HCC INSURANCE HOLDINGS, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN FOR JOHN N. MOLBECK, JR

Exhibit 10.3

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR JOHN N. MOLBECK, JR.

HCC INSURANCE HOLDINGS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FOR JOHN N. MOLBECK, JR.

Table of Contents

HCC INSURANCE HOLDINGS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FOR JOHN N. MOLBECK, JR.

PREAMBLE

     WHEREAS, John N. Molbeck, Jr. (the “Participant”) has been appointed as the Chief Executive Officer of the Company effective as of the Effective Date;

     WHEREAS, the Company desires to amend and restate the nonqualified deferred compensation plan originally established effective as of August 31, 2007 for the exclusive benefit of the Participant to reflect the increased Contributions payable to the Participant under that certain Employment Agreement dated May 5, 2009, between the Company and the Participant (the “Employment Agreement”); and

     WHEREAS, the Company intends that the Participant and his Beneficiary under the Plan shall have the status of unsecured general creditors of the Company with respect to the Plan and that the Plan shall constitute an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select key management and highly compensated employee within the meaning of section 201(2) and similar provisions of ERISA;

     NOW, THEREFORE, the Company hereby amends and restates the HCC Insurance Holdings, Inc. Nonqualified Deferred Compensation Plan for John N. Molbeck, Jr., effective as of the Effective Date. Nothing herein shall be construed to require Contributions for periods prior to the Effective Date that exceed the Contributions required to be made under the Plan as in effect prior to the Effective Date or to require the payment or acceleration of payment of benefits in violation of the requirements of section 409A of the Code.

ARTICLE 1
DEFINITIONS

     1.1 “ Account ” shall mean the record maintained by the Committee showing the monetary value of the individual interest in the Plan of the Participant. The term “Account” shall refer only to a bookkeeping entry and shall not be construed to require the segregation of assets on behalf of the Participant.

     1.2 “ Accrual Date ” shall mean the Valuation Date on which a Contribution is deemed to be made to the Participant’s Account as specified by Sections 3.1 through Section 3.3 or, with respect to Contributions credited under Section 3.4, as specified by the Committee action approving such Contribution. The Accrual Date is relevant for purposes of adjusting the Account for deemed investment experience hereunder.

     1.3 “ Affiliate ” shall mean a member of the controlled group of corporations (as defined in section 1563 of the Code) of which the Company is a member. For purposes of Section 1.20, such term shall mean all persons with whom the Company would be considered a

single employer under Code section 414(b) and/or under Code section 414(c), as modified by the first sentence of Treasury Regulation section 1.409A-1(h)(3).

     1.4 “ Beneficiary ” shall mean the beneficiary or beneficiaries (including any contingent beneficiary or beneficiaries, if applicable) designated by the Participant to receive death benefits, if any, hereunder.

     1.5 “ Board ” shall mean the Board of Directors of the Company, as constituted from time to time.

     1.6 “ Code ” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations promulgated thereunder.

     1.7 “ Committee ” shall mean the Compensation Committee of the Board or, if none, the Board. An individual who ceases to be a member of such Compensation Committee (or Board, if applicable) shall automatically cease to be a member of the Committee hereunder, and an individual who becomes a member of such Compensation Committee (or Board, if applicable) shall automatically become a member of the Committee hereunder.

     1.8 “ Company ” shall mean HCC Insurance Holdings, Inc., a Delaware corporation, or its successor.

     1.9 “ Contribution ” shall mean a bookkeeping entry which reflects the periodic accrual to the Participant’s Account, if any, as provided in Article 3 hereof.

     1.10 “ Effective Date ” shall mean May 5, 2009.

     1.11 “ Employment Agreement ” is defined in the above Preamble.

     1.12 “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the rules and regulations promulgated thereunder.

     1.13 “ HCC Stock Rate ” for a Valuation Date shall mean the one-month total return, dividend reinvested, for the common stock of the Company (or any successor security) for the month containing such Valuation Date, as determined in the sole discretion of the Committee; provided that if the common stock of the Company (or the successor security) ceases to be publicly traded prior to a Valuation Date, the HCC Stock Rate shall be equal to the S&P Rate for such Valuation Date.

     1.14 “ Investment Election ” shall mean a written instrument in a form acceptable to the Committee that is executed by the Participant and delivered to the Committee specifying the Participant’s instructions regarding the matters addressed by Section 4.3.

     1.15 “ Original Effective Date ” shall mean August 31, 2007.

     1.16 “ Participant ” is defined in the above Preamble.

     1.17 “ Plan ” shall mean this HCC Insurance Holdings, Inc. Nonqualified Deferred Compensation Plan for John N. Molbeck, Jr., as amended from time to time.

     1.18 “ Plan Year ” shall mean the annual period beginning January 1 and ending December 31, both dates inclusive of each year.

     1.19 “ Prime Rate ” for a Valuation Date shall mean the latest United States prime lending rate announced by Wells Fargo Bank, N.A. (or its successor) on the business day that is coincident with or immediately precedes such Valuation Date, as adjusted to reflect monthly compounding.

     1.20 “ Separation from Service ” shall mean the Participant’s “separation from service” with the Company and its Affiliates as such term is defined for purposes of Code sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(i). To the extent permitted by Treasury Regulation section 1.409A-1(h)(5), the Participant may be considered to have such a separation from service even if he continues to provide services as a non-employee director of the Company or any of its Affiliates.

     1.21 “ Specified Employee ” shall mean “specified employee” as defined by Code section 409A(a)(2)(B)(i), determined by applying the default rules applicable under such Code section except to the extent such rules are modified by a written resolution that is adopted by the Committee and that applies for purposes of all deferred compensation plans of the Company and its Affiliates.

     1.22 “ S&P Rate ” for a Valuation Date shall mean the one-month total return, cash dividend reinvested, for the S&P 500 Index for the month containing such Valuation Date, as published by Standard & Poor’s (or any successor).

     1.23 “ Valuation Date ” shall mean the last calendar day of each month during the Plan Year.

ARTICLE 2
ELIGIBILITY

     The only individual eligible to participate under the Plan is the Participant. He shall be eligible to participate only while he is an employee of the Company and/or its Affiliates. No Contributions shall be credited to the Participant’s Account with respect to periods after his Separation from Service.

ARTICLE 3
CONTRIBUTIONS

     3.1 Initial Contributions .

     (a) As of the Original Effective Date, the Company shall and has credited the Participant’s Account with an amount equal to $178,035.53.

     (b) As of the first Valuation Date following the Effective Date, the Company shall credit the Participant’s Account with an amount equal to $66,397.85.

     3.2 Required Monthly Contributions before the Effective Date . The Company shall and has credited the Participant’s Account with an amount equal to $29,166.67 as of the Valuation Date for each month during the period beginning on September 1, 2007 and ending on the day immediately preceding the Effective Date; provided that such accrual for the month containing the last day of such period shall be prorated by multiplying $29,166.67 by a fraction equal to the number of calendar days in such month prior to and including such last day divided by the total number of calendar days in such month.

     3.3 Required Monthly Contributions after the Effective Date . The Company shall credit the Participant’s Account with an amount equal to $79,166.67 as of the Valuation Date for each month during the period beginning on June 1, 2009 and ending on the earliest to occur of (a) the Participant’s Separation from Service; (b) the termination of the Employment Agreement; and (c) May 31, 2013; provided that such accrual for the month containing the last day of such period shall be prorated by multiplying $79,166.67 by a fraction equal to the number of calendar days in such month prior to and including such last day divided by the total number of calendar days in such month.

     3.4 Discretionary Contributions . The Committee may approve additional, discretionary Company Contribution to the Participant’s Account for a Plan Year or portion of a Plan Year. Any such discretionary Contributions shall be effective only upon approval by the Committee, which approval shall specify the Accrual Date for each such discretionary Contribution. Discretionary Contributions shall be accrued by the Company or an Affiliate as directed by the Committee.

ARTICLE 4
ADJUSTMENT OF ACCOUNT

     4.1 Contributions and Distributions . Contributions by the Company under Article 3 hereof shall be credited to the Account of the Participant as of the Accrual Date. All distributions from the Account pursuant to Article 5 shall be charged against the Account as of the date of such distribution.

     4.2 Deemed Investment Return .

     (a) The Participant’s Account shall be adjusted each Valuation Date to reflect earnings (or losses) at the Prime Rate, the HCC Stock Rate, and/or the S&P Rate as applicable under Section 4.3.

     (i) The portion of the Participant’s Account (if any) deemed invested at the Prime Rate shall be credited with an amount equal to the balance of such portion (if any) as of the close of the immediately preceding Valuation Date multiplied by the Prime Rate for the current Valuation Date.

     (ii) The portion of the Participant’s Account (if any) deemed invested at the HCC Stock Rate shall be credited with an amount equal to the balance of such portion (if any) as of the close of the immediately preceding Valuation Date multiplied by the HCC Stock Rate for the current Valuation Date.

     (iii) The portion of the Participant’s Account (if any) deemed invested at the S&P Rate shall be credited (or debited) with an amount equal to the balance of such portion (if any) as of the close of the immediately preceding Valuation Date multiplied by the S&P Rate for the current Valuation Date.

     (b) Contributions to a Participant’s Account shall not be adjusted for deemed investment experience for periods prior to the Accrual Date on which the Contributions are credited to the Account (even if the Contribution amount is known prior to such date). No amount shall be adjusted for deemed investment experience after the Valuation Date coincident with or immediately preceding the date on which the amount is distributed from the Participant’s Account.

     (c) The crediting of earnings and losses under the Plan does not mean and shall not be construed to mean that the Participant’s Account is actually invested in any security, fund or other investment, and neither the Participant nor any Beneficiary shall have any security or other interest in any security, fund or investment, even if the Company maintains actual investments that mirror or are substantially similar to liabilities under the Plan.

     4.3 Investment Election . The Participant (or his Beneficiary in the event of the Participant’s death) shall be permitted to determine the manner in which his Account is deemed invested in the Prime Rate option, the HCC Stock Rate option, and the S&P Rate option by delivering an Investment Election to the Committee. The Investment Election shall specify the portion of the Account (in a whole percentage of the total Account balance) to which each such option applies. The Participant’s initial Investment Election made prior to the Original Effective Date was effective as of September 1, 2007. A subsequent Investment Election shall be effective as of the first day of the calendar quarter next following the date on which the election is received by the Committee (so that the election shall apply in determining earnings for the calendar quarter following the calendar quarter in which the election is received). An Investment Election shall remain in effect with respect to the Participant’s Account (including subsequent

Contributions and earnings credited to the Account) until the effective date of a subsequent Investment Election (which may be filed by the Participant (or his Beneficiary in the event of the Participant’s death) at any time). In the absence of an effective Investment Election with respect to all or a portion of the Participant’s Account, the Account (or such portion, as applicable) shall be deemed invested in the Prime Rate option.

ARTICLE 5
PAYMENT OF BENEFITS

     5.1 Benefit Payment Events .

     (a) Payment of the Participant’s Account balance shall commence after the first to occur of the following events:

     (i) the Participant’s Separation from Service due to death; and

     (ii) the Participant’s Separation from Service for any reason other than death.

     (b) If the Participant dies after Separation from Service for any reason other than death and before the distribution of the Participant’s entire Account balance under Section 5.3 (for example, if the Participant is a Specified Employee and dies during the six-month period described in Section 12.2), any remaining payments under such Section shall cease, and payment shall occur instead under Section 5.2. Such payment shall not be subject to Section 12.2.

     (c) For purposes of this Article 5, a payment made as soon as administratively practicable after the specified Valuation Date for payment shall in any event be made within 90 days after such Valuation Date, and neither the Participant nor any Beneficiary shall have a right to designate the taxable year of the administratively delayed payment.

     5.2 Death . In the event of the Participant’s death, his Beneficiary shall be entitled to the entire value of all amounts credited to the Participant’s Account. Payment of such death benefit shall be made in a single lump sum cash payment to the Beneficiary on or as soon as administratively practicable after the first Valuation Date that is at least 30 days after the date of the Participant’s death. The Beneficiary may not elect to defer the date of distribution or change the form of payment of the distribution.

     (a) The Participant may designate one or more Beneficiaries to receive any benefits payable under the Plan after the death of the Participant. The Participant may revoke or change a prior Beneficiary designation at any time prior to his death by filing a new Beneficiary designation with the Committee. To be effective, any Beneficiary designation or revocation of a Beneficiary designation must be in writing on a form acceptable to the Committee, must be signed by the Participant, and must be received by the Committee prior to the death of the Participant.

     (b) Any designation of a person as a Beneficiary shall be deemed to be contingent upon the person’s surviving the Participant. Any designation of a class or group of Beneficiaries shall be deemed to be a designation of only those members of the class or group who are living at the time of the Participant’s death. Any designation of a trust as a Beneficiary shall be invalid if the trust is not in existence at the time of the Participant’s death. The Participant may designate (in the manner provided in subsection (a), above) one or more persons as a contingent Beneficiary or Beneficiaries to receive, upon the Participant’s death, the benefit that the primary Beneficiary would have received had the primary Beneficiary survived the Participant.

     (c) If the Participant does not make an effective Beneficiary designation prior to death, or if all Beneficiaries (primary and contingent) designated by