PARENT GUARANTEE AGREEMENT

Exhibit 10.32

EXECUTION COPY

PARENT GUARANTEE AGREEMENT

by and between

CASTLEPOINT HOLDINGS, LTD.

and

WILMINGTON TRUST COMPANY

Dated as of December 1, 2006

TABLE OF CONTENTS

i

ii

PARENT GUARANTEE AGREEMENT

This PARENT GUARANTEE AGREEMENT (this "Guarantee"), dated as of December 1, 2006, is executed and delivered by CastlePoint Holdings, Ltd., a [PARENT STATE] corporation (the "Guarantor"), and Wilmington Trust Company, a banking corporation, organized under the laws of the State of Delaware, (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Debentures (as defined herein) of CastlePoint Management Corp., a Delaware corporation and a wholly owned subsidiary of the Guarantor (the "Company"), and the Capital Securities (as defined herein) of CastlePoint Management Statutory Trust I, a Delaware statutory trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of the date hereof among Wilmington Trust Company, not in its individual capacity but solely as institutional trustee, the administrators of the Issuer named therein, the Company, as sponsor of the Issuer, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate liquidation amount of $50,000,000 (the "Capital Securities");

WHEREAS, pursuant to a guarantee (the "Company Guarantee") dated the date hereof executed and delivered by the Company and the guarantee trustee named therein for the benefit of the holders from time to time of the Capital Securities, the Company has agreed to make certain payments with respect to the Capital Securities and to make certain other payments with respect to obligations and liabilities of the Issuer;

WHEREAS, pursuant to an indenture of trust (the "Indenture") dated as of the date hereof between the Company and Wilmington Trust Company, not in its individual capacity but solely as trustee, the Company is issuing on the date hereof $51,547,000 aggregate principal amount of Floating Rate Junior Subordinated Deferrable Interest Debentures (the "Debentures");

WHEREAS, the Issuer desires to issue the Capital Securities and to use the proceeds thereof to purchase the Debentures; and

WHEREAS, as incentive for the Holders of the Debentures to purchase the Debentures from the Company and for the Holders of the Capital Securities to purchase the Capital Securities from the Issuer, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments (as defined herein).

NOW, THEREFORE, in consideration of the purchase of the Debentures by each Debenture Holder and of the Capital Securities by each Holder of Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1            Definitions and Interpretation.

In this Guarantee, unless the context otherwise requires:

(a)           capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b)           a term defined anywhere in this Guarantee has the same meaning throughout;

(c)           all references to "the Guarantee" or "this Guarantee" are to this Guarantee as modified, supplemented or amended from time to time;

(d)           all references in this Guarantee to "Articles" or "Sections" are to Articles or Sections of this Guarantee, unless otherwise specified;

(e)           terms defined in the Declaration as at the date of execution of this Guarantee have the same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the context otherwise requires; and

(f)            a reference to the singular includes the plural and vice versa.

" Additional Amount " has the meaning set forth in Section 4.1(b).

" Additional Junior Indebtedness " means, without duplication and other than the Guarantee Payments, (a) any indebtedness, liabilities or obligations of the Guarantor, or any Subsidiary of the Guarantor, under debt securities (or guarantees in respect of debt securities) initially issued on or after the date of this Guarantee to any trust, or a trustee of a trust, partnership or other entity affiliated with the Guarantor that is, directly or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under the Investment Company Act of 1940) or other financing vehicle of the Guarantor or any Subsidiary of the Guarantor in connection with the issuance by that entity of preferred securities, (b) other securities that are issued either junior and subordinate to or on a pari passu basis with the Guarantee Payments or (c) any guarantees of the Guarantor in respect of the equity or other securities of any entity referred to in clause (a).

" Affiliate " has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder.

" Authorized Agent " has the meaning set forth in Section 8.6.

" Beneficiaries " means any Person to whom the Company, under the terms of this Guarantee,  is obligated to pay any sum or hereafter becomes indebted or liable.

" Capital Securities " has the meaning set forth in the recitals to this Guarantee.

2

" Common Securities " means the common securities issued by the Issuer to the Company pursuant to the Declaration.

" Company " means CastlePoint Management Corp. and each of its successors and assigns.

" Company Guarantee " means the guarantee dated the date hereof executed and delivered by the Company and the guarantee trustee named therein for the benefit of the holders from time to time of the Capital Securities.

" Corporate Trust Office " means the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Guarantee is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890.

" Covered Person " means any Holder of Debentures or Capital Securities.

" Debentures " means the debt securities of the Company designated the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2034 held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

" Declaration " has the meaning set forth in the recitals.

" Declaration Event of Default " means an "Event of Default" as defined in the Declaration.

" Event of Default " has the meaning set forth in Section 2.4(a).

" Foreign Jurisdiction " has the meaning set forth in Section 4.1(b).

" Foreign Taxes " has the meaning set forth in Section 4.1(b).

" Guarantee Payments " means the following payments or distributions, without duplication, to the extent not paid or made by the Company:  (i) with respect to the Debentures, any payment that the Company is obligated to make under the Debentures and/or the Indenture; and (ii) with respect to the Capital Securities, any payments that the Company is obligated to make with respect to the Company Guarantee.

" Guarantee Trustee " means Wilmington Trust Company, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.

" Guarantor " means CastlePoint Holdings, Ltd. and each of its successors and assigns.

" Holder " means (i) any holder, as registered on the books and records of the Indenture Trustee, of any Debenture or (ii) any holder, as registered on the books and records of the Issuer, of any Capital Securities; provided , however , that, in determining whether the Holders

3

of the requisite percentage of Debentures and Capital Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor.

" Indemnified Person " means the Guarantee Trustee, any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Guarantee Trustee.

" Indenture " means the Indenture dated as of the date hereof between the Company and Wilmington Trust Company, not in its individual capacity but solely as trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued to the institutional trustee of the Issuer.

" Indenture Trustee " means Wilmington Trust Company, in its capacity as trustee under the Indenture, and its permitted successors and assigns.

" Issuer " has the meaning set forth in the opening paragraph to this Guarantee.

" Liquidation Distribution " has the meaning set forth in the definition of "Guarantee Payments" herein.

" Majority in liquidation amount of the Capital Securities " means Holder(s) of outstanding Capital Securities, voting together as a class, but separately from the holders of Common Securities, of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Capital Securities then outstanding.

" Majority of principal amount of the Debentures " means Holder(s) of outstanding Debentures, voting together as a class, of more than 50% of the aggregate principal amount of all Debentures then outstanding.

" Majority of the Holders of Debentures and Capital Securities " means Majority in liquidation amount of the Capital Securities and Majority of principal amount of the Debentures.

" New York Court " has the meaning set forth in Section 8.6.

" Officer’s Certificate " means, with respect to any Person, a certificate signed by one Authorized Officer of such Person. Any Officer’s Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee shall include:

• • (a)           a statement that the officer signing the Officer’s Certificate has read the covenant or condition and the definitions relating thereto;

     

    (b)           a brief statement of the nature and scope of the examination or investigation undertaken by the officer in rendering the Officer’s Certificate;

4

• • (c)           a statement that the officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer 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, in the opinion of the officer, such condition or covenant has been complied with.

     

" Optional Redemption Price " has the meaning set forth in the Indenture.

" Person " means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

" Responsible Officer " means, with respect to the Guarantee Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

" Senior Indebtedness " means, with respect to the Guarantor, (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Guarantor for money borrowed and (B) indebtedness evidenced by securities, debentures, notes, bonds or other similar instruments issued by the Guarantor; (ii) all capital lease obligations of the Guarantor; (iii) all obligations of the Guarantor issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Guarantor and all obligations of the Guarantor under any title retention agreement; (iv) all obligations of the Guarantor for the reimbursement of any letter of credit, any banker’s acceptance, any security purchase facility, any repurchase agreement or similar arrangement, any interest rate swap, any other hedging arrangement, any obligation under options or any similar credit or other transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Guarantor is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any lien on any property or asset of the Guarantor (whether or not such obligation is assumed by the Guarantor), whether incurred on or prior to the date of this Indenture or thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (1) any Additional Junior Indebtedness, (2) trade accounts payable of the Guarantor arising in the ordinary course of business (such trade accounts payable being pari passu in right of payment to the Guarantee Payments), or (3) obligations with respect to which (a) in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are pari passu , junior or otherwise not superior in right of payment to the Guarantee Payments and (b) the Guarantor, prior to the issuance thereof, has, if required, notified the relevant state insurance regulatory agency. Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.

5

" Special Event " has the meaning set forth in the Indenture.

" Special Redemption Price " has the meaning set forth in the Indenture.

" Subsidiary " means with respect to any Person, (i) any corporation at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of the outstanding partnership or similar interests of which shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. For the purposes of this definition, "voting stock" means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

" Successor Guarantee Trustee " means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 3.1.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE

Section 2.1            Powers and Duties of the Guarantee Trustee.

(a)           This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Debentures and the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Debentures or Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

(b)           If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of the Debentures and/or the Holders of the Capital Securities.

(c)           The Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.4) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee, and use the same degree of care and skill in its

6

exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(d)           No provision of this Guarantee shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

• • (i)            prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

     

    • • (A)          the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee, and no implied covenants or obligations shall be read into this Guarantee against the Guarantee Trustee; and

         

        (B)           in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee;

         

    (ii)           the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

     

    (iii)          the Guarantee 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 written direction of the Holders of not less than a Majority in liquidation amount of the Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or relating to the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; and

     

    (iv)          no provision of this Guarantee shall require the Guarantee 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 the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds is not reasonably assured to it under the terms of this Guarantee or security and indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not reasonably assured to it.

7

Section 2.2            Certain Rights of the Guarantee Trustee.

(a)           Subject to the provisions of Section 2.1:

• • (i)            The Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

     

    (ii)           Any direction or act of the Guarantor contemplated by this Guarantee shall be sufficiently evidenced by an Officer’s Certificate.

     

    (iii)          Whenever, in the administration of this Guarantee, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer’s Certificate of the Guarantor which, upon receipt of such request, shall be promptly delivered by the Guarantor.

     

    (iv)          The Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, refiling or re-registration thereof).

     

    (v)           The Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction.

     

    (vi)          The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided , however , that nothing contained in this Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee.

     

    (vii)         The Guarantee 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, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

8

• • (viii)        The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

     

    (ix)           Any action taken by the Guarantee Trustee or its agents hereunder shall bind the Holders of the Debentures and the Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee, both of which shall be conclusively evidenced by the Guarantee Trustee’s or its agent’s taking such action.

     

    (x)            Whenever in the administration of this Guarantee the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (i) may request instructions from a Majority of the Holders of Debentures and Capital Securities, (ii) may refrain from enforcing su