer is made pursuant to another available exemption
                  from the registration requirements of the Securities Act),
                  (iii) such transfer is made pursuant to an effective
                  registration statement under the Securities Act covering the
                  St. Paul Option Shares being transferred, including a
                  registration statement filed pursuant to the Registration
                  Rights Agreement and in all cases pursuant to this clause (B)
                  such transfer is in compliance with all applicable state
                  securities laws (the Company being entitled to waive or modify
                  the foregoing transfer requirements, generally or in any
                  particular case, to the extent that it determines, on advice
                  of U.S. counsel, that compliance with such requirements is not
                  necessary to ensure compliance with the Securities Act or any
                  applicable state securities laws, or such modification is
                  necessary to ensure compliance with the Securities Act or any
                  applicable state securities laws, as the case may be) and (iv)
                  such transferee agrees to be bound by the provisions of this
                  Agreement;

                           (C)      that, except as provided below, no St. Paul
                  Option Share shall be held in book-entry form, and each
                  certificate representing a St. Paul Option Share shall be
                  evidenced by a certificate bearing a restrictive legend (the
                  "Legend") substantially in the form set forth below:

                  THE COMMON SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
                  UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
                  AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE
                  TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION
                  FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
                  COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. SUCH SHARES
                  MAY NOT BE HELD IN BOOK-ENTRY FORM. SUCH SHARES ARE ALSO
                  SUBJECT TO RESTRICTIONS ON TRANSFER (AS DEFINED IN THE
                  BYE-LAWS OF THE COMPANY) SET FORTH IN THE OPTION AGREEMENT,
                  DATED AS OF [SEPTEMBER 27,] 2002, BETWEEN THE ST. PAUL
                  COMPANIES, INC.

                                      -9-
<PAGE>

                  AND PLATINUM UNDERWRITERS HOLDINGS, LTD. (THE "COMPANY"),
                  WHICH MAY REQUIRE, AMONG OTHER THINGS, THE PRIOR RECEIPT BY
                  THE COMPANY FROM THE TRANSFEROR OR THE TRANSFEREE OF EVIDENCE
                  SATISFACTORY TO IT, WHICH MAY INCLUDE AN OPINION OF U.S.
                  COUNSEL OR UNDERTAKINGS TO BE BOUND BY SUCH AGREEMENT. SUCH
                  SHARES ARE ALSO SUBJECT TO RESTRICTIONS IN THE BYE-LAWS OF THE
                  COMPANY, INCLUDING RESTRICTIONS ON TRANSFER AND VOTING
                  INTENDED TO ENSURE THAT NO PERSON BECOMES OR IS DEEMED TO
                  BECOME A 10% SHAREHOLDER OF THE COMPANY (AS EXPLAINED IN SUCH
                  BYE-LAWS).

                           (D)      that the transferee shall become a party to
                  the Registration Rights Agreement, with the attendant rights
                  and obligations thereunder; PROVIDED, FURTHER, that any
                  proposed transfer may be disapproved by the Board of Directors
                  of the Company if, in their reasonable judgment, they have
                  reason to believe that such transfer may expose the Company,
                  any subsidiary thereof, any shareholder or any person ceding
                  insurance to the Company or any such subsidiary to adverse tax
                  or regulatory treatment in any jurisdiction. In connection
                  with or following any transfer of St. Paul Option Shares in
                  accordance with clause (i) or (iii) of Section 6(c)(ii)(B)
                  (except in the case of a transfer of St. Paul Option Shares to
                  an "affiliate" of St. Paul, as such term is defined in the
                  Securities Act, in accordance with clause (i) of Section
                  6(c)(ii)(B)), and upon the surrender of any certificate or
                  certificates representing such St. Paul Option Shares to the
                  Company (or such agent), the Company shall cause to be issued
                  in exchange therefor a new certificate or certificates that
                  represent the same Common Shares and do not bear the Legend
                  (or shall permit such shares to be held in book-entry form).
                  The Company shall use commercially reasonable efforts to cause
                  each St. Paul Option Share transferred as contemplated by
                  clause (i) or (iii) of Section 6(c)(ii)(B) to be duly listed
                  on each securities exchange, and to be accepted for quotation
                  in each interdealer quotation system, on or in which any
                  Common Shares are listed or quoted at the time of such
                  transfer (PROVIDED that the approval for such listing or
                  quotation has been obtained by the Company), in each case so
                  that the St. Paul Option Share so transferred will be freely
                  transferable on each such exchange and in each such system to
                  the same extent as the Common Shares then listed thereon or
                  quoted therein; and

                           (E)      such transferee shall not become a "10%
                  Shareholder" (as defined in Section 6(d) below) immediately
                  after such transfer (assuming for purposes of this
                  determination that the St. Paul Option Shares were actually
                  owned by the transferee); and

                                      -10-
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                  (iii)    such transfer not resulting, directly or indirectly,
         in a transfer to any Specified Person (as defined below) of more than
         9.9% of the Common Shares outstanding at the time of such transfer, or
         the right to acquire pursuant to the St. Paul Option more than 9.9% of
         the Common Shares outstanding at the time of such transfer, except in
         the following circumstances: (A) in connection with any tender offer or
         exchange offer made to all holders of outstanding Common Shares; (B) to
         any Post-Closing Subsidiary of St. Paul (as defined in the Formation
         and Separation Agreement) provided that such subsidiary agrees in
         writing with the Company to the same transfer restrictions as are
         contained in this Section 6(c); or (C) a transfer by operation of law
         upon consummation of a merger or consolidation of St. Paul into another
         Person (as defined in the Formation and Separation Agreement). For
         purposes of this Section 6(c)(iii), "Specified Person" means any Person
         that generates 50% or more of its gross revenue in its most recent
         fiscal year for which financial statements are available by writing
         property or casualty insurance or reinsurance.

         (d)      In connection with any transfer of all or a portion of the St.
Paul Option pursuant to Section 6(c), the Company shall prepare an option
agreement substantially identical to this Agreement (or, in the case of a
partial transfer, option agreements) issuable to the transferee (and transferor,
in the case of partial transfer) upon surrender to the Company of the existing
option agreement upon consummation of the transfer. Upon said consummation, the
transferee shall have such rights and obligations with respect to the number of
St. Paul Option Shares covered by the portion of the St. Paul Option transferred
to such transferee as the rights and obligations of St. Paul hereunder. As used
herein, "10% Shareholder" means a person who owns, in aggregate, (i) directly,
(ii) with respect to persons who are United States persons, by application of
the attribution and constructive ownership rules of Sections 958(a) and 958(b)
of the Code or (iii) beneficially, directly or indirectly, within the meaning of
Section 13(d)(3) of the United States Securities Exchange Act of 1934, issued
shares of the Company carrying 10% or more of the total combined voting rights
attaching to all issued shares.

         (e)      Any transferee of all or part of the St. Paul Option pursuant
to Section 6(c) hereof (or any subsequent transferee who holds any portion of
the St. Paul Option as a result of a transfer pursuant to this Section 6(e)) may
transfer, in whole but not in part, its portion of the St. Paul Option to a
subsequent transferee; PROVIDED that any such transfer shall be subject to the
terms and conditions set forth in Section 6(c) and 6(d) hereof.
7.       The issuance of share certificates upon the exercise of the St. Paul
Option shall be without charge to St. Paul. The Company shall pay, and indemnify
St. Paul from and against, any issuance, stamp, documentary or other taxes
(other than transfer taxes and income taxes), or charges imposed by any
governmental body, agency or official by reason of the exercise of the St. Paul
Option or the resulting issuance of Common Shares.

8.       This Agreement may not be amended except in a written instrument signed
by the Company and St. Paul.

                                      -11-
<PAGE>

9.       All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand (with receipt confirmed), or by certified mail, postage
prepaid and return receipt requested, or by facsimile addressed as follows (or
to such other address as a party may designate by written notice to the others)
and shall be deemed given on the date on which such notice is received:

         If to St. Paul:

         The St. Paul Companies, Inc.
         385 Washington Street
         St. Paul, MN 55102
         Attention:  General Counsel
         Facsimile:  (410) 205-6967

         with a copy to:

         Donald R. Crawshaw
         Sullivan & Cromwell
         125 Broad Street
         New York, New York 10004
         Facsimile:  (212) 558-3588

         If to the Company:

         Platinum Underwriters Holdings, Ltd.
         Clarendon House
         2 Church Street
         Hamilton HM11
         Bermuda
         Attention:  General Counsel
         Facsimile: (441) 292-4720

         with a copy to:
         Linda E. Ransom
         Dewey Ballantine LLP
         1301 Avenue of the Americas
         New York, New York 10019
         Facsimile:  (212) 259-6333

10.      This Agreement and the Formation and Separation Agreement constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.

                                      -12-
<PAGE>

11.      This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

12.      This Agreement may not be assigned by any party hereto, except to a
party to whom St. Paul transfers the St. Paul Option or St. Paul Option Shares
in accordance with Section 6(c), and then only in accordance with that section.

13.      The headings contained in this Agreement are for convenience only and
do not affect the meaning or interpretation of this Agreement.

14.      (a)       This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York (without regard to principles
of conflict of laws).

         (b)      The parties hereto shall promptly submit any dispute, claim,
or controversy arising out of or relating to this Agreement, including effect,
validity, breach, interpretation, performance, or enforcement (collectively, a
"DISPUTE") to binding arbitration in New York, New York at the offices of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") before an arbitrator
(the "ARBITRATOR") in accordance with JAMS' Comprehensive Arbitration Rules and
Procedures and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1 ET SEQ. The
Arbitrator shall be a former judge selected from JAMS' pool of neutrals. The
parties agree that, except as otherwise provided herein respecting temporary or
preliminary injunctive relief, binding arbitration shall be the sole means of
resolving any Dispute. Judgment on any award of the Arbitrators may be entered
by any court of competent jurisdiction.

         (c)      The costs of the arbitration proceeding and any proceeding in
court to confirm or to vacate any arbitration award or to obtain temporary or
preliminary injunctive relief as provided in paragraph (d) below, as applicable
(including, without limitation, actual attorneys' fees and costs), shall be
borne by the unsuccessful party and shall be awarded as part of the Arbitrator's
decision, unless the Arbitrator shall otherwise allocate such costs in such
decision.

         (d)      This Section 14 shall not prevent the parties hereto from
seeking or obtaining temporary or preliminary injunctive relieve in a court for
any breach or threatened breach of any provision hereof pending the hearing
before and determination of the Arbitrator. The parties hereby agree that they
shall continue to perform their obligations under this Agreement pending the
hearing before and determination of the Arbitrator, it being agreed and
understood that the failure to so provide will cause irreparable harm to the
other party hereto and that the putative breaching party has assumed all of the
commercial risks associated with such breach or threatened breach of any
provision hereof by such party.

         (e)      The parties agree that the State and Federal courts in The
City of New York shall

                                      -13-
<PAGE>

have jurisdiction for purposes of enforcement of their agreement to submit
Disputes to arbitration and of any award of the Arbitrator.

15.      Capitalized terms used but not defined in this Agreement have the
meanings specified in the Formation and Separation Agreement.

16.      This Agreement becomes effective contingent upon the consummation of
the Public Offering automatically and with no action on the part of any person.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
and attested by its duly authorized officers and to be dated as of [September
27], 2002.

                                            PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                            By:_____________________________
                                               Name:
                                               Title:

                                            THE ST. PAUL COMPANIES, INC.

                                            By:_____________________________
                                               Name:
                                               Title:

                                     -14-<Page>

                                                                  Exhibit 10.48

                                LETTER AMENDMENT

                                               Dated as of October 4, 2002

To the banks, financial institutions
   and other institutional lenders
   (collectively, the "LENDERS") parties
   to the Credit Agreement referred to
   below and to Citibank, N.A., as agent
   (the "AGENT") for the Lenders

Ladies and Gentlemen:

         We refer to the Credit Agreement dated as of June 21, 2002 (the "CREDIT
AGREEMENT") among the undersigned and you. Capitalized terms not otherwise
defined in this Letter Amendment have the same meanings as specified in the
Credit Agreement.

         It is hereby agreed by you and us that the Credit Agreement is,
effective as of the date of this Letter Amendment, hereby amended as follows:

                     (a)  Section 3.01(i) is amended in full to read as follows:

                     "(i) The Borrower shall have received not less than
           $825,000,000 of proceeds (net of underwriting commissions) from the
           sum of (i) cash raised from the issuance of common shares in the
           Borrower's initial public offering; (ii) cash raised from the private
           placement of common shares to one or more strategic investor(s); and
           (iii) cash contributed by The St. Paul Companies, Inc."

                     (b)  Section 6.01(i) is amended in full to read as follows:

                     "(i) (x) Any Insurance Subsidiary, after having obtained a
           financial strength rating from A.M. Best Company (a "RATING"), shall
           fail to maintain a Rating of A- or better, (y) any of Platinum
           Underwriters Reinsurance, Inc. and Platinum Underwriters Bermuda,
           Ltd. shall not have obtained a Rating within 30 days after the
           Effective Date or (z) Platinum Re (UK) Limited shall not have
           obtained a Rating within 30 days after obtaining a License from the
           Financial Services Authority in the United Kingdom".

         This Letter Amendment shall become effective as of the date first above
written when, and only when, on or before October 4, 2002, the Agent shall have
received counterparts of this Letter Amendment executed by the undersigned and
all of the Lenders or, as to any of the Lenders, advice satisfactory to the
Agent that such Lender has executed this Letter Amendment. This Letter Amendment
is subject to the provisions of Section 8.01 of the Credit Agreement.

         On and after the effectiveness of this Letter Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement, and each reference in the Notes
to "the Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement, as amended by this Letter Amendment.

<Page>

         The Credit Agreement and the Notes, as specifically amended by this
Letter Amendment, are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed. The execution, delivery and
effectiveness of this Letter Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of any Lender or the
Agent under the Credit Agreement, nor constitute a waiver of any provision of
the Credit Agreement.

         If you agree to the terms and provisions hereof, please evidence such
agreement by executing and returning at least two counterparts of this Letter
Amendment to Susan L. Hobart, Shearman & sterling, 599 Lexington Avenue, New
York, New York 10022.

         This Letter Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Letter Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Letter Amendment.

         This Letter Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.

                                    Very truly yours,

                                    PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                    By
                                         ---------------------------------------
                                         Title:

Agreed as of the date first above written:

CITIBANK, N.A.,
      as Agent and as Lender

By
      ---------------------------------------------------
      Title:

JPMORGAN CHASE BANK

<Page>

By
      ---------------------------------------------------
      Title:

BANK OF AMERICA, N.A.

By
      ---------------------------------------------------
      Title:

FLEET NATIONAL BANK

By
      ---------------------------------------------------
      Title:

STATE STREET BANK AND TRUST COMPANY

By
      ---------------------------------------------------
      Title:

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