EX-10.3: ACCOUNT CONTROL AGREEMENT

ACCOUNT CONTROL AGREEMENT

Date: March 5, 2007

Parties

Citibank Europe plc, as “Secured Party”

Allied World Assurance Company, Ltd, a company organized and existing under the laws of Bermuda, as “Pledgor”

Mellon Bank, N.A., as “Bank”

Account Number: AWAF00010002

(this “Agreement”)

Background

Pledgor has granted Secured Party a security interest in the financial assets in the securities account identified above (the “Account”), maintained by Bank for Pledgor, (including any security entitlement) and in the Account. The parties are entering into this Agreement to provide for the control of the Account as a means to perfect the security interest of Secured Party. Bank has no responsibility to Secured Party in respect to the validity or perfection of such security interest otherwise than to act in accordance with the terms and conditions of this Agreement.

Agreement

1. The Account

Bank represents and warrants to Secured Party that Bank maintains the Account. Bank represents and warrants that except for the claim and interest of Pledgor, Secured Party and any interest in favour of Citibank, N.A., or the claim of Bank as provided in Section 4 of this Agreement, Bank does not know of any claim to or interest in the Account or any financial assets credited thereto. Bank, Pledgor and Secured Party agree that the Account is a ”Securities Account” as that term is defined in Section 8-501(a) of the Uniform Commercial Code as in effect from time to time in the State of New York (the “NYUCC”). Bank, Pledgor and Secured Party agree that each item of Investment Property, Securities, Security Entitlements, Financial Assets, Instruments or other property and all other funds, cash or cash equivalents credited to the Account shall be treated as a “Financial Asset” within the meaning of Section 8-102(a)(9) of the NYUCC.

2. Control by Secured Party

Bank will comply with all notifications it receives directing it to transfer or redeem any Financial Assets credited to the Account (each an Entitlement Order as defined in Section 8-102(a)(8) of the NYUCC) originated by Secured Party and shall otherwise treat Secured Party as entitled to exercise the rights in respect of any Financial Asset credited to the Account without further consent by Pledgor. This provision is intended to grant Secured Party control of all Security Entitlements in the Account for the purposes of section 9-106(c) of the NYUCC.

3. Pledgor’s Rights in Account

Subject to this Section 3, until Bank receives an Entitlement Order from the Secured Party, Bank may accept and comply with any ”Entitlement Order” from Pledgor with regard to the Account or any Financial Asset as follows:

3.01

Until Bank receives an Entitlement Order from Secured Party, Bank shall distribute to Pledgor all cash distributions received in regard to Financial Assets in the Account. Cash distributions do not include any principal received upon sale, redemption or maturity of a Financial Asset, and any such cash will be held for the benefit of Secured Party.

3.02

Bank shall provide Secured Party with electronic access to view holdings and activity in the Account.

3.03

Pledgor shall not direct Bank to release any of the Financial Assets in the Account or to close the Account and Bank agrees that it will not release any of the Financial Assets in the Account or close the Account without Secured Party’s consent. For this purpose the term “release” shall be broadly construed to include release for any purpose, including (without limitation) release for settlement of a sale, release for the purposes of substituting new Financial Assets, release “free” without consideration and any other manner of leaving the Account. Secured Party will consent to the release of the Financial Assets provided that with respect to such Financial Assets, the following procedure is adhered to:

(a)

Pledgor will determine (the “Determination”) that the Financial Assets remaining in the Account will be equal to or exceed the Required Account Value (“Required Account Value” in this context constituting an amount equal to 110% of the aggregate amount of the then outstanding letters of credit issued for the account of the Pledgor) and to determine this shall diligently and in good faith:

	(i)		determine that the remaining Financial Assets are eligible as collateral as specified in Exhibit A hereto; and
	(ii)		use the mark-to-market value provided by pricing services used by Bank in connection with the valuation of Financial Assets under similar account control arrangements or for Bank’s trust accounts; provided that in determining if the remaining Financial Assets are sufficient Pledgor shall use the mark-to-market values of the Financial Assets reported by such services not more than the Bank Business Day (as defined below) prior to the withdrawal or distribution of any Financial Asset. Any Financial Asset that cannot be valued as provided herein and any Financial Asset subject to Bank’s lien specified in Section 4 shall have no value in determining if the Financial Assets to remain in the Account are sufficient for the purposes of meeting the Required Account Value.

(b)

If following the Determination, Pledgor has come to the reasonable conclusion that by requesting a Financial Asset to be released, the Financial Assets remaining in the Account will be equal to or in excess of the Required Account Value (a “Positive Determination”), Pledgor will fax:

	(i)		the instruction relating to the Financial Assets that it wishes to be released (the “Instruction”); and
	(ii)		the value of the Financial Assets that are currently in the Account (in the form of a portfolio valuation statement compiled by Bank and in a form reasonably acceptable to Secured Party) and the value of the Financial Asset (and if applicable any Financial Asset which will be substituted for such Financial Asset) that it wishes to be released (all as calculated in accordance with the methodology in Subsection 3.03(a)),

to Secured Party for the attention of its Collateral Monitoring Unit on +44 207 500 2345 (or such other number as Secured Party may notify Pledgor of from time to time) so that it is received by Secured Party (unless Secured Party agrees otherwise) at least one Business Day (excluding the day upon which it is received and the day upon which such instruction is intended to take effect) before the day upon which such instruction is intended to take effect;

	(c)		Secured Party will then promptly consider the Positive Determination and if it agrees with it, will approve the Instruction (by the affixing of the signatures of two of the persons who appear in Exhibit B hereto (each being an “Authorised Signatory”) as amended and advised in writing to Pledgor by Secured Party from time to time) and will return it by fax to Pledgor on 001 441 296 3428 (or such other number as Pledgor may notify Secured Party of from time to time). Once signed in this manner by Secured Party, the Instruction becomes an “Endorsed Instruction”. If Pledgor does not receive an Endorsed Instruction within two (2) Business Days of receipt by Secured Party of the Instruction, such Instruction shall be deemed to have been rejected.
	(d)		Pledgor will then fax the Endorsed Instruction to Bank for processing on 001 412 234 8725 (or such other number as Bank may notify Pledgor of from time to time).
	(e)		Secured Party and Bank shall have no responsibility for any loss or liability of any nature (direct or indirect) suffered by the Pledgor as a result of any failure to transmit funds or to sell, purchase, or otherwise dispose of commodities or securities (or any delay in transmitting funds or selling, purchasing, or otherwise disposing of commodities or securities) or because the approval given by Secured Party in this Section 3 is either delivered late or not forthcoming, unless Secured Party or Bank (as the case may be) was grossly negligent or acted in bad faith.
	(f)		In this Section a “Business Day” shall be construed as a reference to a day (other than a Saturday or Sunday) on which banks are generally open for business in the Republic of Ireland.