Underwriting Agency Agreement

UNDERWRITING AGENCY AGREEMENT
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THIS AGREEMENT is made effective December 1,2001 between ALLIED WORLD ASSURANCE COMPANY, Ltd, (hereinafter referred to as the "Company") and IPCRe UNDERWRITING SERVICES LIMITED (hereinafter referred to as the "Underwriting Agent").


WHEREAS,


A. The Company has been incorporated in Bermuda and is licensed under
The Insurance Act 1978 as a Class 4 Insurer; and


B. The Underwriting Agent has been incorporated in Bermuda and is
licensed under The Insurance Act 1978 as an Insurance Agent;


NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:


1. APPOINTMENT


Subject to the terms and conditions of this Agreement, the Underwriting Agent is hereby appointed by the Company to solicit, bind, write and administer the business described in Section 2. hereof. The Underwriting Agent hereby accepts such appointment and agrees to perform faithfully the duties thereof to the best of its professional ability, in accordance with the standard of care of a professional insurance underwriter, and with that degree of knowledge, skill and judgment which is exercised by it with respect to its own business and the business of its parent and insurance and reinsurance affiliates. The word "Agreement" herein shall be understood to include any and all Addenda attached in accordance with the terms and conditions herein specified.


2. AUTHORITY OF THE UNDERWRITING AGENT


Subject to compliance with the Underwriting Guidelines (as defined in Section 2.2) and the IPCRe Co-Insurance Limitations (as defined in Section 2.3), the Underwriting Agent shall have the power to bind the Company on the Subject Business described in Section 2.1 and, except as expressly limited elsewhere herein, the Underwriting Agent shall have the authority to do, outside of the United States of America (which, for purposes of this Agreement, shall mean the 50 states and the District of Columbia), all things reasonably necessary in the conduct of such business in order to fulfill its obligations under this Agreement.


2.1 The business to be underwritten on behalf of the Company shall be
limited to property catastrophe treaty reinsurance pertaining to
losses wheresoever arising (the "Subject Business").


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2.2 The Underwriting Agent may not bind the Company to any Subject
Business unless such Subject Business complies with each of the
following guidelines (the "Underwriting Guidelines"):


A. The annual original premium written (excluding reinstatement
premium) for Subject Business ceded to the Company pursuant to
reinsurance treaties entered into by the Underwriting Agent on
behalf of the Company shall not exceed $60 million, in the
aggregate, without the prior consent of an executive officer of the
Company;


B. The types of risks that may be included in the Subject Business
assumed by the Company pursuant to reinsurance treaties entered into
by the Underwriting Agent on behalf of the Company are limited to
property catastrophe treaty reinsurance, and specifically excludes
inward retrocessions and per-risk business;


C. The maximum limit of liability under reinsurance treaties entered
into by the Underwriting Agent on behalf of the Company will be
$12.5 million per program, it being understood that where multiple
programs are written for a single client group of companies, the
limit shall be applied separately to each separate segment of risk,
based on geographic zone or line of business,provided that applying
such separate limits will not result in any significant correlation
leading to additional accumulation of risks related to any such
client group, and provided further that in no event shall the
aggregate risk limit associated with any individual geographic zone
(which zones are described in Addendum A to this agreement) in which
Subject Business risks are located exceed $200 million per zone (the
"Zonal Limit");


D. The reinsurance treaties entered into by the Underwriting Agent
on behalf of the Company must contain customary exclusions no less
favorable to the Company than the exclusions contained in similar
treaties underwritten on behalf of IPCRe Limited;


E. The risks assumed by the Company pursuant to reinsurance treaties
entered into by the Underwriting Agent on behalf of the Company may
be located wheresoever arising, subject to no territorial limits
(other than the Zonal Limits); and


F. The maximum treaty period for any reinsurance treaty entered into
by the Underwriting Agent on behalf of the Company is 3 years, and
any treaty that is proposed to be entered into for a longer period
must be approved by an executive officer of the Company.


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2.3 The Underwriting Agent shall authorize treaty participations to
brokers and other producers of Subject Business only:


A. On the condition that IPCRe Limited will assume at least an equal
amount of the identical risk on any treaty as will the Company, and
subject to contractual terms (including rates, limits, net retention
provisions, and other contractual terms) that are no more favorable
to IPCRe Limited than those applicable to the Company, it being
understood that (i) if the broker or producer refuses, despite the
Underwriting Agent's reasonable best efforts, to accept such
authorization, the Underwriting Agent shall nevertheless be free to
accept the Subject Business on behalf of the Company so long as the
terms on which it is accepted otherwise comply with the terms of
this Agreement and (ii) where IPCRe Limited, for itself, is
precluded from entering into a given treaty because of geographic or
other limitations that would not preclude the Company from entering
into such treaty, the Underwriting Agent may bind the Company to
such treaty; and


B. To the extent that any such treaty would reflect the best efforts
of the Underwriting Agent to achieve consistent proportionality, on
a per treaty basis, between the overall composition of the property
catastrophe treaty reinsurance businesses of the Company and of
IPCRe Limited.


Clauses A. and B. above are referred to as the "IPCRe Co-Insurance
Limitations".


2.4 Except as provided in Section 2.3A., the net retention of IPCRe in
respect of any Subject Business to which the Company is bound
pursuant to a treaty entered into by the Underwriting Agent in
accordance with this Agreement shall at all times equal or exceed
the net retention of the Company.


3. LIMITATIONS OF AUTHORITY


The Underwriting Agent shall have no power or authority other than as granted and set forth herein and no other or greater power shall be implied from the grant or denial of powers specifically mentioned herein.


3.1 In addition to the other limitations expressly contained in this
Agreement, the Underwriting Agent has no authority to:


A. make, accept or endorse notes or otherwise incur any liability
which is not incurred in the ordinary course of business of the
Underwriting Agent on behalf of the Company pursuant to the terms
and conditions of this Agreement;


B. issue a guaranty, other than as permitted expressly in writing by
the Company; or


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C. hold itself out as an agent of the Company in any other manner,
or for any other purposes, than as specifically prescribed in this
Agreement.


3.2 The Underwriting Agent shall use no advertising material,
prospectus, proposal, or representation, either in general or in
relation to a particular product of the Company, unless furnished
by the Company for that purpose.


3.3 The Underwriting Agent shall have no authority to appoint sub-agents
for the Company without prior written approval of the Company,
except that the Underwriting Agent may employ American International
Company Limited at its own expense to assist it in the performance
of any ancillary duties under this Agreement.


3.4 The Underwriting Agent shall have no authority to produce and bind
Subject Business for the Company to the extent that doing so would
result in the Company's having any "related person insurance income"
or "RPII" (as defined in Section 953(c)(2) of the United States
Internal Revenue Code of 1986, as amended (the "Code")). In order to
effectuate the foregoing, the Underwriting Agent, in its capacity as
agent for the Company, will: (A) not write reinsurance for insurers
that are "United States shareholders" (as defined in Section 953(c)
of the Code; (B) in a case where the person or persons insured under
insurance policies that are to be reinsured cannot be identified,
reinsure risks affecting large populations in order to minimize the
portion of the Company's reinsurance premiums that are attributable
(directly or indirectly) to the risks of any particular person that
may be a United States shareholder or persons related to such
shareholder (within the meaning of Section 953(c) of the Code); and
(C), except with the express written consent of the Company (which
consent shall be granted or withheld in the Company's sole and
absolute discretion), not write any reinsurance policy if the
Underwriting Agent knows, or has reason to know, that such policy
may (directly or indirectly) reinsure risks of a United States
shareholder or persons related to such shareholder (within the
meaning of Section 953(c) of the Code). If, and to the extent that,
any reinsurance treaty to which the Underwriting Agent has bound the
Company would otherwise result in the Company's having any RPII, the
Underwriting Agent, on behalf of IPCRe Limited, hereby accepts
retrocession of the reinsured risk to the extent that the ri ...