FIRST SUPPLEMENTAL INDENTURE by and among ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD, as Issuer, ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG, as Guarantor and THE BANK OF NEW YORK MELLON, as Trustee

Exhibit 4.2

FIRST SUPPLEMENTAL INDENTURE

by and among

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD,

as Issuer,

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG,

as Guarantor

and

THE BANK OF NEW YORK MELLON,

as Trustee

Dated as of October 29, 2015

$500,000,000

Allied World Assurance Company Holdings, Ltd

4.35% Senior Notes due 2025

TABLE OF CONTENTS

		Page

ARTICLE I. DEFINITIONS		2

Section 1.1.	Definitions	2

ARTICLE II. GENERAL TERMS AND CONDITIONS OF THE 2025 SENIOR NOTES		3

Section 2.1.	Title	3
Section 2.2.	Principal Amount	3
Section 2.3.	Payment of Principal and Interest	3
Section 2.4.	Optional Redemption	4
Section 2.5.	Redemption for Changes in Withholding Taxes	5
Section 2.6.	Additional Amounts	6
Section 2.7.	Additional Covenant	6
Section 2.8.	Form, Currency and Denominations	6
Section 2.9.	Global Securities	7
Section 2.10.	Ranking	7
Section 2.11.	Miscellaneous	7

ARTICLE III. MISCELLANEOUS PROVISIONS		8

Section 3.1.	Ratification and Incorporation of Original Indenture	8
Section 3.2.	Counterparts	8
Section 3.3.	Governing Law	8
Section 3.4.	Headings	8

EXHIBIT A	Form of Senior Note

FIRST SUPPLEMENTAL INDENTURE

This First Supplemental Indenture, dated as of October 29, 2015 (the “Supplemental Indenture”), to the Indenture, dated as of October 29, 2015 (as heretofore amended and supplemented, the “Original Indenture”), by and among ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD, a Bermuda exempted company (the “Company”), as issuer, having its principal executive office located at 00 Xxxxxxxx Xxxx, Xxxxxxxx HM 08, Bermuda, ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG, a Swiss corporation (the “Guarantor”), as guarantor, having its principal executive office located at Xxxxxxxxxxxx 00, Xxxx Xxxxx, 00xx Xxxxx, 0000 Xxx, Xxxxxxxxxxx and THE BANK OF NEW YORK MELLON, a New York banking corporation, not in its individual capacity but solely as trustee (the “Trustee”), having its corporate trust office located at 000 Xxxxxxx Xxxxxx, Xxxxx 0 Xxxx, Xxx Xxxx, Xxx Xxxx 00000, is effective upon the execution hereof by the parties hereto.

RECITALS

WHEREAS, the Company has heretofore executed and delivered to the Trustee the Original Indenture providing for the issuance from time to time of its senior unsecured debentures, notes or other evidences of indebtedness (the “Securities”), unlimited as to principal amount;

WHEREAS, the Guarantor has heretofore executed and delivered to the Trustee the Original Indenture providing for the issuance of the Guaranty and indemnity provided for therein and as set forth in the Senior Debt Securities Guarantee Agreement, dated as even date herewith (the “Guarantee Agreement”) in respect of the Securities;

WHEREAS, the Original Indenture is incorporated herein by this reference;

WHEREAS, Section 3.1 of the Original Indenture provides that, with respect to any series of Securities to be authenticated and delivered under the Original Indenture, the terms of such series of Securities shall be established by (i) a Board Resolution and Officers’ Certificate or (ii) one or more indentures supplemental to the Original Indenture;

WHEREAS, the Company desires to create, under the Original Indenture, a new series of Securities to be known as its 4.35% Senior Notes due 2025 (the “2025 Senior Notes”), the form and substance of such notes and the terms, provisions and conditions thereof to be set forth as provided in the Original Indenture and this Supplemental Indenture;

WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding agreement of the Company in accordance with its terms, have been done or performed; and

WHEREAS, the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Guarantor and the Trustee mutually covenant and agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1. Definitions.

The following defined terms used herein shall have the meanings specified below. Capitalized terms used herein without definition shall have the respective meanings assigned to such terms in the Original Indenture.

“Consolidated Net Worth” in respect of any Person means the total of the amounts shown on the balance sheet of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of such Person ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (i) the par or stated value of all outstanding Capital Stock of such Person plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus, less any accumulated deficit.

“Designated Subsidiary” means any present or future consolidated Subsidiary (other than the Company) of the Company or the Guarantor, the Consolidated Net Worth of which constitutes at least 20% of the Consolidated Net Worth of the Guarantor.

“Interest Payment Date” means, with respect to the 2025 Senior Notes only, April 29 and October 29 of each year, commencing April 29, 2016.

“Regular Record Date” means, with respect to the 2025 Senior Notes only, the close of business on April 14 or October 14, as the case may be (whether or not a Business Day), immediately preceding each Interest Payment Date.

“Taxing Jurisdiction” means each of (A) Bermuda or such other jurisdiction in which the Company (or any successors) may be organized or any political subdivision or taxing authority thereof or therein, (B) the jurisdiction of the Company’s principal executive offices or any political subdivision or taxing authority thereof or therein, (C) Switzerland or such other jurisdiction in which the Guarantor (or any successors) may be organized or any political subdivision or taxing authority thereof or therein, and (D) the jurisdiction of the Guarantor’s principal executive offices or any political subdivision or taxing authority thereof or therein.

ARTICLE II.

GENERAL TERMS AND CONDITIONS OF THE 2025 SENIOR NOTES

There is hereby established a new series of Securities under the Original Indenture with the following terms:

Section 2.1. Title.

The title of the series is “4.35% Senior Notes due 2025”.

Section 2.2. Principal Amount.

There are to be issued by the Company, and authenticated and delivered by the Trustee on the date hereof $500,000,000 aggregate principal amount of 2025 Senior Notes, and such principal amount of 2025 Senior Notes may be increased from time to time pursuant to Section 3.1 of the Original Indenture. All 2025 Senior Notes need not be issued on the same date and such series may be reopened at any time, without the consent of any Holder, for issuances of additional 2025 Senior Notes, unlimited in principal amount, upon delivery by the Company to the Trustee of either an Officers’ Certificate or an indenture supplemental to the Indenture, setting forth the original issuance date of such additional 2025 Senior Notes. The terms of any such additional 2025 Senior Notes will be identical (except as to denomination and the date from which interest shall accrue) to the terms of the 2025 Senior Notes initially issued, authenticated and delivered on the date hereof. Any such additional 2025 Senior Notes will, together with the previously issued 2025 Senior Notes, constitute a single series of Securities under the Indenture.

Section 2.3. Payment of Principal and Interest.

(a) The principal of the 2025 Senior Notes shall be due on October 29, 2025, subject to the provisions of the Original Indenture relating to acceleration of maturity. The 2025 Senior Notes will bear interest from October 29, 2015, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at a rate of 4.35% per annum, payable semi-annually in arrears on April 29 and October 29 of each year, commencing on April 29, 2016, and at Maturity. The Company will pay interest to the Persons in whose names the 2025 Senior Notes are registered on the Regular Record Date for such Interest Payment Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

(b) If any Interest Payment Date falls on a day that is not a Business Day at the applicable Place of Payment, the interest payment will be postponed to the next day that is a Business Day at such Place of Payment, and no interest on such payment will accrue for the period from and after such Interest Payment Date. If the maturity date of the 2025 Senior Notes falls on a day that is not a Business Day at the applicable Place of Payment, the payment of interest and principal may be made on the next succeeding Business Day at such Place of Payment, and no interest on such payment will accrue for the period from and after the maturity date. Interest payments for the 2025 Senior Notes will include accrued interest from and including the date of issue or from and including the last date in respect of which interest has been paid, as the case may be, to, but excluding, the Interest Payment Date or the date of maturity, as the case may be.

(c) Payment of the principal and interest due at maturity of the 2025 Senior Notes shall be made upon surrender of the 2025 Senior Notes at the Corporate Trust Office of the Trustee. The principal of and interest on the 2025 Senior Notes shall be paid in United States Dollars. Payments of principal of or interest on the 2025 Senior Notes will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer to an account maintained by the payee with a bank located in the United States.

Section 2.4. Optional Redemption.

(a) The 2025 Senior Notes will be redeemable, at the option of the Company, at any time or from time to time in whole or in part, on not less than 30 nor more than 60 days’ prior notice to the Holders of the 2025 Senior Notes, on any date prior to their maturity.

The Redemption Price for any redemption of 2025 Senior Notes before July 29, 2025 (3 months prior to the maturity date) (other than a Tax Redemption) shall be equal to the greater of (i) 100% of the principal amount of the 2025 Senior Notes to be redeemed and (ii) the Discounted Present Value of the 2025 Senior Notes to be redeemed, plus in each case accrued and unpaid interest on the principal amount of the 2025 Senior Notes being redeemed to, but excluding, the Redemption Date.

The Redemption Price for any redemption of 2025 Senior Notes on or after July 29, 2025 (3 months prior to the maturity date) shall be equal to 100% of the principal amount of the 2025 Senior Notes to be redeemed, plus accrued and unpaid interest on such principal amount of such 2025 Senior Notes to, but excluding, the Redemption Date.

Installments of interest on the 2025 Senior Notes for which the Redemption Date is after a Regular Record Date and on or before the following Interest Payment Date shall be payable to the Holders of such 2025 Senior Notes registered as such at the close of business on the Regular Record Date therefor.

As used herein:

“Discounted Present Value” of any 2025 Senior Note subject to optional redemption shall be equal to the sum of the present values of the remaining scheduled payments of principal and interest (excluding interest accrued to the Redemption Date) on such 2025 Senior Note discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 35 basis points.

“Treasury Rate” means, with respect to any Redemption Date, (i) the yield, under the heading which represents the average for the immediately preceding week, 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 term of the 2025 Senior Notes to be redeemed (the “Remaining Life”), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be

determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year 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. The Treasury Rate will be 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 Life.

“Comparable Treasury Price” means (i) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (ii) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Independent Investment Banker” means Barclays Capital Inc. and Credit Suisse Securities (USA) LLC and their respective successors or, if both firms are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

“Reference Treasury Dealer” means each of (i) Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., and a Primary Treasury Dealer (defined herein) selected by Xxxxx Fargo Securities, LLC and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company will substitute another Primary Treasury Dealer and (ii) any two other Primary Treasury Dealers selected by the Independent Investment Banker after consultation with the Company.

“Reference Treasury Quotation” 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.

(b) If less than all of the 2025 Senior Notes are to be redeemed, the 2025 Senior Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee by lot; provided that if the Senior Notes are in global form, interests in such Senior Notes will be selected for redemption by the applicable depository in accordance with its standard procedures.

Section 2.5. Redemption for Changes in Withholding Taxes.

The 2025 Senior Notes will be redeemable (a “Tax Redemption”), at the option of the Company, at any time as a whole but not in part, on not less than 30 nor more than 60 days’ prior notice to the Holders of the 2025 Senior Notes, on any date prior to their maturity, at 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the Redemption

Date, in the event that the Company or the Guarantor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the 2025 Senior Notes, any Additional Amounts as a result of: (i) a change in or an amendment to the laws (including any regulations or rulings promulgated thereunder) of a Taxing Jurisdiction, which change or amendment (A) in the case of the Company or the Guarantor, is announced after October 29, 2015 and (B) in the case of any successor to the Company or the Guarantor, is announced after the date such successor assumes the Company’s or the Guarantor’s obligations under the 2025 Senior Notes and the Indenture; or (ii) any change in or amendment to any official position regarding the application, administration, interpretation or enforcement of such laws, regulations or rulings (including a holding by a court of a competent jurisdiction or by a taxing authority) of a Taxing Jurisdiction, which change or amendment (A) in the case of the Company or the Guarantor, is announced after October 29, 2015 and (B) in the case of any successor to the Company or the Guarantor is announced after the date such successor assumes the Company’s or the Guarantor’s obligations under the 2025 Senior Notes and the Indenture, and, in each case, the Company or the Guarantor, as applicable, cannot avoid such obligation by taking reasonable measures available to it. Installments of interest on the 2025 Senior Notes for which the Redemption Date is after a Regular Record Date and on or before the following Interest Payment Date shall be payable to the Holders of such 2025 Senior Notes registered as such at the close of business on the Regular Record Date therefor.

Before the Company publishes or mails any notice of redemption of the 2025 Senior Notes, pursuant to the preceding paragraph, it will deliver to the Trustee an Officers’ Certificate to the effect that the Company or the Guarantor, as applicable, cannot avoid its obligation to pay Additional Amounts by taking reasonable measures available to it (consistent with practices and interpretations generally followed or in effect at the time such measures could be taken) and an Opinion of Counsel stating that there is a substantial probability that the Company or the Guarantor, as applicable, would be obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of such laws or regulations.

Section 2.6. Additional Amounts.

Section 10.4 of the Original Indenture relating to payment of Additional Amounts shall apply to the 2025 Senior Notes.

Section 2.7. Additional Covenant.

In addition to the covenants set forth in Article 10 of the Original Indenture, the following covenant shall be added to Article 10 with respect to the Senior Notes:

(a) Equivalent Guarantee. If any direct or indirect parent company of the Company guarantees the Company’s outstanding 7.50% senior notes due 2016 or 5.50% senior notes due 2020, equivalent guarantees will be provided with respect to the Senior Notes so long as such other notes are so guaranteed.

Section 2.8. Form, Currency and Denominations.

The 2025 Senior Notes shall be issued in fully registered form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The 2025 Senior

Notes will be issued in substantially the form set forth in Exhibit A hereto. The Depositary with respect to the 2025 Senior Notes shall be The Depository Trust Company.

Section 2.9. Global Securities.

(a) The 2025 Senior Notes will be issued in the form of one or more global Securities registered in the nominee name of the Depositary, which shall be Cede & Co. Except under the circumstances set forth in Section 3.5 of the Original Indenture, the global Securities will not be exchangeable for, and will not otherwise be issuable as, 2025 Senior Notes in definitive form. Owners of beneficial interests in such a global Security will not be considered the registered owners or Holders of 2025 Senior Notes for any purpose.

(b) No global Security representing a 2025 Senior Note shall be exchangeable, except for another global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee. Payment of principal of, any premium or interest on, and any Additional Amounts in respect of, any 2025 Senior Note in global form shall be made to the registered Holder thereof.

Section 2.10. Ranking.

The 2025 Senior Notes will represent the Company’s direct, unsecured obligations and will rank equally with (i) the Company’s 7.50% Senior Notes due 2016 issued pursuant to the Indenture dated as of July 26, 2006, as supplemented, by and between the Company and the Trustee, (ii) the 5.50% Senior Notes due 2020 issued pursuant to the Indenture dated as of November 15, 2010, as supplemented, by and between the Company and the Trustee and (iii) the Company’s other existing and future unsubordinated senior indebtedness. The Guarantee will rank equally with the Guarantor’s liability of its guarantees of (i) the Company’s 7.50% Senior Notes due 2016 issued pursuant to the Indenture dated as of July 26, 2006, as supplemented, by and between Company and the Trustee and (ii) the 5.50% Senior Notes due 2020 issued pursuant to the Indenture dated as of November 15, 2010, as supplemented, by and between the Company and the Trustee and all other similar guarantee agreements issued by the Guarantor as direct, unsecured and unsubordinated obligations.

Section 2.11. Miscellaneous.

The Company is not obligated to redeem or purchase any 2025 Senior Notes pursuant to any sinking fund or analogous provision. The 2025 Senior Notes will not be convertible into shares of Common Stock of the Company and/or exchangeable for other securities. The amount of payments of principal with respect to the 2025 Senior Notes shall not be determined with reference to an index, formula or other method or methods. No 2025 Senior Notes are issuable upon the exercise of warrants. Each of Section 4.2(2) of the Original Indenture relating to defeasance and Section 4.2(3) of the Original Indenture relating to covenant defeasance shall apply to the 2025 Senior Notes, and the covenants subject to Section 4.2(3) and Section 10.6 of the Original Indenture shall include the covenants set forth in, and made applicable to the 2025 Senior Notes by, Section 2.7 of this Supplemental Indenture.

ARTICLE III.

MISCELLANEOUS PROVISIONS

Section 3.1. Ratification and Incorporation of Original Indenture.

As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture as supplemented by this Supplemental Indenture shall be read, taken and construed as one and the same instrument.

Section 3.2. Counterparts.

This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of this Supplemental Indenture and signature pages for all purposes.

Section 3.3. Governing Law.

This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and performed in said state.

Section 3.4. Headings.

The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, each of the Company and the Guarantor has executed this Supplemental Indenture by the signature of its authorized officers, and the Trustee has caused this Supplemental Indenture to be executed in its corporate name by its authorized officers, each as of the date above written.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD, as Issuer

By:	/s/ Xxxxxxxx Xxx	Witnessed by:
	Name: Xxxxxxxx Xxx
	Title: Senior Vice President, Finance	/s/ Xxxxxxxx X. Xxxxxx
		Name: Xxxxxxxx X. Xxxxxx
		Title: Assistant Corporate Secretary


ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG, AS GUARANTOR

By:	/s/ Xxxxxx X. Xxxxxxx
	Name: Xxxxxx X. Xxxxxxx
	Title: Executive Vice President & Chief Financial Officer

[Signature Page to First Supplemental Indenture]

THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Trustee


By:	/s/ Xxxxxxxx Xxxxxxx
	Name: Xxxxxxxx Xxxxxxx
	Title: Vice President

[Signature Page to First Supplemental Indenture]

EXHIBIT A

[Legend to be removed if the 2025 Senior Note is not represented by a global note] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND SUCH PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR NOTES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.]

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
4.35% SENIOR NOTE DUE 2025

No.	CUSIP No.: 01959E AC2

Principal Amount:		$500,000,000

Regular Record Date:		April 14 or October 14, as the case may be, immediately preceding each Interest Payment Date

Original Issue Date:		October 29, 2015

Maturity Date:		October 29, 2025

Interest Payment Dates:		April 29 and October 29

Interest Rate:		4.35% per annum

Authorized Denomination:		$2,000, or any integral multiple of $1,000 in excess thereof

Allied World Assurance Company Holdings, Ltd, a Bermuda exempted company (the “Company”, which term includes any successor company under the Indenture referred to below),

for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of FIVE HUNDRED MILLION UNITED STATES DOLLARS ($500,000,000) on the Maturity Date shown above, and to pay interest thereon from October 29, 2015, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on each Interest Payment Date as specified above (including the Maturity Date), commencing on April 29, 2016, at the rate of 4.35% per annum until the principal hereof is paid or duly provided for.

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (including the Maturity Date) will, as provided in the Indenture, be paid to the Person in whose name this Senior Note is registered at the close of business on the Regular Record Date as specified above next preceding each Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either 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 established by notice given by or on behalf of the Company to the Holders of Senior Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Senior Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

Payments of interest on this Senior Note will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Senior Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Senior Note is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day, with the same force and effect as if made on the date the payment was originally payable. A “Business Day” shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed.

Payment of the principal of and interest due on the Maturity Date of this Senior Note shall be made upon surrender of this Senior Note at the Corporate Trust Office of the Trustee. The principal of and interest on this Senior Note shall be paid in Dollars. Payments of interest will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto at such address as shall appear in the Security Register or (ii) by wire transfer to an account maintained by the payee with a bank located in the United States.

This security is one of a duly authorized issue of debt securities of the Company (herein called the “Securities”), fully and unconditionally guaranteed pursuant to a Senior Debt Securities Guarantee Agreement as to payments of principal, premium, if any, and interest by Allied World Assurance Company Holdings, AG, a Swiss corporation, as guarantor (the “Guarantor,” which term includes any successor guarantor under the Indenture), all issued or to be issued under and pursuant to an Indenture, dated as of October 29, 2015, as supplemented (the “Indenture”), among the Company, the Guarantor and The Bank of New York Mellon, a New York banking corporation, not in its individual capacity but solely as trustee (the “Trustee,”

which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto relating to this security (including, without limitation, the First Supplemental Indenture, dated as of October 29, 2015, among the Company, the Guarantor and the Trustee) reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture or any indenture supplemental thereto. This security is one of a series designated on the face as 4.35% Senior Notes due 2025 (the “Senior Notes”), initially issued in aggregate principal amount to $500,000,000, subject to increase as provided in Section 3.1 of the Indenture. Capitalized terms used herein for which no definition is provided herein shall have the respective meanings ascribed thereto in the Indenture.

The Senior Notes are unsecured and unsubordinated obligations of the Company. Under the Indenture, the Company covenants that if any direct or indirect parent company of the Company guarantees the Company’s outstanding 7.50% senior notes due 2016 or 5.50% senior notes due 2020, equivalent guarantees will be provided with respect to the Senior Notes so long as such other notes are so guaranteed. The Company’s obligation to pay the principal of, premium, if any, and interest on and Additional Amounts, if any, in respect of the Senior Notes is fully and unconditionally guaranteed on an unsecured and unsubordinated basis by the Guarantor pursuant to Article 15 of the Indenture.

While this Senior Note is represented by one or more global notes registered in the name of DTC or its nominee, the Company will cause payments of principal of, premium, if any, and interest on this Senior Note to be made to DTC or its nominee, as the case may be, by wire transfer to the extent, in the funds and in the manner required by agreements with, or regulations or procedures prescribed from time to time by, DTC or its nominee, and otherwise in accordance with such agreements, regulations and procedures.

The Senior Notes will not have a sinking fund.

The Senior Notes will be redeemable, at the option of the Company, at any time as a whole or from time to time in part, on not less than 30 nor more than 60 days’ prior notice to the Holders of the Senior Notes, on any date prior to their maturity. The Redemption Price for any redemption of Senior Notes before July 29, 2025 (other than a Tax Redemption) shall be equal to the greater of (i) 100% of the principal amount of the Senior Notes to be redeemed and (ii) the Discounted Present Value of the Senior Notes to be redeemed, plus in each case accrued and unpaid interest on the principal amount of such Senior Notes to, but excluding, the Redemption Date. The Redemption Price for any redemption of Senior Notes on or after July 29, 2025 shall be equal to 100% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest on such principal amount of such Senior Notes to, but excluding, the Redemption Date. Installments of interest on the Senior Notes for which the Redemption Date is after a Regular Record Date and on or before the following Interest Payment Date shall be payable to the Holders of such Senior Notes registered as such at the close of business on the Regular Record Date therefor.

As used herein:

“Discounted Present Value” of any Senior Note subject to optional redemption (other than a Tax Redemption) shall be equal to the sum of the present values of the remaining scheduled payments of principal and interest (excluding interest accrued to the Redemption Date) on such Senior Note discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 35 basis points.

“Treasury Rate” means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, 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 term of the Senior Notes to be redeemed (the “Remaining Life”), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year 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. The Treasury Rate will be 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 Life.

If less than all of the Senior Notes are to be redeemed as provided above, the Senior Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, by lot; provided that if the Senior Notes are in global form, interests in such Senior Notes will be selected for redemption by the applicable depository in accordance with its standard procedures.

The Senior Notes will be redeemable (a “Tax Redemption”), at the option of the Company, at any time as a whole but not in part, on not less than 30 nor more than 60 days’ prior notice to the Holders of the Senior Notes, on any date prior to their maturity, at 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the Redemption Date, in the event that the Guarantor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Senior Notes, any Additional Amounts as a result of: (i) a change in or an amendment to the laws (including any regulations or rulings promulgated thereunder) of a Taxing Jurisdiction, which change or amendment, (A) in the case of the Guarantor, is announced after October 29, 2015 and (B) in the case of any successor to the Guarantor, is announced after the date such successor assumes the Guarantor’s obligations under the Senior Notes and the Indenture; or (ii) any change in or amendment to any official position regarding the application, administration, interpretation or enforcement of such laws, regulations or rulings (including a holding by a court of competent jurisdiction or by a taxing authority) of a Taxing Jurisdiction, which change or amendment (A) in the case of the Guarantor, is announced after October 29, 2015 and (B) in the case of any successor to the Guarantor, is announced after the date such successor assumes the Guarantor’s obligations under the Senior Notes and the Indenture, and, in each case, the Guarantor cannot avoid such obligation by taking reasonable measures available to it. Installments of interest on the Senior Notes for which the Redemption Date is after a Regular Record Date and on or before the following Interest Payment Date shall be payable to the Holders of such Senior Notes registered as such at the close of business on the Regular Record Date therefor.

The Indenture also contains provisions for defeasance at any time of the entire indebtedness of the Senior Notes and the Guarantee of the Guarantor with respect thereto or of certain restrictive covenants of the Company and the Guarantor with respect to the Senior Notes, in each case, upon compliance with certain conditions set forth in the Indenture.

If an Event of Default with respect to the Senior Notes shall occur and be continuing, the principal of the Senior Notes may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantor and the rights of the Holders of the Securities of each series issued under the Indenture at any time by the Company, the Guarantor and the Trustee with the consent of the Holders of not less than a

majority in aggregate principal amount of the Securities of each series at the time Outstanding affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Senior Notes at the time Outstanding, on behalf of the Holders of all Senior Notes, to waive compliance by the Company or the Guarantor, as applicable, 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 hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Senior Note.

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, premium, if any, and interest on and Additional Amounts, if any, in respect of this Senior Note at the times, place and rate, and in the coin or currency, herein prescribed.

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 or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 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 or certain other expenses payable in connection therewith.

Prior to due presentment of this Senior Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Senior Note is registered as the owner hereof for all purposes, whether or not this Senior Note be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.

The Senior Notes are issuable only in registered form without coupons in denominations of $2,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Senior Notes are exchangeable for a like aggregate principal amount of Senior Notes of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Senior Note or Notes to be exchanged at the office or agency of the Company.

This Senior Note shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and performed in said state.

The proceeds of the offering of this Senior Note shall be used exclusively outside of Switzerland.

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Senior Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by its authorized representatives as of the date set forth below.

Dated:

	ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD


	By:
		Name:
		Title:

Attest:
	Name:
	Title:

[Signature Page to Allied World Assurance Company Holdings, Ltd 4.35% Senior Note Due 2025]

CERTIFICATE OF AUTHENTICATION

This is one of the 4.35% Senior Notes due 2025 referred to in the within-mentioned Indenture.

	THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Trustee


Date:	By:
		Authorized Signatory

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FIRST SUPPLEMENTAL INDENTURE by and among ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD, as Issuer, ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG, as Guarantor and THE BANK OF NEW YORK MELLON, as Trustee

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