UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

Current Report

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 24, 2006

ASPEN INSURANCE HOLDINGS LIMITED

(Exact name of registrant as specified in its charter)


Bermuda 001-31909 Not Applicable
(State or other jurisdiction
of incorporation) 		(Commission
File Number) 		(I.R.S. Employer
Identification No.)

Maxwell Roberts Building
1 Church Street
Hamilton HM 11
Bermuda

(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: ( 441) 295-8201

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[    ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[    ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[    ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[    ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))


Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

At the Annual General Meeting of Shareholders of Aspen Insurance Holdings Limited (the ‘‘Company’’) held on May 25, 2006, the Company’s shareholders approved the 2006 Stock Option Plan for non-employee directors of the Company (‘‘2006 Stock Option Plan’’) under which a total of 400,000 ordinary shares may be issued in relation to options granted under the 2006 Stock Option Plan. The 2006 Stock Option Plan is attached to this filing as Exhibit 10.1 and the form of share option agreement for non-employee directors is attached to this filing as Exhibit 10.2.

Following the Annual General Meeting of Shareholders, on May 25, 2006 the Board of Directors approved the grant of 4,435 options under the 2006 Stock Option Plan for each of the non-employee directors, other than Paul Myners, the Company’s Chairman. With respect to the options granted to Mr. Prakash Melwani and Mr. Kamil Salame, the options will be issued in the name of Blackstone and Credit Suisse, respectively, their employers, and through which they were originally appointed to the Board of Directors. Eighty percent of the options granted to Heidi Hutter will be issued to The Black Diamond Group LLC, of which she is the Chief Executive Officer. The exercise price is $21.96, the average of the high and low prices of the Company’s ordinary shares on the date of grant (May 25, 2006). Subject to the grantee's continued service as a director, the options will vest on the third anniversary of the grant date.

In connection with the appointment of David May as Underwriting Director, on May 24, 2006 the Compensation Committee of the Board of Directors approved an increase in Mr. May’s salary to £250,000. Mr. May will continue to serve as Head of Casualty Reinsurance until February 1, 2007. His current service agreement will remain in place except for his notice provision which will be reduced from 12 months to six months.

Section 5. Corporate Governance and Management

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On May 25, 2006, at a meeting of the Board of Directors, the Board approved the appointment of Ian Campbell as the Company’s Group Chief Accountant. Mr. Campbell has been the Chief Financial Officer of Aspen Insurance UK Limited (‘‘Aspen Re’’), the Company’s U.K. operating subsidiary, since March 31, 2004, and will continue to serve in such capacity. He joined the Company in November 2002 where he served as Assistant Finance Director of Aspen Re from 2002 until March 2004. Mr. Campbell previously worked for Cox Insurance Holdings plc, a Lloyd’s managing agency where he was the Group Financial Controller from 1998 to 2002. Prior to this he was a senior consultant within the Insurance Consulting practice of KPMG. Mr. Campbell is a member of the Institute of Chartered Accountants in England and Wales.

Under Mr. Campbell’s current employment agreement, the agreement may be terminated upon six months’ notice by either party. Mr. Campbell’s retirement age under the agreement is 60 years of age. The agreement provides that Mr. Campbell will be entitled to a discretionary bonus, and that he is entitled to medical insurance, permanent health insurance, personal accident insurance and life insurance. The services agreement contains provisions relating to reimbursement of expenses, confidentiality, non-competition and non-solicitation. Effective April 1, 2006, Mr. Campbell’s salary is £180,000 per annum.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

At the Annual General Meeting of Shareholders of the Company held on May 25, 2006, the Company’s shareholders approved the proposed amendment to Bye-Law 87 to require directors who are 70 years of age or older to stand for re-election each year, rather than every three years as currently applicable to all directors.

The amended Bye-Law 87 is as follows:

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87.  The Directors shall be divided by the Board into three classes, designated Class I, Class II and Class III. The terms of the initial Directors shall be as follows (i) Directors initially designated as Class I Directors shall serve for an initial term ending on the date of the third annual general meeting of Shareholders following the Investment Date, (ii) Directors initially designated as Class II Directors shall serve for an initial term ending on the fourth annual general meeting following the Investment Date, and (iii) Directors initially designated as Class III Directors shall serve for an initial term ending on the fifth annual general meeting following the Investment Date. After the expiration of the respective terms of the initial Directors as set forth above, Directors of each class shall be elected by the Shareholders and shall serve a term ending on the date of the third annual general meeting of Shareholders next following the annual general meeting at which such Director was elected. Notwithstanding the foregoing, directors who are 70 years or older shall be elected every year and shall not be subject to a three-year term. In addition, notwithstanding the foregoing, each Director shall hold office until such Director’s successor shall have been duly elected or until such Director is removed from office pursuant to Bye-Law 89 or such office is otherwise vacated. In the event of any change in the number of Directors, the Board shall apportion any newly created directorships among, or reduce the number of directorships in, such class or classes as shall equalize, as nearly as possible, the number of Directors in each class. In no event will a decrease in the number of Directors shorten the term of any incumbent Director.

Section 9. Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(c)  The following exhibits are filed under Item 1.01 as part of this report:
10.1  2006 Stock Option Plan for non-employee directors
10.2  Form of share option agreement for non-employee directors

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


  ASPEN INSURANCE HOLDINGS LIMITED
  (Registrant)
Dated: May 26, 2006 By: /s/ Julian Cusack                                        
  Name:    Julian Cusack
  Title:      Chief Financial Officer

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INDEX TO EXHIBITS


Exhibit No. Description
10.1 2006 Stock Option Plan for non-employee directors
10.2 Form of share option agreement for non-employee directors

5



Exhibit 10.1

ASPEN INSURANCE HOLDINGS LIMITED
2006 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

1.  Purpose of the Plan
  The purpose of the Plan is to provide ownership of the Company's shares to non-employee members of the Board in order to improve the Company's ability to attract and retain highly qualified individuals to serve as directors of the Company and to strengthen the commonality of interest between directors and shareholders.
2.  Definitions
  The following capitalized terms used in the Plan shall have the respective meanings set forth in this Section:
(a)  ‘‘ Act ’’ means The Securities Exchange Act of 1934, as amended, or any successor thereto.
(b)  ‘‘ Affiliate ’’ means any entity directly or indirectly controlling, controlled by, or under common control with, the Company or any other entity designated by the Board in which the Company or an Affiliate has an interest.
(c)  ‘‘ Beneficial Owner ’’ means a ‘‘beneficial owner,’’ as such term is defined in Rule 13d-3 under the Act (or any successor rule thereto) (except that a Person shall be deemed to have ‘‘beneficial ownership’’ of all Shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time).
(d)  ‘‘ Board ’’ means the Board of Directors of the Company.
(e)  ‘‘ Change in Control ’’ means,

(i)    at any time that the Investors (as defined below) are the Beneficial Owners of 33.33% or more of the combined voting power of the voting shares of the Company, the occurrence of any of the following events:

(A)    the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any Person or Group (other than (x) any subsidiary (as defined below) of the Company or (y) any entity which is a holding company (as defined below) of the Company (other than any holding company which became a holding company in a transaction that resulted in a Change in Control) or any subsidiary of such holding company);

(B)    any Person or Group is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the combined voting power of the voting shares of the Company (or any entity which is the Beneficial Owner of more than 50% of the combined voting power of the voting shares of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; excluding, however, the following: (I) any acquisition directly from the Company, (II) any acquisition by the Company, or (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

(C)    the consummation of any transaction or series of transactions resulting in a merger, consolidation or amalgamation, in which the Company is involved, other than a merger, consolidation or amalgamation which would result in the shareholders of the Company immediately prior thereto continuing to own (either by remaining outstanding or by being converted into voting securities of the surviving entity), in the same proportion as immediately prior to the transaction(s), more than 50% of the combined voting power of the voting shares of the Company or such surviving entity outstanding immediately after such merger, consolidation or amalgamation; and

(ii)    at any time that the Investors (as defined below) are the Beneficial Owners of less than 33.33% of the combined voting power of the voting shares of the Company, the occurrence of any of the following events:



(A)    the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any Person or Group (other than (x) any subsidiary of the Company or (y) any entity that is a holding company of the Company (other than any holding company which became a holding company in a transaction that resulted in a Change in Control) or any subsidiary of such holding company);

(B)    any Person or Group is or becomes the Beneficial Owner, directly or indirectly, of more than 30% of the combined voting power of the voting shares of the Company (or any entity which is the Beneficial Owner of more than 50% of the combined voting power of the voting shares of the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; excluding, however, the following: (I) any acquisition directly from the Company, (II) any acquisition by the Company, (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (IV) any acquisition by a Person or Group if immediately after such acquisition a Person or Group who is a shareholder of the Company on the Effective Date continues to own voting power of the voting shares of the Company that is greater than the voting power owned by such acquiring Person or Group;

(C)    the consummation of any transaction or series of transactions resulting in a merger, consolidation or amalgamation, in which the Company is involved, other than a merger, consolidation or amalgamation which would result in the shareholders of the Company immediately prior thereto continuing to own (either by remaining outstanding or by being converted into voting securities of the surviving entity), in the same proportion as immediately prior to the transaction(s), more than 50% of the combined voting power of the voting shares of the Company or such surviving entity outstanding immediately after such merger, consolidation or amalgamation; or

(D)    a change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board shall be referred to for purposes of this subsection (e)(ii) as the ‘‘Incumbent Board’’) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election, by a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and, provided further, however, that any such individual whose initial assumption of office occurs as the result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A of the Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Board shall not be so considered as a member of the Incumbent Board.

For purposes of this definition of Change in Control, (i) ‘‘Investors’’ shall mean The Blackstone Group, Wellington Underwriting plc, Candover Partners Limited, Credit Suisse First Boston Private Equity, Montpelier Re Holdings Ltd., 3i Group plc, Olympus Partners and Phoenix Equity Partners or their respective Affiliates; (ii) ‘‘subsidiary’’ shall mean, in respect of any entity, any other entity that is, directly or indirectly, wholly owned by the first entity; and (iii) ‘‘holding company’’ shall mean, in respect of any entity, any other entity that, directly or indirectly, wholly owns such first entity.

(f)  ‘‘ Code ’’ means the Internal Revenue Code of 1986, as amended, or any successor thereto.
(g)  ‘‘ Committee ’’ means the Committee, as specified in Section 4, appointed by the Board.
(h)  ‘‘ Company ’’ means Aspen Insurance Holdings Limited, a Bermuda corporation.
(i)  ‘‘ Effective Date ’’ means the date the Board approves the Plan.
(j)  ‘‘ Fair Market Value ’’ means the average of the high and low prices for Shares traded on the New York Stock Exchange on the date of the grant of such Option or if no Shares are traded on that day, on the next preceding day on which the Shares were traded on the New York Stock Exchange.


(k)  ‘‘ Group ’’ means a ‘‘group,’’ as such term is used for purposes of Section 13(d)(3) or 14(d)(2) of the Act (or any successor section thereto).
(l)  ‘‘ Option ’’ means a share option granted pursuant to Section 6.
(m)  ‘‘ Option Price ’’ means the purchase price per Share of an Option, as determined pursuant to Section 6(a).
(n)  ‘‘ Participant ’’ means a non-employee member of the Board or the board of directors of an Affiliate who is selected by the Committee to participate in the Plan. To the extent that the Committee determines it is necessary or desirable to grant an Option directly to the employer of a non-employee director pursuant to Section 10, such employer will be deemed to be the Participant.
(o)  ‘‘ Person ’’ means a ‘‘person,’’ as such term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor section thereto).
(p)  ‘‘ Plan ’’ means the Aspen Insurance Holdings Limited 2006 Stock Option Plan for Non-Employee Directors.
(q)  ‘‘ Service ’’ means a Participant’s service as a non-employee member of the Board or the board of directors of an Affiliate.
(r)  ‘‘ Shares ’’ means ordinary shares, par value $0. 0015144558 per share, in the capital of the Company.
(s)  ‘‘ Subsidiary ’’ means a subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto), of the Company.
3.  Shares Subject to the Plan

The total number of Shares that may be issued pursuant to Options granted under the Plan is 400,000. The Shares may consist, in whole or in part, of unissued Shares or previously issued Shares. The issuance of Shares upon the exercise of an Option shall reduce the total number of Shares available under the Plan. Shares that are (a) subject to Options (or portions thereof) that are forfeited, are cancelled, or expire, terminate or lapse unexercised or (b) held back by the Company upon exercise of an Option to cover the Option Price or tax withholding, as applicable, shall not be treated as having been issued under the Plan.

4.  Administration
(a)  The Plan shall be administered by the full Board or such committee as the Board shall select consisting solely of two or more members of the Board who, during any period the Company is subject to Section 16 of the Act, are intended to qualify as ‘‘Non-Employee Directors’’ within the meaning of Rule 16b-3 under the Act (or any successor rule thereto). The Board or any such committee, as the case may be, shall be referred to as the ‘‘Committee’’ for purposes of this Plan and any Option agreement. To the extent a Committee other than the Board administers the Plan, the members of such Committee shall be appointed from time to time by and shall serve at the discretion of, the Board.
(b)  Subject to the provisions of the Plan, the Committee shall have the full power and authority to grant, and establish the terms and conditions of, any Option to any person eligible to be a Participant. The Committee may amend the terms and conditions of outstanding Options; provided, however, that no such amendment that would adversely affect a Participant's rights with respect to an Option may be made without the prior written consent of the Participant.
(c)  The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan, and may delegate such authority, as it deems appropriate. The Committee may correct any defect or supply any omission or reconcile any


  inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors).
(d)  The Company shall have the power and right, prior to the delivery of Shares pursuant to an Option, to deduct or withhold, or require a participant to remit to the Company (or an Affiliate), an amount (in cash or Shares) sufficient to satisfy any applicable tax withholding requirements applicable to an Option. Subject to such restrictions as the Committee may prescribe, a Participant may satisfy all or a portion of any tax withholding requirements by electing to have the Company withhold Shares having a Fair Market Value equal to the amount to be withheld up to the minimum statutory tax withholding rate (or such other rate that will not result in a negative accounting impact).
5.  Limitations
(a)  No Option may be granted under the Plan after the tenth anniversary of the Effective Date, but Options theretofore granted may extend beyond that date.
(b)  Without the approval of the shareholders of the Company, the Company shall not adjust an Option or exchange an Option with another Option if it would result in an Option with a lower Option Price (except for adjustments pursuant to Section 7 of the Plan).
6.  Terms and Conditions of Options

Options granted under the Plan shall be nonqualified stock options for United States federal income tax purposes, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine:

(a)  Option Price . The Option Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is granted (except to the extent the Option Price is adjusted pursuant to Section 7 of the Plan).
(b)  Exercisability . Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted, except as may be provided pursuant to Section 12.
(c)  Exercise of Options . Except as otherwise provided in the Plan or in an Option agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable. For purposes of this Section 6, the exercise date of an Option shall be the date a notice of exercise is received by the Company, together with payment (or to the extent permitted by applicable law, provision for payment) of the full purchase price in accordance with this Section 6(c). The purchase price for the Shares as to which an Option is exercised shall be paid to the Company, as designated by the Committee, pursuant to one or more of the following methods (subject in each case to such conditions or restrictions as the Committee may prescribe): (i) in cash or its equivalent (e.g., by check); (ii) in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; (iii) partly in cash and partly in Shares; (iv) through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased; or (v) by such other means as the Committee may prescribe. No Participant shall have any rights to dividends or other rights of a shareholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee.
(d)  Attestation . Wherever in this Plan or any agreement evidencing an Option, a Participant is permitted to pay the Option Price or taxes relating to the exercise of an Option by delivering


  Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and/or shall withhold such number of Shares from the Shares acquired by the exercise of the Option, as appropriate.
7.  Adjustments Upon Certain Events
  Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Options granted under the Plan:
(a)  Generally . In the event of any change in the outstanding Shares after the Effective Date by reason of any Share dividend or split, reorganization, amalgamation, recapitalization, merger, consolidation, spin-off, combination or transaction or exchange of Shares or other corporate exchange, or any distribution to shareholders of Shares other than regular cash dividends or any transaction similar to the foregoing, the Committee in its sole discretion and without liability to any person shall make such substitutions or adjustments as it deems to be equitable, in its sole discretion, and necessary to preserve the benefits or potential benefits intended to be made available under this Plan as to (i) the number or kind of Shares or other securities that may be issued pursuant to the Plan or outstanding Options, (ii) the Option Price of any outstanding Option and/or (iii) any other affected terms of such Options.
(b)  Change in Control . In the event of a Change in Control, the Committee may, but shall not be obligated to, (A) with respect to any Option, accelerate or vest with respect to, all or any portion of an Option or (B) cancel Options for fair value (as reasonably determined in the discretion of the Committee) which may equal, but in any event shall not be less than, the excess, if any, of value of the consideration to be paid in the Change in Control transaction to holders of the same number of Shares subject to such Options (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options) over the aggregate exercise price of such Options or (C) provide for the issuance of substitute Options that will substantially preserve the otherwise applicable terms of any affected Options previously granted hereunder as determined by the Committee in its sole discretion or (D) provide that for a period of at least 15 days prior to the Change in Control, such Options shall be exercisable as to all Shares subject thereto and that upon the occurrence of the Change in Control, such Options shall terminate and be of no further force and effect.
8.  No Right to Service or Options
  The granting of an Option under the Plan shall impose no obligation on the Company or any Affiliate to continue the Service of a Participant and shall not lessen or affect the Company’s or Affiliate’s right to terminate the Service of such Participant. No Participant or other Person shall have any claim to be granted any Option, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Options. The terms and conditions of Options and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).
9.  Successors and Assigns
  The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.
10.  Transferability of Options
  Unless otherwise determined by the Committee, an Option shall not be transferable or assignable, provided, however, that (a) an Option may be transferred or assigned by will or by the laws of descent and distribution, and, (b) if permitted by the Committee in its sole discretion, an Option may be granted directly or transferred to the employer of a non-employee director if such non-employee director is obligated to transfer any compensation received as a non-employee director to his or her employer. An Option exercisable after the death of a Participant may be exercised by the legatees, personal representatives or distributees of the Participant.


11.  Amendments or Termination
  The Board or the Committee may amend, alter or discontinue the Plan at any time and from time to time, but no amendment, alteration or discontinuation shall be made, (a) without the approval of the shareholders of the Company, if such action would (i) increase the total number of Shares that may be issued under the Plan, (ii) reduce the Option Price of an Option (except to the extent the increase in Shares or reduction in Option Price is made in connection with an adjustment under Section 7 of the Plan), or (iii) require shareholder approval under any applicable New York Stock Exchange listing standards or any applicable rule promulgated by the United States Securities and Exchange Commission or any securities exchange on which Shares are listed or any other applicable laws, and (b) without the consent of a Participant, if such action would diminish any of the rights of the Participant under any Option theretofore granted to such Participant under the Plan.
12.  Requirements of Law; International Participants
  The Committee may, in its sole discretion, amend the terms of the Plan or Options in order (i) to comply with United States federal law or the rules of any securities exchange in the United States or (ii) with respect to Participants who reside or work outside the United States of America, to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company or an Affiliate, and the Committee may, where appropriate, establish one or more sub-plans to reflect such amended or varied provisions.
13.  Choice of Law
  The Plan shall be governed by and construed in accordance with the laws of Bermuda, without regard to conflicts of laws principles.
14.  Arbitration
  In the event of any controversy between a Participant and the Company arising out of, or relating to, this Plan or an Option granted hereunder which cannot be settled amicably by the parties, such controversy shall be finally, exclusively and conclusively settled by mandatory arbitration conducted expeditiously in accordance with the American Arbitration Association rules, by a single independent arbitrator. If the parties are unable to agree on the selection of an arbitrator, then either the Participant or the Company may petition the American Arbitration Association for the appointment of the arbitrator, which appointment shall be made within ten (10) days of the petition therefor. Either party to the dispute may institute such arbitration proceeding by giving written notice to the other party. A hearing shall be held by the arbitrator in New York, London or Bermuda as agreed by the parties (or, failing such agreement, in Bermuda) within thirty (30) days of his or her appointment. The decision of the arbitrator shall be final and binding upon the parties and shall be rendered pursuant to a written decision that contains a detailed recital of the arbitrator’s reasoning. Judgment upon the award rendered may be entered in any court having jurisdiction thereof.
15.  Code Section 409A Compliance

To the extent applicable, it is intended that this Plan and any Options granted under the Plan comply with the requirements of Section 409A of the Code and any related regulations or other guidance promulgated with respect to such Section by the United States Department of the Treasury or the Internal Revenue Service (‘‘Section 409A’’). Any provision that would cause the Plan or any Option granted hereunder to fail to satisfy Section 409A shall have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A.

16.  Effectiveness of the Plan
  The Plan shall be effective as of the Effective Date, subject to the approval of the shareholders of the Company.


Exhibit 10.2

ASPEN INSURANCE HOLDINGS LIMITED

NON-EMPLOYEE DIRECTOR

NONQUALIFIED SHARE OPTION AGREEMENT

THIS AGREEMENT (the ‘‘Agreement’’), is made effective as of the          day of                                 , 2006 (hereinafter called the ‘‘Date of Grant’’), between Aspen Insurance Holdings Limited, a Bermuda corporation (hereinafter called the ‘‘Company’’), and                              (hereinafter called the ‘‘Participant’’):

RECITALS:

WHEREAS, the Company has adopted the Aspen Insurance Holdings Limited 2006 Stock Option Plan for Non-Employee Directors (the ‘‘Plan’’), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Committee has determined that it would be in the best interests of the Company and its shareholders to grant the stock options provided for herein to the Participant pursuant to the Plan and the terms set forth herein.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1.  Grant of the Option . The Company hereby grants to the Participant the right and option to purchase, on the terms and conditions hereinafter set forth, all or any part of an aggregate of                      Shares (the ‘‘Option’’), subject to adjustment as set forth in the Plan. The purchase price of the Shares subject to the Option shall be $                 per Share (the ‘‘Option Price’’).
2.  Vesting .
(a)  Subject to the Participant’s continued Service as a director of the Company, Shares underlying the Option shall become vested on the third anniversary of the Date of Grant.
(b)  In connection with any event described in Section 7(a) of the Plan or in the event of a change in applicable accounting rules, the Committee shall make such substitutions or adjustments in the terms of the Option, if any, as it shall determine shall be necessary to equitably reflect such event in order to prevent dilution or enlargement of the potential benefits of the Option. The Committee’s determination as to any such adjustment or substitution shall be final.
(c)  If the Participant’s Service with the Company is terminated for any reason and the Option is not then vested, it shall be canceled by the Company without consideration.
3.  Exercise of Option .
(a)  Right to Exercise. Once the Option has vested it shall become immediately exercisable.
(b)  Period of Exercise. Subject to the provisions of the Plan and this Agreement, the Participant may exercise all or any part of the vested Option at any time prior to the earliest to occur of:
(i)  the tenth anniversary of the Date of Grant;
(ii)  the first anniversary of the Participant’s termination of Service other than for Cause; and
(iii)  the date of the Participant’s termination of Service by the Company for Cause.

For purposes of this Agreement, ‘‘Cause’’ shall mean (i) Participant’s engagement in misconduct which is materially injurious to the Company or any of its Affiliates, (ii) Participant’s continued failure to substantially perform his or her duties as a director to the Company or any of its Affiliates, (iii)



Participant’s repeated dishonesty in the performance of his or her duties as a director to the Company or any of its Affiliates, or (iv) Participant’s commission of an act or acts constituting any fraud against, or misappropriation or embezzlement from the Company or any of its Affiliates. The determination of the existence of Cause shall be made by the Committee in good faith.

(c)  Method of Exercise.
(i)  Subject to Section 3(b), the vested Option may be exercised by delivering to the Company at its principal office written notice of intent to so exercise; provided that the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which an Option is being exercised and the method of payment of the Option Price. The Option Price for the Shares as to which the Option is exercised shall be paid to the Company, as designated by the Committee, pursuant to one or more of the following methods (subject in each case to such conditions or restrictions as the Committee may prescribe): (A) in cash or its equivalent (e.g., by check); (B) in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; (C) partly in cash and partly in such Shares; (D) by delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased; or (E) by such other means as the Committee may prescribe. The Participant shall not have any right to dividends or other rights of a shareholder with respect to Shares subject to the Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.
(ii)  Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange that the Committee shall in its sole discretion determine to be necessary or advisable.
(iii)  Upon the Company’s determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to the Participant for damages relating to any delays in issuing the certificates to him, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.
(iv)  In the event of the Participant’s death, subject to Section 6, the vested Option shall remain exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and distribution as the case may be, to the extent set forth in Section 3(b). Any heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof.
4.  No Right to Continued Service . The granting of the Option evidenced hereby and this Agreement shall impose no obligation on the Company or any Affiliate to continue the Service of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Service of such Participant.
5.  Legend on Certificates . The certificates representing the Shares purchased by exercise of the Option shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the U.S. Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.


6.  Transferability .
(a)  The Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance; provided, further, that, upon written request by the Participant, the Committee may, subject to such rules as the Committee may adopt, permit the Option to be transferred or assigned by the Participant to (i) the Participant’s spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (collectively, the ‘‘Immediate Family’’); (ii) a trust primarily for the benefit of the Participant and/or members of his or her Immediate Family (a ‘‘Family Trust’’); (iii) a partnership or limited liability company or other entity whose only partners or other equity owners are a Family Trust, the Participant and/or his or her Immediate Family members; or (iv) such Participant’s employer in the event the Participant is a non-employee director who is required to transfer any compensation received as non-employee director to his or her employer (each transferee described in clauses (i), (ii), (iii) and (iv) above is hereinafter referred to as a ‘‘Permitted Transferee’’). The request by the Participant shall describe the terms and conditions of the proposed transfer and the Committee shall notify the Participant in writing if such a transfer will be permitted.
(b)  Following a permitted transfer described in Section 6(a) above, all terms of the Option shall apply to the Permitted Transferee and any reference in the Plan and in the Agreement to a Participant shall be deemed to refer to the Permitted Transferee, except that (i) Permitted Transferees shall not be entitled to transfer the Option, other than by will or the laws of descent and distribution, (ii) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the shares to be acquired pursuant to the exercise of such Option if the Committee determines that such a registration statement is necessary or appropriate, (iii) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; provided that, if such notice is not provided to the Permitted Transferee, such notices are delivered by the Company to the Participant, and (iv) the consequences of termination of the Participant’s Service under the terms of the Plan and the Agreement shall continue to be applied with respect to the Participant, following which the transferred Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the Agreement. No permitted transfer of the Option to heirs, legatees or the employer of the Participant shall be effective to bind the Company unless the Committee shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof.
(c)  Except as otherwise described in this Section 6, during the Participant’s lifetime, the Option is exercisable only by the Participant.
7.  Withholding . The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Option, its exercise or any payment or transfer under or with respect to the Option and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.
8.  Securities Laws . Upon the acquisition of any Shares pursuant to the exercise of an Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.


9.  Notices . Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
10.  Choice of Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF BERMUDA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
11.  Option Subject to the Plan . By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option is subject to the Plan (including without limitation the arbitration provision), and the terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.
12.  Rights as a Shareholder . The Participant shall have no rights as a shareholder, and shall not receive dividends, with respect to any Shares subject to the Option until the Option has been exercised and Share certificates have been issued to the Participant.
13.  Signature in Counterparts . This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

ASPEN INSURANCE HOLDINGS LIMITED
By:                                                                                 

AGREED AND ACKNOWLEDGED AS
OF THE DATE FIRST ABOVE WRITTEN:

Participant