Document:

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                                                                 EXHIBIT 10.22

                                                                  EXECUTION COPY

                                OPTION AGREEMENT

NONE OF THE OPTION (AS DEFINED BELOW) AND THE COMMON SHARES DELIVERABLE UPON
EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933. NEITHER THE 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 AND EXCEPT TO THE EXTENT
PERMITTED HEREIN. TRANSFER (AS DEFINED IN THE COMPANY'S BYE-LAWS) OF THE 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 OPTION ARE SUBJECT
TO SUBSTANTIAL RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 6 OF THIS OPTION
AGREEMENT.

      This OPTION AGREEMENT is made this 1st day of November, 2002 among (i)
PLATINUM UNDERWRITERS HOLDINGS, LTD., a company organized under the laws of the
Islands of Bermuda (the "Company"), (ii) ST. PAUL REINSURANCE COMPANY LIMITED
(the "Optionee"), a company organized under the laws of England and Wales and a
wholly owned subsidiary of THE ST. PAUL COMPANIES, INC., a company incorporated
under the laws of the State of Minnesota in the United States of America ("St.
Paul") and (iii) 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 October 28, 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 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

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nominees, (i) a number of Common Shares determined as set forth in the Formation
and Separation Agreement and (ii) the 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 the Optionee an option (the "Option") to purchase for
cash up to 894,260 Common Shares (the "Option Shares") following the completion
of the Public Offering.

      (b) The Option is exercisable, at an exercise price per Common Share equal
to 120 percent of the initial public offering price per Common Share (the
"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"). The 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
Option, St. Paul shall, if necessary, dispose (or cause the Optionee to dispose,
as applicable) of such number of Common Shares so that, immediately after any
exercise of Option, St. Paul will not be a "United States 25% Shareholder".

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

      (f) Neither the Optionee nor St. Paul is, 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 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

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Option shall entitle the Optionee to receive all Transaction Consideration that
the Optionee would have been entitled to if it had exercised the 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 the Optionee of the Option Price as in effect immediately prior to
such time. In determining the kind and amount of Transaction Consideration that
the Optionee would be entitled to receive in respect of any Transaction pursuant
to this Section 1(g), the Optionee 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 the Optionee 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), the Optionee shall be entitled to exercise the 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 Option in accordance with Section 1(b) hereof, St. Paul,
on behalf of the Optionee, as the case may be, shall provide written notice to
the Company of its intention to exercise all or a portion of the Option at least
ten (10) Business Days prior to the intended Exercise Date (such notice must
indicate the number of Option Shares the Optionee intends to purchase upon
exercise of the Option and must be in writing signed by or on behalf of the
Optionee and delivered or sent to the Company in accordance with Section 9
hereof).

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

      (c) Concurrently with the issuance of the Option Shares pursuant to
Section 2(b) above, the Optionee shall pay the 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 Option
Price being an amount in U.S. dollars equal to the product of (i) the number of
Option Shares to be purchased pursuant to any exercise of the Option and (ii)
the Option Price.

      (d) Notwithstanding anything to the contrary in this Agreement, the 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:

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            (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 Option shall be
proportionately adjusted so that the Optionee 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 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 Option Shares that the Optionee may purchase thereafter upon the
exercise of the Option will be determined by multiplying the number of Option
Shares theretofore purchasable upon exercise of the 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
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 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 the Optionee would have been entitled to receive after such distribution
had the Option been exercised immediately prior to such distribution or any
record date with respect thereto. The roll-over of the Option into an option to
purchase shares of capital stock of the applicable Subsidiary pursuant to this
Section 3(c) will become effective

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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 of the Current Distribution being herein referred to as the
"Excess Distribution Amount"), the per share 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 per Common
Share 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 the Optionee upon
the exercise of the Option is adjusted, as herein provided, the Option Price
shall be adjusted by multiplying the Option Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Option
Shares purchasable upon the exercise of the Option immediately prior to such
adjustment, and of which the denominator shall be the number of Option Shares
purchasable immediately thereafter.

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      (g) No adjustment in the number of Option Shares purchasable upon the
exercise of the Option need be made under Section 3(b) and (c) if the Company
issues or distributes, pursuant to this Agreement, to the Optionee the shares,
rights, options, warrants, securities or assets referred to in those paragraphs
which the Optionee would have been entitled to receive had the 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 Option
Shares.

      (h) 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, the Optionee 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 Option and the 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
Option Shares contained in paragraphs (a) through (f), inclusive, above;
provided, however, that the 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 Option.

      (i) 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 Option
Price and the number of Common Shares purchasable upon the exercise of the
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 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 Option Price or decreasing the number of
Common Shares purchasable upon the exercise of the 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.

      (j) 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
Option Shares thereafter purchasable upon the exercise of the 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.

      (k) The Company may at its option, at any time during the term of the
Option, reduce the then current 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

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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 Option shall become
exercisable to a level sufficient to satisfy any exercise of the Option.

5. (a) For so long as the 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 Option, including
reasonably promptly furnishing the other with copies of notices or other
communications received by the Company or from all third parties and
governmental authorities with respect to the Option.

      (b) For so long as the Option is exercisable, the Company and St. Paul
agree to reasonably promptly prepare and file, if necessary, any filing under
the Hart-Scott-Rodino 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 the Optionee to
exercise such 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 Option and the Option Shares may not be assigned or otherwise
transferred, disposed of or encumbered by the Optionee (or any subsequent
transferee) in whole or in part except as provided in this Section 6.
Notwithstanding anything to the contrary in this Agreement, the Optionee may, at
any time, assign or otherwise transfer, dispose or encumber the Option or the
Option Shares in whole or in part to St. Paul or any direct or indirect wholly
owned subsidiary thereof, provided that such transferee shall enter into an
option agreement with the Company that is substantially identical to this
Agreement.

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

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      (c) On and after the date which is the second anniversary of the closing
date of the Public Offering, the Optionee may transfer the Option or the 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 Option and the Option Shares have not been
            registered under the Securities Act and, accordingly, the transferee
            may not offer, sell, assign, pledge or otherwise transfer the Option
            or any Option Shares except pursuant to an effective registration
            statement under the Securities Act covering such 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 (as defined in the Company's bye-laws) of Option Shares,
            and any transfer of the Option and 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 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;

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                  (C) that, except as provided below, no Option Share shall be
            held in book-entry form, and each certificate representing a 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 AGREEMENTS, EACH
            DATED AS OF NOVEMBER 1, 2002, AMONG THE ST. PAUL COMPANIES, INC.,
            CERTAIN WHOLLY OWNED SUBSIDIARIES THEREOF 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
            AGREEMENTS. 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 Option
            Shares in accordance with clause (i) or (iii) of Section 6(c)(ii)(B)
            (except in the case of a transfer of Option Shares to an "affiliate"
            of the Company, 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
            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

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            Company shall use commercially reasonable efforts to cause each
            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 Option Shares 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 Option Shares
            were actually owned by the transferee); and

            (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 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 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
Option Shares covered by the portion of the Option transferred to such
transferee as the rights and obligations of the Optionee 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 Option pursuant to Section 6(c)
hereof (or any subsequent transferee who holds any portion of the 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 Option to a subsequent

                                      -10-
<PAGE>

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 Option shall be
without charge to the Optionee. The Company shall pay, and indemnify the
Optionee 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 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 the Optionee.

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 the Optionee:

        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

                                      -11-
<PAGE>

        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.

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. St. Paul shall, in its capacity as the parent company of the Optionee, cause
the Optionee to comply with the provisions of this Agreement.

13. This Agreement may not be assigned by any party hereto, except to a party to
whom the Optionee transfers the Option or Option Shares in accordance with
Section 6, and then only in accordance with that section.

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

15.   (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),

                                      -12-
<PAGE>

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 15 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 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.

                                      -13-
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
its duly authorized officers and to be dated as of the date first above written.

                                       PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                       By: /s/ Jerome T. Fadden
                                          --------------------------------------
                                          Name:  Jerome T. Fadden
                                          Title: President and CEO

                                       THE ST. PAUL COMPANIES, INC.

                                       By: /s/ Thomas A. Bradley
                                          --------------------------------------
                                          Name:  Thomas A. Bradley
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                                       ST. PAUL REINSURANCE COMPANY LIMITED

                                       By: /s/ Thomas J. Mahoney
                                          --------------------------------------
                                          Name:  Thomas J. Mahoney
                                          Title: Managing Director<PAGE>

                                                                  EXHIBIT 10.23

                                                                  Execution Copy

                                OPTION AGREEMENT

NONE OF THE OPTION (AS DEFINED BELOW) AND THE COMMON SHARES DELIVERABLE UPON
EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933. NEITHER THE 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 AND EXCEPT TO THE EXTENT
PERMITTED HEREIN. TRANSFER (AS DEFINED IN THE COMPANY'S BYE-LAWS) OF THE 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 OPTION ARE SUBJECT
TO SUBSTANTIAL RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 6 OF THIS OPTION
AGREEMENT.

         This OPTION AGREEMENT is made as of the first day of November, 2002
between (i) PLATINUM UNDERWRITERS HOLDINGS, LTD., a company organized under the
laws of the Islands of Bermuda (the "Company") and (ii) THE ST. PAUL COMPANIES,
INC., a company incorporated under the laws of the State of Minnesota ("St.
Paul").

                                R E C I T A L S:

         WHEREAS, the Company has conducted 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 October 28, 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;

         WHEREAS, pursuant to the Formation and Separation Agreement, the
Company has, among other things, issued the Option, as defined below,
exercisable under the circumstances specified in this Agreement, to St. Paul
Fire and Marine Insurance Company ("Fire and Marine"), a company incorporated
under the laws of the State of Minnesota and a wholly owned subsidiary

<PAGE>

of St. Paul pursuant to an Option Agreement, dated as of November 1, 2002 (the
"Fire and Marine Option Agreement"), among the Company, St. Paul and Fire and
Marine, and

         WHEREAS, immediately upon completion of the Public Offering, Fire and
Marine has transferred the option granted to it under the Fire and Marine Option
Agreement to St. Paul pursuant to an Option Purchase and Sale Agreement, dated
as of November 1, 2002 (the "Purchase 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 hereby acknowledges the transfer of the Option by
Fire and Marine to St. Paul pursuant to the Purchase Agreement and acknowledges
and agrees that St. Paul has an option (the "Option") to purchase for cash up to
5,105,740 Common Shares (the "Option Shares") in accordance with the terms and
conditions of this Agreement.

         (b)      The Option is exercisable, at an exercise price per Common
Share of $27 (the "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"). The 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 Option, St. Paul shall, if necessary, dispose of such number
of Common Shares so that, immediately after any exercise of Option, St. Paul
will not be a "United States 25% Shareholder".

         (e)      Option Shares upon issue will rank equally in all respects
with the other Common Shares of the Company, but in no case will any 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 Company, or any sale of all or substantially all
the assets of the Company to any third party that is not a

                                       -2-

<PAGE>

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 Option shall entitle
St. Paul to receive all Transaction Consideration that St. Paul would have been
entitled to if it had exercised the Option in full immediately prior to the
Transaction (to the extent it remains unexercised and without regard to the
limitations in Section l(d) hereof), in each case upon payment by St. Paul of
the 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 l(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 l(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 l(g). Notwithstanding the foregoing, if an adjustment
is made pursuant to this Section l(g) in respect of a Transaction that involves
a Change of Control (as defined below), St. Paul shall be entitled to exercise
the Option pursuant to this Section l(g) without regard to Section l(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 Option in accordance with Section l(b) hereof,
St. Paul shall provide written notice to the Company of its intention to
exercise all or a portion of the Option at least ten (10) Business Days prior to
the intended Exercise Date (such notice must indicate the number of Option
Shares St. Paul intends to purchase upon exercise of the 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 Option Shares upon exercise
of the Option and payment of the total price payable therefor.

         (c)      Concurrently with the issuance of the Option Shares pursuant
to Section 2(b) above, St. Paul shall pay the 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 Option
Price being an amount in U.S. dollars equal to the product of (i) the number of
Option Shares to be purchased pursuant to any exercise of the Option and (ii)
the Option Price.

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

                                      -3-

<PAGE>

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 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 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 Option Shares that St. Paul may purchase thereafter upon the
exercise of the Option will be determined by multiplying the number of Option
Shares theretofore purchasable upon exercise of the 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
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 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

                                      -4-

<PAGE>

had the Option been exercised immediately prior to such distribution or any
record date with respect thereto. The roll-over of the 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 of the Current
Distribution being herein referred to as the "Excess Distribution Amount"), the
per share 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 per Common Share 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 Option is adjusted, as herein provided, the Option
Price shall be adjusted by multiplying the Option Price immediately prior to
such adjustment by a fraction, of which the

                                      -5-

<PAGE>

numerator shall be the number of Option Shares purchasable upon the exercise of
the Option immediately prior to such adjustment, and of which the denominator
shall be the number of Option Shares purchasable immediately thereafter.

         (g)      No adjustment in the number of Option Shares purchasable upon
the exercise of the 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 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
Option Shares.

         (h)      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 Option and the 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 Option Shares contained in paragraphs (a) through (f), inclusive, above;
provided, however, that the 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 Option.

         (i)      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
Option Price and the number of Common Shares purchasable upon the exercise of
the 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
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 Option Price or decreasing
the number of Common Shares purchasable upon the exercise of the 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.

         (j)      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 Option Shares thereafter purchasable upon the exercise of the 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.

                                       -6-

<PAGE>

         (k)      The Company may at its option, at any time during the term of
the Option, reduce the then current 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 Option
shall become exercisable to a level sufficient to satisfy any exercise of the
Option.

5.       (a)      For so long as the 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
Option, including reasonably promptly furnishing the other with copies of
notices or other communications received by the Company or from all third
parties and governmental authorities with respect to the Option.

         (b)      For so long as the Option is exercisable, the Company and St.
Paul agree to reasonably promptly prepare and file, if necessary, any filing
under the Hart-Scott-Rodino 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 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 Option and the 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.
Notwithstanding anything to the contrary in this Agreement, St. Paul may, at any
time, assign or otherwise transfer, dispose or encumber the Option or the Option
Shares in whole or in part to any direct or indirect wholly owned subsidiary of
St. Paul, provided that such transferee shall enter into an option agreement
with the Company that is substantially identical to this Agreement.

         (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 Option or the Option Shares may be transferred as part of such
transaction to the other party to such transaction.

                                       -7-

<PAGE>

         (c)      On and after the date which is the second anniversary of the
closing date of the Public Offering, St. Paul may transfer the Option or the
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 Option and the Option Shares have
                  not been registered under the Securities Act and, accordingly,
                  the transferee may not offer, sell, assign, pledge or
                  otherwise transfer the Option or any Option Shares except
                  pursuant to an effective registration statement under the
                  Securities Act covering such 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 (as defined in the Company's bye-laws)
                  of Option Shares, and any transfer of the Option and 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
                  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,

                                       -8-

<PAGE>

                  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 Option
                  Share shall be held in book-entry form, and each certificate
                  representing a 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 AGREEMENTS,
                  EACH DATED AS OF _______, 2002, AMONG THE ST. PAUL COMPANIES,
                  INC., CERTAIN WHOLLY OWNED SUBSIDIARIES THEREOF 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 AGREEMENTS. 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 Option Shares in accordance
                  with clause (i) or (iii) of Section 6(c)(ii)(B) (except in the
                  case of a transfer of Option Shares to an "affiliate" of the
                  Company, 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

                                       -9-

<PAGE>

                  certificate or certificates representing such 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 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 Option Shares 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 Option Shares were actually owned by
                  the transferee); and

                  (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 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
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
Option Shares covered by the portion of the 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.

                                      -10-

<PAGE>

         (e)      Any transferee of all or part of the Option pursuant to
Section 6(c) hereof (or any subsequent transferee who holds any portion of the
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 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 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 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.

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

                                      -11-

<PAGE>

         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.

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.      The parties hereby agree that the Fire and Marine Option Agreement
shall be of no further force or effect.

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

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

15.      (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

                                      -12-

<PAGE>

Arbitration Act, 9 U.S.C. Sections 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 15 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 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.

                                      -13-

<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by its
duly authorized officers and to be dated as of the date first above written.

                                       PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                       By /s/ William A. Robbie
                                          --------------------------------------
                                          Name:  William A. Robbie
                                          Title: EVP, Chief Financial Officer

                                       THE ST. PAUL COMPANIES, INC.

                                       By: ____________________________________
                                          Name:
                                          Title:

Acknowledge and agreed as to Section 12
of this Agreement only:

ST. PAUL FIRE AND MARINE INSURANCE COMPANY

By: ____________________________________
    Name:
    Title:

<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by its
duly authorized officers and to be dated as of the date first above written.

                                       PLATINUM UNDERWRITERS HOLDINGS, LTD.

                                       By: ____________________________________
                                           Name:
                                           Title:

                                       THE ST. PAUL COMPANIES, INC.

                                       By: /s/ Thomas A. Bradley
                                           -------------------------------------
                                           Name:  Thomas A. Bradley
                                           Title: Executive Vice President and
                                                  Chief Financial Officer

Acknowledged and agreed as to Section 12
of this Agreement only:

ST. PAUL FIRE AND MARINE INSURANCE COMPANY

By: /s/ Thomas A. Bradley
    -------------------------------------
    Name:  Thomas A. Bradley
    Title: Executive Vice President and
           Chief Financial Officer

                                      -14-

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