4.17                     No Section 32 Direction

The Obligor has not received any direction or other notification from the Bermuda Monetary Authority pursuant to Section 32 of the Insurance Act, 1978 of Bermuda.

4.18                     Investment Company Act

Neither the Parent nor the Obligor is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

4.19                     Repeating Representations

Each of the Repeating Representations will be correct and complied with in all material respects on each Issue Date and each date that a Letter of Credit is renewed, reissued and extended as if repeated then by reference to the then existing circumstances.

5.                                 COVENANTS

5.1                           Affirmative Covenants

The Obligor for itself covenants and agrees that so long as any Letter of Credit is outstanding:

5.1.1                            Maintenance of Corporate Existence:  The Obligor shall maintain its corporate existence.

5.1.2                            Reporting Requirements:  The Obligor shall furnish to the Agent (with sufficient copies for each Lender):

(a)                     Annual GAAP Financial Statements:  Within 90 days following the end of the Parent’s fiscal year (or, if a registered company, such earlier date as the Parent’s Form 10-K is filed with the SEC) copies of:

(i)                       the consolidated and consolidating balance sheet of the Parent and its Subsidiaries as at the close of such fiscal year, and

(ii)                    the consolidated and consolidating statements of income, changes in shareholders’ equity and cash flows of the Parent and its Subsidiaries for such fiscal year,

in each case setting forth in comparative form the consolidated figures for the preceding fiscal year and prepared in accordance with GAAP, all in reasonable detail and accompanied by an opinion thereon of PricewaterhouseCoopers LLP or other firm of independent public accountants of recognized national standing selected by the Parent and reasonably acceptable to the Agent, to the effect that the financial statements

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have been prepared in accordance with GAAP (except for changes in application in which such accountants concur) and present fairly in all material respects in accordance with GAAP the financial condition of the Parent and its Subsidiaries as of the end of such fiscal year and the consolidated results of operations and cash flows of the Parent and its Subsidiaries for the fiscal year then ended and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards applied on a basis consistent with other prior years (except as otherwise specified in such report; provided that any exceptions or qualifications thereto must be acceptable to the Majority Lenders) and, accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary under the circumstances.

(b)                    Quarterly GAAP Financial Statements:  As soon as available, and in any event within 60 days after the end of each quarterly fiscal period of the Parent (other than the fourth fiscal quarter of any fiscal year), copies of:

(i)                       the consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal quarter, and

(ii)                    the related consolidated statements of income, changes in shareholders’ equity and cash flows of the Parent and its Subsidiaries for such fiscal quarter and the portion of such fiscal year ended with such fiscal quarter,

in each case setting forth in comparative form the figures for the preceding fiscal year and prepared in accordance with GAAP, all in reasonable detail and certified as presenting fairly in accordance with GAAP applied on a basis consistent with other prior years (except as otherwise specified in such report; provided that any exceptions or qualifications thereto must be acceptable to the Majority Lenders) the financial condition of the Parent as of the end of such period and the results of operations for such period by a senior officer of the Parent, subject only to normal year-end accruals and audit adjustments and the absence of footnotes.

(c)                     Annual/Quarterly Reports:  Concurrently with the delivery of the financial statements required pursuant to paragraphs (a), (b), (f) and (g) of this Clause, copies of all reports required to be filed with any Applicable Insurance Regulatory Authority in connection with the filing of such financial statements.

(d)                    Management Letters:  Subject to the consent of the independent certified public accountant in connection with an examination of the financial

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                                   statements of the Parent or the Obligor, promptly upon receipt thereof, copies of any reports or management letters relating to the internal financial controls and procedures delivered to the Parent and the Obligor by any independent certified public accountant in connection with an examination of the financial statements of the Parent or the Obligor, as applicable.

(e)                     Additional Information:  Such additional information as the Agent may reasonably request concerning the Parent or the Obligor and for that purpose all pertinent books and other documents relating to its business, affairs and Properties, including Investments as shall from time to time be designated by the Agent.

(f)                       Annual Obligor Financial Statements:  As soon as available, and in any event within 90 days after the close of each fiscal year of the Obligor, the summary consolidated balance sheet of the Obligor and its Subsidiaries as at the end of such fiscal year and the related summary consolidated statement of income of the Obligor and its Subsidiaries for such fiscal year, setting forth in comparative form the consolidated figures for the fiscal year, all in form and scope consistent in all material respects with the financial statements of the Obligor previously delivered and certified by the chief financial officer or controller of the Obligor, which certificate shall state that such consolidated financial statements present fairly in all material respects the consolidated financial position of the Obligor and its Subsidiaries as at the dates indicated (subject to normal year-end audit adjustments and the absence of full footnote disclosure).  As soon as available and in any event within 90 days after the close of each fiscal year or such later date as may be required by the Bermuda Companies Law, the SAP Financial Statements for the Obligor for such fiscal year.

(g)                    Quarterly Obligor Statements:  As soon as available, and in any event within 60 days after the close of each of the first three quarterly accounting periods in each fiscal year of the Obligor, a summary consolidated balance sheet of the Obligor and its Subsidiaries as at the end of such period and the related summary consolidated statement of income of the Obligor and its Subsidiaries for such period and (in the case of the second and third quarterly periods) for the period from the beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the consolidated figures for the corresponding periods of the previous fiscal year, all in form and scope consistent in all material respects with the financial statements of the Obligor previously provided and certified by the chief financial officer or controller of the Obligor, as presenting fairly in all material respects, on a basis consistent with such prior fiscal periods, the information contained therein, subject to changes

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                                   resulting from normal year-end audit adjustments and the absence of full footnote disclosure.

(h)                    Custodial Account Certificate:  The Obligor shall furnish to the Agent a Custodial Account Certificate substantially in the form of Exhibit D hereto (i) no later than the tenth Business Day of each month, (ii) upon the occurrence of a Default or an Event of Default, and (iii) at any time and from time to time upon the request of the Agent.

(i)                        Compliance Certificate: The Obligor shall supply to the Agent, with each set of financial statements delivered pursuant to paragraphs (a), (b) (f) and (g) of this clause, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with sub-clauses 6.1.2 and 6.1.3 of Clause 6 (Events of Default Defined) as at the date as at which those financial statements were drawn up.  Each Compliance Certificate shall be signed by the chief financial officer or controller of the Obligor.

(j)                        Notification of Default:  The Obligor shall notify the Agent of the occurrence of any Default (and of any action taken or proposed to be taken to remedy it) or Event of Default promptly after becoming aware of it.

(k)                     Material Litigation:  The Obligor shall notify the Agent of any litigation proceedings current, or to its knowledge pending or threatened, in writing which are likely to have a Material Adverse Effect.

(l)                        Insurance Reports and Filings:

(i)                       Promptly following the delivery or receipt, as the case may be, by the Obligor, copies of (a) each material registration, filing or submission made by or on behalf of the Obligor with any Applicable Insurance Regulatory Authority, except for policy form or rate filings, (b) each material examination and/or audit report submitted to the Obligor by any Applicable Insurance Regulatory Authority, (c) all material information which the Lenders may from time to time request with respect to the nature or status of any material deficiencies or violations reflected in any examination report or other similar report, and (d) each material report, order, direction, instruction, approval, authorization, license or other notice which the Obligor may at any time receive from any Applicable Insurance Regulatory Authority.  For the purpose of this clause (ii) only, determinations of “material” shall be made by the Obligor in good faith.

(ii)                    As soon as available and in any event within 120 days after the end of each fiscal year of the Parent, a report by an independent actuarial consulting firm of recognized national standing reviewing the

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                                  adequacy of loss and loss adjustment expense reserves as at the end of the last fiscal year of the Parent and its Subsidiaries on a consolidated basis, determined in accordance with SAP and stating that the Parent has maintained adequate reserves, it being agreed that in each case such independent firm will be provided access to or copies of all relevant valuations relating to the insurance business of the Parent in the possession of or available to the Parent and that the furnishing by the Obligor of such report shall be subject to the consent of such independent firm.

(iii)                 Promptly following notification thereof from a governmental authority, notification of the suspension, limitation, termination or non-renewal of, or the taking of any other material adverse action in respect of, any Insurance License.

(m)                  Section 32 Direction:  Promptly following receipt thereof by the Obligor, notice of any direction or other notification by the Obligor from the Bermuda Monetary Authority pursuant to Section 32 of the Insurance Act, 1978 of Bermuda.

(n)                    Know Your Customer:  Promptly upon the reasonable request of the Agent (for itself or on behalf of any Lender), supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent  in order for the Agent or a Lender to carry out and be satisfied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Fundamental Documents.

(o)                    Delivery of Information:  The Obligor and each Lender hereby acknowledges and agrees that the Agent and/or the Obligor may make available to the Lenders material and/or information provided by or on behalf of the Obligor under this Agreement or any other Fundamental Document by posting such materials and/or information on IntraLinks or another similar electronic system reasonably acceptable to the Agent and the Obligor (it being understood and agreed that the posting of such materials and/or information on IntraLinks or another similar electronic system shall not be deemed a violation of Clause 9.11 (Confidentiality) of this Agreement.

5.1.3                            Minimum Rating:  The Obligor shall at all times maintains a minimum AM Best Financial Strength Rating of B++.

5.1.4                            Maintenance of Adjusted Collateral Value:  The Obligor shall at all times maintain Collateral in the Custodial Account maintained in its name in an amount

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                                                    such that the Adjusted Collateral Value (determined on a daily basis) is not less than the sum of all amounts then outstanding with respect to the sum of the Letter of Credit Obligations and Reimbursement Obligations, taking into account the calculations set forth in this sub-clause 5.1.4 (Maintenance of Adjusted Collateral Value) which provide for Adjusted Collateral Value and issuance of Letter(s) of Credit in pounds sterling, euros or U.S. Dollars as applicable.  If the Obligor requests that the Agent issue on behalf of the Lenders Letter(s) of Credit in a currency other than U.S. Dollars, the Obligor shall deposit Collateral in the Custodial Account the Adjusted Collateral Value of which, in the same currency as the Letter of Credit requested, shall be the equivalent of the face amount of the requested non-U.S. Dollar Letter(s) of Credit.  If, at any time, the Obligor requests a Letter of Credit and deposits into the Custodial Account Investments which are not the same currency as the requested Letter of Credit, the Obligor must maintain an Adjusted Collateral Value of not less than 110% of the Dollar Equivalent of the face amount of such requested Letter of Credit.  The Obligor agrees that if the required Adjusted Collateral Value of the Collateral in the Custodial Account is less than the sum of the Letter of Credit Obligations and the Reimbursement Obligations, the Obligor shall immediately, and in no event no later than 5:00 p.m. (New York time) on the Business Day immediately following the date of notice by any Finance Party, pay to the Custodian the amount of any such deficiency, which payment shall be deposited by the Custodian into the applicable Custodial Account in the form of cash or Investments.  At any time, other than after the occurrence and during the continuation of a Default or an Event of Default, the Obligor may substitute Collateral to the extent such substitution arises from normal trade activities within the Custodial Account in accordance with the provisions of Clause 1 of the Security Agreement between the Obligor and the Security Agent.

5.1.5                            ERISA:  The Obligor shall not:

(a)                     allow, or permit any of its ERISA Affiliates which are Subsidiaries of the Obligor to allow (i) any Single Employer Plan with respect to which the Obligor or its ERISA Affiliates which are Subsidiaries of the Obligor may have any liability to terminate, (ii) the Obligor or any of its ERISA Affiliates which are Subsidiaries of the Obligor to withdraw from any Single Employer Plan and, if applicable, a Multiemployer Plan, or (iii) any Accumulated Funding Deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, to exist involving any of its Single Employer Plans, to the extent that any of the events described in (i), (ii) or (iii), singly or in the aggregate, could have a Material Adverse Effect; or

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(b)                    fail, or permit any of its ERISA Affiliates which are Subsidiaries of the Obligor to fail, to comply with ERISA or other related provisions of the Code, if any such non-compliance, singly or in the aggregate, would be reasonably likely to have a Material Adverse Effect.

5.1.6                            Financial Testing: The financial covenants set out in sub-clauses 5.6.1(b)(xx), 5.6.3(c)(ii)(11), 6.1.2 and 6.1.3 below shall be tested by reference to each of the financial statements and/or each Compliance Certificate delivered pursuant to sub-clause 5.1.2(i) (Compliance Certificate).

5.2                           Books, Records and Inspections

The Obligor shall (i) keep, and will cause each of its Subsidiaries to keep, proper books of record and account in which full, true and correct entries in conformity with GAAP or SAP, as applicable, shall be made of all dealings and transactions in relation to its business and activities; and (ii) subject to binding contractual confidentiality obligations of the Obligor and its Subsidiaries to third parties and to Clause 9.11 (Confidentiality), permit, and will cause each of its Subsidiaries to permit, representatives of any Lender (at such Lender’s expense prior to the occurrence of an Event of Default and at the Obligor’s expense after an Event of Default has occurred and is continuing) to visit and inspect any of their respective properties, to examine their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, in each case at such reasonable times and as often as may be reasonably desired.  The Obligor agrees to cooperate and assist in such visits and inspections.

5.3                           Payment of Taxes

The Obligor will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all income taxes and all other material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, in each case, on a timely basis to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of the Obligor or any of its Subsidiaries; provided that neither the Obligor nor any Subsidiary of the Obligor shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.

5.4                           Compliance with Statutes, etc.

The Obligor will, and will cause each Subsidiary to, comply with all applicable statues, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls) other than those the non-compliance with which

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would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

5.5                           Maintenance of Licenses and Permits

The Obligor will, and will cause each of its Subsidiaries, to maintain all permits, licenses and consents as may be required for the conduct of its business by any state, federal or local government agency or instrumentality, except where failure to maintain the same would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

5.6                           Negative Covenants

5.6.1                            Negative Pledge:

(a)                     Neither the Obligor nor any of its Subsidiaries will permit, create, assume, incur or suffer to exist any Lien on any asset tangible or intangible now owned or hereafter acquired by it, except as set out in paragraph (b) below.

(b)                    Paragraph (a) above does not apply to:

(i)                       Liens created pursuant to the Security Documents;

(ii)                    Liens existing on the date hereof and listed on Schedule 2 (Existing Encumbrances) hereto;

(iii)                 Liens securing repurchase agreements constituting a borrowing of funds by the Obligor or any of its Subsidiaries in the ordinary course of business for liquidity purposes and in no event for a period exceeding 90 days in each case;

(iv)                Liens arising pursuant to purchase money mortgages, capital leases or security interests securing Indebtedness representing the purchase price (or financing of the purchase price within 90 days after the respective purchase) of assets acquired after the Restatement Date;

(v)                   Liens (x) on any asset of any Person existing at the time such Person is merged or consolidated with or into the Obligor or any of its Subsidiaries and not created in contemplation of such event or (y) securing Acquired Indebtedness so long as such Lien existed prior to the contemplated acquisition, was not created in contemplation of such acquisition and only relates to assets of the Person so acquired;

(vi)                Liens securing obligations owed by the Obligor or any of its Subsidiaries to the Parent or any other Subsidiary of the Parent, in each case solely to the extent that such Liens are required by an

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                                  Applicable Insurance Regulatory Authority for such Person to maintain such obligations;

(vii)             Liens securing insurance obligations of the Obligor or any of its Subsidiaries owed to the Parent or any other Subsidiary of the Parent, in each case solely to the extent that such Liens are required or requested by ratings agencies, clients or brokers for such Person to maintain such insurance obligations;

(viii)          Liens on investments and cash balances of the Obligor or any of its Subsidiaries securing obligations of the Obligor or such Subsidiary in respect of trust or similar arrangements formed, letters of credit issued or funds withheld balances established, in each case, in the ordinary course of business for the benefit of cedents to secure reinsurance recoverables owed to them by the Obligor or such Subsidiary;

(ix)                  inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

(x)                     Liens in respect of property or assets of the Obligor or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of the Obligor’s or any such Subsidiary’s property or assets or materially impair the use thereof in the operation of the business of the Obligor or any Subsidiary of the Obligor or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;

(xi)                  licenses, sublicenses, leases, or subleases granted to other Persons not materially interfering with the conduct of the business of the Obligor or any of its Subsidiaries;

(xii)               easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of the Obligor or any of its Subsidiaries;

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(xiii)            Liens arising out of the existence of judgments or awards not constituting an Event of Default under Clause 6.1 (Events of Default Defined);

(xiv)           Liens (other than Liens imposed under ERISA) incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance and social security benefits and Liens securing the performance of bids, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business and consistent with past practice (exclusive of obligations in respect of the payment for borrowed money);

(xv)              bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Obligor or any of its Subsidiaries, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained;

(xvi)           Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the sub-paragraphs of this sub-clause 5.6.1, provided that such Indebtedness is not increased and is not secured by any additional assets;

(xvii)        Liens in respect of property or assets of the Obligor or any of its Subsidiaries securing Indebtedness of the type described in sub-paragraphs (6) or (10) of the definition of “Permitted Indebtedness” (as hereinafter set forth);

(xviii)     Liens in respect of property or assets of any Subsidiary of the Obligor securing Indebtedness of the type described in paragraph (ix) of the definition of “Permitted Indebtedness”; provided that the aggregate amount of the Indebtedness secured by such Liens shall not, when added to the aggregate amount of all outstanding obligations of the Parent secured by Liens incurred pursuant to paragraph (b)(xx) of sub-clause 5.6.1 exceed at any time 10% of Net Worth of the Parent at the time of incurrence of any new Liens under this paragraph (xviii);

(xix)             Liens arising in connection with securities lending arrangements entered into by the Obligor or any of its Subsidiaries with financial institutions in the ordinary course of business so long as any securities subject to any such securities lending arrangements do not constitute collateral under any security document; and

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(xx)                in addition to the Liens described in sub-paragraphs (i) through (xix) above, Liens securing obligations of the Parent; provided that the aggregate amount of the obligations secured by such Liens shall not, when added to the aggregate amount of outstanding Indebtedness of the Obligor and its Subsidiaries pursuant to paragraph (11) of the definition of “Permitted Indebtedness”, exceed at any time 10% of Net Worth of the Parent at the time of incurrence of any Liens under this sub-clause 5.6.1.

5.6.2                            Disposals:

(a)                     The Obligor shall not nor will it permit any of its Subsidiaries to sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily (any of the foregoing being referred to in this paragraph (a) as a “Disposition” and any series of related Dispositions constituting but a single Disposition), any of its properties or assets, tangible or intangible (including but not limited to sale, assignment, discount or other disposition of accounts, contract rights, chattel paper or general intangibles with or without recourse), except as set forth in paragraph (b) below.

(b)                    Paragraph (a) above does not apply to:

(i)                       any Disposition of used, worn out, obsolete or surplus property of the Obligor or any of its Subsidiaries in the ordinary course of business;

(ii)                    license (as licensor) of intellectual property so long as such license does not materially interfere with the business of the Obligor or any of its Subsidiaries;

(iii)                 the Disposition of cash, Cash Equivalents and investment securities;

(iv)                the release, surrender or waiver of contract, tort or other claims of any kind as a result of the settlement of any litigation or threatened litigation;

(v)                   the granting or existence of Liens (and foreclosure thereon) not prohibited by this Agreement;

(vi)                the lease or sublease of real property so long as such lease or sublease does not materially interfere with the business of the Obligor or any of its Subsidiaries;

(vii)             dividends;

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(viii)          any ceding of insurance or reinsurance in the ordinary course of business;

(ix)                  any Disposition by the Obligor or any of its Subsidiaries of any non-core asset or as set forth in Schedule 4 (Dispositions);

(x)                     Dispositions by the Obligor or any of its Subsidiaries of properties or assets having an aggregate fair value (as determined in good faith by the board of directors of the Obligor) of less than USD$1,000,000;

(xi)                  Dispositions by the Obligor or any of its Subsidiaries of any of its respective properties or assets to the Parent, to any wholly-owned Subsidiary of the Parent or (except as to property or assets consisting of the capital stock of Subsidiaries) to Alternative Re Holdings Limited; and

(xii)               other Dispositions to the extent that the fair market value of the assets the subject thereof (as determined in good faith by the board of directors or senior management of the Obligor), when added to the fair market value of the assets the subject of any such other Disposition or Dispositions under this paragraph (xii) previously consummated during the same fiscal year of the Obligor (as determined in good faith by the board of directors or senior management of the Obligor), does not constitute more than 20% of the consolidated assets of the Group as of the last day of the most recently ended fiscal year of the Group.

5.6.3                            Financial Indebtedness:

(a)                     The Obligor shall not incur or permit to subsist, and shall not permit any of its Subsidiaries to incur or subsist, any Indebtedness except Permitted Indebtedness (as hereinafter defined).

(b)                    The Obligor shall not, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, or agree, become or remain liable (contingent or otherwise) to do any of the foregoing, except for Indebtedness incurred by the Obligor or any of its Subsidiaries hereunder and other Indebtedness which is either pari passu with, or subordinated in right of payments to, the Indebtedness incurred by the Obligor hereunder and the other obligations owing hereunder and under the Fundamental Documents.

(c)                     Definitions:  In this Clause 5.6 the following terms have the following meanings.

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(i)                       “Acquired Indebtedness” means Indebtedness of the Obligor or any of its Subsidiaries acquired pursuant to an acquisition not prohibited under this Agreement (or Indebtedness assumed at the time of such acquisition of an asset securing such Indebtedness), provided that such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such acquisition.

(ii)                    “Permitted Indebtedness” means:

(1)                    Indebtedness of the Obligor or any of its Subsidiaries incurred pursuant to this Agreement or the JPMorgan Credit Agreement (as defined in item 2 of Schedule 2 (Existing Encumbrances));

(2)                    Indebtedness of the Obligor or any of its Subsidiaries existing on the date hereof and listed on Schedule 3 (Existing Indebtedness) and refinancings by the Obligor or any of its Subsidiaries thereof; provided that the aggregate principal amount of any such refinancing Indebtedness is not greater than the aggregate principal amount of the Indebtedness being refinanced plus the amount of any premiums required to be paid thereof and fees and expenses associated therewith;

(3)                    Indebtedness of the Obligor or any of its Subsidiaries under any Rate Hedging Obligations, in each case entered into to protect the Obligor or such Subsidiary against fluctuations in interest rates, currency exchange rates or other rate fluctuations and not entered into for speculative purposes;

(4)                    any Indebtedness owed by the Obligor or any of its Subsidiaries to the Parent or any of its Subsidiaries;

(5)                    Indebtedness in respect of purchase money obligations and Capital Lease Obligations of the Obligor or any of its Subsidiaries, and refinancings thereof; provided that the aggregate principal amount of all such Capital Lease Obligations does not exceed at any time outstanding USD$25,000,000 at the time of incurrence of any new Indebtedness under this sub-paragraph (5);

(6)                    Indebtedness of the Obligor or any of its Subsidiaries in respect of letters of credit issued to reinsurance cedents, or to lessors of real property in lieu of security deposits in connection with leases of the Obligor or such Subsidiary, in each case in the ordinary course of business;

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(7)                    Indebtedness of the Obligor or any of its Subsidiaries incurred in the ordinary course of business in connection with workers’ compensation claims, self-insurance obligations, unemployment insurance or other forms of governmental insurance or benefits and pursuant to letters of credit or other security arrangements entered into in connection with such insurance or benefit;

(8)                    Acquired Indebtedness of the Obligor or any of its Subsidiaries;

(9)                    Indebtedness incurred under securities lending arrangements entered into in the ordinary course of business;

(10)              Indebtedness incurred under Credit Protection Arrangements entered into in the ordinary course of business;

(11)              additional Indebtedness of the Obligor or any of its Subsidiaries not otherwise permitted under sub-paragraph (1) through (10) of this definition which, when added to the aggregate amount of all outstanding Indebtedness obligations secured by Liens incurred by the Obligor or any of its Subsidiaries pursuant to sub-clause 5.6.1(b)(xx), shall not exceed at any time outstanding 5% of the Net Worth of the Parent at the time of incurrence of any new Indebtedness under this paragraph (11); and

(12)              Indebtedness arising from Guarantees made by the Obligor or any of its Subsidiaries of Indebtedness of the type described in sub-paragraphs (1) through (12) of this definition.

5.6.4                            Consolidations, Mergers, Sales of Assets and Acquisitions.

(a)                     The Obligor shall not, and shall not permit any of its Subsidiaries to, consolidated or merge with or into any other Person; provided that (i) the Obligor may merge with another Person if (A) the Obligor is the corporation surviving such merger and (B) immediately after giving effect to such merger, no Default or Event of Default shall have occurred and be continuing, and (ii) Subsidiaries of the Obligor may merge with one another.

(b)                    The Obligor shall not, and shall not permit any of its Subsidiaries to, acquire all or substantially all of the capital stock or assets of another Person unless at such time and immediately after giving effect thereto no Default or Event of Default exists or would result therefrom.

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5.6.5                            Transactions with Affiliates:  The Obligor shall not, and shall not permit any of its Subsidiaries to, enter into or be a party to a transaction with any Affiliate of the Obligor or any of its Subsidiaries (which Affiliate is not the Parent) except:

(a)                     transactions with Affiliates on terms no less favorable to the Obligor or such Subsidiary than those that could have been obtained in a comparable transaction on an arm’s length basis from an unrelated Person;

(b)                    transactions and payments pursuant to agreements and arrangements disclosed in, or listed as an exhibit to, the Parent’s annual report on Form 10-K filed with the SEC on March 13, 2006 or any subsequent other filing with the SEC through the Restatement Date or any such agreement or arrangement as thereafter amended, extended or replaced on terms that are, in the aggregate, no less favorable to the Obligor and its Subsidiaries than the terms of such agreement on the Restatement Date, as the case may be;

(c)                     dividends; and

(d)                    fees and compensation paid to and indemnities provided on behalf of officers and directors of the Obligor or any of its Subsidiaries as reasonably determined in good faith by the board of directors or senior management of the Obligor.

5.6.6                            Amendments:  The Obligor shall not amend or otherwise change the terms of the Custodian Agreement other than in favor of the Obligor and not adverse to the Lenders.

5.6.7                            Conduct of Business:  The Obligor shall not, and shall not permit any of its Subsidiaries to, engage in any business other than the businesses engaged in by the Obligor and its Subsidiaries on the Restatement Date and similar or related businesses.

6.                                 EVENTS OF DEFAULT AND REMEDIES

6.1                           Events of Default Defined

Each of the following is an “Event of Default”:

6.1.1                            with respect to the Obligor:

(a)                     failure by the Obligor to pay any amount payable by it hereunder on the date due;

(b)                    if any representation or warranty made by or on behalf of the Obligor in this Agreement, in any other Fundamental Document or in any certificate, report or financial or other statement furnished to the Agent at any time under or in connection with this Agreement, any other Fundamental

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                                   Document or any other such document or agreement shall have been untrue in any material respect when made or deemed to have been made;

(c)                     default by the Obligor in the observance or performance of its covenants set forth in (i) Clause 5 (Covenants); or (ii) default by the Obligor in the observance or performance of its obligation to maintain the value of the Custodial Account maintained in its name in accordance with sub-clause 5.1.4 (Maintenance of Adjusted Collateral Value) hereof and Clause 1 of the Security Agreement between it and the Security Agent;

6.1.2                            failure by the Parent to maintain a minimum Consolidated Tangible Net Worth that is at any time less than the sum of: (i) USD$1,950,000,000; (ii) 25% of the aggregate Net Cash Proceeds received from any issuance of common or preferred equity interests of the Parent consummated on or after August 30, 2006; and (iii) 25% of its Consolidated Net Income (if positive) for each fiscal quarter ended after June 30, 2006.  For purposes of this sub-clause 6.1.2, “Net Cash Proceeds” means for any issuance of equity, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such issuance, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith).

6.1.3                            the Parent Leverage Ratio on the last day of any fiscal quarter or fiscal year of the Parent is greater than 0.35:1.00.  For purposes of this sub-clause 6.1.3:

(a)                     “Parent Leverage Ratio” means, at any time, the ratio of (i) Parent Consolidated Indebtedness at such time to (ii) Parent Consolidated Total Capital at such time;

(b)                    “Parent Consolidated Indebtedness” means, as of any date of determination, (i) all Indebtedness of the Group which at such time would appear on the liability side of a balance sheet of such Persons prepared on a consolidated basis in accordance with GAAP plus (ii) any Indebtedness for borrowed money of any other Person (other than any member of the Group) as to which any member of the Group has created a Guarantee (but only to the extent of such Guarantee).  For the avoidance of doubt, “Parent Consolidated Indebtedness” shall not include any Guarantees of any Person under or in connection with letters of credit or similar facilities so long as no unreimbursed drawings or payments have been made in respect thereof; and

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(c)                     “Parent Consolidated Total Capital” means, as of any date of determination, the sum of (i) Parent Consolidated Indebtedness and (ii) Net Worth of the Parent at such time;

6.1.4                            the Parent permits, creates, assumes, incurs or suffers to exist any Lien on any asset, tangible or intangible, now owned or hereafter acquired, other than in the same manner, and subject to the same limitations, as otherwise permitted under paragraph (b) of sub-clause 5.6.1 (Negative Pledge) and except as set out on Schedule 2 (Existing Encumbrances); for the avoidance of doubt for this purpose, reference to “Subsidiaries” (including in the definition of “Permitted Indebtedness”) shall include Subsidiaries of the Parent;

6.1.5                            the Parent making a Disposition (as defined in paragraph (a) of sub-clause 5.6.2 (Disposals)) of any of its properties or assets, tangible or intangible, other than in the same manner, and subject to the same limitations, as otherwise permitted under paragraph (b) of sub-clause 5.6.2 (Disposals) and except as set out in Schedule 4 (Dispositions); for the avoidance of doubt for this purpose, references to “Subsidiaries” includes Subsidiaries of the Parent;

6.1.6                            non-compliance by the Parent or its ERISA Affiliates of the covenant set forth in sub-clause 5.1.5 (ERISA);

6.1.7                            default by the Obligor in the observance or performance of any covenant or agreement contained in this Agreement or any other Fundamental Document (other than those referred to in Clause 6.1.1) and the continuance thereof unremedied for 28 days after the earlier of (a) an officer of the Obligor or the Parent becoming aware of such default or (b) receipt by the Obligor of written notice of the default from the Agent;

6.1.8                            an order shall be made by a competent court or a resolution shall be passed for the winding up or dissolution or rehabilitation of the Parent or the Obligor save for the purposes of amalgamation, merger, consolidation, reorganization or other similar arrangement on terms approved by the Majority Lenders (not involving the insolvency of the Parent or the Obligor) and save that if any such order or resolution is sought in an involuntary proceeding against any the Person, such Person shall have 30 days from the commencement of such proceeding to obtain an order staying, vacating or dismissing such proceedings, or a petition shall be presented to, or an order shall be made by a competent court for the appointment of, an administrator of the Parent or the Obligor and such petition or order shall not have been stayed, vacated or dismissed within 30 days after the presentation of such petition or the making of such order;

6.1.9                            the Parent or the Obligor shall cease to carry on the whole or substantially the whole of its business, save for the purposes of amalgamation, merger,

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                                                    consolidation, reorganization or other similar arrangement (not involving or arising out of the insolvency of the Parent or the Obligor) which is permitted hereunder, or the Parent or the Obligor shall suspend payment of its debts generally or shall be unable to, or shall admit inability to, pay its debts as they fall due, or shall be adjudicated or found bankrupt or insolvent by any competent court in a voluntary or involuntary bankruptcy or insolvency proceeding and, in the case of an involuntary proceeding, such adjudication or finding is not stayed, vacated or dismissed for 30 days, or shall enter into any composition or other similar arrangement with its creditors generally;

6.1.10                      a receiver, administrator, liquidator or other similar official shall be appointed in relation to the Parent or the Obligor or in relation to the whole or a substantial part of its assets or to the Collateral or a distress, execution or other process shall be levied or enforced upon or out against, or any encumbrance shall take possession of, the whole or a substantial part of its assets or the Collateral and in any of the foregoing cases, such action or person shall not be discharged, dismissed, vacated, stayed or bonded within 30 days;

6.1.11                      any seizure, vesting or intervention by or under authority of a government occurs, by which the Parent’s or the Obligor’s management is displaced or its authority in the conduct of its business is curtailed;

6.1.12                      default by the Parent or the Obligor in (i) any payment of principal of or interest of any Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity, provided that the aggregate principal amount of all Indebtedness under paragraphs (i) and (ii) of this sub-clause 6.1.12 which would then become due and payable would equal or exceed, in the case of the Parent or the Obligor, USD$50,000,000;

6.1.13                      one or more judgments or decrees shall be entered against the Parent or the Obligor involving in the aggregate a liability (to the extent not paid or covered by insurance) of, in the case of the Parent or the Obligor, USD$50,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days after the entry thereof;

6.1.14                      if the validity or enforceability of any Security Document to which the Obligor is a party shall be contested by any Person or the security interest created in favor

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                                                    of the Security Agent pursuant to any Security Document shall cease to be valid and binding or to constitute a fully perfected security interest in the collateral described in such security document, superior in right to any other lien;

6.1.15                      it is or becomes unlawful for the Obligor to perform any of its obligations under this Agreement or any other Fundamental Document;

6.1.16                      the Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate this Agreement, any other Fundamental Document or any Lien created pursuant to the Security Documents or evidences an intention to rescind or repudiate this Agreement, any other Fundamental Document or any Lien created pursuant to the Security Documents;

6.1.17                      receipt by the Obligor of any direction or other notification from the Bermuda Monetary Authority pursuant to Section 32 of the Insurance Act, 1978 of Bermuda; or

6.1.18                      a Change in Control shall occur.

6.2                           Remedies

6.2.1                            Without limiting any other rights or remedies of the Agent or any Lender provided for elsewhere in this Agreement or any other Fundamental Document, or by applicable law, or in equity, or otherwise, (i) if any Event of Default shall occur and be continuing with respect to the Obligor, the Agent may (and shall if so instructed by the Majority Lenders), by notice to the Obligor, declare all amounts owing under this Agreement and any Letters of Credit (whether or not such Letter of Credit Obligations be contingent or unmatured) issued at the request of the Obligor to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Obligor, and (ii) if any Event of Default shall occur and be continuing with respect to the Parent, the Agent may (and shall if so instructed by the Majority Lenders), by notice to the Obligor, declare all amounts owing under this Agreement and any Letters of Credit (whether or not such Letter of Credit Obligations be contingent or unmatured) issued at the request of the Obligor to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Obligor.  The Agent may immediately take any and all remedies with respect to the Collateral permitted by the Security Documents.

6.2.2                            Upon declaration as provided for above, the Obligor shall, as specified in written notice by the Agent, either (i) immediately deliver to the Agent, any amounts required to be paid in accordance with sub-clause 6.2.1 hereof (the “Letter of

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                                                    Credit Amount”), or (ii) with the consent of the Beneficiary or Beneficiaries thereof, cause any Letters of Credit to be cancelled forthwith in a manner satisfactory to the Agent.  In addition to providing the Letter of Credit Amount, the Obligor shall provide the Agent with any documentation as the Agent may from time to time request to perfect its rights in the Letter of Credit Amount, including, without limitation, pledge agreements and financing statements in form and substance satisfactory to the Agent.  The Agent shall hold the Letter of Credit Amount in its own name, for the exclusive purpose of applying such Letter of Credit Amount toward the immediate payment of amounts which are thereafter drawn under any Letter of Credit, and, to the extent of such payment, the Reimbursement Obligations shall be deemed to be satisfied.  Upon the expiry date of all Letters of Credit, any Letter of Credit Amount remaining after satisfaction of all Reimbursement Obligations shall be remitted to the order of the Obligor.  The Obligor shall remain liable for the relevant amount of any deficiency in respect of its Letter of Credit Obligations and Reimbursement Obligations.

6.2.3                            Upon the occurrence and during the continuation of any Default or Event of Default under this Agreement, no Letter of Credit shall be issued, renewed or extended under this Agreement without the consent of each Lender.

7.                                CHANGES TO PARTIES

7.1                           Changes to the Lenders

7.1.1                            Assignments and Transfers by the Lenders

Subject to this Clause 7.1, a Lender (the “Existing Lender”) may:

(a)                     assign any of its rights; or

(b)                    transfer by novation any of its rights and obligations,

to an Eligible Assignee (the “New Lender”).

7.1.2                            Conditions of Assignment or Transfer

(a)                     So long as no Event of Default has occurred and is continuing, the consent of the Obligor is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender.

(b)                    The consent of the Obligor to an assignment or transfer must not be unreasonably withheld or delayed.  The Obligor will be deemed to have given its consent seven Business Days after the Existing Lender has requested it in writing unless consent is expressly refused by the Obligor within that time.

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(c)                     An assignment will only be effective on:

(i)                       receipt by the Agent of an Assignment and Assumption from the New Lender (in form and substance satisfactory to the Agent) stating that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender;

(ii)                    receipt by the Agent of a signed copy from the New Lender of the New Lender’s Authorization Letter substantially in the form of Part B of Exhibit A hereto executed by the New Lender;

(iii)                 issuance by the Agent of an amendment to each outstanding Letter of Credit replacing the Existing Lender with the New Lender and acceptance thereof by each Beneficiary; and

(iv)                performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

(d)                    If:

(i)                       a Lender assigns or transfers any of its rights or obligations under the Fundamental Documents or changes its Facility Office; and

(ii)                    as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under sub-clause 2.9.2 or Clause 2.7 (Regulatory Requirements; Additional Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

7.1.3                            Assignment or Transfer Fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of USD$2,500.

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7.1.4                            Limitation of Responsibility of Existing Lenders

(a)                     Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i)                       the legality, validity, effectiveness, adequacy or enforceability of the Fundamental Documents or any other documents;

(ii)                    the financial condition of any Obligor;

(iii)                 the performance and observance by any Obligor of its obligations under the Fundamental Documents or any other documents; or

(iv)                the accuracy of any statements (whether written or oral) made in or in connection with any Fundamental Document or any other document,

and any representations or warranties implied by law are excluded.

(b)                    Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i)                       has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Fundamental Document; and

(ii)                    will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Fundamental Documents or any Commitment is in force.

(c)                     Nothing in any Fundamental Document obliges an Existing Lender to:

(i)                       accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 7.1; or

(ii)                    support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Fundamental Documents or otherwise.

7.1.5                            Procedure for Transfer

(a)                     Subject to the conditions set out in sub-clause 7.1.2 (Conditions of Assignment or Transfer) a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Assignment and Assumption delivered to it by the Existing Lender and the New Lender. 

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                                   The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment and Assumption appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute such Assignment and Assumption.

(b)                    The Agent shall only be obliged to execute an Assignment and Assumption delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

(c)                     On the Transfer Date:

(i)                       to the extent that in the Assignment and Assumption the Existing Lender seeks to transfer by novation its rights and obligations under the Fundamental Documents, the Obligor and the Existing Lender shall be released from further obligations towards one another under the Fundamental Documents and their respective rights against one another under the Fundamental Documents shall be cancelled (being the “Discharged Rights and Obligations”);

(ii)                    the Obligor and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

(iii)                 the Agent, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent and the Existing Lender shall each be released from further obligations to each other under the Fundamental Documents; and

(iv)                the New Lender shall become a Party as a “Lender”.

7.1.6                            Copy of Assignment and Assumption to Obligor

The Agent shall, as soon as reasonably practicable after it has executed an Assignment and Assumption, send to the Obligor a copy of such Assignment and Assumption.

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7.1.7                            Disclosure of information

Any Lender may disclose to any of its Affiliates and the directors, officers, employees, agents, including accounts, legal counsel and other advisors of the Lender and its Affiliates (subject to Clause 9.11 (Confidentiality) hereof) and any other person:

(a)                     to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement;

(b)                    with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or the Obligor; or

(c)                     to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

any information about the Obligor, the Group and the Fundamental Documents as that Lender shall consider appropriate.

7.2                           Changes to the Obligors

The Obligor may not assign any of its rights or transfer any of its rights or obligations under the Fundamental Documents.

8.                                THE FINANCE PARTIES

8.1                           Role of the Agent and Security Agent

8.1.1                            Appointment of the Agent and Security Agent

(a)                     Each other Finance Party appoints the Agent and Security Agent to act as its agent under and in connection with the Fundamental Documents.

(b)                    Each other Finance Party authorizes the Agent and Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Fundamental Documents together with any other incidental rights, powers, authorities and discretions.

8.1.2                            Duties of the Agent

(a)                     The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.

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(b)                    Except where a Fundamental Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(c)                     If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.

(d)                    If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent) under this Agreement it shall promptly notify the other Finance Parties.

(e)                     The Agent’s duties under the Fundamental Documents are solely mechanical and administrative in nature.

8.1.3                            Role of the Arranger

Except as specifically provided in the Fundamental Documents, the Arranger has no obligations of any kind to any other party under or in connection with any Fundamental Document.

8.1.4                            No Fiduciary Duties

(a)                     Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person.

(b)                    Neither the Agent nor the Arranger shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

8.1.5                            Business with the Group

The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

8.1.6                            Rights and Discretions of the Agent

(a)                     The Agent may rely on:

(i)                       any representation, notice or document believed by it to be genuine, correct and appropriately authorized; and

(ii)                    any statement made by a director, authorized signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

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(b)                    The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i)                       no Default has occurred (unless it has actual knowledge of a Default arising under sub-clause (a));

(ii)                    any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and

(iii)                 any notice or request made by the Obligor is made on behalf of and with the consent and knowledge of the Parent.

(c)                     The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(d)                    The Agent may act in relation to the Fundamental Documents through its personnel and agents.

(e)                     The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

(f)                       Notwithstanding any other provision of any Fundamental Document to the contrary, the Agent is not obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

8.1.7                            Majority Lenders’ Instructions

(a)                     Unless a contrary indication appears in a Fundamental Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

(b)                    Unless a contrary indication appears in a Fundamental Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

(c)                     The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability which it may incur in complying with the instructions.

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(d)                    In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

(e)                     The Agent is not authorized to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Fundamental Document.

8.1.8                            Responsibility for Documentation

Neither the Agent nor the Arranger is:

(a)                     responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, the Obligor or any other person given in or in connection with any Fundamental Document; or

(b)                    responsible for the legality, validity, effectiveness, adequacy or enforceability of any Fundamental Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Fundamental Document.

8.1.9                            Exclusion of Liability

(a)                     Without limiting paragraph (b) below, the Agent will not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for any action taken by it under or in connection with any Fundamental Document, unless directly caused by its gross negligence or willful misconduct.

(b)                    No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Fundamental Document and any officer, employee or agent of the Agent may rely on this Clause.

(c)                     The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Fundamental Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognized clearing or settlement system used by the Agent for that purpose.

(d)                    Nothing in this Agreement shall oblige the Agent to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent that it is solely responsible

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                                   for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent.

8.1.10                      Lenders’ Indemnity to the Agent

Each Lender shall (in proportion to its Ratable Share) indemnify the Agent, within ten Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or willful misconduct) in acting as Agent under the Fundamental Documents (unless the Agent has been reimbursed by the Obligor pursuant to a Fundamental Document).

8.1.11                      Resignation of the Agent

(a)                     The Agent may resign and appoint one of its Affiliates as a successor by giving notice to the other Finance Parties and the Obligor.

(b)                    Alternatively the Agent may resign by giving notice to the other Finance Parties and the Obligor, in which case the Majority Lenders (after consultation with the Obligor) may appoint a successor Agent with the consent of the Obligor (such consent not to be unreasonably withheld or delayed).

(c)                     If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent may appoint a successor Agent with the consent of the Obligor (such consent not to be unreasonably withheld or delayed).

(d)                    The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Fundamental Documents.

(e)                     The Agent’s resignation notice shall only take effect upon the appointment of a successor and the acceptance by such successor to assume all responsibilities of the Agent hereunder.

(f)                       Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Fundamental Documents but shall remain entitled to the benefit of this Clause 8.1.  Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

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(g)                    After consultation with the Obligor, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above.  In this event, the Agent shall resign in accordance with paragraph (b) above.

8.1.12                      Confidentiality

(a)                     In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

(b)                    If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

8.1.13                      Relationship with the Lenders

The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

8.1.14                      Credit Appraisal by the Lenders

(a)                     Without affecting the responsibility of the Obligor for information supplied by it or on its behalf in connection with any Fundamental Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Fundamental Document including but not limited to:

(i)                       the financial condition, status and nature of each member of the Group;

(ii)                    the legality, validity, effectiveness, adequacy or enforceability of any Fundamental Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Fundamental Document;

(iii)                 whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Fundamental Document, the transactions contemplated by the Fundamental Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Fundamental Document; and

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(iv)                the adequacy, accuracy and/or completeness of any information provided by the Agent, the Arranger, any Party or by any other person under or in connection with any Fundamental Document, the transactions contemplated by the Fundamental Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Fundamental Document.

8.1.15                      Reference Bank

If the Reference Bank ceases to be the Agent or a Lender, the Agent shall (in consultation with the Obligor) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

8.1.16                      Deduction from Amounts Payable by the Agent

If any Party owes an amount to the Agent under the Fundamental Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Fundamental Documents and apply the amount deducted in or towards satisfaction of the amount owed.  For the purposes of the Fundamental Documents that Party shall be regarded as having received any amount so deducted.

8.2                           Conduct of Business by the Finance Parties

8.2.1                            No provision of this Agreement will:

(a)                     interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b)                    oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

(c)                     oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

8.3                           Sharing Among the Finance Parties

8.3.1                            Payments to Finance Parties

If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from the Obligor other than in accordance with Clause 9.1 (Payment Mechanics) and applies that amount to a payment due under the Fundamental Documents then:

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(a)                     the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;

(b)                    the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 9.1 (Payment Mechanics), without taking account of any tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and

(c)                     the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with sub-clause 9.1.5 (Partial Payments).

8.3.2                            Redistribution of Payments

The Agent shall treat the Sharing Payment as if it had been paid by the Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with sub-clause 9.1.5 (Partial payments).

8.3.3                            Recovering Finance Party’s Rights

(a)                     On a distribution by the Agent under sub-clause 8.3.2 (Redistribution of Payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.

(b)                    If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.

8.3.4                            Reversal of Redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)                     each Finance Party which has received a share of the relevant Sharing Payment pursuant to sub-clause 8.3.2 (Redistribution of Payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Finance Party an amount equal to the appropriate part of its share of the  Sharing Payment (together with an amount as is necessary to reimburse that

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                                   Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and

(b)                    that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

8.3.5                            Exceptions

(a)                     This Clause 8.3 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the Obligor.

(b)                    A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i)                       it notified that other Finance Party of the legal or arbitration proceedings; and

(ii)                    that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

9.                                 MISCELLANEOUS

9.1                           Payment Mechanics

9.1.1                            Payments to the Agent

(a)                     On each date on which the Obligor or a Lender is required to make a payment under a Fundamental Document, the Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Fundamental Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

(b)                    Payment shall be made to such account in the principal financial center of the country of that currency with such bank as the Agent specifies.

9.1.2                            Distributions by the Agent

Each payment received by the Agent under the Fundamental Documents for another Party shall, subject to sub-clause 9.1.3 (Distributions to the Obligor), sub-clause 9.1.4 (Clawback) and sub-clause 8.1.16 (Deduction from Amounts Payable by the Agent), be made available by the Agent as soon as practicable

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after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial center of the country of that currency.

9.1.3                            Distributions to the Obligor

The Agent may (with the consent of the Obligor or in accordance with Clause 9.6 (Right of Set-off)) apply any amount received by it for the Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Obligor under the Fundamental Documents or in or towards purchase of any amount of any currency to be so applied.

9.1.4                            Clawback

(a)                     Where a sum is to be paid to the Agent under the Fundamental Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

(b)                    If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

9.1.5                            Partial Payments

(a)                     If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by the Obligor under the Fundamental Documents, the Agent shall apply that payment towards the obligations of the Obligor under the Fundamental Documents in the following order:

(i)                       first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent under the Fundamental Documents;

(ii)                    secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

(iii)                 thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(iv)                fourthly, in or towards payment pro rata of any other sum due but unpaid under the Fundamental Documents.

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(b)                    The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

(c)                     Paragraphs (a) and (b) above will override any appropriation made by the Obligor.

9.1.6                            No set-off by Obligors

All payments to be made by the Obligor under the Fundamental Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

9.1.7                            Business Days

(a)                     Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b)                    During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

9.1.8                            Currency of Account

(a)                     Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from the Obligor under any Fundamental Document.

(b)                    A repayment of an Unpaid Sum shall be made in the currency in which that Unpaid Sum is denominated on its due date.

(c)                     Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

(d)                    Each payment in respect of costs, expenses or taxes shall be made in the currency in which the costs, expenses or taxes are incurred.

(e)                     Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

9.1.9                            Change of Currency

(a)                     Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognized by the central bank of any country as the lawful currency of that country, then:

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(i)                       any reference in the Fundamental Documents to, and any obligations arising under the Fundamental Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Obligor); and

(ii)                    any translation from one currency or currency unit to another shall be at the official rate of exchange recognized by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

(b)                    If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Obligor) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the relevant interbank market and otherwise to reflect the change in currency.

9.1.10                      Disruption to Payment Systems etc.

If either the Agent determines (in its reasonable discretion) that a Disruption Event has occurred or the Agent is notified by the Obligor (in its reasonable discretion) that a Disruption Event has occurred:

(a)                     the Agent may, and shall if requested to do so by the Obligor, consult with the Obligor with a view to agreeing with the Obligor such changes to the operation or administration of the Facility as the Agent may deem necessary in the circumstances;

(b)                    the Agent shall not be obliged to consult with the Obligor in relation to any changes mentioned in paragraph (a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

(c)                     the Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

(d)                    any such changes agreed upon by the Agent and the Obligor shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Fundamental Documents notwithstanding the provisions of Clause 9.2 (Amendments and Waivers);

(e)                     the Agent shall not be liable for any damages, costs or losses whatsoever  (including, without limitation for negligence, gross negligence or any other

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                                   category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 9.1; and

(f)                       the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.

9.2                           Amendments and Waivers

9.2.1                            No amendment or waiver of any provision of this Agreement or any other Fundamental Document, nor consent to any departure by the Obligor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, the Majority Lenders and the Obligor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall:

(a)                     increase the maximum aggregate amount of the Letters of Credit without the written consent each Lender;

(b)                    increase the Commitment of any Lender without the written consent of such Lender;

(c)                     reduce the amount, waive, excuse or postpone the due date of any amount payable in respect of any Letter of Credit or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby;

(d)                    postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby;

(e)                     extend the expiration date of any Letter of Credit beyond the Facility Termination Date without the written consent of each Lender affected thereby;

(f)                       change in any manner the obligations of the Lenders relating to the purchase of participations in Letters of Credit without the written consent of each Lender;

(g)                    change any provision of this Clause 9.2.1 or the definition of “Majority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

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(h)                    release any Lien granted in favor of the Security Agent with respect to all or substantially all of the Collateral without the written consent of each Lender; or

(i)                        amend, modify or otherwise affect the rights or duties of the Agent  or the Arranger hereunder without the prior written consent of the Agent or the Arranger, as the case may be.

9.2.2                            In the event that the Obligor wishes to deposit an Investment in the Custodial Account which is rated by a nationally or internationally-recognized ratings agency other than S&P, Moody’s or Fitch, the Agent agrees to reasonably consider on a timely basis whether the rating of such Investment may be considered the equivalent of a rating provided by S&P, Moody’s or Fitch for purposes of the relevant provisions of this Agreement and, if instructed to do so by the Lenders, to execute any amendment, waiver or other writing relating thereto on a timely basis.

9.3                           Addresses for Notices

All notices and other communications provided for hereunder shall be in writing unless otherwise stated herein and shall be delivered by e-mail, fax, hand delivery, or recognized courier service that provides delivery within two (2) Business Days:

if to Arch Reinsurance Ltd., at:

Wessex House, 3rd Floor
45 Reid Street
Hamilton HM 12
Bermuda
Attn:  Controller
Telephone:  +1 ###-###-####
Facsimile:  +1 ###-###-####
E-mail:  ***@***

if to the Agent, at

5 The North Colonnade
London E14 4BB
England
Attn:  Karen Somerville, Loan Operations - - Agency Desk
Telephone:  +44 (0)20 7773 6417
Facsimile:  +44 (0)20 7773 6808
E-mail: ***@***

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if to an Original Lender, at the address set forth under such Original Lender’s name on its signature page hereto

and shall be effective when delivered at the address specified in or pursuant to this Clause 9.3, or such other address notified to the other party in writing.

9.4                           Successors and Assigns

This Agreement is a continuing obligation of the Obligor and shall, until the date on which all amounts due and owing hereunder are paid in full (i) be binding upon the Obligor, its successors and assigns and (ii) inure to the benefit of and be enforceable by the Agent and the Lenders and its successors and assigns, provided that any assignment of this Agreement or any part hereof by the Obligor shall be void.

9.5                           Payment of Expenses and Taxes; Indemnities

9.5.1                            The Obligor hereby agrees to pay or reimburse the Agent and each Lender for all their respective out-of-pocket costs and expenses incurred in connection with the development, preparation and attention to the execution of the Fundamental Documents, and of documents embodying or relating to amendments, waivers or consents with respect to any of the foregoing, including the reasonable fees and out-of-pocket costs and expenses of counsel to the Agent and each Lender, (ii) the Obligor agrees to pay and to save the Agent and each Lender from all registration, recording and filing fees and all liabilities with respect to, or resulting from, any delay by the Obligor in paying stamp and other Taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, any of the Fundamental Documents or any amendment, waiver or consent with respect thereto or the consummation of any of the transactions contemplated thereby, (iii) the Obligor agrees to pay or reimburse the Agent and each Lender for all its out-of-pocket costs and expenses incurred in connection with the preparation and attention to the execution and issuance of Letters of Credit issued at the request of the Obligor and (iv) the Obligor agrees to pay or reimburse the Agent and each Lender for all out-of-pocket costs and expenses incurred by it in connection with the enforcement or preservation of any rights against the Obligor under or in respect of this Agreement and the other Fundamental Documents (including the fees and expenses of lawyers retained by the Agent and each Lender, including the allocated costs of internal counsel, and remuneration paid to agents and experts not in the full-time employ of the Agent and each Lender for services rendered on behalf of the Agent and each Lender) on a full indemnity basis.  All such amounts will be paid by the Obligor on demand.

9.5.2                            The Obligor agrees to indemnify the Agent and any Lender, and their respective directors, officers, employees, agents and Affiliates from, and hold each of them

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harmless against, any and all claims, damages, losses, liabilities, costs and expenses (including without limitation, reasonable fees and disbursements of counsel) arising as a consequence of (i) any failure by the Obligor to pay the Agent or any Lender, as required under this Agreement, punctually on the due date thereof, any amount payable by the Obligor to the Agent or any Lender or (ii) the acceleration, in accordance with the terms of this Agreement, of the time of payment of any of the Reimbursement Obligations, except to the extent caused by the Agent’s or such Lender’s negligence or willful misconduct or breach of this Agreement.  Such losses, costs or expenses may include, without limitation, (i) any costs incurred by the Agent or any Lender in carrying funds to cover any overdue principal, overdue interest, or any other overdue sums payable by the Obligor to the Agent or any Lender or (ii) any losses incurred or sustained by the Agent or any Lender in liquidating or reemploying funds acquired by the Lender from third parties.

9.5.3                            The Obligor agrees to indemnify the Agent, the Arranger and any Lender, and their respective directors, officers, employees, agents and Affiliates from, and hold each of them harmless against, any and all claims, damages, liabilities, losses, costs and expenses (including without limitation, reasonable fees and disbursements of counsel) arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) with respect to the Obligor relating to any transaction contemplated by this Agreement or any other Fundamental Document, any actions or omissions of the Obligor or any of the Obligor’s directors, officers, employees or agents in connection with this Agreement or any other Fundamental Document, including without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified).

9.6                           Right of Set-Off

The Obligor agrees that, in addition to (and without limitation of) any right of setoff, banker’s Lien or counterclaim a Finance Party may otherwise have, such Finance Party shall be entitled, at its option, to offset balances (general or special, time or demand, provisional or final, and regardless of whether such balances are then due to the Obligor) held by it for the account of the Obligor at any of such Finance Party’s offices, in U.S. Dollars or in any other currency, against any amount payable by the Obligor under this Agreement or any Letter of Credit that is not paid when due, taking into account any applicable grace period, in which case it shall promptly notify the Obligor thereof, provided that such Finance Party’s failure to give such notice shall not affect the validity thereof.  In furtherance thereof, the Obligor hereby grants to such Finance Party, a

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continuing Lien, security interest and right of setoff as security for all liabilities and obligations to such Finance Party, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property of the Obligor, now or hereafter in the possession, custody, safekeeping or control of such Finance Party or any entity under the control of the Custodian and its successors and assigns or in transit to any of them.  At any time after the occurrence of an Event of Default, without demand or notice (any such notice being expressly waived by the Obligor), each Finance Party may setoff the same or any part thereof and apply the same to any liability or obligation of the Obligor even though unmatured and regardless of the adequacy of any other collateral securing the Obligor’s obligations hereunder.  ANY AND ALL RIGHTS TO REQUIRE A FINANCE PARTY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGOR’S OBLIGATIONS HEREUNDER, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE OBLIGOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

9.7                           Governing Law

This Agreement, and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the choice of law or conflicts of law principles thereof.

9.8                           Consent to Jurisdiction

The Obligor hereby expressly submits to the non-exclusive jurisdiction of all federal and state courts sitting in the State of New York, and agrees that any process or notice of motion or other application to any of said courts or a judge thereof may be served upon the Obligor within or without such court’s jurisdiction by registered or certified mail, return receipt requested, or by personal service, at the Obligor’s address (or at such other address as the Obligor shall specify by a prior notice in writing to the Agent), provided reasonable time for appearance is allowed.  The Obligor hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue to any suit, action or proceeding arising out or relating to this Agreement brought in any federal or state courts sitting in the State of New York and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Notwithstanding the foregoing, the Agent and the Lenders may sue the Obligor in any jurisdiction where the Obligor or any of its assets may be found and may serve legal process upon the Obligor in any other manner permitted by law.

9.9                           Waiver of Jury Trial

EACH PARTY HERETO MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN

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CONNECTION WITH THIS AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT RELATING TO THE ADMINISTRATION OF THIS AGREEMENT OR ENFORCEMENT OF THE FUNDAMENTAL DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  EXCEPT AS PROHIBITED BY LAW, THE OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  THE OBLIGOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE AGENT TO ENTER INTO THIS AGREEMENT AND THE OTHER FUNDAMENTAL DOCUMENTS.

9.10                     Interest

All agreements between the Agent, the Lenders and the Obligor are hereby expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to the Agent or the Lenders for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law.  As used herein, the term “applicable law” shall mean the law in effect as of the date hereof; provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Agreement shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of the Agent, the Lenders and the Obligor in the execution, delivery and acceptance of this Agreement to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the agreements executed herewith at the time of performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from circumstances whatsoever the Agent or a Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest.  This provision shall control every other provision of all agreements between the Obligor and the Agent and the Lenders.

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9.11                     Confidentiality

The Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to their respective (and their respective Affiliates’) directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential in accordance with the terms of this Agreement, (b) to the extent requested by any regulatory authority or self-regulatory body, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) with the consent of the Obligor or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Clause 9.11.  For the purposes of this Clause 9.11, “information” means all information received by the Agent and the Lenders relating to the Parent or Obligor or any Subsidiary of the Parent or Obligor or their respective businesses, other than any such information that is available to the Agent and the Lenders on a non-confidential basis prior to disclosure by the Parent or Obligor.  Any Person required to maintain the confidentiality of Information as provided in this Clause 9.11 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information or the Agent and the Lenders have treated such Information in a manner consistent with banking industry standards for the treatment of confidential information.  Notwithstanding anything herein to the contrary, each party to this Agreement (and any employee, representative or other agent of each such party) may disclose to any and all Persons, without limitation of any kind, the U.S. federal income tax treatment and the U.S. federal income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure.  However, no disclosure of any information relating to such tax treatment or tax structure may be made to the extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.  The provisions of this Clause 9.11 shall survive the Facility Termination Date and the Letter of Credit Obligations hereunder.

9.12                     Table of Contents and Captions

The Table of Contents hereof and captions herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

9.13                     Integration

This Agreement is intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Letter of Credit and Reimbursement Agreement.  All

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prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement, and no party is relying on any promise, agreement or understanding not set forth in this Agreement.

9.14                     Counterparts

This Agreement may be executed in multiple counterparts each of which shall be an original and all of which when taken together shall constitute but one and the same Agreement.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers, as an instrument under seal, as of the date first above written.

ARCH REINSURANCE LTD., as Obligor

By:  /s/ Nicolas Papadopoulo

Name:  Nicolas Papadopoulo

Title:  President & CEO

BARCLAYS BANK PLC,
as Agent

By:  /s/ Roger Cosby

Name:  Roger Cosby

Title:  Manager

BARCLAYS BANK PLC,
as an Original Lender

By:  /s/ Roger Cosby

Name:  Roger Cosby

Title:   Manager

Address:  5 The North Colonnade, London E14 4BB

ING BANK N.V., LONDON BRANCH, as an Original Lender

By:  /s/ Nick J. Marchant, /s/ M.E.R. Sharman (Managing Director)

Name:  N.J. Marchant

Title:  Director

Address:  60 London Wall, London EC2M 5TQ

LLOYDS TSB BANK PLC, as an Original Lender

By:  /s/ Sebastian Kafetz

Name:  Sebastian Kafetz

Title:  Relationship Manager

Address:  25 Gresham Street, London EC2V 7HN

BARCLAYS CAPITAL,
as Arranger

By:  /s/ Roger Cosby

Name:  Roger Cosby

Title:  Manager

Address:  5 The North Colonnade, London E14 4BB

SCHEDULE 1

LENDER COMMITMENTS