MARKEL CORP (Form: 10-Q, Received: 08/07/2013 16:09:24)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________



x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2013



¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______

Commission File Number: 001-15811

___________________________________________

MARKEL CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________



Virginia		54-1959284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4521 Highwoods Parkway, Glen Allen, Virginia 23060-6148

(Address of principal executive offices)

(Zip Code)

(804) 747-0136

(Registrant’s telephone number, including area code)

___________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares of the registrant’s common stock outstanding at July 31, 2013 : 13,998,686

Table of Contents

Markel Corporation

Form 10-Q

Index




		Page Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets—June 30, 2013 and December 31, 2012	3

	Consolidated Statements of Income and Comprehensive Income (Loss)—Quarters and Six Months Ended June 30, 2013 and 2012	4

	Consolidated Statements of Changes in Equity—Six Months Ended June 30, 2013 and 2012	5

	Condensed Consolidated Statements of Cash Flows—Six Months Ended June 30, 2013 and 2012	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

	Critical Accounting Estimates	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	54

Safe Harbor and Cautionary Statement		55

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 6.	Exhibits	57

Signatures		58

Exhibit Index		59

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands)



	June 30, 2013		December 31, 2012
	(unaudited)
ASSETS
Investments, available-for-sale, at estimated fair value:
Fixed maturities (amortized cost of $10,599,255 in 2013 and $4,562,278 in 2012)	$	10,678,463	$	4,979,283
Equity securities (cost of $1,451,182 in 2013 and $1,387,305 in 2012)	2,810,434		2,406,951
Short-term investments (estimated fair value approximates cost)	995,697		973,330
Total Investments	14,484,594		8,359,564
Cash and cash equivalents	1,702,622		863,766
Restricted cash and cash equivalents	396,416		109,415
Receivables	1,416,165		413,883
Reinsurance recoverable on unpaid losses	1,876,858		778,774
Reinsurance recoverable on paid losses	141,736		51,145
Deferred policy acquisition costs	225,492		157,465
Prepaid reinsurance premiums	426,514		110,332
Goodwill	1,041,900		674,930
Intangible assets	576,688		374,295
Other assets	1,210,995		663,019
Total Assets	$	23,499,980	$	12,556,588
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses	$	10,012,140	$	5,371,426
Life and annuity benefits	1,456,829		—
Unearned premiums	2,332,267		1,000,261
Payables to insurance and reinsurance companies	422,731		103,212
Senior long-term debt and other debt (estimated fair value of $2,383,000 in 2013 and $1,688,000 in 2012)	2,249,819		1,492,550
Other liabilities	625,487		613,897
Total Liabilities	17,099,273		8,581,346
Redeemable noncontrolling interests	74,858		86,225
Commitments and contingencies
Shareholders’ equity:
Common stock	3,269,355		908,980
Retained earnings	2,148,240		2,068,340
Accumulated other comprehensive income	903,309		911,337
Total Shareholders’ Equity	6,320,904		3,888,657
Noncontrolling interests	4,945		360
Total Equity	6,325,849		3,889,017
Total Liabilities and Equity	$	23,499,980	$	12,556,588

See accompanying notes to consolidated financial statements.

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MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income (Loss)

(Unaudited)



	Quarter Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(dollars in thousands, except per share data)
OPERATING REVENUES
Earned premiums	$	784,819		$	513,056		$	1,349,406		$	1,042,652
Net investment income	77,979			63,602			142,596			143,396
Net realized investment gains:
Other-than-temporary impairment losses	(4,589		)	(992		)	(4,589		)	(992		)
Net realized investment gains, excluding other-than-temporary impairment losses	16,135			9,208			34,052			21,117
Net realized investment gains	11,546			8,216			29,463			20,125
Other revenues	157,425			108,373			330,168			220,209
Total Operating Revenues	1,031,769			693,247			1,851,633			1,426,382
OPERATING EXPENSES
Losses and loss adjustment expenses	442,406			221,094			730,302			509,615
Underwriting, acquisition and insurance expenses	363,095			224,784			591,768			463,481
Amortization of intangible assets	11,292			8,315			20,907			17,119
Other expenses	140,759			97,719			293,076			198,123
Total Operating Expenses	957,552			551,912			1,636,053			1,188,338
Operating Income	74,217			141,335			215,580			238,044
Interest expense	28,561			22,209			52,135			44,376
Income Before Income Taxes	45,656			119,126			163,445			193,668
Income tax expense	16,980			28,358			45,506			45,187
Net Income	$	28,676		$	90,768		$	117,939		$	148,481
Net income attributable to noncontrolling interests	920			1,081			1,281			1,541
Net Income to Shareholders	$	27,756		$	89,687		$	116,658		$	146,940

OTHER COMPREHENSIVE INCOME (LOSS)
Change in net unrealized gains on investments, net of taxes:
Net holding gains (losses) arising during the period	$	(158,690	)	$	(8,029	)	$	22,909		$	145,426
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period	(70		)	130			179			(8		)
Reclassification adjustments for net gains included in net income	(7,957		)	(5,739		)	(20,212		)	(13,670		)
Change in net unrealized gains on investments, net of taxes	(166,717		)	(13,638		)	2,876			131,748
Change in foreign currency translation adjustments, net of taxes	(10,459		)	(3,162		)	(11,640		)	(339		)
Change in net actuarial pension loss, net of taxes	366			482			736			965
Total Other Comprehensive Income (Loss)	(176,810		)	(16,318		)	(8,028		)	132,374
Comprehensive Income (Loss)	$	(148,134	)	$	74,450		$	109,911		$	280,855
Comprehensive income attributable to noncontrolling interests	920			1,034			1,281			1,494
Comprehensive Income (Loss) to Shareholders	$	(149,054	)	$	73,416		$	108,630		$	279,361

NET INCOME PER SHARE
Basic	$	2.24		$	8.44		$	10.83		$	14.38
Diluted	$	2.24		$	8.42		$	10.79		$	14.35

See accompanying notes to consolidated financial statements.

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MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

(Unaudited)



(dollars in thousands)	Common Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
December 31, 2011	$	891,507		$	1,835,086		$	660,920		$	3,387,513		$	602		$	3,388,115		$	74,231
Net income (loss)				146,940			—			146,940			(477		)	146,463			2,018
Other comprehensive income (loss)				—			132,421			132,421			—			132,421			(47		)
Comprehensive Income (Loss)										279,361			(477		)	278,884			1,971
Issuance of common stock	8,413			—			—			8,413			—			8,413			—
Repurchase of common stock	—			(16,062		)	—			(16,062		)	—			(16,062		)	—
Restricted stock units expensed	3,806			—			—			3,806			—			3,806			—
Acquisitions	—			—			—			—			—			—			7,896
Adjustment of redeemable noncontrolling interests	—			(8,186		)	—			(8,186		)	—			(8,186		)	8,186
Other	321			—			—			321			—			321			(4,671		)
June 30, 2012	$	904,047		$	1,957,778		$	793,341		$	3,655,166		$	125		$	3,655,291		$	87,613

December 31, 2012	$	908,980		$	2,068,340		$	911,337		$	3,888,657		$	360		$	3,889,017		$	86,225
Net income (loss)				116,658			—			116,658			(363		)	116,295			1,644
Other comprehensive loss				—			(8,028		)	(8,028		)	—			(8,028		)	—
Comprehensive Income (Loss)										108,630			(363		)	108,267			1,644
Issuance of common stock	15,935			—			—			15,935			—			15,935			—
Repurchase of common stock	—			(40,858		)	—			(40,858		)	—			(40,858		)	—
Restricted stock units expensed	14,932			—			—			14,932			—			14,932			—
Acquisition of Alterra	2,330,199			—			—			2,330,199			—			2,330,199			—
Adjustment of redeemable noncontrolling interests	—			3,101			—			3,101			—			3,101			(3,101		)
Purchase of noncontrolling interest	(283		)	—			—			(283		)	—			(283		)	(8,157		)
Other	(408		)	999			—			591			4,948			5,539			(1,753		)
June 30, 2013	$	3,269,355		$	2,148,240		$	903,309		$	6,320,904		$	4,945		$	6,325,849		$	74,858

See accompanying notes to consolidated financial statements.

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MARKEL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Six Months Ended June 30,
	2013			2012
	(dollars in thousands)
OPERATING ACTIVITIES
Net income	$	117,939		$	148,481
Adjustments to reconcile net income to net cash provided by operating activities	122,032			(43,734		)
Net Cash Provided By Operating Activities	239,971			104,747
INVESTING ACTIVITIES
Proceeds from sales of fixed maturities and equity securities	124,109			143,429
Proceeds from maturities, calls and prepayments of fixed maturities	490,775			256,503
Cost of fixed maturities and equity securities purchased	(373,153		)	(285,988		)
Net change in short-term investments	(18,962		)	75,539
Proceeds from sales of equity method investments	75,370			—
Cost of equity method investments	(5,791		)	(38,250		)
Acquisitions, net of cash acquired	7,756			(143,620		)
Additions to property and equipment	(26,418		)	(22,885		)
Change in restricted cash and cash equivalents	127,496			(40,873		)
Other	(2,484		)	(1,509		)
Net Cash Provided (Used) By Investing Activities	398,698			(57,654		)
FINANCING ACTIVITIES
Additions to senior long-term debt and other debt	516,934			73,705
Repayments of senior long-term debt and other debt	(271,559		)	(71,529		)
Repurchases of common stock	(40,858		)	(16,062		)
Issuance of common stock	15,935			8,413
Distributions to noncontrolling interests	(2,779		)	(4,351		)
Purchase of redeemable noncontrolling interests	(8,440		)	(320		)
Other	(254		)	(14,987		)
Net Cash Provided (Used) By Financing Activities	208,979			(25,131		)
Effect of foreign currency rate changes on cash and cash equivalents	(8,792		)	(659		)
Increase in cash and cash equivalents	838,856			21,303
Cash and cash equivalents at beginning of period	863,766			703,259
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,702,622		$	724,562

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Markel Corporation is a diverse financial holding company serving a variety of niche markets. Markel Corporation’s principal business markets and underwrites specialty insurance products and programs. Markel Corporation also owns interests in various industrial and service businesses that operate outside of the specialty insurance marketplace.

On May 1, 2013 (the Acquisition Date), Markel Corporation completed the acquisition of 100% of the issued and outstanding common stock of Alterra Capital Holdings Limited (Alterra) pursuant to an agreement dated December 18, 2012 which provided for the merger of Alterra with one of Markel Corporation's subsidiaries. Total purchase consideration was $3.3 billion . Alterra was a Bermuda-headquartered global enterprise providing diversified specialty insurance and reinsurance products to corporations, public entities and other property and casualty insurers.

The consolidated balance sheet as of June 30, 2013 and the related consolidated statements of income and comprehensive income (loss), changes in equity and cash flows for the quarters and six months ended June 30, 2013 and 2012 are unaudited. In the opinion of management, all adjustments necessary for fair presentation of such consolidated financial statements have been included. Such adjustments consist only of normal, recurring items. Interim results are not necessarily indicative of results of operations for the entire year. The consolidated balance sheet as of December 31, 2012 was derived from Markel Corporation’s audited annual consolidated financial statements.

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of Markel Corporation and its subsidiaries (the Company). All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements include the results of operations and cash flows of Alterra from the Acquisition Date to June 30, 2013 and not in any prior periods, except with respect to the Supplemental Pro Forma Information included in note 3. The Company consolidates the results of its non-insurance subsidiaries on a one-month lag. Certain prior year amounts have been reclassified to conform to the current presentation.

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. Readers are urged to review the Company’s 2012 Annual Report on Form 10-K for a more complete description of the Company’s business and accounting policies.

2. Recent Accounting Pronouncements

Effective January 1, 2013, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2013-02, Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income, which amends FASB Accounting Standards Codification (ASC) 220, Comprehensive Income, to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU No. 2013-02 requires information about reclassifications out of accumulated other comprehensive income to be reported in one place, by component. The guidance also requires disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The adoption of this guidance did not have an impact on the Company's financial position, results of operations or cash flows. The Company has included the additional disclosures required by ASU No. 2013-0 2 in note 14.

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3. Acquisitions

Acquisition of Alterra

a) Overview. On May 1, 2013, the Company completed the acquisition of 100% of the issued and outstanding common stock of Alterra pursuant to an agreement dated December 18, 2012 (the Merger Agreement) which provided for the merger of Alterra with one of the Company's subsidiaries. Alterra was a Bermuda-headquartered global enterprise providing diversified specialty property and casualty insurance and reinsurance products to corporations, public entities and other property and casualty insurers. The acquisition of Alterra creates additional size and scale, providing additional insurance and investment opportunities for the Company. As a result of the acquisition of Alterra, the Company formed a new operating segment, the Alterra segment. Results attributable to Alterra's property and casualty insurance and reinsurance business are included in the Alterra segment. Previously, Alterra also offered life and annuity reinsurance products. In 2010, Alterra ceased writing life and annuity reinsurance contracts and placed this business into run-off. Results attributable to the run-off of Alterra's life and annuity reinsurance business, as well as other lines of business previously discontinued by Alterra, are included in the Company's Other Insurance (Discontinued Lines) segment. See note 6 for further discussion of the Company's operating segments.

Pursuant to the terms of the Merger Agreement, on the Acquisition Date, equity holders of Alterra received, in exchange for each share of Alterra common stock held (other than restricted shares that did not vest in connection with the transaction), (1) 0.04315 shares of the Company's common stock and (2) $10.00 in cash. In total, equity holders of Alterra received total consideration of $3.3 billion , consisting of cash consideration of $964.3 million and stock consideration of 4.3 million shares of the Company's common stock.

Following the acquisition, the Company's board of directors consists of all 10 members from its pre-acquisition board of directors and two additional members who were designated by Alterra and approved by the Company's Nominating/Corporate Governance Committee.

Table of Contents

b) Purchase Price. The Company's total purchase price for Alterra as of the Acquisition Date was calculated as follows:



(in thousands, except per share amounts)
Shares of Alterra common stock outstanding as of the Acquisition Date	96,433
Exchange ratio per the Merger Agreement	0.04315
Markel share issuance to Alterra shareholders	4,161

Shares of Alterra restricted stock outstanding as of the Acquisition Date	2,239
Incentive award ratio per the Merger Agreement	0.06252
Markel restricted stock issuance to Alterra restricted stock holders	140

Multiplied by Markel's weighted average stock price on April 30, 2013 ⁽¹⁾	$	529.59

Markel share and restricted stock issuance consideration, net of taxes	$	2,267,648

Alterra common shares outstanding as of the Acquisition Date that received cash consideration	96,433
Multiplied by cash price per share component per the Merger Agreement	$	10.00
Markel cash consideration	$	964,330

Fair value of Markel warrant issuance to Alterra warrant holders as of the Acquisition Date	$	73,685
Fair value of Markel stock option issuance to Alterra stock option holders as of the Acquisition Date, net of taxes	$	12,335
Fair value of partially vested Markel restricted stock unit issuance as of the Acquisition Date, net of taxes	$	6,867
Unrecognized compensation on unvested restricted stock and restricted stock units	$	(20,572	)
Total acquisition consideration	$	3,304,293


⁽¹⁾	The fair value of the shares issued by the Company was calculated as the weighted average price of the Company's stock on April 30, 2013, the day preceding the Acquisition Date.

As part of the consideration, the Company issued replacement warrants, options and restricted stock awards to holders of Alterra warrants, options and restricted stock awards. The acquisition consideration related to the options, restricted stock awards and partially vested restricted stock units issued was net of income taxes of $1.9 million , $10.1 million and $0.7 million , respectively. See note 13 for additional information about the equity awards issued in connection with the acquisition.

c) Fair Value of Net Assets Acquired and Liabilities Assumed. The purchase price was allocated to the acquired assets and liabilities of Alterra based on estimated fair values at the Acquisition Date. The Company recognized goodwill of $371.6 million , all of which was preliminarily recorded within the Alterra segment and is primarily attributable to Alterra's assembled workforce and synergies that are expected to result upon integration of Alterra into the Company’s insurance operations and investing activities. The Company estimates that none of the goodwill that was recorded will be deductible for income tax purposes. The Company also recognized indefinite lived intangible assets of $37.5 million and other intangible assets of $150 million , which will be amortized over a weighted average period of 17 years .

The Company has not completed the process of determining the fair value of the intangible assets acquired, unpaid losses and loss adjustment expenses and deferred taxes. These valuations will be completed within the measurement period, which cannot exceed 12 months from the Acquisition Date. As a result, the fair value recorded for these items is a provisional estimate and may be subject to adjustment. Once completed, any adjustments resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill.

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The following table summarizes the provisional fair values of the assets acquired and liabilities assumed at the Acquisition Date.



(dollars in thousands)
ASSETS
Investments	$	6,407,841
Cash and cash equivalents	1,036,274
Restricted cash and cash equivalents	414,497
Receivables	866,388
Reinsurance recoverable on unpaid losses	1,169,084
Reinsurance recoverable on paid losses	80,672
Prepaid reinsurance premiums	317,445
Other assets	801,758
LIABILITIES
Unpaid losses and loss adjustment expenses	4,719,461
Life and annuity benefits	1,477,482
Unearned premiums	1,075,610
Payables to insurance and reinsurance companies	342,858
Senior long-term debt	512,463
Other liabilities	220,903
Net assets	2,745,182
Goodwill	371,611
Intangible assets	187,500
Acquisition date fair value	$	3,304,293

An explanation of the significant adjustments for fair value and the related impact on amortization is as follows:

•

Investments - Investments acquired include a net increase of $223.1 million to adjust the historical carrying amount of Alterra's investments to their estimated fair value as of the Acquisition Date. The difference in the par value and estimated fair value of Alterra's fixed maturity securities investments as of the Acquisition Date, $552.4 million , will be amortized to net investment income over the term of the underlying securities, or sooner upon disposition.


•	Intangible assets - Establish the provisional estimated fair value of intangible assets related to Alterra (see below for further detail).

•

Unearned Premiums - Unearned premiums acquired include a decrease of $176.3 million to adjust the carrying value of Alterra's historical unearned premiums to fair value as of the Acquisition Date. The adjustment consists of the present value of the expected underwriting profit within the unearned premiums liability less costs to service the related policies and a risk premium. This adjustment will be amortized to underwriting, acquisition and insurance expenses over a weighted average period of approximately one year , as the contracts for business in-force as of the Acquisition Date expire.

•

Unpaid losses and loss adjustment expenses - Unpaid losses and loss adjustment expenses acquired include a provisional increase of $120.8 million to adjust the carrying value of Alterra's historical unpaid losses and loss adjustment expenses, net of related reinsurance recoverable, to fair value as of the Acquisition Date. The estimated fair value consists of the present value of the expected net loss and loss adjustment expense payments plus a risk premium. This adjustment, plus the $26.5 million unamortized fair value adjustment included in Alterra's historical unpaid losses and loss adjustment expenses, will be amortized to losses and loss adjustment expenses over a weighted average period of approximately five years , based on the estimated payout pattern of net reserves as of the Acquisition Date.

•

Life and Annuity Benefits - Life and annuity benefits acquired include an increase of $329.6 million to adjust the carrying value of Alterra's historical life and annuity benefits to fair value as of the Acquisition Date. The estimated fair value consists of the present value of the expected net life and annuity benefit payments plus a risk premium. See note 8 for detail regarding accounting for life and annuity benefits.


•	Senior long-term debt - Senior long-term debt acquired includes an increase of $71.9 million to adjust the carrying value of Alterra's senior long-term debt to its estimated fair value based on prevailing interest rates and other factors as of the Acquisition Date. This adjustment will be amortized to interest expense over the term of the notes. See note 9.

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The following table summarizes the provisional intangible assets recorded in connection with the acquisition, and as of June 30, 2013 .



(dollars in thousands)	Amount		Economic Useful Life
Customer relationships	$	113,000	18 years
Broker relationships	18,000		18 years
Technology	18,000		10 years
Trade names	1,000		One year
Lloyd's syndicate capacity	12,000		Indefinite
Insurance licenses	25,500		Indefinite
Intangible assets, before amortization, as of the Acquisition Date	187,500
Amortization (from the Acquisition Date through June 30, 2013)	1,699
Net intangible assets of June 30, 2013	$	185,801

Customer relationships represent policyholder relationships and the network of insurance companies through which Alterra conducts its operations. The fair value of customer relationships and broker relationships was estimated using the income approach. Critical inputs into the valuation model for customer relationships and broker relationships include estimates of expected premium and attrition rates, and discounting at a weighted average cost of capital. Technology represents the intangible asset related to Alterra's internally developed software and was valued using the income approach.

The fair value of Lloyd's syndicate capacity and insurance licenses was estimated using the market approach. Lloyd's syndicate capacity represents Alterra's authorized premium income limit to write insurance business in the Lloyd's market. Alterra's proportionate share of Syndicates 1400 and 2526, the syndicates through which it conducts its Lloyd's operations, are 100% and approximately 20% , respectively. The capacity is renewed annually at no cost to the Company but may be freely purchased or sold, subject to Lloyd's approval. The ability to write insurance business within the syndicate capacity is indefinite with the premium income limit being set annually by the Company, subject to Lloyd's approval.

d) Income Taxes. As a result of the acquisition, Alterra and its non-U.S. subsidiaries became controlled foreign corporations subject to U.S. income tax at a statutory rate of 35% . The acquisition was taxable to U.S. shareholders of Alterra, and Markel has elected to treat it as an asset acquisition under section 338(g) of the U.S. Internal Revenue Code of 1986 (IRC), as amended.

Effective May 1, 2013, the Company made an IRC section 953(d) election with respect to Alterra Bermuda Limited (Alterra Bermuda), a wholly-owned subsidiary of Alterra. As a result of the 953(d) election, Alterra Bermuda is treated as a domestic corporation for U.S. tax purposes and, accordingly, was required to record deferred taxes at the 35% statutory U.S. rate.

As part of the provisional allocation of the purchase price, the Company recorded net deferred tax assets of $255.8 million . Of this amount, $284.8 million represents deferred tax assets related to accrued losses and loss adjustment expenses and life and annuity benefits, which were partially offset by deferred tax liabilities of $67.4 million related to the estimated fair value of the intangible assets recorded. Other net deferred tax assets recorded primarily relate to differences between financial reporting and tax bases of the acquired assets and liabilities as of the Acquisition Date. At June 30, 2013 , earnings of Alterra's foreign subsidiaries are considered reinvested indefinitely, consistent with the Company's other foreign subsidiaries, and no provision for deferred U.S. income tax has been recorded.

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e) Transaction and Acquisition-Related Costs. The following table summarizes transaction and acquisition-related costs incurred by the Company in connection with the acquisition, all of which were included in underwriting, acquisition and insurance expenses in the consolidated statements of income and comprehensive income (loss).



(dollars in thousands)	Quarter and Six Months Ended June 30, 2013
Transaction costs	$	15,981
Acquisition-related costs:
Severance costs	28,215
Stay bonuses	6,075
Acceleration of Alterra long-term incentive compensation awards and restricted stock awards	11,538
Total transaction and acquisition-related costs	$	61,809

Transaction costs primarily consist of due diligence, legal and investment banking costs. Per the terms of the Merger Agreement, transaction costs attributable to Alterra were recorded and paid by Alterra prior to the Acquisition Date ( $23.0 million ) and are not included within the Company's consolidated statements of income and comprehensive income (loss).

In connection with the acquisition, Alterra instituted a retention plan for certain employees under which Alterra committed to the payment of stay bonuses to such employees one year from the Acquisition Date, provided they remain employed with the Company through that date. Payments may be accelerated for certain qualifying employment terminations.

Prior to its acquisition by the Company, Alterra granted long term incentive awards to certain employees to be paid in the form of cash on March 1, 2016, provided they remain employed with the Company on that date. Payments may be accelerated prior to March 1, 2016 for certain qualifying employment terminations. Additionally, as part of the purchase consideration, the Company issued replacement restricted stock awards to holders of Alterra restricted stock awards. As a result of separations made in connection with the acquisition, the Company recognized expense totaling $11.5 million related to the acceleration of certain of these awards during the quarter and six months ended June 30, 2013 .

f) Financial Results. The following table summarizes the results of Alterra since the Acquisition Date that have been included within the Company's consolidated statements of income and comprehensive income (loss).



(dollars in thousands)	For the period from May 1, 2013 to June 30, 2013
Operating revenues	$	243,246
Net loss to shareholders	$	(55,743	)

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g) Supplemental Pro Forma Information. Alterra's results have been included in the Company's Consolidated Financial Statements from the Acquisition Date to June 30, 2013 . The following table presents unaudited pro forma consolidated information for the quarter and six months ended June 30, 2013 and 2012 and assumes the Company's acquisition of Alterra occurred on January 1, 2012. The pro forma financial information is presented for informational purposes only and does not necessarily reflect the results that would have occurred had the acquisition taken place on January 1, 2012, nor is it necessarily indicative of future results. Significant adjustments used to determine pro forma results include amortization of intangible assets and amortization of fair value adjustments discussed in c) above, and the corresponding income tax effects. The Company also excluded certain charges from the pro forma results, including transaction costs incurred by the Company ( $16.0 million ) and Alterra ( $23.0 million ) totaling $39.0 million for both the quarter and six months ended June 30, 2013 , respectively, and severance and stay bonuses attributable to the acquisition totaling $28.2 million and $6.1 million , respectively, for both the quarter and six months ended June 30, 2013 . The acceleration of compensation expense during the quarter ended June 30, 2013 related to Alterra's long-term incentive compensation awards and restricted stock awards was attributable to the acquisition, however, the incremental expense recognized during the period only represents a timing difference in the recognition of expense. Therefore, it was not excluded from the pro forma underwriting results.



	Pro Forma						Pro Forma
	Quarter Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2013			2012			2013			2012
Earned premiums	$	888,161		$	862,935		$	1,798,009		$	1,730,284
Operating revenues	1,154,783			1,089,191			2,395,279			2,218,611
Net income to shareholders	72,090			118,551			208,060			205,574

U.S. GAAP combined ratio ⁽¹⁾	97		%	88		%	94		%	93		%

Basic net income per share	$	5.16		$	7.86		$	15.06		$	14.07
Diluted net income per share	$	5.13		$	7.83		$	15.00		$	14.01

Weighted average common shares outstanding:
Basic	14,021			14,035			14,020			14,030
Diluted	14,084			14,092			14,082			14,088


⁽¹⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.

Acquisition of Essentia

On January 1, 2013, the Company completed its acquisition of 100% of the outstanding shares of Essentia Insurance Company, a company that underwrites insurance exclusively for Hagerty Insurance Agency and Hagerty Classic Marine Insurance Agency (collectively, Hagerty) throughout the United States. Hagerty offers insurance for classic cars, vintage boats, motorcycles and related automotive collectibles. The Company recognized intangible assets of $35.4 million associated with this acquisition, which includes $25.0 million of customer relationships to be amortized over a weighted average period of six years. Results attributable to this acquisition are included in the Specialty Admitted segment.

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4. Investments

a) The following tables summarize the Company’s available-for-sale investments.



	June 30, 2013
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Unrealized Other-Than- Temporary Impairment Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	1,310,385	$	11,930	$	(24,171	)	$	—		$	1,298,144
Obligations of states, municipalities and political subdivisions	2,754,979		147,526		(19,633		)	—			2,882,872
Foreign governments	1,389,311		35,242		(45,325		)	—			1,379,228
Commercial mortgage-backed securities	423,886		19		(10,616		)	—			413,289
Residential mortgage-backed securities	1,052,615		10,560		(16,409		)	(2,258		)	1,044,508
Asset-backed securities	288,938		321		(3,167		)	—			286,092
Corporate bonds	3,379,141		71,802		(70,024		)	(6,589		)	3,374,330
Total fixed maturities	10,599,255		277,400		(189,345		)	(8,847		)	10,678,463
Equity securities:
Insurance, banks and other financial institutions	411,661		536,871		(230		)	—			948,302
Industrial, consumer and all other	1,039,521		825,243		(2,632		)	—			1,862,132
Total equity securities	1,451,182		1,362,114		(2,862		)	—			2,810,434
Short-term investments	995,687		11		(1		)	—			995,697
Investments, available-for-sale	$	13,046,124	$	1,639,525	$	(192,208	)	$	(8,847	)	$	14,484,594

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	December 31, 2012
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Unrealized Other-Than- Temporary Impairment Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	297,663	$	19,844	$	—		$	—		$	317,507
Obligations of states, municipalities and political subdivisions	2,586,867		245,057		(362		)	—			2,831,562
Foreign governments	503,844		52,764		—			—			556,608
Residential mortgage-backed securities	202,644		14,996		(5		)	(2,258		)	215,377
Asset-backed securities	13,828		517		—			—			14,345
Corporate bonds	957,432		93,395		(121		)	(6,822		)	1,043,884
Total fixed maturities	4,562,278		426,573		(488		)	(9,080		)	4,979,283
Equity securities:
Insurance, banks and other financial institutions	508,771		389,434		(138		)	—			898,067
Industrial, consumer and all other	878,534		637,783		(7,433		)	—			1,508,884
Total equity securities	1,387,305		1,027,217		(7,571		)	—			2,406,951
Short-term investments	973,318		26		(14		)	—			973,330
Investments, available-for-sale	$	6,922,901	$	1,453,816	$	(8,073	)	$	(9,080	)	$	8,359,564

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b) The following tables summarize gross unrealized investment losses by the length of time that securities have continuously been in an unrealized loss position.



	June 30, 2013
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	1,016,644	$	(24,171	)	$	—	$	—		$	1,016,644	$	(24,171	)
Obligations of states, municipalities and political subdivisions	290,283		(19,526		)	3,367		(107		)	293,650		(19,633		)
Foreign governments	882,167		(45,325		)	—		—			882,167		(45,325		)
Commercial mortgage-backed securities	406,372		(10,616		)	—		—			406,372		(10,616		)
Residential mortgage-backed securities	714,143		(18,665		)	229		(2		)	714,372		(18,667		)
Asset-backed securities	262,570		(3,167		)	—		—			262,570		(3,167		)
Corporate bonds	2,429,938		(76,613		)	—		—			2,429,938		(76,613		)
Total fixed maturities	6,002,117		(198,083		)	3,596		(109		)	6,005,713		(198,192		)
Equity securities:
Insurance, banks and other financial institutions	4,734		(230		)	—		—			4,734		(230		)
Industrial, consumer and all other	65,570		(2,614		)	118		(18		)	65,688		(2,632		)
Total equity securities	70,304		(2,844		)	118		(18		)	70,422		(2,862		)
Short-term investments	164,998		(1		)	—		—			164,998		(1		)
Total	$	6,237,419	$	(200,928	)	$	3,714	$	(127	)	$	6,241,133	$	(201,055	)

At June 30, 2013 , the Company held 1,971 securities with a total estimated fair value of $6.2 billion and gross unrealized losses of $201.1 million . Of these 1,971 securities, 12 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $3.7 million and gross unrealized losses of $0.1 million . Of these securities, 10 securities were fixed maturities and two were equity securities. The Company does not intend to sell or believe it will be required to sell these fixed maturities before recovery of their amortized cost. The Company has the ability and intent to hold these equity securities for a period of time sufficient to allow for the anticipated recovery of their fair value.

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	December 31, 2012
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses			Estimated Fair Value		Gross Unrealized Holding and Other-Than- Temporary Impairment Losses
Fixed maturities:
Obligations of states, municipalities and political subdivisions	$	2,833	$	(46	)	$	3,616	$	(316	)	$	6,449	$	(362	)
Residential mortgage-backed securities	364		(2,260		)	201		(3		)	565		(2,263		)
Corporate bonds	—		(6,822		)	3,860		(121		)	3,860		(6,943		)
Total fixed maturities	3,197		(9,128		)	7,677		(440		)	10,874		(9,568		)
Equity securities:
Insurance, banks and other financial institutions	2,431		(138		)	—		—			2,431		(138		)
Industrial, consumer and all other	82,109		(7,310		)	1,983		(123		)	84,092		(7,433		)
Total equity securities	84,540		(7,448		)	1,983		(123		)	86,523		(7,571		)
Short-term investments	228,820		(14		)	—		—			228,820		(14		)
Total	$	316,557	$	(16,590	)	$	9,660	$	(563	)	$	326,217	$	(17,153	)

At December 31, 2012 , the Company held 35 securities with a total estimated fair value of $326.2 million and gross unrealized losses of $17.2 million . Of these 35 securities, 10 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $9.7 million and gross unrealized losses of $0.6 million . Of these securities, eight securities were fixed maturities and two were equity securities.

The Company completes a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is deemed other-than-temporary. All securities with unrealized losses are reviewed. The Company considers many factors in completing its quarterly review of securities with unrealized losses for other-than-temporary impairment, including the length of time and the extent to which fair value has been below cost and the financial condition and near-term prospects of the issuer. For equity securities, the ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery is considered. For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the implied yield-to-maturity, the credit quality of the issuer and the ability to recover all amounts outstanding when contractually due.

For equity securities, a decline in fair value that is considered to be other-than-temporary is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. For fixed maturities where the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a decline in fair value is considered to be other-than-temporary and is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of a fixed maturity below its amortized cost is considered to be other-than-temporary based upon other considerations, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the other-than-temporary impairment, which is recognized in net income, resulting in a new cost basis for the security. Any remaining decline in fair value represents the non-credit portion of the other-than-temporary impairment, which is recognized in other comprehensive income (loss). The discount rate used to calculate the estimated present value of the cash flows expected to be collected is the effective interest rate implicit for the security at the date of purchase.

When assessing whether it intends to sell a fixed maturity or if it is likely to be required to sell a fixed maturity before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and potential sales of investments to capitalize on favorable pricing. Additional information on the methodology and significant inputs, by security type, that the Company used to determine the amount of credit loss recognized on fixed maturities with declines in fair value below amortized cost that were considered to be other-than-temporary is provided below.

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Residential / Commercial mortgage-backed securities. For mortgage-backed securities, credit impairment is assessed by estimating future cash flows from the underlying mortgage loans and interest payments. The cash flow estimate incorporates actual cash flows from the mortgage-backed securities through the current period and then projects the remaining cash flows using a number of assumptions, including prepayment rates, default rates, recovery rates on foreclosed properties and loss severity assumptions. Management develops specific assumptions using market data and internal estimates, as well as estimates from rating agencies and other third party sources. Default rates are estimated by considering current underlying mortgage loan performance and expectations of future performance. Estimates of future cash flows are discounted to present value. If the present value of expected cash flows is less than the amortized cost, the Company recognizes the estimated credit loss in net income.

Corporate bonds. For corporate bonds, credit impairment is assessed by evaluating the underlying issuer. As part of this assessment, the Company analyzes various factors, including the following:


•	fundamentals of the issuer, including current and projected earnings, current liquidity position and ability to raise capital;


•	fundamentals of the industry in which the issuer operates;


•	expectations of defaults and recovery rates;


•	changes in ratings by rating agencies;


•	other relevant market considerations; and


•	receipt of interest payments.

Default probabilities and recovery rates from rating agencies are key factors used in calculating the credit loss. Additional research of the industry and issuer is completed to determine if there is any current information that may affect the fixed maturity or its issuer in a negative manner and require an adjustment to the cash flow assumptions.

c) The amortized cost and estimated fair value of fixed maturities at June 30, 2013 are shown below by contractual maturity.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	906,912	$	911,807
Due after one year through five years	3,216,710		3,279,236
Due after five years through ten years	2,359,427		2,412,507
Due after ten years	2,350,767		2,331,024
	8,833,816		8,934,574
Commercial mortgage-backed securities	423,886		413,289
Residential mortgage-backed securities	1,052,615		1,044,508
Asset-backed securities	288,938		286,092
Total fixed maturities	$	10,599,255	$	10,678,463

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d) The following table presents the components of net investment income.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Interest:
Municipal bonds (tax-exempt)	$	20,770		$	22,747		$	41,960		$	45,779
Municipal bonds (taxable)	6,613			5,685			12,015			11,385
Other taxable bonds	33,462			26,979			55,354			57,595
Short-term investments, including overnight deposits	604			679			1,274			1,274
Dividends on equity securities	10,761			9,512			23,541			20,458
Change in fair value of credit default swap	3,910			1,140			7,200			12,201
Other	4,981			(1,172		)	7,032			(1,231		)
	81,101			65,570			148,376			147,461
Investment expenses	(3,122		)	(1,968		)	(5,780		)	(4,065		)
Net investment income	$	77,979		$	63,602		$	142,596		$	143,396

e) Cumulative credit losses recognized in net income on fixed maturities where other-than-temporary impairment was identified and a portion of the other-than-temporary impairment was included in other comprehensive income (loss) was $21,370 for the quarter and six months ended June 30, 2013 and 2012. There were no changes in cumulative credit losses for the quarter and six months ended June 30, 2013 or 2012.

f) The following table presents net realized investment gains and the change in net unrealized gains on investments.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Realized gains:
Sales of fixed maturities	$	902		$	3,570		$	1,152		$	5,422
Sales of equity securities	15,994			5,820			33,915			15,514
Other	53			134			53			655
Total realized gains	16,949			9,524			35,120			21,591
Realized losses:
Sales of fixed maturities	(797		)	(316		)	(898		)	(474		)
Sales of equity securities	(17		)	—			(170		)	—
Other-than-temporary impairments	(4,589		)	(992		)	(4,589		)	(992		)
Total realized losses	(5,403		)	(1,308		)	(5,657		)	(1,466		)
Net realized investment gains	$	11,546		$	8,216		$	29,463		$	20,125
Change in net unrealized gains on investments:
Fixed maturities	$	(306,449	)	$	27,921		$	(337,797	)	$	44,590
Equity securities	58,711			(47,744		)	339,606			149,250
Short-term investments	(7		)	(2		)	(2		)	(5		)
Net increase (decrease)	$	(247,745	)	$	(19,825	)	$	1,807		$	193,835

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g) The following table presents other-than-temporary impairment losses recognized in net income and included in net realized investment gains by investment type.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Fixed maturities:
Obligations of states, municipalities and political subdivisions	$	(1,242	)	$	—		$	(1,242	)	$	—
Residential mortgage-backed securities	(523		)	—			(523		)	—
Total fixed maturities	(1,765		)	—			(1,765		)	—
Equity securities:
Insurance, banks and other financial institutions	—			(826		)	—			(826		)
Industrial, consumer and all other	(2,824		)	(166		)	(2,824		)	(166		)
Total equity securities	(2,824		)	(992		)	(2,824		)	(992		)
Total	$	(4,589	)	$	(992	)	$	(4,589	)	$	(992	)

h) The Company had $4.9 billion and $1.3 billion of restricted assets held in trust or on deposit for the benefit of policyholders or ceding companies or to support underwriting activities at June 30, 2013 and December 31, 2012 , respectively, of which $3.5 billion at June 30, 2013 is attributable to Alterra. Additionally, the Company has pledged investments and cash and cash equivalents totaling $763.2 million and $23.2 million as of June 30, 2013 and December 31, 2012 , respectively, as security for letters of credit that have been issued by various banks on behalf of the Company, of which $726.4 million at June 30, 2013 is attributable to Alterra.

These restricted assets are included on the Company's consolidated balance sheets as follows.



(dollars in thousands)	June 30, 2013		December 31, 2012
Investments, available-for-sale	$	5,154,074	$	1,262,755
Other assets	148,670		—
Restricted cash and cash equivalents	396,416		109,415
Total	$	5,699,160	$	1,372,170

5. Fair Value Measurements

FASB ASC 820-10, Fair Value Measurements and Disclosures, establishes a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability.

Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.

Level 3 – Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.

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In accordance with FASB ASC 820, the Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods, including the market, income and cost approaches. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The following section describes the valuation methodologies used by the Company to measure assets and liabilities at fair value, including an indication of the level within the fair value hierarchy in which each asset or liability is generally classified.

Investments available-for-sale. Investments available-for-sale are recorded at fair value on a recurring basis and include fixed maturities, equity securities and short-term investments. Short-term investments include certificates of deposit, commercial paper, discount notes and treasury bills with original maturities of one year or less. Fair value for investments available-for-sale is determined by the Company after considering various sources of information, including information provided by a third party pricing service. The pricing service provides prices for substantially all of the Company’s fixed maturities and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing service. The Company obtains an understanding of the pricing service’s valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows and prepayment speeds. The Company validates prices provided by the pricing service by reviewing prices from other pricing sources and analyzing pricing data in certain instances.

The Company has evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Level 1 investments include those traded on an active exchange, such as the New York Stock Exchange. Level 2 investments include U.S. Treasury securities and obligations of U.S. government agencies, municipal bonds, foreign government bonds, residential mortgage-backed securities and corporate debt securities.

Fair value for investments available-for-sale is measured based upon quoted prices in active markets, if available. Due to variations in trading volumes and the lack of quoted market prices, fixed maturities are classified as Level 2 investments. The fair value of fixed maturities is normally derived through recent reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable data described above. If there are no recent reported trades, the fair value of fixed maturities may be derived through the use of matrix pricing or model processes, where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Significant inputs used to determine the fair value of obligations of states, municipalities and political subdivisions, corporate bonds and obligations of foreign governments include reported trades, benchmark yields, issuer spreads, bids, offers, credit information and estimated cash flows. Significant inputs used to determine the fair value of residential mortgage-backed securities include the type of underlying mortgage loans, benchmark yields, prepayment speeds, collateral information, tranche type and volatility, estimated cash flows, credit information, default rates, recovery rates, issuer spreads and the year of issue.

Derivatives. Derivatives are recorded at fair value on a recurring basis and include a credit default swap. The fair value of the credit default swap is measured by the Company using an external valuation model. See note 10 for a discussion of the valuation model for the credit default swap, including the key inputs and assumptions used in the model and a description of the valuation processes used by the Company. Due to the significance of unobservable inputs required in measuring the fair value of the credit default swap, the credit default swap has been classified as Level 3 within the fair value hierarchy.

Senior long-term debt and other debt. Senior long-term debt and other debt is carried at amortized cost with the estimated fair value disclosed on the consolidated balance sheets. Senior long-term debt and other debt is classified as Level 2 within the fair value hierarchy due to variations in trading volumes and the lack of quoted market prices. Fair value for senior long-term debt and other debt is generally derived through recent reported trades for identical securities, making adjustments through the reporting date, if necessary, based upon available market observable data including U.S. Treasury securities and implied credit spreads. Significant inputs used to determine the fair value of senior long-term debt and other debt include reported trades, benchmark yields, issuer spreads, bids and offers.

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The following tables present the balances of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.



	June 30, 2013
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Investments available-for-sale:
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	1,298,144	$	—	$	1,298,144
Obligations of states, municipalities and political subdivisions	—		2,882,872		—		2,882,872
Foreign governments	—		1,379,228		—		1,379,228
Commercial mortgage-backed securities	—		413,289		—		413,289
Residential mortgage-backed securities	—		1,044,508		—		1,044,508
Asset-backed securities	—		286,092		—		286,092
Corporate bonds	—		3,374,330		—		3,374,330
Total fixed maturities	—		10,678,463		—		10,678,463
Equity securities:
Insurance, banks and other financial institutions	948,302		—		—		948,302
Industrial, consumer and all other	1,862,132		—		—		1,862,132
Total equity securities	2,810,434		—		—		2,810,434
Short-term investments	910,255		85,442		—		995,697
Total investments available-for-sale	$	3,720,689	$	10,763,905	$	—	$	14,484,594
Liabilities:
Derivative contracts	$	—	$	—	$	5,490	$	5,490



	December 31, 2012
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Investments available-for-sale:
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	—	$	317,507	$	—	$	317,507
Obligations of states, municipalities and political subdivisions	—		2,831,562		—		2,831,562
Foreign governments	—		556,608		—		556,608
Residential mortgage-backed securities	—		215,377		—		215,377
Asset-backed securities	—		14,345		—		14,345
Corporate bonds	—		1,043,884		—		1,043,884
Total fixed maturities	—		4,979,283		—		4,979,283
Equity securities:
Insurance, banks and other financial institutions	898,067		—		—		898,067
Industrial, consumer and all other	1,508,884		—		—		1,508,884
Total equity securities	2,406,951		—		—		2,406,951
Short-term investments	888,758		84,572		—		973,330
Total investments available-for-sale	$	3,295,709	$	5,063,855	$	—	$	8,359,564
Liabilities:
Derivative contracts	$	—	$	—	$	12,690	$	12,690

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The following table summarizes changes in Level 3 liabilities measured at fair value on a recurring basis.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Derivatives, beginning of period	$	9,400		$	18,270		$	12,690		$	29,331
Total gains included in:
Net income	(3,910		)	(1,140		)	(7,200		)	(12,201		)
Other comprehensive income (loss)	—			—			—			—
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Derivatives, end of period	$	5,490		$	17,130		$	5,490		$	17,130
Net unrealized gains included in net income relating to liabilities held at June 30, 2013 and 2012 ⁽¹⁾	$	3,910		$	1,140		$	7,200		$	12,201


⁽¹⁾	Included in net investment income in the consolidated statements of income and comprehensive income (loss).

There were no transfers into or out of Level 1 and Level 2 during the quarter and six months ended June 30, 2013 and 2012 . Except as disclosed in note 3, the Company did not have any assets or liabilities measured at fair value on a non-recurring basis during the six months ended June 30, 2013 and 2012 .

6. Segment Reporting Disclosures

The Company historically operated in three segments of the specialty insurance marketplace: the Excess and Surplus Lines, the Specialty Admitted and the London Insurance Market segments. The Company considers many factors, including the nature of its insurance products, production sources, distribution strategies and regulatory environment in determining how to aggregate operating segments.

As a result of the acquisition of Alterra, the Company formed a new operating segment, effective May 1, 2013. The Alterra segment is comprised of all of the active property and casualty underwriting operations of the former Alterra companies. The Alterra segment provides specialty insurance and reinsurance products worldwide from offices in the United States, Bermuda, the United Kingdom, Europe and Latin America. Results attributable to Alterra are being separately evaluated by management. The Company is in the process of integrating Alterra with its existing operations, which is not expected to be complete until 2014.

For purposes of segment reporting, the Other Insurance (Discontinued Lines) segment includes lines of business that have been discontinued in conjunction with acquisitions. Prior to its acquisition by the Company, Alterra offered life and annuity reinsurance products. In 2010, Alterra ceased writing life and annuity reinsurance contracts and placed this business into run-off. Results attributable to the run-off of Alterra's life and annuity reinsurance business, as well as other lines of business previously discontinued by Alterra, are included in the Company's Other Insurance (Discontinued Lines) segment.

All investing activities related to our insurance operations are included in the Investing segment.

The Company’s non-insurance operations primarily consist of controlling interests in various industrial and service businesses. For purposes of segment reporting, the Company’s non-insurance operations are not considered to be a reportable operating segment.

Segment profit for the Investing segment is measured by net investment income and net realized investment gains or losses. Segment profit or loss for the Company’s operating segments is primarily measured by underwriting profit or loss. The property and casualty insurance industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. Underwriting profit or loss does not replace operating income or net income computed in accordance with U.S. GAAP as a measure of profitability. Underwriting profit or loss provides a basis for management to evaluate the Company’s underwriting performance. Segment profit or loss for the Company's operating segments also includes other revenues and other expenses, primarily related to the run-off of managing general agent operations that were discontinued in conjunction with acquisitions. Other revenues and other expenses in the Other Insurance (Discontinued Lines) segment are comprised of the results attributable to the run-off of Alterra's life and annuity reinsurance business.

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For management reporting purposes, the Company allocates assets to its underwriting, investing and non-insurance operations. Underwriting assets are all assets not specifically allocated to the Investing segment or to the Company’s non-insurance operations. Underwriting and investing assets are not allocated to the Excess and Surplus Lines, Specialty Admitted, London Insurance Market, Alterra or Other Insurance (Discontinued Lines) segments since the Company does not manage its assets by operating segment. The Company does not allocate capital expenditures for long-lived assets to any of its operating segments for management reporting purposes.


a)	The following tables summarize the Company’s segment disclosures.



	Quarter Ended June 30, 2013
(dollars in thousands)	Excess and Surplus Lines			Specialty Admitted			London Insurance Market			Alterra			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	274,814		$	253,943		$	229,881		$	342,328		$	14			$	—	$	1,100,980
Net written premiums	231,503			242,313			199,934			253,516			15				—		927,281

Earned premiums	209,345			177,196			172,776			225,487			15				—		784,819
Losses and loss adjustment expenses:
Current accident year	(144,317		)	(121,807		)	(116,783		)	(178,781		)	—				—		(561,688		)
Prior accident years	64,141			15,798			38,904			—			439				—		119,282
Underwriting, acquisition and insurance expenses:
Transaction costs and other acquisition-related expenses ⁽¹⁾	—			—			—			(61,809		)	—				—		(61,809		)
All other expenses	(80,770		)	(80,912		)	(72,661		)	(67,154		)	211				—		(301,286		)
Underwriting profit (loss)	48,399			(9,725		)	22,236			(82,257		)	665				—		(20,682		)
Net investment income	—			—			—			—			—				77,979		77,979
Net realized investment gains	—			—			—			—			—				11,546		11,546
Other revenues (insurance)	—			3,280			505			1,197			319				—		5,301
Other expenses (insurance)	—			(1,958		)	(1,237		)	1,627			(5,877		)		—		(7,445		)
Segment profit (loss)	$	48,399		$	(8,403	)	$	21,504		$	(79,433	)	$	(4,893	)		$	89,525	$	66,699
Other revenues (non-insurance)																			152,124
Other expenses (non-insurance)																			(133,314		)
Amortization of intangible assets																			(11,292		)
Interest expense																			(28,561		)
Income before income taxes																			$	45,656
U.S. GAAP combined ratio ⁽²⁾	77		%	105		%	87		%	136		%	NM			⁽³⁾			103		%

⁽¹⁾

In connection with the acquisition of Alterra, the Company incurred transaction costs of $16.0 million for the quarter ended June 30, 2013 , which primarily consist of due diligence, legal and investment banking costs. Additionally, the Company incurred severance costs of $28.2 million , stay bonuses of $6.1 million and other compensation costs totaling $11.5 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition.


⁽²⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽³⁾	NM – Ratio is not meaningful.

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	Quarter Ended June 30, 2012
(dollars in thousands)	Excess and Surplus Lines			Specialty Admitted			London Insurance Market			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	229,906		$	180,150		$	236,874		$	(8	)		$	—	$	646,922
Net written premiums	193,291			169,276			204,054			(7		)		—		566,614

Earned premiums	189,668			144,695			178,699			(6		)		—		513,056
Losses and loss adjustment expenses:
Current accident year	(127,683		)	(101,378		)	(118,931		)	—				—		(347,992		)
Prior accident years	50,686			11,917			64,785			(490		)		—		126,898
Underwriting, acquisition and insurance expenses:
Prospective adoption of ASU 2010-26 ⁽¹⁾	(6,040		)	(4,499		)	(3,732		)	—				—		(14,271		)
All other expenses	(81,345		)	(53,837		)	(74,947		)	(384		)		—		(210,513		)
Underwriting profit (loss)	25,286			(3,102		)	45,874			(880		)		—		67,178
Net investment income	—			—			—			—				63,602		63,602
Net realized investment gains	—			—			—			—				8,216		8,216
Other revenues (insurance)	—			14,081			147			—				—		14,228
Other expenses (insurance)	—			(11,802		)	(778		)	—				—		(12,580		)
Segment profit (loss)	$	25,286		$	(823	)	$	45,243		$	(880	)		$	71,818	$	140,644
Other revenues (non-insurance)																94,145
Other expenses (non-insurance)																(85,139		)
Amortization of intangible assets																(8,315		)
Interest expense																(22,209		)
Income before income taxes																$	119,126
U.S. GAAP combined ratio ⁽²⁾	87		%	102		%	74		%	NM			⁽³⁾			87		%


⁽¹⁾	Effective January 1, 2012, the Company prospectively adopted FASB ASU No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts . At December 31, 2011, deferred policy acquisition costs included $43.1 million of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms.


⁽²⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽³⁾	NM – Ratio is not meaningful.

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	Six Months Ended June 30, 2013
(dollars in thousands)	Excess and Surplus Lines			Specialty Admitted			London Insurance Market			Alterra			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	519,120		$	457,219		$	525,578		$	342,328		$	35			$	—	$	1,844,280
Net written premiums	441,345			435,395			459,977			253,516			36				—		1,590,269

Earned premiums	410,750			335,665			377,468			225,487			36				—		1,349,406
Losses and loss adjustment expenses:
Current accident year	(277,194		)	(226,932		)	(251,519		)	(178,781		)	—				—		(934,426		)
Prior accident years	124,788			17,453			61,027			—			856				—		204,124
Underwriting, acquisition and insurance expenses:
Transaction costs and other acquisition-related expenses ⁽¹⁾	—			—			—			(61,809		)	—				—		(61,809		)
All other expenses	(164,531		)	(149,439		)	(149,134		)	(67,154		)	299				—		(529,959		)
Underwriting profit (loss)	93,813			(23,253		)	37,842			(82,257		)	1,191				—		27,336
Net investment income	—			—			—			—			—				142,596		142,596
Net realized investment gains	—			—			—			—			—				29,463		29,463
Other revenues (insurance)	—			10,543			4,467			1,197			319				—		16,526
Other expenses (insurance)	—			(8,155		)	(2,595		)	1,627			(5,877		)		—		(15,000		)
Segment profit (loss)	$	93,813		$	(20,865	)	$	39,714		$	(79,433	)	$	(4,367	)		$	172,059	$	200,921
Other revenues (non-insurance)																			313,642
Other expenses (non-insurance)																			(278,076		)
Amortization of intangible assets																			(20,907		)
Interest expense																			(52,135		)
Income before income taxes																			$	163,445
U.S. GAAP combined ratio ⁽²⁾	77		%	107		%	90		%	136		%	NM			⁽³⁾			98		%

⁽¹⁾

In connection with the acquisition of Alterra, the Company incurred transaction costs of $16.0 million for the six months ended June 30, 2013 , which primarily consist of due diligence, legal and investment banking costs. Additionally, the Company incurred severance costs of $28.2 million , stay bonuses of $6.1 million and other compensation costs totaling $11.5 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition.


⁽²⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽³⁾	NM – Ratio is not meaningful.

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	Six Months Ended June 30, 2012
(dollars in thousands)	Excess and Surplus Lines			Specialty Admitted			London Insurance Market			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	452,835		$	328,272		$	514,440		$	(7	)		$	—	$	1,295,540
Net written premiums	386,204			309,828			451,754			(6		)		—		1,147,780

Earned premiums	389,046			278,170			375,441			(5		)		—		1,042,652
Losses and loss adjustment expenses:
Current accident year	(255,750		)	(194,071		)	(250,677		)	—				—		(700,498		)
Prior accident years	81,273			16,243			86,250			7,117				—		190,883
Underwriting, acquisition and insurance expenses:
Prospective adoption of ASU 2010-26 ⁽¹⁾	(14,527		)	(10,263		)	(9,769		)	—				—		(34,559		)
All other expenses	(167,202		)	(111,103		)	(149,950		)	(667		)		—		(428,922		)
Underwriting profit (loss)	32,840			(21,024		)	51,295			6,445				—		69,556
Net investment income	—			—			—			—				143,396		143,396
Net realized investment gains	—			—			—			—				20,125		20,125
Other revenues (insurance)	—			24,529			4,530			—				—		29,059
Other expenses (insurance)	—			(23,003		)	(1,752		)	—				—		(24,755		)
Segment profit (loss)	$	32,840		$	(19,498	)	$	54,073		$	6,445			$	163,521	$	237,381
Other revenues (non-insurance)																191,150
Other expenses (non-insurance)																(173,368		)
Amortization of intangible assets																(17,119		)
Interest expense																(44,376		)
Income before income taxes																$	193,668
U.S. GAAP combined ratio ⁽²⁾	92		%	108		%	86		%	NM			⁽³⁾			93		%


⁽¹⁾	Effective January 1, 2012, the Company prospectively adopted FASB ASU No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts . At December 31, 2011, deferred policy acquisition costs included $43.1 million of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms.


⁽²⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽³⁾	NM – Ratio is not meaningful.


b)	The following table reconciles segment assets to the Company’s consolidated balance sheets.



(dollars in thousands)	June 30, 2013		December 31, 2012
Segment assets:
Investing	$	16,528,571	$	9,277,697
Underwriting	6,082,406		2,387,305
Total segment assets	22,610,977		11,665,002
Non-insurance operations	889,003		891,586
Total assets	$	23,499,980	$	12,556,588

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7. Reinsurance

The following tables summarize the effect of reinsurance on premiums written and earned.



	Quarter Ended June 30,
	2013						2012
(dollars in thousands)	Written			Earned			Written			Earned
Direct	$	877,430		$	719,686		$	530,144		$	490,607
Assumed	223,550			241,664			116,778			91,107
Ceded	(173,699		)	(176,531		)	(80,308		)	(68,658		)
Net premiums	$	927,281		$	784,819		$	566,614		$	513,056



	Six Months Ended June 30,
	2013						2012
(dollars in thousands)	Written			Earned			Written			Earned
Direct	$	1,474,849		$	1,257,828		$	1,048,684		$	1,000,196
Assumed	369,431			343,791			246,856			174,949
Ceded	(254,011		)	(252,213		)	(147,760		)	(132,493		)
Net premiums	$	1,590,269		$	1,349,406		$	1,147,780		$	1,042,652

The percentage of ceded earned premiums to gross earned premiums was 18% and 12% , respectively, for the quarters ended June 30, 2013 and 2012 and 16% and 11% , respectively, for the six months ended June 30, 2013 and 2012 .

The Company uses reinsurance to manage its net retention on individual risks and overall exposure to losses while providing it with the ability to offer policies with sufficient limits to meet policyholder needs. In a reinsurance transaction, an insurance company transfers, or cedes, all or part of its exposure in return for a portion of the premium. The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policies, and the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement.

A credit risk exists with reinsurance ceded to the extent that any reinsurer is unable to meet the obligations assumed under the reinsurance agreements. Allowances are established for amounts deemed uncollectible. The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. At June 30, 2013 and December 31, 2012 , balances recoverable from the Company's ten largest reinsurers, by group, represented approximately 62% and 74% , respectively, of the reinsurance recoverable on paid and unpaid losses, before considering reinsurance allowances. At June 30, 2013 , the Company's largest reinsurance balance was due from the Fairfax Financial Group and represented 10% of the reinsurance recoverable on paid and unpaid losses, before considering reinsurance allowances.

Incurred losses and loss adjustment expenses were net of reinsurance recoverables (ceded incurred losses and loss adjustment expenses) of $86.2 million and $24.2 million , respectively, for the quarters ended June 30, 2013 and 2012 and $81.9 million and $64.3 million , respectively, for the six months ended June 30, 2013 and 2012 .

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8. Life and Annuity Benefits

Prior to its acquisition by the Company, Alterra entered into long duration reinsurance contracts which subject the Company to mortality, longevity and morbidity risks. The Company’s related life and annuity reinsurance benefit reserves are compiled on a reinsurance contract-by-contract basis and are discounted using standard actuarial techniques and cash flow models. Since the development of the life and annuity reinsurance reserves is based upon cash flow projection models, the Company must make estimates and assumptions based on cedant experience and industry mortality tables, longevity, expense and investment experience, including a provision for adverse deviation. The assumptions used to determine policy benefit reserves were determined at the Acquisition Date and are generally locked-in for the life of the contract unless a premium deficiency develops or another unlocking event occurs. As the experience on the reinsurance contracts emerges, the assumptions are reviewed by management, no less than annually, to determine whether the actual and anticipated experience indicates that existing policy reserves, together with the present value of future gross premiums and expected investment income earned thereon, are sufficient to cover the present value of future benefits, settlement and maintenance costs. If such a review produces reserves in excess of those currently held, then the lock-in assumptions are revised and a charge to earnings for life and annuity benefits is recognized at that time. Results attributable to the run-off of Alterra's life and annuity reinsurance business are included in other revenues and other expenses in the Company's consolidated statements of income and comprehensive income and as part of the Company's Other Insurance (Discontinued Lines) segment.

Because of the many assumptions and estimates used in establishing reserves and the long-term nature of reinsurance contracts, the reserving process, while based on actuarial science, is inherently uncertain. Actual results could differ materially from these estimates. The average discount rate for the life and annuity benefit reserves was 2.3% as of June 30, 2013 .

The following table presents life and annuity benefits as of June 30, 2013 :



	(dollars in thousands)
Life	$	191,553
Annuities	1,157,142
Accident and health	108,134
	$	1,456,829

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9. Senior Long-Term Debt and Other Debt

The following table summarizes the Company's senior long-term debt and other debt.



(dollars in thousands)	June 30, 2013		December 31, 2012
6.80% unsecured senior notes, due February 15, 2013, interest payable semi-annually, net of unamortized discount of $45 in 2012	$	—	$	246,619
7.20% unsecured senior notes, due April 14, 2017, interest payable semi-annually, net of unamortized premium of $5,223 in 2013	95,852		—
7.125% unsecured senior notes, due September 30, 2019, interest payable semi-annually, net of unamortized discount of $1,767 in 2013 and $1,909 in 2012	348,233		348,091
6.25% unsecured senior notes, due September 30, 2020, interest payable semi-annually, net of unamortized premium of $65,466 in 2013	415,466		—
5.35% unsecured senior notes, due June 1, 2021, interest payable semi-annually, net of unamortized discount of $1,635 in 2013 and $1,738 in 2012	248,365		248,262
4.90% unsecured senior notes, due July 1, 2022, interest payable semi-annually, net of unamortized discount of $2,514 in 2013 and $2,653 in 2012	347,486		347,347
3.625% unsecured senior notes, due March 30, 2023, interest payable semi-annually, net of unamortized discount of $1,960 in 2013	248,040		—
7.35% unsecured senior notes, due August 15, 2034, interest payable semi-annually, net of unamortized discount of $2,238 in 2013 and $2,291 in 2012	197,762		197,710
5.0% unsecured senior notes, due March 30, 2043, interest payable semi-annually, net of unamortized discount of $6,663 in 2013	243,337		—
Subsidiary debt, at various interest rates ranging from 2.2% to 6.5%	105,278		104,521
Senior long-term debt and other debt	$	2,249,819	$	1,492,550

On July 2, 2012, the Company issued $350 million of 4.90% unsecured senior notes due July 1, 2022. Net proceeds to the Company were $347.2 million . On August 1, 2012, the Company used a portion of these proceeds to redeem its 7.50% unsecured senior debentures due August 22, 2046 at a redemption price equal to 100% of their principal amount, or $150 million . This redemption resulted in a loss of $4.1 million , which is reflected in net realized investment gains. The proceeds from the July 2012 issuance were also used to pre-fund the repayment of the Company's 6.80% unsecured senior notes due February 15, 2013.

On February 15, 2013 , the Company repaid its 6.80% unsecured senior notes ( $246.7 million principal amount outstanding at December 31, 2012).

On March 8, 2013, the Company issued $250 million of 3.625% unsecured senior notes due March 30, 2023 and $250 million of 5.0% unsecured senior notes due March 30, 2043. Net proceeds to the Company were approximately $491.2 million , which will be used for general corporate purposes.

On April 16, 2007, Alterra USA Holdings Limited (Alterra USA), a wholly-owned indirect subsidiary of Alterra, privately issued $100 million of 7.20% unsecured senior notes due April 14, 2017 (the 7.20% unsecured senior notes). The 7.20% unsecured senior notes are Alterra USA’s senior unsecured obligations and rank equally in right of payment with all existing and future senior unsecured indebtedness of Alterra USA. The 7.20% unsecured senior notes are fully and unconditionally guaranteed by Alterra. The principal amount of the 7.20% unsecured senior notes outstanding as of the Acquisition Date was $90.6 million . As of the Acquisition Date, the 7.20% unsecured senior notes were recorded at their estimated fair value of $95.8 million .

On September 27, 2010, Alterra Finance LLC, a wholly-owned indirect subsidiary of Alterra, issued $350 million of 6.25% unsecured senior notes due September 30, 2020 (the 6.25% unsecured senior notes). The 6.25% unsecured senior notes are Alterra Finance LLC’s senior unsecured obligations and rank equally in right of payment with all of Alterra Finance LLC’s future unsecured and unsubordinated indebtedness and rank senior to all of Alterra Finance LLC’s future subordinated indebtedness. The 6.25% unsecured senior notes are fully and unconditionally guaranteed by Alterra on a senior unsecured basis. The guarantee ranks equally with all of Alterra’s existing and future unsecured and unsubordinated indebtedness and ranks senior to all of Alterra’s future subordinated indebtedness. As of the Acquisition Date, the 6.25% unsecured senior notes were recorded at their estimated fair value of $416.6 million .

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Alterra Finance LLC is a finance subsidiary and has no independent activities, assets or operations other than in connection with the 6.25% unsecured senior notes.

The Company's 7.35% unsecured senior notes due August 15, 2034 are not redeemable. The Company's other unsecured senior notes are redeemable by the Company at any time, subject to payment of a make-whole premium to the noteholders. None of the Company's senior long-term debt is subject to any sinking fund requirements.

The Company's subsidiary debt is primarily associated with its non-insurance operations and is non-recourse to the holding company. The debt of the Company's non-insurance subsidiaries generally is secured by the assets of those subsidiaries. ParkLand Ventures, Inc., a subsidiary of the Company, has formed subsidiaries for the purpose of acquiring and financing real estate (the real estate subsidiaries). The assets of the real estate subsidiaries, which are not material to the Company, are consolidated in accordance with U.S. GAAP but are not available to satisfy the debt and other obligations of the Company or any affiliates other than the real estate subsidiaries.

The following table summarizes the future principal payments due at maturity on senior long-term debt and other debt as of June 30, 2013 .



Years Ending December 31,	(dollars in thousands)
2013	$	6,398
2014	14,606
2015	5,785
2016	12,640
2017	100,508
2018 and thereafter	2,055,970
Total principal payments	$	2,195,907
Unamortized premium	53,912
Senior long-term debt and other debt	$	2,249,819

The Company also maintains a revolving credit facility that provides $150 million of capacity for working capital and other general corporate purposes and expires September 2015. Effective July 12, 2013, the capacity of the Company's revolving credit facility was increased to $300 million , as previously provided for by the terms of the revolving credit facility. The Company may select from two interest rate options for balances outstanding under the revolving credit facility and pays a commitment fee ( 0.275% at June 30, 2013) on the unused portion of the facility based on the Company’s debt to equity leverage ratio as calculated under the agreement. At June 30, 2013 and December 31, 2012, the Company had no borrowings outstanding under the revolving credit facility.

Alterra and Alterra Bermuda are party to a $900 million secured credit facility (the senior credit facility), which expires on December 15, 2015. The senior credit facility provides for secured letters of credit to be issued for the account of Alterra, Alterra Bermuda and certain other subsidiaries of Alterra and for loans to Alterra and Alterra Bermuda. Loans under the facility are subject to a sublimit of $250 million . Subject to certain conditions and at the request of Alterra, the aggregate commitments of the lenders under the senior credit facility may be increased up to a total of $1.4 billion . At June 30, 2013 , the Company had no borrowings outstanding under the senior credit facility. At June 30, 2013 , $460.3 million of letters of credit were issued and outstanding under this facility.

At June 30, 2013 , the Company was in compliance with all covenants contained in its revolving credit facility and senior credit facility. To the extent that the Company is not in compliance with its covenants, the Company's access to these credit facilities could be restricted. While the Company believes this to be unlikely, the inability to access the revolving credit facility and senior credit facility could adversely affect the Company's liquidity.

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10. Derivatives

The Company is a party to a credit default swap agreement, under which third party credit risk is transferred from a counterparty to the Company. The Company entered into the credit default swap agreement for investment purposes. At both June 30, 2013 and December 31, 2012 , the notional amount of the credit default swap was $33.1 million , which represented the Company’s aggregate exposure to losses if specified credit events involving third party reference entities occur. These third party reference entities are specified under the terms of the agreement and represent a portfolio of names upon which the Company has assumed credit risk from the counterparty. The Company’s exposure to loss from any one reference entity is limited to $20.0 million . The credit default swap has a scheduled termination date of December 2014.

The credit default swap is accounted for as a derivative instrument and is recorded at fair value with any changes in fair value recorded in net investment income . At June 30, 2013 and December 31, 2012 , the credit default swap had a fair value of $5.5 million and $12.7 million , respectively. The fair value of the credit default swap is included in other liabilities on the consolidated balance sheets. Net investment income for the quarter and six months ended June 30, 2013 included favorable changes in the fair value of the credit default swap of $3.9 million and $7.2 million , respectively. Net investment income for the quarter and six months ended June 30, 2012 included favorable changes in the fair value of the credit default swap of $1.1 million and $12.2 million , respectively.

The fair value of the credit default swap is determined by the Company using a Gaussian copula valuation model, a market standard model for valuing credit default swaps. The fair value is dependent upon several inputs, including changes in interest rates, credit spreads, expected default rates, changes in credit quality, future expected recovery rates and other market factors. The significant unobservable inputs used in the fair value measurement of the credit default swap are expected default rates and future expected recovery rates. The Company determines these unobservable inputs based upon default rates and recovery rates used to price similar credit default swap indices. A significant increase in expected default rates in isolation results in a significantly higher fair value measurement, while a significant decrease in expected default rates results in a significantly lower fair value measurement. A significant increase in future expected recovery rates in isolation results in a significantly lower fair value measurement, while a significant decrease in future expected recovery rates results in a significantly higher fair value measurement. Generally, a change in the assumption used for expected default rates is accompanied by a directionally opposite change in future expected recovery rates. The fair value measurement of the credit default swap at June 30, 2013 included expected default rates ranging between less than 1% and 4% , with a weighted-average expected default rate of 1% , and future expected recovery rates ranging between 20% and 40% , with a weighted-average future expected recovery rate of 39% . The fair value measurement of the credit default swap at December 31, 2012 included expected default rates ranging between 1% and 43% , with a weighted-average expected default rate of 3% , and future expected recovery rates ranging between 20% and 40% , with a weighted-average future expected recovery rate of 39% .

The Company's valuation policies and procedures for the credit default swap are determined by an internal investment manager with oversight provided by the Company's Chief Financial Officer and Chief Investment Officer. Fair value measurements are analyzed quarterly to ensure the change in fair value from prior periods is reasonable relative to recent market trends. Additionally, the reported fair value of the credit default swap is compared to results from similar valuation models.

The Company had no other material derivative instruments at June 30, 2013 .

11. Income Taxes

The Company's effective tax rate was 28% for the six months ended June 30, 2013 compared to 23% for the same period in 2012. In both periods, the effective tax rate differs from the statutory tax rate of 35% primarily as a result of tax-exempt investment income. The increase in the effective tax rate in 2013 was primarily due to the impact of including the operations of Alterra in the Company's effective tax rate beginning May 1, 2013 and anticipating a smaller tax benefit related to tax-exempt investment income, which resulted from having higher estimated income before income taxes in 2013 compared to 2012.

12. Employee Benefit Plans

a) Expenses relating to the Company’s defined contribution plans, including the defined contribution plans of Alterra effective May 1, 2013, were $5.9 million and $10.5 million , respectively, for the quarter and six months ended June 30, 2013 and $4.7 million and $9.3 million , respectively, for the same periods of 2012 .

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b) The following table presents the components of net periodic benefit income for the Terra Nova Pension Plan, a defined benefit plan.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Service cost	$	—		$	89		$	—		$	179
Interest cost	1,603			1,693			3,226			3,386
Expected return on plan assets	(2,655		)	(2,431		)	(5,344		)	(4,863		)
Amortization of net actuarial pension loss	475			644			955			1,287
Net periodic benefit income	$	(577	)	$	(5	)	$	(1,163	)	$	(11	)

The Company contributed $5.3 million to the Terra Nova Pension Plan during the six months ended June 30, 2013 and does not expect to make any additional contributions in 2013.

13. Shareholders' Equity

a) Net income per share was determined by dividing adjusted net income to shareholders by the applicable weighted average shares outstanding. Unvested share-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating awards and are included in the computation of net income per share. Non-participating unvested share-based compensation awards are excluded from the computation of net income per share. Diluted net income per share is computed by dividing adjusted net income to shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the year.



	Quarter Ended June 30,					Six Months Ended June 30,
(in thousands, except per share amounts)	2013		2012			2013		2012
Net income to shareholders	$	27,756	$	89,687		$	116,658	$	146,940
Adjustment of redeemable noncontrolling interests	215		(8,186		)	3,101		(8,186		)
Adjusted net income to shareholders	$	27,971	$	81,501		$	119,759	$	138,754

Basic common shares outstanding	12,464		9,651			11,058		9,646
Dilutive potential common shares from conversion of options	16		4			9		8
Dilutive potential common shares from conversion of non participating restricted stock	34		21			31		18
Diluted shares outstanding	12,514		9,676			11,098		9,672
Basic net income per share	$	2.24	$	8.44		$	10.83	$	14.38
Diluted net income per share	$	2.24	$	8.42		$	10.79	$	14.35

b) The 2012 Equity Incentive Compensation Plan (2012 Compensation Plan) provides for grants and awards of restricted stock, restricted stock units, performance grants, and other stock based awards to employees and directors. The 2012 Compensation Plan is administered by the Compensation Committee of the Company’s Board of Directors (Compensation Committee). In May 2013, the Compensation Committee awarded 31,669 restricted stock units to certain associates and executive officers to assist the Company in retaining the services of key employees. The restricted stock units had a grant-date fair value of $16.6 million . The awards vest over a three year period and entitle the recipient to receive one share of the Company’s common stock for each vested restricted stock unit.

c) In May 2013, in connection with the acquisition of Alterra, the Company issued 101,875 replacement options and 154,103 restricted stock awards to holders of Alterra options and restricted stock awards. The replacement options and restricted stock awards were issued under the terms and conditions of the Alterra Capital Holdings Limited 2008 Stock Incentive Plan, the Alterra Capital Holdings Limited 2006 Equity Incentive Plan and the Alterra Capital Holdings Limited 2000 Stock Incentive Plan (collectively, the Alterra Equity Award Plans). No further options or restricted stock awards are available for issuance under the Alterra Equity Award Plans.

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The replacement options issued were fully vested and exercisable as of the Acquisition Date and had a weighted average exercise price of $398.96 and a grant-date fair value of $140.08 , which was included in the acquisition consideration. The fair value of the options was estimated on the grant date using the Black-Scholes option pricing model. Assumptions used in the pricing model included an expected annual volatility of 19.04% , a risk-free rate of approximately 0.20% and an expected term of approximately two years . The expected annual volatility was based on the historical volatility of the Company's stock and other factors. The risk-free rate was based on the U.S. Treasury yield curve, with a remaining term equal to the expected term assumption at the grant date. The expected term of the options granted represents the period of time that the options were expected to be outstanding at the grant date.

The following table summarizes additional information with respect to these options.



	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Intrinsic Value (in millions)
Outstanding and exercisable, May 1, 2013	101,875	$	398.96
Exercised	43,371	$	398.13
Outstanding and exercisable, June 30, 2013	58,504	$	399.57	2.7	$	7.5

During 2013, 43,371 options were exercised under the Alterra Equity Award Plans, resulting in cash proceeds of $15.8 million and a current tax benefit of $0.5 million . The intrinsic value of options exercised in 2013 was $5.7 million .

The replacement restricted stock awards issued by the Company had a grant date fair value of $81.6 million , or $529.59 per share. The awards were partially vested as of the Acquisition Date and had a weighted average remaining service period of approximately one year . As a result, $61.0 million was recognized as part of the Acquisition Consideration and $20.6 million will be recognized as compensation expense over the remaining service period of the awards. The fair value of the replacement restricted stock awards was determined based on the weighted average price of the Company's stock on April 30, 2013, the day preceding the Acquisition Date. The following table summarizes activity related to these nonvested restricted stock awards.



	Number of Awards		Weighted Average Grant-Date Fair Value
Nonvested awards issued on May 1, 2013	154,103		$	529.59
Vested	(74,493	)	529.59
Forfeited	(3,992	)	529.59
Nonvested awards at June 30, 2013	75,618		$	529.59

The Company recognized compensation expense totaling $9.4 million during the quarter and six months ended June 30, 2013 related to these restricted stock awards. As of June 30, 2013, unrecognized compensation cost related to the nonvested restricted stock awards was $9.0 million , which is expected to be recognized over a weighted average period of approximately one year . The fair value of the restricted stock awards that vested during 2013 was $39.5 million .

d) In accordance with the terms of the Merger Agreement, the Company also assumed outstanding warrants to purchase Alterra common stock. Holders of the warrants had the option to surrender them for consideration specified in the Merger Agreement, which included cash and registered shares of the Company's common stock, or to have them remain outstanding as “Company Converted Warrants,” in which case the holders would be entitled to a combination of cash and unregistered shares of the Company's common stock upon exercise of the warrants. The warrants of all warrant holders who elected to exercise in conjunction with the Acquisition Date were considered to have been exercised on May 1, 2013. The Company issued 225,529 Company Converted Warrants with a fair value of $73.7 million to Alterra warrant holders who elected not to surrender their warrants in connection with the merger. Three holders who elected to have their warrants remain outstanding subsequently exercised a total of 225,499 warrants and received a total of 100,115 shares of the Company's common stock under the cashless exercise provision of the warrants. As of June 30, 2013, the Company had outstanding warrants to purchase 30 shares of its common stock.

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14. Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes net holding gains (losses) arising during the period, changes in unrealized other-than-temporary impairment losses on fixed maturities arising during the period and reclassification adjustments for net gains included in net income. Other comprehensive income (loss) also includes changes in foreign currency translation adjustments and changes in net actuarial pension loss.

The following table presents the change in accumulated other comprehensive income by component, net of taxes and noncontrolling interests, for the six months ended June 30, 2013 and 2012 .



(dollars in thousands)	Unrealized Holding Gains on Available-for-Sale Securities			Foreign Currency			Net Actuarial Pension Loss			Total
December 31, 2011	$	704,719		$	(2,614	)	$	(41,185	)	$	660,920
Other comprehensive income (loss) before reclassifications	145,418			(292		)	—			145,126
Amounts reclassified from accumulated other comprehensive income	(13,670		)	—			965			(12,705		)
Total other comprehensive income (loss)	131,748			(292		)	965			132,421
June 30, 2012	$	836,467		$	(2,906	)	$	(40,220	)	$	793,341

December 31, 2012	$	946,933		$	(1,075	)	$	(34,521	)	$	911,337
Other comprehensive income (loss) before reclassifications	23,088			(11,640		)	—			11,448
Amounts reclassified from accumulated other comprehensive income	(20,212		)	—			736			(19,476		)
Total other comprehensive income (loss)	2,876			(11,640		)	736			(8,028		)
June 30, 2013	$	949,809		$	(12,715	)	$	(33,785	)	$	903,309

The following table summarizes the deferred tax expense (benefit) associated with each component of other comprehensive income (loss).



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Change in net unrealized gains on investments:
Net holding gains (losses) arising during the period	$	(77,471	)	$	(3,887	)	$	8,075		$	67,890
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period	(21		)	43			54			(3		)
Reclassification adjustments for net gains included in net income	(3,536		)	(2,343		)	(9,198		)	(5,800		)
Change in net unrealized gains on investments	(81,028		)	(6,187		)	(1,069		)	62,087
Change in foreign currency translation adjustments	—			122			38			(48		)
Change in net actuarial pension loss	109			162			219			322
Total	$	(80,919	)	$	(5,903	)	$	(812	)	$	62,361

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The following table presents the details of amounts reclassified from accumulated other comprehensive income into income, by component.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Unrealized holding gains on available-for-sale securities:
Net realized investment gains	$	11,493		$	8,082		$	29,410		$	19,470
Income taxes	(3,536		)	(2,343		)	(9,198		)	(5,800		)
Reclassification of unrealized holding gains, net of taxes	$	7,957		$	5,739		$	20,212		$	13,670

Net actuarial pension loss:
Underwriting, acquisition and insurance expenses	$	(475	)	$	(644	)	$	(955	)	$	(1,287	)
Income taxes	109			162			219			322
Reclassification of net actuarial pension loss, net of taxes	$	(366	)	$	(482	)	$	(736	)	$	(965	)

15. Contingencies

Contingencies arise in the normal course of the Company’s operations and are not expected to have a material impact on the Company’s financial condition or results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The accompanying consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of Markel Corporation and its subsidiaries.

Critical Accounting Estimates

Critical accounting estimates are those estimates that both are important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of material contingent assets and liabilities, including litigation contingencies. These estimates, by necessity, are based on assumptions about numerous factors.

We review our critical accounting estimates and assumptions quarterly. These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, life and annuity reinsurance benefit reserves, the reinsurance allowance for doubtful accounts and income tax liabilities, as well as analyzing the recoverability of deferred tax assets, assessing goodwill and intangible assets for impairment, estimating reinsurance premiums written and evaluating the investment portfolio for other-than-temporary declines in estimated fair value. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

The following discussion should be read in conjunction with our 2012 Annual Report on Form 10-K, which provides a more complete description of our critical accounting estimates.

Reinsurance Premiums

Our reinsurance premiums are recorded at the inception of each contract based upon contract terms and information received from ceding clients and brokers. For excess of loss contracts, the amount of minimum and/or deposit premium is usually contractually documented at inception, and variances between this premium and final premium are generally small. An adjustment is made to the minimum and/or deposit premium, when notified, if there are changes in underlying exposures insured. For quota share or proportional reinsurance contracts, gross premiums written are normally estimated at inception based on information provided by cedants and/or brokers. We generally record such premiums using the client’s initial estimates, and then adjust them as more current information becomes available, with such adjustments recorded as premiums written in the period they are determined. We believe that the ceding clients’ estimate of the volume of business they expect to cede to us usually represents the best estimate of gross premium written at the beginning of the contract. As the contract progresses, we monitor actual premium received in conjunction with correspondence from the ceding client in order to refine our estimate. Variances from original premium estimates are normally greater for quota share contracts than excess of loss contracts. Premiums are earned on a pro rata basis over the coverage period. The impact of premium adjustments to net income may be mitigated by related acquisition costs and losses.

Life and Annuity Benefits

Prior to its acquisition, Alterra entered into long duration reinsurance contracts which subject us to mortality, longevity and morbidity risks. The related life and annuity reinsurance benefit reserves are compiled by our actuaries on a reinsurance contract-by-contract basis and are computed on a discounted basis using standard actuarial techniques and cash flow models. Since the development of our life and annuity reinsurance reserves is based upon cash flow projection models, we must make estimates and assumptions based on cedant experience and industry mortality tables, longevity, expense and investment experience, including a provision for adverse deviation. The assumptions used to determine policy benefit reserves were determined as of May 1, 2013 (the Acquisition Date) and are generally locked-in for the life of the contract unless a premium deficiency develops or another unlocking event occurs. As the experience on the reinsurance contracts emerges, the assumptions are reviewed by management, no less than annually, to determine whether the actual and anticipated experience indicates that existing policy reserves, together with the present value of future gross premiums and expected investment income earned thereon, are sufficient to cover the present value of future benefits, settlement and maintenance costs. If such a review produces reserves in excess of those currently held, then the lock-in assumptions are revised and a charge for life and annuity benefits is recognized at that time.

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Our Business

We are a diverse financial holding company serving a variety of niche markets. Our principal business markets and underwrites specialty insurance products. We believe that our specialty product focus and niche market strategy enable us to develop expertise and specialized market knowledge. We seek to differentiate ourselves from competitors by our expertise, service, continuity and other value-based considerations. We historically competed in three segments of the specialty insurance marketplace: the Excess and Surplus Lines, the Specialty Admitted and the London Insurance Market segments. As a result of the acquisition of Alterra, we formed a new operating segment during the second quarter of 2013. The Alterra segment comprises all of the active property and casualty underwriting operations of the former Alterra companies. We also own interests in various industrial and service businesses that operate outside of the specialty insurance marketplace. Our financial goals are to earn consistent underwriting and operating profits and superior investment returns to build shareholder value.

Our Excess and Surplus Lines segment writes hard-to-place risks outside of the standard market, including catastrophe-exposed property, professional liability, products liability, general liability, commercial umbrella and other coverages tailored for unique exposures. Our Excess and Surplus Lines segment is comprised of five regions, and each regional office is responsible for serving the wholesale producers located in its region. Our regional teams focus on customer service and marketing, underwriting and distributing our insurance solutions and provide customers easy access to our products.

Our Specialty Admitted segment writes risks that, although unique and hard-to-place in the standard market, must remain with an admitted insurance company for marketing and regulatory reasons. Our underwriting units in this segment write specialty program insurance for well-defined niche markets, personal and commercial property and liability coverages and workers' compensation insurance. Our Specialty Admitted segment is comprised of three underwriting units: Markel Specialty, Markel American Specialty Personal and Commercial Lines and Markel FirstComp. In January 2012, we acquired Thompson Insurance Enterprises, LLC (Thomco), a privately held program administrator that underwrites multi-line, industry-focused insurance programs that complement the Markel Specialty product offerings. Examples include social service organizations, senior living, childcare and fitness centers. In January 2013, we acquired Essentia Insurance Company, a company that underwrites insurance exclusively for Hagerty Insurance Agency and Hagerty Classic Marine Insurance Agency (collectively, Hagerty) throughout the United States. Hagerty offers insurance for classic cars, vintage boats, motorcycles and related automotive collectibles. Premiums associated with Hagerty for 2012 were in excess of $180 million. Results attributable to these acquisitions are included in the Specialty Admitted segment.

Our London Insurance Market segment writes specialty property, casualty, professional liability, equine, marine, energy and trade credit insurance and reinsurance on a worldwide basis. We participate in the London market through Markel International, which includes Markel Capital Limited and Markel International Insurance Company Limited, wholly-owned subsidiaries. Markel Capital Limited is the corporate capital provider for Markel Syndicate 3000 at Lloyd's, which is managed by Markel Syndicate Management Limited, a wholly-owned subsidiary.

Our Alterra segment writes specialty insurance and reinsurance on a worldwide basis from offices in the United States, Bermuda, the United Kingdom, Europe and Latin America. The Alterra segment's Lloyd's operations are conducted by Alterra at Lloyd's through Lloyd's Syndicates 1400 and 2526. At June 30, 2013, the Company's proportionate share of Syndicates 1400 and 2526 were 100% and approximately 20%, respectively. Alterra also has a 2% share in the 2012 and prior underwriting years of Syndicate 2525. Business written by the Alterra segment includes a wide range of commercial insurance and reinsurance products, including general and excess liability, property, accident and health, agriculture, auto, credit/surety, marine and energy, medical malpractice, professional liability and workers compensation coverages.

For purposes of segment reporting, the Other Insurance (Discontinued Lines) segment includes lines of business that have been discontinued in conjunction with acquisitions. Alterra previously offered life and annuity reinsurance products. In 2010, Alterra ceased writing life and annuity reinsurance contracts and placed this business into run-off. Results attributable to the run-off of Alterra's life and annuity reinsurance business, as well as other lines of business previously discontinued by Alterra, are included in the Company's Other Insurance (Discontinued Lines) segment. This segment also includes development on asbestos and environmental loss reserves, none of which are related to the acquisition of Alterra.

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Through our wholly-owned subsidiary Markel Ventures, Inc., we own interests in various industrial and service businesses that operate outside of the specialty insurance marketplace. These businesses are viewed by management as separate and distinct from our insurance operations and are comprised of a diverse portfolio of companies from different industries, including manufacturing, health care and business and financial services. Local management teams oversee the day-to-day operations of these companies, while strategic decisions are made in conjunction with members of our executive management team, principally our President and Chief Investment Officer. The financial results of those companies in which we own controlling interests have been consolidated in our financial statements. The financial results of those companies in which we hold a noncontrolling interest are accounted for under the equity method of accounting.

Our strategy in making these private equity investments is similar to our strategy for purchasing equity securities. We seek to invest in profitable companies, with honest and talented management, that exhibit reinvestment opportunities and capital discipline, at reasonable prices. We intend to own the businesses acquired for a long period of time.

Regulatory Environment

Our insurance subsidiaries are subject to regulation and supervision by the insurance regulatory authorities of the various jurisdictions in which they conduct business. As a result of our acquisition of Alterra, we became subject to regulatory authorities in Bermuda, Ireland and certain other foreign jurisdictions. The following discussion should be read in conjunction with our 2012 Annual Report on Form 10-K, which provides a more complete description of our regulatory environment.

Bermuda Insurance Regulation

The insurance and reinsurance industry in Bermuda is regulated by the Bermuda Monetary Authority (the BMA). Alterra Bermuda is regulated by the BMA under the Insurance Act 1978 of Bermuda and its related regulations (collectively, the Bermuda Insurance Act). The Bermuda Insurance Act imposes solvency and liquidity standards and auditing and reporting requirements on Alterra Bermuda and grants to the BMA powers to supervise, investigate and intervene in the affairs of Bermuda insurance and reinsurance companies.

Alterra Bermuda’s business is subject to enhanced capital requirements in addition to minimum solvency and liquidity requirements. The enhanced capital requirement is determined by reference to a risk-based capital model that determines a control threshold for statutory capital and surplus by taking into account the risk characteristics of different aspects of the insurer's business. If a company fails to maintain or meet the control level, various degrees of regulatory action may be taken by the BMA.

Alterra Bermuda is also subject to the Insurance Code of Conduct (the Insurance Code), which prescribes duties and standards to be complied with to ensure that Alterra Bermuda implements sound corporate governance, risk management and internal controls. Non compliance with the Insurance Code could result in intervention by the BMA. The BMA also monitors each insurer’s compliance with the Insurance Code and may use it as a factor in calculating the applicable operational risk charge in relation to that insurer’s risk-based capital model.

In addition, our Bermuda incorporated entities are each required to comply with the provisions of the Companies Act 1981 of Bermuda (the Bermuda Companies Act). The Bermuda Companies Act regulates, among other things, the payment of dividends and making of distributions from contributed surplus.

Ireland Insurance Regulation

The insurance and reinsurance industry in Ireland is regulated by the Central Bank of Ireland (the CBI). Our Irish operating subsidiary, Markel Europe plc (Markel Europe, formerly known as Alterra Europe), is subject to regulation by the CBI under a variety of Irish rules and regulations. Markel Europe must comply with the Irish Insurance Acts 1909 to 2011, regulations promulgated thereunder, regulations relating to insurance business promulgated under the European Communities Act 1972, the Irish Central Bank Acts 1942 to 2010, as amended, regulations promulgated thereunder and directions and guidelines and codes of conduct issued by the CBI (collectively, the Insurance Acts and Regulations).

Markel Europe is required to maintain statutory reserves, particularly in respect of underwriting liabilities, and a solvency margin as provided for in the Insurance Acts and Regulations. Assets constituting statutory reserves must comply with admissibility, diversification, localization and currency matching rules. Statutory reserves must be actuarially certified annually.

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Other Jurisdictions

As a global provider of specialty insurance and reinsurance, we must comply with various regulatory requirements in jurisdictions where we provide coverage or have activities in addition to the United States, the United Kingdom, Bermuda and Ireland. For example, Markel Europe and Alterra at Lloyd’s must comply with applicable Latin America regulatory requirements in connection with our Latin American reinsurance operations, and Markel Europe must comply with applicable German, Swiss and United Kingdom regulatory requirements in connection with its branch activities in those countries.

In addition to the regulatory requirements imposed by the jurisdictions in which a reinsurer is licensed, a reinsurer’s business operations are affected by regulatory requirements governing credit for reinsurance in other jurisdictions in which its ceding companies are located. In general, a ceding company that obtains reinsurance from a reinsurer that is licensed, accredited or approved by the jurisdiction in which the ceding company files statutory financial statements is permitted to reflect in its statutory financial statements a credit in an aggregate amount equal to the liability for unearned premiums and loss reserves and loss expense reserves ceded to the reinsurer. Many jurisdictions also permit ceding companies to take credit on their statutory financial statements for reinsurance obtained from unlicensed or non-admitted reinsurers if certain prescribed security arrangements are made. Because Alterra Bermuda is not licensed, accredited or approved in any jurisdiction other than Bermuda, in certain instances our reinsurance customers require Alterra Bermuda to provide a letter of credit or enter into other security arrangements.

Key Performance Indicators

We measure financial success by our ability to compound growth in book value per share at a high rate of return over a long period of time. To mitigate the effects of short-term volatility, we measure ourselves over a five-year period. We believe that growth in book value per share is the most comprehensive measure of our success because it includes all underwriting and investing results. We measure underwriting results by our underwriting profit or loss and combined ratio. We measure investing results by our total investment return. These measures are discussed in greater detail under “Results of Operations.”

Results of Operations

The following table presents the components of net income to shareholders.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Underwriting profit (loss)	$	(20,682	)	$	67,178		$	27,336		$	69,556
Net investment income	77,979			63,602			142,596			143,396
Net realized investment gains	11,546			8,216			29,463			20,125
Other revenues	157,425			108,373			330,168			220,209
Amortization of intangible assets	(11,292		)	(8,315		)	(20,907		)	(17,119		)
Other expenses	(140,759		)	(97,719		)	(293,076		)	(198,123		)
Interest expense	(28,561		)	(22,209		)	(52,135		)	(44,376		)
Income tax expense	(16,980		)	(28,358		)	(45,506		)	(45,187		)
Net income attributable to noncontrolling interests	(920		)	(1,081		)	(1,281		)	(1,541		)
Net income to shareholders	$	27,756		$	89,687		$	116,658		$	146,940

Net income to shareholders for the quarter and six months ended June 30, 2013 decreased due to less favorable underwriting results compared to the same period of 2012 . The components of net income to shareholders are discussed in further detail under “Underwriting Results,” “Investing Results,” “Non-Insurance Operations” and “Interest Expense and Income Taxes.”

Underwriting Results

Underwriting profits are a key component of our strategy to grow book value per share. We believe that the ability to achieve consistent underwriting profits demonstrates knowledge and expertise, commitment to superior customer service and the ability to manage insurance risk. The property and casualty insurance industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. We use underwriting profit or loss as a basis for evaluating our underwriting performance.

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The following table presents selected data from our underwriting operations.



	Quarter Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2013				2012				2013				2012
Gross premium volume	$	1,100,980			$	646,922			$	1,844,280			$	1,295,540
Net written premiums	$	927,281			$	566,614			$	1,590,269			$	1,147,780
Net retention	84		%		88		%		86		%		89		%
Earned premiums	$	784,819			$	513,056			$	1,349,406			$	1,042,652
Losses and loss adjustment expenses	$	442,406			$	221,094			$	730,302			$	509,615
Underwriting, acquisition and insurance expenses	$	363,095		⁽¹⁾	$	224,784		⁽²⁾	$	591,768		⁽¹⁾	$	463,481		⁽²⁾
Underwriting profit (loss)	$	(20,682	)		$	67,178			$	27,336			$	69,556

U.S. GAAP Combined Ratios ⁽³⁾
Excess and Surplus Lines	77		%		87		%		77		%		92		%
Specialty Admitted	105		%		102		%		107		%		108		%
London Insurance Market	87		%		74		%		90		%		86		%
Alterra	136		%		—		%		136		%		—		%
Other Insurance (Discontinued Lines)	NM			⁽⁴⁾	NM			⁽⁴⁾	NM			⁽⁴⁾	NM			⁽⁴⁾
Markel Corporation (Consolidated)	103		%		87		%		98		%		93		%

⁽¹⁾

In connection with the acquisition of Alterra, we incurred transaction and other acquisition-related costs of $61.8 million for the quarter and six months ended June 30, 2013 . Included in this amount are transaction costs totaling $16.0 million , which primarily consist of due diligence, legal and investment banking costs, severance costs totaling $28.2 million , stay bonuses of $6.1 million and other compensation costs of $11.5 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition.

⁽²⁾

Effective January 1, 2012, we prospectively adopted Financial Accounting Standards Board Accounting Standards Update (ASU) No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts . At December 31, 2011, deferred policy acquisition costs included $43.1 million of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms ($14.3 million and $34.6 million for the quarter and six months ended June 30, 2012, respectively).


⁽³⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. A combined ratio less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss.


⁽⁴⁾	NM – Ratio is not meaningful.

Our combined ratio was 103% and 98% , respectively, for the quarter and six months ended June 30, 2013 compared to 87% and 93% , respectively for the same periods of 2012 . For the quarter ended June 30, 2013, the increase in the combined ratio was driven by a higher current accident year loss ratio, less favorable development on prior years' loss reserves and a higher expense ratio compared to the same period in 2012. For the six months ended June 30, 2013, the increase in the combined ratio was driven by a higher current accident year loss ratio and less favorable development on prior years' loss reserves.

The increase in the consolidated current accident year loss ratio for the quarter and six months ended June 30, 2013 was primarily due to unfavorable underwriting results attributable to Alterra driven by catastrophe losses and the impact of applying our "more likely redundant than deficient" loss reserving philosophy to Alterra's current year loss reserves.

The consolidated combined ratio for the quarter and six months ended June 30, 2013 included $119.3 million and $204.1 million, respectively, of favorable development on prior years' loss reserves compared to $126.9 million and $190.9 million of favorable development for the same periods in 2012. In both periods of 2013, the benefit of the favorable development on prior years' loss reserves had less of an impact on the combined ratio in 2013 compared to 2012 due to higher earned premium volume in 2013.

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Underwriting, acquisition and insurance expenses for both the quarter and six months ended June 30, 2013 include transaction and other acquisition-related costs of $61.8 million, or eight points and five points, respectively, on the combined ratio. In connection with the acquisition of Alterra, we incurred transactions costs of $16.0 million , which primarily consist of due diligence, legal and investment banking costs, severance costs totaling $28.2 million , stay bonuses of $6.1 million and other compensation costs of $11.5 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition. We expect to recognize additional costs totaling $14.1 million through May 1, 2014 associated with the payment of stay bonuses, which were awarded to certain employees of Alterra provided they remain employed one year from the Acquisition Date.

Excluding the underwriting results attributable to Alterra, the expense ratio for both the quarter and six months ended June 30, 2013 decreased due to the impact of the prospective adoption of ASU No. 2010-26 during the first quarter of 2012. The prospective adoption of ASU No. 2010-26 increased our underwriting, acquisition and insurance expenses for the quarter and six months ended June 30, 2012 by approximately $14.3 million, or three points on the combined ratio and $34.6 million, or three points on the combined ratio, respectively.

Excess and Surplus Lines Segment

The combined ratio for the Excess and Surplus Lines segment was 77% for both the quarter and six months ended June 30, 2013 compared to 87% and 92% , respectively, for the same periods of 2012 . For both the quarter and six months ended June 30, 2013, the combined ratio decreased due to more favorable development of prior years' loss reserves and a lower expense ratio compared to the same periods of 2012.

The Excess and Surplus Lines segment’s combined ratio for the quarter and six months ended June 30, 2013 included $64.1 million and $124.8 million, respectively, of favorable development on prior years’ loss reserves compared to $50.7 million and $81.3 million of favorable development for the same periods in 2012. The redundancies on prior years' loss reserves experienced within the Excess and Surplus Lines segment during both periods of 2013 and 2012 were most significant on our casualty product lines across several accident years. Additionally, the quarter and six months ended June 30, 2013 included $4.2 million and $11.7 million, respectively, of favorable development on Hurricane Sandy.

The improvement in the expense ratio for the quarter and six months ended June 30, 2013 was primarily due to the impact of the prospective adoption of ASU No. 2010-26 during the first quarter of 2012, which added approximately $6.0 million, or three points, and $14.5 million, or four points, respectively, to the segment's 2012 combined ratios. The expense ratio for the Excess and Surplus Lines segment also improved in both periods of 2013 due to lower general expenses and higher earned premiums compared to the same periods last year.

Specialty Admitted Segment

The combined ratio for the Specialty Admitted segment was 105% and 107% , respectively, for the quarter and six months ended June 30, 2013 compared to 102% and 108% , respectively, for the same periods of 2012 . For the quarter ended June 30, 2013, the increase in the combined ratio was due to a higher expense ratio, which was partially offset by a lower current accident year loss ratio. For the six months ended June 30, 2013, the decrease in the combined ratio was primarily due to a lower current accident year loss ratio.

For the quarter ended June 30, 2013, the increase in the expense ratio was primarily due to contingent commissions on our Hagerty book of business which we began writing in January 2013. Gross written premiums on this business for the quarter and six months ended June 30, 2013 were $62.2 million and $94.4 million, respectively, compared to earned premiums of $16.8 million and $20.9 million, respectively. As earned premiums on this business continue to align with written premiums, the impact of contingent commissions recorded on premiums written will stabilize. In the second quarter of 2013, the expense ratio was also unfavorably impacted by higher bad debt expense and higher general expenses compared to the same period last year. The impact of these unfavorable expense movements was partially offset by a decrease in the expense ratio due to the impact of prospective adoption of ASU No. 2010-26 during the first quarter of 2012, which added approximately $4.5 million, or three points, and $10.3 million, or four points, respectively, to the segment's 2012 combined ratios.

The lower current accident year loss ratio for both the quarter and six months ended June 30, 2013 was primarily due to more favorable rates on our workers' compensation business and to a higher proportion of non-California workers' compensation business (which carries a lower loss ratio) being written by our Markel FirstComp unit during 2013 compared to 2012. Also contributing to the lower current accident year loss ratio in 2013 was the contribution of premium from the Hagerty business, which also carries a lower loss ratio.

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London Insurance Market Segment

The combined ratio for the London Insurance Market segment was 87% and 90% , respectively, for the quarter and six months ended June 30, 2013 compared to 74% and 86% , respectively, for the same periods of 2012 . For both the quarter and six months ended June 30, 2013, the increase in the combined ratio was primarily due to less favorable development on prior years’ loss reserves, partially offset by a lower expense ratio compared to the same periods of 2012.

The London Insurance Market segment's combined ratio for the quarter and six months ended June 30, 2013 included $38.9 million and $61.0 million, respectively, of favorable development on prior years’ loss reserves compared to $64.8 million and $86.3 million of favorable development for the same periods in 2012. The favorable development on prior years' loss reserves in 2013 was primarily on the 2010 accident year and in the Marine, Specialty and Elliott Special Risks divisions. Favorable development of prior years' loss reserves in 2012 was primarily on the 2008 and 2009 accident years and occurred in a variety of programs across each of our divisions. The loss reserve redundancies for the quarter and six months ended ended June 30, 2013 also included $9.7 million and $9.9 million, respectively, of favorable loss reserve development on the 2001 and prior accident years, compared to $14.8 million and $18.3 million, respectively, in the same periods of 2012.

The improvement in the expense ratio for the quarter and six months ended June 30, 2013 was due to the impact of the prospective adoption of ASU No. 2010-26 during the first quarter of 2012, which added approximately $3.7 million, or two points, and $9.8 million, or three points, respectively, to the segment's 2012 combined ratios.

Alterra Segment

Following the completion of the acquisition of Alterra on May 1, 2013, we have included the underwriting results of Alterra in the Alterra segment. As a result, a comparison of current and prior year periods is not meaningful. For this reason, we have included certain financial information for the Alterra segment on a pro forma basis as if the acquisition of Alterra had occurred on January 1, 2012. The pro forma financial information discussed herein is for informational purposes only and does not necessarily reflect the results that would have occurred had the acquisition taken place on January 1, 2012, nor is it necessarily indicative of future results. Significant adjustments used to determine pro forma results include amortization of intangible assets and amortization of fair value adjustments recorded for differences between the fair value and historical carrying amount of Alterra's investments, unpaid losses and loss adjustment expenses and life and annuity benefits, and the corresponding income tax effects. We have also excluded certain charges from the pro forma results, including transaction costs incurred by the Company ($16.0 million) and Alterra ($23.0 million) totaling $39.0 million for both the quarter and six months ended June 30, 2013 and severance and stay bonuses attributable to the acquisition totaling $28.2 million and $6.1 million , respectively, for both the quarter and six months ended June 30, 2013 . The acceleration of compensation expense during the quarter ended June 30, 2013 related to Alterra's long-term incentive compensation awards and restricted stock awards was attributable to the acquisition, however, the incremental expense recognized during the period only represents a timing difference in the recognition of expense. Therefore, it was not excluded from the pro forma underwriting results.

The following table presents the underwriting results for the Alterra segment for the period from May 1, 2013 to June 30, 2013, which are included in the consolidated statements of income and comprehensive income (loss) for the quarter and six months ended June 30, 2013 and the pro forma underwriting results for the Alterra segment for the quarter and six months ended June 30, 2013 and 2012.

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	For the period			Pro Forma						Pro Forma
	May 1, 2013 to			Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	June 30, 2013			2013			2012			2013			2012
Earned premiums	$	225,487		$	328,829		$	349,879		$	674,090		$	687,632
Losses and loss adjustment expenses:
Current accident year	(178,781		)	(244,700		)	(218,138		)	(467,412		)	(436,612		)
Prior accident years	—			—			20,394			20,560			31,159
Underwriting, acquisition and insurance expenses:
Transaction and other acquisition-related expenses ⁽¹⁾	(61,809		)	(11,538		)	—			(11,538		)	—
All other expenses	(67,154		)	(111,259		)	(119,491		)	(225,014		)	(237,906		)
Underwriting profit (loss)	$	(82,257	)	$	(38,668	)	$	32,644		$	(9,314	)	$	44,273

U.S. GAAP combined ratio	136		%	112		%	91		%	101		%	94		%

⁽¹⁾

In connection with the acquisition of Alterra, we incurred transaction costs of $16.0 million for the quarter ended June 30, 2013 , which primarily consist of due diligence, legal and investment banking costs. Additionally, we incurred severance costs of $28.2 million , stay bonuses of $6.1 million and other compensation costs totaling $11.5 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition. The acceleration of compensation expense during the quarter ended June 30, 2013 was attributable to the acquisition, however, the incremental expense recognized during the period only represents a timing difference in the recognition of expense. Therefore, it was not excluded from the pro forma underwriting results.

The combined ratio for the Alterra segment was 136% for the period ended June 30, 2013 . The combined ratio for the Alterra segment included transaction and other acquisition-related costs of $61.8 million, or 27 points on the combined ratio. The combined ratio for the period ended June 30, 2013 also included $25.4 million, or 11 points, of underwriting loss related to catastrophes that occurred during the second quarter of 2013.

The increase in the Alterra segment's pro forma combined ratio for both the quarter and six months ended June 30, 2013 was to due a higher current year loss ratio, less favorable development of prior year loss reserves and a higher expense ratio.

For the quarter and six months ended June 30, 2013, the increase in the pro forma current accident year loss ratio was primarily driven by catastrophe losses and the impact of applying our "more likely redundant than deficient" loss reserving philosophy to Alterra's current year loss reserves. The pro forma current accident year loss ratio for the quarter and six months ended June 30, 2013 included eight points and four points, respectively, of catastrophe losses.

The increase in the pro forma expense ratio for the quarter ended June 30, 2013 was due to $11.5 million of compensation costs incurred in the second quarter of 2013 associated with the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition.

Other Insurance (Discontinued Lines)

The Other Insurance (Discontinued Lines) segment produced an underwriting profit of $0.7 million and $1.2 million for the quarter and six months ended June 30, 2013 , respectively, compared to an underwriting loss of $0.9 million and an underwriting profit of $6.4 million for the same periods of 2012 , respectively. The underwriting profit for the six months ended June 30, 2012 was primarily due to the release of allowances for reinsurance bad debt related to discontinued lines of business originally written by Markel International.

The Other Insurance (Discontinued Lines) segment also included other revenues of $0.3 million and other expenses of $5.9 million for the period ended June 30, 2013 related to the life and annuity reinsurance business which was acquired through the acquisition of Alterra on May 1, 2013. This business is in run-off and we are not writing any new life and annuity reinsurance contracts, however, we will continue to recognize the existing life and annuity reinsurance obligations. The life and annuity benefit reserves are recorded on a discounted present value basis using assumptions that were determined at the Acquisition Date. The accretion of this discount together with changes in reserves are recognized in the statement of income and comprehensive income as other expenses. Other revenues attributable to the Other Insurance (Discontinued Lines) segment represent ongoing premium adjustments on existing contracts.

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Premiums and Net Retentions

The following tables summarize gross premium volume, net written premiums and earned premiums by segment.



Gross Premium Volume
	Quarter Ended June 30,					Six Months Ended June 30,
(dollars in thousands)	2013		2012			2013		2012
Excess and Surplus Lines	$	274,814	$	229,906		$	519,120	$	452,835
Specialty Admitted	253,943		180,150			457,219		328,272
London Insurance Market	229,881		236,874			525,578		514,440
Alterra	342,328		—			342,328		—
Other Insurance (Discontinued Lines)	14		(8		)	35		(7		)
Total	$	1,100,980	$	646,922		$	1,844,280	$	1,295,540

Gross premium volume for the quarter and six months ended June 30, 2013 increased 70% and 42%, respectively, compared to the same periods of 2012. The increase in gross premium volume in both periods of 2013 was primarily attributable to the inclusion of $342.3 million of premiums written by the Alterra segment from May 1, 2013, as well as higher gross premium volume in the Specialty Admitted and Excess and Surplus Lines segments. Gross premium volume in the Specialty Admitted segment increased 41% and 39% for the quarter and six months ended June 30, 2013 , respectively. The Specialty Admitted segment included $62.2 million and $94.4 million of gross written premiums from Hagerty for the quarter and six months ended June 30, 2013 , respectively, which we began writing in the first quarter of 2013. Gross premium volume in the Specialty Admitted segment for the quarter and six months ended June 30, 2013 also included $38.9 million and $69.8 million, respectively, of gross premium volume attributable to Thomco, compared to $25.7 million and $26.3 million for the same periods of 2012. Gross premium volume for the quarter and six months ended June 30, 2013 in our Excess and Surplus Lines segment increased 20% and 15%, respectively, due in part to the impact of more favorable rates and improving economic conditions. Foreign currency exchange rate movements did not have a significant impact on gross premium volume for the quarter and six months ended June 30, 2013 .

During 2012, we saw mid-single digit favorable rate changes across our portfolio as market conditions improved and revenues, gross receipts and payrolls of our insureds were favorably impacted by improved economic conditions. We have continued to see modest price increases across many of our product lines during the first half of 2013 and will continue to pursue price increases when possible; however, when we believe the prevailing market price will not support our underwriting profit targets, the business is not written. As a result of our underwriting discipline, gross premium volume may vary when we alter our product offerings to maintain or improve underwriting profitability.

On a pro forma basis, gross premiums written for the Alterra segment were $563.9 million and $1.2 billion for the quarter and six months ended June 30, 2013, respectively, compared to $565.8 million and $1.2 billion, respectively, for the same periods of 2012.



Net Written Premiums
	Quarter Ended June 30,					Six Months Ended June 30,
(dollars in thousands)	2013		2012			2013		2012
Excess and Surplus Lines	$	231,503	$	193,291		$	441,345	$	386,204
Specialty Admitted	242,313		169,276			435,395		309,828
London Insurance Market	199,934		204,054			459,977		451,754
Alterra	253,516		—			253,516		—
Other Insurance (Discontinued Lines)	15		(7		)	36		(6		)
Total	$	927,281	$	566,614		$	1,590,269	$	1,147,780

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We purchase reinsurance in order to reduce our retention on individual risks and enable us to write policies with sufficient limits to meet policyholder needs. Net retention of gross premium volume for the quarter and six months ended June 30, 2013 was 84% and 86% , respectively, compared to 88% and 89% , respectively, for the same periods of 2012 . The decrease in net retention for the quarter and six months ended June 30, 2013 was due to the inclusion of premiums written by Alterra from May 1, 2013. Net retention of gross premium volume in the Alterra segment was 74% for the period ended June 30, 2013. Excluding premiums written by Alterra for the quarter and six months ended June 30, 2013 , our consolidated net retention of gross premium volume in 2013 would have been 89% for both the quarter and six months ended June 30, 2013, which is consistent with 2012.

On a pro forma basis, net retention of gross premium volume in the Alterra segment for both the quarter and six months ended June 30, 2013 would have been 70% compared to 66% for the same periods of 2012. The increase in pro forma net retention in the Alterra segment during 2013 was due in part to a decrease in the ceding percentage on Alterra's property quota share treaties. Additionally, Alterra ceased writing contract binding business in the second quarter of 2012, which was 100% ceded.



Earned Premiums
	Quarter Ended June 30,					Six Months Ended June 30,
(dollars in thousands)	2013		2012			2013		2012
Excess and Surplus Lines	$	209,345	$	189,668		$	410,750	$	389,046
Specialty Admitted	177,196		144,695			335,665		278,170
London Insurance Market	172,776		178,699			377,468		375,441
Alterra	225,487		—			225,487		—
Other Insurance (Discontinued Lines)	15		(6		)	36		(5		)
Total	$	784,819	$	513,056		$	1,349,406	$	1,042,652

Earned premiums for the quarter and six months ended June 30, 2013 increased 53% and 29%, respectively, compared to the same periods of 2012. The increase in earned premiums in both periods of 2013 was primarily attributable to the inclusion of $225.5 million of premiums earned by the Alterra segment from May 1, 2013. The increase in earned premiums in 2013 was also attributable to higher earned premiums in the Specialty Admitted and Excess and Surplus Lines segments. For the quarter and six months ended June 30, 2013 , the Specialty Admitted segment included $25.2 million and $45.7 million, respectively, of earned premiums from Thomco, compared to $6.7 million and $6.8 million for the same periods of 2012. The Specialty Admitted segment also included $16.8 million and $20.9 million of earned premiums from Hagerty for the quarter and six months ended June 30, 2013 . Foreign currency exchange rate movements did not have a significant impact on earned premiums for the quarter and six months ended June 30, 2013 .

On a pro forma basis, earned premiums for the Alterra segment for the quarter and six months ended June 30, 2013 were $328.8 million and $674.1 million, respectively, compared to $349.9 million and $687.6 million, respectively, for the same periods of 2012. In both periods, the decrease in earned premiums was driven by a decrease in reinsurance premiums assumed.

Investing Results

Net investment income for the second quarter of 2013 was $78.0 million compared to $63.6 million for the second quarter of 2012 . Net investment income was $142.6 million for the six months ended June 30, 2013 and $143.4 million for the six months ended June 30, 2012 . The quarter and six months ended June 30, 2013 included $17.3 million of net investment income attributable to Alterra, which was net of $21.4 million of amortization expense as a result of establishing a new amortized cost for Alterra's fixed maturity securities as of the Acquisition Date. For the six months ended June 30, 2013 , net investment income also included a favorable change in the fair value of our credit default swap of $7.2 million compared to $12.2 million for the same period of 2012 . The fair value of our credit default swap is driven by observable and unobservable inputs as discussed in note 10 of our consolidated financial statements. During 2012, financial markets improved and credit spreads narrowed, which favorably impacted the fair value of the credit default swap. Changes in the fair value of this derivative instrument could be significant prior to its scheduled termination date of December 2014. Excluding net investment income attributable to the credit default swap and invested assets and net investment income attributable to Alterra, net investment income for the quarter and six months ended June 30, 2013 decreased compared to the same periods of 2012 due in part to a decrease in our holdings of fixed maturities and increase in holdings of cash and cash equivalents. See note 4(d) of the notes to consolidated financial statements for details regarding the components of net investment income.

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Net realized investment gains for the second quarter of 2013 were $11.5 million compared to $8.2 million for the second quarter of 2012 . For the six months ended June 30, 2013 , net realized investment gains were $29.5 million compared to $20.1 million for the same period of 2012 . Net realized investment gains for the quarter and six months ended June 30, 2013 included $4.6 million of write downs for other-than-temporary declines in the estimated fair value of investments compared to $1.0 million for the same periods of 2012 .

We complete a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is deemed other-than-temporary. At June 30, 2013 , we held securities with gross unrealized losses of $201.1 million , or approximately 1% of invested assets. All securities with unrealized losses were reviewed, and we believe that there were no other securities with indications of declines in estimated fair value that were other-than-temporary at June 30, 2013 . However, given the volatility in the debt and equity markets, we caution readers that further declines in fair value could be significant and may result in additional other-than-temporary impairment charges in future periods. Variability in the timing of realized and unrealized gains and losses is to be expected.

Non-Insurance Operations (Markel Ventures)

We consolidate our non-insurance operations on a one-month lag. Operating revenues and expenses associated with our non-insurance operations are included in other revenues and other expenses in the consolidated statements of income and comprehensive income (loss). Revenues for our non-insurance operations were $152.1 million and $313.6 million for the quarter and six months ended June 30, 2013 compared to $94.1 million and $191.2 million for the same periods of 2012 . Net income to shareholders from our non-insurance operations was $6.8 million and $10.5 million for the quarter and six months ended June 30, 2013 compared to $0.2 million and $0.4 million for the same periods of 2012 . EBITDA from our non-insurance operations was $21.0 million and $40.3 million for the quarter and six months ended June 30, 2013 compared to $9.8 million and $19.2 million for the same periods of 2012 . Revenues, net income to shareholders and EBITDA from our non-insurance operations increased for the quarter and six months ended June 30, 2013 compared to the same periods of 2012 primarily due to more favorable results at AMF Bakery Systems and our acquisitions of Havco WP LLC in April 2012 and Reading Bakery Systems in September 2012.

Markel Ventures EBITDA is a non-GAAP financial measure and reflects income attributable to our ownership interest in Markel Ventures before interest, income taxes, depreciation and amortization. We use Markel Ventures EBITDA as an operating performance measure in conjunction with U.S. GAAP measures, including revenues and net income, to monitor and evaluate the performance of our non-insurance operations. Because EBITDA excludes interest, income taxes, depreciation and amortization, it provides an indicator of economic performance that is useful to both management and investors in evaluating our non-insurance businesses as it is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation and amortization resulting from purchase accounting. The following table reconciles EBITDA of Markel Ventures to consolidated net income to shareholders.



	Quarter Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2013			2012			2013			2012
Markel Ventures EBITDA	$	20,975		$	9,753		$	40,335		$	19,170
Interest expense	(2,071		)	(2,540		)	(4,553		)	(5,057		)
Income tax expense	(3,096		)	(386		)	(7,393		)	(585		)
Depreciation expense	(4,710		)	(3,022		)	(9,388		)	(5,655		)
Amortization of intangible assets	(4,255		)	(3,616		)	(8,514		)	(7,508		)
Markel Ventures net income	6,843			189			10,487			365
Net income from other Markel operations	20,913			89,498			106,171			146,575
Net Income to Shareholders	$	27,756		$	89,687		$	116,658		$	146,940

Interest expense for both the quarters and six months ended June 30, 2013 and 2012 includes intercompany interest expense of $1.6 million and $3.2 million , respectively.

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Interest Expense and Income Taxes

Interest expense for the second quarter of 2013 increased to $28.6 million from $22.2 million in the same period of 2012 . Interest expense for the six months ended June 30, 2013 increased to $52.1 million from $44.4 million in the same period of 2012 . The increase in interest expense for both periods of 2013 is due in part to $3.4 million of interest expense associated with our 6.25% unsecured senior notes and 7.20% unsecured senior notes which were assumed in connection with the acquisition of Alterra. Interest expense for the six months ended June 30, 2013 also increased due to the July 2012 issuance of our 4.90% unsecured senior notes and March 2013 issuance of our 3.625% unsecured senior notes and 5.0% unsecured senior notes, partially offset by the redemption of our 7.50% unsecured senior debentures in August 2012 and the repayment of our 6.80% unsecured notes in February 2013.

The effective tax rate was 28% and 23% as of June 30, 2013 and 2012 , respectively. For both periods, the effective tax rate differs from the statutory tax rate of 35% primarily as a result of tax-exempt investment income. The increase in the effective tax rate in 2013 was driven by higher estimated earnings taxed at a 35% tax rate, primarily as a result of the inclusion of the results of operations of Alterra beginning May 1, 2013 and anticipating a smaller tax benefit related to tax-exempt investment income, which resulted from having higher estimated income before income taxes in 2013 compared to 2012.

Comprehensive Income (Loss) to Shareholders

Comprehensive loss to shareholders was $149.1 million for the second quarter of 2013 compared to comprehensive income of $73.4 million for the same period of 2012 . Comprehensive loss to shareholders for the second quarter of 2013 included a decrease in net unrealized gains on investments, net of taxes, of $166.7 million and net income to shareholders of $27.8 million . Comprehensive income to shareholders for the second quarter of 2012 included a decrease in net unrealized gains on investments, net of taxes, of $13.6 million and net income to shareholders of $89.7 million .

For the six months ended June 30, 2013 , comprehensive income to shareholders was $108.6 million compared to $279.4 million for the same period of 2012 . Comprehensive income to shareholders for the six months ended June 30, 2013 included net income to shareholders of $116.7 million and an increase in net unrealized gains on investments, net of taxes, of $2.9 million . Comprehensive income to shareholders for the six months ended June 30, 2012 included net income to shareholders of $146.9 million and an increase in net unrealized gains on investments, net of taxes, of $131.7 million .

Financial Condition

Investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) were $16.6 billion at June 30, 2013 compared to $9.3 billion at December 31, 2012 . Net unrealized gains on investments, net of taxes, were $949.8 million at June 30, 2013 compared to $946.9 million at December 31, 2012 . Equity securities were $2.8 billion , or 17% of invested assets, at June 30, 2013 compared to $2.4 billion , or 26% of invested assets, at December 31, 2012 .

Net cash provided by operating activities was $240.0 million for the six months ended June 30, 2013 compared to $104.7 million for the same period of 2012 . The increase in net cash provided by operating activities was due to higher cash flows from underwriting activities and non-insurance operations. The increase in cash flows from underwriting activities is primarily a result of the acquisition of Alterra and higher premium volume primarily in our Specialty Admitted and Excess and Surplus Lines segments. Additionally, the six months ended June 30, 2013 included higher cash flows from our non-insurance operations driven by increases at AMF Bakery Systems and our acquisitions of Havco WP LLC in April 2012 and Reading Bakery Systems in September 2012.

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Net cash provided by investing activities was $398.7 million for the six months ended June 30, 2013 compared to net cash used by investing activities of $57.7 million for the same period of 2012 . During the first six months of 2013, net cash was provided by acquisitions as a result of Alterra's cash balance exceeding cash paid for the acquisition by $49.5 million. See note 3 of our consolidated financial statements for a discussion of acquisitions. We initiated redemptions totaling $129.7 million from our hedge fund portfolio acquired from Alterra, which is included in other assets on the consolidated balance sheet, and received cash of $69.2 million during the period for hedge fund redemptions. We are able to redeem our hedge funds on the same terms that the underlying funds can be redeemed. In general, the funds in which we are invested require at least 30 days notice of redemption, and may be redeemed on a monthly, quarterly, semi-annual, annual or longer basis, depending on the fund. We anticipate additional redemptions from our hedge fund portfolio totaling approximately $73 million throughout the remainder of 2013. During 2013, we reduced our holdings of fixed maturities, earning lower investment yields. Due to the current low interest rate environment, we have chosen to take a more defensive posture in order to maintain a high level of liquidity and have flexibility in how we allocate capital. Cash flow from investing activities is affected by various factors such as anticipated payment of claims, financing activity, acquisition opportunities and individual buy and sell decisions made in the normal course of our investment portfolio management.

Net cash provided by financing activities was $209.0 million for the six months ended June 30, 2013 compared to net cash used by financing activities of $25.1 million for the same period of 2012 . On March 8, 2013, the Company issued $250 million of 3.625% unsecured senior notes due March 30, 2023 and $250 million of 5.0% unsecured senior notes due March 30, 2043. Net proceeds were approximately $491.2 million . On February 15, 2013 , we repaid our 6.80% unsecured senior notes, which had an outstanding principal balance of $246.7 million . Cash of $40.9 million and $16.1 million was used to repurchase shares of our common stock during the first six months of 2013 and 2012, respectively.

We seek to maintain prudent levels of liquidity and financial leverage for the protection of our policyholders, creditors and shareholders. Our target capital structure includes approximately 30% debt. Our debt to capital ratio was 26% at June 30, 2013 and 28% at December 31, 2012 . From time to time, our debt to capital ratio may increase due to business opportunities that may be financed in the short term with debt. Alternatively, our debt to capital ratio may fall below our target capital structure, which provides us with additional borrowing capacity to respond when future opportunities arise.

Our holding company had $1.1 billion and $1.4 billion of invested assets at June 30, 2013 and December 31, 2012 , respectively. The decrease in invested assets is primarily the result of cash paid for the Alterra acquisition of approximately $1.0 billion and the repayment of our 6.80% unsecured senior notes in February 2013 partially offset by dividends received from our subsidiaries of $515.0 million and our March 2013 issuance of 3.625% and 5.0% unsecured senior notes.

Shareholders' equity was $6.3 billion at June 30, 2013 and $3.9 billion at December 31, 2012 . Book value per share increased to $451.72 at June 30, 2013 from $403.85 at December 31, 2012 primarily due to equity issued in connection with the acquisition of Alterra and $108.6 million of comprehensive income to shareholders for the six months ended June 30, 2013 .

The holding company has historically relied upon dividends from its domestic subsidiaries to meet debt service obligations. Under the insurance laws of the various jurisdictions in which our domestic insurance subsidiaries and Alterra Bermuda, which we have elected to treat as a U.S. company for U.S. income tax purposes, are incorporated, an insurer is restricted in the amount of dividends it may pay without prior approval of regulatory authorities. Based on statutory surplus and net income as of and for the year ended December 31, 2012 , and after considering dividends paid through June 30, 2013 , at June 30, 2013 , our domestic insurance subsidiaries and Alterra Bermuda could pay ordinary dividends of $305.0 million during the remainder of 2013 under these laws.

There are also regulatory restrictions on the amount of dividends that our foreign insurance subsidiaries may pay based on applicable laws in Ireland and the United Kingdom. At June 30, 2013 , earnings of our foreign subsidiaries are considered reinvested indefinitely for U.S. income tax purposes. At June 30, 2013 , cash and cash equivalents, restricted cash and cash equivalents and short-term investments of $882.8 million were held by our foreign subsidiaries and will not be made available for distributions to the holding company. We do not expect the amount of cash and cash equivalents, restricted cash and cash equivalents and short-term investments that we consider reinvested indefinitely to have a material effect on our liquidity or capital resources.

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The following table summarizes our contractual cash payment obligations at June 30, 2013 .



	Payments Due by Period
(dollars in thousands)	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Senior long-term debt and other debt ⁽¹⁾	$	3,620,835	$	138,994	$	272,207	$	352,728	$	2,856,906
Operating leases	239,388		30,470		48,985		38,645		121,288
Unpaid losses and loss adjustment expenses (estimated)	9,865,700		1,986,826		3,067,638		1,724,550		3,086,686
Life and annuity benefits (estimated)	2,005,505		99,627		189,813		176,319		1,539,746
Total	$	15,731,428	$	2,255,917	$	3,578,643	$	2,292,242	$	7,604,626


⁽¹⁾	Amounts include interest.

Senior long-term debt and other debt, excluding unamortized premium, was $2.2 billion and $1.5 billion at June 30, 2013 and December 31, 2012 , respectively. As of June 30, 2013 and December 31, 2012 , there were no borrowings outstanding under our $150 million revolving credit facility. As of June 30, 2013 , there were no borrowings outstanding under our $900 million senior credit facility and there were $460.3 million of letters of credit that were issued and outstanding. Effective July 12, 2013, the capacity of our revolving credit facility was increased to $300 million .

We were in compliance with all covenants contained in our revolving and senior credit facilities at June 30, 2013 . To the extent that we are not in compliance with our covenants, our access to the credit facilities could be restricted. While we believe this to be unlikely, the inability to access the credit facilities could adversely affect our liquidity. See note 9 of the notes to consolidated financial statements for further discussion of our revolving and senior credit facilities.

Reserves for unpaid losses and loss adjustment expenses and life and annuity benefits represent future contractual obligations associated with insurance and reinsurance contracts issued to our policyholders or other insurance companies. Information presented in the table of contractual cash payment obligations is an estimate of the ultimate cost to settle losses and benefits as of June 30, 2013 . The estimation of losses and benefits is based on various complex and subjective judgments. Actual losses and benefits paid may differ, perhaps significantly, from the reserve estimates reflected in our financial statements. Similarly, the timing of payment of our estimated losses and benefits is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid in any such period can be significantly different from the amounts disclosed above.

The amounts in the above table represent our gross estimates of known liabilities as of June 30, 2013 and do not include any allowance for claims for future events within the time period specified. Accordingly, it is highly likely that the total amounts paid out in the time periods shown will be greater than those indicated in the table. Life and annuity benefits are computed on a net present value basis in the consolidated balance sheet as of June 30, 2013 , whereas the expected payments by period in the table above are the estimated payments at a future time and do not reflect a discount of the amount payable. As described in note 3 to the consolidated financial statements, unpaid losses and loss adjustment expenses attributable to Alterra were recorded at fair value as of the Acquisition Date, which consists of the present value of the expected net loss and loss adjustment expense payments plus a risk premium. The expected payments by period in the table above are the estimated payments at a future time, whereas the reserves for unpaid losses and loss adjustment expenses included in the consolidated balance sheet include the unamortized portion of the fair value adjustment recorded at the Acquisition Date.

At June 30, 2013 , we had $5.7 billion of invested assets and other assets held in trust or on deposit for the benefit of policyholders, ceding companies or banks in the event of a default on our obligations. These invested assets and the related liabilities are included on our consolidated balance sheet. See note 4(h) of the notes to consolidated financial statements for further discussion of restrictions over our invested assets.

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Our insurance operations require capital to support premium writings, and we remain committed to maintaining adequate capital and surplus at each of our insurance subsidiaries. The National Association of Insurance Commissioners (NAIC) developed a model law and risk-based capital formula designed to help regulators identify domestic property and casualty insurers that may be inadequately capitalized. Under the NAIC's requirements, a domestic insurer must maintain total capital and surplus, calculated on an annual basis, above a calculated threshold or face varying levels of regulatory action. Based on calculations performed at December 31, 2012 , the capital and surplus of each of our domestic insurance subsidiaries was above the minimum regulatory thresholds; however, as a result of adverse trends at Alterra America Insurance Company (Alterra America) and Alterra Excess & Surplus Lines Company (Alterra E&S), primarily due to losses from Hurricane Sandy, the Company agreed with the Delaware Department of Insurance to make a $40 million capital contribution to Alterra America on August 1, 2013. Alterra America in turn contributed the $40 million to Alterra E&S, which is its wholly-owned subsidiary.

Capital adequacy of our international insurance subsidiaries is regulated by applicable laws of the United Kingdom, Ireland and Bermuda. Based on calculations performed at December 31, 2012 , the capital and surplus of each of our international insurance subsidiaries was above the minimum regulatory thresholds.

We have access to various capital sources, including dividends from certain of our insurance subsidiaries, holding company invested assets, undrawn capacity under our revolving credit facility and access to the debt and equity capital markets. We believe that we have sufficient liquidity to meet our capital needs.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosures

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Our consolidated balance sheets include assets and liabilities with estimated fair values that are subject to market risk. Historically, our primary market risks have been equity price risk associated with investments in equity securities, interest rate risk associated with investments in fixed maturities and foreign currency exchange rate risk associated with our international operations. We have no material commodity risk.

Credit risk is the potential loss resulting from adverse changes in an issuer's ability to repay its debt obligations. General concern exists about the number of municipalities experiencing financial difficulties in light of the adverse economic conditions experienced over the past several years. We manage the exposure to credit risk in our municipal bond portfolio by investing in high quality securities and by diversifying our holdings, which are typically either general obligation or revenue bonds related to essential products and services.

We monitor our portfolio to ensure that credit risk does not exceed prudent levels. We have consistently invested in high credit quality, investment grade securities. Our fixed maturity portfolio has an average rating of "AA," with approximately 95% rated "A" or better by at least one nationally recognized rating organization. Our policy is to invest in investment grade securities and to minimize investments in fixed maturities that are unrated or rated below investment grade. At June 30, 2013 , less than 2% of our fixed maturity portfolio was unrated or rated below investment grade. Our fixed maturity portfolio includes securities issued with financial guaranty insurance. We purchase fixed maturities based on our assessment of the credit quality of the underlying assets without regard to insurance.

Our fixed maturity portfolio includes securities issued by foreign governments. General concern exists about the financial difficulties facing certain European countries in light of the adverse economic conditions experienced over the past several years. We monitor developments in foreign countries, currencies and issuers that could pose risks to our fixed maturity portfolio, including ratings downgrades, political and financial changes and the widening of credit spreads. We believe that our fixed maturity portfolio is highly diversified and is comprised of high quality securities.

We obtain information from news services, rating agencies and various financial market participants to assess potential negative impacts on a country or company's financial risk profile. We analyze concentrations within our fixed maturity portfolio by country, currency and issuer, which allows us to assess our level of diversification with respect to these exposures, reduce troubled exposures should they occur and mitigate any future financial distress that these exposures could cause. The following tables present the estimated fair values of foreign exposures included in our fixed maturity portfolio.

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	June 30, 2013
(dollars in thousands)	Sovereign		Non-Sovereign Financial Institutions		Non-Sovereign Non-Financial Institutions		Total
European exposures:
Portugal, Ireland, Italy, Greece and Spain	$	—	$	40,811	$	3,089	$	43,900
Eurozone (excluding Portugal, Ireland, Italy, Greece and Spain)	924,564		255,055		204,243		1,383,862
Supranationals	—		205,843		5,700		211,543
Other European exposures (excluding Eurozone)	94,340		240,946		184,529		519,815
Total European exposures	1,018,904		742,655		397,561		2,159,120
All other foreign (non-European) exposures	444,794		144,857		110,650		700,301
Total foreign exposures	$	1,463,698	$	887,512	$	508,211	$	2,859,421



	December 31, 2012
(dollars in thousands)	Sovereign		Non-Sovereign Financial Institutions		Non-Sovereign Non-Financial Institutions		Total
European exposures:
Portugal, Ireland, Italy, Greece and Spain	$	—	$	36,233	$	2,641	$	38,874
Eurozone (excluding Portugal, Ireland, Italy, Greece and Spain)	146,173		170,758		102,952		419,883
Supranationals	—		113,025		—		113,025
Other European exposures (excluding Eurozone)	6,442		19,803		71,132		97,377
Total European exposures	152,615		339,819		176,725		669,159
All other foreign (non-European) exposures	403,993		73,019		54,420		531,432
Total foreign exposures	$	556,608	$	412,838	$	231,145	$	1,200,591

The estimated fair value of our investment portfolio at June 30, 2013 was $16.6 billion , 83% of which was invested in fixed maturities, short-term investments, cash and cash equivalents and restricted cash and cash equivalents and 17% of which was invested in equity securities. At December 31, 2012 , the estimated fair value of our investment portfolio was $9.3 billion , 74% of which was invested in fixed maturities, short-term investments, cash and cash equivalents and restricted cash and cash equivalents and 26% of which was invested in equity securities.

Our fixed maturities, equity securities and short-term investments are recorded at fair value, which is measured based upon quoted prices in active markets, if available. We determine fair value for these investments after considering various sources of information, including information provided by a third party pricing service. The pricing service provides prices for substantially all of our fixed maturities and equity securities. In determining fair value, we generally do not adjust the prices obtained from the pricing service. We obtain an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows and prepayment speeds. We validate prices provided by the pricing service by reviewing prices from other pricing sources and analyzing pricing data in certain instances.

Interest Rate Risk

Our fixed maturity investments and borrowings are subject to interest rate risk. Increases and decreases in interest rates typically result in decreases and increases, respectively, in the fair value of these financial instruments.

The majority of our investable assets come from premiums paid by policyholders. These funds are invested predominantly in high quality corporate, government and municipal bonds with relatively short durations. The fixed maturity portfolio, including short-term investments, cash and cash equivalents and restricted cash and cash equivalents, has an average duration of 3.5 years and an average rating of "AA." See note 4(c) of the notes to consolidated financial statements for disclosure of contractual maturity dates of our fixed maturity portfolio. The changes in the estimated fair value of the fixed maturity portfolio are presented as a component of shareholders' equity in accumulated other comprehensive income, net of taxes.

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We work to manage the impact of interest rate fluctuations on our fixed maturity portfolio. The effective duration of the fixed maturity portfolio is managed with consideration given to the estimated duration of our liabilities. We have investment guidelines that limit the maximum duration and maturity of the fixed maturity portfolio.

We use a commercially available model to estimate the effect of interest rate risk on the fair values of our fixed maturity portfolio and borrowings. The model estimates the impact of interest rate changes on a wide range of factors including duration, prepayment, put options and call options. Fair values are estimated based on the net present value of cash flows, using a representative set of possible future interest rate scenarios. The model requires that numerous assumptions be made about the future. To the extent that any of the assumptions are invalid, incorrect estimates could result. The usefulness of a single point-in-time model is limited, as it is unable to accurately incorporate the full complexity of market interactions.

The following table summarizes our interest rate risk and shows the effect of hypothetical changes in interest rates as of June 30, 2013 and December 31, 2012 . The selected hypothetical changes do not indicate what could be the potential best or worst case scenarios.



(dollars in millions)	Estimated Fair Value		Hypothetical Change in Interest Rates (bp=basis points)	Estimated Fair Value after Hypothetical Change in Interest Rates		Hypothetical Percentage Increase (Decrease) in
(dollars in millions)	Estimated Fair Value		Hypothetical Change in Interest Rates (bp=basis points)			Fair Value of Fixed Maturities		Shareholders' Equity
Fixed Maturity Investments
As of June 30, 2013
Total fixed maturity investments ⁽¹⁾	$	13,773	200 bp decrease	$	14,806	7.5	%	10.8	%
			100 bp decrease	14,279		3.7		5.3
			100 bp increase	13,272		(3.6	)	(5.3	)
			200 bp increase	12,792		(7.1	)	(10.3	)
As of December 31, 2012
Total fixed maturity investments ⁽¹⁾	$	6,926	200 bp decrease	$	7,326	5.8	%	7.2	%
			100 bp decrease	7,123		2.8		3.5
			100 bp increase	6,721		(3.0	)	(3.6	)
			200 bp increase	6,504		(6.1	)	(7.5	)
Liabilities ⁽²⁾
As of June 30, 2013
Borrowings	$	2,383	200 bp decrease	$	2,784
			100 bp decrease	2,571
			100 bp increase	2,216
			200 bp increase	2,068
As of December 31, 2012
Borrowings	$	1,688	200 bp decrease	$	1,916
			100 bp decrease	1,796
			100 bp increase	1,591
			200 bp increase	1,503


⁽¹⁾	Includes short-term investments, cash and cash equivalents and restricted cash and cash equivalents.


⁽²⁾	Changes in estimated fair value have no impact on shareholders' equity.

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Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15 (Disclosure Controls). This evaluation was conducted under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO).

Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon our controls evaluation, the CEO and CFO concluded that effective Disclosure Controls were in place to ensure that the information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

On May 1, 2013, we completed the acquisition of Alterra, whose assets and revenues constitute approximately 47% of our total assets and approximately 24% of our operating revenues as of and for the quarter ended June 30, 2013 . Alterra had an existing system of internal control over financial reporting in compliance with the Sarbanes Oxley Act of 2002, the components of which were either maintained or integrated into our system of internal control over financial reporting during the quarter ended June 30, 2013.

During the second quarter of 2013, Markel International replaced a number of different underwriting systems with one integrated wholesale underwriting and technical accounting system. The new application also provides for the generation of financial accounting values, including premium earnings, and replaces an internally developed financial accounting and reporting system. While we do not believe that our previous systems had any material weaknesses, the new system allows Markel International to manage its business more efficiently, and has enhanced the overall control environment.

There were no other changes in our internal control over financial reporting during the second quarter of 2013 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Safe Harbor and Cautionary Statement

This report contains statements concerning or incorporating our expectations, assumptions, plans, objectives, future financial or operating performance and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

There are risks and uncertainties that may cause actual results to differ materially from predicted results in forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additional factors that could cause actual results to differ from those predicted are set forth under “Risk Factors” and “Safe Harbor and Cautionary Statement” in our 2012 Annual Report on Form 10-K or are included in the items listed below:


•	our anticipated premium volume is based on current knowledge and assumes no significant man-made or natural catastrophes, no significant changes in products or personnel and no adverse changes in market conditions;


•	the effect of cyclical trends, including demand and pricing in the insurance and reinsurance markets;


•	actions by competitors, including consolidation, and the effect of competition on market trends and pricing;


•	we offer insurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses;


•	the frequency and severity of man-made and natural catastrophes (including earthquakes and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of weather-related catastrophes, may be exacerbated if, as many forecast, conditions in the oceans and atmosphere result in increased hurricane or other adverse weather-related activity;


•	changing legal and social trends and inherent uncertainties (including but not limited to those uncertainties associated with our asbestos and environmental reserves) in the loss estimation process can adversely impact the adequacy of loss reserves and the allowance for reinsurance recoverables;


•	reinsurance reserves are subject to greater uncertainty and reliability than insurance reserves primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution;


•	changes in the assumptions and estimates used in establishing reserves for Alterra's life and annuity reinsurance book (which is in runoff), for example, mortality, longevity, morbidity and interest rates, could result in material increases in our estimated loss reserves for such business;


•	adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;


•	the failure of any loss limitation methods employed;


•	changes in the availability, costs and quality of reinsurance coverage which may impact our ability to write certain lines of business;


•	industry and economic conditions can affect the ability and/or willingness of reinsurers to pay balances due;


•	after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings;


•	regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital;

•

economic conditions, actual or potential defaults in sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of fixed maturities and equity securities, as well as the carrying value of other assets and liabilities, and this impact may be heightened by market volatility;


•	economic conditions, changes in government support for education, healthcare and infrastructure projects and foreign currency exchange rates, among other factors, may adversely affect the markets served by our non-insurance operations and negatively impact their revenues and profitability;


•	economic conditions may adversely affect access to capital and credit markets;

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•	we have substantial investments in municipal bonds (approximately $2.9 billion at June 30, 2013 ) and, although no more than 10% of our municipal bond portfolio is tied to any one state, widespread defaults could adversely affect our results of operations and financial condition;

•

we cannot predict the extent and duration of the current period of slow economic growth; the effects of government actions to address the U.S. federal deficit and debt ceiling issues; the continuing effects of government intervention into the markets to address the financial crisis of 2008 and 2009 (including, among other things, the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder); the outcome of economic and currency concerns in the Eurozone; and their combined impact on our industry, business and investment portfolio;


•	we cannot predict the impact of U.S. health care reform legislation and regulations under that legislation on our business;


•	our business is dependent upon the successful functioning and security of our computer systems; if our information technology systems fail or suffer a security breach, our business or reputation could be adversely impacted;


•	we have recently completed a number of acquisitions and may engage in additional acquisition activity in the future, which may increase operational and control risks for a period of time;


•	the amount of the costs, fees, expenses and charges related to our acquisition of Alterra may exceed our expectations;


•	we may not realize the contemplated benefits, including cost savings and synergies, of our acquisition of Alterra;


•	any determination requiring the write-off of a significant portion of the goodwill and intangible assets ( $371.6 million and $187.5 million , respectively) recorded in connection with the acquisition of Alterra;


•	we may have difficulties retaining all business previously written by us and Alterra following our acquisition of Alterra;


•	loss of services of any executive officers or other key personnel in conjunction with our acquisition of Alterra or otherwise could impact our operations; and


•	adverse changes in our assigned financial strength or debt ratings as a result of our acquisition of Alterra or otherwise could impact our ability to attract and retain business or obtain capital.

Our premium volume, underwriting and investment results and results from our non-insurance operations have been and will continue to be potentially materially affected by these factors. By making forward-looking statements, we do not intend to become obligated to publicly update or revise any such statements whether as a result of new information, future events or other changes. Readers are cautioned not to place undue reliance on any forward-looking statements which speak only as at their dates.

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PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) In accordance with the terms of the Merger Agreement, the Company assumed outstanding warrants to purchase Alterra common stock. Holders of the warrants had the option to surrender them for consideration specified in the Merger Agreement, which included cash and registered shares of the Company's common stock, or to have them remain outstanding as “Company Converted Warrants,” in which case the holders would be entitled to a combination of cash and unregistered shares of the Company's common stock upon exercise of the warrants. Three holders who elected to have their warrants remain outstanding subsequently exercised their warrants and received a total of 100,115 shares of the Company's common stock under the cashless exercise provision of the warrants. These shares were issued under the exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received no cash proceeds in connection with the warrant exercises.

Issuer Purchases of Equity Securities



	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
April 1, 2013 through April 30, 2013	—	—		—	$	139,533
May 1, 2013 through May 31, 2013	47,693	$	528.61	47,693	$	114,322
June 1, 2013 through June 30, 2013	—	$	—	—	$	—
Total	47,693	$	528.61	47,693	$	114,322

⁽¹⁾

The Board of Directors approved the repurchase of up to $200 million of our common stock pursuant to a share repurchase program publicly announced on December 1, 2010 (the Program). Under the Program, we may repurchase outstanding shares of our common stock from time to time, primarily through open-market transactions. The Program has no expiration date but may be terminated by the Board of Directors at any time.

Item 6. Exhibits

See Exhibit Index for a list of exhibits filed as part of this report.

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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, thereunto duly authorized, th is 7 ^th day of August 2013 .



	Markel Corporation

	By:	/s/ Alan I. Kirshner
		Alan I. Kirshner
		Chief Executive Officer and
		Chairman of the Board of Directors

	By:	/s/ Anne G. Waleski
		Anne G. Waleski
		Vice President and Chief Financial Officer
		(Principal Financial Officer)

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Exhibit Index



Number	Description

2.1	Agreement and Plan of Merger, dated as of December 18, 2012, by and among Alterra Capital Holdings Limited, Markel Corporation and Commonwealth Merger Subsidiary Limited (2.1)a

3(i)	Amended and Restated Articles of Incorporation (3.1)b

3(ii)	Bylaws, as amended (3.1)c

4.1	Form of Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.1)d

4.2	Form of Consent dated as of June 25, 2012 regarding Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.2)e

4.3	Form of First Amendment to the Amended and Restated Credit Agreement dated as of February 28, 2013 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.3)f

4.4	Form of Second Amendment to the Amended and Restated Credit Agreement dated as of July 12, 2013 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (10.2)g

4.5	Credit Agreement, dated as of December 16, 2011, among Alterra Capital Holdings Limited, Alterra Bermuda Limited, the lenders parties thereto and Bank of America, N.A., as Administrative Agent*

4.6	Amendment No. 1 dated as of February 7, 2013, to the Credit Agreement among Alterra Capital Holdings Limited, Alterra Bermuda Limited, the lenders parties thereto and Bank of America, N.A., as Administrative Agent*

4.7	Indenture dated as of June 5, 2001, between Markel Corporation and The Chase Manhattan Bank, as Trustee (4.1)h

4.8	Form of Third Supplemental Indenture dated as of August 13, 2004 between Markel Corporation and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)i

4.9	Form of Fifth Supplemental Indenture dated as of September 22, 2009 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)j

4.10	Form of Sixth Supplemental Indenture dated as of June 1, 2011 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)k

4.11	Form of Seventh Supplemental Indenture dated as of July 2, 2012 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)l

4.12	Form of Eighth Supplemental Indenture dated as of March 8, 2013 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.2)m

4.13	Form of Ninth Supplemental Indenture dated as of March 8, 2013 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.3)m

4.14	Indenture dated as of September 1, 2010, among Alterra Finance LLC, Alterra Capital Holdings Limited and The Bank of New York Mellon, as Trustee*

4.15	Form of First Supplemental Indenture, dated as of September 27, 2010 between Alterra Finance LLC, Alterra Capital Holdings Limited and The Bank of New York Mellon, as Trustee, including the form of the securities as Exhibit A*

	The registrant hereby agrees to furnish to the Securities and Exchange Commission a copy of all instruments defining the rights of holders of long-term debt of the registrant’s subsidiaries shown on the Consolidated Balance Sheet of the registrant at June 30, 2013 and the respective Notes thereto, included in this Quarterly Report on Form 10-Q.

10.1	Schedule of Base Annual Salaries for Executive Officers effective May 1, 2013 and Restricted Stock Units awarded on May 13, 2013*

10.2	Form of Form of Restricted Stock Unit Award Agreement for Executive Officers (10.1)n

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10.3	Alterra Capital Holdings Limited 2008 Stock Incentive Plan (99.1)o

10.4	Alterra Capital Holdings Limited 2006 Equity Incentive Plan (99.2)o

10.5	Alterra Capital Holdings Limited 2000 Stock Incentive Plan (99.3)o

10.6	Joinder Agreement, dated July 12, 2013, by and among Markel Corporation, JPMorgan Chase Bank, N.A. and SunTrust Bank, as Administrative Agent (10.1)g

31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)*

31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)*

32.1	Certification of Principal Executive Officer furnished Pursuant to 18 U.S.C. Section 1350*

32.2	Certification of Principal Financial Officer furnished Pursuant to 18 U.S.C. Section 1350*

99.1	Alterra Capital Holdings Limited - Consolidated Financial Statements (99.2)p

101	The following consolidated financial statements from Markel Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on August 7, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income (Loss), (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.*


a.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on December 19, 2012.


b.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on May 13, 2011.


c.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on November 18, 2011.


d.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended September 30, 2011.


e.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2012.


f.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended March 31, 2013.


g.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on July 15, 2013.


h.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on June 5, 2001.


i.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on August 11, 2004.


j.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on September 21, 2009.


k.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant’s report on Form 8-K filed on May 31, 2011.


l.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 29, 2012.


m.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on March 7, 2013.


n.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 17, 2013.


o.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's Registration Statement on Form S-8 filed on May 2, 2013.


p.	Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 1, 2013.


*	Filed with this report.

Exhibit 4.5

EXECUTION VERSION

Published CUSIP Number: G0229EAA5

CREDIT AGREEMENT

Dated as of December 16, 2011

among

ALTERRA CAPITAL HOLDINGS LIMITED

and

ALTERRA BERMUDA LIMITED

as the Borrowers,

BANK OF AMERICA, N.A. ,
as Administrative Agent, Fronting Bank
and
L/C Administrator,

CITIBANK, N.A.
and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agents,

ING BANK N.V., LONDON BRANCH,
LLOYDS SECURITIES INC.,

and THE BANK OF NEW YORK MELLON,
as Co-Documentation Agents

and

THE OTHER LENDERS PARTY HERETO

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ,

CITIGROUP GLOBAL MARKETS INC.
and
WELLS FARGO SECURITIES, LLC ,

Joint Lead Arrangers and Joint Book Managers

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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS



		Page
1.01	Defined Terms	1
1.02	Other Interpretive Provisions	27
1.03	Accounting Terms	27
1.04	Exchange Rates; Currency Equivalents	28
1.05	Additional Alternative Currencies	28
1.06	Rounding	29
1.07	Times of Day	29
1.08	Letter of Credit Amounts	29

ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS



2.01	Commitments	29
2.02	Borrowings, Conversions and Continuations of Loans	30
2.03	Letters of Credit	32
2.04	Prepayments	44
2.05	Termination or Reduction of Commitments	44
2.06	Repayment of Loans	45
2.07	Interest	45
2.08	Fees	45
2.09	Computation of Interest and Fees	46
2.10	Evidence of Debt	46
2.11	Payments Generally; Administrative Agent's Clawback	47
2.12	Sharing of Payments by Lenders	48
2.13	Increase in Commitments	49
2.14	Designated Borrower	51
2.15	Several Obligations of Borrowers	52
2.16	Cash Collateral	52
2.17	Defaulting Lenders	53

ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY



3.01	Taxes	56

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(con’t)



		Page
3.02	Illegality	60
3.03	Inability to Determine Rates	61
3.04	Increased Costs; Reserves on Eurodollar Rate Loans	61
3.05	Compensation for Losses	63
3.06	Mitigation Obligations; Replacement of Lenders or Fronting Bank	64
3.07	Survival	64

ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS



4.01	Conditions of Effectiveness	65
4.02	Conditions to All Credit Extensions	67

ARTICLE V.
REPRESENTATIONS AND WARRANTIES



5.01	Existence, Qualification and Power; Compliance with Laws	69
5.02	Authorization; No Contravention	69
5.03	Governmental Authorization; Other Consents	69
5.04	Binding Effect	69
5.05	Financial Statements	69
5.06	Litigation	70
5.07	No Default	70
5.08	Ownership of Property	70
5.09	Taxes	70
5.10	ERISA Compliance	70
5.11	Subsidiaries; Equity Interests	72
5.12	Margin Regulations; Investment Company Act; Investment Business Act	72
5.13	Disclosure	72
5.14	Compliance with Laws	72
5.15	Representations as to Foreign Jurisdiction Matters	73
5.16	First Priority Interest	74

ARTICLE VI.
AFFIRMATIVE COVENANTS



6.01	Reports, Certificates and Other Information	74
6.02	Corporate Existence, Foreign Qualification; Permits	78

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(con’t)



		Page
6.03	Books, Records and Inspections	78
6.04	Payment of Obligations	78
6.05	Compliance with Laws	78
6.06	Maintenance of Properties	79
6.07	Conduct of Business	79
6.08	Use of Credit Extensions	79
6.09	Further Assurances	79
6.10	Collateral Requirements	79
6.11	OFAC; PATRIOT Act Compliance	80

ARTICLE VII.
NEGATIVE COVENANTS



7.01	Alterra Capital Debt to Total Capitalization Ratio	80
7.02	Financial Strength Rating	80
7.03	Indebtedness	80
7.04	Mergers, Consolidations and Dispositions	81
7.05	Transactions with Affiliates	82
7.06	Liens	82
7.07	Restricted Payments, Etc	83

ARTICLE VIII.
EVENTS OF DEFAULT AND THEIR EFFECT



8.01	Events of Default	84
8.02	Remedies Upon Event of Default	86
8.03	Remedies Upon Event of Default Application of Funds	86

ARTICLE IX.
ADMINISTRATIVE AGENT



9.01	Appointment and Authority	87
9.02	Rights as a Lender	88
9.03	Exculpatory Provisions	88
9.04	Reliance by Administrative Agent	89
9.05	Delegation of Duties	89
9.06	Resignation of Administrative Agent	89
9.07	Non-Reliance on Administrative Agent and Other Lenders	91

iii

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(con’t)



		Page
9.08	No Other Duties, Etc	91
9.09	Administrative Agent May File Proofs of Claim	91
9.10	Collateral Matters	92

ARTICLE X.
ALTERRA CAPITAL GUARANTEE



10.01	Unconditional Guarantee	93
10.02	Guarantee Absolute	93
10.03	Waivers	94
10.04	Subrogation	94
10.05	Survival	95
10.06	Severability	95

ARTICLE XI.
MISCELLANEOUS



11.01	Amendments, Etc	95
11.02	Notices; Effectiveness; Electronic Communication	97
11.03	No Waiver; Cumulative Remedies	99
11.04	Expenses; Indemnity; Damage Waiver	99
11.05	Payments Set Aside	101
11.06	Successors and Assigns	102
11.07	Treatment of Certain Information; Confidentiality	107
11.08	Right of Setoff	108
11.09	Interest Rate Limitation	108
11.10	Counterparts; Integration; Effectiveness	108
11.11	Survival of Representations and Warranties	109
11.12	Severability	109
11.13	Replacement of Lenders	109
11.14	Governing Law; Jurisdiction; Etc	110
11.15	WAIVER OF JURY TRIAL	111
11.16	No Advisory or Fiduciary Responsibility	112
11.17	Electronic Execution of Assignments	112
11.18	USA PATRIOT Act Notice	112

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(con’t)



		Page
11.19	Judgment Currency	113

SCHEDULES

1.01 Regulatory Matters

1.02 Borrowing Base Calculation

2.01 Commitments and Applicable Percentages

5.11 Subsidiaries
11.02 Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

Form of

A Loan Notice

B-1 Fronted Letter of Credit

B-2 Several Letter of Credit

C Note

D Compliance Certificate

E-1 Assignment and Assumption
E-2 Administrative Questionnaire

F Tax Forms

G Request for Issue

H-1 Designated Borrower Request
H-2 Designated Borrower Assumption Agreement

I Designated Borrower Notice

J Security Agreement

K Borrowing Base Certificate

CREDIT AGREEMENT

This CREDIT AGREEMENT (“ Agreement ”) is entered into as of December 16, 2011, among ALTERRA CAPITAL HOLDINGS LIMITED, a Bermuda company (“ Alterra Capital ”), ALTERRA BERMUDA LIMITED, a Bermuda company (“ Alterra Bermuda ”), certain other Subsidiaries of Alterra Capital party hereto pursuant to Section 2.14 (each a “ Designated Borrower ” and, together with Alterra Capital and Alterra Bermuda, the “ Borrowers ” and, each a “ Borrower ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A. , as Administrative Agent, Fronting Bank and L/C Administrator.

Alterra Capital and Alterra Bermuda have requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms .

As used in this Agreement, the following terms shall have the meanings set forth below:

“ Account Bank ” means any “bank” within the meaning of Section 9-102(a)(8) of the UCC at which any deposit account constituting a Collateral Account is held, which shall be (a) located in the United States and (b) reasonably acceptable to the Administrative Agent.

“ Adjusted Fair Market Value ” means with respect to any Eligible Collateral, an amount equal to the product of the Fair Market Value of such Eligible Collateral and the applicable percentage with respect to such Eligible Collateral as set forth on Schedule 1.02 .

“ Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“ Administrative Agent’s Office ” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02 with respect to such currency, or such other address or account as the Administrative Agent may from time to time notify to the Borrowers and the Lenders.

“ Administrative Questionnaire ” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.

“ Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Aggregate Commitments ” means the Commitments of all the Lenders. On the Effective Date the Aggregate Commitments are $1,100,000,000.

“ Agreement ” has the meaning set forth in the introductory paragraph.

“ Alternative Currency ” means each of Canadian Dollars, Euro, Sterling and each other currency (other than Dollars) that is approved in accordance with Section 1.05 .

“ Alternative Currency Equivalent ” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Fronting Bank at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.

“ Alternative Currency L/C Sublimit ” means $50,000,000.

“ Alterra Bermuda ” has the meaning set forth in the introductory paragraph.

“ Alterra Capital ” has the meaning set forth in the introductory paragraph.

“ Alterra Capital Debt ” means the consolidated Indebtedness of Alterra Capital and its Subsidiaries. For purposes of calculating consolidated Indebtedness (i) the amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date, (ii) the amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date, (iii) the amount of any Indebtedness described in clause (e) of the definition of Indebtedness shall be the lesser of the fair market value of such assets at such date of determination (determined in good faith by Alterra Capital) and the amount of such Indebtedness, (iv) Indebtedness under clause (b) of the definition thereof shall be included only to the extent that payments have been made or draws have been honored under such instruments but not reimbursed, and (v) Indebtedness shall not include any payment of obligations arising under a repurchase, securities loan or similar agreement, except for the excess of the payment of obligations for which such Person is liable under such agreement over the value of the collateral securing such payment obligations.

“ Alterra Capital Debt to Total Capitalization Ratio ” means the ratio of (a) Alterra Capital Debt to (b) the sum of Alterra Capital Debt plus the Net Worth of Alterra Capital.

“ Alterra Reinsurance USA ” means Alterra Reinsurance USA Inc., a Connecticut company.

“ Alterra UK ” means Alterra Capital UK Limited, a company formed under the laws of England and Wales.

“ Alterra USA Holdings ” means Alterra USA Holdings Limited, a Delaware corporation.

“ Annual Statement ” means, as to any Person, the annual financial statement of such Person as required to be filed with the applicable Governmental Authority of such Person’s

domicile, together with all exhibits or schedules filed therewith, prepared in conformity with SAP.

“ Applicable Issuing Party ” means (a) in the case of Fronted Letters of Credit, the Fronting Bank and (b) in the case of Several Letters of Credit, the L/C Administrator.

“ Applicable Percentage ” means with respect to any Lender, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment or, if the Commitment of each Lender to make Loans and the obligation of the Fronting Bank and the Lenders to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, the percentage (carried out to the ninth decimal place) of the Total Outstanding Amount of all Lenders represented by such Lender’s Total Outstanding Amount. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

“ Applicable Rate ” means the following percentages per annum (i) with respect to Eurodollar Loans, 0.75%, (ii) with respect to Base Rate Loans, 0% and (iii) with respect to the Letter of Credit Fee, 0.400%.

“ Applicable Time ” means, with respect to any payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Fronting Bank, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.

“ Applicant Borrower ” has the meaning set forth in Section 2.14 .

“ Arranger ” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, each in its capacity as joint lead arranger and joint book manager.

“ Arranger Fee Letter ” means each of (a) the letter agreement dated November 8, 2011 among Alterra Capital, Alterra Bermuda and Citigroup Global Capital Markets Inc. and (b) the letter agreement dated November 8, 2011 among Alterra Capital, Alterra Bermuda and Wells Fargo Bank, National Association and Wells Fargo Securities, LLC.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form approved by the Administrative Agent.

“ Attributable Indebtedness ” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“ Availability Period ” means the period from and including the Effective Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.05 , and (c) the date of termination of the Commitment of each Lender to make Loans and of the obligation of the Fronting Bank and the Lenders to make L/C Credit Extensions pursuant to Section 8.02 .

“ Bank of America ” means Bank of America, N.A. and its successors.

“ Bank of America Fee Letter ” means the letter agreement dated November 8, 2011 among Alterra Capital, Alterra Bermuda, Bank of America and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurodollar Rate for a one-month Interest Period commencing on such day plus 1%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Loan that bears interest at the Base Rate.

“ Borrower ” and “ Borrowers ” each has the meaning set forth in the introductory paragraph hereto.

“ Borrower’s Outstanding Amount ” means, as to any Borrower on any date of determination, the sum of (a) the aggregate outstanding principal amount of Loans made to such Borrower after giving effect to any Borrowings and prepayments or repayments of Loans of such Borrower occurring on such date; plus (b) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the L/C Obligations of such Borrower after giving effect to any L/C Credit Extension for such Borrower occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by such Borrower of Unreimbursed Amounts.

“ Borrower Materials ” has the meaning set forth in Section 6.01 .

“ Borrowing ” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

“ Borrowing Base ” means with respect to any Borrower on any date of determination, an amount equal to the sum of the Adjusted Fair Market Value of all Eligible Collateral of such Borrower.

“ Borrowing Base Certificate ” means a certificate substantially in the form of Exhibit K with such changes therein as the Administrative Agent may reasonably request from time to time or another form which is acceptable to the Administrative Agent in its reasonable discretion.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and (a) if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market and (b) if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars in respect of a Letter of Credit denominated in an Alternative Currency, or any other dealings in any Alternative Currency to be carried out pursuant to this Agreement in respect of any such Letter of Credit, means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such Alternative Currency.

“ Canadian Dollar ” and “ C$ ” means lawful money of Canada.

“ Cash ” has the meaning set forth in Schedule 1.02 .

“ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, the Fronting Bank and the Lenders (as applicable), as collateral for L/C Obligations, or obligations of Lenders to fund participations in respect thereof (as the context may require), cash or deposit account balances or, if the Administrative Agent and the Fronting Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Fronting Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“ Cash Equivalents ” has the meaning set forth in Schedule 1.02 .

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“ Change of Control ” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or

its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “ option right ”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of at least 51% or more of the equity securities of Alterra Capital entitled to vote for members of the board of directors or equivalent governing body of Alterra Capital on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) without regard to the voting limitations set forth in the Organization Documents of Alterra Capital;

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of Alterra Capital cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

(c) Alterra Capital fails to own, directly or indirectly, free and clear of all Liens, 100% of the Equity Interests of Alterra Bermuda and each Person who becomes a Designated Borrower (so long as such Person is a Designated Borrower) without regard to any voting limitations set forth in the Organization Documents of such Subsidiary.

“ Code ” means the Internal Revenue Code of 1986.

“ Collateral ” means, with respect to any Borrower, all property and assets with respect to which a security interest is purported to be granted in favor of the Administrative Agent pursuant to a Security Agreement executed by such Borrower.

“ Collateral Account ” means, with respect to any Borrower, any account at a Financial Institution as to which such Financial Institution, such Borrower and the Administrative Agent have entered into a Control Agreement.

“ Commercial Paper ” has the meaning set forth in Schedule 1.02 .

“ Commitment ” means with respect to each Lender, the amount set forth on Schedule 2.01 hereto, or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as the amount of such Lender’s commitment to make Loans to the Borrowers and to issue and participate in the issuance, extension and renewal of Letters of Credit

for the account of a Borrower, as the same may be adjusted from time to time; or if such commitment is terminated pursuant to the provisions hereof, zero.

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit D with such changes therein as the Administrative Agent may from time to time reasonably request for purposes of monitoring the Borrowers’ compliance herewith or as may be requested by a Borrower and are reasonably satisfactory to the Administrative Agent.

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Control Agreement ” means, with respect to any Borrower, an agreement between such Borrower, the applicable Financial Institution and the Administrative Agent with respect to any deposit or securities account of such Borrower in which a security interest is purported to be granted to the Administrative Agent pursuant to a Security Agreement in form and substance reasonably acceptable to the Administrative Agent.

“ Corporate/Municipal Securities ” has the meaning set forth in Schedule 1.02 .

“ Credit Extension ” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States, Bermuda or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would, unless cured or waived, become an Event of Default.

“ Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the interest rate (including any Applicable Rate) applicable to such Obligation plus (ii) 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.

“ Defaulting Lender ” means, subject to Section 2.17(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and Alterra Capital in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (ii) issue its applicable percentage or fund its obligations in connection with any Several Letter of Credit within two Business Days of the date such obligations were required to be issued or funded hereunder, or (iii) pay to the Administrative Agent, the Fronting Bank or any other Lender any other amount required to be paid by it hereunder ( including in respect of its participation in Letters of Credit ) within two Business Days of the date when due; (b) has notified Alterra Capital, the Administrative Agent, the L/C Administrator or the Fronting Bank in writing that it does not intend to comply with its funding obligations hereunder or generally under other agreements in which it commits to extend credit, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three Business Days after written request by the Administrative Agent or Alterra Capital, to confirm in writing to the Administrative Agent and Alterra Capital that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and Alterra Capital); or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver , custodian , conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or has taken any action in furtherance of or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that for the avoidance of doubt, a Lender shall not be a Defaulting Lender solely by virtue of (A) the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority or (B) in the case of a solvent Lender, the precautionary appointment of an administrator, guardian, custodian or other similar official by a Governmental Authority or instrumentality thereof under or based on the Law of the country where such Lender is subject to home jurisdiction supervision if applicable Law requires that such appointment not be publicly disclosed, in any case so long as such action does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b) ) upon delivery of written notice of such determination to Alterra Capital, the Fronting Bank, and each other Lender.

“ Designated Borrower ” has the meaning set forth in the introductory paragraph.

“ Designated Borrower Assumption Agreement ” means an assumption agreement substantially in the form of Exhibit H-2 .

“ Designated Borrower Notice ” has the meaning set forth in Section 2.14 .

“ Designated Borrower Request ” means a request substantially in the form of Exhibit H-1 .

“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ Dollar ” and “ $ ” mean lawful money of the United States.

“ Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined as of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.

“ Drawing Request ” has the meaning set forth in Section 2.03(c)(i) .

“ Effective Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 11.01 .

“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender that is primarily engaged in the business of commercial banking; and (c) any other Person (other than a natural person) approved by (i) the Administrative Agent, and (ii) unless an Event of Default has occurred and is continuing, Alterra Capital (each such approval of the Administrative Agent and Alterra Capital not to be unreasonably withheld or delayed); provided , that notwithstanding the foregoing, (x) the Fronting Bank must approve any proposed assignee who is not a Lender, (y) “Eligible Assignee” shall not include Alterra Capital or any of Alterra Capital’s Affiliates or Subsidiaries and (z) Alterra Capital must approve any proposed assignee that is not an NAIC Approved Bank.

“ Eligible Collateral ” means Cash, Cash Equivalents, Commercial Paper, MBS Investments, Corporate/Municipal Securities, Government Debt and G7 Securities which (a) have the required rating as set forth on Schedule 1.02 , (b) are capable of being marked to market on a daily basis and (c) are held in a Collateral Account.

“ EMU Legislation ” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.

“ Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any Hazardous Materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Alterra Capital or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with any Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ ERISA Event ” means (a) a Reportable Event occurs with respect to a Pension Plan; (b) the withdrawal of Alterra Capital or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or a cessation of operations by Alterra Capital or any ERISA Affiliate that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Alterra Capital or any ERISA Affiliate from a Multiemployer Plan or the receipt by Alterra Capital or any ERISA Affiliate of a notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan amendment as a termination, under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) the occurrence of any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Alterra Capital or any ERISA Affiliate.

“ Euro ” and “ EUR ” mean the lawful currency of the Participating Member States introduced in accordance with the EMU Legislation.

“ Eurodollar Rate ” means (a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to (i) the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or, if Reuters is not available, such other commercially available, generally recognized source providing quotations of BBA LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to (i) BBA LIBOR, as published by Reuters (or, if Reuters is not available, such other commercially available, generally recognized source providing quotations of BBA LIBOR as may be designated by the Administrative Agent from time to time), at approximately 11:00 a.m., London time determined two Business Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank Eurodollar market at their request at the date and time of determination.

“ Eurodollar Rate Loan ” means a Loan that bears interest at a rate based on the Eurodollar Rate.

“ Event of Default ” has the meaning set forth in Section 8.01 .

“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient , (a) Taxes imposed on or measured by net income (however denominated) , franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment other than pursuant to an assignment request by Alterra Capital under Section 11.13 or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii) or (c) , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately

before it changed its Lending Office, (c ) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) , and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

“ Existing Credit Agreements ” means (a) the Credit Agreement dated as of August 7, 2007 among Alterra Capital, Alterra Bermuda, various financial institutions and Bank of America as administrative agent, and (b) the Amended and Restated Credit Agreement dated as of June 12, 2007 among Alterra Holdings Limited, Alterra Bermuda, Alterra Reinsurance USA and Alterra USA Holdings Limited , in each case as in effect immediately prior to the Effective Date.

“ Existing Letters of Credit ” means all Letters of Credit outstanding under the Existing Credit Agreements on the Effective Date.

“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

“ Fair Market Value ” means (a) with respect to any publicly traded security (other than those set forth in clause (b) ) the closing price for such security on the largest exchange on which such security is traded (or if not traded on an exchange, then the average of the closing bid and ask prices quoted over-the-counter) on the date of the determination (as such prices are reported in The Wall Street Journal (Midwest Edition) or if not so reported, in any nationally recognized financial journal or newspaper), (b) with respect to Cash, Cash Equivalents and Commercial Paper, the amounts thereof, and (c) with respect to any Investment (other than those set forth in clauses (a) , and (b) ), the price for such Investment on the date of calculation obtained from a generally recognized source approved by the Administrative Agent or the most recent bid quotation from such approved source (or, if no generally recognized source exists as to a particular Investment, any other source specified by Alterra Capital to which the Administrative Agent does not reasonably object). With respect to Investments denominated in a currency other than Dollars, the Dollar equivalent thereof (using a method agreed upon by Alterra Capital and the Administrative Agent) shall be used for purposes of determining the Fair Market Value of such Investment.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as reasonably determined by the Administrative Agent.

“ Fee Letters ” means the Arranger Fee Letters and the Bank of America Fee Letter.

“ Financial Institution ” means the Securities Intermediary or Account Bank, as applicable, with respect to any Collateral Account.

“ Financial Strength Rating ” means with respect to any Material Insurance Subsidiary, the financial strength rating of such Material Insurance Subsidiary as determined by A.M. Best Company, Inc.

“ Foreign Benefit Plan ” means any employee benefit plan, pension plan or welfare plan not subject to ERISA which is maintained or contributed to for the benefit of the employees of a Borrower or its Subsidiaries which, under applicable Law, (a) is required to be funded through a trust or similar funding vehicle or (b) creates or could result in a Lien on any property of a Borrower or any of its Subsidiaries.

“ Foreign Lender ” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Obligor ” means each Borrower that is not organized under the laws of the United States or a state thereof.

“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.

“ Fronted Letter of Credit ” means a Letter of Credit issued by the Fronting Bank in which the Lenders purchase a risk participation pursuant to Section 2.01(c) which shall be substantially in the form of Exhibit B-1 or in such other form as may be agreed by the applicable L/C Applicant (or, in the case of a Letter of Credit issued for the account of an Insurance Subsidiary of Alterra Capital which is not a Borrower, by Alterra Bermuda) and the Fronting Bank, provided that the Fronting Bank will agree to reasonable changes to such form, necessary to satisfy any then applicable requirement of the applicable insurance regulators and/or of any rating agency.

“ Fronting Bank ” means Bank of America or any successor fronting bank.

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to the Fronting Bank, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations with respect to Fronted Letters of Credit other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof and (b) if such Defaulting Lender is a Participating Bank, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations with respect to its Several Letters of Credit.

“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board consistently applied or such other principles as may be approved by a

significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination.

“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Government Debt ” has the meaning set forth in Schedule 1.02 .

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the primary obligor) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided , that (i) obligations of Alterra Bermuda or any other Insurance Subsidiary (including without limitation any guarantee by Alterra Capital or any of its Subsidiaries of such Person’s Insurance Subsidiaries’ obligations thereunder) under Primary Policies and Reinsurance Agreements (including security posted to secure obligations thereunder), (ii) obligations of Alterra Capital or any of its Subsidiaries to guarantee payment of any real property lease for office premises entered into by a direct or indirect Subsidiary of such Person in the ordinary course of business, (iii) obligations of Alterra Capital or any of its Subsidiaries arising in the ordinary course of business pursuant to letters to certain insurers, reinsurers and insurance brokers to contribute or cause to be contributed sufficient capital surplus to any direct or indirect Insurance Subsidiary of such Person in the event that such Insurance Subsidiary is unable or unwilling in whole or in part for financial reasons to make payment of any of its claims, losses or expenses pursuant to Primary Policies or Reinsurance Agreements issued to clients of the addressees of such letters and (iv) agreements by Alterra Bermuda or any other Insurance Subsidiary in favor of any of its Insurance Subsidiaries to maintain the capital of such Insurance Subsidiary at 150% of the required regulatory level (collectively, the “ Permitted Transactions ”) shall not be deemed to be Guarantees or constitute Indebtedness of such Person for the purposes of this Agreement. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect

thereof as determined by the guaranteeing Person in good faith, provided , that the amount of any Guarantee described in clause (b) of the immediately preceding sentence shall be the lesser of (x) the fair market value of such assets at such date of determination (determined in good faith by Alterra Capital) and (y) the amount of such Indebtedness or other obligation of such other Person. The term Guarantee as a verb has a corresponding meaning.

“ Guaranteed Borrowers ” means each Borrower (including each Designated Borrower) other than Alterra Capital.

“ Guaranteed Obligations ” has the meaning set forth in Section 10.01 .

“ G7 Securities ” has the meaning set forth in Schedule 1.02 .

“ Hazardous Materials ” means all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law including all explosive or radioactive substances or wastes.

“ Honor Date ” has the meaning set forth in Section 2.03(c)(i) .

“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all direct or contingent obligations of such Person arising under bankers’ acceptances, bank guaranties, surety bonds and similar instruments and all obligations of such Person in respect of letters of credit;

(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f) capital leases and Synthetic Lease Obligations;

(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Indebtedness is expressly made non-recourse to such Person. Indebtedness shall not include (i) obligations arising from the honoring of a check, draft or similar instrument against insufficient funds provided such obligation is extinguished within three Business Days of its incurrence, (ii) obligations of any Insurance Subsidiary under any Primary Policy, Reinsurance Agreement or Retrocession Agreement, or (iii) compensatory grants of equity awards in respect of Alterra Capital’s Equity Interests (including, without limitation, options, restricted stock and restricted stock units) on account of the performance of services.

“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“ Indemnitees ” has the meaning set forth in Section 11.04(b) .

“ Information ” has the meaning set forth in Section 11.07 .

“ Insurance Regulatory Authority ” means, with respect to any Insurance Subsidiary, the Governmental Authority charged with regulating insurance companies or insurance holding companies in its jurisdiction of domicile and, to the extent that it has regulatory authority over such Insurance Subsidiary, in each other jurisdiction in which such Insurance Subsidiary conducts business or is licensed to conduct business.

“ Insurance Subsidiary ” means each of Alterra Bermuda and any other Subsidiary which is licensed by any Governmental Authority to issue insurance and/or reinsurance policies.

“ Interest Payment Date ” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

“ Interest Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months or, if available to all Lenders (and approved in accordance with Section 2.02(a)(i)), such longer or shorter period thereafter, as selected by a Borrower in its Loan Notice; provided , that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date.

“ Investment ” means, as to any Person, any investment of any Person, whether by means of security purchase, capital contribution, loan, time deposit or otherwise, and shall include Cash, Cash Equivalents and Commercial Paper.

“ IRS ” means the United States Internal Revenue Service.

“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

“ Issue ” means, with respect to any Letter of Credit, to issue, to amend or to extend the expiry date of, or to increase the stated amount of, such Letter of Credit; and the terms “Issued”, “Issuing” and “Issuance” have corresponding meanings.

“ Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the Applicable Issuing Party and (x) in the case of Letters of Credit issued for its own account, the applicable Borrower and (y) in the case of Letters of Credit issued for the account of an Insurance Subsidiary of Alterra Capital which is not a Borrower, Alterra Bermuda, or in favor of the Applicable Issuing Party relating to any such Letter of Credit.

“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“ L/C Administrator ” means Bank of America’s Letter of Credit Operations located at One Fleet Way, Scranton, PA 18507, as letter of credit administrator for the Lenders and any replacement L/C Administrator.

“ L/C Advance ” means, with respect to each Lender, in connection with any Letter of Credit, the amount funded by such Lender in accordance with Section 2.03(c)(iv) .

“ L/C Advance Date ” has the meaning set forth in Section 2.03(c)(ii) .

“ L/C Applicant ” means (a) a Borrower with respect to Letters of Credit issued for its account, and (b) in the case of a Letter of Credit requested for the account of an Insurance Subsidiary of Alterra Capital which is not a Borrower, Alterra Bermuda.

“ L/C Credit Extension ” means, without duplication with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“ L/C Issuer ” means (a) with respect to any Fronted Letter of Credit, the Fronting Bank who has issued such Letter of Credit and (b) with respect to a Several Letter of Credit, each Lender other than a Participating Bank.

“ L/C Obligations ” means, as at any date of determination, the Dollar Equivalent of the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . For all purposes of this Agreement, if on any date of determination a Letter of Credit that is subject to the rules of the ISP has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. For purposes of determining the L/C Obligations held by any Lender, a Lender shall be deemed to hold an amount equal to the sum of (a) the aggregate amount of each Lender’s direct obligation, in all outstanding Several Letters of Credit (or, if a Participating Bank, its risk participation in Several Letters of Credit), (b) its risk participation in all outstanding Fronted Letters of Credit, and (c) its L/C Advances. The L/C Obligation of any L/C Applicant shall be the aggregate amount available to be drawn under all outstanding Letters of Credit issued for the account of such L/C Applicant plus the aggregate of all Unreimbursed Amounts owed by such L/C Applicant.

“ Lender ” has the meaning set forth in the introductory paragraph hereto together with, in each case, (a) any Affiliate of any such Lender through which such Lender elects, by written notice to the Administrative Agent and the Borrowers, to make any Loans available to any Borrower other than a Borrower located in the United States or Bermuda or (b) if such Lender is not an NAIC Approved Bank, any Affiliate of any such Lender identified on Schedule 2.01 or by written notice to the Administrative Agent as the Person who will be the L/C Issuer with respect to Several Letters of Credit for such Lender, provided that, in each case, for all purposes of voting or consenting with respect to (i) any amendment, supplementation or modification of any Loan Document, (ii) any waiver of any requirements of any Loan Document or any Default and its consequences, or (iii) any other matter as to which a Lender may vote or consent pursuant to this Agreement, the Lender making such election shall be deemed the “Person”, rather than such Affiliate, entitled to vote or consent.

“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Alterra Capital and the Administrative Agent.

“ Letter of Credit ” means (a) the Existing Letters of Credit, (b) any standby letter of credit issued hereunder (i) for the account of any Borrower and (ii) at the request of Alterra Bermuda, for the account of an Insurance Subsidiary of Alterra Capital which is not a Borrower, in each case to support obligations relating to insurance or reinsurance liabilities, for regulatory purposes or for general corporate purposes. Letters of Credit may be issued in Dollars or in an Alternative

Currency and, to the extent applicable, shall be in a form which complies with the applicable insurance regulatory requirements.

“ Letter of Credit Application ” means each request for Issue of a Letter of Credit substantially in the form of Exhibit G or any other application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the Applicable Issuing Party.

“ Letter of Credit Expiration Date ” means the date which is one year after the Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).

“ Letter of Credit Fee ” has the meaning set forth in Section 2.03(i).

“ Lien ” means any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“ Loan ” has the meaning set forth in Section 2.01 .

“ Loan Documents ” means this Agreement, each Note, each Issuer Document, each Security Agreement, each Control Agreement, each Designated Borrower Request, each Designated Borrower Assumption Agreement and the Fee Letters.

“ Loan Notice ” means a notice given pursuant to Section 2.02(a) of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, which, if in writing, shall be substantially in the form of Exhibit A .

“ Loan Sublimit ” means $250,000,000.

“ Material Adverse Effect ” means a material adverse effect upon (a) the business, assets, properties, results of operations or condition (financial or otherwise) of Alterra Capital and its Subsidiaries, taken as a whole, (b) the ability of any Borrower to perform its payment or other material obligations under this Agreement or any of the other Loan Documents to which it is a party or (c) the legality, validity or enforceability of this Agreement or any of the other Loan Documents against any Borrower party thereto or the rights and remedies of the Administrative Agent and the Lenders hereunder and thereunder.

“ Material Insurance Subsidiary ” means Alterra Bermuda and each other Insurance Subsidiary that is a Designated Borrower or (after elimination of intercompany accounts) whose consolidated total assets or total revenues exceed 10% of the consolidated total assets or total revenues of Alterra Capital and its Subsidiaries for the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 6.01(a) .

“ Material Party ” means each Borrower, each Material Insurance Subsidiary and each other Subsidiary (after elimination of intercompany accounts) whose consolidated total assets or total revenues exceed 10% of the consolidated total assets or total revenues of Alterra Capital

and its Subsidiaries for the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 6.01(a) .

“ Maturity Date ” means December 15, 2015.

“ MBS (Agency CMOs) ” has the meaning set forth in Schedule 1.02 .

“ MBS (Agency Pass-Throughs) ” has the meaning set forth in Schedule 1.02 .

“ MBS Investments ” has the meaning set forth in Schedule 1.02 .

“ Minimum Collateral Amount ” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided by a Defaulting Lender to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to 103% of the Fronting Exposure with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.16(a) , an amount equal to 101% of the Borrower’s Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the Fronting Bank in their sole discretion.

“ Moody’ s” means Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Alterra Capital or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including Alterra Capital or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“ NAIC ” means the National Association of Insurance Commissioners and any successor thereto.

“ NAIC Approved Bank ” means any bank listed on the most current list of banks approved by the Securities Valuation Office of the NAIC and acting through the branch so listed.

“ Net Worth ” means, for any Person and its consolidated Subsidiaries, shareholder’s equity calculated in accordance with GAAP.

“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (ii) has been approved by the Required Lenders.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ Note ” means a promissory note made by a Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit C .

“ Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Borrower arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Borrower of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“ Ordinary Course Litigation ” means claims which relate to Reinsurance Agreements, Retrocession Agreements or Primary Policies entered into by Insurance Subsidiaries in the ordinary course of business.

“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06 ).

“ Participant ” has the meaning set forth in Section 11.06(d) .

“ Participant Register ” has the meaning set forth in Section 11.06(d) .

“ Participating Bank ” means, from time to time, with respect to any Several Letter of Credit, a Lender that is unable due to regulatory restrictions or other legal impediments to Issue such Several Letter of Credit because of its relationship to the beneficiary and/or a Lender that is not, or that loses its status as, an NAIC Approved Bank.

“ Participating Bank Issuer ” means, with respect to a Participating Bank, the Lender who has agreed to front for such Participating Bank under a Several Letter of Credit.

“ Participating Member State ” means each state so described in any EMU Legislation.

“ Patriot Act ” has the meaning set forth in Section 11.17 .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“ Pension Plan ” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by Alterra Capital and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“ Permitted Transactions ” has the meaning set forth in the term Guarantee.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of Alterra Capital or any ERISA Affiliate or any such Plan to which Alterra Capital or any ERISA Affiliate is required to contribute on behalf of any of its employees.

“ Platform ” has the meaning set forth in Section 6.01 .

“ Primary Policies ” means any insurance policies issued by an Insurance Subsidiary.

“ Prior Lender ” has the meaning set forth in Section 2.03(l) .

“ Prior Lender Liability ” has the meaning set forth in Section 2.03(l) .

“ Process Agent ” has the meaning set forth in Section 11.14(d) .

“ Recipient ” means the Administrative Agent, any Lender, the Fronting Bank or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder.

“ Register ” has the meaning set forth in Section 11.06(c) .

“ Regulatory Matters ” means the regulatory matters and investigations described in Schedule 1.01 .

“ Reinsurance Agreements ” means any agreement, contract, treaty, certificate or other arrangement whereby Alterra Capital or any of its Insurance Subsidiaries agrees to assume from or reinsure an insurer or reinsurer for all or part of the liability of such insurer or reinsurer under a policy or policies of insurance issued by such insurer or under a reinsurance agreement assumed by such reinsurer.

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents, advisors and representatives of such Person and of such Person’s Affiliates.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

“ Request for Credit Extension ” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

“ Required Lenders ” means, at any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the Commitment of each Lender to make Loans and the obligation of the Fronting Bank and the Lenders to make L/C Credit Extensions have been terminated pursuant to Section 8.02 , Lenders holding in the aggregate more than 50% of the Total Outstanding Amount (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition); provided , that the Commitment of, and the portion of the Total Outstanding Amount held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders; and provided, further that for purposes of amending the definition of “Eligible Collateral”, such percentage shall be 66 2/3.

“ Responsible Officer ” means with respect to any Person, the chief executive officer, president, chief financial officer, chief accounting officer, controller or treasurer of such Person. Any document delivered hereunder that is signed by a Responsible Officer of a Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower.

“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of a Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof).

“ Retrocession Agreements ” means any agreement, treaty, certificate or other arrangement whereby any Insurance Subsidiary transfers, cedes or retrocedes to another insurer or reinsurer all or part of such Insurance Subsidiary’s liability under a policy or policies of insurance issued by such Insurance Subsidiary or under a Reinsurance Agreement assumed by such Insurance Subsidiary.

“ Revaluation Date ” means with respect to any Letter of Credit, each of the following: (a) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (b) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (c) each date of any payment by the Fronting Bank under any Letter of Credit denominated in an Alternative Currency, (d) the Letter of Credit Expiration Date, (e) with respect to the Existing Letters of Credit, the Effective Date and (f) such additional dates as the Administrative Agent, the Fronting Bank or a Borrower shall determine or the Required Lenders shall require.

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

“ Same Day Funds ” means (a) with respect to disbursements and payments in Dollars, same day funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the Fronting Bank, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.

“ Sanctioned Country ” means a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/sanctions, or as otherwise published from time to time.

“ Sanctioned Person ” means (a) a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn, or as otherwise published from time to time, or (b)(i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.

“ SAP ” means the statutory accounting practices prescribed or permitted by the applicable Governmental Authority in an Insurance Subsidiary's domicile for the preparation of Annual Statements and other financial reports by insurance corporations of the same type as such Insurance Subsidiary.

“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“ Securities Intermediary ” means any “securities intermediary” within the meaning of Section 8.102(a)(14) of the UCC at which any securities account constituting a Collateral Account is held, which shall be (a) located in the United States and (b) reasonably acceptable to the Administrative Agent.

“ Security Agreement ” means a Security Agreement substantially in the form of Exhibit J with such changes therein as may be agreed to by the Administrative Agent and any Borrower which may be entered into from time to time between the Administrative Agent and such Borrower.

“ Several Letter of Credit ” means a Letter of Credit issued severally by or on behalf of the Lenders pursuant to which the Lenders (or in the case of any Participating Bank, its Participating Bank Issuer) are severally liable to the beneficiary which shall be substantially in the form of Exhibit B-2 or in such other form as may be agreed by the applicable L/C Applicant and the L/C Administrator; provided that the L/C Administrator will agree to reasonable changes to such form, necessary to satisfy any then applicable requirement of the applicable insurance regulators and/or of any rating agency.

“ Spot Rate ” for a currency means the rate determined by the Administrative Agent, to be the rate quoted by the Administrative Agent as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Administrative Agent does not have as of the date of determination a spot buying rate for any such currency; and provided further , that the Administrative Agent may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.

“ Sterling ” and “ £ ” mean the lawful currency of the United Kingdom.

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Alterra Capital.

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, property catastrophe futures or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign

Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a Master Agreement), including any such obligations or liabilities under any Master Agreement.

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

" SWIFT " has the meaning set forth in Section 2.03(f) .

“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Threshold Amount ” means $75,000,000.

“ Total Credit Exposure ” means, as to any Lender at any time, the unused Commitments and Total Outstanding Amount of such Lender at such time.

“ Total Outstanding Amount ” means the sum of (a) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Loans occurring on such date; plus (b) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by L/C Applicants of Unreimbursed Amounts. The Total Outstanding Amount of any Lender on any date means the sum of (x) the aggregate outstanding principal amount of Loans owed to such Lender plus (y) the Dollar Equivalent amount of L/C Obligations of such Lender on such date, in each case after giving effect to any Credit Extensions and/or prepayments or repayments of Credit Extensions on such date.

“ Type ” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York.

“ UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce ("ICC") Publication No. 600 (or such later version thereof as may be in effect at the time of issuance); unless an L/C Applicant or a beneficiary advises that the Uniform Customs and Practice for Documentary Credits, ICC Publication No. 500 or another subsequent version is required by its insurance regulator.

“ United States ” and “ U.S. ” mean the United States of America.

“ Unreimbursed Amount ” has the meaning set forth in Section 2.03(c)(ii) .

“ U.S. Tax Compliance Certificate ” has the meaning set forth in Section 3.01(e)(ii)(B)(III ).

“ Wholly Owned ” means, with respect to any Subsidiary of any Person, that 100% of the outstanding Equity Interests of such Subsidiary is owned, directly or indirectly, by such Person.

1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law or regulation shall, unless otherwise specified, refer to such Law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c) Article and section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03 Accounting Terms .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time except as otherwise specifically prescribed herein.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement or any other standard, term or availability under any basket set forth in any Loan Document, and either Alterra Capital or the Required Lenders shall so request, the Administrative Agent, the Lenders and Alterra Capital shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided , that until so amended, (i) such ratio, requirement standard term or basket shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Alterra Capital shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

1.04 Exchange Rates; Currency Equivalents .

(a) The Administrative Agent or the Fronting Bank, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and any portion of the Total Outstanding Amount denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by the Borrowers hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent.

(b) Wherever in this Agreement in connection with the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent.

1.05 Additional Alternative Currencies . (a) Alterra Capital may from time to time request that Letters of Credit be issued in a currency other than those specifically listed in the

definition of “Alternative Currency;” provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request, such request shall be subject to the approval of the Administrative Agent and the Fronting Bank and if the Administrative Agent and the Fronting Bank consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify Alterra Capital and the Lenders and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances.

(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., ten Business Days prior to the date of the desired Credit Extension or such shorter time as may be agreed by the Administrative Agent and the Fronting Bank, in its or their sole discretion. In the case of any such request, the Administrative Agent shall promptly notify the Fronting Bank thereof. The Fronting Bank shall notify the Administrative Agent, not later than 11:00 a.m., five Business Days after receipt of such request whether it consents, in its sole discretion, to the issuance of Letters of Credit in such requested currency.

(c) Any failure by the Fronting Bank to respond to such request within the time period specified in the subsection (b) above shall be deemed to be a refusal by the Fronting Bank to permit Letters of Credit to be issued in such requested currency. If the Administrative Agent and the Fronting Bank consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify Alterra Capital and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.05 , the Administrative Agent shall promptly so notify Alterra Capital.

1.06 Rounding . Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.07 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

1.08 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum Dollar Equivalent of the stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Commitments. On and subject to the terms and conditions set forth herein, (a) each Lender severally agrees to make loans (each such loan, a “ Loan ”) to Alterra Capital, Alterra Bermuda, and, upon satisfaction of the conditions in Section 2.14 , each Designated Borrower, in Dollars from time to time, on any Business Day during the Availability Period in such Lender’s Applicable Percentage of such aggregate amounts as such Borrower may from time to time request, (b) each Lender that is not a Participating Bank severally agrees to issue, extend and renew in such Lender’s Applicable Percentage, Several Letters of Credit at the request of and for the account of Alterra Capital, Alterra Bermuda (or at the request of Alterra Bermuda for the account of any Insurance Subsidiary of Alterra Capital which is not a Borrower), and, upon satisfaction of the conditions in Section 2.14 , each Designated Borrower, from time to time during the Availability Period and each Participating Bank Issuer hereby agrees that it shall be severally (and not jointly) liable for an amount equal to its Applicable Percentage plus its Participating Bank’s Applicable Percentage and each Participating Bank hereby agrees to purchase a risk participation in the obligations of such Participating Bank Issuer under any such Several Letter of Credit in an amount equal to such Participating Bank’s Applicable Percentage, and (c) the Fronting Bank agrees to issue, extend and renew Fronted Letters of Credit for the account of Alterra Capital, Alterra Bermuda (or at the request of Alterra Bermuda for the account of any Insurance Subsidiary of Alterra Capital which is not a Borrower) and each Designated Borrower, from time to time during the Availability Period and each Lender agrees to purchase risk participations in the obligations of the Fronting Bank under the Fronted Letters of Credit as more fully set forth in Section 2.03 ; provided , that after giving effect to any Credit Extension pursuant to this Section 2.01 ,

(A) the Total Outstanding Amount shall not exceed the Aggregate Commitments,

(B) the aggregate Total Outstanding Amount of any Lender shall not exceed such Lender's Commitment,

(D) such Borrower's Outstanding Amount (including, in the case of Alterra Bermuda, L/C Obligations for Letters of Credit issued for the account of any Insurance Subsidiary of Alterra Capital which is not a Borrower) shall not exceed such Borrower's Borrowing Base, and

(E) the stated amount of all Letters of Credit denominated in an Alternative Currency shall not exceed the Alternative Currency L/C Sublimit.

Within the foregoing limits, and subject to the terms and conditions hereof, an L/C Applicant’s ability to obtain Letters of Credit shall be fully revolving and accordingly an L/C Applicant may during the Availability Period obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. Within the limits of this Section 2.01 and subject to the other terms and conditions hereof, a Borrower may borrow Loans under this Section 2.01 , prepay Loans under Section 2.04 and reborrow Loans under this Section 2.01 .

2.02 Borrowings, Conversions and Continuations of Loans .

(a) (i) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the applicable Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (x) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (y) on the requested date of any Borrowing of Base Rate Loans; provided , that if a Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period”, the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation of Eurodollar Rate Loans, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is available to all of them. Not later than 11:00 a.m. three Business Days before the requested date of such Borrowing, conversion or continuation of Eurodollar Rate Loans, the Administrative Agent shall notify the applicable Borrower (which notice may be by telephone) whether or not the requested Interest Period is available to all the Lenders. Each telephonic notice by a Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of such Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (A) whether the applicable Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (B) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (C) the principal amount of Loans to be borrowed, converted or continued, (D) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the applicable Borrower fails to specify a Type of Loan in a Loan Notice or if the applicable Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If a Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

(ii) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by such Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent's Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon

satisfaction of the applicable conditions set forth in Section 4.02 , the Administrative Agent shall make all funds so received available to the applicable Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the applicable Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by such Borrower.

(b) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of an Event of Default, no Loans may be requested as, converted to or continued as, Eurodollar Rate Loans without the consent of the Required Lenders.

(c) The Administrative Agent shall promptly notify Alterra Capital and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify Alterra Capital and the Lenders of any change in Bank of America's prime rate used in determining the Base Rate promptly following the public announcement of such change.

(d) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, no Borrower shall have more than three Interest Periods in effect with respect to its Loans.

2.03 Letters of Credit.

(a) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit .

(i) Subject to Section 2.01 , each Letter of Credit shall be issued or amended, as the case may be, upon the request of an L/C Applicant delivered to (x) the Fronting Bank, in the case of Fronted Letters of Credit and (y) the L/C Administrator, in the case of Several Letters of Credit (with a copy in each case to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of such L/C Applicant. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the Applicable Issuing Party, by personal delivery or by any other means acceptable to the Applicable Issuing Party. Such Letter of Credit Application must be received by the Applicable Issuing Party and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the Applicable Issuing Party may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the Applicable Issuing Party: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof which shall be the earlier of the date which is twelve months from the date of issuance (or in the case of Letters of Credit denominated in

Canadian Dollars, thirteen months solely if necessary for regulatory purposes) or the Letter of Credit Expiration Date; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) whether such Letter of Credit is to be a Fronted Letter of Credit or a Several Letter of Credit (it being agreed that (x) all Letters of Credit issued in an Alternative Currency shall be Fronted Letters of Credit and (y) in the case of Several Letters of Credit, in the event a Lender advises the L/C Administrator that such Lender is a Participating Bank, such Lender shall have advised the L/C Administrator of its Participating Bank Issuer); (H) whether such Letter of Credit shall be issued under the rules of the ISP or the UCP; (I) the name of the account party, and (J) such other matters as the Applicable Issuing Party may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the Applicable Issuing Party (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the Applicable Issuing Party may require. Additionally, the applicable L/C Applicant shall furnish to the Applicable Issuing Party and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the Applicable Issuing Party or the Administrative Agent may reasonably require. In the event Alterra Bermuda requests that a Letter of Credit be issued for the account of any of Alterra Capital's Insurance Subsidiaries, Alterra Bermuda shall be liable for all Obligations under such Letter of Credit and shall be required to post Collateral in compliance with Sections 2.01(D) and 6.10 with respect to such Letter of Credit, as if it had been issued for the account of Alterra Bermuda itself.

(ii) Promptly after receipt of any Letter of Credit Application, the Applicable Issuing Party will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from an L/C Applicant and, if not, the Applicable Issuing Party will provide the Administrative Agent with a copy thereof. Unless the Applicable Issuing Party has received written notice from any Lender, the Administrative Agent or a Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied (such conditions, for the avoidance of doubt, being inapplicable to any such amendment that does not constitute an L/C Credit Extension), then, subject to the terms and conditions hereof, the Applicable Issuing Party shall, on the requested date, issue a Letter of Credit for the account of such L/C Applicant or enter into the applicable amendment, as the case may be, in each case in accordance with the Applicable Issuing Party's usual and customary business practices. The Applicable Issuing Party will promptly notify the Administrative Agent of any L/C Credit Extension, and any decrease in the stated amount of or termination of a Letter of Credit prior to its stated expiry date. Immediately upon the issuance of each Fronted Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, without recourse or warranty, purchase from the Fronting Bank a risk participation in such Fronted Letter of

Credit in an amount equal to the product of such Lender's Applicable Percentage times the amount of such Fronted Letter of Credit.

(b) The L/C Administrator is hereby authorized to execute and deliver each Several Letter of Credit and each amendment to a Several Letter of Credit on behalf of each Lender (unless such Lender has advised the L/C Administrator that it is a Participating Bank) provided that, upon request of an L/C Applicant, such Several Letter of Credit or amendment will be executed by each Lender (other than a Participating Bank). The L/C Administrator shall use the Applicable Percentage of each Lender as its “Commitment share” under each Several Letter of Credit provided that the Participating Bank Issuer shall be severally (and not jointly) liable for an amount equal to its Applicable Percentage plus the Applicable Percentage of its Participating Bank under any such Several Letter of Credit. The L/C Administrator shall not amend any Several Letter of Credit to change the “Commitment shares” of an L/C Issuer or add or delete an L/C Issuer liable thereunder unless such amendment is done in connection with an assignment in accordance with Section 11.06 , a change in the Lenders and/or the Applicable Percentages as a result of any increase in the Aggregate Commitments pursuant to Section 2.13 or any other addition or replacement of a Lender in accordance with the terms of this Agreement or a change in status of a Lender as a Participating Bank or Defaulting Lender. Fees owed by any Participating Bank to its Participating Bank Issuer pursuant to Section 2.03(j) shall accrue for the account of such Participating Bank only during such period as such Lender is a Participating Bank with respect to any such Several Letter of Credit. Each Lender hereby irrevocably constitutes and appoints the L/C Administrator its true and lawful attorney-in-fact for and on behalf of such Lender with full power of substitution and revocation in its own name or in the name of the L/C Administrator to issue, execute and deliver, as the case may be, each Several Letter of Credit and each amendment to a Several Letter of Credit and to carry out the purposes of this Agreement with respect to Several Letters of Credit. Upon request, each Lender shall execute such powers of attorney or other document as any beneficiary of any Several Letter of Credit may reasonably request to evidence the authority of the L/C Administrator to execute and deliver such Several Letter of Credit and any amendment or other modification thereto on behalf of the Lenders. Immediately upon issuance of each Several Letter of Credit, each Participating Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, without recourse or warranty, purchase from its Participating Bank Issuer a risk participation in such Several Letter of Credit in an amount equal to the product of such Participating Bank's Applicable Percentage times the amount of such Several Letter of Credit.

(i) The Applicable Issuing Party shall not issue any Letter of Credit, if:

(A) subject to Section 2.03(b)(v) , the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension (or in the case of Letters of Credit denominated in Canadian Dollars, thirteen months solely if necessary for regulatory purposes) unless the Lenders have approved such expiry date;

(B) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date;

(C) if the L/C Applicant is an Irish company, unless the beneficiary of such Letter of Credit is neither habitually resident in Ireland nor has a place of establishment in Ireland; or

(D) if the Letter of Credit is a Several Letter of Credit, a Participating Bank does not have a Participating Bank Issuer for such Letter of Credit.

(ii) An L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing such Letter of Credit, or any Law applicable to such L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such L/C Issuer in good faith deems material to it;

(B) except as otherwise agreed by the Administrative Agent and the Applicable Issuing Party, such Letter of Credit is in an initial stated amount less than $50,000;

(C) such Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency or, after giving effect to such issuance the Dollar Equivalent of the stated amount of all Letters of Credit denominated in an Alternative Currency would exceed the Alternative Currency L/C Sublimit;

(D) such Letter of Credit is not substantially in the form of Exhibit B-1 or B-2 , as applicable; provided that the Applicable Issuing Party can and will agree to reasonable changes to such forms, not adverse to interests of the Lenders, necessary to satisfy any then applicable requirements of the applicable insurance regulators and/or of any rating agency; or

(E) if the Letter of Credit is a Fronted Letter of Credit, a default of any Lender's obligations to fund under Section 2.03(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the Fronting Bank has entered into satisfactory arrangements to eliminate the Fronting Bank's risk with respect to such Lender.

(iii) The Applicable Issuing Party shall not amend any Letter of Credit if (A) the Applicable Issuing Party would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(iv) The L/C Administrator shall act on behalf of the Lenders with respect to any Several Letters of Credit issued hereunder and the documents associated thereto and the Fronting Bank shall act on behalf of the Lenders with respect to any Fronted Letters of Credit issued by the Fronting Bank hereunder and the documents associated therewith, and each of the L/C Administrator and the Fronting Bank shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Administrator or the Fronting Bank, as the case may be, in connection with Letters of Credit issued or proposed to be issued hereunder and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Administrator and the Fronting Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Administrator and the Fronting Bank.

(v) If an L/C Applicant so requests in any applicable Letter of Credit Application, the Applicable Issuing Party may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the Applicable Issuing Party to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Applicable Issuing Party, the applicable L/C Applicant shall not be required to make a specific request to the Applicable Issuing Party for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Applicable Issuing Party to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , that the Applicable Issuing Party shall not permit any such extension if (A) the Applicable Issuing Party has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (i) or (ii) of Section 2.03(b) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the applicable L/C Applicant that it does not wish to have such Letter of Credit extended, (2) from the Administrative Agent that the Lenders have elected not to permit such extension or (3) from the Administrative Agent, any Lender or any Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the Applicable Issuing Party not to permit such extension.

(vi) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the Applicable Issuing Party will also deliver to the applicable L/C Applicant and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.


(c)	Drawings and Reimbursements; Funding of Participations .

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit (a “ Drawing Request ”), the Applicable Issuing Party shall notify the applicable L/C Applicant and the Administrative Agent of the receipt of such Drawing Request and of the date the Applicable Issuing Party will honor such request (each such date, an “ Honor Date ”). Not later than 11:00 a.m. on such Honor Date in the case of Letters of Credit to be reimbursed in Dollars or the Applicable Time on the Honor Date with respect to Letters of Credit to be reimbursed in an Alternative Currency, the applicable L/C Applicant shall reimburse the respective L/C Issuers through the Administrative Agent in Same Day Funds the amount of the Drawing Request. In the case of a Letter of Credit denominated in an Alternative Currency, the applicable L/C Applicant shall reimburse the Fronting Bank through the Administrative Agent in such Alternative Currency, unless (A) the Fronting Bank (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, such L/C Applicant shall have notified the Fronting Bank promptly following receipt of notice of drawing that such L/C Applicant will reimburse the Fronting Bank in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the Administrative Agent shall notify the applicable L/C Applicant of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. To the extent that Same Day Funds are received by the Administrative Agent from the applicable L/C Applicant prior to 11:00 a.m. (or the Applicable Time in the case of any Letter of Credit to be reimbursed in an Alternative Currency) on the Honor Date, the Administrative Agent shall remit the funds so received to the Applicable Issuing Party. Any notice given by the Applicable Issuing Party or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) With respect to any Drawing Request, if Same Day Funds are not received by the Administrative Agent from the applicable L/C Applicant prior to 11:00 a.m. (or the Applicable Time in the case of any Letter of Credit to be reimbursed in an Alternative Currency) on the Honor Date in the amount of such Drawing Request, the Administrative Agent shall promptly notify each Lender of such Drawing Request, the amount of the unreimbursed drawing (the “ Unreimbursed Amount ”) and such Lender's Applicable Percentage of such Unreimbursed Amount. If such Unreimbursed Amount relates to a Letter of Credit issued in an Alternative Currency, such Unreimbursed Amount shall be the Dollar Equivalent (as calculated by the Administrative Agent using the Spot Rate) of the Drawing Request. Each Lender shall make funds available to the Administrative Agent for the account of the Applicable Issuing Party at the Administrative Agent's Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent (the “ L/C Advance Date ”). The Administrative Agent shall remit the funds so received to the Applicable Issuing Party. To the extent that Same Day Funds are received by the Administrative Agent from the Lenders (or the Participating Bank Issuer on behalf of a Participating Bank) with respect to a Several Letter of Credit prior to 2:00 p.m. on

the L/C Advance Date, the Administrative Agent shall notify the L/C Administrator and the L/C Administrator shall promptly make such funds available to the beneficiary of such Several Letter of Credit on such date. To the extent that the L/C Administrator has not delivered funds to any beneficiary of a Several Letter of Credit on behalf of a Lender on the L/C Advance Date, if Same Day Funds are received by the Administrative Agent from such Lender: (i) after 2:00 p.m. on the L/C Advance Date, the L/C Administrator shall make such funds available to such beneficiary on the next Business Day; (ii) prior to 2:00 p.m. on any Business Day after the L/C Advance Date, the L/C Administrator shall make those funds available to such beneficiary on such Business Day; and (iii) after 2:00 p.m. on any Business Day after the L/C Advance Date, the L/C Administrator shall make those funds available to such beneficiary on the next Business Day following such Business Day.

(iii) Unless the Administrative Agent or L/C Administrator receives notice from a Lender prior to any L/C Advance Date with respect to a Several Letter of Credit that such Lender will not make available as and when required hereunder to the Administrative Agent the amount of such Lender's L/C Advance on such L/C Advance Date, the Administrative Agent and the L/C Administrator may assume that such Lender has made such amount available to the Administrative Agent in Same Day Funds on the L/C Advance Date and the L/C Administrator may (but shall not be required), in reliance upon such assumption, make available to the beneficiary of the related Several Letter of Credit on such date such Lender's L/C Advance.

(iv) With respect to any Unreimbursed Amount, the applicable L/C Applicant shall be deemed to have incurred an L/C Advance in the Dollar Equivalent of the Unreimbursed Amount from (x) in the case of Fronted Letters of Credit, the Fronting Bank and (y) in the case of Several Letters of Credit, from the Lenders to the extent that they have provided funds with respect to such Several Letter of Credit pursuant to Section 2.03(c)(ii) , from the Participating Bank Issuer or from the L/C Administrator to the extent it has made funds available on behalf of a Lender pursuant to Section 2.03(c)(iii) . L/C Advances shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. Each Lender's or Participating Bank's payment to the Administrative Agent for the account of the Applicable Issuing Party pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Advance and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 . Any payment by an L/C Applicant in respect of such L/C Advance shall be made to the Administrative Agent and upon receipt applied by the Administrative Agent in accordance with Section 2.03(d) .

(v) Until each Lender funds its L/C Advance pursuant to this Section 2.03(c) to reimburse the Applicable Issuing Party for any amount drawn under any Letter of Credit, interest in respect of such Lender's Applicable Percentage of such Unreimbursed Amount shall be solely for the account of the Fronting Bank or the L/C Administrator, as applicable.

(vi) Each Lender's obligation to make L/C Advances to reimburse the Applicable Issuing Party for amounts drawn under Letters of Credit, as contemplated by

this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Administrative Agent, the Applicable Issuing Party, any Lender, any L/C Applicant, any beneficiary named in any Letter of Credit, any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting) or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, (C) any lack of validity or enforceability of such Letter of Credit, this Agreement or any other Loan Document, (D) any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, (E) the surrender or impairment of any security for the performance or observance of any of the terms of the Loan Documents, (F) any matter or event set forth in Section 2.03(b)(i) , or (G) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Advance shall relieve or otherwise impair the obligation of the applicable L/C Applicant to reimburse the respective L/C Issuers for the amount of any payment made by the respective L/C Issuers under any Letter of Credit, together with interest as provided herein.

(vii) If any Lender fails to make available to the Administrative Agent for the account of the Applicable Issuing Party any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in the third sentence of Section 2.03(c)(ii) , the Applicable Issuing Party, shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Applicable Issuing Party, as the case may be, at a rate per annum equal to the Federal Funds Rate, plus any administrative, processing or similar fees customarily charged by the Applicable Issuing Party in connection with the foregoing. A certificate of the Applicable Issuing Party, submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vii) shall be conclusive absent manifest error.

(d) Repayment of Participations .

(i) At any time after the Applicable Issuing Party has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with Section 2.03(c) , if the Administrative Agent receives any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the applicable L/C Applicant or otherwise, including proceeds of Cash Collateral or other Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 11.05 (including pursuant to any settlement entered into by the Applicable Issuing Party

in its discretion), each Lender shall pay to the Administrative Agent for the account of the Applicable Issuing Party its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute . The obligation of each L/C Applicant to reimburse the respective L/C Issuers for each drawing under each Letter of Credit issued for the account of such L/C Applicant and to repay each related L/C Advance shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that any Borrower or any Subsidiary for whose account such Letter of Credit was issued may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Applicable Issuing Party or any L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the Applicable Issuing Party under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the Applicable Issuing Party under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

(v) waiver by the Applicable Issuing Party of any requirement that exists for the Applicable Issuing Party's protection and not the protection of the L/C Applicant;

(vi) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP to the extent the UCC, the ISP or the UCP applies to such Letter of Credit by its terms;

(vii) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the applicable L/C Applicant or in the relevant currency markets generally; or

(viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Borrower or any L/C Applicant.

Each L/C Applicant shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with such L/C Applicant’s instructions or other irregularity, such L/C Applicant will promptly notify the Applicable Issuing Party. Such L/C Applicant shall be conclusively deemed to have waived any such claim against the Applicable Issuing Party and its correspondents unless such notice is given as aforesaid.

(f) Role of Applicable Issuing Party . Each Lender and each L/C Applicant agrees that, in paying any drawing under a Letter of Credit, the Applicable Issuing Party shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Applicable Issuing Parties, the L/C Issuers, the Lenders, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of an Applicable Issuing Party or L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Required Lenders; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Each L/C Applicant hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , that this assumption is not intended to, and shall not, preclude such L/C Applicant from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Applicable Issuing Parties, the L/C Issuers, the Lenders, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of an Applicable Issuing Party or L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e) ; provided , that anything in such clauses to the contrary notwithstanding, the applicable L/C Applicant may have a claim against the Applicable Issuing Party and/or the L/C Issuers, and the Applicable Issuing Party and/or the L/C Issuers may be liable to such L/C Applicant to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by such L/C Applicant which such L/C Applicant proves were caused by the Applicable Issuing Party's or L/C Issuer's willful misconduct or gross negligence or the Applicable Issuing Party's or L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the Applicable Issuing Party may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and neither the Applicable Issuing Party nor any L/C Issuer shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or

assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The Applicable Issuing Party may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary (unless such beneficiary or the L/C Applicant on behalf of such beneficiary has advised the Applicable Issuing Party of the preferred means of communication).

(g) Cash Collateral .

(i) If the Administrative Agent notifies Alterra Capital at any time that the Total Outstanding Amount of L/C Obligations with respect to Alternative Currency denominated Letters of Credit at such time exceeds 103% of the Alternative Currency L/C Sublimit, then, within two Business Days after receipt of such notice, the applicable Borrower(s) shall either Cash Collateralize the L/C Obligations of such Borrower(s) in an amount equal to such excess or post additional Eligible Collateral having an Adjusted Fair Market Value equal to such excess. Upon the request of the applicable Borrower(s) made within two Business Days following any Revaluation Date, the Administrative Agent will, so long as no Default then exists, release Cash Collateral to such Borrower(s) in an amount up to the excess of (x) the aggregate amount of Cash Collateral on deposit with respect to Alternative Currency denominated Letters of Credit over (y) 103% of the Alternative Currency L/C Sublimit.

(ii) The Administrative Agent or the Fronting Bank may, at any time and from time to time after the initial deposit of Cash Collateral pursuant to clause (i) above, request additional Cash Collateral to the extent the amount of Cash Collateral with respect to Alternative Currency denominated Letters of Credit is less than the positive difference between the Total Outstanding Amount of all L/C Obligations for Alternative Currency denominated Letters of Credit and 103% of the Alternative Currency L/C Sublimit due to exchange rate fluctuations.

(h) Applicability of ISP and UCP . Unless otherwise expressly agreed by the Applicable Issuing Party and the applicable L/C Applicant when a Letter of Credit is issued either the rules of the ISP or the UCP at the option of such L/C Applicant shall apply to each Letter of Credit.

(i) Letter of Credit Fees . Each L/C Applicant shall pay to the Administrative Agent for the account of each Lender in accordance, subject to Section 2.17 , with its Applicable Percentage in Dollars, a letter of credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit issued for the account of such L/C Applicant equal to the Applicable Rate times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . Letter of Credit Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand; provided that with respect to the Existing Letters of

Credit and any Letters of Credit issued on or before December, 31, 2011, Letter of Credit fees for such Letters of Credit shall be payable on March 31, 2012 and such date thereafter . Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(j) Fronting Fee and Documentary and Processing Charges .

(i) Each L/C Applicant shall pay directly to the Fronting Bank for its own account in Dollars a fronting fee with respect to each Fronted Letter of Credit issued for the account of such L/C Applicant by the Fronting Bank, at the rate per annum specified in the Bank of America Fee Letter, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable at such times (no more frequently than quarterly) as the Fronting Bank advises such L/C Applicant, on the Letter of Credit Expiration Date and thereafter on demand, it being understood that the Fronting Bank will invoice each L/C Applicant directly for amounts due under this Section 2.03(j) . For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . In addition, each L/C Applicant shall pay directly to the Applicable Issuing Party for its own account letter of credit processing fees as set forth in the Bank of America Fee Letter. Such fees are due and payable on demand and are nonrefundable.

(ii) Each Participating Bank with respect to a Several Letter of Credit shall pay to its Participating Bank Issuer a fronting fee (the “ Several L/C Fronting Fee ”) computed on the risk participation purchased by such Participating Bank from such Participating Bank Issuer with respect to such Several Letter of Credit at the rate per annum and at the times and in the manner agreed upon by such Participating Bank and its Participating Bank Issuer.

(k) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

(l) Existing Letters of Credit .

(i) On and after the Effective Date, the Existing Letters of Credit shall be deemed to be issued under this Agreement for all purposes, including for purposes of the fees to be collected pursuant to Sections 2.03(i) and (j) , and reimbursement of costs and expenses to the extent provided herein and, in the case of Existing Letters of Credit issued for someone other than Alterra Bermuda, Alterra Bermuda shall be liable for such Existing Letters of Credit as if they had been issued for the account of Alterra Bermuda originally.

(ii) On the Effective Date, the risk participation of each Lender in the Existing Letters of Credit issued as Fronted Letters of Credit shall be equal to each Lender's Applicable Percentage and the risk participation of each Lender in the Existing Letters of

Credit issued as Several Letters of Credit (the “ Existing Several Letters of Credit ”) shall be equal to each Lender's Applicable Percentage.

(iii) Bank of America shall promptly amend each Existing Several Letter of Credit to reflect the applicable Lenders as L/C Issuers and the correct Applicable Percentages of such Lenders under such Existing Several Letter of Credit. The Borrowers shall cooperate with Bank of America and provide any necessary documents as may reasonably be requested by a beneficiary in connection with such amendment. From the Effective Date until the date on which an Existing Several Letter of Credit has been amended to reflect the applicable Lenders' Applicable Percentages, each Lender hereby irrevocably and unconditionally purchases from each lender who has issued such Existing Several Letter of Credit, a risk participation in such Existing Several Letter of Credit in an amount such that after giving effect to such purchase, each applicable Lender has its Applicable Percentage of such Existing Several Letter of Credit.

(iv) Prior to the date when all Existing Several Letters of Credit have been amended to delete any Person shown as a “Letter of Credit Bank” who is not a Lender hereunder (each such Person, a “ Prior Lender ”), the L/C Applicants of the Existing Several Letters of Credit and the Lenders agree that in the event of a draw under an Existing Several Letter of Credit for which funds have not been provided by the L/C Applicant or the Lenders in accordance with the terms hereof (such amount not so provided, the Prior Lender Liability ”), the Administrative Agent shall withdraw Collateral from the Collateral Account of the L/C Applicant in an amount equal to the Prior Lender Liability and deliver such amount to the beneficiary of such Existing Several Letter of Credit. The amount withdrawn and paid to the beneficiary shall be deemed payment by such L/C Applicant with respect to the remaining Unreimbursed Amount with respect to such drawing. Any Lender whose failure to fund gave rise to such Prior Lender Liability shall be a Defaulting Lender.

2.04 Prepayments .

Each Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay its Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by a Borrower, such Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided , that any such notice may state that it is conditioned on the effectiveness of new credit facilities or other specified events in which case such notice may be revoked if such conditions are not satisfied and such prepayment will not be required but such

Borrower shall be obligated to pay amounts due pursuant to Section 3.05(b) . Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages. In the event that any of the provisions of Sections 2.01 (A) through (D) have been violated and there are Loans outstanding, Alterra Capital shall cause the applicable Borrower(s) to prepay Loans in such amount as is necessary to cure such violation together with any additional amounts due pursuant to Section 3.05(b) .

2.05 Termination or Reduction of Commitments. Alterra Capital may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $500,000 in excess thereof, and (iii) Alterra Capital shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstanding Amount would exceed the Aggregate Commitments: provided , that any such notice may state that it is conditioned on the effectiveness of new credit facilities or other specified events in which case such notice may be revoked if such conditions are not satisfied but such Borrower shall be obligated to pay amounts due pursuant to Section 3.05(b) to the extent that any concurrent prepayment of Eurodollar Loans would have been made in connection with such termination. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.06 Repayment of Loans . Each Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of its respective Loans outstanding on such date.

2.07 Interest .

(a) Subject to the provisions of subsection (b ) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate, if any.

(b) (i) If any amount of principal of any Loan or any L/C Advance is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) If an Event of Default under Section 8.01(b) has occurred and is continuing, the overdue amount shall bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) Upon the request of the Required Lenders, while any Event of Default has occurred and is continuing (other than as set forth in clauses (b)(i) and (b)(ii) above), the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.08 Fees. In addition to certain fees described in subsections (g) and (h) of Section 2.03 :

(a) Commitment Fee . Alterra Capital and Alterra Bermuda shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to 0.125% per annum times the Dollar Equivalent of the actual daily amount by which the Aggregate Commitments exceeds the Total Outstanding Amount. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the fiscal quarter ending on March 30, 2012), and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears.

(b) Other Fees. (i) Alterra Capital and Alterra Bermuda shall pay to the Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letters. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) Alterra Capital and Alterra Bermuda shall pay to the Lenders such upfront fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.09 Computation of Interest and Fees . All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is

made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.10 Evidence of Debt .

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business in which it shall record the amount of each Loan made, the Type and the Interest Period thereof and the amount of repayments thereon. The accounts or records maintained by the Administrative Agent and each Lender shall be prima facie evidence of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of a Borrower hereunder to pay any amount owing with respect to its Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the applicable Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a) above, each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

2.11 Payments Generally; Administrative Agent’s Clawback .

(a) General . All payments to be made by the Borrowers shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the applicable Borrower, the interest rate applicable to Base Rate Loans. If the applicable Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the applicable Borrower the amount of such interest paid by the applicable Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender's Loan included in such Borrowing. Any payment by the applicable Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrowers; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received written notice from the applicable Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders, the L/C Issuers or the Fronting Bank hereunder that the applicable Borrower will not make such payment, the Administrative Agent may assume that the applicable Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the applicable Person the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders, the L/C Issuers and the Fronting Bank severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Person, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A written notice of the Administrative Agent to any Lender or a Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the

foregoing provisions of this Article II , and such funds are not made available to the applicable Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Loans, to fund Several Letters of Credit and purchase participations in Letters of Credit and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any Several Letter of Credit or any such participation or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to fund a Several Letter of Credit, to purchase its participation or to make its payment under Section 11.04(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan, any Letter of Credit or any L/C Advance in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan, any Letter of Credit or any L/C Advance in any particular place or manner.

2.12 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans or L/C Advances made by it or the participations in L/C Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or L/C Advances or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Total Outstanding Amount and other amounts owing them, provided , that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by a Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.16(c) , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations to any assignee or participant, other than to Alterra Capital or any Subsidiary or Affiliate thereof (as to which the provisions of this Section shall apply).

Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.

2.13 Increase in Commitments.

(a) Increase Request . Alterra Capital shall have the right at any time prior to the date that is 30 days prior to the Maturity Date to increase the aggregate Commitments hereunder by an amount (for all such requests) not exceeding $500,000,000 by adding to this Agreement one or more other Eligible Assignees (which may include any existing Lender, with the consent of such Lender in its sole discretion) (each such bank, a “ Supplemental Lender ”) with the approval of (x) the Administrative Agent (which approval shall not be unreasonably withheld or delayed); provided that no consent of the Administrative Agent will be required in the case of any such Eligible Assignee that is a Lender or an Affiliate of a Lender and (y) the Fronting Bank (which approval shall not be unreasonably withheld or delayed), provided that (i) each Supplemental Lender shall have entered into an agreement pursuant to which such Supplemental Lender shall undertake a Commitment (or, if such Supplemental Lender is an existing Lender, pursuant to which its Commitment shall be increased), (ii) such Commitment of any Supplemental Lender that is not an existing Lender shall be in an amount of at least $25,000,000, (iii) such Commitment (together with the increased Commitment(s) of all other Supplemental Lenders being provided at such time) shall be in an aggregate amount of at least $25,000,000, and (iv) if such Supplemental Lender will need to be a Participating Bank, it has a Participating Bank Issuer.

(b) Required Supplemental Lender Documentation . Each such Supplemental Lender shall enter into an agreement in form and substance satisfactory to Alterra Capital and the Administrative Agent pursuant to which such Supplemental Lender shall, as of the effective date of such increase in the Commitments (which shall be a Business Day and, unless the Administrative Agent otherwise agrees, on which no issuance, amendment, renewal or extension of any Letter of Credit is scheduled to occur or no Borrowing is scheduled to be made, each a “ Supplemental Commitment Date ”), undertake a Commitment (or, if any such Supplemental Lender is an existing Lender, its Commitment shall be in addition to such Lender's Commitment hereunder on such date) and such Supplemental Lender shall thereupon become (or continue to be) a “Lender” for all purposes hereof.

(c) Conditions to Effectiveness of Increase . Notwithstanding the foregoing, no increase in the aggregate Commitments hereunder pursuant to this Section shall be effective unless:

(i) Alterra Capital shall have given the Administrative Agent written notice of any such increase at least three Business Days prior to the applicable Supplemental Commitment Date;

(ii) no Default shall have occurred and be continuing on the applicable Supplemental Commitment Date;

(iii) Alterra Capital shall deliver to the Administrative Agent a certificate of each Borrower dated as of the Supplemental Commitment Date signed by a Responsible Officer of such Borrower (x) certifying and attaching the resolutions adopted by such Borrower approving or consenting to such increase, and (y) in the case of Alterra Capital, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents shall be true in all material respects on and as of the applicable Supplemental Commitment Date with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (B) no Default exists; and

(iv) on each Supplemental Commitment Date, the Administrative Agent shall reallocate any outstanding Loans so that, after giving effect thereto, the Loans are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such increase) and each Borrower shall (A) prepay the interest due on such Loans prior to such Supplemental Commitment Date and (B) pay to the Lenders the amounts, if any, payable under Section 3.05 as if such Loans had been prepaid it being understood that the Administrative Agent and Alterra Capital will cooperate, to the extent feasible to set the Supplemental Commitment Date on a date which minimizes or eliminates the obligation of the Borrowers to pay additional amounts under Section 3.05 .

(d) Revised Percentages and Letter of Credit Amendments . The Administrative Agent shall promptly notify the Lenders of the new Applicable Percentages after giving effect to the Supplemental Commitment. Promptly after the Supplemental Commitment Date, the L/C Administrator shall amend the outstanding Several Letters of Credit to reflect the new “Commitment share” of each Lender (including the Supplemental Lenders) and prior to the date a Several Letter of Credit has been amended to give effect to such new “Commitment share”, each Supplemental Lender shall be deemed to irrevocably and unconditionally purchase from each Lender who has issued such Several Letter of Credit, a risk participation in such Several Letter of Credit in an amount such that after giving effect to such purchase, each Lender (including the Supplemental Lender) has its Applicable Percentage of such Several Letter of Credit.

(e) Conflicting Provisions . This Section shall supersede any provisions in Section 2.12 or 11.01 to the contrary

2.14 Designated Borrower .

(a) Alterra Capital may designate any Wholly-Owned direct or indirect Subsidiary (an “ Applicant Borrower ”) as a Designated Borrower to request Letters of Credit and receive Loans hereunder by delivering to the Administrative Agent a duly executed Designated Borrower Request at least 15 Business Days (unless such Applicant Borrower is (i) organized in Bermuda, Ireland, the United Kingdom or the United States, in which case at least ten Business Days or (ii) Alterra Reinsurance USA, in which case at least five Business Days) prior to the proposed date specified in such Designated Borrower Request (the “ Designated Date ”) on which such Applicant Borrower is requested to become a Designated Borrower (or, in each case, such

shorter period as may be agreed by the Administrative Agent in its sole discretion). Promptly following its receipt of a Designated Borrower Request, the Administrative Agent shall deliver a copy thereof to each Lender and, if such Applicant Borrower is organized in a jurisdiction other than Bermuda, Ireland, the United Kingdom or the United States, such Lender shall, not later than the Designated Date specified therein, notify the Administrative Agent whether such Lender consents to such Applicant Borrower becoming a Designated Borrower. Each Lender agrees that it consents to the designation of any Applicant Borrower organized in Bermuda, Ireland, the United Kingdom or the United States as a Designated Borrower entitled to request Loans and Letters of Credit.

(b) Promptly following receipt of the necessary consents (if any) and satisfaction of the conditions set forth in Section 4.02(e) , the Administrative Agent shall send a notice in substantially the form of Exhibit I (a “ Designated Borrower Notice ”) to Alterra Capital and the Lenders specifying the effective date upon which the applicable Applicant Borrower shall constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders agrees to permit such Designated Borrower to request Letters of Credit and subject to receipt of consent from all the Lenders (if required under Section 2.14(a) ), request Loans hereunder, on the terms and conditions set forth herein, and each of the parties agrees that such Designated Borrower otherwise shall be a Borrower for all purposes of this Agreement; provided that other than with regard to Alterra Reinsurance USA, no Loan Notice or Letter of Credit Application may be submitted by or on behalf of such Designated Borrower until the date five Business Days after the applicable Designated Date.

(c) If there are outstanding Letters of Credit which show the Designated Borrower as the account party, then on the applicable Designated Date, such Letters of Credit shall be deemed to be L/C Obligations of such Designated Borrower (and Alterra Bermuda shall cease to be liable for such Letters of Credit), such Designated Borrower shall execute such documents as may be reasonably requested by the Applicable Issuing Parties to reflect the same and such Designated Borrower shall comply with the provisions of Section 6.10 with respect to such Letters of Credit.

(d) Each Subsidiary that becomes a “Designated Borrower” pursuant to this Section 2.14 hereby irrevocably appoints Alterra Capital as its agent for all purposes relevant to this Agreement and each of the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loans, if any, made by the Lenders, to any such Designated Borrower hereunder. Any acknowledgment, consent, direction, certification or other action which might otherwise be valid or effective only if given or taken by all Borrowers, or by each Borrower acting singly, shall be valid and effective if given or taken only by Alterra Capital, whether or not any such other Borrower joins therein. Any notice, demand, consent, acknowledgement, direction, certification or other communication delivered to Alterra Capital in accordance with the terms of this Agreement shall be deemed to have been delivered to each Designated Borrower.

(e) Alterra Capital may from time to time, upon not less than 10 Business Days' notice from Alterra Capital to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), terminate a Designated Borrower's

status as such, provided that there are no outstanding Loans payable by or Letters of Credit issued for the account of such Designated Borrower, or other amounts payable by such Designated Borrower on account of any Loans or Letters of Credit made to it, as of the effective date of such termination. The Administrative Agent will promptly notify the Lenders of any such termination of a Designated Borrower's status.

2.15 Several Obligations of Borrowers . Except as otherwise expressly provided herein, the obligations of each Borrower shall be several in nature; it being understood that no Borrower that is an Insurance Subsidiary (other than Alterra Bermuda as expressly provided herein) shall be liable for the obligations of any other Borrower.

2.16 Cash Collateral .

(a) Certain Credit Support Events . If there shall exist a Defaulting Lender who has not provided Cash Collateral pursuant to Section 2.17(b) or whose L/C Obligations have not been reallocated pursuant to Section 2.17(a)(iv) , each L/C Applicant shall be required to provide Cash Collateral in an amount sufficient to cover the Fronting Exposure with respect to such Defaulting Lender within five Business Days following the request of the Fronting Bank.

(b) Grant of Security Interest . Each L/C Applicant, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the Fronting Bank and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as Cash Collateral pursuant to Sections 2.03(g) , 2.16 or 8.02 or , and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(c) . If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the Fronting Bank as herein provided or Liens of the type described in Section 7.06(b) or Liens permitted under any control agreement with respect to such Cash Collateral, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the applicable Person providing such Cash Collateral will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. The Person providing such Cash Collateral shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of such Cash Collateral.

(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of Sections 2.03 , 2.17 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(d) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 11.06(b)(vi) ) or (ii) the determination by the Administrative Agent and the Fronting Bank that there exists excess Cash Collateral; provided , that the Person providing Cash Collateral and the Fronting Bank may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.17 Defaulting Lenders.

(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

(i) Waivers and Amendments . Such Defaulting Lender's right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 11.01 .

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender, whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Fronting Bank hereunder; third , to Cash Collateralize the Fronting Bank's Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.16 ; fourth , as Alterra Capital may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and Alterra Capital, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender's potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Fronting Bank's future Fronting Exposure and such Defaulting Lender's future L/C Obligations with respect to Several Letters of Credit with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.16 ; sixth , to the payment of any amounts owing to the Lenders or the Fronting Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Fronting Bank against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the applicable Borrower as a result of any judgment of a court of competent jurisdiction obtained by the applicable Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and eighth , to such

Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Advances in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.17(a)(iv) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(A) No Defaulting Lender shall be entitled to receive any fee payable under Section 2.08(a) for any period during which that Lender is a Defaulting Lender (and Alterra Capital and Alterra Bermuda shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) except to the extent that it has provided Cash Collateral for its unfunded Commitment.

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral.

(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such Letter of Credit fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender's participation in L/C Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Fronting Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Fronting Bank's Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . All or any part of such Defaulting Lender's participation in L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender's Commitment) but only to the extent that (x) the conditions set forth in Section 4.02(a) and (b) are satisfied at the time of such reallocation (and, unless Alterra Capital shall have otherwise notified the Administrative Agent at such time, the Borrowers shall be deemed to have represented and warranted that such conditions are satisfied at such

time), and (y) such reallocation does not cause the aggregate Total Outstanding Amount of any Non-Defaulting Lender to exceed such Non-Defaulting Lender's Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender's increased exposure following such reallocation.

(v) Cash Collateral . If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the applicable L/C Applicant shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, Cash Collateralize the Fronting Bank's Fronting Exposure in accordance with the procedures set forth in Section 2.16 to the extent such Fronting Exposure has not been Cash Collateralized by the Defaulting Lender.

(b) Defaulting Lender Cure. If Alterra Capital, the Administrative Agent and the Fronting Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.17(a)(iv) ), whereupon such Lender will cease to be a Defaulting Lender; provided , that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of a Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the Borrowers, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes .

(i) Any and all payments by or on account of any obligation of the respective Borrower hereunder or under any other Loan Document shall be made without reduction or withholding for any Indemnified Taxes or Other Taxes except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the Administrative Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Borrower, then the Administrative Agent or such Borrower shall be entitled to make such deduction or withholding upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

(ii) If any Borrower or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes the sum payable by the applicable Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b) Payment of Other Taxes by the Borrowers . Without limiting the provisions of subsection (a) above, the respective Borrower shall timely pay any Other Taxes attributable to such Borrower's Obligations to the relevant Governmental Authority in accordance with applicable Law.

(c) Indemnification. (i) Each Borrower shall, and does hereby, severally, indemnify each Recipient, and shall make payment in respect thereof within 15 Business Days after receipt of written demand therefor made on such Borrower, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient with respect to such Borrower's Obligations and any penalties, interest and reasonable expenses arising therefrom or with respect thereto (provided that such penalties, interests and expenses are not attributable to the gross negligence, fraud or willful misconduct of the Person making such demand), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability setting forth in reasonable detail the basis of such amount delivered to the applicable Borrower by a Lender or the Fronting Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, the Fronting Bank or the L/C Administrator, shall be conclusive absent manifest error. Each of the Borrowers shall also, and does hereby, severally (and not jointly) indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount with respect to such Borrower or its Obligations, other than amounts attributable to Excluded Taxes, which a Lender or the Fronting Bank for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 3.01(c)(ii) below.

(ii) Each Lender and the Fronting Bank shall, and does hereby, severally indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, against (x ) any Indemnified Taxes attributable to such Lender or the Fronting Bank (but only to the extent that the applicable Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrowers to do so), (y ) any Taxes attributable to such Lender's failure to comply with the provisions of Section 11.06(c ) relating to the maintenance of a

Participant Register and (z ) any Excluded Taxes attributable to such Lender or the Fronting Bank, in each case, that are payable or paid by the Administrative Agent or a Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the Fronting Bank hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the Fronting Bank, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii) .

(d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority with respect to such Borrower's Obligations, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders; Tax Documentation . Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Alterra Capital and the Administrative Agent, at the time or times reasonably requested by Alterra Capital or the Administrative Agent, such properly completed and executed documentation reasonably requested by the applicable Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Alterra Capital or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by Alterra Capital or the Administrative Agent as will enable Alterra Capital or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(i)(A) and (i)(B) below) shall not be required if in the Lender's reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to Alterra Capital and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Alterra Capital or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is entitled to do so under applicable Law, deliver to Alterra Capital and the Administrative Agent (in such

number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Alterra Capital or the Administrative Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) executed originals of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Alterra Capital within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Alterra Capital and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Alterra Capital or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be

prescribed by applicable Law to permit Alterra Capital or the Administrative Agent to determine the withholding or deduction required to be made;

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Alterra Capital and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Alterra Capital or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Alterra Capital or the Administrative Agent as may be necessary for Alterra Capital and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement; and

(E) if a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, such Lender agrees with and in favor of the Administrative Agent, to deliver to the Administrative Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement, but only if such Lender is legally able to deliver such forms, provided, that nothing in this Section 3.01(e)(i)(E) shall require a Lender to disclose any information that it deems to be confidential (including without limitation, its tax returns).

(ii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Alterra Capital and the Administrative Agent in writing of its legal inability to do so.

(f) Treatment of Certain Refunds . If the Administrative Agent, any Lender or the Fronting Bank determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by a Borrower or with respect to which such Borrower has paid additional amounts pursuant to this Section, it shall pay to such Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (excluding Taxes) of the Administrative Agent, such Lender or the Fronting Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund which shall not be subject to the limitations set forth in the immediately preceding parenthetical), provided that such Borrower, upon the request of the Administrative Agent, such Lender or the Fronting Bank, agrees to repay the amount paid over to such Borrower (plus any

penalties (other than any penalties attributable to gross negligence of or fraud or willful misconduct by such Administrative Agent, such Lender or the Fronting Bank as determined by a court of competent jurisdiction by a final and nonappealable judgment), interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the Fronting Bank in the event the Administrative Agent, such Lender or the Fronting Bank is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to any Borrower pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require the Administrative Agent, any Lender or the Fronting Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to such Borrower or any other Person.

(g) Survival. Each party's obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the Fronting Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02 Illegality. If any Lender determines that any Change in Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on written notice thereof by such Lender to the Borrowers through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and Alterra Capital that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate.

Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Base Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify Alterra Capital and each Lender in writing. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

3.04 Increased Costs; Reserves on Eurodollar Rate Loans .

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e) ) or the Fronting Bank;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the Fronting Bank or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making converting to, continuing or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Fronting Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Fronting Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the Fronting Bank, the applicable Borrower

will pay to such Lender or the Fronting Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Fronting Bank, as the case may be, for such additional costs incurred or reduction suffered with respect to such Borrower’s Obligations.

(b) Capital Requirements . If any Lender or the Fronting Bank determines that any Change in Law affecting such Lender or the Fronting Bank or any Lending Office of such Lender or such Lender's or the Fronting Bank's holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender's or the Fronting Bank's capital or on the capital of such Lender's or the Fronting Bank's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Fronting Bank or such Lender, to a level below that which such Lender or the Fronting Bank or such Lender's or the Fronting Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Fronting Bank's policies and the policies of such Lender's or the Fronting Bank's holding company with respect to capital adequacy), then from time to time the applicable Borrower will pay to such Lender or the Fronting Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Fronting Bank or such Lender's or the Fronting Bank's holding company for any such reduction suffered with respect to such Borrower's Obligations.

(c) Certificates for Reimbursement . A certificate of a Lender or the Fronting Bank setting forth in reasonable detail the amount or amounts (and the basis for such amount or amounts) necessary to compensate such Lender or the Fronting Bank or its holding company, as the case may be, as specified in Subsection (a) or (b) of this Section and delivered to Alterra Capital shall be conclusive absent manifest error so long as the determination of such amount or amounts is made by such Lender or the Fronting Bank in good faith and is applied to the Borrowers in a non-discriminatory manner as compared to similarly situated borrowers or similar credit facilities. Each Borrower shall pay such Lender or the Fronting Bank, as the case may be, the amount shown as due from such Borrower on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or the Fronting Bank to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender's or the Fronting Bank's right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or the Fronting Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender or the Fronting Bank, as the case may be, notifies Alterra Capital of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Fronting Bank's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Reserves on Eurodollar Rate Loans . Each Borrower with respect to its Loans shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal

amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided such Borrower shall have received at least 10 days' prior written notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give written notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.

3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, each Borrower with respect to its Loans shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by such Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by such Borrower; or

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by Alterra Capital pursuant to Section 11.13 provided that this clause (c) shall not apply to any Defaulting Lender;

including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Each Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by a Borrower to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

3.06 Mitigation Obligations; Replacement of Lenders or Fronting Bank.

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or a Borrower is required to pay any indemnity or additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then at the request of Alterra Capital such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the good faith judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender to any

unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Alterra Capital hereby agrees to pay all reasonable out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 3.04 , or if a Borrower is required to pay any indemnity or additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a) , Alterra Capital may replace such Lender in accordance with Section 11.13 .

(c) Replacement of Fronting Bank . If the Fronting Bank requests compensation under Section 3.04 or is entitled not to issue any Letter of Credit pursuant to Section 2.03(b)(ii) or if a Borrower is required to pay any indemnity or additional amount to the Fronting Bank or any Governmental Authority for the account of the Fronting Bank pursuant to Section 3.01 , or the Fronting Bank ceases to be an NAIC Approved Bank, Alterra Capital may request that the Fronting Bank resign as the Fronting Bank hereunder and Alterra Capital may designate a new Lender as the Fronting Bank in accordance with Section 11.06(g) .

3.07 Survival . All of the Borrowers’ obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Effectiveness . This Agreement shall not become effective, and no Fronting Bank or Lender shall have an obligation to make its initial Credit Extension hereunder, until satisfaction or waiver of the following conditions precedent:

(a) The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles or sent by electronic mail (followed promptly by originals) unless otherwise specified, each dated the Effective Date (or, in the case of certificates of governmental officials, a recent date before the Effective Date) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:

(i) executed counterparts of this Agreement, sufficient in number for distribution to the Administrative Agent, each Lender and each Borrower as of the Effective Date;

(ii) a Security Agreement and Control Agreement for each Borrower executed by the parties thereto with such number of counterparts as may be requested by the Administrative Agent;

(iii) a Note executed by each Borrower in favor of each Lender requesting a Note;

(iv) such certificates of resolutions or other action, incumbency certificates and/or other certificates of the Secretary or Assistant Secretary of each Borrower as the

Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Borrower is a party;

(v) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Borrower is duly organized or formed, validly existing, in good standing (to the extent such concept is applicable) and qualified to engage in business in the jurisdiction in which it is organized;

(vi) a favorable opinion from each of (A) Skadden, Arps, Slate, Meager & Flom LLP, New York counsel to the Borrowers, and (B) Conyers Dill & Pearman, Bermuda counsel to the Borrowers, in each case addressed to the Administrative Agent, the Fronting Bank and each Lender and in form and substance reasonably acceptable to the Administrative Agent;

(vii) a certificate of a Responsible Officer of each Borrower either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by each Borrower and the validity against such Borrower of the Loan Documents to which it is a party, and confirming that such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

(viii) (A) a certificate signed by a Responsible Officer of each Borrower certifying that the conditions specified in Sections 4.02(a) and (b) have been satisfied and (B) a certificate signed by a Responsible Officer of Alterra Capital certifying that (1) since December 31, 2010 there has not occurred a material adverse change in the business assets, properties, results of operations or condition (financial or otherwise) of Alterra Capital and its Subsidiaries, taken as a whole; and (2) the current Financial Strength Rating of Alterra Bermuda;

(ix) the Financial Strength Rating of Alterra Bermuda shall be A- or better;

(x) a Borrowing Base Certificate for each Borrower executed by a Responsible Officer of such Borrower calculated as of the most recent Business Day in accordance with the requirements hereof and demonstrating compliance with Section 6.10 with respect to such Borrower;

(xi) the Existing Credit Agreements shall have been terminated and all loans, interest, fees and other costs and expenses due and owing through the Effective Date shall have been paid in full;

(xii) a Master Participation Agreement executed by all of the Lenders, the lenders under the Existing Credit Agreements and the Administrative Agent in form and substance satisfactory to the Administrative Agent;

(xiii) satisfactory evidence that there are no Liens on the Collateral Accounts and no financing statements or other similar filings with respect thereto other than those under the Existing Credit Agreement and Liens permitted under Sections 7.06(b) and (n) ;

(xiv) a letter from the Process Agent agreeing to the terms of Section 11.14(d) ; and

(xv) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Administrator, the Lender or the Required Lenders may reasonably require.

(b) Any fees required to be paid on or before the Effective Date shall have been paid to the extent invoiced at least one (1) Business Day prior thereto.

(c) Unless waived by the Administrative Agent, Alterra Capital and Alterra Bermuda shall have paid all reasonable and documented fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least one day prior to or on the Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Alterra Capital, Alterra Bermuda and the Administrative Agent).

Without limiting the generality of the provisions of Section 9.04 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto.

4.02 Conditions to All Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the condition that the Effective Date shall have occurred and the following additional conditions precedent:

(a) The representations and warranties of the Borrowers contained in Article V or any other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that for purposes of this Section 4.02 , the representations and warranties contained in Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to Section 6.01(a).

(b) No Default shall have occurred and be continuing or will result from the making of the Credit Extensions.

(c) The Administrative Agent and, if applicable, the Applicable Issuing Party shall have received a Request for Credit Extension in accordance with the requirements hereof

and the Administrative Agent shall have received a Borrowing Base Certificate calculated as of the most recent Business Day in accordance with the requirements hereof and demonstrating compliance with Section 6.10 with respect to such Borrower.

(d) In the case of a Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders or the Applicable Issuing Party would make it impracticable for such Credit Extension to be denominated in the relevant Alternative Currency.

(e) In addition to satisfaction of the conditions in clauses (a) through (d) , the obligation of each Lender to make its initial Credit Extension to a Designated Borrower is subject to the satisfaction of the conditions that the Administrative Agent shall have received the following:

(i) a Designated Borrower Assumption Agreement executed by such Designated Borrower and Alterra Capital and a Security Agreement and Control Agreement executed by such Designated Borrower;

(ii) all documents as shall reasonably demonstrate the existence of such Designated Borrower, the corporate power and authority of such Designated Borrower to enter into, and the validity with respect to such Designated Borrower of, this Agreement and the other Loan Documents to which it is a party and the incumbency of officers executing the Loan Documents (including an opinion of counsel to such Designated Borrower and, if such counsel is not licensed to practice in New York, an opinion of New York counsel), in form and substance reasonably satisfactory to the Administrative Agent;

(iii) a certificate of a Responsible Officer of Alterra Capital or such Designated Borrower either (A) attaching copies of all consents, licenses and approvals from a Governmental Authority required in connection with the execution, delivery and performance by such Designated Borrower and the validity against such Designated Borrower of the Loan Documents to which it is a party and confirming that such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

(iv) such corporate documents and other information as any Lender shall reasonably request for purposes of the Patriot Act and/or such Lender's “Know Your Client” requirements;

(v) if such Designated Borrower is a Foreign Obligor, no Lender shall be subject to any legal or regulatory requirement to be licensed to do business in the jurisdiction in which such Designated Borrower is organized in order to make Credit Extensions to such Designated Borrower or shall be otherwise prohibited from lending to such Designated Borrower;

(vi) if required by Section 2.14 (c) , the Designated Borrower shall have deposited the necessary Eligible Collateral in its Collateral Account and provided a Borrowing Base Certificate reflecting such deposit;

(vii) if the Designated Borrower is Alterra Reinsurance USA, Alterra Reinsurance USA shall have a Financial Strength Rating of at least A-; and

(viii) a Note for each Lender requesting the same.

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by a Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b), have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants solely with respect to itself and its respective Subsidiaries (provided, that only Alterra Bermuda makes the representation regarding its financial statements in Section 5.05 and only Alterra Capital makes the representation regarding its financial statements in Section 5.05 and the representations in Section 5.10 ) to the Administrative Agent and the Lenders that:

5.01 Existence, Qualification and Power; Compliance with Laws . Each Borrower and each Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing (or similar concept under the applicable Law of the relevant jurisdiction) under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership of its assets or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c) , to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by each Borrower of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien (other than any Lien arising under any Loan Document) under, or require any payment to be made under (i) any material Contractual Obligation that is binding on such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law to which such Person is subject.

5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person that has not been obtained or made is necessary or required in

connection with the execution, delivery or performance by, or enforcement against, any Borrower of this Agreement or any other Loan Document.

5.04 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Borrower that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Borrower, enforceable against each Borrower that is party thereto in accordance with its terms, subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law) and to applicable bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights generally.

5.05 Financial Statements .

(a) The audited consolidated balance sheet and related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal year ended December 31, 2010 of (i) Alterra Capital and its Subsidiaries and (ii) Alterra Bermuda and its Subsidiaries (x) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (y) fairly present in all material respects the financial condition of Alterra Capital and its Subsidiaries or Alterra Bermuda and its Subsidiaries, as the case may be, as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby.

(b) The unaudited consolidated balance sheet and the related consolidated statements of income or operations, shareholders' equity and cash flow for the fiscal quarter ended September 30, 2011 of (i) Alterra Capital and its Subsidiaries and (ii) Alterra Bermuda and its Subsidiaries (x) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (y) fairly present in all material respects the financial condition of Alterra Capital and its Subsidiaries or Alterra Bermuda and its Subsidiaries, as the case may be, as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby subject to the absence of footnotes and normal year-end audit adjustments.

5.06 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrowers or any of their respective Subsidiaries or against any of their properties or revenues that (i) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (ii) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, with respect to the Regulatory Matters, the information provided with respect thereto is based solely on the limited information previously provided by Chubb Re and none of the Borrowers nor any of their respective Affiliates have made or will make any representation or warranty with respect to such information or its accuracy or completeness.

5.07 No Default. None of the Borrowers nor any of their respective Subsidiaries thereof is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.08 Ownership of Property. Each Borrower and its Subsidiaries has good legal title in fee simple to, or valid leasehold interests in, all material real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.09 Taxes. Alterra Capital and its Subsidiaries have filed all federal, material state and other material Tax returns and reports required to be filed, and have paid all federal, material state and other material Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. To the knowledge of Alterra Capital, there is no proposed Tax assessment against Alterra Capital or any of its Subsidiaries that would, if made, have a Material Adverse Effect.

5.10 ERISA Compliance .

(a) Except as could not reasonably be expected to have a Material Adverse Effect: (i) each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws and (ii) each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Alterra Capital, nothing has occurred which would prevent, or cause the loss of, such qualification. Alterra Capital and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of Alterra Capital, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) No ERISA Event has occurred that could reasonably be expected to result in a Material Adverse Effect, and neither Alterra Capital nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan that could reasonably be expected to result in a Material Adverse Effect; (ii) Alterra Capital and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither Alterra Capital nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause

the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither Alterra Capital nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, all of which have been paid; (v) neither Alterra Capital nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA which could reasonably be expected to result in a Material Adverse Effect; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC that could reasonably be expected to result in a Material Adverse Effect, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan which termination could reasonably be expected to result in a Material Adverse Effect.

(d) With respect to any Foreign Benefit Plan, (i) except as could not reasonably be expected to have a Material Adverse Effect, each Foreign Benefit Plan is in compliance in all material respects with applicable Law, (ii) the aggregate of the accumulated benefit obligations under all Foreign Benefit Plans does not exceed the current fair market value of the assets held in the trust or similar funding vehicles for such Foreign Benefit Plans in an amount in excess of the Threshold Amount, and (iii) reasonable reserves have been established in accordance with prudent business practice or where required by ordinary accounting practices in the jurisdiction in which such Foreign Benefit Plan is maintained. There are no material actions, suits or claims (other than routine claims for benefits) pending, or to the knowledge of Alterra Capital threatened against it or any of its Subsidiaries with respect to any Foreign Benefit Plan which could reasonably be expected to result in a Material Adverse Effect.

5.11 Subsidiaries; Equity Interests . As of the Effective Date, Alterra Capital has no Subsidiaries other than those disclosed on Schedule 5.11 and such Schedule correctly indicates which Subsidiaries are Insurance Subsidiaries, Material Insurance Subsidiaries and Material Parties.

5.12 Margin Regulations; Investment Company Act; Investment Business Act .

(a) None of the Borrowers is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b) None of the Borrowers, any Person Controlling the Borrowers, or any Subsidiary of Alterra Capital is or is required to be registered as an “investment company” under the Investment Company Act of 1940. Neither Alterra Capital nor Alterra Bermuda nor any other Borrower organized under the laws of Bermuda is engaged in the “Investment Business” as defined in the Investment Business Act of 2003 of Bermuda.

(c) Alterra Bermuda has not received any direction or other notification pursuant to Section 32 of Insurance Act, 1978 of Bermuda.

5.13 Disclosure. No written report, financial statement, certificate or other written information furnished by or on behalf of any Borrower to the Administrative Agent or any

Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case taken as a whole as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, (taken as a whole with other such statements theretofore or contemporaneously furnished) in light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected financial information, the Borrowers represent only that such information was prepared in good faith based upon assumptions that the Borrowers believed were reasonable at the time of preparation thereof, it being understood by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by such projections may differ from the projected results. Notwithstanding the foregoing, the Lenders acknowledge that the information provided with respect to the Regulatory Matters is based solely on the limited information previously provided by Chubb Re prior to March 24, 2006 (and not any of the Borrowers or their Affiliates or their respective officers or representatives), that such information has not been and will not be updated and that no representation or warranty is made by the Borrowers or any of their respective Affiliates with respect to such information nor its accuracy or completeness.

5.14 Compliance with Laws. Each Borrower and its respective Subsidiaries is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.15 Representations as to Foreign Jurisdiction Matters. Each Foreign Obligor represents and warrants (solely as to itself) to the Administrative Agent and the Lenders that:

(a) Such Foreign Obligor is subject to civil and commercial Laws with respect to its obligations under this Agreement and the other Loan Documents to which it is a party (collectively as to such Foreign Obligor, the “ Applicable Foreign Obligor Documents ”), and the execution, delivery and performance by such Foreign Obligor of the Applicable Foreign Obligor Documents constitute and will constitute private and commercial acts and not public or governmental acts. Such Foreign Obligor does not have any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of the jurisdiction in which such Foreign Obligor is organized and existing in respect of its obligations under the Applicable Foreign Obligor Documents.

(b) Except as set forth in such Designated Borrower's Designated Borrower Request, and such exception is acceptable to the Administrative Agent, the Applicable Foreign Obligor Documents are in proper legal form under the Laws of the jurisdiction in which such Foreign Obligor is organized and existing for the enforcement thereof against such Foreign Obligor under the Laws of such jurisdiction, and to ensure the legality, validity, enforceability or admissibility in evidence of the Applicable Borrower Documents. It is not necessary to ensure the legality, validity, enforceability, priority or admissibility in evidence of the Applicable Foreign Obligor Documents that the Applicable Foreign Obligor Documents be filed, registered

or recorded with, or executed or notarized before, any court or other authority in the jurisdiction in which such Foreign Obligor is organized and existing or that any registration charge or stamp or similar tax be paid on or in respect of the Applicable Foreign Obligor Documents or any other document, except for (i) any such filing, registration, recording, execution or notarization that has been made and is in full force and effect, or is not required to be made until such Applicable Foreign Obligor Documents are sought to be enforced, (ii) any charge or tax that has been timely paid by or on behalf of such Foreign Obligor and (iii) any such charge or tax which can not be paid, or any filing, registration or recording or necessary to perfect any Lien granted by such Foreign Obligor pursuant to the Applicable Foreign Obligor Documents which can not be made, in each case, prior to execution of such Applicable Foreign Obligor Document.

(c) As of the Effective Date (or in the case of a Designated Borrower which is a Foreign Obligor, the date such Designated Borrower becomes a party hereto), there is no tax, levy, impost, duty, fee, assessment or other governmental charge, or any deduction or withholding, imposed by any Governmental Authority in or of the jurisdiction in which such Foreign Obligor is organized and existing (i) on or by virtue of the execution or delivery of the Applicable Foreign Obligor Documents or (ii) on any payment to be made by such Foreign Obligor pursuant to the Applicable Foreign Obligor Documents other than, in the case of a Designated Borrower, those set forth in such Designated Borrower's Designated Borrower Request.

(d) The execution, delivery and performance of the Applicable Foreign Obligor Documents executed by such Foreign Obligor are, under applicable foreign exchange control regulations of the jurisdiction in which such Foreign Obligor is incorporated or organized and existing, not subject to any notification or authorization except (i) such as have been made or obtained or (ii) such as cannot be made or obtained until a later date ( provided that any notification or authorization described in clause (ii) shall be made or obtained as soon as is reasonably practicable).

5.16 First Priority Interest . The Administrative Agent, for the benefit of itself, the Fronting Bank, the L/C Administrator and the Lenders, has a first priority (subject only to Liens of the type described in Sections 7.06(b) and (n) to the extent set forth in the applicable Control Agreement) perfected security interest in the Collateral pledged by each Borrower pursuant to its respective Security Agreement.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any L/C Obligation, Loan or other Obligation hereunder (other than any contingent indemnification liability that is not then payable) shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Alterra Capital and each other Borrower shall, and shall to the extent required pursuant to the applicable provisions of this Article VI , cause each of their respective Subsidiaries to (provided that each Borrower covenants solely with respect to itself and its respective Subsidiaries):

6.01 Reports, Certificates and Other Information . Furnish or cause to be furnished to the Administrative Agent for distribution to the Lenders:

(a) GAAP Financial Statements :

(i) Within 45 days after the close of each of the first three fiscal quarters of each fiscal year beginning with the fiscal quarter ending after the Effective Date (A) of Alterra Bermuda, a copy of the unaudited consolidated balance sheets of Alterra Bermuda and its Subsidiaries, as of the close of such quarter and the related statements of income and cash flows for that portion of the fiscal year ending as of the close of such fiscal quarter, all prepared in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) and accompanied by the certification of a Responsible Officer of Alterra Bermuda that all such financial statements are complete and correct and present fairly, in all material respects, in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) the financial position and consolidated results of operations and cash flows of Alterra Bermuda as at the end of such fiscal quarter and for the period then ended and (B) of Alterra Capital, a copy of the unaudited consolidated balance sheets of Alterra Capital, as of the close of such quarter and the related consolidated statements of income and cash flows for that portion of the fiscal year ending as of the close of such fiscal quarter, all prepared in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) and accompanied by the certification of a Responsible Officer of Alterra Capital that all such financial statements are complete and correct and present fairly, in all material respects, in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) the financial position and consolidated results of operations and cash flows of Alterra Capital as at the end of such fiscal quarter and for the period then ended.

(ii) Within 90 days after the close of each fiscal year beginning with the fiscal year ended 2011, (A) of Alterra Bermuda, a copy of the annual audited consolidated financial statements of Alterra Bermuda and its Subsidiaries consisting of balance sheets and statements of income and retained earnings and cash flows, setting forth in comparative form in each case the figures for the previous fiscal year, which financial statements shall be prepared in accordance with GAAP, certified without material qualification by KPMG or any other firm of independent certified public accountants of recognized national standing selected by Alterra Capital that all such financial statements are complete and correct and present fairly, in all material respects, in accordance with GAAP the financial position and the consolidated results of operations and cash flows of Alterra Bermuda as at the end of such year and for the period then ended and (B) of Alterra Capital, a copy of the annual audited financial statements of Alterra Capital consisting of consolidated and consolidating balance sheets and consolidated and consolidating statements of income and retained earnings and cash flows, setting forth in comparative form in each case the figures for the previous fiscal year, which financial statements shall be prepared in accordance with GAAP, certified without material qualification by KPMG or any other firm of independent certified public accountants of recognized national standing selected by Alterra Capital that all such financial statements are complete and correct and present fairly, in all material respects, in accordance with GAAP the financial position and the consolidated results of operations and cash flows of Alterra Capital as at the end of such year and for the period then ended.

(b) SAP Financial Statements . Within 30 days after the transmittal thereof to any Governmental Authority, any Annual Statement or quarterly statutory statements required to be delivered to such Governmental Authority by a Borrower or any Material Insurance Subsidiary prepared in conformity with the requirements thereof.

(c) Monthly Report and Borrowing Base Certificate . As soon as available, but in any event within 25 days after the end of each calendar month of each fiscal year, (i) a report listing each Borrower's Eligible Collateral and (ii) a Borrowing Base Certificate executed by a Responsible Officer. For purposes of such report and of completing the Borrowing Base Certificate required under this Section 6.01(c) , Eligible Collateral shall be valued based on its Fair Market Value as at the last Business Day of the calendar month for which such report or Borrowing Base Certificate is being delivered.

(d) SEC Filings, etc. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Alterra Capital or any other Borrower (except any stockholder reports prepared internally for Subsidiaries (and not for the use of or distribution to third parties)), and copies of all annual, regular, periodic and special reports and registration statements which Alterra Capital or any other Material Party may file or be required to file with the SEC under Section 13 or 15 of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto.

(e) Additional Borrowing Base Certificates . Promptly, at the request of the Administrative Agent, a Borrowing Base Certificate for any given Business Day executed by a Responsible Officer of each Borrower.

(f) Notice of Default, etc . Promptly (and in any event within two Business Days) after any Responsible Officer of any Borrower knows or has reason to know of the existence of any Default, any ERISA Event or any event, development or other information which would have a Material Adverse Effect, telephonic or telegraphic notice specifying the nature of such Default, ERISA Event or event, development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within two Business Days;

(g) Other Information . The following certificates and other information which shall be delivered promptly after (and in any event within five Business Days after) receipt of:

(i) Copies of any financial examination reports by a Governmental Authority with respect to any Material Insurance Subsidiary relating to the insurance or reinsurance business of such Material Insurance Subsidiary (when, and if, prepared); provided , interim reports shall only be required to be delivered hereunder at such time as such Borrower has knowledge that a final report will not be issued and delivered to the Administrative Agent within 90 days of any such interim report.

(ii) Copies of all filings (other than nonmaterial filings) with Governmental Authorities by any Material Insurance Subsidiary which seek approval of Governmental

Authorities with respect to transactions between any Borrower or any Material Insurance Subsidiary and its Affiliates.

(iii) Notice of proposed or actual suspension, termination or revocation of any material license of any Material Insurance Subsidiary by any Governmental Authority or of receipt of notice from any Governmental Authority notifying a Borrower or any Material Insurance Subsidiary of a hearing relating to such a suspension, termination or revocation, including any request by a Governmental Authority which commits any Borrower or any Material Insurance Subsidiary to take, or refrain from taking, any material action or which otherwise materially and adversely affects the authority of any Borrower or any Material Insurance Subsidiary to conduct its business.

(iv) Notice of any pending or threatened (in writing) investigation or regulatory proceeding (other than routine periodic investigations or reviews) by any Governmental Authority concerning the business, practices or operations of any Borrower or any Material Insurance Subsidiary.

(v) Notice of any material change in accounting policies or financial reporting practices by Alterra Capital or any other Borrower except as required or permitted by GAAP or SAP, as applicable.

(vi) Promptly upon the announcement thereof, any change in the Financial Strength Rating of Alterra Bermuda or any Designated Borrower which is an Insurance Subsidiary.

(h) Compliance Certificates . Concurrently with the delivery to the Administrative Agent of the GAAP financial statements under Sections 6.01(a) , a duly completed Compliance Certificate, signed by the Responsible Officer of Alterra Capital.

(i) Notice of Litigation, License, etc. Promptly upon learning of the occurrence of any of the following, written notice thereof, describing the same and the steps being taken by Alterra Capital or any other Borrower with respect thereto: (i) the institution of, or any adverse determination in, any litigation, arbitration proceeding or governmental proceeding which could, if adversely determined, be reasonably expected to have a Material Adverse Effect and which is not Ordinary Course Litigation or (ii) the commencement of any dispute which could reasonably be expected to lead to the modification, transfer, revocation, suspension or termination of this Agreement or any Loan Document.

(j) Other Information . From time to time such other information concerning Alterra Capital and its Subsidiaries as the Administrative Agent or any Lender through the Administrative Agent may reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or Section 6.01(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrowers post such documents, or provide a link thereto on Alterra Capital’s or Alterra Bermuda’s respective website on the Internet at the respective website address listed on Schedule 11.02 ; or (ii) on which such documents are posted on the Borrowers’ behalf on an

Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrowers shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrowers to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrowers shall notify the Administrative Agent and each Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrowers with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

The Borrowers hereby acknowledge that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders, the L/C Administrator and the Fronting Bank materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks , Syndtrak or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders may be “public-side” Lenders ( i.e., Lenders that do not wish to receive material non-public information with respect to either Borrower or its securities) (each, a “ Public Lender ”). The Borrowers hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Administrator, the Fronting Bank and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to such Borrower or its securities for purposes of United States Federal and state securities laws ( provided , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”

6.02 Corporate Existence, Foreign Qualification; Permits . (a) Preserve, renew and maintain in full force and effect the legal existence and good standing of each Borrower and each Material Party under the laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 and except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal conduct of the respective businesses of each Borrower and each Material Party, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

6.03 Books, Records and Inspections . (a) Maintain proper books of record and account, in which materially complete, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Alterra Capital or such Material Party, as the case may be; (b) maintain such

books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Alterra Capital or such Material Party, as the case may be; and (c) permit designated representatives of the Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants ( provided that the Borrowers shall be given the opportunity to participate in any discussion or meeting with such independent accountants so long as no Event of Default then exists), all at the expense of the Administrative Agent and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrowers; provided , that during the continuance of an Event of Default, the Administrative Agent (or any of its designated representatives) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

6.04 Payment of Obligations . Pay, and cause each Material Party to pay, and discharge as the same shall become due and payable (a) all its obligations and liabilities, unless the failure to do so would not reasonably be expected to have a Material Adverse Effect and (b) all federal income taxes and all other material tax liabilities, assessments and governmental charges or levies imposed upon it unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Borrower or such Subsidiary.

6.05 Compliance with Laws . Comply in all material respects with all applicable Laws, except in such instances in which (a) such Law is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties . Keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where the failure to keep or maintain the same would not reasonably be expected to have a Material Adverse Effect.

6.07 Conduct of Business . Engage primarily in the insurance and reinsurance business and such other businesses described in quarterly report on form 10-Q for the fiscal quarter ended September 30, 2011.

6.08 Use of Credit Extensions . Use the proceeds of all Credit Extensions for general corporate purposes not in contravention of any Law or of any Loan Document and not use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

6.09 Further Assurances . Promptly upon the request of the Administrative Agent, Alterra Capital shall cause each Borrower to execute, acknowledge, deliver and record and do any and all such further acts and deeds as the Administrative Agent may reasonably request from time to time in order to ensure that the Obligations of such Borrower are secured by a first

priority (subject only to Liens described in Sections 7.06(b) and (n) ) perfected interest in the assets of such Borrower stated to be pledged pursuant to its Security Agreement and to perfect and maintain the validity, effectiveness and priority of its Security Agreement and the Liens intended to be created thereby. Notwithstanding any provision of a Control Agreement to the contrary, without the prior written consent of the Administrative Agent, no Borrower shall give directions or entitlement orders, as applicable, to the Financial Institution party to any applicable Control Agreement to make a delivery to such Borrower or any other Person of assets or properties (other than dividends and interest on the Eligible Collateral) from such Borrower’s Collateral Account except in connection with the sale, investment or reinvestment of Eligible Collateral the proceeds of which will be deposited into such Borrower’s Collateral Account. The Administrative Agent, on behalf of the Fronting Bank, the L/C Administrator and the Lenders, agrees that provided (i) no Event of Default exists and is continuing and (ii) after giving effect to the proposed delivery, the Borrowing Base of such Borrower is equal to or in excess of such Borrower’s Outstanding Amount, the Administrative Agent shall consent to any such delivery within one Business Day after such request.

6.10 Collateral Requirements . (A) Alterra Capital shall cause each Borrower’s Borrowing Base at all times to be equal to or greater than such Borrower’s Outstanding Amount. If at any time a Borrower’s Borrowing Base is less than its Borrower’s Outstanding Amount, Alterra Capital will cause such Borrower to immediately (and in any event within two Business Days) deposit into its Collateral Account Eligible Collateral or reduce its Borrower’s Outstanding Amount, or a combination of the foregoing, in an amount sufficient to eliminate such excess. At any time an Event of Default has occurred and is continuing, at the request of the Administrative Agent, Alterra Capital shall cause such Borrower to take such actions as may be necessary to ensure that its Collateral consists solely of Cash and Cash Equivalents; provided , that the concentration limits with regard to Cash Equivalents shall not apply.

(b) The minimum weighted average credit quality rating of the Eligible Collateral in each Collateral Account shall be at least AA/Aa2 or the equivalent; provided , that a Borrower shall not be in violation of this Section 6.10(b) if such violation occurs as a result of a change in the Fair Market Value or ratings of such Eligible Collateral (as opposed to a change in the makeup of such Eligible Collateral) unless such deficiency exists for 30 days.

6.11 OFAC; PATRIOT Act Compliance . In each case only if and to the extent that it is subject to OFAC (a) refrain from doing business in a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administered by OFAC, and (b) provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the PATRIOT Act.

ARTICLE VII.

NEGATIVE COVENANTS

applicable provisions of this Article VII , shall not permit any of its respective Subsidiaries to (provided that each Borrower covenants solely with respect to itself and its respective Subsidiaries):

7.01 Alterra Capital Debt to Total Capitalization Ratio . Permit the Alterra Capital Debt to Total Capitalization Ratio to be greater than 35%.

7.02 Financial Strength Rating . Permit the Financial Strength Rating of Alterra Bermuda or any Designated Borrower which is an Insurance Subsidiary to fall below the rating of “B++”.

7.03 Indebtedness . Create, incur, assume or suffer to exist any Indebtedness of Alterra Capital’s Subsidiaries except:

(a) Indebtedness under the Loan Documents;

(b) obligations (contingent or otherwise) existing or arising under any Swap Contract entered into by such Person in the ordinary course of business for the purpose of hedging currency, commodity or interest rate risk and not for purposes of speculation or taking a “market view”;

(c) Indebtedness for standby letters of credit issued to secure liabilities under Primary Policies or Reinsurance Agreements entered into in the ordinary course of business;

(d) Indebtedness owed by any Subsidiary to Alterra Capital or any of its Subsidiaries; provided that if such Indebtedness is owed by a Borrower, such Borrower's Indebtedness, if any, is subordinate to Indebtedness under this Agreement (including any Guarantees of such Indebtedness) on terms satisfactory to the Administrative Agent;

(e) Indebtedness of any Subsidiary in connection with securities lending arrangements with financial institutions in the ordinary course of business;

(f) unsecured Indebtedness of Alterra USA Holdings and Alterra Finance LLC not exceeding $450,000,000 at any time;

(g) Indebtedness of Alterra UK for standby letters of credit which have been, or may from time to time in the future be, issued to provide funds at Lloyd's to support Lloyd's syndicate commitments of Alterra UK and its Subsidiaries;

(h) Indebtedness not included in clauses (a ) through (g) , provided that the aggregate amount of all such Indebtedness at any one time outstanding does not exceed $500,000,000; and

(i) Indebtedness arising under Guarantees made by any Subsidiary of Indebtedness owed by any other Subsidiaries of the type described in clauses (a) through (h) above.

7.04 Mergers, Consolidations and Dispositions . Merge, dissolve, liquidate, amalgamate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default or Event of Default exists or would result therefrom:

(a) any Subsidiary (other than Alterra Bermuda) may merge, amalgamate or consolidate with Alterra Capital or another Subsidiary so long as (i) if either such Subsidiary is a Wholly Owned Subsidiary, the surviving Person shall (or, in the case of an amalgamation, the amalgamated entity shall), after giving effect to such merger, amalgamation or consolidation, be Alterra Capital or a Wholly Owned Subsidiary, as the case may be; and (ii) if a Borrower is a party thereto, (A) a Borrower is the surviving entity (or, if an amalgamation, the amalgamated entity shall be liable for such Borrower's obligations), and (B) the Administrative Agent shall have received such documents, certificates and opinions in connection with such merger, amalgamation or consolidation affirming the effectiveness of this Agreement and the other Loan Documents and the liability of such Borrower (including, in the case of an amalgamation, the amalgamated entity) for the Obligations as it shall have reasonably requested;

(b) any Subsidiary (other than Alterra Bermuda) may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Alterra Capital or to any other Subsidiary; and any Subsidiary (other than a Material Party) may dissolve or Dispose of its assets;

(c) any Subsidiary (other than Alterra Bermuda) may merge, consolidate or amalgamate with any Person who is not a Subsidiary provided (i) in the case of a merger, consolidation or amalgamation, a Subsidiary shall be the continuing or surviving Person and, if any Wholly Owned Subsidiary is merging, consolidating or amalgamating with another Person, such Subsidiary (or, in the case of an amalgamation, the amalgamated entity), shall continue to be Wholly Owned after such merger, consolidation or amalgamation, and (ii) if a Borrower is involved, the Administrative Agent shall have received such documents, certificates and opinions in connection with such merger, amalgamation or consolidation affirming the effectiveness of this Agreement and the other Loan Documents.

7.05 Transactions with Affiliates . Enter into, or cause, suffer or permit to exist, any arrangement, transaction or contract with any of its Affiliates unless such arrangement, transaction or contract is on an arm’s length basis; provided that the foregoing restriction shall not apply to (i) Permitted Transactions, (ii) transactions between or among Alterra Capital and any of its Wholly Owned Subsidiaries or between and among any Wholly Owned Subsidiaries, (iii) Restricted Payments permitted pursuant to Section 7.09 , (iv) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Alterra Capital and its Subsidiaries and reimbursement of reasonable expenses of directors of Alterra Capital and its Subsidiaries, (v) compensation arrangements for officers and other employees of Alterra Capital and its Subsidiaries entered in the ordinary course of business, and (vi) the provision of director’s, officer’s and employee’s indemnification and insurance in the ordinary course of business.

7.06 Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens for Taxes not yet due or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

(d) Liens of landlords or of mortgagees of landlords arising by operation of law or pursuant to the terms of real property leases, provided that the rental payments secured thereby are not yet due and payable;

(e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other forms of governmental insurance or benefits and Liens pursuant to Letters of Credit or other security arrangements in connection with such insurance or benefits, other than any Lien imposed by ERISA;

(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar encumbrances affecting real property which, in the aggregate, do not materially interfere with the ordinary conduct of the business of Alterra Capital and its Subsidiaries as a whole;

(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(l) ;

(i) Liens on assets held in trust in respect of, or deposited or segregated to secure, liabilities under any Primary Policies or Reinsurance Agreements or securing Indebtedness permitted under Section 7.03(c) ;

(j) Liens securing Indebtedness permitted under Section 7.03(g) ;

(k) Liens securing Indebtedness permitted under Section 7.03(h) provided that the amount of the Indebtedness secured thereby does not exceed $250,000,000 at any time;

(l) Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any clause of this Section 7.06 , provided that such Indebtedness is not increased and is not secured by additional assets;

(m) Liens on any asset subject to any trust or other account arising out of regulatory requirements to the extent that such Liens are required by an applicable Insurance Regulatory Authority for such Person to maintain such obligations;

(n) bankers' Liens, rights of setoff and similar Liens arising in the ordinary course of business on operating accounts (including any related securities accounts) maintained by Alterra Capital or any of its Subsidiaries in the ordinary course of business; and

(o) Liens arising in connection with securities lending arrangements with financial institutions in the ordinary course of business;

provided , that no Lien (other than Liens pursuant to Sections 7.06(a) or (b) or with respect to the Collateral, Liens of the type permitted in Section 7.06(n) with respect to the applicable Control Agreement) shall be permitted to exist on the Equity Interest in any Insurance Subsidiaries or on the Collateral.

7.07 Restricted Payments, Etc. (a) Declare or pay any dividends on any of the Equity Interests in Alterra Capital, (b) purchase any Equity Interests in Alterra Capital or (c) set aside funds for any of the foregoing, except that Alterra Capital may declare or pay dividends on, or make distributions in respect of, any of its Equity Interests and Alterra Capital may purchase any of its Equity Interests provided , that no Default or Event of Default has occurred and is continuing before or after giving effect to the declaration or payment of such dividends, distributions or purchases.

ARTICLE VIII.

EVENTS OF DEFAULT AND THEIR EFFECT

8.01 Events of Default . Each of the following shall constitute an Event of Default under this Agreement:

(a) Non-Payment of Credit Extension . Default in the payment when due of any L/C Advance or any amount of principal on any Loan.

(b) Non-Payment of Interest, Fees, etc. Any Borrower fails to pay within three Business Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or any other amount payable hereunder or under any other Loan Document.

(c) Non-Payment of Other Indebtedness . (i) any Material Party (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any other Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee having an aggregate principal amount of more than the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto, and, in each case, such default continues for more than the period of grace, if any, therein specified, the effect of which default is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such

Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Material Party is the sole Defaulting Party (as defined in such Swap Contract) or (B) any Additional Termination Event (as so defined) under such Swap Contract as to which a Material Party is the sole Borrower (as so defined) and, in either event, the Swap Termination Value owed by a Material Party as a result thereof is greater than the Threshold Amount.

(d) Bankruptcy, Insolvency, etc. Any Material Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or any Material Party becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 60 days after its issue or levy.

(e) Financial Statements . Failure by any Borrower required to comply with the covenants set forth in Section 6.01 and continuance of such failure for five Business Days after notice thereof from the Administrative Agent.

(f) Specific Defaults . Failure by a Borrower to comply with the covenants set forth in Sections 6.02, 6.08 , 6.10, 7.01 , 7.02 , 7.03 , 7.04 , 7.06 , or 7.07.

(g) Non-compliance With Other Provisions . Failure by a Borrower to comply with or to perform any provision of this Agreement or any other Loan Document (and not constituting an Event of Default under any of the other provisions of this Article VIII ) and such failure continues for 30 days from the earliest of (i) the date a Responsible Officer has knowledge of such failure or (ii) the date the Administrative Agent or the Required Lenders give notice of such failure.

(h) Warranties and Representations . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower herein, in any other Loan Document, or in any document delivered by or on behalf of such Borrower in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made.

(i) Employee Benefit Plans . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of a Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Alterra Capital or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or (iii) institution of any steps by Alterra Capital or any other Person to terminate a Foreign Benefit Plan if as a result of such termination, Alterra Capital or any of its respective Subsidiaries could be required to make a contribution to such Foreign Benefit Plan, or could incur a liability or obligation to such Foreign Benefit Plan, in excess of the Threshold Amount, or (iv) a contribution failure with respect to any Foreign Benefit Plan sufficient to give rise to a Lien under applicable Law in excess of the Threshold Amount occurs.

(j) Loan Documents . Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Borrower contests in any manner the validity or enforceability of any Loan Document or denies that it has any liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document other than in accordance with the terms of any such Loan Document or the Administrative Agent shall fail to have a first priority perfected Lien on any Collateral (subject only to Liens described in Sections 7.06(b) and (n) ).

(k) Change in Control . A Change in Control occurs.

(l) Judgments . There is entered against any Borrower (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not paid, fully bonded or covered by independent third-party insurance as to which the surety or insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, such judgment shall not have been discharged or vacated or had execution thereof stayed pending appeal within 60 days after entry of such judgment.

8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and L/C Extensions and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and remedies available to it, the Lenders and the L/C Issuers under the Loan Documents;

provided , that upon the occurrence of an actual or deemed entry of an order for relief with respect to a Borrower under any Debtor Relief Law, the obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions shall automatically terminate, and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

8.03 Remedies Upon Event of Default Application of Funds . After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17 , be applied in the following order ( provided , that notwithstanding anything contained herein to the contrary, funds received from a Borrower or any of such Borrower’s Collateral shall be applied only to the Obligations of such Borrower):

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the Fronting Bank (including fees, charges and disbursements of counsel to the respective Lenders and the Fronting Bank and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Advances and other Obligations, ratably among the Lenders and the Fronting Bank in proportion to the respective amounts described in this clause Third payable to them;

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Advances, ratably among the Lenders and the Fronting Bank in proportion to the respective amounts described in this clause Fourth held by them;

Fifth , to the Administrative Agent for the account of (x) the Fronting Bank, in the case of Fronted Letters of Credit and (y) the Lenders, in the case of Several Letters of Credit, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the applicable Borrower or as otherwise required by Law.

Amounts held to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any Cash Collateral remains after all Letters of Credit of such Borrower shall have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations of such Borrower, if any, in the order set forth above.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01 Appointment and Authority . Each of the Lenders, each L/C Issuer, the L/C Administrator and the Fronting Bank hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder (including the guaranty set forth in Article X ) and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto except for Alterra Capital’s approval right set forth in Section 9.06 and Bank of America hereby accepts such appointment. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders, the L/C Issuers, the L/C Administrator and the Fronting Bank, and no Borrower shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

9.02 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Alterra Capital or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be

expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Alterra Capital or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.

The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by a Borrower, a Lender or the Fronting Bank.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Applicable Issuing Party, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Applicable Issuing Party unless the Administrative Agent shall have received notice to the contrary from such Lender or the Applicable Issuing Party prior to the making of such Loan or the issuance of such Letter of

Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub‑agents appointed by the Administrative Agent. The Administrative Agent and any such sub‑agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub‑agent and to the Related Parties of the Administrative Agent and any such sub‑agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents .

9.06 Resignation of Administrative Agent . (A) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Fronting Bank and Alterra Capital. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the prior written consent of Alterra Capital (except during the existence of an Event of Default), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, the L/C Issuers, the L/C Administrator and the Fronting Bank, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date .

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable Law, by notice in writing to Alterra Capital and such Person remove such Person as Administrative Agent and, with the prior written consent of Alterra Capital (except during the existence of an Event of Default), appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders, the L/C Issuers, the L/C Administrator or the Fronting Bank under any of the Loan Documents, the

retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender, the L/C Administrator and the Fronting Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided for above in this Section). The fees payable by Alterra Capital and Alterra Bermuda to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Alterra Capital, Alterra Bermuda and such successor. After the retiring or removed Administrative Agent's resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

(d) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Administrator and as the Fronting Bank provided , that prior to a termination of the Commitments that Bank of America may not resign as L/C Administrator and Fronting Bank unless either (x) there is another Fronting Bank under this Agreement and the Fronting Bank agrees to act as L/C Administrator hereunder or (y) the successor Administrative Agent or another Person who is an NAIC Approved Bank has agreed to assume the obligations of Bank of America as Fronting Bank and L/C Administrator hereunder. If Bank of America resigns as the Fronting Bank and L/C Administrator, it shall retain all the rights, powers, privileges and duties of the Fronting Bank and L/C Administrator hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Fronting Bank and L/C Administrator and all L/C Obligations with respect thereto, including the right to require the Lenders to make L/C Advances with respect to Fronted Letters of Credit pursuant to Section 2.03(c) . Upon the appointment of a successor Fronting Bank or L/C Administrator hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Fronting Bank or L/C Administrator, as applicable, (b) the retiring Fronting Bank or L/C Administrator shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents, and (c) the successor Fronting Bank or L/C Administrator shall issue letters of credit in substitution for (or amendments to) the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Fronting Bank or L/C Administrator, as the case may be, to effectively assume the obligations of the retiring Fronting Bank or L/C Administrator, as the case may be with respect to such Letters of Credit.

9.07 Non-Reliance on Administrative Agent and Other Lenders . Each Lender, the L/C Administrator and the Fronting Bank acknowledges that it has, independently and without reliance upon the Administrative Agent, the L/C Administrator, the Fronting Bank or any other Lender, or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender, the L/C Administrator and the Fronting Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, the L/C Administrator, the Fronting Bank or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers, Syndication Agents, and Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender, the Fronting Bank or the L/C Administrator hereunder.

9.09 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Borrower, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers, the L/C Administrator, the Fronting Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers, the L/C Administrator, the Fronting Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuers, the L/C Administrator, the Fronting Bank and the Administrative Agent under Sections 2.03(i) and (j) , 2.09 and 11.04 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender, each L/C Issuer, the L/C Administrator and the Fronting Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the L/C Issuers, the L/C Administrator and the Fronting Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 11.04 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender, any L/C Issuer, the L/C Administrator or the Fronting Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender, any L/C Issuer, the L/C Administrator or the Fronting Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender any L/C Issuer, the L/C Administrator or the Fronting Bank in any such proceeding.

9.10 Collateral Matters . The Lenders and the Fronting Bank irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Loan Document, or (iii) upon approval of the requisite Lenders pursuant to Section 11.01(e) ; and (iv) as permitted under Sections 2.16, 2.17 and 6.10 . Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property, pursuant to this Section 9.10 .

The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Borrower in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders, the L/C Issuers, the L/C Administrator or the Fronting Bank for any failure to monitor or maintain any portion of the Collateral.

ARTICLE X.

ALTERRA CAPITAL GUARANTEE

10.01 Unconditional Guarantee . For valuable consideration, receipt whereof is hereby acknowledged, and to induce the Fronting Bank and each Lender to make Loans to and Issue Letters of Credit (or purchase participations therein) for the account of each Guaranteed Borrower and to induce the Administrative Agent to act hereunder, Alterra Capital hereby unconditionally and irrevocably guarantees to each Lender, the Fronting Bank and the Administrative Agent the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Guaranteed Borrowers, whether for principal, interest, fees, expenses, indemnification or otherwise, whether direct or indirect, absolute or contingent or now existing or hereafter arising (such Obligations being the “ Guaranteed Obligations ”). Without limiting the generality of the foregoing, Alterra Capital’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by each Guaranteed Borrower to the Administrative Agent, the Fronting Bank or any other Lender under this Agreement but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Guaranteed Borrower or its Affiliates. This is a guarantee of payment and not of collection merely.

10.02 Guarantee Absolute . Alterra Capital guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement, regardless of any law or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender, the Fronting Bank or the Administrative Agent with respect thereto. The Obligations of Alterra Capital under this Article X are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Alterra Capital to enforce this Article X , irrespective of whether any action is brought against any Guaranteed Borrower or whether any Guaranteed Borrower is joined in any such action or actions. The liability of Alterra Capital under this guarantee shall be irrevocable, absolute and unconditional irrespective of, and Alterra Capital hereby irrevocably waives any defense it may now or hereafter have in any way relating to, any or all of the following:

(a) any lack of validity or enforceability of this Agreement, any other Loan Document or any other agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from this Agreement (other than this Article X );

(c) any taking, exchange, release or non-perfection of any collateral or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;

(d) any change, restructuring or termination of the corporate structure or existence of any Guaranteed Borrower or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Guaranteed Borrower or any of its assets or any resulting release or discharge of any obligation of any Guaranteed Borrower under this Agreement; or

(e) any other circumstance (including, without limitation, any statute of limitations to the fullest extent permitted by applicable Law) which might otherwise constitute a defense available to, or a legal or equitable discharge of, Alterra Capital or any Guaranteed Borrower (other than a discharge arising from the payment in full of the Guaranteed Obligations).

This guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Lender, the Fronting Bank or the Administrative Agent upon the insolvency, bankruptcy or reorganization of Alterra Capital or otherwise, all as though such payment had not been made.

10.03 Waivers . Alterra Capital hereby expressly waives promptness, diligence, notice of acceptance, presentment, demand for payment, protest, any requirement that any right or power be exhausted or any action be taken against any of the Guaranteed Borrowers or against any other guarantor of all or any portion of the Guaranteed Obligations, and all other notices and demands whatsoever.

(a) Alterra Capital hereby waives any right to revoke this guaranty, and acknowledges that this guaranty is continuing in nature and applies to all Guaranteed

Obligations, whether existing now or in the future and regardless of whether Guaranteed Obligations are reduced to zero at any time or from time to time (other than a reduction to zero due to the payment in full in cash of the Guaranteed Obligations concurrently with or after the termination of all Commitments).

(b) Alterra Capital acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated herein and that the waivers set forth in this Article X are knowingly made in contemplation of such benefits.

10.04 Subrogation . Alterra Capital will not exercise any rights that it may now or hereafter acquire against any of the Guaranteed Borrowers or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guaranteed Obligations under this Agreement, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Administrative Agent, the Fronting Bank or any other Lender against any of the Guaranteed Borrowers or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any of the Guaranteed Borrowers or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations shall have been paid in full in cash and the Commitments shall have terminated. If any amount shall be paid to Alterra Capital in violation of the preceding sentence at any time prior to the later of the payment in full in cash of the Guaranteed Obligations and the termination of the Commitments, such amount shall be held in trust for the benefit of the Administrative Agent, the Fronting Bank and the other Lenders and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as collateral for any Guaranteed Obligations thereafter arising.

10.05 Survival . This guaranty is a continuing guarantee and shall (a) remain in full force and effect until payment in full in cash of the Guaranteed Obligations and the termination of the Commitments and the expiration or cancellation of all Letters of Credit, (b) be binding upon Alterra Capital and its successors and assigns, (c) inure to the benefit of and be enforceable by each Lender (including each assignee Lender pursuant to Section 11.06 ), the Fronting Bank and the Administrative Agent and their respective successors, transferees and assigns and (d) shall be reinstated if at any time any payment to a Lender, the Fronting Bank or the Administrative Agent hereunder is required to be restored by such Lender, the Fronting Bank or the Administrative Agent. Without limiting the generality of the foregoing clause (c) , any transferee of any interest in any Loan or Commitment of a Lender pursuant to Section 11.06 shall become vested with all the rights in respect thereof granted to such Lender herein or otherwise.

10.06 Severability . Notwithstanding any other provision of this Article X to the contrary, in the event that any action is brought seeking to invalidate Alterra Capital’s obligations under this Article X under any fraudulent conveyance or fraudulent transfer theory, Alterra Capital shall be liable under this Article X only for an amount equal to the maximum amount of liability that could have been incurred under applicable Law by Alterra Capital under

any guarantee of the Obligations of the Guaranteed Borrowers (or any portion thereof) at the time of the execution and delivery of this Agreement (or, if such date is determined not to be the appropriate date for determining the enforceability of Alterra Capital’s obligations under this Article X for fraudulent conveyance or transfer purposes, on the date determined to be so appropriate) without rendering such a hypothetical guarantee voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer (the “ Maximum Guaranteed Obligations ”) and not for any greater amount, as if the stated amount of the Guaranteed Obligations had instead been the Maximum Guaranteed Obligations.

ARTICLE XI.

MISCELLANEOUS

11.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Borrower therefrom, shall be effective unless in writing signed by the Required Lenders and the applicable Borrower and acknowledged by the Administrative Agent, and each 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) waive any condition set forth in Section 4.01(a) without the written consent of each Lender directly affected thereby;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 4.02 or of any Default shall not be deemed to be an extension or increase in the Commitment of any Lender);

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to receive such payment;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Advance, or (subject to clause (iii) of the second proviso to this Section 11.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to receive such payment of principal, interest, fees or other amounts; provided , that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate;

(e) except as expressly provided in this Agreement or any other Loan Document, release all or substantially all of the Collateral without the consent of each Lender; provided , that only the consent of the Required Lenders shall be necessary to amend the definition of “Eligible Collateral” except that the consent of 100% of the Lenders shall be required to increase the applicable percentages set forth on Schedule 1.02 ;

(f) change Section 2.12 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby;

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

(h) release Alterra Capital from its obligations under Article X without the written consent of each Lender;

and, provided , that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Administrator and/or the Fronting Bank in addition to the Lenders required above, affect the rights or duties of the L/C Administrator and/or the Fronting Bank under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iii) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended nor may the principal amount of any Loan or L/C Advance owed to such Defaulting Lender be decreased or the payment date postponed without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

11.02 Notices; Effectiveness; Electronic Communication .

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrowers, the Administrative Agent, the L/C Administrator or the Fronting Bank, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02 ; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire.

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b) .

(b) Electronic Communications . Notices and other communications to the Lenders, the Fronting Bank and the L/C Administrator hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender, the Fronting Bank or the L/C Administrator pursuant to Article II if such Lender, the Fronting Bank or the L/C Administrator, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or a Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement) and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) , if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to any Borrower, any Lender, the Fronting Bank, the L/C Administrator or any other Person for losses,

claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Borrower's or the Administrative Agent's transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , that in no event shall any Agent Party have any liability to any Borrower, any Lender, the Fronting Bank, the L/C Administrator or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the L/C Administrator and the Fronting Bank may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Borrowers, the Administrative Agent, the L/C Administrator and the Fronting Bank. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

(e) Reliance by Administrative Agent, the Fronting Bank, L/C Administrator and Lenders . The Administrative Agent, the Fronting Bank, the L/C Administrator and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of Alterra Capital even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Each Borrower shall indemnify the Administrative Agent, the Fronting Bank, the L/C Administrator, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of such Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

11.03 No Waiver; Cumulative Remedies . No failure by any Lender, the Fronting Bank, the L/C Administrator or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Borrowers or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the

Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders, the L/C Administrator and the Fronting Bank; provided , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Applicable Issuing Party from exercising the rights and remedies that inure to its benefit (solely in its capacity as an Applicable Issuing Party) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.13 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Borrower under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) , (c) and (d) of the preceding proviso and subject to Section 2.13 any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

11.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses . Alterra Capital and Alterra Bermuda shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of a single counsel for the Administrative Agent and single local counsel and single specialist counsel (for each relevant jurisdiction and relevant specialization), as reasonably required, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated). Each Borrower shall pay (i) all reasonable and documented out‑of‑pocket expenses incurred by an Applicable Issuing Party in connection with the issuance, amendment, renewal or extension of any Letter of Credit issued for such Borrower's account or any demand for payment thereunder and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender, the Fronting Bank or the L/C Administrator (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Lender, the Fronting Bank or the L/C Administrator) in connection with the enforcement or protection of its rights against such Borrower (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder to or for the account of such Borrower, including all such out‑of‑pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) Indemnification . Alterra Capital and Alterra Bermuda shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, the Fronting Bank and the L/C Administrator, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented fees, charges and disbursements of any counsel for any Indemnitee but excluding Taxes, which shall be covered by Section 3.01 ) incurred by any Indemnitee or asserted against

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any Indemnitee by any Person (including any Borrower) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Applicable Issuing Party to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Alterra Capital or any of its Subsidiaries, or any Environmental Liability related in any way to Alterra Capital or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by Alterra Capital or any other Borrower against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if Alterra Capital or such other Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction .

(c) Reimbursement by Lenders . To the extent that the Borrowers for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Fronting Bank, the L/C Administrator or any Related Party of any of the foregoing (and without limiting the Borrowers obligations to do so), each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Fronting Bank, the L/C Administrator or such Related Party, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender's share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders' Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided , that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or an Applicable Issuing Party in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or an Applicable Issuing Party in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.11(d) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, no Borrower shall assert, and hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special,

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indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction. The Borrowers shall not have any liability (whether direct or indirect, in contract or tort or otherwise) arising out of, related to or in connection with any aspect of the transactions contemplated hereby or by any other Loan Document for special, indirect, consequential or punitive damages, other than such damages which are awarded to third parties in a manner for which the Indemnitees are indemnified

(e) Payments . All amounts due under this Section shall be payable not later than fifteen Business Days after demand therefor.

(f) Survival . The agreements in this Section shall survive the resignation of the Administrative Agent, the Fronting Bank and the L/C Administrator, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

11.05 Payments Set Aside . To the extent that any payment by or on behalf of a Borrower is made to the Administrative Agent, the Fronting Bank, the L/C Administrator or any Lender, or the Administrative Agent, the Fronting Bank, the L/C Administrator or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the Fronting Bank, the L/C Administrator or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender, the Fronting Bank and the L/C Administrator severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders, the Fronting Bank and the L/C Administrator under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

11.06 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors

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and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, the Fronting Bank and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Administrator, the Fronting Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b) , direct obligations under and L/C Advances or participations in L/C Obligations) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and /or the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, Alterra Capital otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

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(A) the consent of Alterra Capital (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender or an Affiliate of a Lender;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender or an Affiliate of such Lender; and

(C) the consent of the Fronting Bank shall be required for any assignment and, if such Assignee could not be an L/C Issuer of a Several Letter of Credit under applicable regulatory requirements, the Fronting Bank must have agreed (in its sole discretion) to front for such Assignee under Several Letters of Credit.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire, and unless otherwise agreed between the assigning Lender and such Assignee, if any Several Letters of Credit are outstanding, all such outstanding Letters of Credit are either amended or replaced to give effect to such assignment on the Trade Date.

(v) No Assignment to Certain Persons . No such assignment shall be made (A) to Alterra Capital or any of Alterra Capital’s Subsidiaries or Affiliates, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B) , or (C) to a natural Person.

(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of Alterra Capital and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Fronting Bank or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans, obligations under Several Letters of Credit and participations in Fronted Letters of Credit in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become

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effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by Alterra Capitals, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption and participation delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by each of the Borrowers, the Lenders, the L/C Administrator and the Fronting Bank at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person or Alterra Capital or any of Alterra Capital's Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender's participations in L/C Obligations and/or L/C Advances) owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the Fronting Bank shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.04(d) with respect to any payments made by such Lender to its Participant(s).

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Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in Sections 11.01(b) , (d) , (e) and (h) that directly affects such Participant. Each Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section, (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided , that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 11.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04 , with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at Alterra Capital’s request and expense, to use reasonable efforts to cooperate with Alterra Capital to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2. 13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of Alterra Capital, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Limitations upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Alterra Capital's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless Alterra Capital is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Sections 3.01(e) and Section 3.06 as though it were a Lender.

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(f) Certain Pledges . Any Lender may at any time pledge, assign or grant a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge, assignment or grant of a security interest to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender; provided that no such pledge, assignment or grant of a security interest shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee or grantee for such Lender as a party hereto.

(g) Resignation as L/C Administrator or Fronting Bank After Assignment or Request . Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to Alterra Capital and the Lenders, resign as L/C Administrator and/or Fronting Bank. In the event of any such resignation as L/C Administrator and/or Fronting Bank, Alterra Capital shall be entitled to appoint from among the Lenders a successor L/C Administrator and/or Fronting Bank hereunder; provided , that prior to a termination of the Commitments that Bank of America may not resign as L/C Administrator and Fronting Bank unless either (x) there is another Fronting Bank under this Agreement and the Fronting Bank agrees to act as L/C Administrator hereunder or (y) the successor Administrative Agent or another Person who is an NAIC Approved Bank has agreed to assume the obligations of Bank of America as Fronting Bank and L/C Administrator hereunder. If Bank of America resigns as Fronting Bank and L/C Administrator, it shall retain all the rights, powers, privileges and duties of the Fronting Bank and L/C Administrator hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Fronting Bank and L/C Administrator and all L/C Obligations with respect thereto (including the right to require the Lenders to make L/C Advances pursuant to Section 2.03(c) ). Upon the appointment of a successor Fronting Bank and L/C Administrator, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Fronting Bank and L/C Administrator, and (b) the successor Fronting Bank and L/C Administrator shall issue letters of credit in substitution for (or amendments of) the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

11.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the Lenders, the Fronting Bank and the L/C Administrator agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (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), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the NAIC), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.16(c) or (ii) any

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actual or prospective party (or its Related Parties) to any swap , derivative or other transaction under which payments are to be made by reference to a Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating Alterra Capital or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided hereunder, (h ) with the consent of Alterra Capital or ( i ) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Fronting Bank or any of their respective Affiliates on a nonconfidential basis from a source other than a Borrower (unless the receiving Person knows that such source is breaching a confidentiality agreement or any confidentiality obligation with any Borrower).

For purposes of this Section, “Information” means all information received from Alterra Capital or any Subsidiary relating to Alterra Capital or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Fronting Bank on a nonconfidential basis prior to disclosure by Alterra Capital or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section 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. Each Lender shall be responsible for a any breach of this confidentiality undertaking by any of its Related Parties.

Each of the Administrative Agent, the Lenders, the L/C Administrator and the Fronting Bank acknowledges that (a) the Information may include material non-public information concerning Alterra Capital or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

11.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender, the Fronting Bank, the L/C Administrator and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Fronting Bank, the L/C Administrator or any such Affiliate to or for the credit or the account of any Borrower against any and all of the Obligations of such Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Fronting Bank or the L/C Administrator, irrespective of whether or not such Lender, the Fronting Bank or the L/C Administrator shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Borrower may be contingent or unmatured or are owed to a branch or office of such Lender, the Fronting Bank or the L/C Administrator different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in

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trust for the benefit of the Administrative Agent, the Fronting Bank and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Administrator, the Fronting Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Administrator, the Fronting Bank or their respective Affiliates may have. Each Lender, the L/C Administrator and the Fronting Bank agrees to notify the applicable Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

11.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the applicable Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

11.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof it being understood that such representation and warranties shall only be made when made or deemed made hereunder. Such representations and warranties have been or will be relied upon by the Administrative Agent, the Fronting Bank and each Lender, regardless of any investigation made by the Administrative Agent, the Fronting Bank or any Lender or on their behalf and notwithstanding that the Administrative Agent, the Fronting Bank or any Lender may have had notice or knowledge of any Default at the time of any Credit

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Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

11.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent or the Fronting Bank, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.13 Replacement of Lenders . If Alterra Capital is entitled to replace a Lender pursuant to the provisions of Section 3.06 , or if any Lender is a Defaulting Lender or a Non-Consenting Lender or if any Lender ceases to be a NAIC Approved Bank and does not have a Participating Bank Issuer, then Alterra Capital may, at its sole expense and effort (but subject to all rights that Alterra Capital may have against a Defaulting Lender), upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) Alterra Capital shall have paid to the Administrative Agent the assignment fee specified in Section 11.06(b) ;

(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Alterra Capital (in the case of all other amounts) and any outstanding Several Letters of Credit have been amended or returned and reissued to reflect such assignment;

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable Laws; and

(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

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A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Alterra Capital to require such assignment and delegation cease to apply.

11.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE FRONTING BANK, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE FRONTING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT

111

PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. ON OR PRIOR TO THE EFFECTIVE DATE, EACH BORROWER SHALL APPOINT CT CORPORATION SYSTEM (THE “ PROCESS AGENT ”), WITH AN OFFICE ON THE DATE HEREOF AT 111 8 ^TH AVENUE, NEW YORK, NEW YORK 10011, UNITED STATES, AS ITS AGENT TO RECEIVE ON ITS BEHALF AND ITS PROPERTY SERVICE OF THE SUMMONS AND COMPLAINTS AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING, PROVIDED , THAT A COPY OF SUCH PROCESS IS ALSO MAILED IN THE MANNER PROVIDED IN SECTION 11.02 . SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWERS IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT’S ABOVE ADDRESS, AND EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH PARTY HERETO ALSO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

11.15 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.16 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby, each Borrower acknowledges and agrees that: (a)(k) the arranging and other services regarding this Agreement provided by the Administrative Agent and each Arranger are arm’s-length commercial transactions between the Borrowers and their respective Affiliates, on the one hand, and the Administrative Agent and the Arrangers, on the other hand, (ii) each Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) each Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b)(i) the Administrative Agent and each Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrowers or any of their respective Affiliates, or any other Person and (ii) neither the

112

Administrative Agent nor any of the Arrangers has any obligation to any Borrower or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent and the Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their respective Affiliates, and neither the Administrative Agent nor any of the Arrangers has any obligation to disclose any of such interests to the Borrower s or any of their respective Affiliates. To the fullest extent permitted by law, each Borrower hereby waives and releases any claims that it may have against the Administrative Agent or any of the Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

11.17 Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

11.18 USA PATRIOT Act Notice . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies such Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Act. Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

11.19 Judgment Currency . If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum

113

originally due to the Administrative Agent from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable Law).

114

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.



	ALTERRA CAPITAL HOLDINGS LIMITED

	By:	/s/ Andrew Cook
	Name:	D. Andrew Cook
	Title:	Executive Vice President, Global Development


	ALTERRA BERMUDA LIMITED

	By:	/s/ Andrew Cook
	Name:	D. Andrew Cook
	Title:	President

S-1



	BANK OF AMERICA, N.A., as
	Administrative Agent, Fronting Bank, L/C
	Administrator and Lender

	By:	/s/ Tiffany Burgess
	Name:	Tiffany Burgess
	Title:	Vice President

S-2



	WELLS FARGO BANK NATIONAL
	ASSOCIATION, as Lender and Co-Syndication
	Agent

	By:	/s/ Grainne M. Pergolini
	Name:	Grainne M. Pergolini
	Title:	Director

S-3



	CITIBANK, N.A., as Lender and Co-Syndication
	Agent

	By:	/s/ Maureen P. Maroney
	Name:	Maureen P. Maroney
	Title:	Authorized Signatory

S-4



	ING BANK N.V., LONDON BRANCH

	By:	/s/ N.J. Marchant
	Name:	N.J. Marchant
	Title:	Director

	By:	/s/ Mer Sharman
	Name:	Mer Sharman
	Title:	Managing Director

S-5



	THE BANK OF NEW YORK MELLON

	By:	/s/ Michael Pensari
	Name:	Michael Pensari
	Title:	M.D.

S-6



	LLOYDS TSB BANK PLC

	By:	/s/ Julia R. Franklin
	Name:	Julia R. Franklin
	Title:	Vice President

	By:	/s/ Karen Weich
	Name:	Karen Weich
	Title:	Vice President

S-7



	COMMERZBANK AKTIENGESELLSCHAFT,
	FILIALE LUXEMBURG

	By:	/s/ A. Stockemer
	Name:	A. Stockemer
	Title:

	By:	/s/ Bianca Bahn
	Name:	Bianca Bahn
	Title:

S-8



	U.S. BANK NATIONAL ASSOCIATION

	By:	/s/ Evan Glass
	Name:	Evan Glass
	Title:	Vice President

S-9



	BARCLAYS BANK PLC

	By:	/s/ Stuart Ratcliffe
	Name:	Stuart Ratcliffe
	Title:	Director

S-10



	DEUTSCHE BANK AG NEW YORK BRANCH

	By:	/s/ John S. McGill
	Name:	John S. McGill
	Title:	Director

	By:	/s/ Virginia Cosenza
	Name:	Virginia Cosenza
	Title:	Vice President

S-11



	NORDEA BANK FINLAND PLC, NEW YORK
	BRANCH

	By:	/s/ Harri Staven
	Name:	Harri Staven
	Title:	Vice President

	By:	/s/ Mogens R. Jensen
	Name:	Mogens R. Jensen
	Title:	Senior Vice President

S-12



	COMERICA BANK

	By:	/s/ Chatphet Saipetch
	Name:	Chatphet Saipetch
	Title:	V.P.

S-13

Exhibit 4.6

FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT, dated as of February 7, 2013 (this “ Amendment ”), is entered into by and among Alterra Capital Holdings Limited, a Bermuda company (“ Alterra Capital ”), Alterra Bermuda Limited, a Bermuda company (“ Alterra Bermuda ”), Alterra Reinsurance USA Inc., a Connecticut corporation, (“ Alterra Reinsurance ” and together with Alterra Capital and Alterra Bermuda, the “ Borrowers ”), various lenders party hereto (the “ Lenders ”), and Bank of America, N.A., as Administrative Agent (in such capacity, the “ Administrative Agent ”), Fronting Bank and L/C Administrator.

RECITALS

A. The Borrowers, the Lenders and the Administrative Agent are parties to the Credit Agreement, dated as of December 16, 2011 (as in effect on the date hereof, the “ Existing Credit Agreement ”, and after giving effect to the amendments in Article II of this Amendment, the “ Credit Agreement ”). Capitalized terms used herein without definition shall have the meanings given to them in the Existing Credit Agreement.

B. Markel Corporation, a Virginia corporation (“ Markel ”), and Alterra Capital have agreed that upon satisfaction of certain conditions precedent, Commonwealth Merger Subsidiary Limited, a Bermuda exempted company and newly formed wholly owned subsidiary of Markel (“ Merger Sub ”), will merge into Alterra Capital with Alterra Capital as the surviving company and a direct, wholly-owned subsidiary of Markel (the “ Merger ”) pursuant to the Agreement and Plan of Merger dated as of December 18, 2012 (the “ Merger Agreement ”) among Alterra Capital, Markel and Merger Sub.

C. The Borrowers desire to obtain the consent of the Required Lenders to the Merger and to make certain amendments to the Existing Credit Agreement, and the Administrative Agent and the Required Lenders have agreed to make such amendments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

CONSENT

1.1 Upon satisfaction of the conditions set forth in Section 3.1 of this Amendment, notwithstanding anything contained in Sections 7.04 and 8.01(k) of the Existing Credit Agreement to the contrary, the undersigned Lenders hereby each consent to the Merger and the Change of Control that will occur upon effectiveness of the Merger and waive any Event of Default under Section 8.01(f) of the Existing Credit Agreement as a result of noncompliance with Section 7.04 of the Existing Credit Agreement or under Section 8.01(k) of the Existing Credit Agreement (in effect immediately prior to the effectiveness hereof) that would arise as a result of the Merger.

1.2 This consent shall not constitute or be deemed to be a waiver of, consent to or departure from, any other term or provision in the Existing Credit Agreement, which shall continue in full force and effect, nor shall this limited consent constitute a course of dealing among the parties.

ARTICLE II

AMENDMENTS TO CREDIT AGREEMENT

2.1 Upon effectiveness of the Merger, the Existing Credit Agreement will be amended as follows:

(a) Amendments to Section 1.01 . Section 1.01 is amended by:

(i) amending and restating the definition of “Aggregate Commitments” to read as follows:

“ Aggregate Commitments ” means the Commitments of all the Lenders. On the First Amendment Effective Date the Aggregate Commitments are $900,000,000.

(ii) amending and restating the definition of “Alterra Capital” to read as follows:

“ Alterra Capital ” means Alterra Capital Holdings Limited, a Bermuda exempt company and the surviving company in the Merger.

(iii) amending and restating the definition of “Change of Control” to read as follows:

“ Change of Control ” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “ option right ”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of at least 51% or more of the equity securities of Markel entitled to vote for members of the board of directors or equivalent governing body of Markel on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) without regard to the voting limitations set forth in the Organization Documents of Markel;

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body

- 2 -

of Markel cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii) , any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors);

(c) Markel fails to own, directly or indirectly, free and clear of all Liens, 100% of the Equity Interests of Alterra Capital without regard to any voting limitations set forth in the Organization Documents of Alterra Capital; or

(d) Alterra Capital fails to own, directly or indirectly, free and clear of all Liens, 100% of the Equity Interests of Alterra Bermuda and each Person who becomes a Designated Borrower (so long as such Person is a Designated Borrower) without regard to any voting limitations set forth in the Organization Documents of such Subsidiary.

(iv) adding the following definitions in proper alphabetical order:

“ First Amendment ” means the First Amendment to Credit Agreement and Consent dated as of February 7, 2013 by and among the Borrowers, the Lenders party thereto and the Administrative Agent.

“ First Amendment Effective Date ” has the meaning set forth in the First Amendment.

“ Markel ” means Markel Corporation, a Virginia corporation.

“ Merger ” means a merger of Merger Sub into Alterra Capital with Alterra Capital as the surviving company and a direct, wholly-owned subsidiary of Markel pursuant to the Agreement and Plan of Merger dated as of December 18, 2012 among Alterra Capital, Markel and Merger Sub.

“ Merger Sub ” means Commonwealth Merger Subsidiary Limited, a Bermuda exempted company and newly formed wholly owned subsidiary of Markel.

- 3 -

(b) Amendment to Section 6.01(d) . Section 6.01(d) is amended and restated to read as follows:

(d) [Reserved]

7.05 Transactions with Affiliates . Enter into, or cause, suffer or permit to exist, any arrangement, transaction or contract with any of its Affiliates unless such arrangement, transaction or contract is on an arm’s length basis; provided that the foregoing restriction shall not apply to (i) Permitted Transactions, (ii) transactions between or among Markel and any of its Wholly Owned Subsidiaries or between and among any of Markel’s Wholly Owned Subsidiaries, (iii) Restricted Payments permitted pursuant to Section 7.07 , (iv) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Alterra Capital and its Subsidiaries and reimbursement of reasonable expenses of directors of Alterra Capital and its Subsidiaries, (v) compensation arrangements for officers and other employees of Markel and its Subsidiaries entered in the ordinary course of business, and (vi) the provision of director’s, officer’s and employee’s indemnification and insurance in the ordinary course of business.

(d) Amendments to Section 8.01 . Section 8.01 of the Credit Agreement is amended as follows:

(i) Section 8.01(k) is amended and restated to read as follows:

(k) Change of Control . A Change of Control occurs.

(ii) The following new subsection (m) is inserted at the end of Section 8.01:

(m) Merger Documents . Alterra Capital fails to provide Administrative Agent with the following on or before the date which is five (5) Business Days (or such longer period as may be acceptable to the Administrative Agent) following the date on which the Merger becomes effective, each in form and substance reasonably satisfactory to the Administrative Agent: (i) an opinion of Bermuda counsel to the Borrowers and (ii) a certificate of the secretary or an assistant secretary of Alterra Capital certifying (A) that attached thereto is a true and complete copy of the memorandum of association of Alterra Capital filed with the Registrar of Companies for the Bermuda Ministry of Finance after giving effect to the Merger, (B) that attached thereto is a true and complete copy of the Bye-laws or similar governing document of Alterra Capital after giving effect to the Merger, and (C) as to the incumbency and genuineness of the signature of each officer of Alterra Capital entitled to execute Loan Documents and request Credit Extensions under the Credit Agreement, and attaching all such copies of the documents described above.

(e) Amendment to Schedule 2.01 . Schedule 2.01 (Commitments and Applicable Percentages) is amended by substituting Schedule 2.01 attached hereto therefor.

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ARTICLE III

CONDITIONS OF EFFECTIVENESS

3.1 This Amendment shall become effective as of the date hereof (the “ First Amendment Effective Date ”) when, and only when, each of the following conditions precedent shall have been satisfied:

(a) The Administrative Agent shall have received a counterpart of this Amendment executed and delivered by the Borrowers, the Administrative Agent and the Required Lenders.

(b) The representations and warranties of the Borrowers contained in Article V of the Existing Credit Agreement and in the other Loan Documents are true and correct in all material respects as of the First Amendment Effective Date, with the same effect as though made on such date (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

(c) No Default has occurred and is continuing or will result from the execution and delivery or effectiveness of this Amendment.

(d) The Administrative Agent shall have received an amendment fee of $15,000 for each consenting Lender.

ARTICLE IV

CONFIRMATION OF REPRESENTATIONS AND WARRANTIES

Each Borrower hereby represents and warrants, on and as of the First Amendment Effective Date, that (i) the representations and warranties applicable to such Borrower contained in Article V of the Existing Credit Agreement and in the other Loan Documents are true and correct in all material respects as of the First Amendment Effective Date, with the same effect as though made on such date (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), (ii) this Amendment has been duly authorized, executed and delivered by such Borrower and constitutes the legal, valid and binding obligation of such Borrower enforceable against it in accordance with its terms, subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law) and to applicable bankruptcy, insolvency, and similar laws affecting the enforcement of creditors’ rights generally, (iii) no Default shall have occurred and be continuing, both immediately before and after giving effect to the applicable provisions of this Amendment, and (iv) the Borrowers have heretofore furnished to the Administrative Agent true and complete copies of the Merger Agreement (including all publicly available exhibits and schedules) and all amendments, modifications and waivers relating thereto, in each case as in effect on the First Amendment Effective Date.

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ARTICLE V

MISCELLANEOUS

5.1 Governing Law . This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York.

5.2 Full Force and Effect . Except as provided in Article I hereof, the Existing Credit Agreement shall continue in full force and effect in accordance with the provisions thereof. Upon the effectiveness of the Merger, the Existing Credit Agreement as amended pursuant to Article II hereof shall continue in full force and effect and any reference to the Existing Credit Agreement or any of the other Loan Documents herein or in any Loan Document shall refer to the Credit Agreement and the other Loan Documents as amended pursuant to Article II hereof. This Amendment is limited as specified and shall not constitute or be deemed to constitute an amendment, modification or waiver of any provision of the Existing Credit Agreement except as expressly set forth herein. This Amendment shall constitute a Loan Document under the terms of the Credit Agreement.

5.3 Expenses . All reasonable fees and expenses of counsel to the Administrative Agent, and all reasonable out-of-pocket costs and expenses of the Administrative Agent, in each case, in connection with the preparation, negotiation, execution and delivery of this Amendment and the other Loan Documents delivered in connection herewith shall be paid prior to the First Amendment Effective Date to the extent invoiced prior to the First Amendment Effective Date.

5.4 Severability . To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction.

5.5 Successors and Assigns . This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto.

5.6 Construction . The headings of the various sections and subsections of this Amendment have been inserted for convenience only and shall not in any way affect the meaning or construction of any of the provisions hereof.

5.7 Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed signature page of this Amendment by facsimile transmission or electronic “.pdf” file shall be effective as delivery of a manually executed counterpart hereof.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the date first above written.



	ALTERRA CAPITAL HOLDINGS LIMITED

	By:	/s/ Andrew Cook
	Name:	Andrew Cook
	Title:	Executive Vice President


	ALTERRA BERMUDA LIMITED

	By:	/s/ Andrew Cook
	Name:	Andrew Cook
	Title:	President


	ALTERRA REINSURANCE USA INC.

	By:	/s/ Stephen E. Leitz
	Name:	Stephen E. Leitz
	Title:	Treasurer

S-1



	BANK OF AMERICA, N.A., as
	Administrative Agent, Fronting Bank, L/C
	Administrator and Lender

	By:	/s/ Tiffany Burgess
	Name:	Tiffany Burgess
	Title:	Vice President

S-2



	WELLS FARGO BANK, NATIONAL
	ASSOCIATION

	By:	/s/ Grainne M. Pergolini
	Name:	Grainne M. Pergolini
	Title:	Director

S-3



	CITIBANK, N.A.

	By:	/s/ Richard Rivera
	Name:	Richard Rivera
	Title:	Vice President

S-4



	ING BANK N.V., LONDON BRANCH

	By:	/s/ M. Groen
	Name:	M. Groen
	Title:	Director

	By:	/s/ Mer Sharman
	Name:	Mer Sharman
	Title:	Managing Director

S-5



	THE BANK OF NEW YORK MELLON

	By:	/s/ Michael Pensari
	Name:	Michael Pensari
	Title:	Managing Director

S-6



	LLOYDS TSB BANK PLC

	By:	/s/ Julia R. Franklin
	Name:	Julia R. Franklin F014
	Title:	Vice President

	By:	/s/ Stephen Giacolone
	Name:	Stephen Giacolone G011
	Title:	Assistant Vice President

S-7



	COMMERZBANK AKTIENGESELLSCHAFT,
	FILIALE LUXEMBURG

	By:	/s/ Frank Schmidt
	Name:	Frank Schmidt
	Title:	Associate

	By:	/s/ Bianca Bahn
	Name:	Bianca Bahn
	Title:	Assistant Vice President

S-8



	U.S. BANK NATIONAL ASSOCIATION

	By:	/s/ Evan Glass
	Name:	Evan Glass
	Title:	Vice President

S-9



	BARCLAYS BANK PLC

	By:	/s/ Karla Maloof
	Name:	Karla Maloof
	Title:	Director

S-10



	DEUTSCHE BANK AG NEW YORK BRANCH

	By:	/s/ Virginia Cosenza
	Name:	Virginia Cosenza
	Title:	Vice President

	By:	/s/ Ming K. Chu
	Name:	Ming K. Chu
	Title:	Vice President

S-11



	NORDEA BANK FINLAND PLC, NEW YORK
	BRANCH

	By:	/s/ Harri Staven
	Name:	Harri Staven
	Title:	Vice President

	By:	/s/ Mogens R. Jensen
	Name:	Mogens R. Jensen
	Title:	Senior Vice President

S-12



	COMERICA BANK

	By:	/s/ Chatphet Saipetch
	Name:	Chatphet Saipetch
	Title:	Vice President

S-13

Exhibit 4.14

ALTERRA FINANCE LLC, as Issuer,

ALTERRA CAPITAL HOLDINGS LIMITED, as Guarantor

AND

THE BANK OF NEW YORK MELLON, as Trustee,
Paying Agent and Registrar

_____________

SENIOR INDENTURE

Dated as of
September 1, 2010

CROSS REFERENCE SHEET*

Provisions of Trust Indenture Act of 1939 and Indenture dated as of September 1, 2010, among Alterra Finance LLC, as issuer, Alterra Capital Holdings Limited, as guarantor, and The Bank of New York Mellon, as Trustee:




Section of the Act		Section of Indenture
310(a)(1) and (2)		6.9
310(a)(3) and (4)		Inapplicable
310(b)		6.8 and 6.10(a), (b) and (d)
310(c)		Inapplicable
311(a)		6.13
311(b)		6.13
311(c)		Inapplicable
312(a)		4.1 and 4.2
312(b)		4.2
312(c)		4.2
313(a)		4.4
313(b)(1)		Inapplicable
313(b)(2)		4.4
313(c)		4.4, 5.11, 6.10, 6.11, 8.2 and 12.2
313(d)		4.4
314(a)		3.8, 3.9 and 4.3
314(b)		Inapplicable
314(c)(1) and (2)		11.5
314(c)(3)		Inapplicable
314(d)		Inapplicable
314(e)		11.5
314(f)		Inapplicable
315(a), (c) and (d)		6.1
315(b)		5.11
315(e)		5.12
316(a)(1)		5.9 and 5.10
316(a)(2)		Not required
316(a) (last sentence)		7.4
316(b)		5.7
316(c)		7.6
317(a)		5.2
317(b)		3.3
318(a)		11.7



*	This Cross Reference Sheet is not part of the Indenture.

TABLE OF CONTENTS



		Page
ARTICLE ONE DEFINITIONS		1
SECTION 1.1	Certain Terms Defined	1
ARTICLE TWO SECURITIES		9
SECTION 2.1	Forms Generally	9
SECTION 2.2	Form of Trustee's Certificate of Authentication	12
SECTION 2.3	Amount Unlimited; Issuable in Series	13
SECTION 2.4	Authentication and Delivery of Securities	15
SECTION 2.5	Execution of Securities	17
SECTION 2.6	Certificate of Authentication	17
SECTION 2.7	Denomination and Date of Securities; Payments of Interest	17
SECTION 2.8	Registration, Transfer and Exchange	19
SECTION 2.9	Mutilated, Defaced, Destroyed, Lost and Stolen Securities	24
SECTION 2.10	Cancellation of Securities	25
SECTION 2.11	Temporary Securities	25
SECTION 2.12	Currency and Manner of Payments in Respect of Securities	25
SECTION 2.13	CUSIP Numbers	28
SECTION 2.14	Securities in Global Form	28
ARTICLE THREE COVENANTS		29
SECTION 3.1	Payment of Principal, any Premium, Interest and Additional Amounts	29
SECTION 3.2	Offices for Notices and Payment, etc.	29
SECTION 3.3	Money for Securities Payments to Be Held in Trust	30
SECTION 3.4	Additional Amounts	31
SECTION 3.5	Limitation on Liens on Stock of Designated Subsidiaries	33
SECTION 3.6	Limitation on Disposition of Stock of Designated Subsidiaries	33
SECTION 3.7	Corporate Existence	34
SECTION 3.8	Waiver of Certain Covenants	34
SECTION 3.9	Company Statement as to Compliance; Notice of Certain Defaults	34



SECTION 3.10	Guarantor Statement as to Compliance; Notice of Certain Defaults	35
SECTION 3.11	Maintenance of Properties	36
SECTION 3.12	Further Acts and Instruments	36
SECTION 3.13	Calculation of Original Issue Discount	36
ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER, GUARANTOR AND THE TRUSTEE		36
SECTION 4.1	Company and Guarantor to Furnish Trustee Information as to Names and Addresses of Securityholders	36
SECTION 4.2	Preservation and Disclosure of Securityholders' Lists	37
SECTION 4.3	Reports by the Company and Guarantor	38
SECTION 4.4	Reports by the Trustee	39
ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT		39
SECTION 5.1	Event of Default Defined; Acceleration of Maturity; Waiver of Default	39
SECTION 5.2	Collection of Indebtedness by Trustee; Trustee May Prove Debt	42
SECTION 5.3	Application of Proceeds	44
SECTION 5.4	Suits for Enforcement	45
SECTION 5.5	Restoration of Rights on Abandonment of Proceedings	45
SECTION 5.6	Limitations on Suits by Securityholders	45
SECTION 5.7	Unconditional Right of Securityholders to Institute Certain Suits	46
SECTION 5.8	Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default	46
SECTION 5.9	Control by Securityholders	46
SECTION 5.10	Waiver of Past Defaults	47
SECTION 5.11	Trustee to Give Notice of Default, But May Withhold in Certain Circumstances	47
SECTION 5.12	Right of Court to Require Filing of Undertaking to Pay Costs	47
ARTICLE SIX CONCERNING THE TRUSTEE		48
SECTION 6.1	Duties and Responsibilities of the Trustee; During Default; Prior to Default	48
SECTION 6.2	Certain Rights of the Trustee	49
SECTION 6.3	Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof	51



SECTION 6.4	Trustee and Agents May Hold Securities; Collections, etc.	51
SECTION 6.5	Moneys Held by Trustee	51
SECTION 6.6	Compensation and Indemnification of Trustee and Its Prior Claim	51
SECTION 6.7	Right of Trustee to Rely on Officers' Certificate, Guarantor's Officer's Certificate, etc.	52
SECTION 6.8	Disqualification of Trustee; Conflicting Interests	52
SECTION 6.9	Persons Eligible for Appointment as Trustee	53
SECTION 6.10	Resignation and Removal; Appointment of Successor Trustee	53
SECTION 6.11	Acceptance of Appointment by Successor Trustee	54
SECTION 6.12	Merger, Conversion, Consolidation or Succession to Business of Trustee	55
SECTION 6.13	Preferential Collection of Claims Against the Company	56
SECTION 6.14	Appointment of Co-Trustees	56
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS		57
SECTION 7.1	Evidence of Action Taken by Securityholders	57
SECTION 7.2	Proof of Execution of Instruments	57
SECTION 7.3	Holders to Be Treated as Owners	58
SECTION 7.4	Securities Owned by Company Deemed Not Outstanding	58
SECTION 7.5	Right of Revocation of Action Taken	58
SECTION 7.6	Record Date for Determination of Holders Entitled to Vote	59
SECTION 7.7	Regarding the Depositary	59
ARTICLE EIGHT SUPPLEMENTAL INDENTURES		60
SECTION 8.1	Supplemental Indentures Without Consent of Securityholders	60
SECTION 8.2	Supplemental Indentures With Consent of Securityholders	61
SECTION 8.3	Effect of Supplemental Indenture	62
SECTION 8.4	Documents to Be Given to Trustee	62
SECTION 8.5	Notation on Securities in Respect of Supplemental Indentures	63
ARTICLE NINE CONSOLIDATION, AMALGAMATION, MERGER AND SALES		63
SECTION 9.1	Company and Guarantor May Consolidate, etc., on Certain Terms	63
SECTION 9.2	Successor Substituted	63

iii



ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS		64
SECTION 10.1	Satisfaction and Discharge of Indenture	64
SECTION 10.2	Application by Trustee of Funds Deposited for Payment of Securities	69
SECTION 10.3	Repayment of Moneys Held by Paying Agent	69
SECTION 10.4	Return of Unclaimed Moneys Held by Trustee and Paying Agent	69
SECTION 10.5	Reinstatement of Company's and Guarantor's Obligations	69
SECTION 10.6	Payments in Foreign Currencies	70
SECTION 10.7	Indemnification Against Taxes	70
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS		70
SECTION 11.1	Incorporators, Stockholders, Officers and Directors of Company and Guarantor Exempt from Individual Liability	70
SECTION 11.2	Provisions of Indenture for the Sole Benefit of Parties and Securityholders	71
SECTION 11.3	Successors and Assigns of Company and Guarantor Bound by Indenture	71
SECTION 11.4	Notices and Demands on Company, the Guarantor, Trustee and Securityholders	71
SECTION 11.5	Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein	72
SECTION 11.6	Payments Due on Saturdays, Sundays and Holidays	73
SECTION 11.7	Conflict of Any Provision of Indenture with Trust Indenture Act of 1939	73
SECTION 11.8	New York Law to Govern; Submission to Jurisdiction; Waiver of Trial by Jury	73
SECTION 11.9	Counterparts	74
SECTION 11.10	Effect of Headings	74
SECTION 11.11	Determination of Principal Amount	75
ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS		75
SECTION 12.1	Applicability of Article	75
SECTION 12.2	Notice of Redemption; Partial Redemptions	75
SECTION 12.3	Payment of Securities Called for Redemption	76
SECTION 12.4	Exclusion of Certain Securities from Eligibility for Selection for Redemption	77
SECTION 12.5	Mandatory and Optional Sinking Funds	77



SECTION 12.6	Repayment at the Option of the Holders	79
SECTION 12.7	Optional Redemption For Tax Reasons	79
ARTICLE THIRTEEN GUARANTEE AND INDEMNITY		80
SECTION 13.1	The Guarantee	80
SECTION 13.2	Guarantee Unconditional, etc.	81
SECTION 13.3	Limitation on Liability	82
SECTION 13.4	Reinstatement	82
SECTION 13.5	Subrogation	82
SECTION 13.6	Indemnity	82

THIS INDENTURE, dated as of September 1, 2010, among ALTERRA FINANCE LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the “Company”), ALTERRA CAPITAL HOLDINGS LIMITED, a company duly organized and existing under the laws of Bermuda (the “Guarantor”), and THE BANK OF NEW YORK MELLON, a corporation organized under the laws of the State of New York authorized to conduct a banking business, as Trustee (the “Trustee”), Paying Agent (the “Paying Agent”) and Registrar (the “Registrar”).

W I T N E S S E T H:

WHEREAS, the Company has duly authorized the issue from time to time of its notes, unsecured debentures, securities or other evidences of indebtedness to be issued in one or more Series (the “Securities”) up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Company has duly authorized the execution and delivery of this Indenture;

WHEREAS, for value received, the Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Guarantee (as defined herein) and the indemnities provided for herein; and

WHEREAS, all things necessary to make this Indenture a valid indenture and agreement of each party according to its terms have been done by each such party.

NOW, THEREFORE:

In consideration of the premises and the purchases of the Securities by the Holders (as defined herein) thereof, the Company, the Guarantor and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective Holders from time to time of the Securities as follows:

ARTICLE ONE

DEFINITIONS

SECTION 1.1 Certain Terms Defined . The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as are generally accepted at the time of any computation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole, as supplemented and amended from time to time, and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.

“Additional Amounts” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company or the Guarantor in respect of certain taxes, assessments or other governmental charges imposed on Holders specified therein and which are owing to such Holders.

“Agent” means any Paying Agent, Registrar, or other agent appointed in accordance with this Indenture to perform any function that this Indenture authorizes such agent to perform.

“Applicable Procedures” means, with respect to any transfer, redemption, exchange or transaction involving any Global Security or interest therein, the rules and procedures of the Depositary that apply to such transfer, redemption, exchange or transaction.

“Authorized Newspaper” means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a business day in the place of publication, whether or not published on days that are legal holidays in the place of publication, and that has general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication.

“Authorized Officer” means any authorized Officer of the Company or Guarantor, as applicable, in each case that is duly authorized to act generally or in any particular respect for the Company or Guarantor hereunder.

“Board of Directors” means (i) the board of directors of the Company (or any committee of that board) or, if none, of the sole member of the Company or (ii) any Authorized Officers of the Company.

“Board Resolution” means a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of the Company (or its sole member) to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee.

“Business Day” means, except as may otherwise be provided in the form of Securities of any particular Series, any day, other than a Saturday or Sunday, or other day on which banking institutions are authorized or required by law or regulation to close in New York, New York or Hamilton, Bermuda, and, with respect to Securities denominated in a Foreign Currency, the capital city of the country of such Foreign Currency, or, with respect to Securities denominated in the Euro, Brussels, Belgium.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including Preferred Stock, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligation” means an obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with generally accepted accounting

principles, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with such principles.

“Change in Tax Law” has the meaning specified in Section 12.7.

“Clearstream” means Clearstream Banking, société anonyme, and any successor thereto.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

“Company” means the Person named as the “Company” in the first paragraph of this instrument, and, subject to Article Nine, its successors and assigns.

“Consolidated Total Assets” means, in respect of the Guarantor, as of any date of determination, the amount of total assets shown on the consolidated balance sheet of the Guarantor and its consolidated subsidiaries contained in the most recent annual or quarterly report filed with the Commission, or if the Guarantor is not then subject to the Exchange Act, the most recent annual or quarterly report to shareholders and, in respect of any Subsidiary as of any date of determination, the amount of total assets of such Subsidiary and its consolidated subsidiaries from which such consolidated balance sheet of the Guarantor and its consolidated Subsidiaries was derived; provided that if the Guarantor completed a significant acquisition subsequent to the date of such latest consolidated balance sheet and filed a current report on Form 8-K which included audited financial statements of such acquired business and the pro forma financial information required by Article 11 of Regulation S-X promulgated under the Securities Act, the amount of total assets of the Guarantor shall be as shown on the pro forma balance sheet of the Guarantor and its consolidated subsidiaries included in such current report on Form 8-K, rather than as shown on the historical consolidated balance sheet of the Guarantor and its consolidated subsidiaries.

“Conversion Date” has the meaning specified in Section 2.12(d).

“Conversion Event” means the cessation of use of a Foreign Currency both by the government of the country that issued such Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community.

“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located at 101 Barclay Street, Floor 4 East, New York, NY 10286, Attention: International Corporate Trust.

“Corporation” includes corporations and limited liability companies, associations, companies and business trusts.

“Currency” means any currency or currencies, including, without limitation, the Euro, issued by the government of one or more countries or by any reorganized confederation or association of such governments.

“Currency Determination Agent” means the New York Clearing House bank, if any, from time to time selected by the Company and notified to the Trustee in writing for purposes of Section 2.12.

“Custodian” means, with respect to the Securities of a Series issuable or issued in whole or in part in global form, the custodian for the Depositary with respect to the Securities of such Series, and any and all successors thereto.

“Definitive Security” means a certificated Security (excluding Global Securities) that is registered in the name of the Holder thereof and issued in accordance with Section 2.8 or 2.9 hereof.

“Depositary” means, with respect to the Securities of any Series issuable or issued in the form of one or more Global Securities, the Person designated as Depositary for such Global Securities by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Depositary” shall mean or include each Person who is then a Depositary for such Global Securities, and if at any time there is more than one Person designated as Depositary for Global Securities of a particular Series, “Depositary,” as used with respect to the Securities of such Series, means the Depositary with respect to the particular Global Security or Securities; provided , that if no Depositary is named with respect to a Series of Securities issued in the form of one or more Global Securities, the Depositary shall be DTC.

“Designated Subsidiary” means (1) the Company, (2) any other future or present Subsidiary of the Guarantor the Consolidated Total Assets of which constitute ten percent or more of the Consolidated Total Assets of the Guarantor; and (3) any Subsidiary which is a successor, by merger or otherwise, to substantially all of the business or properties of any Subsidiary referred to or described in the foregoing clauses (1) or (2).

“Dollar” means the coin or Currency of the United States of America which as of the time of payment is legal tender for the payment of public and private debts.

“Dollar Equivalent of the Foreign Currency” has the meaning specified in Section 2.12.

“DTC” means The Depository Trust Company.

“Euro” means the single currency of Participating Member States of the European Union.

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear System, and any successor thereto.

“Event of Default” means any event or condition specified as such in Section 5.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Rate Officer’s Certificate” means a certificate setting forth (i) the applicable Market Exchange Rate or the applicable quotation and (ii) the Dollar or Foreign Currency amounts payable on the basis of such Market Exchange Rate or quotation in respect of the principal of and interest on the applicable Series of Securities, signed by the treasurer or any assistant treasurer of the Company, and delivered to the Trustee.

“Foreign Currency” means any Currency, including, without limitation, the Euro, issued by the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments.

“Global Security Legend” means the legend set forth in Section 2.8(f), which is required to be placed on all Global Securities issued under this Indenture.

“Global Security” means any global Security in book-entry form issued in accordance with Article Two hereof.

“Government Obligations” means securities which are (i) direct obligations of the government which issued the Currency in which the Securities of a particular Series are denominated or (ii) obligations of a Person controlled or supervised by, or acting as an agency or instrumentality of, the government which issued the Currency in which the Securities of such Series are denominated, the payment of which obligations is unconditionally guaranteed by such government, and which, in either case, are full faith and credit obligations of such government, are denominated in the Currency in which the Securities of such Series are denominated and which are not callable or redeemable at the option of the issuer thereof.

“Guarantee” means the unconditional guarantee by the Guarantor of the payment of the principal of, any premium or interest on, and any Additional Amounts with respect to the Securities and of all obligations of the Company under this Indenture, as more fully set forth in Article Thirteen.

“Guarantor” means the Person named as the “Guarantor” in the first paragraph of this instrument, and subject to Article Nine, its successors and assigns.

“Guarantor’s Board of Directors” means the board of directors of the Guarantor or any committee of that board duly authorized to act generally or in any particular respect for the Guarantor hereunder.

“Guarantor’s Board Resolution” means a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of the Guarantor to have been duly adopted by the Guarantor’s Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee.

“Guarantor’s Officer’s Certificate” means a certificate signed by the Chairman of the Guarantor’s Board of Directors, any Vice Chairman of the Guarantor’s Board of Directors, the Chief Executive Officer, any Vice President, the Chief Financial Officer, the Chief Operating Officer, the Chief Risk Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer the General Counsel, the Secretary or any Assistant Secretary of the Guarantor, that

complies with the requirements of Section 11.5, if and to the extent required hereby, and is delivered to the Trustee.

“Holder,” “Holder of Securities,” “Securityholder” or other similar terms mean the Person in whose name such Security is registered in the Security Register.

“Indebtedness” means, with respect to any Person, (i) the principal of and any premium and interest on (a) indebtedness of such Person for money borrowed and (b) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (v) all obligations of the type referred to in clauses (i) through (iv) of other Persons, the payment of which such Person is responsible or liable as obligor, guarantor or otherwise; (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured; and (vii) any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described as Indebtedness in clauses (i) through (vi) above.

“Indenture” means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular Series of Securities established as contemplated hereunder.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Security through a Participant.

“interest,” when used with respect to non-interest bearing Securities, means interest payable at Maturity and, when used with respect to a Security which provides for the payment of Additional Amounts pursuant to Section 3.4 or otherwise, includes such Additional Amounts.

“Interest Payment Date” with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

“Letter of Representations” has the meaning specified in Section 2.1(c)(vi).

“Lien” has the meaning specified in Section 3.5.

“Market Exchange Rate” has the meaning specified in Section 2.12(g).

“Maturity” with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in or pursuant to this Indenture, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or repurchase, notice of option to elect repayment or otherwise, and includes the Redemption Date.

“Officer” means the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company or the Guarantor.

“Officers’ Certificate” means a certificate signed by the President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 11.5, if and to the extent required hereby.

“Opinion of Counsel” means an opinion (or opinions) in writing signed by legal counsel who may be an employee of or counsel to the Company and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 11.5, if and to the extent required hereby.

“Original Issue Discount Security” means any Security which provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.1.

“Outstanding” when used with reference to Securities, shall, subject to the provisions of Sections 7.4 and 11.11, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except

(a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount and in the specified Currency shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside, segregated and held in trust by the Company for the Holders of such Securities (if the Company shall act as its own Paying Agent), provided that if such Securities, or portions thereof, are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee and the Company is presented that such Security is held by a Person in whose hands such Security is a legal, valid and binding obligation of the Company).

“Participant” means, with respect to any Depositary, a Person who has an account with the Depositary and, with respect to DTC, shall include Euroclear and Clearstream.

“Paying Agent” means any Person (which may include the Company) authorized by the Company to pay the principal of or interest, if any, on any Security.

“Payor” has the meaning specified in Section 3.4.

“Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or other entity.

“Place of Payment,” when used with respect to the Securities of any Series, means the place or places where the principal of and interest, if any, on the Securities of that Series are payable as specified pursuant to Section 3.2.

“Preferred Stock” means any Capital Stock with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

“principal” whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include “and premium, if any.”

“Redemption Date” with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture or such Security.

“Registrar” has the meaning specified in Section 2.8(h)(i).

“Relevant Tax Jurisdiction” has the meaning specified in Section 3.4.

“Responsible Officer” when used with respect to the Trustee shall mean any officer assigned to the International Corporate Trust Department (or any successor division or unit) of the Trustee located at the Corporate Trust Office of the Trustee, who shall have direct responsibility for the administration of this Indenture, and for the purposes of Section 5.9, Section 5.11 and Section 6.1(b) shall also include any other officer of the Trustee to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Securities Act” means the Securities Act of 1933, as amended.

“Security” or “Securities” has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture.

“Security Register” has the meaning specified in Section 2.8(h)(i).

“Series” or “Series of Securities” means a series of Securities. Subject to Section 2.3, the Securities of a Series shall be identical.

“Stated Maturity” with respect to any Security or any installment of principal thereof or interest thereon or any Additional Amounts with respect thereto, means the date established by or pursuant to this Indenture or such Security as the fixed date on which the principal of such

Security or such installment of principal or interest is, or such Additional Amounts are, due and payable.

“Subsidiary” means with respect to any Person, any other Corporation, partnership or other entity, of which at least a majority of the outstanding stock, partnership interests or other securities, as the case may be, having by the terms thereof ordinary voting power to elect a majority of the board of directors of such Corporation, partnership or other entity (irrespective of whether or not at the time stock, partnership interests or other securities, as the case may be, of any other class or classes of such Corporation, partnership or other entity, shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or by one or more Subsidiaries of such Person.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“Trustee” means the Person identified as “Trustee” in the first paragraph hereof and, subject to the provisions of Article Six, any successor trustee.

“United States of America” or “United States” means the fifty states constituting the United States of America as of the date of this Indenture.

“Valuation Date” has the meaning specified in Section 2.12.

“Vice President” when used with respect to the Company or the Guarantor, means any vice president, whether or not designated by a number or a word or words added before or after the title of “vice president.”

ARTICLE TWO

SECURITIES

SECTION 2.1 Forms Generally . (a) The Securities of each Series shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to a Board Resolution and set forth in an Officers’ Certificate or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture (the provisions of which shall be appropriate to reflect the terms of each Series of Securities, including the Currency or authorized denominations, which may be Dollars or any Foreign Currency) and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the Officer executing such Securities as evidenced by such Officer’s execution of the Securities.

The Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Officer executing such Securities as evidenced by such Officer’s execution of such Securities.

(b) Each Global Security shall represent such aggregate principal amount of the Outstanding Securities of such Series as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of Outstanding Securities of such Series from time to time endorsed thereon and that the aggregate principal amount of Outstanding Securities of such Series represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of Outstanding Securities represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in connection with any transfer of a beneficial interest therein pursuant to Section 2.8 hereof.

(i) This Section 2.1(c) shall apply only to Global Securities. Participants and Indirect Participants shall have no rights under this Indenture or any Global Security with respect to any Global Security held on their behalf by the Depositary or by the Custodian for the Depositary, and the Depositary (or its nominee) shall be treated by the Company, the Trustee, each Agent and any agent of the Company, the Trustee or any Agent as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, any Agent or any agent of the Company, the Trustee or any Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants or Indirect Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security.

(ii) All of the Global Securities shall be registered in the Security Register in the name of the Depositary or its nominee; provided that if the Depositary shall request that the Securities of such Series be registered in the name of a different nominee, the Trustee shall exchange all or any portion of the Securities of such Series for an equal aggregate principal amount of Securities of such Series registered in the name of such nominee or nominees of the Depositary. No Person other than the Depositary or its nominee shall be entitled to receive from the Company or the Trustee either a Security or any other evidence of ownership of the Securities of such Series, or any right to receive any payment in respect thereof, unless the Depositary or its nominee shall transfer record ownership of all or any portion of the Securities of such Series on the Security Register in connection with discontinuing the book-entry system as provided in Section 2.1(e) below or otherwise in accordance with the Global Security Legend.

(iii) So long as any Securities of such Series are registered in the name of the Depositary or any nominee thereof, all payments of the principal or redemption price of or interest on such Securities shall be made to the Depositary or its nominee on the dates provided for such payments under this Indenture and the Securities of such Series. Each such payment to the Depositary or its nominee shall be valid and effective to fully discharge all liability of the Company with respect to the principal or redemption price of or interest on the Securities of such Series to the extent of the sum or sums so paid. In the event of the redemption of less than all of the Securities of any Series Outstanding,

the Trustee shall not require surrender by the Depositary or its nominee of the Securities of such Series so redeemed, but the Depositary (or its nominee) may retain such Securities and make an appropriate notation on the Security certificate as to the amount of such partial redemption; provided that the Depositary shall deliver to the Trustee, upon request, a written confirmation of such partial redemption and thereafter the records maintained by the Trustee shall be conclusive as to the principal amount of the Securities of such Series which have been redeemed.

(iv) The Company and the Trustee may treat the Depositary (or its nominee) as the sole and exclusive Holder of the Securities of any Series registered in its name for the purposes of payment of the principal or redemption price of or interest on the Securities of such Series, selecting the Securities of such Series or portions thereof to be redeemed, giving any notice permitted or required to be given to Holders under this Indenture, registering the transfer of Securities of such Series, obtaining any consent or other action to be taken by Holders and for all other purposes whatsoever; and neither the Company, the Trustee, nor any Agent shall be affected by any notice to the contrary. Neither the Company, the Trustee nor any Agent shall have any responsibility or obligation to any Participant or Indirect Participant, any Person claiming a beneficial ownership interest in the Securities of such Series under or through the Depositary or any Participant or Indirect Participant, or any other Person which is not shown on the Security Register as being a Holder, with respect to (1) the Securities of such Series, (2) the accuracy of any records maintained by the Depositary or any Participant or Indirect Participant, (3) the payment by the Depositary or any Participant or Indirect Participant of any amount in respect of the principal or redemption price of or interest on the Securities of such Series, (4) any notice which is permitted or required to be given to Holders under this Indenture, (5) the selection by the Depositary or any Participant or Indirect Participant of any Person to receive payment in the event of a partial redemption of the Securities of a Series, and (6) any consent given or other action taken by the Depositary as Holder.

(v) So long as the Securities of any Series or any portion thereof are registered in the name of the Depositary or any nominee thereof, all notices required or permitted to be given to the Holders of such Securities under this Indenture shall be given to the Depositary.

(vi) So long as the Securities of any Series or any portion thereof are to be registered in the name of the Depositary or any nominee thereof, at or prior to settlement for the Securities of any Series subject to this Section 2.1(c), the Company and the Trustee (if required by the Depositary) shall execute, or signify their approval of, a letter of representations or such other writing requested by the Depositary (the “Letter of Representations”) applicable to the Securities of such Series. Any successor Trustee shall, in its written acceptance of its duties under this Indenture, agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations.

(d) The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream” and “Customer Handbook” of Clearstream, or any successor publications, shall be

applicable to transfers of beneficial interests in Global Securities that are held by Euroclear or Clearstream as Depositary or as Participants in DTC.

(e) The Company shall exchange Global Securities of any Series for Definitive Securities of such Series if (i) at any time the Depositary notifies the Company that it is unwilling or unable to continue to act as Depositary for the Global Securities of such Series or if at any time the Depositary shall no longer be eligible to act as such because it ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company shall not have appointed a successor Depositary within 90 days after the Company receives such notice or becomes aware of such ineligibility; (ii) the Company, at its option, determines that the Global Securities shall be exchanged for Definitive Securities and delivers a written notice to such effect to the Trustee; or (iii) upon written request of the Depositary if an Event of Default shall have occurred and be continuing.

Upon the occurrence of any of the events set forth in clauses (i), (ii) or (iii) of Section 2.1(e) above, the Company shall execute, and, upon receipt of an order in accordance with Section 2.4 hereof, the Trustee shall authenticate and deliver, Definitive Securities of such Series, in authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Securities of such Series in exchange for such Global Securities.

Upon the exchange of a Global Security of a Series for Definitive Securities of such Series, such Global Securities shall be cancelled by the Trustee. Definitive Securities of a Series issued in exchange for a Global Security of such Series pursuant to this Section 2.1 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its Participants or its Applicable Procedures, shall instruct the Trustee in writing. The Trustee shall deliver such Definitive Securities to or as directed in writing by the Persons in whose names such Definitive Securities are so registered or to the Depositary.

SECTION 2.2 Form of Trustee’s Certificate of Authentication . The Trustee’s certificate of authentication on all Securities shall be in substantially the following form:

This is one of the Securities of the Series designated herein and referred to in the within-mentioned Indenture.



,
as Trustee


By
Authorized Signatory

[or

,
as Authenticating Agent


By
Authorized Signatory]

Dated:

SECTION 2.3 Amount Unlimited; Issuable in Series . The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

(a) The Securities may be issued in one or more Series and each such Series shall rank equally and pari passu with all other unsubordinated debt of the Company. There shall be established in or pursuant to a Board Resolution and set forth in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any Series:

(1) the title of the Securities of the Series (which title shall distinguish the Securities of the Series from all other Securities issued by the Company);

(2) any limit upon the aggregate principal amount of the Securities of the Series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Sections 2.8, 2.9, 2.11 or 12.3);

(3) if other than 100% of their principal amount, the percentage of their principal amount at which the Securities of the Series will be offered;

(4) the date or dates on which the principal of the Securities of the Series is payable;

(5) the rate or rates, which may be fixed or variable, at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest shall

accrue, the Interest Payment Dates on which such interest shall be payable and the record dates for the determination of Holders to whom interest and principal is payable;

(6) the Place or Places of Payment where the principal and interest on Securities of the Series shall be payable (if other than as provided in Section 3.2);

(7) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the Series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise;

(8) if Original Issue Discount Securities, the portion of the principal amount of Securities of the Series which shall be payable upon declaration of acceleration of the Maturity pursuant to Section 5.1 or provable in bankruptcy pursuant to Section 5.2;

(9) the obligation, if any, of the Company to redeem, purchase or repay Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices in the Currency in which the Securities of such Series are payable, at which and the period or periods within which and the terms and conditions upon which Securities of the Series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;

(10) if other than minimum authorized denominations of $2,000 and any integral multiple of $1,000 in excess thereof, or, if other than in Dollars, units of 2,000 in the applicable Foreign Currency and units of 1,000 in excess thereof, the authorized denominations in which Securities of the Series shall be issuable;

(11) the form of the Securities, including such legends as required by this Indenture, by law or as the Company deems necessary or appropriate;

(12) whether the Securities of such Series shall be issuable or issued in the form of one or more Global Securities and, if so, whether on what terms the Global Securities shall be exchangeable for Definitive Securities of such Series (if other than as provided in Section 2.1(e)) and the name of the Depositary for such Global Security (if other than DTC);

(13) the Currency or Currencies in which payments of interest or principal and other amounts are payable with respect to the Securities of the Series are to be denominated, payable, redeemable or repurchasable, as the case may be;

(14) whether, and under what circumstances, the Securities of any Series shall be convertible into Securities of any other Series;

(15) if other than the Trustee, any trustees or Agents with respect to the Securities of such Series;

(16) if the Securities of such Series do not bear interest, the applicable dates for purposes of Section 4.1 hereof;

(17) any deletions from, modifications of or additions to the Events of Default or covenants of the Company or the Guarantor with respect to Securities of the Series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein;

(18) whether, and under what circumstances and the Currency in which, the Guarantor or any successor to the Guarantor or the Company will pay Additional Amounts as contemplated by Section 3.4 on the Securities of the Series in respect of any tax, assessment or governmental charge and, if so, whether the Company will have the option to redeem such Securities in the event such Additional Amounts (and the terms of any such option); and

(19) any other terms or conditions upon which the Securities of the Series are to be issued (which terms shall not be inconsistent with the provisions of this Indenture).

SECTION 2.4 Authentication and Delivery of Securities . At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any Series executed by the Company to the Trustee for authentication, together with an Officers’ Certificate for the authentication and delivery of such Securities, and the Trustee shall thereupon authenticate and deliver such Securities in accordance with such Officers’ Certificate. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive and shall be fully protected in relying upon:

(1) a copy of any Board Resolution(s) authorizing the action taken pursuant to clause (2) or (3) below;

(2) if the form and terms of such Securities have been established by or pursuant to a supplement to this Indenture, an executed supplemental indenture, setting forth the form and terms of the Securities of such Series as required pursuant to Sections 2.1 and 2.3, respectively, and prepared in accordance with Section 8.1;

(3) if the form and terms of such Securities have been established by or pursuant to a Board Resolution but not a supplement to this Indenture, an Officers’ Certificate setting forth the form and terms of the Securities of such Series as required pursuant to Sections 2.1 and 2.3, respectively, and prepared in accordance with Section 11.5;

(4) if the form and terms of such Securities have been established by or pursuant to a supplement to this Indenture, an Officers’ Certificate prepared in accordance with Section 8.4 and Section 11.5;

(5) an Opinion of Counsel, prepared in accordance with Section 11.5 (and Section 8.4, to the extent applicable), to the effect that:

(a) the form or forms of such Securities have been established by or pursuant to a Board Resolution or by a supplemental indenture as permitted by Section 2.1 in conformity with the provisions of this Indenture;

(b) to the extent applicable, the terms of such Securities have been established by or pursuant to a Board Resolution and set forth in an Officers’ Certificate as permitted by Section 2.3 in conformity with the provisions of this Indenture;

(c) such Securities have been duly authorized by the Company, and, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable in accordance with their terms (subject, as to enforceability, to applicable bankruptcy, reorganization, insolvency, conservatorship, moratorium, receivership or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity);

(d) the registration statement, if any, relating to the Securities of such Series and any amendments thereto has become effective under the Securities Act and to the knowledge of such counsel, no stop order suspending the effectiveness of such registration statement has been issued and no proceedings for that purpose have been instituted or threatened by the U.S. Securities and Exchange Commission;

(e) all conditions precedent provided for in this Indenture to the authentication and delivery of the Securities of such Series by the Trustee have been complied with; and

(f) this Indenture has been qualified under the Trust Indenture Act or that it is not necessary to qualify the Indenture under the Trust Indenture Act.

If all the Securities of any Series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel at the time of issuance of each Security, but such opinion shall be delivered at or before the time of issuance of the first Security of such Series. After any such first delivery, an Officers’ Certificate directing the Trustee authenticate and deliver Securities of such Series for original issue will be deemed to be a certification by the Company that all conditions precedent provided for in this Indenture relating to authentication and delivery of such Securities continue to have been complied with.

The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Company or if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties, immunities or indemnities under this Indenture in a manner not acceptable to the Trustee.

Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.10, together with an Officers’ Certificate (which need not comply with Section 11.5 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the

Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

The Trustee may appoint one or more authenticating agents reasonably acceptable to the Company to authenticate the Securities. Any such appointment shall be evidenced by an instrument signed by a Responsible Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such authenticating agent. An authenticating agent has the same rights under this Indenture as any Agent.

SECTION 2.5 Execution of Securities . The Securities shall be signed on behalf of the Company by one Officer of the Company. Such signature may be the manual or facsimile signature of the present or any future such Officers. Typographical and other minor errors or defects in any such reproduction of any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.

In case any Officer of the Company who shall have signed any of the Securities (or any Officer of the Guarantor if there shall be required by the form of such Series of Securities a separate notation of the Guarantee) shall cease to be such Officer before the Security so signed shall be authenticated (in the case of the Securities) and delivered by the Trustee or disposed of by the Company or the Guarantor, as the case may be, such Security nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Security had not ceased to be such Officer of the Company or the Guarantor, as the case may be; and any Security may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Security (or Guarantee, as applicable), shall be an Officer of the Company or the Guarantor, as applicable, although at the date of the execution and delivery of this Indenture any such Person was not such an Officer.

SECTION 2.6 Certificate of Authentication . Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized signatories (or executed by an authorized officer of the authenticating agent as provided in Section 2.1 and Section 2.4), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

SECTION 2.7 Denomination and Date of Securities; Payments of Interest . The Securities shall be issuable in denominations as shall be specified or as contemplated by Section 2.3(b)(10). Interest shall be computed, except as may be otherwise provided in the Board Resolution and Officers’ Certificate or supplemental indenture establishing the relevant Series, on the basis of a 360-day year of twelve 30-day months. The Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plan as the Officers of the Company and the Guarantor executing the same may determine as evidenced by the execution thereof.

Each Security shall be dated the date of its authentication. Interest on each Security shall accrue from and be payable on the dates and at the rates per annum and on such other terms, in each case, which shall be specified as contemplated by Section 2.3.

Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for the payment of such interest.

The term “record date” as used with respect to any Interest Payment Date (except for a date for payment of defaulted interest) shall mean the date specified as such in the terms of the Securities of any particular Series, or, if no such date is so specified, if such Interest Payment Date is the first day of a calendar month, the close of business on the fifteenth day of the next preceding calendar month or, if such Interest Payment Date is the fifteenth day of a calendar month, the close of business on the first day of such calendar month, whether or not such record date is a Business Day.

Any interest on any Security of any Series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (called “defaulted interest” for the purpose of this Section) shall forthwith cease to be payable to the Holder on the relevant record date by virtue of his having been such Holder; and such defaulted interest may be paid by the Company or the Guarantor, as the case may be, at its election in each case, as provided in clause (1) or clause (2) below:

(1) The Company or the Guarantor, as the case may be, may elect to make payment of any defaulted interest to the Persons in whose names any such Securities (or their respective predecessor Securities) are registered at the close of business on a special record date for the payment of such defaulted interest, which shall be fixed in the following manner. At least thirty (30) days prior to the date of any proposed payment, the Company or the Guarantor, as the case may be, shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Security of such Series and the date of the proposed payment, and at the same time the Company or the Guarantor, as the case may be, shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as in this subsection provided. Thereupon the Trustee shall fix a special record date for the payment of such defaulted interest in respect of Securities of such Series which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company and the Guarantor of such special record date and, in the name and at the expense of the Company or the Guarantor, shall cause notice of the proposed payment of such defaulted interest and the special record date thereof to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such defaulted interest and the special record date therefor having been mailed as aforesaid,

such defaulted interest in respect of Securities of such Series shall be paid to the Person in whose names such Securities (or their respective predecessor Securities) are registered on such special record date and such defaulted interest shall no longer be payable pursuant to the following clause (2).

(2) The Company or the Guarantor, as the case may be, may make payment of any defaulted interest on the Securities of any Series in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of that Series may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company or the Guarantor, as the case may be, to the Trustee of the proposed payment pursuant to this clause (2), such payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid which were carried by such other Security.

SECTION 2.8 Registration, Transfer and Exchange .

(a) Transfer And Exchange of Global Securities . A Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Upon the occurrence of any of the events set forth in Section 2.1(e) above, Definitive Securities shall be issued in such names as the Depositary shall instruct the Trustee in writing. Global Securities also may be exchanged or replaced, in whole or in part, as provided in Sections 2.9 and 2.11 hereof. Except as provided above, every Security authenticated and delivered in exchange for, or in lieu of, a Global Security or any portion thereof, pursuant to this Section 2.8 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Security. Unless otherwise specified with respect to any Securities pursuant to Section 2.3, a Global Security may not be exchanged for another Security other than as provided in Section 2.1(e) or this Section 2.8(a), and beneficial interests in a Global Security may not be transferred and exchanged other than as provided in Section 2.8(b) or (c) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Securities . The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depositary, in accordance with the provisions of this Indenture, the Securities and the Applicable Procedures.

(i) Transfer of Beneficial Interests in the Same Global Security. Beneficial interests in any Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Security. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.8(b)(i).

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Securities. In connection with all transfers and exchanges of beneficial interests that are

not subject to Section 2.8(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar (A) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or exchanged and (B) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in this Indenture and the Securities, the Trustee shall adjust the principal amount of the relevant Global Security(ies) pursuant to Section 2.8(h) hereof.

(c) Transfer and Exchange of Beneficial Interests in Global Securities for Definitive Securities . Subject to Section 2.8(a) hereof, if any holder of a beneficial interest in a Global Security proposes to exchange such beneficial interest for a Definitive Security or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Security, then, upon satisfaction of the applicable conditions set forth in Section 2.8(b)(ii) hereof, the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to Section 2.8(h) hereof, the aggregate principal amount of the applicable Global Security, and the Company shall execute, and, upon receipt of an Officers’ Certificate in accordance with Section 2.4 hereof, the Trustee shall authenticate and deliver a Definitive Security in the appropriate principal amount to the Person identified in written instructions delivered to the Registrar by the Depositary. Any Definitive Security issued in exchange for a beneficial interest pursuant to this Section 2.8(c) shall be registered in such name or names and in such authorized denomination or denominations as the Depositary shall designate in such instructions. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities are so registered.

(d) Transfer and Exchange of Definitive Securities for Beneficial Interests in the Global Securities .

(i) Transfer or Exchange of Definitive Securities to Beneficial Interests in Global Securities . A Holder of a Definitive Security may exchange such Definitive Security for a beneficial interest in a Global Security or transfer such Definitive Security to a Person who takes delivery thereof in the form of a beneficial interest in a Global Security at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Security and increase or cause to be increased in a corresponding amount pursuant to Section 2.8(h) hereof the aggregate principal amount of one of the Global Securities.

(ii) Issuance of Global Securities . If any such exchange or transfer of a Definitive Security for a beneficial interest in a Global Security is effected pursuant to clause (i) above at a time when a Global Security has not yet been issued, the Company shall issue and, upon receipt of an order in accordance with Section 2.4 hereof, the Trustee shall authenticate one or more Global Securities in an aggregate principal amount equal to the principal amount of Definitive Securities so transferred.

(e) Transfer and Exchange of Definitive Securities for Definitive Securities . A Holder of Definitive Securities may transfer such Definitive Securities to a Person who takes delivery thereof in the form of a Definitive Security. Upon request by a Holder of Definitive Securities and such Holder’s compliance with the provisions of this Section 2.8(e), the Registrar shall register the transfer or exchange of Definitive Securities. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Securities duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Company and the Registrar duly executed by such Holder. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, as may be reasonably required by the Company to the effect that such transfer or exchange complies with applicable securities laws. Upon receipt of a request to register such a transfer, the Registrar shall register the exchange of Definitive Securities in accordance with the instructions from the Holder thereof.

(f) Global Security Legend . The following legend shall appear on the face of all Global Securities issued under this Indenture unless specifically stated otherwise with respect to any Securities pursuant to Section 2.3.

“THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.8 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.8(a) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

(g) Cancellation and/or Adjustment of Global Securities . At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or cancelled in whole and not in part, each such Global Security shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.10 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the aggregate principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, the aggregate principal amount of such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(h) General Provisions Relating to Transfers and Exchanges .

(i) With respect to the Securities of each Series, the Company shall cause to be kept a register (each such register being herein sometimes referred to as the “Security Register”) at an office or agency for such Series in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Securities of such Series and of transfers of the Securities of such Series. Such office or agency shall be the “Registrar” for that Series of Securities. Unless otherwise specified in or pursuant to this Indenture or the Securities, the Trustee shall be the initial Registrar for each Series of Securities. The Company shall have the right to remove and replace from time to time the Registrar for any Series of Securities; provided that no such removal or replacement shall be effective until a successor Registrar with respect to such Series of Securities shall have been appointed by the Company and shall have accepted such appointment by the Company. In the event that the Trustee shall not be or shall cease to be Registrar with respect to a Series of Securities, it shall have the right to examine the Security Register for such Series at all reasonable times. There shall be only one Security Register for each Series of Securities.

(ii) Upon surrender for registration of transfer of any Definitive Security of any Series at any office or agency for such Series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Definitive Securities of the same Series denominated as authorized in or pursuant to this Indenture, of a like aggregate principal amount bearing a number not contemporaneously Outstanding and containing identical terms and provisions.

(iii) At the option of the Holder, Definitive Securities of any Series may be exchanged for other Definitive Securities of the same Series containing identical terms and provisions, in any authorized denominations, and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at any office or agency for such Series. Whenever any Definitive Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Definitive Securities which the Holder making the exchange is entitled to receive.

(iv) Every Security presented or surrendered for registration of transfer or for exchange or redemption shall (if so required by the Company or the Registrar for such Security) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar for such Security duly executed by the Holder thereof or his attorney duly authorized in writing.

(v) No service charge shall be made to a holder of a beneficial interest in a Global Security or to a Holder of a Definitive Security for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.11, 8.5 and 12.3 hereof).

(vi) All Global Securities and Definitive Securities issued upon any registration of transfer or exchange of Global Securities or Definitive Securities shall be the valid obligations of the Company and the Guarantor, evidencing the same debt as the Global Securities or Definitive Securities surrendered upon such registration of transfer or exchange and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Securities duly issued hereunder.

(vii) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption under Article Twelve hereof and ending at the close of business on the date of selection, (B) to register the transfer of or to exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part or (C) to register the transfer of or to exchange a Security between a record date (including a regular record date) and the next succeeding Interest Payment Date.

(viii) Prior to due presentment for the registration of transfer of any Security, the Trustee, the Company and each Agent may deem and treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of, and interest on such Security and for all other purposes, in each case regardless of any notice to the contrary.

(ix) Neither the Trustee nor any Agent shall have any obligation or duty to monitor, determine or inquire as to compliance with any restriction on transfer or exchange imposed under this Indenture, any Security or under applicable law (including transfers between or among beneficial owners of interests in any Global Security) other

than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture or any Security, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x) In connection with the transfer or exchange of any beneficial interest in a Global Security or any interest in a Definitive Security, in the event the Company reasonably believes that such transfer or exchange may violate any applicable securities laws, the Company may request from the transferee or transferor of such beneficial interest or Definitive Security as a condition to such transfer or exchange any additional certifications, documents and information, as applicable, as may be reasonably required by the Company.

SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities . In case any temporary or definitive Security shall become mutilated, defaced or be destroyed, lost or stolen, the Company in its discretion may execute, and upon delivery of an Officers’ Certificate, the Trustee shall authenticate and deliver, a new Security of the same Series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Company, the Guarantor, the Trustee, any Agent and to any agent of the Company, the Guarantor, the Trustee or such Agent such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

Upon the issuance of any substitute Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security) if the applicant for such payment shall furnish to the Company, the Guarantor and the Trustee and any agent of the Company, the Guarantor or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, the Guarantor, the Trustee and each Agent and any agent of the Company, the Guarantor, the Trustee or such Agent evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

Every substitute Security of any Series issued pursuant to the provisions of this Section by virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company and the Guarantor, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities of such Series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by the law, the foregoing provisions are exclusive with respect to the

replacement or payment of mutilated, defaced, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

SECTION 2.10 Cancellation of Securities . All Securities surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, shall, if surrendered to the Company, the Guarantor, any Agent or any agent of the Company, the Guarantor, the Trustee or such Agent, be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities shall be issued in lieu thereof, except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of cancelled Securities in accordance with its customary procedures. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.

SECTION 2.11 Temporary Securities . Pending the preparation of definitive Securities for any Series, the Company may execute and the Trustee shall authenticate and deliver temporary Securities for such Series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any Series may be issued in any authorized denomination, and substantially in the form of the definitive Securities of such Series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company with the concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Company shall execute and shall furnish definitive Securities of such Series and thereupon temporary Securities of such Series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Company for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such Series a like aggregate principal amount of definitive Securities of the same Series of authorized denominations. Until so exchanged, the temporary Securities of any Series shall be entitled to the same benefits under this Indenture as definitive Securities of such Series.

SECTION 2.12 Currency and Manner of Payments in Respect of Securities .

(a) With respect to Securities of any Series with respect to which the Holders of such Securities have not made the election provided for in Section 2.12(b) below, the following payment provisions shall apply:

(1) Except as provided in Section 2.12(a)(2), (b), (c) or (e) below or in the Securities of any particular Series, payment of the principal of any Security will be made at the Place of Payment by delivery of a check in the Currency in which the Security is denominated on the payment date against presentation and, with respect to the final principal payment, surrender of such Security, and any interest on any Security will be paid at the Place of Payment by mailing a check in the Currency in which the Securities

were issued to the Person entitled thereto at the address of such Person appearing on the Security Register.

(2) Payment of the principal of and interest on any Global Security will be made by wire transfer to the account of the Depositary or to such other account as directed in writing by the Depositary.

(3) Payment of the principal of and interest on such Security may also, subject to applicable laws and regulations, be made at such other place or places as may be designated by the Company by any appropriate method.

(b) With respect to Securities of any Series, the following payment provisions shall apply, except as otherwise provided in paragraphs (e) and (f) below:

(1) The Board of Directors may provide with respect to any Series of such Securities that Holders shall have the option to receive payments of principal of and interest on such Security in any of the Currencies which may be designated for such election in such Security by delivering to the Trustee a written election, in the form provided for in such Security, not later than the close of business on the record date immediately preceding the applicable payment date. Such election will remain in effect for such Holder until changed by the Holder by written notice to the Trustee (but any such change must be made not later than the close of business on the record date immediately preceding the next payment date to be effective for the payment to be made on such payment date and no such change may be made with respect to payments to be made on any Security with respect to which notice of redemption has been given by the Company pursuant to Article Twelve). Any Holder of any such Security who shall not have delivered any such election to the Trustee not later than the close of business on the applicable record date will be paid the amount due on the applicable payment date in the relevant Currency as provided in paragraph (a) of this Section 2.12. Payment of the principal of any such Security will be made at the Place of Payment on the payment date against presentation and, with respect to the final principal payment, surrender of such Securities. Payment of principal and interest shall be made at the Place of Payment by mailing a check in the applicable Currency to the Person entitled thereto at the address of such Person appearing on the Security Register. The provisions of Sections 2.12(c), (d), (e), (f), (g) and (h) are applicable only if the Board of Directors has provided with respect to a Series that Holders should have the option to elect to receive payments of principal and interest in currencies designated in that election.

(2) Payment of the principal of and interest on any Global Security will be made by wire transfer to the account of the Depositary or to such other account as directed in writing by the Depositary.

(c) Not later than the fourth Business Day after the record date for each payment date, the Trustee will deliver to the Company a written notice specifying, in the Currency in which each Series of the Securities are denominated, the respective aggregate amounts of principal of and interest on the Securities to be made on such payment date, specifying the amounts so payable in respect of the Securities as to which the Holders shall have elected to be paid in another Currency as provided in paragraph (b) above. If the Board of Directors has provided for the election referred to in paragraph (b) above and if at least one Holder has made such election, then not later than the second Business Day preceding such record date the Company will deliver to the Trustee an Exchange Rate Officer’s Certificate in respect of the Dollar or Foreign Currency payments to be made on such payment date. The Dollar or Foreign Currency amount receivable by Holders of Securities who have elected payment in another Currency as provided in paragraph (b) above shall be determined by the Company on the basis of the applicable Market Exchange Rate in effect on the second Business Day (the “Valuation Date”) prior to such payment date and set forth in the applicable Exchange Rate Officer’s Certificate.

(d) If a Conversion Event occurs with respect to a Foreign Currency in which any of the Securities are denominated or payable, then with respect to each date for the payment of principal of and interest on the applicable Foreign Currency denominated Securities occurring after the last date on which the Foreign Currency was so used (the “Conversion Date”), the Dollar shall be the Currency of payment for use on each such payment date. The Dollar amount to be paid by the Company to the Trustee and by the Trustee or any Paying Agent to the Holders of such Securities with respect to such payment date shall be, in the case of a Foreign Currency, the Dollar Equivalent of the Foreign Currency as determined by the Currency Determination Agent in the manner provided in paragraph (g) or (h) below.

(e) If the Holder of a Security elects payment in a specified Currency as provided for by paragraph (b) and a Conversion Event occurs with respect to such elected Currency, such Holder shall receive payment in the Currency in which payment would have been made in the absence of such election; and if a Conversion Event occurs with respect to the Currency in which payment would have been made in the absence of such election, such Holder shall receive payment in Dollars.

(f) The “Dollar Equivalent of the Foreign Currency” shall be determined by the Currency Determination Agent as of each Valuation Date and shall be obtained by converting the specified Foreign Currency into Dollars at the Market Exchange Rate on the Conversion Date.

(g) For purposes of this Section 2.12 the following term shall have the following meaning:

“Market Exchange Rate” shall mean for any Currency the noon Dollar buying rate for that Currency for cable transfers quoted in New York City on the Valuation Date as certified for customs purposes by the Federal Reserve Bank of New York. If such rates are not available for any reason with respect to one or more Currencies for which an exchange rate is required, the Currency Determination Agent shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major

banks in New York City or in the country of issue of the Currency in question, or such other quotations as the Currency Determination Agent shall deem appropriate. Unless otherwise specified by the Currency Determination Agent, if there is more than one market for dealing in any Currency by reason of foreign exchange regulations or otherwise, the market to be used in respect of such Currency shall be that upon which a nonresident issuer of securities designated in such Currency would purchase such Currency in order to make payments in respect of such securities.

(h) All decisions and determinations of the Currency Determination Agent regarding the Dollar Equivalent of the Foreign Currency and the Market Exchange Rate as specified above shall be in its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon the Company, the Guarantor and the Trustee for the relevant Series of Securities and all Holders of such Securities. In the event that a Conversion Event has occurred with respect to a Foreign Currency, the Company, after learning thereof, will immediately give written notice thereof to the Trustee (and the Trustee will promptly thereafter give notice in the manner provided in Section 11.4 to the affected Holders) specifying the Conversion Date. The Trustee shall be fully justified and protected in relying on and acting upon the information so received by it from the Company and the Currency Determination Agent and shall not otherwise have any duty or obligation to determine such information independently. The Trustee shall have no liability or responsibility with respect to, or obligation or duty to monitor, determine or inquire as to whether or not a Conversion Date has occurred.

SECTION 2.13 CUSIP Numbers . The Company in issuing the Securities may use “CUSIP” or “ISIN” numbers (if then generally in use), and, if so, the Trustee shall indicate the “CUSIP” or “ISIN” numbers of the Securities in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” or “ISIN” numbers.

SECTION 2.14 Securities in Global Form . If Securities of or within a Series are issuable in whole or in part in global form, any such Security may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Securities represented thereby, shall be made in such manner and by such Person or Persons as shall be specified therein or in the Officers’ Certificate to be delivered to the Trustee pursuant to Section 2.4 or, if applicable, 2.8 or 2.11. Subject to the provisions of Section 2.4 and, if applicable, Section 2.8 or 2.11, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Officers’ Certificate. Any Officers’ Certificate delivered by the Company with respect to endorsement or deliver or redelivery of a Security in global form shall be in writing but need not comply with Section 11.5 and need not be accompanied by an Opinion of Counsel.

The provisions of the second paragraph of Section 2.4 shall apply to any Security in global form if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Security in global form together with an Officers’ Certificate (which need not comply with Section 11.5 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last paragraph of Section 2.4.

Notwithstanding the provisions of Section 3.1, unless otherwise specified as contemplated by Section 2.4, payment of principal of and interest on any Security in permanent global form shall be made to the Person or Persons specified in such Security.

ARTICLE THREE

COVENANTS

SECTION 3.1 Payment of Principal, any Premium, Interest and Additional Amounts . The Company covenants and agrees for the benefit of each Series of Securities that it will duly and punctually pay or cause to be paid (in the Currency in which the Securities of such Series are payable, except as otherwise provided pursuant to Section 2.3 for the Securities of such Series and except as provided in Section 2.12(b), (d) and (e) hereof) the principal of, any premium and interest on, if any, and any Additional Amounts, if any, with respect to, each of the Securities of such Series in accordance with the terms of the Securities of such Series and this Indenture.

SECTION 3.2 Offices for Notices and Payment, etc. So long as any of the Securities remain Outstanding, the Company and the Guarantor shall maintain the following for each Series: an office or agency in each Place of Payment (a) where the Securities may be presented or surrendered for payment, (b) where the Securities may be presented for registration of transfer and for exchange as in this Indenture provided and (c) where notices and demands to or upon the Company or the Guarantor in respect of the Securities, the Guarantee or of this Indenture (other than the type contemplated by Section 11.8) may be served. The Company or the Guarantor will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. In case the Company or the Guarantor shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations, surrenders and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. Unless otherwise specified pursuant to Section 2.3, the Trustee is initially appointed Paying Agent and Registrar.

The Company and the Guarantor may also from time to time designate one or more other offices or agencies where the Securities of one or more Series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Company or the Guarantor of its obligation to maintain an office or agency in each Place of Payment for Securities of any Series for such purposes. The Company and the Guarantor shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise provided in or pursuant to this Indenture, the Company and the Guarantor hereby designate as the Place of Payment for each Series of Securities the Borough of Manhattan, The City of New York, and initially appoint the

Corporate Trust Office of the Trustee as the office or agency of the Company in the Borough of Manhattan, The City of New York for such purpose. The Company and the Guarantor may subsequently appoint a different office or agency in the Borough of Manhattan, The City of New York and additional Places of Payment for the Securities of any Series.

Unless otherwise specified with respect to any Securities pursuant to Section 2.3, if and so long as the Securities of any Series (i) are denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency, or (iii) so long as it is required under any other provision of this Indenture, then the Company will maintain with respect to each such Series of Securities, or as so required, at least one exchange rate agent.

SECTION 3.3 Money for Securities Payments to Be Held in Trust . (a) If the Company shall at any time act as its own Paying Agent, or if the Guarantor shall act as Paying Agent, with respect to any Series of Securities, it shall, on or before each due date of the principal of, any premium, interest on, if any, or Additional Amounts, if any, with respect to, any of the Securities of such Series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in the Currency or Currencies, Currency unit or units or composite Currency or Currencies in which the Securities of such Series are payable (except as otherwise specified pursuant to Section 2.3 for the Securities of such Series) sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and shall promptly notify the Trustee in writing of its action or failure so to act.

(b) Whenever the Company shall have one or more Paying Agents for any Series of Securities, it shall, prior to 10:00 a.m., New York City time, on each due date of the principal of, any premium or interest on, if any, or Additional Amounts, if any, with respect to, any Securities of such Series, deposit with any Paying Agent a sum (in the Currency or Currencies, Currency unit or units or composite Currency or Currencies described in the preceding paragraph) sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee in writing of its action or failure so to act.

(c) The Company shall cause each Paying Agent for any Series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Company, subject to the provisions of this Section, that such Paying Agent shall:

(1) hold all sums held by it for the payment of the principal of, any premium or interest on, if any, or Additional Amounts, if any, with respect to Securities of such Series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided in or pursuant to this Indenture;

(2) give the Trustee notice of any default by the Company or the Guarantor (or any other obligor upon the Securities of such Series) in the making of any payment of principal, any premium or interest on, if any, or Additional Amounts, if any, with respect to the Securities of such Series; and

(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

(d) The Company or the Guarantor may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by written direction of the Company or Guarantor, as applicable, direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company, the Guarantor or such Paying Agent, such sums to be held by the Trustee in trust in accordance with this Indenture; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.

(e) Except as otherwise provided herein or pursuant hereto, any money deposited with the Trustee or any Paying Agent, or then held by the Company or the Guarantor, in trust for the payment of the principal of, any premium or interest on, if any, or Additional Amounts, if any, with respect to, any Security of any Series and remaining unclaimed for two years after such principal or any such premium or interest or any such Additional Amounts shall have become due and payable shall be paid to the Company on written request of the Company (or if deposited by the Guarantor, paid to the Guarantor on written request of the Guarantor), or (if then held by the Company or the Guarantor) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company and the Guarantor for payment thereof, and all liability of the trustee or such Paying Agent with respect to such trust money, and all liability of the Company as Trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may, but shall not be required to, at the expense of the Company and the Guarantor cause to be published once, in an Authorized Newspaper in each Place of Payment for such Series or to be mailed to Holders of Securities of such Series, or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing nor shall it be later than two years after such principal and any premium or interest or Additional Amounts shall have become due and payable, any unclaimed balance of such money then remaining will be repaid to the Company or the Guarantor, as the case may be.

SECTION 3.4 Additional Amounts . If any taxes, assessments or other governmental charges are imposed by the jurisdiction, other than the United States, where the Guarantor or a successor to the Company or the Guarantor (a “Payor”) is organized or otherwise considered to be a resident for tax purposes, any jurisdiction, other than the United States, from or through which the Payor makes a payment on the Securities of any Series, or, in each case, any political organization or governmental authority thereof or therein having the power to tax (the “Relevant Tax Jurisdiction”) in respect of any payments under the Securities of such Series, the Payor shall pay to each Holder of any such Security, to the extent it may lawfully do so, such Additional Amounts as may be necessary in order that the net amounts paid to such Holder will be not less than the amount specified in such Security to which such Holder is entitled; provided , however , the Payor shall not be required to make any payment of Additional Amounts for or on account of:

(a) any tax, assessment or other governmental charge which would not have been imposed but for (i) the existence of any present or former connection between such Holder (or

between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership, limited liability company or corporation) and the Relevant Tax Jurisdiction including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in a trade or business therein or having or having had a permanent establishment therein or (ii) the presentation of a Security (where presentation is required) for payment on a date more than 30 days after (x) the date on which such payment became due and payable or (y) the date on which payment thereof is duly provided for, whichever occurs later;

(b) any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or other governmental charge;

(c) any tax, assessment or other governmental charge which is payable otherwise than by withholding from payment of (or in respect of) principal of, premium, if any, or any interest on, the Securities of such Series;

(d) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of the Securities of such Series to comply with a request of the Payor addressed to the Holder to provide information, documents or other evidence concerning the nationality, residence or identity of the Holder or such beneficial owner which is required by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge; or

(e) any combination of the above;

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any Securities of such Series to any Holder who is a fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Tax Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or limited liability company or a beneficial owner who would not have been entitled to such Additional Amounts had it been the Holder of such Securities.

The Payor shall provide the Trustee with the official acknowledgment of the relevant tax authority (or, if such acknowledgment is not available, a certified copy thereof) evidencing the payment of the withholding taxes by the Payor. Copies of such documentation shall be made available to the Holders of the Securities of such Series or the Paying Agent, as applicable, upon written request therefor.

Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any Series or the net proceeds received on the sale or exchange of any Security of any Series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such Series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express

mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made.

Except as otherwise provided in or pursuant to this Indenture or the Securities of the applicable Series, at least 10 days prior to the first Interest Payment Date with respect to such Series of Securities (or if the Securities of such Series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers’ Certificate, the Company shall furnish to the Trustee and the Paying Agent or Paying Agents, if other than the Trustee, an Officers’ Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and premium, if any, or interest on, if any, and Additional Amounts, if any, with respect to the Securities of such Series shall be made to Holders of Securities of such Series without withholding for or on account of any tax, assessment or other governmental charge. If any such withholding shall be required, then such Officers’ Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities, that the Company will pay all such amounts required to be withheld to the relevant governmental authority and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold each of them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished pursuant to this Section 3.4.

SECTION 3.5 Limitation on Liens on Stock of Designated Subsidiaries . So long as any Securities are Outstanding, neither the Company nor the Guarantor will, nor will it permit any of their respective Subsidiaries to, create, assume, incur, guarantee or otherwise permit to exist any Indebtedness secured by any mortgage, pledge, lien, security interest or other encumbrance (a “Lien”) upon any shares of Capital Stock of any Designated Subsidiary (whether such shares of stock are now owned or hereafter acquired) without effectively providing concurrently that the Securities (and, if the Company and the Guarantor so elect, any other Indebtedness of the Company that is not subordinate to the Securities and with respect to which the governing instruments require, or pursuant to which the Company is otherwise obligated, to provide such security) shall be secured equally and ratably with such Indebtedness for at least the time period such other Indebtedness is so secured.

SECTION 3.6 Limitation on Disposition of Stock of Designated Subsidiaries. So long as any Securities are outstanding and except in a transaction otherwise permitted by this Indenture, neither the Company nor the Guarantor will issue, sell, assign, transfer or otherwise dispose of any shares of, securities convertible into, or warrants, rights or options to subscribe for or purchase shares of, Capital Stock (other than Preferred Stock having no voting rights) of any Designated Subsidiary, and will not permit any Designated Subsidiary (other than to the Company or the Guarantor) to issue any shares (other than the director’s qualifying shares and Preferred Stock having no voting rights) of, or securities convertible into, or warrants, rights or options to subscribe for or purchase shares of, Capital Stock (other than Preferred Stock having no voting rights) of any Designated Subsidiary, if, after giving effect to any such transaction and

the issuance of the maximum number of shares issuable upon the conversion or exercise of all such convertible securities, warrants, rights or options, the Company or the Guarantor, as the case may be, would own, directly or indirectly, less than 80% of the shares of Capital Stock of such Designated Subsidiary (other than Preferred Stock having no voting rights); provided, however, that (i) the foregoing shall not prevent any issuance, sale, assignment, transfer or other disposition by the Company or the Guarantor if the consideration is at least at fair market value as determined in good faith by the Guarantor’s Board of Directors pursuant to a Guarantor’s Board Resolution and (ii) the foregoing shall not prohibit any such issuance or disposition of securities if required by any law or any regulation or order of any governmental or insurance regulatory authority. Notwithstanding the foregoing, (i) the Company or the Guarantor, as the case may be, may merge or consolidate any Designated Subsidiary into or with another direct or indirect Subsidiary of the Guarantor, the shares of capital stock of which the Guarantor owns directly or indirectly at least 80%, and (ii) the Company or the Guarantor, as the case may be, may, subject to the provisions of Article Nine, sell, assign, transfer or otherwise dispose of the entire Capital Stock of any Designated Subsidiary at one time for at least a fair market value consideration as determined in good faith by the Guarantor’s Board of Directors pursuant to a Guarantor’s Board Resolution.

SECTION 3.7 Corporate Existence . Subject to Article Nine, the Company and the Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect their respective organizational existence and rights (constitutive and statutory) and franchises; provided, however, that the foregoing shall not obligate the Company or the Guarantor to preserve any such right or franchise if the Company or the Guarantor shall determine that the preservation thereof is no longer desirable in the conduct of their respective business and that the loss thereof is not disadvantageous in any material respect to the Holders.

SECTION 3.8 Waiver of Certain Covenants . The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 3.5, 3.6, 3.7 or 3.11 with respect to the Securities of any Series if before the time for such compliance the Holders of at least a majority in aggregate principal amount at Maturity of the Outstanding Securities of such Series, by act of such Holders, either shall waive such compliance in such instance or generally shall have waived compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

SECTION 3.9 Company Statement as to Compliance; Notice of Certain Defaults .

(1) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year (which fiscal year shall end on December 31, unless the Company otherwise notifies the Trustee in writing), a written statement (which need not be contained in or accompanied by an Officers’ Certificate) signed by an Officer that is the principal executive officer, the principal financial officer or the principal accounting officer of the Company, stating that

(a) a review of the activities of the Company during such year and of its performance under this Indenture has been made under his or her supervision, and

(b) to the best of his or her knowledge, based on such review, (a) the Company has complied with all the conditions and covenants imposed on it under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him or her and the nature and status thereof, and (b) no event has occurred and is continuing which is, or after notice or lapse of time or both would become, an Event of Default, or, if such an event has occurred and is continuing, specifying each such event known to him and the nature and status thereof.

(2) The Company shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any Event of Default or any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (c) of Section 5.1.

(3) The Trustee shall have no duty to monitor the Company’s compliance with the covenants contained in this Article Three other than to require delivery of the certificate specifically set forth in this Section 3.9.

SECTION 3.10 Guarantor Statement as to Compliance; Notice of Certain Defaults .

(1) The Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year (which fiscal year shall end on December 31, unless the Guarantor otherwise notifies the Trustee in writing), a written statement (which need not be contained in or accompanied by a Guarantor’s Officer’s Certificate) signed by an Officer that is the principal executive officer, the principal financial officer or the principal accounting officer of the Guarantor, stating that

(a) a review of the activities of the Guarantor during such year and of performance under this Indenture has been made under his or her supervision, and

(b) to the best of his or her knowledge, based on such review, (a) the Guarantor has complied with conditions and covenants imposed on it under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him or her and the nature and status thereof, and (b) no event has occurred and is continuing which constitutes, or which after notice or lapse of time or both would become, an Event of Default, or, if such an event has occurred and is continuing, specifying each such event known to him and the nature and status thereof.

(2) The Guarantor shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (c) of Section 5.1.

(3) The Trustee shall have no duty to monitor the Guarantor’s compliance with the covenants contained in this Article Three other than to require delivery of the certificate specifically set forth in this Section 3.10.

SECTION 3.11 Maintenance of Properties . The Company and the Guarantor will, and will cause their respective Subsidiaries to, cause all properties used or useful in the conduct of their respective businesses, or the business of any Subsidiary of the Company or of the Guarantor, to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company or the Guarantor, as applicable, may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company or the Guarantor from discontinuing the operation or maintenance of any such properties if such discontinuance is, in the judgment of the Company or the Guarantor, as applicable, desirable in the conduct of the business of the Company or the Guarantor, or the business of any Subsidiary of the Company or the Guarantor, and not disadvantageous in any material respect to the Holders.

SECTION 3.12 Further Acts and Instruments . Upon request of the Trustee, the Company and the Guarantor will execute and deliver such further instruments and perform such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

SECTION 3.13 Calculation of Original Issue Discount . The Company shall file with the Trustee promptly at the end of each calendar year (a) a written notice specifying the amount of original issue discount for U.S. federal income tax purposes (including daily rates and accrual periods), if any, accrued on Outstanding Securities as of the end of such year and (b) such other specific information relating to such original issue discount as may then be relevant under the Code, as amended from time to time.

ARTICLE FOUR

SECURITYHOLDERS’ LISTS AND REPORTS BY THE
ISSUER, GUARANTOR AND THE TRUSTEE

SECTION 4.1 Company and Guarantor to Furnish Trustee Information as to Names and Addresses of Securityholders . The Company and the Guarantor each covenants and agrees that they will furnish or cause to be furnished to the Trustee for the Securities of each Series a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Securities of each Series:

(a) semi-annually and not more than 15 days after each record date for the payment of interest on such Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing securities in each year, and

(b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Company or the Guarantor of any such request such list to be as of a date not more

than 15 days prior to the time such information is furnished, provided , that if and so long as the Trustee shall be the Registrar for such Series, such list shall not be required to be furnished.

SECTION 4.2 Preservation and Disclosure of Securityholders’ Lists . (b) The Trustee for the Securities of each Series shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of each Series of Securities contained in the most recent list furnished to it as provided in Section 4.1 or maintained by the Trustee in its capacity as Registrar for such Series, if so acting. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished.

(b) In case three or more Holders of Securities of any Series (hereinafter referred to as “applicants”) apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of a particular Series (in which case the applicants must all hold Securities of such Series) or with Holders of all Securities with respect to their rights under this Indenture or under such Securities and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either

(i) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, or

(ii) inform such applicants as to the approximate number of Holders of Securities of such Series or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section.

If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder of such Series or all Securities, as the case may be, whose name and address appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section, a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities of such Series or all Securities, as the case may be, or could be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of such order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants

respecting their application. If the Commission shall refuse to accept the filing by the Trustee because the Company is not subject to the ongoing reporting requirements of Section 13 of 15(d) of the Exchange Act or otherwise, or otherwise communicates to the Company, the applicants or the Trustee that it does not have jurisdiction over the matter, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after such refusal or communication.

(c) Each and every Holder of Securities, by receiving and holding the same, agrees with the Company, the Guarantor and the Trustee that none of the Company, the Guarantor, the Trustee, any Agent or any agent of the Company, the Guarantor, the Trustee or such Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b).

SECTION 4.3 Reports by the Company and Guarantor . The Guarantor or the Company, if the Company is no longer a Subsidiary of the Guarantor, covenants:

(a) to file with the Trustee for the Securities of each Series, within 15 days after the Company or the Guarantor, as the case may be, is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company or the Guarantor, as the case may be, may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act, or if the Company or the Guarantor, as the case may be, is not required to file information, documents, or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with applicable rules and regulations, if any, prescribed from time to time by the Commission, such of the supplementary and periodic information, documents, and reports which may be required pursuant to Section 13 of the Exchange Act, or in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

(b) to file with the Trustee and the Commission, in accordance with applicable rules and regulations, if any, prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Company or the Guarantor, as the case may be, with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations; and

(c) to transmit by mail to the Holders of Securities, as the names and addresses of such Holders appear upon the Security Register, in the manner required by Section 11.4, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents, and reports required to be filed by the Company or the Guarantor, as the case may be, pursuant to subsection (a) and (b) of this Section as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the Commission.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s or the Guarantor’s compliance with any of their respective covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

SECTION 4.4 Reports by the Trustee . (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act, if applicable, at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).

(b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, with the Commission, the Company and the Guarantor. The Company or the Guarantor, as the case may be, will promptly notify the Trustee in writing when the Securities are listed on any stock exchange and of any delisting thereof.

ARTICLE FIVE

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default . In case one or more of the following Events of Default (unless it is either inapplicable to a particular Series or it is specifically deleted from or modified in the instrument establishing such Series and the form of Security for such Series) shall have occurred and be continuing with respect to any Series of Securities:

(a) default in the payment of any installment of interest upon any Security of such Series, or any Additional Amounts payable with respect thereto, as and when such interest becomes or such Additional Amounts become due and payable, and continuance of such default for a period of 30 days; or

(b) default in the payment of the principal of or any premium on any Security of such Series, or any Additional Amounts payable with respect thereto, when such principal or premium becomes or such Additional Amounts become due and payable at their Maturity, upon redemption (for any sinking fund payment or otherwise), by declaration or otherwise; or

(c) failure on the part of the Company or the Guarantor, as the case may be, duly to observe or perform any other of the covenants or agreements on the part of the Company or the Guarantor in this Indenture, as the case may be, in the Securities of such Series, or in this Indenture contained and relating to such Series, for a period of 60 days after the date on which written notice specifying such failure and requiring the Company or the Guarantor, as the case may be, to remedy the same and stating that such notice is a “Notice of Default” hereunder shall have been given to the Company or the Guarantor, as the case may be, by the Trustee for the

Securities of such Series, or to the Company, the Guarantor and the Trustee by the Holders of at least 25% in aggregate principal amount at Maturity of the Securities of such Series at the time Outstanding in accordance with Section 11.4; or

(d) if any event of default as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company, the Guarantor or any of its Designated Subsidiaries (including, in each case, an Event of Default under any other Series of Securities), whether such Indebtedness now exists or shall hereafter be created or incurred, shall happen and shall consist of default in the payment of more than $30,000,000 in principal amount of such Indebtedness at the maturity thereof (after giving effect to any applicable grace period) or shall result in such Indebtedness in principal amount in excess of $30,000,000 becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such default shall not be cured or such acceleration shall not be rescinded or annulled within a period of 30 days after there shall have been given to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of at least 25% in aggregate principal amount at Maturity of the Outstanding Securities of such Series, a written notice specifying such event of default and requiring the Company or the Guarantor to cause such acceleration to be rescinded or annulled or to cause such Indebtedness to be discharged and stating that such notice is a “Notice of Default” hereunder in accordance with Section 11.4; or

(e) the Company or the Guarantor shall fail within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $30,000,000, which is not stayed on appeal or is not otherwise being appropriately contested in good faith; or

(f) except as permitted by this Indenture, the Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or the Guarantor or any Person acting on its behalf, shall deny or disaffirm the Guarantor’s obligations under the Guarantee; or

(g) the entry by a court having competent jurisdiction of:

(i) a decree or order for relief in respect of the Company, the Guarantor or any of its Designated Subsidiaries in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization (other than a reorganization under a foreign law that does not relate to insolvency) or other similar law and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

(ii) a decree or order adjudging the Company, the Guarantor or any of its Designated Subsidiaries to be insolvent, or approving a petition seeking reorganization (other than a reorganization under a foreign law that does not relate to insolvency), arrangement, adjustment or composition of the Company, the Guarantor or any of its Designated Subsidiaries and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

(iii) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of the Company, the Guarantor or any of its Designated Subsidiaries of any substantial part of the property of the Company, the Guarantor or any of its Designated Subsidiaries or ordering the winding up or liquidation of the affairs of the Company, the Guarantor or any of its Designated Subsidiaries; or

(h) the commencement by the Company, the Guarantor or any of its Designated Subsidiaries of a voluntary proceeding under any applicable bankruptcy, insolvency, reorganization (other than a reorganization under a foreign law that does not relate to insolvency) or other similar law or of a voluntary proceeding seeking to be adjudicated insolvent or the consent by the Company, the Guarantor or any of its Designated Subsidiaries to the entry of a decree or order for relief in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any insolvency proceedings against it, or the filing by the Company, the Guarantor or any of its Designated Subsidiaries of a petition or answer or consent seeking reorganization, arrangement, adjustment or composition of the Company, the Guarantor or any of its Designated Subsidiaries under any applicable law, or the consent by the Company, the Guarantor or any of its Designated Subsidiaries to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of the Company, the Guarantor or any of its Designated Subsidiaries of any substantial part of the property of the Company, the Guarantor or any of its Designated Subsidiaries or the making by the Company, the Guarantor or any of its Designated Subsidiaries of an assignment for the benefit of creditors, or the taking of corporate action by the Company, the Guarantor or any of its Designated Subsidiaries in furtherance of any such action; or

(i) any other Event of Default provided in any supplemental indenture or Board Resolution under which such Series of Securities is issued or in the form of Security for such Series;

then and in each and every such case (other than an Event of Default under clause (g) and (h) above), so long as such Event of Default with respect to such Series shall not have been remedied or waived, unless the principal of all Securities of such Series shall have already become due and payable, either the Trustee for such Series or the Holders of not less than 25% in aggregate principal amount at Maturity of the Securities of such Series then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Holders), may declare the principal (or, in the case of Original Issue Discount Securities, such principal amount as may be determined in accordance with the terms thereof) of all the Securities of such Series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Securities of such Series contained to the contrary notwithstanding. With respect to an Event of Default described under clauses (g) and (h) above, the principal of all Securities of such Series shall become immediately due and payable without any declaration or other act by the Trustee or the Holders. This provision, however, is subject to the condition that if at any time after the principal of the Securities of such Series (or, in the case of Original Issue Discount Securities, such principal amount as may be determined in accordance with the terms thereof) shall have been so declared due and payable, and if recission would not conflict with any judgment or decree of a court of competent jurisdiction, the Company or the Guarantor shall pay or shall deposit with the Trustee

a sum sufficient to pay in the Currency in which the Securities of such Series are payable (except as otherwise provided pursuant to Section 2.3 for the Securities of such Series and except as provided in Section 2.12(b), (d) and (e) hereof) all matured installments of interest, if any, upon all the Securities of such Series and the principal of any and all Securities of such Series which shall have become due otherwise than by such acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, upon overdue installments of interest, at the rate borne by the Securities of such Series (or, in the case of Original Issue Discount Securities, at the yield to Maturity) to the date of such payment or deposit) and in Dollars such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel and all other expenses and liabilities incurred, and all advances made, by the Trustee, its agents, attorneys and counsel and any and all defaults under this Indenture, other than the nonpayment of the principal of Securities of such Series which shall have become due by such acceleration, shall have been cured or waived, then and in every such case the Holders of at least a majority in aggregate principal amount at Maturity of the Securities of such Series then Outstanding, by written notice to the Company, the Guarantor and the Trustee for the Securities of such Series, may waive all defaults and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt . The Company and the Guarantor each covenants that (a) in case default shall be made in the payment of any installment of interest on or any Additional Amounts any of the Securities of any Series when such interest or Additional Amounts shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any Series when such interest on or any Additional Amounts shall have become due and payable, whether upon Maturity of the Securities of such Series or upon any redemption or by declaration or otherwise, then upon demand of the Trustee for the Securities of such Series, the Company or the Guarantor, as the case may be, will pay to the Trustee for the Securities of such Series for the benefit of the Holders of the Securities of such Series the whole amount that then shall have become due and payable on all Securities of such Series for principal of or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest and Additional Amounts at the same rate as the rate of interest specified in the Securities of such Series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee.

Until such demand is made by the Trustee, the Company or the Guarantor, as the case may be, may pay the principal of, interest on, and any Additional Amounts the Securities of any Series to the Persons entitled thereto, whether or not the principal of and interest on the Securities of such Series are overdue.

In case the Company or the Guarantor, as the case may be, shall fail forthwith to pay such amounts upon such demand, the Trustee for the Securities of such Series, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings

at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company or the Guarantor, as the case may be, or other obligor upon such Securities and collect in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings relative to the Company, the Guarantor or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company, the Guarantor or their respective properties or such other obligor, or in case of any other comparable judicial proceedings relative to the Company, the Guarantor or other obligor under the Securities of any Series, if any, or to the creditors or property of the Company, the Guarantor or any such other obligor, the Trustee, irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

(a) to file and prove a claim or claims for the whole amount of principal (or, if the Securities of such Series are Original Issue Discount Securities, such portion of the principal amount as may be due and payable with respect to the Securities of such Series pursuant to a declaration in accordance with Section 5.1 hereof), any premium, interest and Additional Amounts owing and unpaid in respect of the Securities of any Series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee,) and of the Securityholders allowed in any judicial proceedings relative to the Company, the Guarantor or any other obligor upon all Securities of any Series, or to the creditors or property of the Company, the Guarantor or any such other obligor,

(b) unless prohibited by applicable law and regulations, to vote pursuant to and in accordance with the written instruction of the Holders of a majority in aggregate principal amount at Maturity of the Securities of any Series on behalf of such Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, and

(c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Trustee for the Securities of such Series, and, in the event that such Trustee shall consent to the making of payments directly to the Securityholders, to pay to such Trustee such amounts as shall be sufficient to cover reasonable compensation to such Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred,

and all advances made, by such Trustee and each predecessor Trustee and all other amounts due to such Trustee or any predecessor Trustee pursuant to Section 6.6.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any Series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee for the Securities of such Series without the possession of any of the Securities of such Series or the production thereof at any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities in respect of which such action was taken.

In any proceedings brought by the Trustee for the Securities of such Series (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities parties to any such proceedings.

SECTION 5.3 Application of Proceeds . Any moneys collected by the Trustee for the Securities of such Series pursuant to this Article in respect of the Securities of any Series and any money or other property distributable in respect of the Company’s or the Guarantor’s obligations under this Indenture after the occurrence of an Event of Default shall be applied in the following order at the date or dates fixed by such Trustee and, in case of the distribution of such moneys on account of principal, interest or Additional Amounts upon presentation of the several Securities in respect of which moneys have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such Series in reduced principal amounts in exchange for the presented Securities of like Series if only partially paid, or upon surrender thereof if fully paid:

FIRST: To the payment of costs and expenses applicable to such Series in respect of which moneys have been collected, including compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6;

SECOND: In case the principal of the Securities of such Series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such Series in default in the order of the Maturity of the installments of such interest and any Additional Amounts, with interest and any Additional Amounts (to the extent that such interest has been collected by the

Trustee) upon the overdue installments of interest at the same rate as the rate of interest specified in such Securities, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

THIRD: In case the principal of the Securities of such Series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such Series for principal, interest and Additional Amounts, with interest upon the overdue principal, and (to the extent that payment of such interest is permissible by law and that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest specified in the Securities of such Series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such Series, then to the payment of such principal, interest and Additional Amounts without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Security of such Series over any other Security of such Series, ratably to the aggregate of such principal and accrued and unpaid interest; and

FOURTH: To the payment of the remainder, if any, to the Company, the Guarantor or any other Person lawfully entitled thereto.

SECTION 5.4 Suits for Enforcement . In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

SECTION 5.5 Restoration of Rights on Abandonment of Proceedings . In case the Trustee for the Securities of any Series shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Company, the Guarantor and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Guarantor, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.

SECTION 5.6 Limitations on Suits by Securityholders . No Holder of any Security of any Series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount at Maturity of the Securities of such Series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as

Trustee hereunder and shall have offered to the Trustee such reasonable indemnity, as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the Holder of every Security with every other Holder of a Security and the Trustee, that no one or more Holders of Securities of any Series shall have any right in any manner whatever, by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable Series. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

SECTION 5.7 Unconditional Right of Securityholders to Institute Certain Suits . Notwithstanding any provision in this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and interest on such Security at the respective rates, in the respective amount and in the Currency therein prescribed on or after the respective due dates expressed in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default . Except as provided in Sections 2.9 or 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Sections 2.9 or 5.6, every power and remedy given by this Indenture or by law to the Trustee, or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee, or the Securityholders.

SECTION 5.9 Control by Securityholders . The Holders of a majority in aggregate principal amount at Maturity of the Securities of each Series affected (with each Series treated as a separate class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such Series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being

advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all Series so affected not joining in the giving of said direction, it being understood that the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders.

Nothing in this Indenture shall impair the right of the Trustee to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders.

SECTION 5.10 Waiver of Past Defaults . Prior to the declaration of the acceleration of the Maturity of the Securities of any Series as provided in Section 5.1, the Holders of not less than a majority in aggregate principal amount at Maturity of the Securities of such Series at the time Outstanding may on behalf of the Holders of all the Securities of such Series waive any past default hereunder or its consequences, except a default in the payment of the principal of or interest on or any Additional Amounts with respect to, any of the Securities of such Series (unless the conditions specified in the last paragraph of Section 5.1 have been fully satisfied). In the case of any such waiver, the Company, the Guarantor, the Trustee and the Holders of the Securities of such Series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances . The Trustee shall transmit to the Securityholders of any Series notice in the manner and to the extent provided in Section 11.4, of all defaults known to the Trustee to have occurred with respect to such Series (as provided in Section 6.2(h)), such notice to be transmitted within 90 days after the occurrence thereof, unless such defaults shall have been cured before the giving of such notice (the term “default” or “defaults” for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of, interest on or any Additional Amounts with respect to, any of the Securities of such Series or any default in the payment of any sinking fund installment or analogous obligation in respect of any of the Securities of such Series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such Series.

SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs . All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof, shall

be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any Series holding in the aggregate more than 10% in aggregate principal amount at Maturity of the Securities of such Series, or, in the case of any suit relating to or arising under clause (d) of Section 5.1 (if the suit relates to Securities of more than one but less than all Series), 10% in aggregate principal amount at Maturity of Securities Outstanding affected thereby, or in the case of any suit relating to or arising under clause (d) (if the suit under clause (d) relates to all the Securities then Outstanding), (e), (f) or (g) of Section 5.1, 10% in aggregate principal amount of all Securities Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of, interest on or any Additional Amounts with respect to, any Security on or after the due date expressed in such Security.

ARTICLE SIX

CONCERNING THE TRUSTEE

SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default . (a) With respect to the Holders of any Series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular Series and after the curing or waiving of all Events of Default which may have occurred with respect to such Series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a Series has occurred (which has not been cured or waived) of which a Responsible Officer has actual knowledge, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

(b) Prior to the occurrence of an Event of Default with respect to the Securities of any Series and after the curing or waiving of all such Events of Default with respect to such Series which may have occurred, the duties and obligations of the Trustee with respect to the Securities of any Series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(c) In the absence of bad faith or negligence on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to

the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(d) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this Subsection shall not be construed to limit the effect of the Subsections (a), (b), (c), (e) or (f) of this Section;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.

(e) None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it.

(f) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the conditions of this Section 6.1.

SECTION 6.2 Certain Rights of the Trustee . Subject to Section 6.1:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, Officers’ Certificate, Guarantor’s Officer’s Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Company or of the Guarantor mentioned herein shall be sufficiently evidenced by an Officers’ Certificate or the Guarantor’s Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution or Guarantor’s Board Resolution may be evidenced to the Trustee by a copy thereof certified by the secretary or any assistant secretary of the Company or the Guarantor, as the case may be;

(c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken,

suffered or omitted to be taken by it hereunder in good faith and in reliance on such advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to exercise any of the rights, trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred therein or thereby;

(e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder;

(h) the Trustee shall not be deemed to have notice or be charged with knowledge of any default or Event of Default unless a Responsible Officer has received written notice from the Company, the Guarantor or any Holder of such default or Event of Default at the Corporate Trust Office of the Trustee and such notice references the Securities and this Indenture and identifies each such default or Event of Default;

(i) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each Agent, agent, co-Trustee, custodian and other Person employed to act hereunder;

(j) the Trustee may request that the Company or the Guarantor deliver an Officers’ Certificate or Guarantor’s Officer’s Certificate, respectively, setting forth the names of individuals and/or titles of Officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate or Guarantor’s Officer’s Certificate, as the case may be, may be signed by any Person authorized to sign an Officers’ Certificate or Guarantor’s Officer’s Certificate, as the case may be, including any Person specified as so authorized in any such certificate previously delivered and not superseded;

(k) no provision of this Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts, receive or obtain any interest in property or exercise

any interest in property, or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, to receive or obtain any such interest in property or to exercise any such right, power, duty or obligation; and no permissive or discretionary power or authority available to the Trustee shall be construed to be a duty;

(l) anything in this Indenture notwithstanding, in no event shall the Trustee be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss of profit), even if the Trustee has been advised as to the likelihood of such loss or damage and regardless of the form of action; and

(m) the Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; interruptions; loss or malfunctions of utilities, computer (hardware or software) or communication services; accidents; labor disputes; acts of civil or military authority and governmental action.

SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof . The recitals contained herein and in the Securities, except the Trustee’s certificate of authentication, shall be taken as the statements of the Company or the Guarantor, as the case may be, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of any offering materials, this Indenture, the Guarantee or of the Securities. The Trustee shall not be accountable for the use or application by the Company or the Guarantor, as the case may be, of any of the Securities or of the proceeds thereof.

SECTION 6.4 Trustee and Agents May Hold Securities; Collections, etc. The Trustee, any Paying Agent, Registrar, or any agent of the Company, the Guarantor or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if operative, may otherwise deal with the Company or the Guarantor, as the case may be, and receive, collect, hold and retain collections from the Company or the Guarantor, as the case may be, with the same rights it would have if it were not the Trustee or such agent.

SECTION 6.5 Moneys Held by Trustee . Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee, any Agent, nor any agent of the Company, the Guarantor, the Trustee or the Agent shall be under any liability for interest on or the investment of any moneys received by it hereunder.

SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim . The Company and the Guarantor, covenant and agree to pay in Dollars to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as shall be agreed in writing

between the Company or the Guarantor, as the case may be, and the Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company and the Guarantor covenant and agree to pay or reimburse in Dollars the Trustee and each predecessor Trustee upon its request for all expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture or the Securities (including the compensation and the expenses and disbursements of its counsel and of all agents and other Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. Each of the Company and the Guarantor also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any and all loss, liability, damage, claim, cost or expense, including taxes (other than taxes based on the income of the Trustee), incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture, the exercise of its rights hereunder or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim (whether asserted by the Company, the Guarantor, a Holder or any other Person) of liability in the premises. The obligations of the Company and the Guarantor under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional Indebtedness hereunder and shall survive the satisfaction and discharge of the Securities and this Indenture, the termination for any reason of this Indenture, or the resignation or removal of the Trustee. Such additional Indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such senior claim.

When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(e), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law.

“Trustee” for purposes of this Section shall include any predecessor Trustee; provided , however , that the negligence, willful misconduct or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.

SECTION 6.7 Right of Trustee to Rely on Officers’ Certificate, Guarantor’s Officer’s Certificate, etc. Whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate or Guarantor’s Officer’s Certificate, as the case may be, complying with Section 11.5 delivered to the Trustee, and such certificate, in the absence of bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it or under the provisions of this Indenture upon the faith thereof.

SECTION 6.8 Disqualification of Trustee; Conflicting Interests . If the Trustee for the Securities of any Series has or shall acquire any “conflicting interest,” as defined in the Trust

Indenture Act, it shall, within 90 days after ascertaining that it has such conflicting interest, and if the default (as defined in the Trust Indenture Act) to which such conflicting interest relates has not been cured or waived or otherwise eliminated before the end of such 90-day period, the Trustee shall, either eliminate such conflicting interest or resign in the manner and with the effect specified in the Trust Indenture Act and this Indenture.

SECTION 6.9 Persons Eligible for Appointment as Trustee . The Trustee for each Series of Securities hereunder shall at all times be a Corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, state or District of Columbia authority. If such Corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10.

SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee . (a) The Trustee, or any Trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all Series of Securities by giving written notice of resignation to the Company and the Guarantor and by mailing notice thereof to the Holders in the manner and to the extent provided in Section 11.4. Upon receiving such notice of resignation, the Company or the Guarantor, as the case may be, shall promptly appoint a successor Trustee or Trustees with respect to the applicable Series by written instrument in duplicate, executed by authority of the Board of Directors or the Guarantor’s Board of Directors, as the case may be, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee or trustees. If no successor Trustee shall have been so appointed with respect to any Series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition, at the expense of the Company and the Guarantor, any court of competent jurisdiction for the appointment of a successor Trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable Series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any Series of Securities after written request therefor by the Company, the Guarantor or by any Securityholder who has been a bona fide Holder of a Security or Securities of such Series for at least six months unless the Trustee’s duty to resign is stayed in accordance with the provisions of Section 310(b) of the Trust Indenture Act; or

(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Company, the Guarantor or by any Securityholder; or

(iii) the Trustee shall become incapable of acting with respect to any Series of the Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public Officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, the Company or the Guarantor may remove the Trustee with respect to the applicable Series of Securities and appoint a successor Trustee for such Series by written instrument, in duplicate, executed by order of the Board of Directors of the Company or the Guarantor’s Board of Directors, as the case may be, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee, or, subject to the provisions of Section 5.12, any Securityholder who has been a bona fide Holder of a Security or Securities of such Series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to such Series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor Trustee.

(c) The Holders of a majority in aggregate principal amount of the Securities of each Series at the time Outstanding may at any time remove the Trustee with respect to Securities of such Series and such Holders shall provide promptly to the Company and the Guarantor the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. In such an event and upon receipt of such evidence, the Company or the Guarantor will appoint a successor Trustee with respect to the Securities of such Series by delivering to the Trustee so removed, and to the successor Trustee so appointed such evidence received from the Holders.

If no successor Trustee shall have been appointed with respect to such Series within 30 days after the mailing of such notice of removal, the Trustee being removed may petition, at the expense of the Company and the Guarantor, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such Series.

(d) Any resignation or removal of the Trustee with respect to any Series and any appointment of a successor Trustee with respect to such Series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 6.11.

SECTION 6.11 Acceptance of Appointment by Successor Trustee . Any successor Trustee appointed as provided in Section 6.10 shall execute and deliver to the Company, the Guarantor and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Trustee with respect to all or any applicable Series shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such Series of its predecessor hereunder, with like effect as if originally named as

Trustee for such Series hereunder; but, nevertheless, on the written request of the Company, of the Guarantor or of the successor Trustee, upon payment of its charges then unpaid, the Trustee ceasing to act shall, subject to Section 10.4, pay over to the successor Trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers, duties and obligations. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to the provisions of Section 6.6.

If a successor Trustee is appointed with respect to the Securities of one or more (but not all) Series, the Company, the Guarantor, the predecessor Trustee and each successor Trustee with respect to the Securities of any applicable Series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any Series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts under separate indentures.

No successor Trustee with respect to any Series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor Trustee shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9.

Upon acceptance of appointment by any successor Trustee as provided in this Section 6.11, the Company or the Guarantor, as the case may be, shall give notice in the manner and to the extent provided in Section 11.4 to the Holders of Securities of any Series for which such successor Trustee is acting as Trustee at their last addresses as they shall appear in the Security Register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company and the Guarantor.

SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee . Any Corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Corporation succeeding to all or substantially all the corporate trust business of the Trustee (including this transaction), shall be the successor of the Trustee hereunder, provided that such Corporation shall be qualified under the provisions of Section 6.8 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any Series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any Series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities of such Series or in this Indenture provided that the certificate of the Trustee shall have; provided , that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any Series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

SECTION 6.13 Preferential Collection of Claims Against the Company . If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act, if such act shall then be applicable to this Indenture, regarding the collection of claims against the Company or the Guarantor (or any such other obligor).

SECTION 6.14 Appointment of Co-Trustees . At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any collateral may at the time be located, or if the Trustee is unable or unwilling to execute any documents in a jurisdiction in which any collateral may at any time be located or hold or enforce the rights of the secured parties thereunder, each of the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least twenty-five percent (25%) in aggregate principal amount of all of the Securities then Outstanding, the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee and, if no Event of Default shall have occurred and be continuing, by the Company either to act as co-Trustee, jointly with the Trustee, of all or any part of any collateral, or to act as separate Trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Company does not join in such appointment within fifteen (15) days after the receipt by it of a request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment.

Should any written instrument or instruments from the Company and the Guarantor be required by any co-Trustee or separate Trustee so appointed to more fully confirm to such co-Trustee or separate Trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company and the Guarantor.

Every co-Trustee or separate Trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions:

(a) The Securities shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal

property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee;

(b) The rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-Trustee or separate Trustee jointly, as shall be provided in the instrument appointing such co-Trustee or separate Trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-Trustee or separate Trustee;

(c) The Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company and the Guarantor, may accept the resignation of or remove any co-Trustee or separate Trustee appointed under this Section, and, if an Event of Default shall have occurred and be continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-Trustee or separate Trustee without the concurrence of the Company. Upon the written request of the Trustee, the Company and the Guarantor shall join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-Trustee or separate Trustee so resigned or removed may be appointed in the manner provided in this Section;

(d) Neither the Trustee nor any co-Trustee or separate Trustee hereunder shall be personally liable by reason of any act or omission of any other Trustee hereunder; and

(e) Any act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-Trustee and separate Trustee.

ARTICLE SEVEN

CONCERNING THE SECURITYHOLDERS

SECTION 7.1 Evidence of Action Taken by Securityholders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all Series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in Person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee, the Company and the Guarantor, if made in the manner provided in this Article.

(b) The ownership of Securities shall be proved by the Security Register.

SECTION 7.2 Proof of Execution of Instruments . The execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable

rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee.

SECTION 7.3 Holders to Be Treated as Owners . The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may deem and treat the Person in whose name any Security shall be registered upon the Security Register for such Series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of, interest on, and any Additional Amounts with respect to, such Security and for all other purposes; and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security.

SECTION 7.4 Securities Owned by Company Deemed Not Outstanding . In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all Series have concurred in any direction, consent or waiver under this Indenture or whether a quorum is present at a meeting of Holders of Securities, Securities which are owned by the Company, the Guarantor or any other obligor on the Securities with respect to which such determination is being made or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, the Guarantor or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, and for purposes of determining the presence of a quorum, only Securities which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, the Guarantor or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers’ Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of any of the above-described Persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination.

SECTION 7.5 Right of Revocation of Action Taken . At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all Series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing

written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all Series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Guarantor, the Trustee and the Holders of all the Securities affected by such action.

SECTION 7.6 Record Date for Determination of Holders Entitled to Vote . The Company may, in the circumstances permitted by the Trust Indenture Act, if applicable, set a record date for the purpose of determining the Securityholders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Securityholders. If there is to be a record date and no such record date has been set by the Company prior to the first solicitation of a Securityholder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 4.1) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly appointed proxies) shall be entitled to give or take, or vote on, the relevant action.

SECTION 7.7 Regarding the Depositary . Neither the Trustee nor any Agent shall have any responsibility or obligation to any beneficial owner in a Global Security, any member of or Participant or Indirect Participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Participant or Indirect Participant, with respect to any ownership interest in the Securities or with respect to the delivery to any Participant, Indirect Participant, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Securityholders and all payments to be made to Holders under the Securities and this Indenture shall be given or made only to or upon the order of the Holders (which shall be the Depositary or its nominee in the case of the Global Security). The rights of beneficial owners in the Global Security shall be exercised only through the Depositary subject to the applicable procedures. The Trustee and each Agent shall be entitled to rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, Participants, Indirect Participants and any beneficial owners. The Trustee and each Agent shall be entitled to deal with the Depositary, and any nominee thereof, that is the Holder of any Global Security for all purposes of this Indenture relating to such Global Security (including the payment of principal, premium, if any, and interest and Additional Amounts, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Security) as the sole Holder of such Global Security and shall have no obligations to the beneficial owners thereof. Neither the Trustee nor any Agent shall have any responsibility or liability for any acts or omissions of the Depositary with respect to such Global Security, for the records of any such depositary, including records in respect of beneficial ownership interests in respect of any such Global Security, for any transactions between the Depositary and any Participant or Indirect

Participant or between or among the Depositary, any such Participant or Indirect Participant and/or any holder or owner of a beneficial interest in such Global Security, or for any transfers of beneficial interests in any such Global Security.

ARTICLE EIGHT

SUPPLEMENTAL INDENTURES

SECTION 8.1 Supplemental Indentures Without Consent of Securityholders . The Company (when authorized by a resolution of its Board of Directors), the Guarantor (when authorized by a Guarantor’s Board Resolution) and the Trustee for the Securities of an affected Series may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act, if such act shall then be applicable to the Indenture, as in force at the date of the execution thereof), in form satisfactory to such Trustee, and applicable to a particular Series of Securities or all Series of Securities Outstanding or to be Outstanding hereunder for one or more of the following purposes:

(a) to convey, transfer, assign, mortgage or pledge as security for the Securities of one or more Series any property or assets;

(b) to evidence the succession of another Corporation to the Company or the Guarantor, or successive successions, and the assumption by the successor Corporation of the covenants, agreements and obligations of the Company or the Guarantor, as the case may be, pursuant to Article Nine;

(c) to add to the covenants of the Company or the Guarantor, as the case may be, such further covenants, restrictions, conditions or provisions as the Board of Directors or the Guarantor’s Board of Directors, as applicable, and the Trustee shall consider to be for the protection of the Holders of Securities of any or all Series and, if such additional covenants are to be for the benefit of less than all the Series of Securities stating that such covenants are being added solely for the benefit of such Series, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth (and if such additional Events of Default are to be for the benefit of less than all Series of the Securities stating that such Events of Default are being added solely for the benefit of such Series); provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of not less than a majority in aggregate principal amount at Maturity of the Securities of such Series to waive such an Event of Default;

(d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture

as the Board of Directors or the Guarantor’s Board of Directors may deem necessary or desirable and which shall not materially and adversely affect the interests of the Holders of the Securities;

(e) to establish the form or terms of Securities of any Series as permitted by Sections 2.1 and 2.3;

(f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than the one Trustee, pursuant to the requirements of Section 6.11; or

(g) for the issuance of a different Series of Securities; provided , that prior to the issuance of any such different Series, a supplemental indenture may change any provision of this Indenture applicable only to such Series.

Any amendment described in clause (d) above made solely to conform this Indenture or the Securities of a particular Series to the final prospectus, offering memorandum or other disclosure document provided to investors in connection with the initial offering of such Securities by the Company will not be deemed to adversely affect the interests of the Holders in any respect.

The Trustee is hereby authorized to join with the Company and the Guarantor in the execution of any such supplemental indenture, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 8.2.

SECTION 8.2 Supplemental Indentures With Consent of Securityholders . With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount at Maturity of the Securities at the time Outstanding of each Series affected by such supplemental indenture (treated as one class), the Company, when authorized by a resolution of its Board of Directors, the Guarantor, when authorized by a Guarantor’s Board Resolution and the Trustee for such Series of Securities may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act, if such act shall then be applicable to the Indenture, as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such Series; provided , that no such supplemental indenture shall (a) extend the final Maturity of any Security of such Series, or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof, or impair or affect the right of any Securityholder of such Series to institute suit for payment thereof or (b) reduce the aforesaid percentage of Securities of any such Series, the consent of the Holders of

which is required for any such supplemental indenture, without the consent of the Holders of each Security of such Series so affected.

Upon the request of the Company or the Guarantor, accompanied by a copy of a resolution of the Board of Directors or by a copy of a Guarantor’s Board Resolution, certified by the secretary or an assistant secretary of the Company or the Guarantor, as the case may be, authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee for such Series of Securities of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 7.1, the Trustee for such Series of Securities shall join with the Company and the Guarantor in the execution of such supplemental indenture unless such supplemental indenture affects such Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case such Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Company, the Guarantor and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Company and the Guarantor shall give notice in the manner and to the extent provided in Section 11.4 to the Holders of Securities of each Series affected thereby at their addresses as they shall appear on the Security Register, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company or the Guarantor to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

For the purposes of this Section 8.2 only, if the Securities of any Series are issuable upon the exercise of warrants, each holder of an unexercised and unexpired warrant with respect to such Series shall be deemed to be a Holder of Outstanding Securities of such Series in the amount issuable upon the exercise of such warrant. For such purposes, the ownership of any such warrant shall be determined by the Company and the Guarantor in a manner consistent with customary commercial practices. The Trustee for such Series shall be entitled to rely on an Officers’ Certificate or a Guarantor’s Officer’s Certificate as to the principal amount of Securities of such Series in respect of which consents shall have been executed by holders of such warrants.

SECTION 8.3 Effect of Supplemental Indenture . Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company, the Guarantor and the Holders of Securities of each Series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 8.4 Documents to Be Given to Trustee . The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article

Eight is authorized or permitted by this Indenture and the Securities of each Series affected thereby.

SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures . Securities of any Series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear, upon the written direction of the Company, a notation for the Securities of such Series as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If the Company or the Trustee shall so determine, new Securities of any Series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities of such Series then Outstanding.

ARTICLE NINE

CONSOLIDATION, AMALGAMATION, MERGER AND SALES

SECTION 9.1 Company and Guarantor May Consolidate, etc., on Certain Terms . Neither the Company nor the Guarantor shall consolidate or amalgamate with or merge into any other Person (whether or not affiliated with the Company or the Guarantor), or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any other Person (whether or not affiliated with the Company or the Guarantor), and the Company shall not permit any other Person (whether or not affiliated with the Company or the Guarantor) to consolidate or amalgamate with or merge into the Company or Guarantor or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to the Company or Guarantor; unless:

(a) either the Company or the Guarantor is the continuing Person, or the successor Person (if other than the Company or the Guarantor) expressly assumes by supplemental indenture the obligations and covenants evidenced by this Indenture and the Securities (in which case, the Company or the Guarantor, as applicable, will be discharged therefrom),

(b) if the Company or the Guarantor is not the continuing Person, the successor Person shall be a corporation or limited liability company organized under the laws of the United States of America, any state thereof or the District of Columbia, Bermuda or any member of the Organization for Economic Co-Operation and Development;

(c) immediately after giving effect to such transaction, no Event of Default or event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(d) an Officers’ Certificate (if involving the Company) or a Guarantor’s Officer’s Certificate (if involving the Guarantor) and an Opinion of Counsel are delivered to the Trustee, each (1) stating that such transaction and any supplemental indentures pertaining thereto, comply with Article Eight and Article Nine, respectively, and (2) otherwise complying with Section 11.5.

SECTION 9.2 Successor Substituted . Upon any consolidation of the Company or the Guarantor with, or merger or amalgamation of the Company or the Guarantor into, any other Person or any conveyance, lease or transfer of the properties and assets of the Company or the Guarantor, substantially as an entirety, as the case may be, in accordance with Section 9.1, the successor Person formed by such consolidation or into which the Company or the Guarantor is merged or amalgamated or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor, as the case may be, under this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE TEN

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 10.1 Satisfaction and Discharge of Indenture .

(a) Satisfaction and Discharge . (i) If at any time (A) the Company or the Guarantor shall have paid or caused to be paid the principal of, interest on and any Additional Amounts on all the Securities of any Series Outstanding hereunder (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (ii) the Company or the Guarantor shall have delivered to the Trustee for cancellation all Securities of any Series theretofore authenticated (other than any Securities of such Series which have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (iii)(A) all the Securities of such Series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (B) the Company or the Guarantor shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in the Currency required (other than moneys repaid by the Trustee or any Paying Agent to the Company or the Guarantor in accordance with Section 10.4) or Government Obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of cash sufficient, in the opinion of a firm of independent certified public accountants, to pay at Maturity or upon redemption all Securities of such Series (other than any Securities of such Series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) not theretofore delivered to the Trustee for cancellation, including principal, interest due or to become due and any Additional Amounts to such date of Maturity as the case may be, and if, in any such case, the Company or the Guarantor shall also pay or cause to be paid all other sums payable hereunder by the Company or the Guarantor with respect to Securities of such Series and the Guarantee in respect thereof, then this Indenture shall cease to be of further effect with respect to Securities of such Series (except as to (i) rights of registration of transfer and exchange, and the Company’s right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of Holders to receive payments of principal thereof and interest thereon upon the original stated due dates therefor (but not upon acceleration) and remaining rights of the Holders to receive

mandatory sinking fund payments, if any, (iv) the rights, powers, trusts, indemnities and immunities of the Trustee hereunder and (v) the rights of the Securityholders of such Series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and, subject to Section 10.5, the Trustee, on demand of the Company accompanied by an Officers’ Certificate, or on demand of the Guarantor accompanied by a Guarantor’s Officer’s Certificate, and an Opinion of Counsel and at the written request of and at the cost and expense of the Company and the Guarantor, shall execute instruments acknowledging such satisfaction of and discharging this Indenture with respect to such Series; provided, that the rights of Holders of the Securities to receive amounts in respect of principal of, interest on and any Additional Amounts with respect to, the Securities held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Company and the Guarantor each agree to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture, the Securities of such Series and the Guarantee in respect thereof.

(b) Covenant Defeasance .

(i) On and after the date the conditions set forth in clause (ii) below are satisfied (“covenant defeasance”), the Company and the Guarantor shall be released from their respective obligations under Sections 3.4, 3.5, 3.6, 3.9, 3.10, 3.11, 4.3, 9.1(c), and, to the extent specified pursuant to Section 2.3 with respect to the Securities of a particular Series, any other covenant applicable to such Series and Events of Default specified in Sections 5.1 (c), (d), (e), (f) or (i). For this purpose, such covenant defeasance means that, with respect to such Outstanding Securities, the Company and the Guarantor may omit to comply with, and shall have no liability in respect of, any term, condition or limitation set forth in any such Section or such other covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or such other covenant or by reason of reference in any such Section or such other covenant to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1(c) or otherwise, as the case may be, but, except as specified above, the remainder of this Indenture, such Securities and the Guarantee in respect thereof shall be unaffected thereby.

(ii) The following shall be the conditions to application of clause (i) above to any Outstanding Securities of or within a Series:

(A) The Company or the Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another Trustee satisfying the requirements of Section 6.9 who shall agree to comply with the provisions of this Section 10.1(b) applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (1) an amount in the required Currency in which such Securities are then specified as payable, or (2) Government Obligations applicable to such Securities (determined on the basis of the Currency in which such Securities are then specified as payable) which through the scheduled payment of principal and interest in respect thereof in

accordance with their terms will provide, not later than one day before the due date of any payment of principal of and interest, if any, on such Securities, money in an amount, or (3) a combination thereof, in any case, in an amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying Trustee) to pay and discharge, (y) the principal of, interest on and any Additional Amounts on such Outstanding Securities at the Maturity (which may be a Redemption Date) of such principal or installment of principal or interest or any Additional Amounts and (z) any mandatory sinking fund payments or analogous payments applicable to such Outstanding Securities on the days on which such payments are due and payable in accordance with the terms of this Indenture, of such Securities and the Guarantee in respect thereof;

(B) such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company or the Guarantor is a party or by which either of them is bound (other than a default under this Indenture arising from the borrowing of funds to make such deposit);

(C) no Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Securities shall have occurred and be continuing on the date of such deposit and at any time during the period ending on the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period);

(D) the Company or the Guarantor shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Outstanding Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(E) the Company or the Guarantor shall have delivered to the Trustee an Opinion of Counsel to the effect that, after the 123rd day after the date of deposit, all money and Government Obligations (including the proceeds thereof) deposited or caused to be deposited with the Trustee (or other qualifying Trustee) pursuant to this clause (ii) to be held in trust will not be subject to any case or proceeding (whether voluntary or involuntary) in respect of the Company or the Guarantor under any U.S. federal or state bankruptcy, insolvency, reorganization or other similar law, or any decree or order for relief in respect of the Company or the Guarantor issued in connection therewith;

(F) the Company or the Guarantor shall have delivered to the Trustee an Officers’ Certificate or Guarantor’s Officer’s Certificate, as the case may be,

and an Opinion of Counsel, each stating that all conditions precedent to the covenant defeasance under clause (b) of this Section 10.1 have been complied with; and

(G) notwithstanding any other provisions of this Section 10.1(b), such defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company or the Guarantor in connection therewith pursuant to Section 2.3.

(i) On and after the date the conditions set forth in clause (ii) below are satisfied (“legal defeasance”), the Company and the Guarantor shall be deemed to have been discharged from its obligations with respect to the Securities of any Series and this Indenture with respect to such Series. For this purpose, such legal defeasance means that the Company and the Guarantor shall be deemed to have paid and discharged the entire Indebtedness represented by such Outstanding Securities which shall thereafter be deemed to be “Outstanding” only for the purposes of Section 10.1 and the other Sections of this Indenture referred to in clauses (A) and (B) below, and to have satisfied all of its other obligations under such Securities, the Guarantee in respect thereof and this Indenture insofar as such Securities and the Guarantee in respect thereof are concerned (and the Trustee, at the written request of and at the cost and expense of the Company and the Guarantor shall execute instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of such Outstanding Securities to receive, solely from the trust fund described in clause (ii)(A) and as more fully set forth in such clause, payments in respect of the principal of and interest, if any, on, and Additional Amounts, if any, with respect to, such Securities when such payments are due, (ii) the obligations of the Company, the Guarantor and the Trustee with respect to such Securities under Sections 2.8, 2.9 and 3.2 and with respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section 3.7 (but only to the extent that the Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to clause (ii)(A)), (iii) the rights, powers, trusts, immunities and indemnities of the Trustee hereunder, (iv) the rights of optional redemption and (v) this Article Ten.

(ii) The following shall be the conditions to application of clause (i) above to any Outstanding Securities of or within a Series:

(A) The Company or the Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another Trustee satisfying the requirements of Section 6.9 who shall agree to comply with the provisions of this Section 10.1(c) applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (1) an amount in the required Currency in which such Securities are then specified as payable, or (2) Government Obligations applicable to such Securities (determined on the basis of

the Currency in which such Securities are then specified as payable) which through the scheduled payment of principal, interest and any Additional Amounts in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment of principal of and interest, if any, and any Additional Amounts, on such Securities, money in an amount, or (3) a combination thereof, in any case, in an amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying Trustee) to pay and discharge, (y) the principal of, interest on and any Additional Amounts on such Outstanding Securities at the Maturity (which may be a Redemption Date) of such principal or installment of principal or interest and any Additional Amounts and (z) any mandatory sinking fund payments or analogous payments applicable to such Outstanding Securities on the days on which such payments are due and payable in accordance with the terms of this Indenture, of such Securities and the Guarantee in respect thereof;

(D) the Company or the Guarantor shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company or the Guarantor has received from the Internal Revenue Service a letter ruling, or there has been published by the Internal Revenue Service a revenue ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such Outstanding Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;

pursuant to this clause (ii) to be held in trust will not be subject to any case or proceeding (whether voluntary or involuntary) in respect of the Company or the Guarantor under any U.S. federal or state bankruptcy, insolvency, reorganization or other similar law, or any decree or order for relief in respect of the Company or the Guarantor issued in connection therewith;

(F) the Company or the Guarantor shall have delivered to the Trustee an Officers’ Certificate or a Guarantor’s Officer’s Certificate, as the case may be, and an Opinion of Counsel, each stating that all conditions precedent to the defeasance under clause (c) of this Section 10.1 have been complied with; and

(G) notwithstanding any other provisions of this Section 10.1(c), such defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company or the Guarantor in connection therewith pursuant to Section 2.3.

SECTION 10.2 Application by Trustee of Funds Deposited for Payment of Securities . Subject to Section 10.4, all moneys deposited with the Trustee pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company or the Guarantor acting as its own Paying Agent), to the Holders of the particular Securities of such Series for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law.

SECTION 10.3 Repayment of Moneys Held by Paying Agent . In connection with the satisfaction and discharge of this Indenture with respect to Securities of any Series, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to such Series of Securities shall, upon written demand of the Company or the Guarantor, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 10.4 Return of Unclaimed Moneys Held by Trustee and Paying Agent . Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or interest on any Security of any Series and not applied but remaining unclaimed for two years after the date upon which such principal, interest or any Additional Amounts shall have become due and payable, shall, upon the written request of the Company or the Guarantor and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company or the Guarantor, as the case may be, by the Trustee or such Paying Agent for such Series, and the Holder of the Security of such Series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company or the Guarantor, as the case may be, for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease.

SECTION 10.5 Reinstatement of Company’s and Guarantor’s Obligations . If the Trustee is unable to apply any funds or Government Obligations in accordance with Section 10.1

by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application or by reason of the Trustee’s inability to convert any such funds or Government Obligations into the Currency required to be paid with respect to the Securities of such Series, the Company’s and the Guarantor’s obligations under this Indenture and the Securities of any Series for which such application is prohibited shall be revived and reinstated as if no deposit had occurred pursuant to Section 10.1 until such time as the Trustee is permitted to apply all such funds or Government Obligations in accordance with Section 10.1 or is able to convert all such funds or Government Obligations; provided , however , that if the Company or the Guarantor has made any payment of interest on or principal of any of such Securities because of the reinstatement of either of its obligations, the Company or the Guarantor, as the case may be, shall be subrogated to the rights of the Securityholders of such Securities to receive such payment from the funds or Government Obligations held by the Trustee.

SECTION 10.6 Payments in Foreign Currencies . Unless otherwise specified in or pursuant to this Indenture or any Security, if, after a deposit referred to in 10.1 has been made, (a) the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 3.1 or the terms of such Security to receive payment in a Currency other than that in which the deposit pursuant to Section 10.1 has been made in respect of such Security, or (b) a Conversion Event occurs in respect of the Foreign Currency in which the deposit pursuant to Section 10.1 has been made, the indebtedness represented by such Security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, and interest, if any, on, and Additional Amounts, if any, with respect to, such Security as the same becomes due out of the proceeds yielded by converting (from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such Security into the Currency in which such Security becomes payable as a result of such election or Conversion Event based on (x) in the case of payments made pursuant to clause (a) above, the applicable Market Exchange Rate for such Currency in effect on the second Business Day prior to each payment date, or (y) with respect to a Conversion Event, the applicable Market Exchange Rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event.

SECTION 10.7 Indemnification Against Taxes . The Company and the Guarantor shall pay and indemnify the Trustee (or other qualifying Trustee, collectively for purposes of this Section 10.7 and Section 10.1, the “Trustee”) against any tax, fee or other charge, imposed on or assessed against the Government Obligations deposited pursuant to Section 10.1 or the principal or interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Outstanding Securities.

ARTICLE ELEVEN

MISCELLANEOUS PROVISIONS

SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Company and Guarantor Exempt from Individual Liability . No recourse under or upon any obligation, covenant or agreement contained in this Indenture, in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any

past, present or future stockholder, member, partner, other owner of Capital Stock, officer or director, as such, of the Company or the Guarantor or of any successor, either directly or through the Company, the Guarantor or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the Holders thereof and as part of the consideration for the issue of the Securities.

SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Securityholders . Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any Person, firm or Corporation, other than the parties hereto, any Paying Agent and their successors hereunder and the Holders of the Securities any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities.

SECTION 11.3 Successors and Assigns of Company and Guarantor Bound by Indenture . All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of each of the Company and the Guarantor shall bind their respective successors and assigns, whether so expressed or not.

SECTION 11.4 Notices and Demands on Company, the Guarantor, Trustee and Securityholders . Any notice, request, instruction, communication, direction or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee, by the Holders of Securities to the Company or the Guarantor shall be in English and in writing and shall be given or served in person or by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein), by overnight courier or facsimile transmission addressed (until another address of the Company or the Guarantor is filed by the Company or the Guarantor with the Trustee) to Alterra Finance LLC, c/o Alterra Capital Holdings Limited, Alterra House, 2 Front Street, Hamilton, HM 12, Bermuda, Attention: General Counsel with a copy to the Chief Financial Officer. Notice, request, instruction, communication, direction or demand by the Company or the Guarantor or any Securityholder to the Trustee shall be in English and in writing and delivered in person, overnight courier, via facsimile or by postage pre-paid, first-class mail and shall be deemed to have been sufficiently given or made, for all purposes, if actually received at the Corporate Trust Office. Any facsimiles to the Trustee shall be sent to fax number (212) 815-5802 or (212) 815-5803.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed by first-class mail, postage prepaid to such Holders as their names and addresses appear in the Security Register within the time prescribed. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders,

and any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given.

In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Company, the Guarantor and Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.

In respect of this Indenture, the Trustee shall not have any duty or obligation to verify or confirm that the Person sending instructions, directions, reports, notices or other communications or information by electronic transmission is, in fact, a Person authorized to give such instructions, directions, reports, notices or other communications or information on behalf of the party purporting to send such electronic transmission; and the Trustee shall not have any liability for any losses, liabilities, costs or expenses incurred or sustained by any party as a result of such reliance upon or compliance with such instructions, directions, reports, notices or other communications or information. Each other party agrees to assume all risks arising out the use of electronic methods to submit instructions, directions, reports, notices or other communications or information to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, notices or other communications or information, and the risk of interception and misuse by third parties.

SECTION 11.5 Officers’ Certificates and Opinions of Counsel; Statements to Be Contained Therein . Upon any application or demand by the Company or the Guarantor to the Trustee to take any action under any of the provisions of this Indenture, the Company or the Guarantor shall furnish to the Trustee an Officers’ Certificate or Guarantor’s Officer’s Certificate, as the case may be, stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture (except for the certificates specified in Sections 3.8 and 3.9) and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the Person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an Officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such Officer knows that the certificate or opinion or representations with

respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Company or the Guarantor, upon the certificate, statement or opinion of or representations by an Officer or Officers of the Company or the Guarantor, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate, statement or opinion of an Officer of the Company or the Guarantor or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company or the Guarantor, unless such Officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion as to such matters in one or several documents.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.

SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays . Unless otherwise specified in the certificate representing the Securities of a Series, the date of Maturity of interest on or principal of the Securities of any Series or the date fixed for redemption or repayment of any such Security shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of Maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.

SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939 . If this Indenture has been qualified under the Trust Indenture Act with respect to a particular Series of Securities, and to the extent that any provision of this Indenture, with respect to said Series of Securities, limits, qualifies or conflicts with another provision included in this Indenture which is required to be included herein by any of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required provision shall control with respect to such Series of Securities.

SECTION 11.8 New York Law to Govern; Submission to Jurisdiction; Waiver of Trial by Jury . This Indenture and each Security shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State.

Each of the Company and the Guarantor submits to the jurisdiction of the courts of the State of New York and the courts of the United States, in each case located in the Borough of Manhattan, The City of New York and State of New York over any suit, action or proceeding arising under or in connection with this Indenture, the Securities, the Guarantee or the transactions contemplated hereby or the Securities. Each of the Company and the Guarantor waives any objection that it may have to the venue of any suit, action or proceeding arising under or in connection with this Indenture, the Securities, the Guarantee or the transactions contemplated hereby, in the courts of the State of New York or the courts of the United States, in each case located in the Borough of Manhattan, The City of New York and State of New York, or that such suit, action or proceeding brought in the courts of the State of New York or the courts of the United States, in each case located in the Borough of Manhattan, The City of New York and State of New York, was brought in an inconvenient court and agrees not to plead or claim the same.

Each of the Company and Guarantor agrees that service of all writs, process and summonses in any suit, action or proceeding arising under or in connection with this Indenture, the Securities, the Guarantee or the transactions contemplated hereby against the Company or Guarantor in any court of the State of New York or any United States Federal court, in each case, sitting in the Borough of Manhattan, City and State of New York, may be made upon the CT Corporation System at 111 Eighth Avenue, New York, New York 10011, whom the Company and the Guarantor irrevocably appoints as its authorized agent for service of process. Each of the Company and the Guarantor represents and warrants that the CT Corporation System has agreed to act as the Company’s and Guarantor’s agent for service of process. Each of the Company and the Guarantor agrees that such appointment shall be irrevocable until the irrevocable appointment by the Company and Guarantor of a successor in The City of New York as its authorized agent for such purpose and the acceptance of such appointment by such successor. Each of the Company and Guarantor further agrees to take any and all action, including the filing of any and all documents and instruments that may be necessary to continue such appointment in full force and effect as aforesaid. If the CT Corporation System shall cease to act as the agent for service of process for the Company and the Guarantor, the Company and the Guarantor shall appoint without delay, another such agent and provide prompt written notice to the Trustee of such appointment.

EACH PARTY HERETO, AND EACH HOLDER OF A SECURITY BY ACCEPTANCE THEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE, THE SECURITIES OR THE GUARANTEE.

SECTION 11.9 Counterparts . This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 11.10 Effect of Headings . The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 11.11 Determination of Principal Amount . In determining whether the Holders of the requisite principal amount of Outstanding Securities of any Series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, whether a quorum is present at a meeting of Holders of Securities or whether sufficient funds are available for redemption or for any other purpose, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.1 and the principal amount of any Securities denominated in a Foreign Currency that shall be deemed to be Outstanding for such purposes shall be determined by the Company and notified to the Trustee in writing by converting the Foreign Currency into Dollars at the Market Exchange Rate as of the date of such determination.

ARTICLE TWELVE

REDEMPTION OF SECURITIES AND SINKING FUNDS

SECTION 12.1 Applicability of Article . The provisions of this Article shall be applicable to the Securities of any Series which are redeemable before their Maturity or to any sinking fund for the retirement of Securities of a Series except as otherwise specified as contemplated by Section 2.3 for Securities of such Series.

SECTION 12.2 Notice of Redemption; Partial Redemptions . Notice of redemption to the Holders of Securities of any Series to be redeemed as a whole or in part at the option of the Company shall be given by giving notice of such redemption as provided in Section 11.4, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such Series. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a Series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such Series.

The notice of redemption to each such Holder shall identify the Securities to be redeemed (including “CUSIP” or “ISIN” numbers), specify the Redemption Date, the redemption price, the Place or Places of Payment, that payment will be made upon presentation and surrender of such Securities, and that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, or for tax or other reasons, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue and that, if less than all of the Outstanding Securities of a Series are to be redeemed, the identification and principal amount of the Securities to be redeemed. If less than all of the Securities of any Series are to be redeemed, the notice of redemption shall specify the numbers of the Securities of such Series to be redeemed. In case any Security of a Series is to be redeemed in part, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such Series in principal amount equal to the unredeemed portion thereof will be issued.

The notice of redemption of Securities of any Series to be redeemed at the option of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company. The Company shall give the Trustee at least 45 days prior written notice of any redemption hereunder (unless a shorter notice shall be satisfactory to the Trustee).

Not later than 10:00 a.m., New York time, on the Redemption Date specified in the notice of redemption given as provided in this Section, the Company will have on deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, will set aside, segregate and hold in trust as provided in Section 3.4) an amount of money in the Currency in which the Securities of such Series are payable (except as otherwise specified pursuant to Section 2.3 and except as provided in Sections 2.12(b), (d) and (e) of this Indenture) sufficient to redeem on the Redemption Date all the Securities of such Series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the Outstanding Securities of a Series are to be redeemed, the Company will deliver to the Trustee at least 45 days prior to the date fixed for redemption an Officers’ Certificate stating the aggregate principal amount of Securities to be redeemed.

If less than all the Securities of a Series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such Series to be redeemed in whole or in part. Securities may be redeemed in part equal to the minimum authorized denomination for Securities of such Series or any integral multiple in excess thereof. The Trustee shall promptly notify the Company in writing of the Securities of such Series selected for redemption and, in the case of any Securities of such Series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any Series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.

SECTION 12.3 Payment of Securities Called for Redemption . If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the Redemption Date, and on and after said date (unless the Company shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a Place of Payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any semi-annual payment of interest on Securities becoming due on the date fixed for redemption shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.4 hereof.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest borne by the Security.

Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption . Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in an Officers’ Certificate and delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Company, (b) the Guarantor or (c) an entity specifically identified in such written statement directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.

SECTION 12.5 Mandatory and Optional Sinking Funds . The minimum amount of any sinking fund payment provided for by the terms of Securities of any Series is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of any Series is herein referred to as an “optional sinking fund payment.” The date on which a sinking fund payment is to be made is herein referred to as the “sinking fund payment date.”

In lieu of making all or any part of any mandatory sinking fund payment with respect to any Series of Securities in cash, the Company or the Guarantor may at its option (a) deliver to the Trustee Securities of such Series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Company or the Guarantor or receive credit for Securities of such Series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company or the Guarantor and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such Series (not previously so credited) redeemed by the Company or the Guarantor through any optional redemption provision contained in the terms of such Series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities.

On or before the forty-fifth day next preceding each sinking fund payment date for any Series of Securities, the Company or the Guarantor will deliver to the Trustee a written statement (which need not contain the statements required by Section 11.5) signed by an Officer of the Company or the Guarantor, as the case may be, (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash in the Currency in which the Securities of such Series are payable (except as otherwise specified pursuant to Section 2.3 for the Securities of such Series and except as provided in Section 2.12(b), (d) and (e) hereof), and the portion to be satisfied by credit of Securities of such Series, (b) stating that none of the Securities of such Series has theretofore been so credited, (c) stating that no defaults in the payment of

interest or Events of Default with respect to such Series have occurred (which have not been waived or cured) and are continuing, (d) stating whether or not the Company or the Guarantor, as the case may be, intends to exercise its right to make an optional sinking fund payment with respect to such Series and, if so, specifying the amount of such optional sinking fund payment which the Company or the Guarantor, as the case may be, intends to pay on or before the next succeeding sinking fund payment date and (e) specifying such sinking fund payment date. Any Securities of such Series to be credited and required to be delivered to the Trustee in order for the Company or the Guarantor, as the case may be, to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such written statement on or before said forty-fifth day (or reasonably promptly thereafter if acceptable to the Trustee). Such written statement shall be irrevocable and upon its receipt by the Trustee the Company and the Guarantor shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Company or the Guarantor, on or before any such forty-fifth day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Company or the Guarantor (i) that the mandatory sinking fund payment for such Series due on the next succeeding sinking fund payment date shall be paid entirely in cash (in the Currency described above) without the option to deliver or credit Securities of such Series in respect thereof and (ii) that the Company or the Guarantor will make no optional sinking fund payment with respect to such Series as provided in this Section.

If the sinking fund payment or payments (mandatory or optional or both) to be made in cash (in the Currency described above) on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $100,000, or the equivalent in the Currency in which the Securities of such Series are payable (or a lesser sum if the Company or the Guarantor shall so request) with respect to the Securities of any particular Series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such Series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $100,000, or the equivalent in the Currency in which the Securities of such Series are payable, or less and the Company or the Guarantor makes no such request then it shall be carried over until a sum in excess of $100,000, or the equivalent in the Currency in which the Securities of such Series are payable, is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such Series to absorb said cash, as nearly as may be possible, and shall (if requested in writing by the Company or the Guarantor) inform the Company or the Guarantor of the serial numbers of the Securities of such Series (or portions thereof) so selected. Securities of any Series which are identified by registration and certificate number in an Officers’ Certificate at least 45 days prior to the sinking fund payment date as being beneficially owned by, and not pledged or hypothecated by, the Company, the Guarantor or an entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the Guarantor shall be excluded from Securities of such Series eligible for selection for redemption. The Company or the Guarantor (or the Trustee, in the name and at the expense of the Company or the Guarantor if it shall so request of the Trustee in writing) shall cause notice of redemption of the Securities of such Series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such Series in part

at the option of the Company. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such Series shall be added to the next cash sinking fund payment for such Series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the Stated Maturity date of the Securities of any particular Series (or earlier, if such Maturity is accelerated), which are not held for the payment or redemption of particular Securities of such Series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such Series at Maturity.

The Trustee shall not convert any Currency in which the Securities of such Series are payable for the purposes of such sinking fund application unless specifically requested to do so by the Company or the Guarantor, and any such conversion agreed to by the Trustee in response to such request shall be for the account and at the expense of the Company or the Guarantor and shall not affect the Company’s or the Guarantor’s obligation to pay the Holders in the Currency to which such Holder may be entitled.

Not later than 10:00 a.m., New York time, on the sinking fund payment date, the Company or the Guarantor shall have paid to the Trustee in cash (in the Currency described in the third paragraph of this Section 12.5) or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date.

The Trustee shall not redeem or cause to be redeemed any Securities of a Series with sinking fund moneys or mail or publish any notice of redemption of Securities for such Series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the mailing or publication of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company or the Guarantor a sum sufficient for such redemption in immediately available funds. Except as aforesaid, any moneys in the sinking fund for such Series at the time when any such Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the forty-fifth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities.

SECTION 12.6 Repayment at the Option of the Holders . Securities of any Series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with the terms of the Securities of such Series.

The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their Stated Maturity, for purposes of Section 10.1, shall not operate as a payment, redemption or satisfaction of the Indebtedness represented by such Securities unless and until the Company or the Guarantor, at its option, shall deliver or surrender the same to the Trustee with a directive that such Securities be cancelled.

SECTION 12.7 Optional Redemption For Tax Reasons . The Company shall be entitled to redeem all, but not part, of the Securities of any Series if as a result of any change in or amendment to the laws, including any regulations promulgated thereunder, of the Relevant Tax Jurisdiction or any change in or amendment to any official position regarding the application or interpretation of such laws or regulations (a “Change in Tax Law”), the Payor is or would be required on the occasion of the next payment of principal or interest in respect of the Securities of such Series to pay Additional Amounts pursuant to Section 3.4 and the payment of such Additional Amounts cannot be avoided by the use of any reasonable measures available to the Payor. The Change in Tax Law must be announced and become effective (i) in the case of the Guarantor, after the original issue date with respect to the Securities of such Series and (ii) in the case of any successor to the Guarantor or the Company, after the date such successor became the successor to the Guarantor or the Company, as the case may be. Notwithstanding anything to the contrary contained in this Article Twelve, the Company must (i) deliver to the Trustee at least 30 days before the Redemption Date an Officers’ Certificate and an opinion of independent legal counsel of recognized standing to the effect that the Payor has or will become obligated to pay Additional Amounts as a result of such Change in Tax Law and (ii) provide the Holders with notice of the intended redemption at least 30 days and no more than 60 days before the Redemption Date. The redemption price will equal (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment) the principal amount of the Securities of such Series plus accrued interest to the Redemption Date.

ARTICLE THIRTEEN

GUARANTEE AND INDEMNITY

SECTION 13.1 The Guarantee .

(a) The Guarantor hereby unconditionally guarantees to each Holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of, any premium and interest on, and any Additional Amounts with respect to such Security and the due and punctual payment of the sinking fund payments (if any) provided for pursuant to the terms of such Security and any other amounts due under this Indenture, when and as the same shall become due and payable, whether at Maturity, by acceleration, redemption, repayment or otherwise, in accordance with the terms of such Security and of this Indenture. In case of the failure of the Company punctually to pay any such principal, premium, interest, Additional Amounts, sinking fund payment or other amount, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at Maturity, upon acceleration, redemption, repayment or otherwise, and as if such payment were made by the Company. The aforesaid Guarantee is one of payment and not of collection.

(b) The Guarantor’s obligations hereunder shall rank pari passu with all other senior unsecured debt obligations of the Guarantor (other than any obligations preferred by statute or by operation of law).

(c) The Guarantor’s obligation under Section 13.1(a) shall terminate if and when the Company ceases to be a Subsidiary of the Guarantor; provided , however , that immediately prior to such termination, the Guarantor shall automatically assume, without any action by the Holders

or the Trustee or any further action on behalf of the Guarantor, the due and punctual payment of the principal of, any premium and interest on and any Additional Amounts with respect to all the Securities and the performance of every obligation in this Indenture and the Outstanding Securities on the part of the Company to be performed or observed with the same effect as if the Guarantor had been named as an issuer herein. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such Series.

(d) The Guarantor may, without the consent of the Holders, assume all of the rights and obligations of the Company hereunder with respect to a Series of Securities and under the Securities of such Series if, after giving effect to such assumption, no Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such Series.

(e) The Guarantor shall assume all of the rights and obligations of the Company hereunder with respect to a Series of Securities and under the Securities of such Series if, upon a default by the Company in the due and punctual payment of the principal of, any premium and interest on and any Additional Amounts with respect to all such Securities, the Guarantor is prevented by any court order or judicial proceeding from fulfilling its obligations under Section 13.1(a) with respect to such Series of Securities. Such assumption shall result in the Securities of such Series becoming the direct obligations of the Guarantor and shall be effected without the consent of the Holders of the Securities of any Series. Upon such an assumption, the Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such Series.

SECTION 13.2 Guarantee Unconditional, etc. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security or this Indenture, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the Holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of, any premium and interest on, and any Additional Amounts and sinking fund payments required with respect to, the Securities and the complete performance of all other obligations contained in the Securities. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the Maturity of the obligations

guaranteed hereby may be accelerated as provided in Section 5.1 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or prohibition extant under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.

SECTION 13.3 Limitation on Liability . The Guarantor, and by its acceptance of Securities of any series, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee not constitute a fraudulent transfer or conveyance for purposes of the United State Bankruptcy Code or any similar law to the extent applicable to any Guarantee. Any term of provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by the Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to the Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

SECTION 13.4 Reinstatement . This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment on any Security, in whole or in part, is rescinded or must otherwise be restored to the Company or the Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.

SECTION 13.5 Subrogation . The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided , however , that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, any premium and interest on, and any Additional Amounts and sinking fund payments required with respect to, all Securities shall have been paid in full.

SECTION 13.6 Indemnity . As a separate and alternative stipulation, the Guarantor unconditionally and irrevocably agrees that any sum expressed to be payable by the Company under this Indenture, the Securities but which is for any reason (whether or not now known or becoming known to the Company, the Guarantor, the Trustee or any Holder of any Security) not recoverable from the Guarantor on the basis of the Guarantee will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by it to the Trustee on demand. This indemnity constitutes a separate and independent obligation from the other obligations in this Indenture, gives rise to a separate and independent cause of action and will apply irrespective of any indulgence granted by the Trustee or any Holder of any Security.

[ signature page follows ]

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.



	ALTERRA FINANCE LLC,
		as Issuer

	By:	/s/ Peter A. Minton
		Name: Peter A. Minton
		Title: Chief Operating Officer


	ALTERRA CAPITAL HOLDINGS LIMITED,
		as Guarantor

	By:	/s/ Peter A. Minton
		Name: Peter A. Minton
		Title: Chief Operating Officer


	THE BANK OF NEW YORK MELLON
		as Trustee, Paying Agent and Registrar

	By:	/s/ Lici Zhu
		Name: Lici Zhu
		Title: Assistant Vice President

S-1

Exhibit 4.15

______________________________________________________________________________

ALTERRA FINANCE LLC, AS ISSUER
ALTERRA CAPITAL HOLDINGS LIMITED, AS GUARANTOR

AND

THE BANK OF NEW YORK MELLON, AS TRUSTEE, PAYING AGENT AND REGISTRAR

___________________

FIRST SUPPLEMENTAL INDENTURE

Dated as of September 27, 2010

SENIOR INDENTURE

Dated as of September 1, 2010

___________________

6.25% Senior Notes due 2020

____________________________________________________________________________________________________________________________________________________________

This FIRST SUPPLEMENTAL INDENTURE, dated as of September 27, 2010 (this “ First Supplemental Indenture ”), among ALTERRA FINANCE LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the “ Company ”), ALTERRA CAPITAL HOLDINGS LIMITED, a company duly organized and existing under the laws of Bermuda (the “ Guarantor ”), and THE BANK OF NEW YORK MELLON, a corporation organized under the laws of the State of New York authorized to conduct a banking business, as Trustee (the “ Trustee ”), Paying Agent (the “ Paying Agent ”) and Registrar (the “ Registrar ”), to the Senior Indenture dated as of September 1, 2010 among the Company, the Guarantor and the Trustee (the “ Original Indenture ” and as hereby supplemented, the “ Indenture ”).

RECITALS OF THE COMPANY

WHEREAS, the Company entered into the Original Indenture to provide for the issuance from time to time of its notes, unsecured debentures, securities or other evidences of indebtedness (therein called the “ Securities ”), in an unlimited aggregate principal amount to be issued in one or more series as contemplated therein;

WHEREAS, pursuant to the terms of the Indenture, the Company desires by this First Supplemental Indenture to provide for the establishment of one new Series of its Securities to be known as its 6.25% Senior Notes due 2020 (the “ Senior Notes ”), the form and substance of such Senior Notes and the terms, provisions and conditions thereof to be set forth as provided in the Original Indenture and this First Supplemental Indenture;

WHEREAS, the Guarantor desires to guarantee the Senior Notes;

WHEREAS, each of the Company and the Guarantor has duly authorized the execution and delivery of this First Supplemental Indenture to establish the Senior Notes as a Series of Securities under the Original Indenture and to provide for, among other things, the issuance and form of the Senior Notes and the terms, provision, conditions and guarantee thereof;

WHEREAS, the Company desires and has requested the Trustee to join with it in the execution and delivery of this First Supplemental Indenture, and all requirements necessary to make this First Supplemental Indenture a valid instrument, in accordance with its terms, and to make the Senior Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company and the Guarantor, have been satisfied; and

NOW THEREFORE, in consideration of the premises and the purchase of the Senior Notes by the Holders thereof, the Company, the Guarantor and the Trustee mutually covenant and agree for the equal and proportionate benefit of all Holders of the Senior Notes as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101. Definitions . Each capitalized term used but not defined in this First Supplemental Indenture shall have the meaning assigned to such term in the Original Indenture. For all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(b) all terms used herein without definition which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c) any reference herein to an “Article” or “Section” refers to an “Article” or “Section”, as the case may be, of this First Supplemental Indenture; and

(d) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision.

Section 102. Certain Definitions . The following definitions are hereby added to the definitions contained in Section 1.1 of the Original Indenture, but only with respect to the Senior Notes issued in accordance with the provisions hereof:

“ Additional Notes ” means any Senior Notes issued under this First Supplemental Indenture at any time after the date hereof, in addition to the Initial Notes, and having the same terms in all respects as the Senior Notes (except for the issue date, issue price and, if applicable, the date from which interest thereon shall begin to accrue, the initial interest payment date), which if issued, will be treated with the Initial Notes as single Series and single class of Securities with the Senior Notes for all purposes under the Indenture.

“ Comparable Treasury Issue ” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“ Remaining Life ”) of the Senior Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life.

“ Comparable Treasury Price ” means (1) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four Reference Treasury Dealer Quotations, the average of all such quotations.

“ Independent Investment Banker ” means Banc of America Securities LLC, Citigroup Global Markets Inc., and Wells Fargo Securities, LLC, or, if these firms are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

“ Initial Notes ” means the aggregate principal amount of $350,000,000 of Senior Notes issued under this First Supplemental Indenture on the Issue Date.

“ Issue Date ” means September 27, 2010, the date of the original issuance of the Initial Notes.

“ Reference Treasury Dealer ” means (1) Banc of America Securities LLC, Citigroup Global Markets Inc., and a primary treasury dealer (defined herein) selected by Wells Fargo

Securities, LLC, and their respective successors; provided, however, that if any of the foregoing cease to be a primary U.S. Government securities dealer in the United States (a “ Primary Treasury Dealer ”), the Company shall substitute therefor another Primary Treasury Dealer; and (2) any one other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company.

“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

“ Remaining Scheduled Payments ” means the remaining scheduled payments of principal of and interest on the Senior Note that would be due after the related Redemption Date but for such redemption. If such Redemption Date is not an Interest Payment Date with respect to this Senior Note, the amount of the next succeeding scheduled interest payment on this Senior Note will be reduced by the amount of interest accrued on this Senior Note to such Redemption Date.

“ Senior Notes ” means the Initial Notes and any Additional Notes issued on or after the Issue Date in accordance with Section 201 herein treated as a single Series and single class of Securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this First Supplemental Indenture.

“ Treasury Rate ” means, with respect to any Redemption Date:

•

the yield, under the heading which represents the average for the week immediately preceding the date of calculation, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from these yields on a straight line basis, rounding to the nearest month); or

•

if the release (or any successor release) is not published during the week immediately preceding the calculation date or does not contain these yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date;

in each case, calculated on the third Business Day preceding the Redemption Date.

ARTICLE TWO

THE SENIOR NOTES

Section 201. Designation and Issuance of Senior Notes .

(a) There is hereby created a Series of Securities designated, as hereinbefore recited, as the Company’s “6.25% Senior Notes due 2020.” In accordance with Section 2.4 of the Original Indenture, the Trustee will, upon receipt of an Officers’ Certificate, authenticate (i) the Initial Notes and (ii) any Additional Notes from time to time as permitted under the Indenture.

(b) The Senior Notes shall be issuable initially in the form of one or more Global Securities and shall bear the legends, in each case, substantially in the form set forth in Exhibit A hereto. The aggregate principal amount of Senior Notes which may be authenticated and delivered under this First Supplemental Indenture is unlimited. The aggregate principal amount of Initial Notes which may be authenticated and delivered under this First Supplemental Indenture on the Issue Date is $350,000,000 (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Sections 2.8, 2.9, 2.11 or 12.3 of the Original Indenture), and the Senior Notes shall be denominated and payable in Dollars.

(c) The Company initially appoints The Depository Trust Company (the “ DTC ”) to act as Depositary with respect to the Senior Notes.

(d) The Company initially appoints the Trustee to act as Registrar and Paying Agent with respect to the Senior Notes, and the Trustee hereby agrees so to initially act.

(e) The Senior Notes are not convertible into Securities of any other Series.

(f) The Company shall pay the principal of, any premium and interest on, the Senior Notes in accordance with Section 3.4 of the Original Indenture.

Section 202. Form, Date, Maturity, Interest Rate and Interest Payment Dates of Senior Notes .

The Senior Notes shall be payable in the amounts, on the dates and in the manner provided for in the form of the Senior Notes attached hereto as Exhibit A and such provisions are incorporated at this place as though set forth in their entirety. The interest rate and the Maturity of the Senior Notes shall be as set forth in the form of the Senior Notes attached hereto as Exhibit A.

Section 203. Optional Redemption of Senior Notes .

The Senior Notes shall be redeemable at the option of the Company, at the times and in the manner provided for in the form of the Senior Notes attached hereto as Exhibit A, and such provisions are incorporated at this place as though set forth in their entirety.

Section 204. Issuances of Additional Notes .

The Company shall be entitled, upon delivery of the Officers’ Certificate for authentication required pursuant to Section 2.4 of the Original Indenture, to issue Additional Notes under this First Supplemental Indenture. The Initial Notes issued on the Issue Date, and any Additional Notes issued shall be treated as a single series and single class of Securities for all purposes under this First Supplemental Indenture and the Original Indenture.

(a) At any time after the execution of this First Supplemental Indenture, the Company may deliver Additional Notes to the Trustee for authentication, together with an Officers’ Certificate for the authentication and delivery of such Additional Notes and the Trustee shall thereafter authenticate and deliver such Additional Notes in accordance with such Officers’ Certificate. In authenticating such Additional Notes and accepting the additional responsibilities under this First Supplemental Indenture in relation to such Additional Notes, the Trustee shall be entitled to receive and fully protected in relying upon an Officers’ Certificate, setting forth any limit upon the aggregate principal amount of such Additional Notes to be authenticated and delivered under this First Supplemental Indenture and setting forth the issue price, the issue date and the CUSIP number of such Additional Notes, prepared in accordance with Section 11.5 of the Original Indenture.

Section 205. Guarantee .

In accordance with, and subject to, Article Thirteen of the Original Indenture, the Senior Notes will be fully and unconditionally guaranteed by the Guarantor. The Guarantor’s obligations under its guarantee of the Senior Notes shall rank pari passu with all other senior unsecured debt obligations of the Guarantor (other than any obligations preferred by statute or by operation of law).

ARTICLE THREE

SINKING FUND

Section 301. No Sinking Fund . The Senior Notes are not entitled to the benefit of any sinking fund.

ARTICLE FOUR

MISCELLANEOUS PROVISIONS

Section 401. Ratification . The Original Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed. This First Supplemental Indenture shall be deemed part of the Original Indenture in the manner and to the extent provided herein and therein and every Holder of Senior Notes authenticated and delivered under this First Supplemental Indenture shall be bound hereby and thereby. Notwithstanding any other provision of the Original Indenture or this First Supplemental Indenture to the contrary, to the extent any provisions of this First Supplemental Indenture or the Senior Note issued hereunder shall conflict with any provision of the Original Indenture, the provisions of this First Supplemental Indenture or the Senior Notes, as applicable, shall govern.

Section 402. Governing Law; Waiver of Trial by Jury . This First Supplemental Indenture and the Senior Notes shall be governed by and construed in accordance with the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State. Each of the Company and Guarantor agrees to be bound by the provisions of Section 11.8 of the Original Indenture.

Section 403. Severability Clause . In case any provision in this First Supplemental Indenture or the Senior Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 404. Conflict with Trust Indenture Act . If any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this First Supplemental Indenture by, or is otherwise governed by, any of the provisions of the Trust Indenture Act, such other provision shall control; and if any provision hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall control unless otherwise provided as contemplated by Section 11.7 of the Original Indenture with respect to this Series of Senior Notes.

Section 405. No Additional Rights . Nothing in this First Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this First Supplemental Indenture.

Section 406. Successors and Assigns . All covenants and agreements in this First Supplemental Indenture by the Company, the Guarantor and the Trustee shall bind their respective successors and assigns, whether so expressed or not.

Section 407. Effective Date . This First Supplemental Indenture shall become effective upon the execution and delivery by the parties hereto.

Section 408. Execution in Counterparts . This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

Section 409. No Liability of the Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Company and the Guarantor.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the day and year first above written.



ALTERRA FINANCE LLC, as Issuer

By:		/s/ Joseph W. Roberts
	Name:	Joseph W. Roberts
	Title:	Chief Financial Officer


ALTERRA CAPITAL HOLDINGS LIMITED, as Guarantor

By:		/s/ Joseph W. Roberts
	Name:	Joseph W. Roberts
	Title:	Chief Financial Officer


THE BANK OF NEW YORK MELLON, as Trustee, Paying Agent and Registrar

By:		/s/ Lici Zhu
	Name:	Lici Zhu
	Title:	Assistant Vice President

First Supplemental Indenture

EXHIBIT A

[FORM OF SENIOR NOTE]

CUSIP NUMBER 02153LAA2
ISIN NUMBER USO2153LAA26

(Face of Senior Note)

THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.8 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.8(a) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

ALTERRA FINANCE LLC

6.25% SENIOR NOTES DUE 2020

No. __

ALTERRA FINANCE LLC, a Delaware limited liability company (the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of ___________________ Dollars, or such greater or lesser amount as may from time to time be endorsed on the Schedule of Increases and Decreases of Interests in the Global Securities attached hereto (but in no event may such amount exceed the aggregate principal amount of Senior Notes authenticated pursuant to Section 2.4 of the Original Indenture referred to below and then outstanding pursuant to the First Supplemental Indenture) on the Maturity specified below.

Original Issue Date: September 27, 2010

Maturity: September 30, 2020

Interest Rate: 6.25%

Interest Payment Dates: September 30 and March 30, commencing March 30, 2011

Record Dates: September 15 and March 15

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name by the manual or facsimile signature of an Officer and attested by the manual or facsimile signature of another Officer.



ALTERRA FINANCE LLC

By:
	Name:	Joseph W. Roberts
	Title:	Chief Financial Officer


ATTEST:

By:
	Name:	Carol S. Rivers
	Title:	Secretary and General Counsel

This is one of the Senior Notes of the Series herein designated referred to in the within-mentioned Indenture.

Dated: September 27, 2010



THE BANK OF NEW YORK MELLON
as Trustee

By:
	Authorized Signatory

ALTERRA FINANCE LLC

6.25% SENIOR NOTES DUE 2020

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. The Senior Notes are general obligations of the Alterra Finance LLC as described in the Indenture. This Senior Note is entitled to the benefits of the guarantee by Alterra Capital Holdings Limited (the “Guarantor”) on the terms set forth in the Indenture.

1. Interest . ALTERRA FINANCE LLC, a Delaware limited liability company (the “Company”) promises to pay interest from the Original Issue Date specified above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on the Interest Payment Dates specified above in each year, commencing on March 30, 2011, and at Maturity, at the interest rate per annum specified above, until the principal hereof is paid or made available for payment. No interest shall accrue on or after Maturity, so long as the principal amount of this Senior Note is paid at Stated Maturity. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date (except for interest payable on the Maturity specified above, or, if applicable, upon redemption or acceleration) will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Senior Note is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such payment date; and provided, that interest payable on the Stated Maturity specified above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable on such Stated Maturity. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and shall be paid to the Person in whose name this Senior Note is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders not more than fifteen days or fewer than ten days prior to such special record date.

No reference herein to the Indenture and no provision of this Senior Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Senior Note at the times, place, and rate, in the coin or currency, and in the manner, herein prescribed.

2. Method of Payment . Payment of the principal of and premium, if any, on this Senior Note and interest hereon at the Maturity shall be made upon presentation of this Senior Note at the Corporate Trust Office of The Bank of New York Mellon as Paying Agent, located at 101 Barclay Street 4E, New York, New York 10286, or at such other office or agency as may be designated for such purpose by the Company from time to time. Payment of interest on this Senior Note (other than interest at Maturity) shall be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, except that (a) if such Person shall be a Depositary, such payment may be made by wire transfer to the account of the Depositary or to such other account as directed in writing by the Depositary and (b) if such Person is a Holder of $1,000,000 or more in aggregate principal amount of Senior Notes of this Series such payment may be in immediately available funds by wire transfer to such account as

may have been designated in writing by such Holder as set forth herein in time for the Paying Agent to make such payments in accordance with its normal procedures. Any such designation for wire transfer purposes shall be made by filing the appropriate information with the Trustee and the Paying Agent not less than fifteen calendar days prior to the applicable payment date and, unless revoked by written notice to the Trustee and the Paying Agent received on or prior to the Record Date immediately preceding the applicable payment date, shall remain in effect with respect to any further payments (other than interest payments at Stated Maturity) with respect to this Senior Note payable to such Holder. Payment of the principal of and premium, if any, and interest on this Senior Note, as aforesaid, shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

If any Interest Payment Date, any Redemption Date, or Maturity shall not be a Business Day (as hereinafter defined), payment of the amounts due on this Senior Note on such date may be made on the next succeeding Business Day; and, if such payment is made or duly provided for on such next succeeding Business Day, no interest shall accrue on such amounts for the period from and after such Interest Payment Date, Redemption Date, or Stated Maturity, as the case may be, to such Business Day.

3. Paying Agent and Registrar . Initially, The Bank of New York Mellon, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company and the Guarantor may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its subsidiaries and the Guarantor may act in any such capacity; provided that if the Company or such subsidiary and the Guarantor is acting as Paying Agent, the Company or such subsidiary and Guarantor shall segregate all funds held by it as Paying Agent and hold them in a separate trust fund for the benefit of the Holders.

4. Registration of Transfer and Exchange . As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Senior Note is registrable in the Security Register, upon surrender of this Senior Note for registration of transfer at the office of the Registrar, The Bank of New York Mellon, located at 101 Barclay Street 4E, New York, New York 10286, or such other office or agency as may be designated by the Company from time to time, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes of this Series of authorized denominations and of like tenor and aggregate principal amount, will be issued to the designated transferee or transferees.

Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange Senior Notes during a period beginning at the opening of business 15 days before the day of any selection of Senior Notes for redemption under Article Twelve of the Original Indenture and ending at the close of business on the date of selection, (B) to register the transfer of or to exchange Senior Notes so selected for redemption in whole or in part, except the unredeemed portion of the Senior Notes being redeemed in part or (C) to register the transfer of or to exchange Senior Notes between a record date (including a regular record date) and the next succeeding Interest Payment Date.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Senior Note for registration of transfer, the Company, the Trustee, the Agent and any other agent of the Company or the Trustee may treat the Person in whose name this Senior Note is registered as the absolute owner hereof for all purposes, whether or not this Senior Note be overdue, and neither the Company, the Trustee, any Agent nor any other such agent shall be affected by notice to the contrary.

5. Indenture . This Senior Note is a global security in respect of a duly authorized issue of 6.25% Senior Notes due 2020 (the “Senior Notes,” which term includes any global note representing such Senior Notes) of the Company, issued and issuable in one or more Series under the Indenture dated as of September 1 (the “Original Indenture”), as supplemented by the First Supplemental Indenture, dated as of September 27, 2010 (the “First Supplemental Indenture”) (as originally executed and delivered and as supplemented or amended from time to time thereafter being herein called the “Indenture”), among the Company, the Guarantor and The Bank of New York Mellon as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture references are hereby made for a description of the respective rights, limitations of rights, duties, and immunities of the Company, the Guarantor, the Trustee, and the Holders of the Senior Notes thereunder and of the terms and conditions upon which the Senior Notes are, and are to be, authenticated and delivered. The acceptance of this Senior Note shall be deemed to constitute the consent and agreement by the Holder hereof to all of the terms and provisions of the Indenture. This Senior Note is one of the Series designated on the face hereof.

6. Optional Redemption .

This Senior Note is redeemable, at any time in whole or from time to time in part, at the Company’s option, on at least 30 days’, but not more than 60 days’, prior notice delivered to each Holder of the Senior Notes in the manner set forth in Section 12.2 of the Original Indenture. The redemption price will be equal to the greater of: (1) 100% of the principal amount of the Senior Notes to be redeemed, and (2) as determined by the Independent Investment Banker (as defined below), the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the Redemption Date, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) plus 50 basis points. In each case, accrued and unpaid interest will be payable to the Redemption Date.

“ Treasury Rate ” means, with respect to any Redemption Date:

•

maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from these yields on a straight line basis, rounding to the nearest month); or

•

in each case, calculated on the third Business Day preceding the Redemption Date.

“ Comparable Treasury Issue ” means the United States Treasury security selected by an independent investment banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Senior Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life.

“ Reference Treasury Dealer ” means (1) Banc of America Securities LLC, Citigroup Global Markets Inc., and a primary treasury dealer (defined herein) selected by Wells Fargo Securities, LLC, and their respective successors; provided, however, that if any of the foregoing cease to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer; and (2) any one other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company.

On and after the Redemption Date, interest will cease to accrue on this Senior Note or any portion of the Senior Note so called for redemption (unless the Company defaults in the payment of the redemption price and accrued interest). On or before 10:00 a.m. New York City time on the Redemption Date, the Company will deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on the Senior Note to be redeemed on such date. If less than all the Senior Notes of any Series are to be redeemed, the Senior Notes to be redeemed shall be selected by the Trustee in accordance with Section 12.2 of the Original Indenture.

7. Optional Redemption For Tax Reasons .

The Company shall be entitled to redeem all, but not part, of the Senior Notes if as a result of any change in or amendment to the laws, including any regulations promulgated thereunder, of the Relevant Tax Jurisdiction or any change in or amendment to any official position regarding the application or interpretation of such laws or regulations (a “Change in Tax Law”), the Payor is or would be required on the occasion of the next payment of principal or interest in respect of the Senior Notes to pay Additional Amounts pursuant to Section 3.4 of the Original Indenture and the payment of such Additional Amounts cannot be avoided by the use of any reasonable measures available to the Payor. The Change in Tax Law must be announced and become effective (i) in the case of the Guarantor, after the original issue date with respect to the Senior Notes and (ii) in the case of any successor to the Guarantor or the Company, after the date such successor became the successor to the Guarantor or the Company, as the case may be. The Company must (i) deliver to the Trustee at least 30 days before the Redemption Date an Officers’ Certificate and an opinion of independent legal counsel of recognized standing to the effect that the Payor has or will become obligated to pay Additional Amounts as a result of such Change in Tax Law and (ii) provide the Holders with notice of the intended redemption at least 30 days and no more than 60 days before the Redemption Date. The redemption price will equal (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant interest payment) the principal amount of Senior Notes plus accrued interest to the Redemption Date.

8. Mandatory Redemption .

The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Senior Notes.

9. Notice of Redemption; New Notes . Notice of redemption shall be given by mail to Holders of Senior Notes, not less than 30 days nor more than 60 days prior to the date fixed for redemption, all as provided in the Indenture. As provided in the Original Indenture, notice of redemption at the election of the Company as aforesaid may state that such redemption shall be conditional upon the receipt by the Paying Agent or Agents of money sufficient to pay the principal of and premium, if any, and interest, if any, on this Senior Note on or prior to the date fixed for such redemption; a notice of redemption so conditioned shall be of no force or effect if such money is not so received and, in such event, the Company shall not be required to redeem this Senior Note.

In the event of redemption of this Senior Note in part only, a new Senior Note or Senior Notes of this series, of like tenor, representing the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof.

10. Denominations . The Senior Notes of this Series are issuable only as registered notes, without coupons, and in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

11. Amendment, Supplement and Waiver . The Indenture permits, with certain exceptions as therein provided, the Company, the Guarantor and the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture with the consent of the Holders of a majority in aggregate principal amount of the Senior Notes then Outstanding under the Indenture; provided, however, that if there shall be Securities of more than one Series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of any such Series, then the consent of the Holders of only a majority in aggregate principal amount of the Outstanding Securities of all Series so directly affected, considered as one class, shall be required; and provided, further, that the Indenture permits the Trustee, the Company and the Guarantor to enter into one or more supplemental indentures for limited purposes without the consent of any Holders of Senior Notes. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Senior Notes then Outstanding, on behalf of the Holders of all Senior Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Senior Note shall be conclusive and binding upon such Holder and upon all future Holders of this Senior Note and of any Senior Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Senior Note.

12. Defaults and Remedies . If an Event of Default with respect to the Senior Notes shall occur and be continuing, the principal of this Senior Note may be declared due and payable in the manner and with the effect provided in the Indenture.

13. No Recourse Against Others . As provided in the Indenture, no recourse shall be had for the payment of the principal of or premium, if any, or interest on any Senior Notes, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant, or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present, or future of the Company or of any predecessor or successor corporation (either directly or through the Company, or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and this Senior Note are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of this Senior Note.

14. Authentication . Unless the certificate of authentication hereon has been executed by the Trustee or an authenticating agent by manual signature, this Senior Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

15. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Senior Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

Alterra Finance LLC
c/o Alterra Capital Holdings Limited
Alterra House
2 Front Street
Hamilton, HM 11, Bermuda

16. Discharge and Defeasance . As provided in the Indenture and subject to certain limitations therein and herein set forth, this Senior Note or any portion of the principal amount hereof will be deemed to have been paid for all purposes of the Indenture and to be no longer Outstanding thereunder if there has been irrevocably deposited with the Trustee in trust, money in an amount which will be sufficient and/or Government Obligations, the principal of and interest on which when due, without any regard to reinvestment thereof, will provide moneys which, together with moneys so deposited, will be sufficient to pay when due the principal of and premium, if any, and interest, if any, on this Senior Note when due.

17. Consolidation, Amalgamation, Merger and Sales . The Indenture contains terms, provisions, and conditions relating to the consolidation or merger of the Company and the Guarantor with or into, and the conveyance or other transfer, or lease, of assets to, another Person, to the assumption by such other Person, in certain circumstances, of all of the obligations

of the Company or the Guarantor under the Indenture and on the Senior Notes and to the release and discharge of the Company or the Guarantor in certain circumstances, from such obligations.

18. Governing Law . The Indenture and the Senior Notes shall be governed by and construed in accordance with the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State.

SCHEDULE OF INCREASES AND DECREASES OF INTERESTS
IN THE GLOBAL SECURITIES

The following increases or decreases in this Global Security have been made:



Date of Transfer or Exchange	Amount of decrease in Principal Amount of this Global Security	Amount of increase in Principal Amount of this Global Security	Principal Amount of this Global Security following such decrease (or increase)	Signature of authorized officer of Trustee

Exhibit 10.1

Schedule of Base Annual Salaries for Executive Officers effective May 1, 2013 and

Restricted Stock Units awarded on May 13, 2013

As previously disclosed on May 17, 2013 in a Current Report on Form 8-K filed with the Securities and Exchange Commission, on May 13, 2013 the Compensation Committee of Markel Corporation (the “Company”) approved salary increases for the Company's named executive officers, taking into account increased size and complexity of the Company following its acquisition of Alterra Capital Holdings Limited (“Alterra”) on May 1, 2013 and the work that will be required by these individuals with respect to the integration of Alterra into the Company over the next several years. In addition, the Compensation Committee approved retention awards of restricted stock units to each of the named executive officers other than Steven A. Markel (who has not, at his request, participated in the Company's equity incentive plans). The purpose of these awards was to assist in assuring the Company of the services of these individuals to oversee the Alterra integration.

The table below sets forth the new base salaries for each of the named executive officers, as well as the Company's other full-time executive officers, which went into effect on May 1, 2013, as well as the number of restricted stock units granted to the Company's executive officers on May 13, 2013. The restricted stock units were granted under the Company's 2012 Equity Incentive Compensation Plan and, subject to certain conditions, are scheduled to vest on May 13, 2016, with pro rata vesting in the case of death or disability. Each unit represents the right to receive one share of the Company's common stock upon vesting.



Name	Title	Base Salary Effective May 1, 2013		Restricted Stock Unit Award
Alan I. Kirshner	Chairman and CEO	$	900,000	3,805 units
Steven A. Markel	Vice Chairman	$	700,000	N/A
F. Michael Crowley	President and Co- Chief Operating Officer	$	750,000	3,805 units
Thomas S. Gayner	President and Chief Investment Officer	$	750,000	3,805 units
Richard R. Whitt, III	President and Co- Chief Operating Officer	$	750,000	3,805 units
Anne G. Waleski	Chief Financial Officer	$	425,000	1,427 units
Gerard Albanese, Jr.	Chief Underwriting Officer	$	600,000	3,805 units
Britton L. Glisson	Chief Administrative Officer	$	400,000	761 units
Bradley J. Kiscaden	Chief Actuarial Officer	$	425,000	809 units

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Alan I. Kirshner, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Markel Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



August 7, 2013		/s/ Alan I. Kirshner
		Alan I. Kirshner
		Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Anne G. Waleski, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Markel Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



August 7, 2013		/s/ Anne G. Waleski
		Anne G. Waleski
		Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Markel Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan I. Kirshner, Chairman and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Alan I. Kirshner
Alan I. Kirshner
Chairman and Chief Executive Officer
August 7, 2013

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Markel Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anne G. Waleski, Vice President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Anne G. Waleski
Anne G. Waleski
Vice President and Chief Financial Officer
August 7, 2013