Greenlight Capital Re, Ltd. (Form: S-1, Received: 01/16/2007 13:47:31)

Cayman Islands

Not Applicable

(State or other jurisdiction of incorporation or organization)

(Primary Standard Industrial Classification Number)

(IRS Employer
Identification No.)

As filed with the Securities and Exchange Commission on January 16, 2007

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Greenlight Capital Re, Ltd.

(Exact name of registrant as specified in its charter)

802 West Bay Road, The Grand Pavilion
Grand Cayman, KY 1-1205
Cayman Islands
Telephone: (345) 745-4573
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Corporation Service Company
1133 Avenue of the Americas
Suite 3100
New York, New York 10036-6710
Telephone: (212) 299-5600
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Kerry E. Berchem, Esq. Bruce Mendelsohn, Esq. Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, New York 10022 (212) 872-1000 Fax: (212) 872-1002	Leonard Goldberg Chief Executive Officer Greenlight Capital Re, Ltd. 802 West Bay Road, The Grand Pavilion Grand Cayman, KY 1-1205 Cayman Islands Telephone: (345) 745-4573 Facsimile: (345) 745-4576	Gary Horowitz, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 (212) 455-2000 Fax: (212) 455-2502

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price ⁽¹⁾			Amount of Registration Fee
Class A Ordinary Shares, par value $.10		$	175,000,000		$	18,725


⁽¹⁾	In accordance with Rule 457(o) under the Securities Act, the number of shares being registered and the proposed maximum offering price per share are not included in this table.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject To Completion, dated January 16, 2007

P RELIMINARY P ROSPECTUS

Class A Ordinary Shares

Greenlight Capital Re, Ltd., or Greenlight Re, is making an initial public offering of its Class A Ordinary Shares. No public market currently exists for its Class A Ordinary Shares. Greenlight Re is offering all of the Class A Ordinary Shares offered by this prospectus. In addition, contingent upon the completion of this offering and certain other conditions, Greenlight Re will sell and David Einhorn, Chairman of our Board of Directors, will purchase in a concurrent private placement of our Class B Ordinary Shares at the initial public offering price, simultaneously with the completion of this offering.

We will apply to have our Class A Ordinary Shares included for quotation on the Nasdaq Global Select Market under the symbol ‘‘GLRE.’’ We anticipate that the initial public offering price will be between $ and $ per share.

Investing in our Class A Ordinary Shares involves risks. See ‘‘Risk Factors’’ beginning on page 10 of this prospectus.

Per Share

Total

Public offering price

Underwriting discounts and commissions

Proceeds to us before expenses

We have granted the underwriters a 30-day option to purchase up to an additional Class A Ordinary Shares from us on the same terms and conditions as set forth above if the underwriters sell more than Class A Ordinary Shares in the offering.

None of the Securities and Exchange Commission, state securities regulators, the Cayman Islands Monetary Authority nor any other governmental or regulatory body in the Cayman Islands has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is unlawful.

The underwriters expect to deliver the Class A Ordinary Shares to purchasers against payment on or about , 2007.

Joint Book-Running Managers

L EHMAN B ROTHERS UBS I NVESTMENT B ANK

, 2007

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Prospectus	Page
Summary		1
Risk Factors		10
Information Regarding Forward Looking Statements		28
Use Of Proceeds		29
Dividend Policy		29
Capitalization		30
Dilution		31
Selected Consolidated Financial Data		32
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations		34
Business		45
Regulation		57
Management		59
Principal Shareholders		76
Certain Relationships And Related Party Transactions		78
Description Of Share Capital		80
Shares Eligible For Future Sale		86
Certain Cayman Islands Tax Considerations		89
Certain United States Tax Considerations		89
Underwriting		101
Legal Matters		106
Experts		106
Where To Find More Information		106
Enforceability Of Civil Liabilities Under U.S. Federal Securities Laws And Other Matters		107
Index To Consolidated Financial Statements		F-1
Glossary Of Selected Reinsurance Terms		G-1

You should rely only on the information contained in this prospectus. Neither we nor any underwriter or agent has authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. Neither we nor any underwriter or agent is making an offer to sell our Class A Ordinary Shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A Ordinary Shares.

Statements contained in this prospectus as to the contents of any contract or other document are not complete, and in each instance we refer you to the copy of the contract or document filed as an exhibit to the registration statement of which the prospectus constitutes a part, each of those statements being qualified in all respects by this reference.

Until , 2007 (25 days after the date of this prospectus), all dealers that buy, sell or trade our Class A Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside of the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

No invitation is being made to the public in the Cayman Islands to subscribe for the Class A Ordinary Shares.

Greenlight Re is our trademark. Other trademarks and trade names appearing in this prospectus are the property of their respective holders.

Greenlight Capital Re, Ltd. is incorporated under the laws of the Cayman Islands as an exempted company limited by shares. We were formed in July 2004. Our subsidiary, Greenlight Reinsurance,

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Ltd., is incorporated under the laws of the Cayman Islands as an exempted company limited by shares and has been granted an unrestricted Class B Insurers License from the Cayman Islands Monetary Authority, or CIMA, under the terms of the Insurance Law (as revised) of the Cayman Islands, or the Law. Our principal executive offices are located at 802 West Bay Road, The Grand Pavilion, Grand Cayman, KY 1-1205, Cayman Islands. Our telephone number is (345) 745-4573. Our website address is www.greenlightre.ky . The information contained in, or accessible through, our website is not part of this prospectus.

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SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A Ordinary Shares. You should carefully read the entire prospectus, including ‘‘Risk Factors’’ and our financial statements and related notes, before you decide whether to invest in our Class A Ordinary Shares. References to ‘‘we,’’ ‘‘our,’’ ‘‘our company,’’ ‘‘us,’’ ‘‘Greenlight Re,’’ or ‘‘the Company’’ refer to Greenlight Capital Re, Ltd. and our wholly-owned subsidiary, Greenlight Reinsurance, Ltd., unless the context dictates otherwise. References to our ‘‘Ordinary Shares’’ refers collectively to our Class A Ordinary Shares and Class B Ordinary Shares. References in this prospectus to our ‘‘Articles’’ refer to the third amended and restated memorandum and articles of association of Greenlight Re as the same shall be in effect upon completion of this offering assuming the adoption of the Articles by our shareholders. Investing in our Class A Ordinary Shares, involves risks. See ‘‘Risk Factors.’’ For your convenience, we have included a glossary beginning on page G-1 of selected reinsurance terms and have printed these terms in boldfaced type the first time they are used in this prospectus. All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding.

Greenlight Capital Re, Ltd.

Company Overview

We are a Cayman Islands-based specialty property and casualty reinsurer with a differentiated reinsurance and investment strategy. We focus on building long-term shareholder value by opportunistically offering customized reinsurance solutions in market segments that we believe present favorable risk-adjusted return characteristics. We manage our investment portfolio according to an absolute return, value-oriented philosophy and we invest primarily in publicly-traded equity securities.

Our strategy is to build a balanced reinsurance portfolio of select frequency and severity contracts that we believe will generate superior economic returns over the long-term. We seek to capitalize on market dislocations by identifying underserved markets and clients with unique reinsurance needs. We may also participate in traditional reinsurance programs that we believe exhibit superior risk-adjusted return characteristics. Our goal is to work closely with clients and brokers to provide customized reinsurance solutions that are structured to align the interests of our clients with our own. We choose to underwrite contracts where we can model, analyze and monitor our risks effectively. We use an integrated underwriting approach in which our underwriters are responsible for contracts from origination until final disposition, including underwriting, pricing, servicing, monitoring and claims processing. We anticipate this approach will translate to superior contract management and better client service.

Our investment strategy attempts to generate superior, long-term risk-adjusted returns by primarily investing in equity securities in developed markets. As of September 30, 2006, 98% of our investment portfolio was invested in publicly-traded equity securities. Our investment portfolio is managed by DME Advisors, LP, or DME Advisors, which is controlled by David Einhorn, the Chairman of our Board of Directors and the president of Greenlight Capital, Inc. DME Advisors is a value-oriented investment manager that seeks to identify a company’s fundamental economic drivers and to exploit market pricing inefficiencies in order to maximize risk-adjusted returns. Since our inception in July 2004 to September 30, 2006, the annualized return on our investment portfolio has been 17.3%, net of fees.

We measure our success by long-term growth in book value per share, which we believe is the most comprehensive gauge of the performance of our business. Accordingly, our incentive compensation plans are designed to align employee and shareholder interests. Compensation under our cash bonus plan is based on the ultimate underwriting returns of our business measured over a multi-year period, rather than premium targets or estimated underwriting profitability for the year in which we initially underwrote the business.

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We began underwriting business in April 2006, once our senior underwriting team and infrastructure were in place. For the nine months ended September 30, 2006, we generated earned premiums of $12.5 million, net investment income of $41.0 million and net income of $39.6 million. As of September 30, 2006, we had total assets of $423.2 million and total shareholders’ equity of $278.5 million. In August 2006, we received an A− (Excellent) financial strength rating with a stable outlook from A.M. Best & Co. Inc., or A.M. Best, which is the fourth highest of 15 ratings A.M. Best issues. This rating reflects the rating agency’s opinion of our financial strength, operating performance and ability to meet obligations and it is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares.

Market Trends and Opportunities

The property and casualty insurance industry experiences shortages of capacity in certain product lines from time to time. In the past, extended periods of competitive pricing, increases in reserves, rating downgrades, higher than expected losses and rating agency changes in capital requirements for certain lines of business, have caused capacity shortages. These market dislocations have created considerable cyclical increases in pricing and changes in terms and conditions that are significantly more favorable for reinsurers.

As market conditions continue to change, we intend to selectively underwrite in markets experiencing dislocations and anomalies which we believe will result in attractive risk-adjusted returns.

Our Competitive Strengths

We believe we distinguish ourselves as follows:


	•	Focus on Customized Products. We focus on customized reinsurance solutions. In particular, we focus on business that is difficult for brokers to place, that is not already sold by brokers or that requires an innovative underwriting approach. We believe we differentiate ourselves by offering customized products at times and in markets where capacity and alternatives are limited. We may also participate in traditional reinsurance programs which exhibit superior risk-adjusted return characteristics.


	•	Focus on Economic Results. Our goal is to achieve attractive economic returns on every reinsurance contract we underwrite without focusing on traditional reinsurance metrics, such as the current year combined ratio or other short-term considerations. Our decision to underwrite a contract depends on our determination that the expected economic returns exceeds our internal return hurdle. In pricing contracts, we assume investment returns equal to the risk-free rate instead of historical investment returns.


	•	Non-traditional Investment Approach. As compared to other reinsurance companies, we employ a non-traditional investment approach that has the potential to generate a higher rate of return than traditional fixed-income investment strategies. Since our formation, our investment portfolio has generated superior returns compared to traditional fixed-income portfolios through an absolute return, value-oriented investment strategy. An absolute return, value-oriented investment strategy takes long positions in undervalued securities and short positions in overvalued securities and seeks positive risk-adjusted returns in both up and down markets.


	•	Alignment of Management and Shareholder Interests. Our management incentive compensation plans are designed to align management and employee interests with those of our shareholders over the long-term. The majority of payments under our cash bonus plan are based on the ultimate underwriting returns, not on underwriting profitability in any single year or the returns generated by our investment portfolio. As a result, we expect most of the cash bonus plan payments each year will be deferred for multiple years to reflect actual underwriting results as they develop.

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	•	Experienced Management and Underwriting Team with Well-Established Market Relationships. Our management team has a broad range of relevant skills and experiences in the reinsurance industry. Our Chief Executive Officer, Leonard Goldberg, has more than 22 years of industry experience, including substantial time as a chief actuary and as president of the North American operations of a major reinsurer. Our President and Chief Underwriting Officer, Barton Hedges, is an actuary with 20 years of industry experience and was the president and chief operating officer of the Bermudian operations of a major reinsurer. Our underwriting team has knowledge, experience and relationships with many brokers in the United States, Europe and Bermuda.


	•	Financial Strength. Our balance sheet is not encumbered by issues of historic loss reserve adequacy, uncollectible retrocession or indebtedness. In August 2006, we received an A− (Excellent) financial strength rating with a stable outlook from A.M. Best, which is the fourth highest of 15 ratings A.M. Best issues. This rating reflects the rating agency’s opinion of our financial strength, operating performance and ability to meet obligations and is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares.

Our Strategy

We seek to maximize sustainable long-term growth in book value by pursuing the following strategies:


	•	Selectively Underwrite Reinsurance Risks . We employ a strict underwriting discipline to identify and select reinsurance opportunities with favorable risk-adjusted returns based on our proprietary actuarial modeling techniques. We intend to pursue an opportunistic strategy in all property and casualty lines of business to take advantage of market dislocations when and where they occur. We plan to develop an underwriting portfolio of frequency and severity business where each transaction is important to both our client and us. By maintaining a focused portfolio, we believe we will understand our risks and exposures better than our competitors. Our underwriting strategy is driven by our goal to produce superior long-term growth in book value per share, rather than by pursuing premium production targets.


	•	Operate as a Lead Reinsurer on the Majority of the Business that We Underwrite. Due to the customized nature of our business strategy, we anticipate that the majority of our reinsurance contracts will be sizeable and require significant interaction among clients, brokers and ourselves. We have a strong preference to lead these transactions to help ensure they meet or exceed our internal return hurdles. Therefore, we intend to be the lead underwriter for the majority of the aggregate premium that we underwrite. We will participate in non-lead positions when we believe the opportunity offers compelling risk-adjusted returns.


	•	Manage Capital Prudently and Maintain a Disciplined Balance Sheet. Our strategy is to generate underwriting profits while maintaining a disciplined balance sheet and managing our capital prudently relative to our risk exposure. We manage our property catastrophe risk exposures based on total aggregate limits rather than probable maximum loss estimates, which we believe to be a more conservative measure of our capital at risk. We intend to manage our other business by analyzing our maximum loss potential on each contract, subject to maximum amounts set by our Board. Occasionally, we may purchase retrocessional protection for our reinsurance business in order to mitigate concentrations of risk. We currently employ no debt in our capital structure and plan to maintain our A− (Excellent) rating from A.M. Best.

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	•	Employ a Differentiated Investment Approach. We use an absolute return, value-oriented investment strategy and we primarily invest in publicly-traded equity securities. This approach is intended to provide us with greater flexibility in managing our reinsurance business and the ability to optimize returns on our investment portfolio. We believe we will achieve higher rates of return over the long-term than more traditional fixed-income investment strategies followed by most reinsurers.


	•	Maintain a Lean and Focused Operating Structure. We believe that our highly focused and centralized management structure allows us to identify and quickly respond to market opportunities. This should allow us to capitalize on attractive opportunities and to provide superior client service.

Risks Relating to Our Business and this Offering

Investing in our Class A Ordinary Shares involves substantial risk. In addition, the maintenance of our competitive strengths, the implementation of our business strategy and our future results of operations and financial condition are subject to a number of risks and uncertainties. We discuss the factors that could adversely affect our actual results and performance, as well as the successful implementation of our business strategy, under the heading ‘‘Risk Factors’’ beginning on page 10. Before you invest in our Class A Ordinary Shares, you should carefully consider all of the information in this prospectus, including matters set forth under the heading ‘‘Risk Factors,’’ including:


	•	Earnings Volatility. Due to the nature of our reinsurance operations and our investment strategy, our operating results will fluctuate from period to period. In addition, our opportunistic nature and focus on long-term growth in book value per share will result in fluctuations in the total premiums written over certain periods as we focus on underwriting contracts that we believe will generate better long-term results. Accordingly, our short-term results of operations may not be indicative of our long-term prospects.


	•	Limited Operating History. Our future performance is difficult to predict because we have limited operating history.


	•	Uncertainty of Establishing Reserves. As a relatively new reinsurer, our estimation of reserves may be less reliable than the reserve estimations of a reinsurer with a greater volume of business and an established loss history. Actual losses and loss adjustment expenses paid may deviate substantially from the estimates of our loss reserves contained in our financial statements.


	•	Cyclicality of the Reinsurance Market. The property and casualty reinsurance industry is cyclical and subject to unpredictable developments which affect the industry’s profitability. These include trends of courts granting increasingly larger awards for certain damages, natural disasters, fluctuations in interest rates, changes in the investment environment that affect market prices of investments, inflationary pressures and other events that affect the size of losses companies and primary insurers experience.


	•	Loss of Key Personnel. The loss of the services of one or more of the members of our senior management or other key personnel, or our inability to hire and retain other key personnel, could delay or prevent us from fully implementing our business strategy. In addition, the diminution or loss of the services of DME Advisors’ principals could have a material adverse effect on our business.


	•	Dependence upon Letter of Credit Facilities. Certain ceding companies will require us to obtain letters of credit or provide other collateral through funds withheld or trust arrangements. The inability to maintain or increase our letter of credit facility may significantly limit the amount of reinsurance we can write or require us to modify our investment strategy. If we fail to renew or increase our letter of credit facilities, our ability to implement our business strategy could be significantly and negatively affected.

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	•	Potential for Rating Downgrade. Our rating is subject to periodic review by A.M. Best and may be revised downward or revoked at its sole discretion. A downward revision or revocation of our rating may occur as a result of a variety of factors including the risk factors included in this prospectus. If A.M. Best downgrades or withdraws our rating we could be severely limited or prevented from writing any new reinsurance contracts, which would significantly and negatively affect our ability to implement our business strategy.


	•	Exposure to Natural and Man-made Disasters. Our reinsurance operations expose us to claims arising out of unpredictable catastrophic events, such as hurricanes, hailstorms, tornados, windstorms, severe winter weather, earthquakes, floods, fires, explosions, volcanic eruptions and other natural and man-made disasters. Claims from catastrophic events could cause substantial volatility in our financial results and could have a material adverse effect on our financial condition and results of operations.


	•	Investment Company Act Risks. We rely upon an exception under the Investment Company Act for a company organized and regulated as a foreign insurance company primarily and predominantly engaged in the reinsurance business. If this exception were deemed inapplicable, we would have to register under the Investment Company Act as an investment company, and as a result we would not be permitted to operate our business in the manner in which we currently operate.


	•	Investment Strategy Risks. We derive a significant portion of our income from our investment portfolio. As a result, our operating results depend on the performance of our investment portfolio. The risks associated with our anticipated investment strategy may be substantially greater than the risks associated with traditional fixed-income investments.


	•	Passive Foreign Investment Company Risks. Significant adverse tax consequences could result to our shareholders if either Greenlight Re or Greenlight Reinsurance Ltd. is characterized as a passive foreign investment company, or PFIC. The determination is factual in nature and conducted annually, and we cannot assure you that either Greenlight Re or Greenlight Reinsurance Ltd. will not currently or in the future be characterized as a PFIC.

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The Offering


Issuer		Greenlight Capital Re, Ltd.


Class A Ordinary Shares offered		shares


Underwriters’ option to purchase additional shares		shares


Number of Class A Ordinary Shares to be outstanding after this offering		Class A Ordinary Shares


Number of Class B Ordinary Shares to be outstanding after this offering and the concurrent private placement		Class B Ordinary Shares


Listing		Nasdaq Global Select Market


Trading symbol		GLRE


Use of proceeds		We estimate net proceeds to us from this offering to be approximately $ million, based upon an assumed initial offering price of $ per Class A Ordinary Share, representing the midpoint of the offering range set forth on the cover of this prospectus, and after deducting the underwriting discounts and commissions. We intend to use the net proceeds from this offering for additional capital for underwriting operations and for general corporate purposes. See ‘‘Use of Proceeds.’’


Dividend policy		We currently do not expect to pay any dividends on our Ordinary Shares. See ‘‘Dividend Policy.’’


Voting rights		Except as described herein with regard to voting rights adjustments for holders holding 9.9% or more of the total voting power of our Ordinary Shares, holders of our Class A Ordinary Shares have one vote for each Class A Ordinary Share held by them and are entitled to vote on a noncumulative basis at all meetings of shareholders. Holders of our Class B Ordinary Shares are entitled to ten votes for each Class B Ordinary Share held by them, subject to the limitation described above and a limitation on the maximum voting power of the Class B Ordinary Shares of 9.5%. See ‘‘Description of Share Capital— Ordinary Shares—Voting General’’ and ‘‘Risk Factors— Provisions of our Articles may reallocate the voting power of our Class A Ordinary Shares and subject holders of Class A Ordinary Shares to SEC Compliance.’’

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Except as otherwise indicated, all information contained in this prospectus:


	•	assumes the underwriters do not exercise their option to purchase additional Class A Ordinary Shares;


	•	excludes of our Class A Ordinary Shares issuable upon the exercise of options outstanding as of , 2007, at a weighted average exercise price of $ per share issued under our 2004 stock incentive plan or stock incentive plan;


	•	excludes 400,000 of our Class A Ordinary Shares issuable upon the exercise of share purchase options granted to First International Securities Ltd., or First International, a service provider, outstanding as of December 31, 2006, at an exercise price of $10.00 per share; and


	•	excludes shares of our Class B Ordinary Shares issuable in a concurrent private placement to David Einhorn, the Chairman of our Board of Directors. Each Class B Ordinary Share will automatically convert into one Class A Ordinary Share when no longer held by David Einhorn or certain persons and entities related to David Einhorn.

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Summary Financial Data

The following table sets forth our summary financial data for the nine months ended September 30, 2006 and 2005, and the fiscal year ended December 31, 2005 and the period from inception on July 13, 2004 to December 31, 2004. We were capitalized in August 2004 and commenced underwriting operations in April 2006. We derived the financial data for the year ended December 31, 2005 and the period from July 13, 2004 to December 31, 2004 from our audited financial statements included elsewhere in this prospectus, which we have prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The financial data for the nine months ended September 30, 2006 and 2005 is derived from our unaudited financial statements included elsewhere in this prospectus. These historical results are not necessarily indicative of future results and the interim results are not necessarily indicative of our full-year performance. You should read the following summary financial data together with our audited financial statements and related notes included elsewhere in this prospectus and the information under ‘‘Selected Consolidated Financial Data’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’


	Nine Months Ended September 30,							Year Ended December 31, 2005			Period from July 13, 2004 to December 31, 2004
	2006				2005			Year Ended December 31, 2005			Period from July 13, 2004 to December 31, 2004
	($ in thousands, except share, per share data and ratios)
Summary Statement of Income Data:
Premiums written		$	36,223			$	—		$	—		$	—
Premiums earned			12,454				—			—			—
Net investment income			41,028				21,392			27,934			9,636
Interest income on related party promissory note receivable			827				965			1,323			516
Total revenues			54,309				22,357			29,257			10,152
Loss and loss adjustment expenses incurred			5,512				—			—			—
Acquisition costs			2,787				—			—			—
General and administrative expenses			6,439				1,683			2,992			3,377
Total expenses			14,738				1,683			2,992			3,377
Net income		$	39,571			$	20,674		$	26,265		$	6,775
Earnings Per Share Data:
Basic		$	1.86			$	0.97		$	1.24		$	0.32
Diluted			1.85				0.97			1.24			0.32
Weighted average number of Ordinary Shares
Basic			21,362,111				21,225,245			21,226,868			21,225,000
Diluted			21,408,898				21,258,760			21,265,801			21,234,350
Selected Ratios (based on U.S. GAAP Statement of Income data):
Loss ratio			44.3	%			—			—			—
Acquisition cost ratio			22.4	%			—			—			—
Internal expense ratio			51.7	%			—			—			—
Combined ratio			118.4	%			—			—			—

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	As of September 30,			As of December 31,
	2006			2005			2004
	($ in thousands, except share and per share data)
Summary Balance Sheet Data:
Cash and cash equivalents		$	5,718		$	7,218		$	30,664
Restricted cash and cash equivalents			116,190			99,719			96,791
Investments in securities, at fair value			278,724			219,211			162,205
Total assets			423,185			327,935			290,764
Loss and loss adjustment expense reserves			1,872			—			—
Unearned premium reserves			23,769			—			—
Total liabilities			144,675			96,113			94,240
Total shareholders’ equity			278,510			231,822			196,524
Adjusted book value ⁽¹⁾		$	291,823		$	248,034		$	221,024
Ordinary shares outstanding
Basic			21,399,728			21,231,666			21,225,000
Per Share Data:
Basic adjusted book value per share		$	13.64		$	11.68		$	10.41
Diluted adjusted book value per share			13.48			11.63			10.40

⁽¹⁾

Adjusted book value equals total shareholders’ equity plus the aggregate principal outstanding on a promissory note from Greenlight Capital Investors, LLC, or GCI, issued in partial payment for 5,050,000 Class B Ordinary Shares, pursuant to the Securities Purchase Agreement dated August 11, 2004 between us and GCI. GCI repaid the outstanding principal amount of the promissory note on December 6, 2006.

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RISK FACTORS

Investing in our Class A Ordinary Shares involves significant risks, including the potential loss of all or part of your investment. These risks could materially affect our business, financial condition and results of operations and cause a decline in the market price of our Class A Ordinary Shares. You should carefully consider all of the risks described in this prospectus, in addition to the other information contained in this prospectus, before you make an investment in our Class A Ordinary Shares.

Risks Relating to Our Business

Our results of operations will fluctuate from period to period and may not be indicative of our long-term prospects.

The performance of our reinsurance operations and our absolute return, value-oriented investment strategy will fluctuate from period to period. Fluctuations will result from a variety of factors, including:


	•	reinsurance contract pricing;


	•	our assessment of the quality of available reinsurance opportunities;


	•	the volume and mix of reinsurance products we underwrite;


	•	loss experience on our reinsurance liabilities;


	•	our ability to assess and integrate our risk management strategy properly; and


	•	the performance of our investment portfolio.

In particular, we seek to underwrite products and make investments to achieve positive risk-adjusted long-term results and our investment strategy is likely to be more volatile than traditional fixed-income strategies. In addition, our opportunistic nature and focus on long-term growth in book value will result in fluctuations in total premiums written from period to period as we concentrate on underwriting contracts that we believe will generate better long-term rather than short-term results. Accordingly, our short-term results of operations may not be indicative of our long-term prospects.

We are a start-up operation and there is limited historical information available for investors to evaluate our performance or a potential investment in our Class A Ordinary Shares.

We have limited operating history. We were formed in July 2004 but we did not begin underwriting reinsurance transactions until April 2006. As a result, there is limited historical information available to help prospective investors evaluate our performance or an investment in our Class A Ordinary Shares. In addition, in light of our limited operating history, our historical financial statements are not necessarily meaningful for evaluating an investment in our Class A Ordinary Shares.

In general, reinsurance and insurance companies in their initial stages of development present substantial business and financial risks and may suffer significant losses. They must develop business relationships, establish operating procedures, hire staff, install information technology systems, implement management processes and complete other tasks appropriate for the conduct of their intended business activities. In particular, our ability to implement our strategy to penetrate the reinsurance market depends on, among other things:


	•	our ability to attract clients;


	•	our ability to attract and retain personnel with underwriting, actuarial and accounting and finance expertise;


	•	our ability to maintain commercially acceptable financial strength ratings with one or more ratings agencies;


	•	our ability to evaluate the risks we assume under reinsurance contracts that we write; and

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	•	the risk of an adverse tax characterization if we are unable to implement our business plan.

We cannot assure you that there will be sufficient demand for the reinsurance products we plan to write to support our planned level of operations, or that we will accomplish the tasks necessary to implement our business strategy.

Established competitors with greater resources may make it difficult for us to effectively market our products or offer our products at a profit.

The reinsurance industry is highly competitive. We compete with major reinsurers, many of which have substantially greater financial, marketing and management resources than we do. Competition in the types of business that we underwrite is based on many factors, including:


	•	premium charges;


	•	the general reputation and perceived financial strength of the reinsurer;


	•	relationships with reinsurance intermediaries;


	•	terms and conditions of products offered;


	•	ratings assigned by independent rating agencies;


	•	speed of claims payment and reputation; and


	•	experience in the particular lines of reinsurance to be written.

We cannot assure you that we will be able to compete successfully in the reinsurance market. Our failure to compete effectively would significantly and negatively affect our financial condition and results of operations.

Our losses may exceed our loss reserves, which could significantly and negatively affect our business.

Our results of operations and financial condition depend upon our ability to assess accurately the potential losses associated with the risks we reinsure. Reserves are estimates at a given time of claims an insurer ultimately expects to pay, based upon facts and circumstances then known, predictions of future events, estimates of future trends in claim severity and other variable factors. The inherent uncertainties of estimating loss reserves generally are greater for reinsurance companies as compared to primary insurers, primarily due to:


	•	the lapse of time from the occurrence of an event to the reporting of the claim and the ultimate resolution or settlement of the claim;


	•	the diversity of development patterns among different types of reinsurance treaties ; and


	•	the necessary reliance on the client for information regarding claims.

Our estimation of reserves, as a relatively new reinsurer, may be less reliable than the reserve estimations of a reinsurer with a greater volume of business and an established loss history. Actual losses and loss adjustment expenses paid may deviate substantially from the estimates of our loss reserves contained in our financial statements, to our detriment. If we determine our loss reserves to be inadequate, we will increase our loss reserves with a corresponding reduction in our net income in the period in which we identify the deficiency and such a reduction will negatively affect our results of operations. If our losses exceed our loss reserves, our financial condition may be significantly and negatively affected.

The property and casualty reinsurance market may be affected by cyclical trends.

We write reinsurance in the property and casualty markets. The property and casualty reinsurance industry is cyclical. Primary insurers’ underwriting results, prevailing general economic and market conditions, liability retention decisions of companies and primary insurers and reinsurance premium rates influence the demand for property and casualty reinsurance. Prevailing prices and available

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surplus to support assumed business influence reinsurance supply. Supply may fluctuate in response to changes in rates of return on investments realized in the reinsurance industry, the frequency and severity of losses and prevailing general economic and market conditions. Unpredictable developments, including courts granting increasingly larger awards for certain damages, natural disasters (such as catastrophic hurricanes, windstorms, tornados, earthquakes and floods), fluctuations in interest rates, changes in the investment environment that affect market prices of investments and inflationary pressures, affect the industry’s profitability. The effects of cyclicality could significantly and negatively affect our financial condition and results of operations.

A downgrade or withdrawal of our A.M. Best rating would significantly and negatively affect our ability to implement our business strategy successfully.

Companies, insurers and reinsurance intermediaries use ratings from independent ratings agencies as an important means of assessing the financial strength and quality of reinsurers. A.M. Best has assigned us a financial strength rating of A− (Excellent), which is the fourth highest of 15 ratings that A.M. Best issues. This rating reflects the rating agency’s opinion of our financial strength, operating performance and ability to meet obligations. It is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares. A.M. Best periodically reviews our rating, and may revise it downward or revoke it at its sole discretion. This may occur as a result of a variety of factors including the risk factors included in this prospectus. If A.M. Best downgrades or withdraws our rating, we could be severely limited or prevented from writing any new reinsurance contracts which would significantly and negatively affect our ability to implement our business strategy.

If we lose or are unable to retain our senior management and other key personnel and are unable to attract qualified personnel, our ability to implement our business strategy could be delayed or hindered, which, in turn, could significantly and negatively affect our business.

Our future success depends to a significant extent on the efforts of our senior management and other key personnel to implement our business strategy. We believe there are only a limited number of available, qualified executives with substantial experience in our industry. In addition, we will need to add personnel, including underwriters, to implement our business strategy. We could face challenges attracting personnel to the Cayman Islands. Accordingly, the loss of the services of one or more of the members of our senior management or other key personnel, or our inability to hire and retain other key personnel, could delay or prevent us from fully implementing our business strategy and, consequently, significantly and negatively affect our business.

We do not currently maintain key man life insurance with respect to any of our senior management, including our Chief Executive Officer, Chief Financial Officer or Chief Underwriting Officer. If any member of senior management dies or becomes incapacitated, or leaves the company to pursue employment opportunities elsewhere, we would be solely responsible for locating an adequate replacement for such senior management and for bearing any related cost. To the extent that we are unable to locate an adequate replacement or are unable to do so within a reasonable period of time, our business may be significantly and negatively affected.

Our failure to maintain sufficient letter of credit facilities or to increase our letter of credit capacity on commercially acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy.

We are not licensed or admitted as a reinsurer in any jurisdiction other than the Cayman Islands. Certain jurisdictions, including the United States, do not permit insurance companies to take credit for reinsurance obtained from unlicensed or non-admitted insurers on their statutory financial statements unless appropriate security measures are implemented. Consequently, certain clients will require us to obtain a letter of credit or provide other collateral through funds withheld or trust arrangements. When we obtain a letter of credit facility, we are customarily required to provide collateral to the letter of credit provider in order to secure our obligations under the facility. Our ability to provide collateral, and the costs at which we provide collateral, are primarily dependent on the composition of our investment portfolio.

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Typically, letters of credit are collateralized with fixed-income securities. Banks may be willing to accept our investment portfolio as collateral, but on terms that may be less favorable to us than reinsurance companies that invest solely or predominantly in fixed-income securities. The inability to maintain or obtain letters of credit collateralized by our investment portfolio may significantly limit the amount of reinsurance we can write or require us to modify our investment strategy. As of September 30, 2006, we had a letter of credit facility, valid until October 11, 2007, from Citibank, N.A. in a maximum amount of $200 million of which $53.9 million had been issued. We may need additional letter of credit capacity as we grow, and if we are unable to renew or increase our letter of credit facility or are unable to do so on commercially acceptable terms we may need to liquidate all or a portion of our investment portfolio and invest in a fixed-income portfolio or other forms of investment acceptable to our clients and banks as collateral, which could significantly and negatively affect our ability to implement our business strategy.

The inability to obtain business provided from brokers could adversely affect our business strategy and results of operations.

A substantial portion of our business is primarily placed through brokered transactions, which involve a limited number of reinsurance brokers. Since we began underwriting operations in April 2006, we have placed all of our gross premiums written through brokers. To lose or fail to expand all or a substantial portion of the brokered business provided through one or more of these brokers, many of whom may not be familiar with our Cayman Islands jurisdiction, could significantly and negatively affect our business and results of operations.

We may need additional capital in the future in order to operate our business, and such capital may not be available to us or may not be available to us on favorable terms. Furthermore, our raising additional capital could dilute your ownership interest in our company and may cause the market price of the Class A Ordinary Shares to decline.

We may need to raise additional capital in the future through public or private equity or debt offerings or otherwise in order to:


	•	fund liquidity needs caused by underwriting or investment losses;


	•	replace capital lost in the event of significant reinsurance losses or adverse reserve development;


	•	satisfy letters of credit or guarantee bond requirements that may be imposed by our clients or by regulators;


	•	meet applicable statutory jurisdiction requirements;


	•	meet rating agency capital requirements; or


	•	respond to competitive pressures.

Additional capital may not be available on terms favorable to us, or at all. Further, any additional capital raised through the sale of equity could dilute your ownership interest in our company and may cause the market price of our Class A Ordinary Shares to decline. Additional capital raised through the issuance of debt may result in creditors having rights, preferences and privileges senior or otherwise superior to those of our Class A Ordinary Shares.

Our property and property catastrophe reinsurance operations may make us vulnerable to losses from catastrophes and may cause our results of operations to vary significantly from period to period.

Our reinsurance operations expose us to claims arising out of unpredictable catastrophic events, such as hurricanes, hailstorms, tornados, windstorms, severe winter weather, earthquakes, floods, fires, explosions, volcanic eruptions and other natural or man-made disasters. The incidence and severity of catastrophes are inherently unpredictable but the loss experience of property catastrophe reinsurers has been generally characterized as low frequency and high severity. Claims from catastrophic events

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could reduce our earnings and cause substantial volatility in our results of operations for any fiscal quarter or year and adversely affect our financial condition. Corresponding reductions in our surplus levels could impact our ability to write new reinsurance policies.

Catastrophic losses are a function of the insured exposure in the affected area and the severity of the event. Because accounting regulations do not permit reinsurers to reserve for catastrophic events until they occur, claims from catastrophic events could cause substantial volatility in our financial results for any fiscal quarter or year and could significantly and negatively affect our financial condition and results of operations.

The risks associated with insurance underwriting could adversely affect us.

In some of our reinsurance business under quota-share and whole book of business arrangements, we do not expect to separately evaluate each of the original individual risks assumed under these reinsurance contracts. Therefore, we will be largely dependent on the original underwriting decisions made by ceding companies. We will be subject to the risk that the ceding companies may not have adequately evaluated the insured risks and that the premiums ceded may not adequately compensate us for the risks we assume. We also do not expect to separately evaluate each of the individual claims made on the underlying insurance contracts under quota-share and whole book of business arrangements. Therefore, we will be dependent on the original claims decisions made by ceding companies. We will be subject to the risk that the ceding companies may pay invalid claims, which could result in reinsurance losses for us.

We could face unanticipated losses from war, terrorism, and political unrest, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations.

We have exposure to large, unexpected losses resulting from man-made catastrophic events, such as acts of war, acts of terrorism and political instability. These risks are inherently unpredictable and recent events may indicate an increased frequency and severity of losses. It is difficult to predict the timing of these events or to estimate the amount of loss that any given occurrence will generate. To the extent that losses from these risks occur, our financial condition and results of operations could be significantly and negatively affected.

The involvement of reinsurance brokers subjects us to their credit risk.

In accordance with industry practice, we frequently pay amounts owed on claims under our policies to reinsurance brokers, and these brokers, in turn, remit these amounts to the ceding companies that have reinsured a portion of their liabilities with us. In some jurisdictions, if a broker fails to make such a payment, we might remain liable to the ceding company for the deficiency notwithstanding the broker’s obligation to make such payment. Conversely, in certain jurisdictions, when the ceding company pays premiums for policies to reinsurance brokers for payment to us, these premiums are considered to have been paid and the ceding company will no longer be liable to us for these premiums, whether or not we have actually received them. Consequently, we assume a degree of credit risk associated with brokers around the world.

We may be unable to purchase retrocession, and if we successfully purchase retrocession, we may be unable to collect, which could adversely affect our business, financial condition and results of operations.

We may purchase retrocession for our own account in order to mitigate the effect of large and multiple losses upon our financial condition. A retrocessionaire’s insolvency or inability or refusal to make payments under the terms of its retrocession agreement with us could have an adverse effect on us because we remain liable to our client. From time to time, market conditions have limited, and in some cases have prevented, reinsurers from obtaining the types and amounts of retrocession that they consider adequate for their business needs. Accordingly, we may not be able to obtain our desired amounts of retrocession or negotiate terms that we deem appropriate or acceptable or obtain retrocession from entities with satisfactory creditworthiness. Our failure to establish adequate retrocessional arrangements or the failure of our retrocessional arrangements to protect us from overly concentrated risk exposure could significantly and negatively affect our business, financial condition and results of operations.

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Currency fluctuations could result in exchange rate losses and negatively impact our business.

Our functional currency is the U.S. dollar. However, we expect that we will write a portion of our business and receive premiums in currencies other than the U.S. dollar. In addition, DME Advisors may invest a portion of our portfolio in assets denominated in currencies other than the U.S. dollar. Consequently, we may experience exchange rate losses to the extent our foreign currency exposure is not hedged or is not sufficiently hedged, which could significantly and negatively affect our business. If we do seek to hedge our foreign currency exposure through the use of forward foreign currency exchange contracts or currency swaps, we will be subject to the risk that our counterparties to the arrangements fail to perform.

Our ability to implement our business strategy could be delayed or adversely affected by Cayman Islands employment restrictions.

Under Cayman Islands law, persons who are not Caymanian, do not possess Caymanian status, or are not otherwise entitled to reside and work in the Cayman Islands pursuant to provisions of the Immigration Law (2006 Revision) of the Cayman Islands, which we refer to as the Immigration Law, may not engage in any gainful occupation in the Cayman Islands without an appropriate governmental work permit. Such a work permit may be granted or extended on a continuous basis for a maximum period of seven years (unless the employee is deemed to be exempted from such requirement in accordance with the provisions of the Immigration Law, in which case such period may be extended to nine years and the employee given the opportunity to apply for permanent residence) upon showing that, after proper public advertisement, no Caymanian or person of Caymanian status, or other person legally and ordinarily resident in the Cayman Islands who meets the minimum standards for the advertised position is available. The failure of these work permits to be granted or extended could delay us from fully implementing our business strategy.

Risks Relating to Insurance and Other Regulations

Any suspension or revocation of our reinsurance license would materially impact our ability to do business and implement our business strategy.

We are licensed as a reinsurer only in the Cayman Islands and do not plan to be licensed in any other jurisdiction. The suspension or revocation of our license to do business as a reinsurance company in the Cayman Islands for any reason would mean that we would not be able to enter into any new reinsurance contracts until the suspension ended or we became licensed in another jurisdiction. Any such suspension or revocation of our license would negatively impact our reputation in the reinsurance marketplace and could have a material adverse effect on our results of operations. In addition, a suspension or revocation of our license could result in our losing our exception under the Investment Company Act of 1940, as amended, or the Investment Company Act. See ‘‘—We are subject to the risk of possibly becoming an investment company under U.S. federal securities law.’’

We are subject to the risk of possibly becoming an investment company under U.S. federal securities law.

The Investment Company Act regulates certain companies that invest in or trade securities. We rely on an exception under the Investment Company Act for a company organized and regulated as a foreign insurance company which is engaged primarily and predominantly in the reinsurance of risks on insurance agreements. The law in this area is subjective and there is a lack of guidance as to the meaning of ‘‘primarily and predominantly’’ under the relevant exception to the Investment Company Act. For example, there is no standard for the amount of premiums that need be written relative to the level of a company’s capital in order to qualify for the exception. If this exception were deemed inapplicable, we would have to register under the Investment Company Act as an investment company. Registered investment companies are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, leverage, dividends and transactions with affiliates. Registered investment companies are not permitted to operate their business in the manner in which we operate our business, nor are registered investment companies permitted to have many of the relationships that we have with our affiliated companies.

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If at anytime it were established that we had been operating as an investment company in violation of the registration requirements of the Investment Company Act, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, that we would be unable to enforce contracts with third parties or that third parties could seek to obtain recission of transactions with us undertaken during the period in which it was established that we were an unregistered investment company.

To the extent that the laws and regulations change in the future so that contracts we write are deemed not to be reinsurance contracts, we will be at greater risk of not qualifying for the Investment Company Act exception.

Insurance regulators in the United States or elsewhere may review our activities and claim that we are subject to that jurisdiction’s licensing requirements.

We do not presently expect that we will be admitted to do business in any jurisdiction other than the Cayman Islands. We cannot assure you, however, that insurance regulators in the United States, the United Kingdom or elsewhere will not review our activities and claim that we are subject to such jurisdiction’s licensing requirements. In addition, we are subject to indirect regulatory requirements imposed by jurisdictions that may limit our ability to provide reinsurance. For example, our ability to write reinsurance may be subject, in certain cases, to arrangements satisfactory to applicable regulatory bodies and proposed legislation and regulations may have the effect of imposing additional requirements upon, or restricting the market for, alien reinsurers such as us with whom domestic companies may place business. In general, the Cayman Islands insurance statutes, regulations and the policies of the Cayman Islands Monetary Authority are less restrictive than United States state insurance statutes and regulations.

If in the future we were to become subject to the laws or regulations of any state in the United States or to the laws of the United States, the United Kingdom or of any other country, we may consider various alternatives to our operations. If we choose to attempt to become licensed in another jurisdiction, for instance, we may not be able to do so and the modification of the conduct of our business or the non-compliance with insurance statutes and regulations could significantly and negatively affect our business.

Current legal and regulatory activities relating to certain structured insurance products could affect our business, results of operations and financial condition

The sale and purchase of structured reinsurance and other non-traditional and loss mitigation insurance products, along with the accounting treatment of those products, have become the focus of investigations by the Securities and Exchange Commission, or the SEC, and numerous state Attorneys General. We cannot predict at this time the effect that current investigations, litigation and regulatory activity will have on the reinsurance industry or our business or what, if any, changes may be made to laws and regulations regarding the industry and financial reporting. It is possible that these investigations or related regulatory developments will mandate changes in industry practices that will negatively impact our ability to operate our business. Any reclassification of reinsurance contracts that we write could call into question our exception under the Investment Company Act. Any of the foregoing could significantly and negatively affect our business, results of operations and financial condition, and our ability to implement our business strategy.

The outcome of recent industry investigations and regulatory proposals could adversely affect our financial condition and results of operations and cause the price of our shares to be volatile.

The insurance industry has attracted increased scrutiny by regulatory and law enforcement authorities relating to allegations of improper special payments, price-fixing, bid-rigging, improper accounting practices and other alleged misconduct. Formal and informal inquiries have been made of a large segment of the industry, and a number of companies in the insurance industry have received subpoenas, requests for information from regulatory agencies or other inquiries relating to these and similar matters. These efforts have resulted in both enforcement actions and proposals for new

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regulation. Although some of these enforcement actions have been settled and we are not subject to the United States regulatory regime, we cannot predict the outcome of this increased regulatory scrutiny or whether it will expand into other areas, whether activities and practices currently thought to be lawful will be characterized as unlawful, what form new regulations will have when finally adopted or the impact, if any, of increased regulatory and law enforcement action on our business and results of operations.

Risks Relating to Our Investment Strategy and Our Investment Advisor

We have limited control as to how our investment portfolio is allocated and its performance depends on the ability of DME Advisors to select and manage appropriate investments.

We have engaged DME Advisors to act as our exclusive investment advisor for our investment portfolio and to recommend appropriate investment opportunities. Although DME Advisors is contractually obligated to follow our investment guidelines, we cannot assure shareholders as to how assets will be allocated to different investment opportunities, including long and short positions and derivatives trading, which could increase the level of risk to which our investment portfolio will be exposed. In addition, DME Advisors can outsource to subadvisors without our consent or approval.

The performance of our investment portfolio depends to a great extent on the ability of DME Advisors to select and manage appropriate investments. The advisory agreement terminates on December 31, 2009, unless extended, and we have limited ability to terminate the advisory agreement earlier. We cannot assure you that DME Advisors will be successful in meeting our investment objectives or that the advisory agreement with DME Advisors will be renewed. The failure of DME Advisors to perform adequately could significantly and negatively affect our business, results of operations and financial condition.

Our investment performance may suffer as a result of adverse capital market developments or other factors and impact our liquidity, which could in turn adversely affect our financial condition and results of operations.

We derive a significant portion of our income from our investment portfolio. As a result, our operating results depend in part on the performance of our investment portfolio. For the nine months ended September 30, 2006, our investment income was $41.0 million, or 76%, of total revenue. We strive to structure our investments in a manner that recognizes our liquidity needs for future liabilities. We cannot assure that DME Advisors will successfully structure our investments in relation to our anticipated liabilities. Failure to do so could force us to liquidate investments at a significant loss or at prices that are not optimal, which could significantly and adversely affect our financial results.

The risks associated with DME Advisors’ anticipated investment strategy may be substantially greater than the risks associated with traditional fixed-income investment strategies. Consequently, the market price of the Class A Ordinary Shares may be volatile and the risk of loss may be greater when compared with other reinsurance companies. The success of our investment strategy may also be affected by general economic conditions. Unexpected market volatility and illiquidity associated with our investments could significantly and negatively affect our investment portfolio results.

Potential conflicts of interest with DME Advisors may exist that could adversely affect us.

None of DME Advisors and its principals, including David Einhorn, Chairman of our Board of Directors, are obligated to devote any specific amount of time to the affairs of our company. Affiliates of DME Advisors manage and expect to continue to manage other client accounts, some of which have objectives similar to ours, including collective investment vehicles which are managed by affiliates of DME Advisors and in which DME Advisors or its affiliates may have an equity interest. If we compete for any investment opportunity with another entity that DME Advisors or its affiliates manage, DME Advisors is not required to afford us any exclusivity or priority. For instance, Mr. Einhorn is the president of Greenlight Capital, Inc. Greenlight Capital, Inc.’s interest and those of DME Advisors may at times conflict, possibly to DME Advisors’ detriment, which may potentially

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adversely affect our investment opportunities and returns. Mr. Einhorn also serves as the Chairman of our Board of Directors and our Board of Directors approves and adopts the investment guidelines under our advisory agreement, which may potentially lead to a conflict of interest.

DME Advisors and its affiliates may also manage accounts whose advisory fee schedules, investment objectives and policies differ from ours, which may cause DME Advisors and its affiliates to effect trading in one account that may have an adverse effect on another account, including ours. We are not entitled to inspect the trading records of DME Advisors, or its principals, that are not related to our company.

Our investment portfolio may be concentrated in a few large positions which could result in large losses.

Our investment guidelines provide that DME Advisors may commit up to 20% of our capital to any one investment. Accordingly, from time to time we may hold a few, relatively large securities positions in relation to our capital. Since our investment portfolio will not necessarily be widely diversified, it may be subject to more rapid changes in value than would be the case if the investment portfolio were required to maintain a wide diversification among companies, securities and types of securities.

DME Advisors may trade on margin and use other forms of financial leverage, which could potentially adversely affect our revenues.

Our investment guidelines provide DME Advisors with the ability to trade on margin and use other forms of financial leverage. Fluctuations in the market value of our investment portfolio can have a disproportionately large effect in relation to our capital. Any event which may adversely affect the value of positions we hold could significantly negatively affect the net asset value of our investment portfolio and thus our results of operations.

DME Advisors may effectuate short sales that subject us to unlimited loss potential.

DME Advisors may enter into transactions in which it sells a security it does not own, which we refer to as a short sale, in anticipation of a decline in the market value of the security. Short sales for our account theoretically will involve unlimited loss potential since the market price of securities sold short may continuously increase. Under adverse market conditions, DME Advisors might have difficulty purchasing securities to meet short sale delivery obligations, and may have to cover shorts sales at suboptimal prices.

The loss by DME Advisors of key employees could materially adversely affect our investment results.

DME Advisors, and consequently our investment portfolio, is dependent on the talents, efforts and leadership of DME Advisors’ principals. The diminution or loss of the services of DME Advisors’ principals, or diminution or loss of their reputation and integrity, or any negative market or industry perception arising from that diminution or loss, could have a material adverse effect on our business. Our advisory agreement with DME Advisors does not allow us to terminate the agreement in the event that DME Advisors loses any or all of its principals.

DME Advisors may transact in derivative instruments which may increase the risk of our investment portfolio.

Derivative instruments, or derivatives, include futures, options, swaps, structured securities and other instruments and contracts that derive their value from one or more underlying securities, financial benchmarks, currencies, commodities or indices. There are a number of risks associated with derivatives trading. Because many derivatives are leveraged, and thus provide significantly more market exposure than the money paid or deposited when the transaction is entered into, a relatively small adverse market movement may result in the loss of a substantial portion of or the entire investment, and may potentially expose us to a loss exceeding the original amount invested. Derivatives may also expose us to liquidity and counterparty risk. There may not be a liquid market

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within which to close or dispose of outstanding derivatives contracts. In the event of the counterparty’s default, we will generally only rank as an unsecured creditor and risk the loss of all or a portion of the amounts we are contractually entitled to receive.

The compensation arrangements of DME Advisors may create an incentive to effect transactions that are risky or speculative.

DME Advisors is entitled to two forms of compensation under the advisory agreement:


	•	a management fee of 1.5% annually, charged monthly, based on net assets under management; and


	•	performance compensation based on the appreciation, including unrealized appreciation, in the value of our investment portfolio equal to 20% of net profits, subject to a loss carryforward provision.

While the performance compensation arrangement provides that losses will be carried forward as an offset against net profits in subsequent periods, DME Advisors generally will not otherwise be penalized for realized losses or decreases in the value of our portfolio. These performance compensation arrangements may create an incentive for DME Advisors to engage in transactions that focus on the potential for short-term gains rather than long-term growth or that are particularly risky or speculative.

DME Advisors may serve on boards and committees.

DME Advisors may from time to time place its or its affiliates’ representatives on Creditors Committees and/or boards of certain companies in which we have invested. While such representation may enable DME Advisors to enhance the sale value of our investments, it may also prevent us from freely disposing of our investments and may subject us to additional liability. The advisory agreement provides for the indemnification of DME Advisors or any other person designated by DME Advisors for claims arising from such board representation.

The ability to use ‘‘soft dollars’’ may provide DME Advisors with an incentive to select certain brokers that may take into account benefits to be received by DME Advisors.

DME Advisors’ authority to use ‘‘soft dollar’’ credits generated by our securities transactions to pay for expenses that might otherwise have been borne by DME Advisors may give DME Advisors an incentive to select brokers or dealers for our transactions, or to negotiate commission rates or other execution terms, in a manner that takes into account the soft dollar benefits received by DME Advisors rather than giving exclusive consideration to the interests of our investment portfolio.

The Advisory Agreement has limited termination provisions.

The advisory agreement has limited termination provisions which restrict our ability to manage our investment portfolio outside of DME Advisors. Because the advisory agreement contains exclusivity and limited termination provisions, we are unable to use investment managers other than DME Advisors for so long as the agreement is in effect. Thus, even if we become dissatisfied with the results of the investment performance of DME Advisors, we will be unable to hire new investment managers until the advisory agreement expires or is terminated for cause.

Certain of our investments may have limited liquidity and lack valuation data.

Our investment guidelines provide DME Advisors with the flexibility to invest in certain securities with limited liquidity or no public market. This lack of liquidity may adversely affect the ability of DME Advisors to execute trade orders at desired prices, and may impact our ability to fulfill our payment obligations. To the extent that DME Advisors invests in securities or instruments for which market quotations are not readily available, under the terms of the advisory agreement the valuation of such securities and instruments for purposes of compensation to DME Advisors will be determined by DME Advisors, whose determination subject to audit verification will be conclusive and binding in the absence of bad faith or manifest error.

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Increased regulation or scrutiny of alternative investment strategies may affect our investment portfolio or our business reputation.

Alternative investment strategies have recently come under increased scrutiny by regulatory officials and have been the subject of proposals for new regulation and oversight. It is possible that increased regulation of alternative investment managers could adversely impact DME Advisors’ ability to manage our investment portfolio, which could significantly and negatively affect our business and results of operations. In addition, adverse publicity regarding alternative investment strategies generally, or DME Advisors or its affiliates specifically, could negatively affect our business reputation and attractiveness as a counterparty to brokers and ceding companies.

We may invest in securities based outside the United States which may be riskier than securities of United States issuers.

Under our investment guidelines, DME Advisors may invest in securities of issuers organized or based outside the United States. These investments may be subject to a variety of risks and other special considerations not affecting securities of United States issuers. Many foreign securities markets are not as developed or efficient as those in the United States. Securities of some foreign issuers are less liquid and more volatile than securities of comparable United States issuers. Similarly, volume and liquidity in many foreign securities markets are less than in the United States and, at times, price volatility can be greater than in the United States. The issuers may be subject to less stringent financial reporting and informational disclosure standards, practices and requirements than those applicable to United States issuers.

Risks Relating to our Class A Ordinary Shares

A shareholder may be required to sell its Class A Ordinary Shares.

Our Articles provide that we have the option, but not the obligation, to require a shareholder to sell its Class A Ordinary Shares for their fair market value to us, to other shareholders or to third parties if our Board of Directors determines that ownership of our Class A Ordinary Shares by such shareholder may result in adverse tax, regulatory or legal consequences to us, any of our subsidiaries or any of our shareholders and that such sale is necessary to avoid or cure such adverse consequences.

Provisions of our Articles, the Companies Law of the Cayman Islands and our corporate structure may each impede a takeover, which could adversely affect the value of our Class A Ordinary Shares.

Our Articles contain certain provisions that could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our shareholders. Our Articles provide that a director may only be removed for ‘‘Cause’’ as defined in the Articles, upon the affirmative vote of not less than 50% of our issued and outstanding Ordinary Shares.

Our Articles permit our Board of Directors to issue preferred shares from time to time, with such rights and preferences as they consider appropriate. Our Board of Directors may authorize the issuance of preferred shares with terms and conditions and under circumstances that could have an effect of discouraging a takeover or other transaction, deny shareholders the receipt of a premium on their Class A Ordinary Shares in the event of a tender or other offer for Class A Ordinary Shares and have a depressive effect on the market price of the Class A Ordinary Shares.

Unlike many jurisdictions in the United States, Cayman Islands law does not provide for mergers as that term is understood under corporate law in the United States. Cayman Islands law does have statutory provisions that provide for the reconstruction and amalgamation of companies, which are commonly referred to in the Cayman Islands as ‘‘schemes of arrangement.’’ The procedural and legal requirements necessary to consummate these transactions are more rigorous and take longer to complete than the procedures typically required to consummate a merger in the United States. Under Cayman Islands law and practice, a scheme of arrangement in relation to a Cayman Islands company must be approved at a shareholders’ meeting by each class of shareholders, in each case, by a majority of the number of holders of each class of a company’s shares that are present and voting, either in person or by proxy, at such a meeting, which holders must also represent 75% in value of such class issued that are present and voting, either in person or by proxy, at such meeting, excluding the shares owned by the parties to the scheme of arrangement.

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The convening of these meetings and the terms of the amalgamation must also be sanctioned by the Grand Court of the Cayman Islands. Although there is no requirement to seek the consent of the creditors of the parties involved in the scheme of arrangement, the Grand Court typically seeks to ensure that the creditors have consented to the transfer of their liabilities to the surviving entity or that the scheme of arrangement does not otherwise materially adversely affect the creditors’ interests. Furthermore, the Grand Court will only approve a scheme of arrangement if it is satisfied that:


	•	the statutory provisions as to majority vote have been complied with;


	•	the shareholders have been fairly represented at the meeting in question;


	•	the scheme of arrangement is such as a businessman would reasonably approve; and


	•	the scheme of arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.

In addition, upon the completion of this offering David Einhorn will own all of the outstanding Class B Ordinary Shares. As a result, we will not be able to enter into a scheme of arrangement without the approval of David Einhorn as the holder of our Class B Ordinary Shares.

Holders of Class A Ordinary Shares may have difficulty obtaining or enforcing a judgment against us, and they may face difficulties in protecting their interests because we are incorporated under Cayman Islands law.

Because we are a Cayman Islands company, there is uncertainty as to whether the Grand Court of the Cayman Islands would recognize or enforce judgments of United States courts obtained against us predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in the Cayman Islands against us predicated upon the securities laws of the United States or any state thereof.

We are incorporated as an exempted company limited by shares under the Companies Law. A significant amount of our assets are located outside of the United States. As a result, it may be difficult for persons purchasing the Class A Ordinary Shares to effect service of process within the United States upon us or to enforce judgments against us or judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States or any state of the United States.

Turner & Roulstone, our Cayman Islands counsel, has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will, based on the principle that a judgment by a competent foreign court will impose upon the judgment debtor an obligation to pay the sum for which judgment has been given, recognize and enforce a foreign judgment of a court of competent jurisdiction if such judgment is final, for a liquidated sum, not in respect of taxes or a fine or penalty if not inconsistent with a Cayman Islands judgment in respect of the same matters, and was not obtained in a manner, and is not of a kind, the enforcement of which is contrary to the public policy of the Cayman Islands. There is doubt, however, as to whether the courts of the Cayman Islands will, in an original action in the Cayman Islands, recognize or enforce judgments of U.S. courts predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States on the grounds that such provisions are penal in nature.

A Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere.

Unlike many jurisdictions in the United States, Cayman Islands law does not specifically provide for shareholder appraisal rights on a merger or consolidation of a company. This may make it more difficult for shareholders to assess the value of any consideration they may receive in a merger or consolidation or to require that the offeror give a shareholder additional consideration if he believes the consideration offered is insufficient.

Shareholders of Cayman Islands exempted companies such as us have no general rights under Cayman Islands law to inspect corporate records and accounts. Our directors have discretion under

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our Articles to determine whether or not, and under what conditions, the corporate records may be inspected by shareholders, but are not obliged to make them available to shareholders. This fact may make it more difficult for shareholders to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Subject to limited exceptions, under Cayman Islands law, a minority shareholder may not bring a derivative action against our Board of Directors.

Provisions of our Articles may reallocate the voting power of our Class A Ordinary Shares and subject holders of Class A Ordinary Shares to SEC compliance.

The total voting power of our Ordinary Shares held by any one person is limited to 9.9% and the total voting power of the Class B Ordinary Shares is limited to 9.5%. In the event a holder of our Ordinary Shares acquires shares representing 9.9% or more of the total voting power of our Ordinary Shares or the Class B Ordinary Shares represent more then 9.5% of the total voting power of our outstanding shares, there will be an effective reallocation of the voting power of the Class A Ordinary Shares or Class B Ordinary Shares which may cause a shareholder to acquire 5% or more of the voting power of the Ordinary Shares. Such shareholder may become subject to the reporting and disclosure requirements of Sections 13(d) and (g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such a reallocation also may result in an obligation to amend previous filings made under Section 13(d) or (g) of the Exchange Act. Under our Articles, we have no obligation to notify shareholders of any adjustments to their voting power. Shareholders should consult their own legal counsel regarding the possible reporting requirements under Section 13 of the Exchange Act. After giving effect to the offering described herein and the concurrent private placement of Class B Ordinary Shares to David Einhorn, each Class A Ordinary Share will be effectively entitled to more than one vote per share.

Risks Relating to Taxation

In addition to the risk factors discussed below, we advise you to read ‘‘Certain Cayman Islands Tax Considerations’’ described on page 89 and ‘‘Certain United States Tax Considerations’’ beginning on page 89 and to consult your own tax advisor regarding the tax consequences to your investment in our Class A Ordinary Shares.

We may become subject to taxation in the Cayman Islands which would negatively affect our results.

Under current Cayman Islands law, we are not obligated to pay any taxes in the Cayman Islands on either income or capital gains. The Governor-in-Cabinet of Cayman Islands has granted us an exemption from the imposition of any such tax on us for twenty years from February 1, 2005. We cannot be assured that after such date we would not be subject to any such tax. If we were to become subject to taxation in the Cayman Islands, our financial condition and results of operations could be significantly and negatively affected. See ‘‘Certain Cayman Islands Tax Considerations.’’

We may be subject to United States federal income taxation.

We are incorporated under the laws of the Cayman Islands and intend to operate in a manner that will not cause us to be treated as engaging in a United States trade or business and will not cause us to be subject to current United States federal income taxation on our net income. However, because there are no definitive standards provided by the Internal Revenue Code, regulations or court decisions as to the specific activities that constitute being engaged in the conduct of a trade or business within the United States, and as any such determination is essentially factual in nature, we cannot assure you that the United States Internal Revenue Service, or the IRS, will not successfully assert that we are engaged in a trade or business in the United States and thus are subject to current United States federal income taxation.

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United States persons who own Class A Ordinary Shares may be subject to United States federal income taxation on our undistributed earnings and may recognize ordinary income upon disposition of Class A Ordinary Shares.

Passive Foreign Investment Company. Significant potential adverse United States federal income tax consequences generally apply to any United States person who owns shares in a PFIC. We believe that Greenlight Re and Greenlight Reinsurance, Ltd. were both PFICs in 2004, 2005 and 2006. We further believe, although no assurance can be given, that neither Greenlight Re nor Greenlight Reinsurance, Ltd. will be a PFIC for 2007 or any future taxable year.

In general, either of Greenlight Re or Greenlight Reinsurance Ltd. would be a PFIC for a taxable year if 75% or more of its income constitutes ‘‘passive income’’ or 50% or more of its assets produce ‘‘passive income’’. Passive income generally includes interest, dividends and other investment income but does not include income derived in the active conduct of an insurance business by a corporation predominantly engaged in an insurance business. This exception for insurance companies is intended to ensure that a bona fide insurance company’s income is not treated as passive income, except to the extent such income is attributable to financial reserves in excess of the reasonable needs of the insurance business. We are currently operating and intend to continue operating our business with financial reserves at a level that should not cause us to be deemed PFICs, although we cannot assure you the IRS will not successfully challenge this conclusion.

In addition, sufficient risk must be transferred under an insurance company’s contracts with its insureds in order to qualify for the insurance exception. Whether our insurance contracts possess adequate risk transfer for purposes of determining whether income under our contracts is insurance income, and whether we are predominantly engaged in the insurance business, are subjective in nature and there is very little authority on these issues. However, because we are and may continue to be engaged in certain structured risk and other non-traditional reinsurance markets, we cannot assure you that the IRS will not successfully challenge the level of risk transfer under our reinsurance contracts for purposes of the insurance company exception. The IRS has notified taxpayers in IRS Notice 2003-34 that it intends to scrutinize the activities of certain insurance companies located outside of the United States, including reinsurance companies that invest a significant portion of their assets in alternative investment strategies, to determine whether such companies qualify for the active insurance company exception in the PFIC rules. We cannot assure you that the IRS will not successfully challenge our interpretation of the scope of the active insurance company exception and our qualification for the exception. Further, the IRS may issue regulatory or other guidance that causes us to fail to qualify for the active insurance company exception on a prospective or retroactive basis. Therefore, we cannot assure you that we will satisfy the exception for insurance companies and will not be treated as PFICs currently or in the future.

The consequences of Greenlight Re and/or Greenlight Reinsurance, Ltd. being treated as a PFIC and certain elections designed to mitigate such consequences are discussed in more detail under the heading ‘‘Certain United States Tax Considerations’’ beginning on page 89. If you are a United States person, we advise you to consult your own tax advisor concerning the potential tax consequences to you under the PFIC rules.

Controlled Foreign Corporation. United States persons who, directly or indirectly or through attribution rules, own 10% or more of our Class A Ordinary Shares, which we refer to as United States 10% shareholders, may be subject to the controlled foreign corporation, or CFC, rules. Under the controlled foreign corporation rules, each United States 10% shareholder must annually include his pro rata share of the controlled foreign corporation’s ‘‘subpart F income,’’ even if no distributions are made. In general, a foreign insurance company will be treated as a controlled foreign corporation only if United States 10% shareholders collectively own more than 25% of the total combined voting power or total value of the company’s shares for an uninterrupted period of 30 days or more during any year. We believe that the anticipated dispersion of our Class A Ordinary Shares among holders and the restrictions placed on transfer, issuance or repurchase of our Class A Ordinary Shares (including the ownership limitations described below), will generally prevent shareholders who acquire Class A Ordinary Shares from being United States 10% shareholders. In addition, because our

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Articles prevent any person from holding 9.9% or more of the total combined voting power of our shares (whether held directly, indirectly, or constructively), unless such provision is waived by the unanimous consent of our Board of Directors, we believe no persons holding Class A Ordinary Shares should be viewed as United States 10% shareholders of a CFC for purposes of the CFC rules. We cannot assure you, however, that these rules will not apply to you. If you are a United States person we strongly urge you to consult your own tax advisor concerning the controlled foreign corporation rules.

Related Person Insurance Income. If:


	•	our gross income attributable to insurance or reinsurance policies where the direct or indirect insureds are our direct or indirect United States shareholders or persons related to such United States shareholders equals or exceeds 20% of our gross insurance income in any taxable year; and


	•	direct or indirect insureds and persons related to such insureds owned directly or indirectly 20% or more of the voting power or value of our stock,

a United States person who owns Class A Ordinary Shares directly or indirectly on the last day of the taxable year would most likely be required to include their pro rata share of our related person insurance income for the taxable year in their income. This amount would be determined as if such related person insurance income were distributed proportionally to United States person at that date. We do not expect that we will knowingly enter into reinsurance agreements in which, in the aggregate, the direct or indirect insureds are, or are related to, owners of 20% or more of the Class A Ordinary Shares. We do not believe that the 20% gross insurance income threshold will be met. However, we cannot assure you that this is or will continue to be the case. Consequently, we cannot assure you that a person who is a direct or indirect United States shareholder will not be required to include amounts in its income in respect of related person insurance income in any taxable year.

If a United States shareholder is treated as disposing of shares in a foreign insurance corporation that has related person insurance income and in which United States persons own 25% or more of the voting power or value of the company’s capital stock, any gain from the disposition will generally be treated as a dividend to the extent of the United States shareholder’s portion of the corporation’s undistributed earnings and profits that were accumulated during the period that the United States shareholder owned the shares. In addition, the shareholder will be required to comply with certain reporting requirements, regardless of the amount of shares owned by the direct or indirect United States shareholder. Although not free from doubt, we believe these rules should not apply to dispositions of Class A Ordinary Shares because Greenlight Re is not directly engaged in the insurance business and because proposed United States Treasury regulations applicable to this situation appear to apply only in the case of shares of corporations that are directly engaged in the insurance business. We cannot assure you, however, that the IRS will interpret the proposed regulations in this manner or that the proposed regulations will not be promulgated in final form in a manner that would cause these rules to apply to dispositions of Class A Ordinary Shares.

United States tax-exempt organizations who own Class A Ordinary Shares may recognize unrelated business taxable income.

If you are a United States tax-exempt organization you may recognize unrelated business taxable income if a portion of our subpart F insurance income is allocated to you. In general, subpart F insurance income will be allocated to you if we are a CFC as discussed above and you are a United States 10% shareholder or there is related person insurance income and certain exceptions do not apply. Although we do not believe that any United States persons will be allocated subpart F insurance income, we cannot assure you that this will be the case. If you are a United States tax-exempt organization, we advise you to consult your own tax advisor regarding the risk of recognizing unrelated business taxable income.

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Change in United States tax laws may be retroactive and could subject us, and/or United States persons who own Class A Ordinary Shares to United States income taxation on our undistributed earnings.

The tax laws and interpretations regarding whether a company is engaged in a United States trade or business, is a CFC, has related party insurance income or is a PFIC are subject to change, possibly on a retroactive basis. There are currently no regulations regarding the application of the passive foreign investment company rules to an insurance company and the regulations regarding related party insurance income are still in proposed form. New regulations or pronouncements interpreting or clarifying such rules may be forthcoming from the IRS. We are not able to predict if, when or in what form such guidance will be provided and whether such guidance will have a retroactive effect.

The impact of the Cayman Islands’ letter of commitment or other concessions to the Organization for Economic Cooperation and Development to eliminate harmful tax practices is uncertain and could adversely affect our tax status in the Cayman Islands.

The Organization for Economic Cooperation and Development, or OECD, has published reports and launched a global dialogue among member and non-member countries on measures to limit harmful tax competition. These measures are largely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. In the OECD’s 2000 report, the Cayman Islands was not listed as a tax haven jurisdiction because it had previously committed itself to eliminate harmful tax practices and to embrace international tax standards for transparency, exchange of information and the elimination of any aspects of the regimes for financial and other services that attract business with no substantial domestic activity. We are not able to predict what changes will arise from the commitment or whether such changes will subject us to additional taxes.

Risks Relating to This Offering

There is no prior public market for our Class A Ordinary Shares and we cannot assure you that an active trading market or a specific share price will be established or maintained. The market price and trading volume of our Class A Ordinary Shares may be volatile, and you may not be able to resell your Class A Ordinary Shares at or above the initial public offering price.

We intend to apply for listing of our Class A Ordinary Shares on the Nasdaq Global Select Market under the symbol ‘‘GLRE.’’ Prior to the closing of this offering, there has been no public trading market of our Class A Ordinary Shares. If an active trading market does not develop and continue upon the closing of this offering, your investment may become less liquid and the market price of our Class A Ordinary Shares may decline below the initial public offering price. The initial public offering price per share will be determined by negotiation among us and the underwriters and may not be indicative of the market price of our Class A Ordinary Shares after completion of this offering. The price of our Class A Ordinary Shares after the closing of this offering may fluctuate widely, depending upon many factors, including:


	•	the perceived prospects for the reinsurance industry in general;


	•	differences between our actual financial and operating results and those expected by investors;


	•	changes in the share price of public companies with which we compete;


	•	news about our industry and our competitors;


	•	changes in general economic or market conditions including broad market fluctuations;


	•	adverse regulatory actions; and


	•	other factors listed in this section or otherwise.

Our Class A Ordinary Shares may trade at prices significantly below the initial public offering price in which case, holders of the Class A Ordinary Shares may experience difficulty in reselling, or an inability to sell, the Class A Ordinary Shares. In addition, when the market price of a company’s

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common equity drops significantly, shareholders often institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources away from the day-to-day operations of our business.

We will incur increased costs as a result of being a public company.

As a public company, we will incur increased legal, accounting and other costs not incurred as a private company. The Sarbanes-Oxley Act of 2002 and related rules and regulations of the SEC and the Nasdaq market regulate the corporate governance practices of public companies. We expect that compliance with these requirements will increase our expenses and make some activities more time consuming than they have been in the past when we were a private company. Such additional costs going forward could negatively impact our financial results.

Securities analysts may not initiate coverage of our Class A Ordinary Shares or may issue negative reports, which may adversely affect the trading price of the Class A Ordinary Shares.

We cannot assure you that securities analysts will cover our company after completion of this offering. If securities analysts do not cover our company, this lack of coverage may adversely affect the trading price of the Class A Ordinary Shares. The trading market for the Class A Ordinary Shares will rely in part on the research and reports that securities analysts publish about us and our business. If one or more of the analysts who cover our company downgrades the Class A Ordinary Shares, the trading price of the Class A Ordinary Shares may decline. If one or more of these analysts ceases to cover our company, we could lose visibility in the market, which, in turn, could also cause the trading price of the Class A Ordinary Shares to decline. Further, because of our small market capitalization, it may be difficult for us to attract securities analysts to cover our company, which could significantly and adversely affect the trading price of our Class A Ordinary Shares.

You will suffer immediate and substantial dilution as a result of investing in the Class A Ordinary Shares.

The initial public offering price per Class A Ordinary Share is higher than our net tangible book value per share. Accordingly, if you purchase Class A Ordinary Shares in this offering, you will suffer immediate and substantial dilution of your investment. Based upon the issuance and sale of Class A Ordinary Shares, you will incur immediate dilution of approximately $ in the net tangible book value per Class A Ordinary Share and, with the concurrent private placement of Class B Ordinary Shares, you will incur immediate dilution of approximately $ in the net tangible value per Ordinary Share. See ‘‘Dilution.’’

Future sales of our Class A Ordinary Shares may affect their market price and the future exercise of share purchase options and the concurrent private placement may result in immediate and substantial dilution of the Class A Ordinary Shares.

Our Articles authorize our Board of Directors to issue one or more series of ordinary shares and preferred shares without shareholder approval. Specifically, our Board of Directors may issue up to 100,000,000 Class A Ordinary Shares, 25,000,000 Class B Ordinary Shares and 50,000,000 preferred shares, of which Class A Ordinary Shares or Class A Ordinary Shares if the underwriters exercise their option to purchase additional Class A Ordinary Shares in full ( of which the issuance will be registered under this offering), Class B Ordinary Shares and no preferred shares will have been issued as of this offering. Our Board of Directors has the right to issue the remaining shares as provided by our Articles and without obtaining any approval from our shareholders, and to designate and issue up to 50,000,000 preferred shares in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or designation of such series. Any issuance of our preferred shares could adversely affect the voting power of the holders of our Class A Ordinary Shares and could have the effect of delaying, deferring, or preventing the payment of any dividends, including any liquidating dividends, and any change in

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control of the company. While we have not issued any preferred shares and have no present plans to do so, we may do so in the future. If we issue any preferred shares, you should know that our Class A Ordinary Shares may be subordinate to our preferred shares and any series of preferred shares designated and issued by our Board of Directors. Additionally, if a significant number of shares are issued, it may cause the market price of our Class A Ordinary Shares to decline.

We, all of our Directors and Executive Officers, and shareholders have agreed that, subject to certain exceptions, without the prior written consent of each of Lehman Brothers Inc. and UBS Securities LLC, we and they will not directly or indirectly, among other things, offer for sale, sell, pledge, or otherwise dispose of any Ordinary Shares or securities convertible into or exercisable or exchangeable for Class A Ordinary Shares for a period of 180 days after the date of this prospectus. We cannot predict what effect, if any, future sales of our Ordinary Shares, or the availability of Ordinary Shares for future sale, will have on the market price of our Ordinary Shares, including after the expiration of the 180 day lock-up period. Sales of substantial amounts of our Ordinary Shares in the public market following our initial public offering, or the perception that such sales could occur, may adversely affect the market price of our Ordinary Shares and may make it more difficult for you to sell your Ordinary Shares at a time and price which you deem appropriate.

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INFORMATION REGARDING FORWARD LOOKING STATEMENTS

Certain information contained in this prospectus is forward-looking. All statements, other than statements of historical facts, included or referenced in this prospectus that address activities, events or developments which we expect or anticipate will or may occur in the future are forward-looking statements. Statements which include the words ‘‘expect,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘believe,’’ ‘‘project,’’ ‘‘anticipate,’’ ‘‘will,’’ and similar statements of a future or forward-looking nature identify forward-looking statements.

These statements include forward-looking statements both with respect to us specifically and the reinsurance industry generally. These statements are based on certain assumptions and analyses made by us in light of our expertise and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and conditions is subject to a number of risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to, the following:


	•	The risks beginning on page 10 of this prospectus;


	•	the volatility of our earnings;


	•	our limited operating history;


	•	the highly competitive business environment;


	•	uncertainty with respect to the establishment of our reserves;


	•	the cyclicality of the reinsurance market;


	•	loss of key personnel;


	•	dependence upon letter of credit facilities;


	•	potential for rating downgrade;


	•	exposure to natural and man-made disasters;


	•	changes in domestic or foreign laws or regulations or their interpretations;


	•	changes in accounting principles or the application of such principles by accounting firms or regulators;


	•	risks inherent to our investment strategy; and


	•	other factors, most of which are beyond our control.

Accordingly, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this prospectus which could cause actual results to differ before you make an investment decision.

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USE OF PROCEEDS

We estimate net proceeds to us from the sale of approximately Class A Ordinary Shares in this offering, based upon an assumed initial offering price of $ per Class A Ordinary Share, representing the midpoint of the offering range set forth on the cover of this prospectus and after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $ million ($ million if the underwriters exercise in full their option to purchase additional Class A Ordinary Shares), assuming the shares are offered at $ per Class A Ordinary Share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering as additional capital for operating and for general corporate purposes.

DIVIDEND POLICY

We have not paid any cash dividends on our Ordinary Shares.

We currently do not intend to declare and pay dividends on our Ordinary Shares. However, if we decide to pay dividends, we cannot assure you sufficient cash will be available to pay such dividends. In addition, our letter of credit facility prohibits us from paying dividends during an event of default as defined in the letter of credit agreement. Our future dividend policy will also depend on the requirements of any future financing agreements to which we may be a party and other factors considered relevant by our Board of Directors. Further, any future declaration and payment of dividends is discretionary and our Board of Directors may at any time modify or revoke our dividend policy on our Class A Ordinary Shares. Any dividends we pay will be declared and paid in U.S. dollars.

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CAPITALIZATION

The table below sets forth our consolidated capitalization as of September 30, 2006:


	•	on an actual basis;


	•	pro forma to reflect certain transactions; and


	•	as adjusted to give effect to this offering of our Class A Ordinary Shares and the concurrent private placement of our Class B Ordinary Shares and the application of the net proceeds of both offerings.

This table should be read in conjunction with ‘‘Selected Consolidated Financial Data’’, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and our consolidated financial statements and related notes included elsewhere in this prospectus.


	As of September 30, 2006				Pro Forma ⁽³⁾			As adjusted for this offering and the concurrent private placement ⁽⁴⁾
					($ in thousands)
Debt: ⁽¹⁾		$	—			$	—		$
Shareholders’ equity:
Share capital ⁽²⁾			2,140				2,156
Additional paid-in capital			217,072				219,202
Less: Related party promissory note receivable			(13,313	)			—
Retained earnings			72,611				72,611
Total shareholders’ equity		$	278,510			$	293,969		$


⁽¹⁾	As of September 30, 2006, we had $146.1 million available under our $200 million letter of credit facility provided by Citibank, N.A.


⁽²⁾	Includes 100,000,000 authorized, 16,349,728 outstanding Class A Ordinary Shares and 25,000,000 authorized, 5,050,000 outstanding Class B Ordinary Shares.


⁽³⁾	Adjusted for (i) issuance of 97,200 Class A Ordinary Shares in October 2006 in a private placement transaction for net proceeds of $1.3 million; (ii) issuance of 60,300 Class A Ordinary Shares in November 2006 in a private placement transaction for net proceeds of $0.8 million; and (iii) repayment of the related party promissory note on December 6, 2006.


⁽⁴⁾	Reflects completion of this offering, net of underwriting discounts and commissions and estimated offering expenses of $ million (assuming no exercise of the underwriters’ option to purchase additional Class A Ordinary Shares) and the concurrent private placement of our Class B Ordinary Shares.

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DILUTION

The initial public offering price per Class A Ordinary Share is higher than our book value per Ordinary Share. Net book value per Ordinary Share represents the amount of assets less total liabilities, divided by the number of Ordinary Shares outstanding. Dilution in net book value per Ordinary Share represents the difference between (i) the amount per Class A Ordinary Share paid by purchasers of our Class A Ordinary Shares in this offering and (ii) the net book value per Ordinary Share immediately after this offering. As of September 30, 2006, our net book value was $278.5 million, or $13.01 per Class A Ordinary Share. After giving effect to the issuance in this initial public offering of of our Class A Ordinary Shares (after deducting estimated underwriting discounts and commissions and our estimated offering expenses and assuming that the underwriters’ option to purchase additional Class A Ordinary Shares is not exercised) and the concurrent private placement of Class B Ordinary Shares and the application of the estimated net proceeds therefrom, our net book value as of September 30, 2006 would have been $ million, or $ per Class A Ordinary Share. This amount represents an immediate increase of $ per Class A Ordinary Share to the existing shareholders and an immediate dilution of $ per Class A Ordinary Share issued to the new investors purchasing shares offered hereby at the assumed public offering price. The following table illustrates this per Ordinary Share dilution:


Initial public offering price per Class A Ordinary Share				$
Net book value per Class A Ordinary Share before the offering
Increase attributable to the offering of Class A Ordinary Shares
Increase attributable to the concurrent private placement offering of Class B Ordinary Shares
Net book value per Ordinary Share after the offering of Class A Ordinary Shares and concurrent private placement of Class B Ordinary Shares
Dilution per Ordinary Share to new investors ⁽¹⁾				$


⁽¹⁾	If the underwriters’ option to purchase additional Class A Ordinary Shares is exercised in full, dilution per Ordinary Share to new shareholders will be $ .

The following table sets forth the number of our issued Class A Ordinary Shares, the total consideration paid and the average price per Ordinary Share paid by all of our existing shareholders and new investors, after giving effect to the issuance of Class A Ordinary Shares in this offering (before deducting estimated underwriting discounts and commissions and our estimated offering expenses).


	Class A Ordinary Shares issued					Class B Ordinary Shares issued		Total consideration
	Number		Percent			Number	Percent	Amount			Percent			Average price per Ordinary Share
								($ in thousands)
Existing shareholders		16,349,728			%				$	166,020			%		$
New investors
Total				100.0	%				$			100.0	%		$

This table does not give effect to:


	•	Class A Ordinary Shares that may be issued pursuant to the underwriters’ option to purchase additional Class A Ordinary Shares;


	•	Class A Ordinary Shares that may be issued pursuant to options that have been granted as of , 2007 at a weighted average exercise price or $ per share pursuant to our stock incentive plan; or


	•	400,000 Class A Ordinary Shares that may be issued pursuant to a share purchase option granted in September 2004 to First International in exchange for services rendered.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected historical statement of income data for the nine months ended September 30, 2006 and 2005 and the fiscal year ended December 31, 2005 and the period from inception on July 13, 2004 to December 31, 2004, as well as our selected balance sheet data as of September 30, 2006 and December 31, 2005 and 2004. The statements of income data for the nine months ended September 30, 2006 and 2005 as well as the balance sheet data as of September 30, 2006 are derived from our unaudited financial statements included elsewhere in this prospectus, which have been prepared in accordance with U.S. GAAP. The statement of income data for the years ended December 31, 2005 and 2004 as well as the balance sheet information as of December 31, 2005 and 2004 are derived from our audited consolidated financial statements also included as part of this prospectus. The audited consolidated financial statements are prepared in accordance with U.S. GAAP and have been audited by BDO Seidman, LLP, an independent registered public accounting firm. Since we commenced underwriting business in April 2006 and did not write any reinsurance contracts in 2005 and 2004, comparisons to prior periods may not be meaningful.

These historic results are not necessarily indicative of results for any future period and the year to date results are not necessarily indicative of our full year performance. You should read the following selected financial data in conjunction with ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the financial statements and related notes included elsewhere in this prospectus.


	Nine Months Ended September 30,							Year Ended December 31,			July 13, 2004 to December 31,
	2006				2005			2005			2004
	($ in thousands, except per share data and ratios)
Summary Statement of Income Data:
Premiums written		$	36,223			$	—		$	—		$	—
Premiums earned			12,454				—			—			—
Net investment income			41,028				21,392			27,934			9,636
Interest income on related party promissory note receivable			827				965			1,323			516
Total revenues			54,309				22,357			29,257			10,152
Loss and loss adjustment expenses incurred			5,512				—			—			—
Acquisition costs			2,787				—			—			—
General and administrative expenses			6,439				1,683			2,992			3,377
Total expenses			14,738				1,683			2,992			3,377
Net income		$	39,571			$	20,674		$	26,265		$	6,775
Earnings Per Share Data:
Basic		$	1.86			$	0.97		$	1.24		$	0.32
Diluted			1.85				0.97			1.24			0.32
Weighted average number of Ordinary Shares:
Basic			21,362,111				21,225,245			21,226,868			21,225,000
Diluted			21,408,898				21,258,760			21,265,801			21,234,350
Selected Ratios (based on U.S. GAAP Statement of Income data):
Loss ratio ⁽¹⁾			44.3	%			—			—			—
Acquisition cost ratio ⁽²⁾			22.4	%			—			—			—
Internal expense ratio ⁽³⁾			51.7	%			—			—			—
Combined ratio ⁽⁴⁾			118.4	%			—			—			—

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	As of September 30, 2006			As of December 31,
	As of September 30, 2006			2005			2004
	($ in thousands, except for share and per share data)
Selected Balance Sheet Data:
Cash and cash equivalents		$	5,718		$	7,218		$	30,664
Restricted cash and cash equivalents			116,190			99,719			96,791
Investments			278,724			219,211			162,205
Total assets			423,185			327,935			290,764
Loss and loss adjustment expense reserves			1,872			—			—
Unearned premium reserves			23,769			—			—
Total liabilities			144,675			96,113			94,240
Total shareholders’ equity			278,510			231,822			196,524
Adjusted book value ⁽⁵⁾		$	291,823		$	248,034		$	221,024
Ordinary shares outstanding:
Class A			16,349,728			16,181,666			16,175,000
Class B			5,050,000			5,050,000			5,050,000
Total basic			21,399,728			21,231,666			21,225,000
Adjusted book value per share:
Basic ⁽⁶⁾		$	13.64		$	11.68		$	10.41
Diluted ⁽⁷⁾			13.48			11.63			10.40


⁽¹⁾	The loss ratio is calculated by dividing underwriting losses incurred and loss adjustment expenses by premiums earned.


⁽²⁾	The acquisition cost ratio is calculated by dividing acquisition cost expense by premiums earned.


⁽³⁾	The internal expense ratio is calculated by dividing the general and administrative expenses by premiums earned.


⁽⁴⁾	The combined ratio is the sum of the loss ratio, acquisition cost ratio and the internal expense ratio.


⁽⁵⁾	Adjusted book value equals total shareholders’ equity plus the aggregate principal outstanding on the GCI promissory note pursuant to the Securities Purchase Agreement dated April 11, 2004 between us and GCI, which was fully repaid on December 6, 2006.


⁽⁶⁾	Adjusted basic book value per share is calculated by dividing adjusted book value by basic shares outstanding.


⁽⁷⁾	Adjusted diluted book value per share is calculated by dividing the aggregate of adjusted book value and the proceeds from the exercise of options by the number of shares and share equivalents outstanding at the end of the period.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes, which appear elsewhere in this prospectus.

Executive Overview

We are a Cayman Islands-based specialty property and casualty reinsurer with a differentiated reinsurance and investment strategy. We focus on building long-term shareholder value by opportunistically offering customized reinsurance solutions in market segments we believe present favorable risk-adjusted return characteristics. We manage our investment portfolio according to an absolute return, value-oriented philosophy invested primarily in publicly-traded equity securities.

We manage our business on the basis of one operating segment, property and casualty reinsurance, in accordance with the qualitative and quantitative criteria established by SFAS 131, ‘‘Disclosure about Segments of an Enterprise and Related Information.’’ Within the property and casualty reinsurance segment, we analyze our underwriting operations using two categories:


	•	frequency business; and


	•	severity business.

Frequency business is characterized by contracts containing a potentially large number of smaller losses emanating from multiple events. Clients generally buy this protection to increase their own underwriting capacity and typically select a reinsurer based upon the reinsurer’s financial strength and expertise. We expect the results of frequency business to be less volatile than those of severity business from period to period due to its greater predictability. We also expect that over time the profit margins and return on equity for our frequency business will be lower than those of our severity business.

Severity business is typically characterized by contracts with the potential for significant losses emanating from one event. Clients generally buy this protection to remove volatility from their balance sheets and, accordingly, we expect the results of severity business to be volatile from period to period. However, over the long term, we also expect that our severity business will generate higher profit margins and return on equity than our frequency business.

We aim to complement our underwriting results with a non-traditional investment approach in order to achieve higher rates of return over the long-term than reinsurance companies that employ more traditional, fixed-income investment strategies.

Because we have a limited operating history, period-to-period comparisons of our underwriting results are not yet possible and may not be meaningful in the near future. In addition, due to the nature of our reinsurance and investment strategies, our operating results will likely fluctuate from period to period.

Revenues

We derive our revenues from two principal sources:


	•	premiums from reinsurance on property and casualty business assumed; and


	•	income from investments.

Premiums from reinsurance on property and casualty business assumed are directly related to the number, type and pricing of contracts we write. We earn premiums over the contract term, which is typically twelve months.

Income from our investments is primarily comprised of interest income, dividends and gains, net realized and unrealized gains on investment securities. We also derive interest income from money market funds.

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Expenses

Our expenses consist primarily of the following:


	•	underwriting losses and loss adjustment expenses;


	•	acquisition costs;


	•	investment related expenses; and


	•	general and administrative expenses.

Loss and loss adjustment expenses are a function of the amount and type of reinsurance contracts we write and of the loss experience of the underlying coverage. As described below, loss and loss adjustment expenses are based on an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Depending on the nature of the contract, loss and loss adjustment expenses may be paid over a period of years.

Acquisition costs consist primarily of brokerage fees, ceding commissions, premium taxes and other direct expenses that relate to our writing reinsurance contracts. We amortize deferred acquisition costs over the related contract term.

Investment related expenses primarily consist of management and performance fees we pay to our investment advisor. We net these expenses against investment income in our financial statements.

General and administrative expenses consist primarily of salaries and benefits and related costs, including costs associated with our incentive compensation plan, stock option expenses, professional fees, travel and entertainment, letter of credit facility, information technology, rent and other general operating expenses.

For stock option expenses, we calculate compensation cost using the Black-Scholes option pricing model and expense stock options over their vesting period, which is typically three years.

Critical Accounting Policies

Our consolidated financial statements contain certain amounts that are inherently subjective in nature and have required management to make assumptions and best estimates to determine reported values. If certain factors, including those described in ‘‘Risk Factors,’’ cause actual events or results to differ materially from our underlying assumptions or estimates, there could be a material adverse effect on our results of operations, financial condition or liquidity. We believe that the following accounting policies affect the more significant estimates used in the preparation of our consolidated financial statements. The descriptions below are summarized and have been simplified for clarity. A more detailed description of our critical accounting policies is included in the notes to the consolidated financial statements.

Premium Revenues and Risk Transfer. Our property and casualty reinsurance premiums are recorded as premiums written at the inception of each contract, based upon contract terms and information received from ceding companies and their brokers. For excess of loss reinsurance contracts, premiums are typically stated as a percentage of the subject premiums written by the ceding company, subject to a minimum and deposit premium. The minimum and deposit premium is typically based on an estimate of subject premium expected to be written by the ceding company the contract term. Initially the minimum and deposit premium is reported as premiums written and adjusted, if necessary, in subsequent periods once the actual subject premium is known.

For each quota-share or proportional property and casualty reinsurance contract we underwrite, our client estimates gross premiums written at inception of the contract. We generally account for such premiums using the client’s initial estimates, and then adjust the estimates as advised by our client. We believe that the client’s estimate of the volume of business it expects to cede to us represents the best estimate of gross premiums written at the beginning of the contract. As the contract progresses, we monitor actual premiums received in conjunction with correspondence from the client in order to refine our estimate. Variances from initial gross premiums written estimates can

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be greater for quota-share contracts than for excess of loss contracts. Premiums are earned on a pro rata basis over the coverage period. Unearned premiums consist of the unexpired portion of reinsurance provided.

We account for reinsurance contracts in accordance with SFAS No. 60, ‘‘Accounting and Reporting by Insurance Enterprises’’ and SFAS No. 113, ‘‘Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts.’’ Assessing whether or not a reinsurance contract meets the conditions for risk transfer requires judgment. The determination of risk transfer is critical to reporting gross premiums written and is based, in part, on the use of actuarial and pricing models and assumptions. If we determine that a reinsurance contract does not transfer sufficient risk, we must account for the contract as a deposit liability.

Investments. We classify all investments as trading securities and record their values based on the last reported price on the balance sheet date as reported by a recognized exchange. If no such sale of such security was reported on that date, the market value will be the last reported bid price (in the case of securities held long), or last reported ask price (in the case of securities sold short). Securities for which recognized exchange quotations are not readily available are valued at management’s best estimate (utilizing the services of DME Advisors) of fair value based on prices received from market makers. Any realized and unrealized gains or losses are determined on the basis of the specific identifications method (by reference to cost or amortized cost, as appropriate) and included in investment income in the statement of income.

Loss and Loss Adjustment Expense Reserves. We establish reserves for contracts based on estimates of the ultimate cost of all losses including losses incurred but not reported , or IBNR . These estimated ultimate reserves are based on reports received from ceding companies, historical experience and actuarial estimates. These estimates are periodically reviewed and adjusted when necessary. Since reserves are estimates, the setting of appropriate reserves is an inherently uncertain process. Our estimates are based upon actuarial and statistical projections and on our assessment of currently available data, predictions of future developments and estimates of future trends and other factors. The final settlement of losses may vary, perhaps materially, from the reserves initially established and any adjustments to the estimates are recorded in the period in which they are determined. Under U.S. GAAP, we are not permitted to establish loss reserves, which include case reserves and IBNR, until the occurrence of an event which may give rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date are established, with no allowance for the establishment of loss reserves to account for expected future losses.

For natural catastrophe exposed business we establish loss reserves based on loss payments and case reserves reported by ceding companies. We then add to these case reserves our estimates for IBNR. To establish our IBNR loss estimates, in addition to the loss information and estimates communicated by ceding companies, we use industry information, knowledge of the business written by us and management’s judgment.

Reserves for losses and loss adjustment expenses as of September 30, 2006 were comprised of the following:


	Case Reserves			IBNR			Total
	($ in thousands)
Frequency		$	953		$	653		$	1,606
Severity			—			266			266
Total		$	953		$	919		$	1,872

In each of the contracts we have written to date, our risk exposure is limited by the fact that the contracts have defined limits of liability. Once the loss limit for a contract has been reached, we have no further exposure to additional losses from that contract.

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For all non-natural catastrophe business, we initially reserve every account to the expected value of the pricing analysis; thereafter we use a variety of standard actuarial methods in our analysis. Such methods may include:


	•	Paid Loss Development Method . We estimate ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid in a consistent pattern. It provides an objective test of reported loss projections because paid losses contain no reserve estimates. For many coverages, claim payments are made very slowly and it may take years for claims to be fully reported and settled.


	•	Reported Loss Development Method. We estimate ultimate losses by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than paid loss methods. Thus, reported loss patterns may be less varied than paid loss patterns, especially for coverage that have historically been paid out over a long period of time but for which claims are reported relatively early and case loss reserve estimates established.


	•	Expected Loss Ratio Method. We estimate ultimate losses under the expected loss ratio method, by multiplying earned premiums by an expected loss ratio. We select the expected loss ratio using industry data, historical company data and our professional judgment. We use this method for lines of business and contracts where there are no historical losses or where past loss experience is not credible.


	•	Bornheutter-Ferguson Paid Loss Method. We estimate ultimate losses by modifying expected loss ratios to the extent paid losses experienced to date differ from what would have been expected to have been paid based upon the selected paid loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of paid losses to calculate ultimate losses. We use this method for lines of business and contracts where there are limited historical paid losses.


	•	Bornheutter-Ferguson Reported Loss Method. We estimate ultimate losses by modifying expected loss ratios to the extent reported losses experienced to date differ from what would have been expected to have been reported based upon the selected reported loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of reported losses to calculate ultimate losses. We use this method for lines of business and contracts where there are limited historical reported losses.

We perform a quarterly loss reserve analysis on each contract. This analysis incorporates specific exposures, loss payment and reporting patterns and other relevant factors. We also intend to have our loss reserves reviewed, on an annual basis, by an independent outside actuary who will test and review the work done by our actuaries to ensure that reserves we report are being established consistently and appropriately.

Acquisition Costs. We capitalize brokerage fees, ceding commissions, premium taxes and other direct expenses that relate to the writing of reinsurance contracts which are incurred in the acquisition of new and renewal business. Acquisition costs are deferred subject to ultimate recoverability and amortized over the same period as premiums are earned.

Share-Based Payments. We have established a stock option plan, for which we account under SFAS 123R, ‘‘Share Based Payments.’’ SFAS 123R requires us to recognize share-based compensation transactions using the fair value at the grant date of the award. Determining the fair value of share based awards at the grant date requires judgment. We use an option-pricing model (Black-Scholes pricing model) to assist in the calculation of fair value. Due to our limited operating history, we also use the ‘‘calculated value method’’ which relies on historical industry volatility and uses the full life of the option, ten years, as the estimated term of the option. Additionally, we have assumed that

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dividends will not be paid. If actual results differ significantly from these estimates and assumptions, share based compensation expense could be materially impacted.

Additionally, in September 2004 we granted 400,000 share purchase options with a 10-year expiration to a service provider in exchange for services rendered, for which we have applied SFAS 123R, ‘‘Share Based Payments.’’ The share purchase options granted to the service provider were expensed based on a fair value of $2.0 million and are included in general and administrative expenses in our consolidated financial statements for the year ended December 31, 2004, the year in which the services were provided.

Results of Operations

Comparison of Nine Months Ended September 30, 2006 and 2005

Premiums Written

For the nine months ended September 30, 2006, we wrote $36.2 million of premiums from eight different reinsurance contracts compared to no reinsurance contracts in the prior comparable period. We did not purchase any retrocessional coverage during the period and as such, premiums written for the period equal gross premiums written. The premiums written were comprised of $22.5 million of frequency business and $13.7 million of severity business. There were no premiums written in the prior comparable period.


Premiums Earned

We earned premiums of $12.5 million for the nine months ended September 30, 2006, comprised of $6.1 million of frequency business and $6.4 million of severity business. There were no premiums earned in the prior comparable period. Premiums earned reflects the pro rata inclusion into income of premiums written over the life of the reinsurance contract.

Losses Incurred

Losses incurred include losses paid, changes in loss reserves, including IBNR reserves, as well as any profit commissions paid or accrued. We incurred losses of $5.5 million for the nine months ended September 30, 2006, comprised of $3.4 million of frequency business and $2.1 million of severity business. There were no losses in the prior comparable period.

We believe the dollar losses incurred for the nine months ended September 30, 2006 are likely to be lower than we expect to experience in the future as our underwriting portfolio develops.

Acquisition Costs

Acquisition costs for the period ended September 30, 2006 totaled $2.8 million and are comprised of $2.3 million of frequency business and $0.5 million of severity business. These acquisition costs represent the amortization of the commission and brokerage expenses incurred on contracts written. Deferred acquisition costs are limited to the amount expected to be recovered from future earned premiums and anticipated investment income. There were no acquisition costs in the prior comparable period.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2006 and 2005 were $6.4 million and $1.7 million, respectively. The increase of $4.7 million reflects the cost of commencing underwriting operations, including hiring staff, leasing office space, and other related expenses. These expenses for the current period include $2.2 million for the accrual of the fair value of stock options granted to employees and directors as compared to $0.3 million for the nine months ended September 30, 2005.

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We expect our general and administrative expenses to increase once we become subject to reporting requirements applicable to public companies.


Net Investment Income

A summary of our consolidated net investment income for the nine months ended September 30, 2006 and 2005 is as follows:


	Nine Months Ended September 30,
	2006				2005
	($ in thousands)
Investment income		$	55,916			$	29,516
Investment expenses			(1,749	)			(419	)
Investment advisor fees			(13,139	)			(7,705	)
Net investment income		$	41,028			$	21,392

For the nine months ended September 30, 2006, net investment income was $41.0 million dollars, a 91.8% increase from $21.4 million for the previous period.

Taxes

We are not obligated to pay any taxes in the Cayman Islands on either income or capital gains. We have been granted an exemption by the Governor In Cabinet from any taxes that may be imposed in the Cayman Islands for a period of 20 years, expiring on February 1, 2025.

Net Income

Our net income increased 91.4% to $39.6 million for the nine month period ended September 30, 2006 from $20.7 million for the nine month period ended September 30, 2005. The increase in net income of $18.9 million is due to the positive impact of underwriting activities and an increase in investment returns for the nine months ended September 30, 2006.

Ratio Analysis

As a result of the nature of our frequency and severity businesses, we expect to report different loss and expense ratios in these categories from period to period. For the nine months ended September 30, 2006, the following ratios are reported:


	Frequency			Severity			Total
Loss ratio		55.7	%		32.8	%		44.3	%
Acquisition cost ratio		37.7	%		7.8	%		22.4	%
Composite ratio		93.4	%		40.6	%		66.7	%
Internal expense ratio								51.7	%
Combined ratio								118.4	%

The loss ratio is calculated by dividing underwriting losses incurred and loss adjustment expenses by premiums earned. For the nine months ended September 30, 2006, our frequency business reported a loss ratio of 55.7%, as compared to the 32.8% reported by our severity business. Favorable loss experience in the period allowed our severity business to report a lower loss ratio. However, we expect that the loss ratio will be volatile for our severity business and may exceed that of our frequency business in certain periods.

The composite ratio is the ratio of underwriting losses incurred, loss adjustment expenses and acquisition costs, excluding general and administrative expenses, to premiums earned. This ratio demonstrates the higher acquisition costs incurred for frequency business than for severity business. Similar to the loss ratio, we expect that this ratio will be volatile for our severity business depending on loss activity in any particular period.

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The internal expense ratio is the ratio of all general and administrative expenses to premiums earned. We expect our internal expense ratio to decrease significantly as we write more business.

The combined ratio is the ratio of the sum of the composite ratio and the internal expense ratio. It measures the total profitability of our underwriting operations. This ratio does not take investment income into account. The reported combined ratio of 118.4% is due to the start-up nature of our reinsurance operations. We expect our general and administrative expenses as a percentage of premiums earned to decrease significantly as we write more business.

There are no applicable ratios for the prior comparable period, since we did not begin underwriting operations until April 2006.

Comparison of Year Ended December 31, 2005 and Period From July 13, 2004 (date of incorporation) to December 31, 2004

During the period from July 13, 2004 through the end of 2005, we were in the process building our infrastructure, retaining our management team and procuring office space. No reinsurance contracts were bound prior to April 2006 and thus there was no underwriting activity to report prior to January 1, 2006.

Premiums Written

There were no premiums written for the year ended December 31, 2005 or the prior comparable period since we did not begin underwriting operations until April 2006.

Premiums Earned

There were no premiums earned for the year ended December 31, 2005 or the prior comparable period since we did not begin underwriting operations until April 2006.

Losses Incurred

There were no losses incurred for the year ended December 31, 2005 or the prior comparable period since we did not begin underwriting operations until April 2006.

Acquisition Costs

There were no acquisition costs for the year ended December 31, 2005 or the prior comparable period since we did not begin underwriting operations until April 2006.

General and Administrative Expenses

Our general and administrative expenses for the years ended December 31, 2005 and 2004 were $3.0 million and $3.4 million, respectively. During 2005, expenses of approximately $2.2 million were incurred as a result of the initial hiring of staff, professional fees and other administrative expenses. Additionally, approximately $0.7 million was incurred as a result of stock option expenses granted to new employees.

The expenses for the year ended December 31, 2004 were primarily due to the expensing of $2.0 million of share purchase options that were granted to a service provider as well as $1.0 million in legal expenses both of which were incurred in connection with our formation and capitalization.

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Net Investment Income

A summary of our consolidated net investment income for the year ended December 31, 2005 and the period from July 13, 2004 to December 31, 2004 is as follows:


	Year ended December 31, 2005				Period Ended July 13, 2004 — December 31, 2004
	($ in thousands)
Investment income		$	38,815			$	13,314
Investment expenses			(698	)			(161	)
Investment advisor fees			(10,183	)			(3,517	)
Net investment income		$	27,934			$	9,636

Taxes

Net Income

Net income for the year ended December 31, 2005 was $26.3 million. As there were no contracts underwritten during 2005, net income was the total of net investment income of $27.9 million plus interest income on related party note of $1.3 million less operating expenses of $3.0 million. The increase over net income of $6.8 million in 2004 is primarily due to the commencement of operations in July 2004.

Ratio Analysis

There is no ratio analysis for the year ended December 31, 2005 or the prior comparable period since we did not begin underwriting operations until April 2006.

Liquidity and Capital Resources

General

We are organized as a holding company with no operations of our own. All of our operations are conducted through our sole reinsurance subsidiary, Greenlight Reinsurance, Ltd., which underwrites risks associated with our property and casualty reinsurance programs. We have minimal continuing cash needs which are principally related to the payment of administrative expenses. There are restrictions on Greenlight Reinsurance, Ltd.’s ability to pay dividends which are described in more detail below. It is our initial policy to retain earnings to support the growth of our business. We currently do not expect to pay dividends on our Ordinary Shares.

Sources and Uses of Funds

Our sources of funds primarily consist of premium receipts (net of brokerage and ceding commissions) and investment income, including realized gains. We use cash to pay losses and loss adjustment expenses, profit commissions and general and administrative expenses. Substantially all of our surplus funds, net of funds required for cash liquidity purposes, are invested with our investment advisor to invest in accordance with our investment guidelines. An additional source of funds is the proceeds from selling equity securities not yet purchased. Typically these funds must remain in a designated account and are not available for our general use.

For the nine months ended September 30, 2006, we generated net cash flow from operations of $9.9 million, primarily relating to the receipt of reinsurance premiums (net of acquisition expenses) of $12.6 million. For the nine months ended September 30, 2006, cash flow from financing was

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$5.2 million. During the nine months ended September 30, 2006, we raised an aggregate of $2.0 million from two private placements of an aggregate 168,064 Class A Ordinary Shares to employees and directors. Additionally, we received $2.9 million from principal payments on the related party promissory note, as described below.

On August 11, 2004, we raised $212.2 million from the private placements of 16,175,000 Class A Ordinary Shares and 5,050,000 Class B Ordinary Shares. In connection with the August 11, 2004 private placement of the Class B Ordinary Shares, we lent $24.5 million to GCI, as evidenced by the GCI promissory note. GCI used cash and the proceeds of the GCI promissory note to purchase the Class B Ordinary Shares. Under the terms of the GCI promissory note, GCI paid us interest annually at a rate of LIBOR plus 3% per annum. As of September 30, 2006, principal repayments totaled $11.2 million, $2.9 million of which were made during the first nine months of 2006. On December 6, 2006, GCI repaid in full the principal and interest on the GCI promissory note.

As of September 30, 2006, we believe we had sufficient cash flow from operations to meet our liquidity requirements. We expect that our operational needs for liquidity will be met by cash, funds generated from underwriting activities and investment income, including realized gains, together with the net proceeds of this offering and the concurrent private placement of Class B Ordinary Shares. We have no plans to issue debt and expect to fund our operations for the foreseeable future from operating cash flow, this offering and the private placement of Class B Ordinary Shares. However, we cannot provide assurances that in the future we will not incur indebtedness to implement our business strategy, pay claims or make acquisitions.

Although Greenlight Capital Re, Ltd. is not subject to any significant legal prohibitions on the payment of dividends, Greenlight Reinsurance, Ltd. is subject to Cayman Islands regulatory constraints that affect its ability to pay dividends to us and include a minimum net worth requirement. Currently the minimum net worth requirement for Greenlight Reinsurance, Ltd. is $120,000. As of September 30, 2006, Greenlight Reinsurance, Ltd. exceeded the minimum required by $278.4 million. By law, Greenlight Reinsurance, Ltd. is restricted from paying a dividend if such a dividend would cause its net worth to drop to less than the required minimum.

Greenlight Reinsurance, Ltd. is not licensed or admitted as a reinsurer in any jurisdiction other than the Cayman Islands. Because many jurisdictions do not permit domestic insurance companies to take credit on their statutory financial statements unless appropriate measures are in place from reinsurance obtained from unlicensed or non-admitted insurers we anticipate that all of our U.S. clients and some of our non-U.S. clients will require us to provide collateral through funds withheld, trust arrangements, letters of credit or a combination thereof. Accordingly, we have established a $200 million letter of credit facility with Citibank, N.A., which we believe is sufficient to support expected collateral needs during 2007. We may seek to increase this facility or obtain an additional letter of credit facility. As of September 30, 2006, $53.9 million in letters of credit were issued. Under the letter of credit facility, we provide collateral that may consist of equity securities. The letter of credit facility agreement contains various covenants that, in part, restrict Greenlight Reinsurance, Ltd.’s ability to place a lien or charge on the pledged assets and further restricts Greenlight Reinsurance, Ltd.’s ability to issue any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, as defined in the credit agreement, Greenlight Reinsurance, Ltd. will be prohibited from paying dividends to us.

Capital

As of September 30, 2006, total shareholder’s equity was $278.5 million compared to $231.8 million at December 31, 2005. This increase in total shareholders’ equity is principally due to net income of $39.6 million during the nine months ended September 30, 2006.

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Our capital structure currently consists entirely of equity issued in two separate classes of Ordinary Shares. We expect that the proceeds of this offering and the concurrent private placement of Class B Ordinary Shares, together with the existing capital base and internally generated funds, will be sufficient to implement our business strategy. Consequently, we do not presently anticipate that we will incur any material indebtedness in the ordinary course of our business. However, we cannot provide assurances, that in the future we will not be required to incur indebtedness to implement our business strategy, pay claims or make acquisitions. We did not make any significant capital expenditures during the period from inception to September 30, 2006.

Contractual Obligations and Commitments

The following table shows our aggregate contractual obligations by time period remaining to due date as of September 30, 2006:


	Total			Less than 1 year			1-3 years			3-5 years			More than 5 years
	($ in thousands)
Lease obligations		$	353		$	90		$	194		$	69		$	—
Private equity investments ⁽¹⁾			6,178			6,178			—			—			—
Loss and loss adjustment expense reserves ⁽²⁾			1,872			1,119			721			32			—
		$	8,403		$	7,387		$	915		$	101		$	—

⁽¹⁾

We have made total commitments of $10.5 million to two separate private equity vehicles. As of September 30, 2006, we have invested $4.3 million of this amount, and our remaining commitments to these vehicles total $6.2 million. Given the nature of the private equity vehicles, we are unable to determine with any degree of accuracy on when the commitments will be called. As such, for the purposes of the above table, we have assumed that all commitments will be made within one year.


⁽²⁾	Due to the nature of our reinsurance operations, the amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain.

As of September 1, 2005, we entered into a five-year lease agreement for office premises in the Cayman Islands. The lease repayment schedule is provided in the accompanying financial statements. As described above, we have entered into a letter of credit facility which can be terminated by either party with effect from any October 11 ^th , the anniversary date, by providing written notification to the other party at least 120 days before the anniversary date. The earliest possible termination date of this agreement is October 11, 2007.

Effective January 1, 2007, we entered into a new advisory agreement with DME Advisors that grants DME Advisors an exclusive right to manage our investment portfolio in accordance with the investment guidelines as approved by the Board of Directors. The agreement expires on December 31, 2009, and will be renewed for successive three-year periods unless either we or DME Advisors gives 90 days notice of its desire to terminate the agreement.

Off Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, other than those derivatives in our investment portfolio and disclosed in the financial statements, which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

We believe we are principally exposed to five types of market risk:

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	•	equity price risk;


	•	foreign currency risk;


	•	interest rate risk;


	•	credit risk; and


	•	effects of inflation.

Equity Price Risk. Our investment portfolio consists primarily of long/short equity securities, the carrying values of which are primarily based on quoted market prices. Market prices of common equity securities, in general, are subject to fluctuation which could cause the amount to be realized upon the closing of the position to differ significantly from the current reported value. This risk is partly mitigated by the presence of both long and short equity securities As of September 30, 2006, a 10% decline in the price of each of these equity securities would result in an $18.6 million, or 6.5%, decline in the fair value of the total investment portfolio.

Foreign Currency Risk. Certain of our reinsurance contracts provide that ultimate losses may be payable in foreign currencies depending on the country of original loss. Foreign currency exchange rate risk exists to the extent that there is an increase in the exchange rate of the foreign currency in which losses are ultimately owed. As of September 30, 2006, there are no known or estimated losses payable in foreign currencies.

While we do not seek to specifically match our liabilities under reinsurance policies that are payable in foreign currencies with investments denominated in such currencies, we continually monitor our exposure to potential foreign currency losses and will consider the use of forward foreign currency exchange contracts in an effort to hedge against adverse foreign currency movements.

Through investments in securities denominated in foreign currencies, we are exposed to foreign (non-U.S.) currency risk. Foreign currency exchange rate risk is the potential for loss in the U.S. dollar value of investments due to a decline in the exchange rate of the foreign currency in which the investments are denominated. As of September 30, 2006, our total exposure to foreign denominated securities was approximately $90.5 million, or 22.8%, of our investment portfolio including cash and cash equivalents.

Interest Rate Risk. Our investment portfolio has historically held a very small portion of fixed-income securities, which are classified as trading securities. The primary market risk exposure for any fixed-income security is interest rate risk. As interest rates rise, the market value of our fixed-income portfolio falls, and the converse is also true. We did not hold any fixed income securities at September 30, 2006.

Credit Risk. We are exposed to credit risk primarily from the possibility that counterparties may default on their obligations to us. The amount of the maximum exposure to credit risk is indicated by the carrying value of our financial assets. Other than our investment in derivative contracts and U.S. corporate bonds, if any, there are no significant concentrations of credit risk.

Effects of Inflation. We do not believe that inflation has had or will have a material effect on our combined results of operations, except insofar as inflation may affect interest rates.

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BUSINESS

Company Overview

Our strategy is to build a balanced portfolio of select frequency and severity contracts that we believe will generate superior economic returns over the long-term. We seek to capitalize on market dislocations by identifying underserved markets and clients with unique reinsurance needs. We may also participate in traditional reinsurance programs that we believe exhibit superior risk-adjusted return characteristics. Our goal is to work closely with clients and brokers to provide customized reinsurance solutions that are structured to align the interests of our clients with our own. We choose to underwrite contracts where we can model, analyze and monitor our risks effectively. We use an integrated underwriting approach in which our underwriters are responsible for contracts from origination until final disposition, including underwriting, pricing, servicing, monitoring and claims processing. We anticipate this approach will translate to superior contract management and better client service.

Our investment strategy attempts to generate superior, long-term risk-adjusted returns by primarily investing in equity securities in developed markets. As of September 30, 2006, 92% of our investment portfolio was invested in publicly-traded equity securities. Our investment portfolio is managed by DME Advisors which is controlled by David Einhorn, the Chairman of our Board of Directors and the president of Greenlight Capital, Inc. DME Advisors is a value-oriented investment manager that seeks to identify a company’s fundamental economic drivers and to exploit market pricing inefficiencies in order to maximize risk-adjusted returns. Since our inception in July 2004 to September 30, 2006, the annualized return on our investment portfolio has been 17.3%, net of fees.

We began underwriting business in April 2006, once our senior underwriting team and infrastructure were in place. For the nine months ended September 30, 2006, we generated earned premiums of $12.5 million, net investment income of $41.0 million and net income of $39.6 million. As of September 30, 2006, we had total assets of $423.2 million and total shareholders’ equity of $278.5 million. In August 2006, we received an A− (Excellent) financial strength rating with a stable outlook from A.M. Best, which is the fourth highest of 15 ratings A.M. Best issues. This rating reflects the rating agency’s opinion of our financial strength, operating performance and ability to meet obligations and it is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares.

Market Trends and Opportunities

As market conditions continue to change, we intend to selectively underwrite in markets experiencing dislocations and anomalies which we believe will result in attractive risk-adjusted returns.

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Our Competitive Strengths

We believe we distinguish ourselves as follows:


	•	Focus on Customized Products. We focus on customized reinsurance solutions. In particular, we focus on business that is difficult for brokers to place, that is not already sold by brokers or that requires an innovative underwriting approach. We believe we differentiate ourselves by offering customized products at times and in markets where capacity and alternatives are limited. We may also participate in traditional reinsurance programs which exhibit superior risk-adjusted return characteristics.


	•	Focus on Economic Results. Our goal is to achieve attractive economic returns on every reinsurance contract we underwrite without focusing on traditional reinsurance metrics, such as the current year combined ratio or other short-term considerations. Our decision to underwrite a contract depends on our determination that the expected economic returns exceeds our internal return hurdle. In pricing contracts, we assume investment returns equal to the risk-free rate instead of historical investment returns.


	•	Non-traditional Investment Approach. As compared to other reinsurance companies, we employ a non-traditional investment approach that has the potential to generate a higher rate of return than traditional fixed-income investment strategies. Since our formation, our investment portfolio has generated superior returns compared to traditional fixed-income portfolios through an absolute return, value-oriented investment strategy. An absolute return, value-oriented investment strategy takes long positions in undervalued securities and short positions in overvalued securities and seeks positive risk-adjusted returns in both up and down markets.


	•	Alignment of Management and Shareholder Interests. Our management incentive compensation plans are designed to align management and employee interests with those of our shareholders over the long-term. The majority of payments under our cash bonus plan are based on the ultimate underwriting returns, not on underwriting profitability in any single year or the returns generated by our investment portfolio. As a result, we expect most of the cash bonus plan payments each year will be deferred for multiple years to reflect actual underwriting results as they develop.


	•	Experienced Management and Underwriting Team with Well-Established Market Relationships. Our management team has a broad range of relevant skills and experiences in the reinsurance industry. Our Chief Executive Officer, Leonard Goldberg, has more than 22 years of industry experience, including substantial time as a chief actuary and as president of the North American operations of a major reinsurer. Our President and Chief Underwriting Officer, Barton Hedges, is an actuary with 20 years of industry experience and was the president and chief operating officer of the Bermudian operations of a major reinsurer. Our underwriting team has knowledge, experience and relationships with many brokers in the United States, Europe and Bermuda.


	•	Financial Strength. Our balance sheet is not encumbered by issues of historic loss reserve adequacy, uncollectible retrocession or indebtedness. In August 2006, we received an A− (Excellent) financial strength rating with a stable outlook from A.M. Best, which is the fourth highest of 15 ratings A.M. Best issues. This rating reflects the rating agency’s opinion of our financial strength, operating performance and ability to meet obligations and is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares.

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Our Strategy

We seek to maximize sustainable long-term growth in book value by pursuing the following strategies:


	•	Selectively Underwrite Reinsurance Risks. We employ a strict underwriting discipline to identify and select reinsurance opportunities with favorable risk-adjusted returns based on our proprietary actuarial modeling techniques. We intend to pursue an opportunistic strategy in all property and casualty lines of business to take advantage of market dislocations when and where they occur. We plan to develop an underwriting portfolio of frequency and severity business where each transaction is significant to both our client and us. By maintaining a focused portfolio, we believe we will understand our risks and exposures better than our competitors. Our underwriting strategy is driven by our goal to produce superior long-term growth in book value per share, rather than by pursuing premium production targets.


	•	Operate as a Lead Reinsurer on the Majority of the Business that We Underwrite. Due to the customized nature of our business strategy, we anticipate that the majority of our reinsurance contracts will be sizeable and require significant interaction among clients, brokers and ourselves. We have a strong preference to lead these transactions to help ensure they meet or exceed our internal return hurdles. Therefore, we intend to be the lead underwriter for the majority of the aggregate premium that we underwrite. We will participate in non-lead positions when we believe the opportunity offers compelling risk-adjusted returns.


	•	Manage Capital Prudently and Maintain a Disciplined Balance Sheet. Our strategy is to generate underwriting profits while maintaining a disciplined balance sheet and managing our capital prudently relative to our risk exposure. We manage our property catastrophe risk exposures based on total aggregate limits rather than probable maximum loss estimates, which we believe to be a more conservative measure of our capital at risk. We intend to manage our other business by analyzing our maximum loss potential on each contract, subject to maximum amounts set by our Board. Occasionally, we may purchase retrocessional protection for our reinsurance business in order to mitigate concentrations of risk. We currently employ no debt in our capital structure and plan to maintain our A- (Excellent) rating from A.M. Best.


	•	Employ a Differentiated Investment Approach. We use an absolute return, value-oriented investment strategy and we primarily invest in publicly-traded equity securities. This approach is intended to provide us with greater flexibility in managing our reinsurance business and the ability to optimize returns on our investment portfolio. We believe we will achieve higher rates of return over the long-term than more traditional fixed-income investment strategies followed by most reinsurers.


	•	Maintain a Lean and Focused Operating Structure. We believe that our highly focused and centralized management structure allows us to identify and quickly respond to market opportunities. This should allow us to capitalize on attractive opportunities and to provide superior client service.

Reinsurance Risks to Be Written

We intend to underwrite reinsurance contracts with favorable risk-adjusted returns as opportunities arise. We will attempt to select the most economically attractive opportunities across all property and casualty lines of business.

Reinsurance is an arrangement under which an insurance company or reinsurer agrees to indemnify or assume the obligations of another insurance company, ceding company or client, for all or a portion of the insurance risks underwritten by the ceding company. It is standard industry practice for primary insurers to reinsure portions of their insurance risks with other insurance companies under reinsurance agreements or contracts. This permits primary insurers to underwrite policies in amounts larger than the risks they are willing to retain. Reinsurance is generally designed to:

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	•	reduce the ceding company’s net liability on individual risks, thereby assisting it in increasing its capacity to underwrite business as well as increasing the limit to which it can underwrite on a single risk;


	•	assist the ceding company in meeting applicable regulatory and rating agency capital requirements;


	•	assist the ceding company in reducing the short-term financial impact of sales and other acquisition costs; and


	•	enhance the ceding company’s financial strength and statutory capital.

We characterize the reinsurance risks we assume as frequency or severity and aim to balance the risks and opportunities of our underwriting activities by creating a diversified portfolio of both types of businesses.

We expect to act as lead underwriter for the majority of total premium we underwrite. Our goal is to work closely with our clients to provide customized reinsurance solutions that often contain non-standard provisions to allow us to offer a tailored approach to underwriting. As a result, most contracts we underwrite uniquely focus on particular client needs while maintaining an attractive risk-adjusted return profile for us.

In addition, some of the risks we intend to underwrite will reflect traditional opportunities in reinsurance where we will participate in a larger underwriting syndicate, where we believe the risk-adjusted return characteristics exceed our internal return hurdle.

Products

We offer a range of property and casualty reinsurance products. We offer casualty and liability risks, medical malpractice , natural peril /property/damage, professional liability , surety and fidelity and workers’ compensation , among others. While we expect to establish a diversified portfolio, our allocation of risk will vary based on our perception of the opportunities available in each line of business.


	•	Casualty and Liability. Casualty and liability insurance is primarily concerned with the losses caused by injuries to third persons and the legal liability imposed on the policyholder. Certain casualty risks have greater unpredictability because there tends to be a greater delay in the reporting and settlement of claims due to the long tail nature of the underlying risks and their greater potential for litigation.


	•	Medical Malpractice. Medical malpractice insurance provides an indemnity to physicians and their employers for losses related to patient injuries arising from medical advice rendered or procedures performed.


	•	Natural Peril/Property Damage. Natural peril/property damage insurance protects the insured against financial loss arising out of the loss of property or its use caused by an insured peril.

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	•	Professional Liability. Professional liability insurance protects a company and its representatives against legal claims arising from error or misconduct in providing or failing to provide professional services. This type of coverage includes errors and/or omissions policies, directors and officers liability coverage and specialty areas including employment practices liability insurance.


	•	Surety and Fidelity Insurance. Surety and fidelity insurance includes guaranteeing the fidelity of persons holding positions of public or private trust; guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings and contracts of suretyship; and indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss.


	•	Workers’ Compensation. Workers’ compensation insurance provides medical, disability and lost-wage benefits to employees for injuries and illness sustained in the course of their employment.

We may only offer or underwrite a limited number of these lines in any given period. We intend to target markets where capacity and alternatives are limited and to employ a strict underwriting discipline to identify and select reinsurance opportunities with favorable risk-adjusted returns and, in fact, may offer lines that are not described in this prospectus.

Marketing and Distribution

We expect that the majority of our business will be sourced through reinsurance brokers. Brokerage distribution channels provide us with access to an efficient, variable cost, and global distribution system without the significant time and expense that would be incurred in creating a wholly-owned distribution network. We believe that our financial strength rating, unencumbered balance sheet and superior client service are essential for creating long-term relationships with clients and brokers.

We intend to build long-term relationships with global reinsurance brokers and captive insurance companies located in the Cayman Islands. Our management team has significant relationships with most of the primary and specialty broker intermediaries in the reinsurance marketplace. We believe that by maintaining close relationships with brokers we will be able to continue to obtain access to a broad range of reinsurance clients and opportunities.

We intend to focus on the quality and financial strength of any brokerage firm with which we do business. Brokers do not have the authority to bind us to any reinsurance contract. We review and approve all contract submissions in our corporate offices located in the Cayman Islands. From time to time, we may also enter into relationships with managing general agents who could bind us to reinsurance contracts based on narrowly defined underwriting guidelines.

Reinsurance brokers receive a brokerage commission that is usually a percentage of gross premiums. We seek to become the first choice of brokers and clients by providing:


	•	customized solutions that address the specific business needs of our clients;


	•	rapid and substantive responses to proposal and pricing quote requests;


	•	timely payment of claims; and


	•	financial security.

For the nine months ended September 30, 2006, three brokerage firms, and their respective clients, accounted for 62.1%, 14.8% and 11.0% of our premiums written.

In addition, we expect the large number of captive insurance companies located in the Cayman Islands to be an important source of business for us in the future. We expect to develop relationships with potential clients when we believe they have a need for reinsurance, based on our industry knowledge and market trends. We believe that diversity in our sources of business will help reduce any potential adverse effects arising out of the termination of any one of our business relationships.

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Underwriting and Risk Management

We have established a senior team of generalist underwriters and actuaries to operate our reinsurance business. We believe our opportunistic approach to underwriting will allow us to deploy our capital in the lines of business that we believe offer the best risk-adjusted returns at any given time. Our underwriters and actuaries have expertise in a number of lines of business and we will also look to outside consultants on a fee-for-service basis, to help us with niche areas of expertise when we deem it appropriate. We generally apply the following underwriting and risk management principles:

Economics of Results

Our primary goal is to build a reinsurance portfolio that has attractive economic results. We may underwrite a reinsurance contract that may not demonstrate immediate short-term benefits if we believe it has superior risk-adjusted return characteristics over the economic life of the contract. In pricing our products, we assume investment returns equal to the risk-free rate.

Team Approach

Each transaction typically is assigned to an underwriter and an actuary to evaluate underwriting, structuring and pricing. Prior to committing capital to any transaction, the evaluation team creates a deal analysis memorandum that highlights the key components of the proposed transaction and presents the proposed transaction to a senior group of staff, including underwriting, actuarial and finance. This group, including our Chief Underwriting Officer, must agree that the transaction meets or exceeds our risk-adjusted return profile before we submit a firm proposal. Our Chief Underwriting Officer maintains the exclusive ultimate authority to bind contracts.

Actuarially Based Pricing

We have developed proprietary actuarial models and also use several commercially available tools to price our business. Our models not only consider conventional underwriting metrics, but also incorporate a component for risk aversion that places greater weight on scenarios that result in greater losses. The actuary working on the transaction must agree that the transaction meets or exceeds our risk-adjusted return requirements before we commit capital. We price each transaction based on the merits and structure of the transaction.

Act as Lead Underwriter

Typically, one reinsurer acts as the lead in negotiating principal policy terms and pricing of reinsurance contracts. We plan to act as the lead underwriter for the majority of the aggregate premium that we underwrite. We believe that lead underwriting is an important factor in achieving long-term success, as lead underwriters have greater influence in negotiating pricing, terms and conditions. In addition, we believe that reinsurers that lead policies are generally solicited for a broader range of business and have greater access to attractive risks.

Alignment of Company and Client’s Interests

We seek to ensure every contract we underwrite aligns our interests with our client’s interests through profit commissions , self-insured retentions , co-participation , reinstatement premiums or other specific terms within the contract. We believe that aligning our interests with our client’s interests promotes accurate reporting of information, timely settling and management of claims and limits the potential for disputes.

Integrated Operations

We have implemented a ‘‘cradle to grave’’ service philosophy where the same individual underwrites and administers the reinsurance contracts. We believe this method enables us to best understand the risks and likelihood of loss for any particular contract and to provide superior client service.

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Detailed Contract Diligence

We are highly selective in the contracts we choose to underwrite and spend a significant amount of time with our clients and brokers to understand the risks and appropriately structure the contracts. We usually obtain significant amounts of data from our clients to conduct a thorough actuarial modeling analysis. As part of our pricing and underwriting process, we assess among other factors:


	•	the client’s and industry historical loss data;


	•	the expected duration for claims to fully develop;


	•	the client’s pricing and underwriting strategies;


	•	the geographic areas in which the client is doing business and its market share;


	•	the reputation and financial strength of the client;


	•	the reputation and expertise of the broker;


	•	the likelihood of establishing a long-term relationship with the client and the broker; and


	•	reports provided by independent industry specialists.

Underwriting Authorities

We use our proprietary actuarial models and apply our underwriting guidelines to analyze each reinsurance opportunity before we commit capital. The Underwriting Committee of our Board of Directors has set parameters for zonal and aggregate property catastrophic caps and limits for maximum loss potential under any individual contract. The Underwriting Committee may approve exceptions to the established limits. Our approach to risk control imposes an absolute loss limit on our natural catastrophic exposures rather than an estimate of probable maximum losses and we have established zonal and aggregate limits. We manage all non-catastrophic exposures and other risks by analyzing our maximum loss potential on a contract-by-contract basis.

Retrocessional Coverage

We do not plan to purchase retrocessional coverage. However, we may do so to manage our overall exposure and to balance our portfolio. We have not yet purchased retrocessional coverage but expect that, if we do, we will only purchase uncollateralized retrocessional coverage from a retrocessionaire with a minimum financial strength rating of A− from either A.M. Best or Standard & Poors.

Capital Allocation

We expect to allocate capital to each contract that we bind. Our capital allocation methodology uses the probability and magnitude of potential for economic loss. We allocate capital for the period until the risk is resolved. We have developed a proprietary return on equity capital allocation model to evaluate and price each reinsurance contract that we underwrite. We use different return on equity thresholds depending on the type and risk characteristics of the business we underwrite.

Claims Management

We have not experienced a high volume of claims to date. Our claims management process initiates upon receipt of reports from our clients.

We have implemented a ‘‘cradle to grave’’ service philosophy where the same individual underwrites and administers the reinsurance contracts.

Underwriters review claims submissions for authorization prior to entry and settlement. We believe this ensures we pay claims consistently with the terms and conditions of each contract. Our Chief Financial Officer must also approve all cash disbursements.

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Where necessary, we will conduct or contract for on-site audits, particularly for large accounts and for those whose performance differs from our expectations. Through these audits, we will evaluate ceding companies’ claims-handling practices, including the organization of their claims departments, their fact-finding and investigation techniques, their loss notifications, the adequacy of their reserves, their negotiation and settlement practices and their adherence to claims-handling guidelines.

We recognize that fair interpretation of our reinsurance agreements with our clients and timely payment of covered claims is a valuable service to our clients.

Reserves

Our reserving philosophy is to reserve to our best estimates of the actual results of the risks underwritten. Our actuaries and underwriters provide reserving estimates on a quarterly basis calculated to meet our estimated future obligations. We reserve on a transaction by transaction basis. Starting in 2007, outside actuaries will review these estimates at least once a year. Due to the use of different assumptions, accounting treatment and loss experience, the amount we establish as reserves with respect to individual risks, transactions or classes of business may be greater or less than those established by clients or ceding companies. Reserves may also include unearned premiums, premium deposits, profit sharing earned but not yet paid, claims reported but not yet paid, claims incurred but not reported, and claims in the process of settlement.

Reserves do not represent an exact calculation of liability. Rather, reserves represent our estimate of the expected cost of the ultimate settlement and administration of the claim. Although the methods for establishing reserves are well-tested, some of the major assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. We base these estimates on our assessment of facts and circumstances then known, as well as estimates of future trends in claim severity and frequency, judicial theories of liability and other factors, including the actions of third parties, which are beyond our control.

Collateral Arrangements/Letter of Credit Facility

We are not licensed or admitted as an insurer in any jurisdiction other than the Cayman Islands. Many jurisdictions such as the United States do not permit clients to take credit for reinsurance on their statutory financial statements if such reinsurance is obtained from unlicensed or non-admitted insurers without appropriate collateral. As a result, we anticipate that all of our U.S. clients and a portion of our non-U.S. clients will require us to provide collateral for the contracts we bind with them. We expect this collateral to take the form of funds withheld, trust arrangements or letters of credit. We have obtained a letter of credit facility from Citibank, N.A. in a maximum amount of $200 million. The failure to maintain, replace or increase our letter of credit facility on commercially acceptable terms may significantly and negatively affect our ability to implement our business strategy. As of September 30, 2006, we have issued letters of credit totaling $53.9 million to clients.

Competition

The reinsurance industry is highly competitive. We expect to compete with major reinsurers, most of which are well established, have significant operating histories and strong financial strength ratings and have developed long-standing client relationships.

While we have a limited operating history, we believe that our unique approach to underwriting will allow us to be successful in underwriting transactions against more established competitors. Also, as the first open market reinsurer in the Cayman Islands, we believe we have a competitive advantage when competing for business of Cayman-based captive insurance companies.

Ratings

We currently have an A− (Excellent) financial strength rating with a stable outlook from A.M. Best, which is the fourth highest of 15 ratings. We believe that a strong rating is an important factor in the marketing of reinsurance products to clients and brokers. This rating reflects the rating agency’s

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opinion of our financial strength, operating performance and ability to meet obligations. It is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A Ordinary Shares.

Advisory Agreement

We have entered into the advisory agreement with DME Advisors. Pursuant to the terms of the advisory agreement, DME Advisors has the exclusive right to manage our investments, subject to the investment guidelines adopted by our Board of Directors for so long as the agreement is in effect.

DME Advisors receives two forms of compensation:


	•	a 1.5% annual fee payable monthly based on the net asset value of our investment account, excluding assets used to collateralize Regulation 114 Trusts ; and


	•	performance compensation based on the appreciation in the value of our investment account equal to 20% of net profits calculated per annum, subject to a loss carryforward provision. The loss carryforward provision allows DME Advisors to earn a reduced incentive fee of 10% in any year after our investments managed by the investment advisor incur a loss, until all the losses are recouped and an additional amount equal to 150% of the loss is earned.

The advisory agreement requires that DME Advisors follow our investment guidelines and act in a manner that it considers fair and equitable in allocating investment opportunities to us, but does not otherwise impose any specific obligations or requirements concerning the allocation of time, effort or investment opportunities to us or any restrictions on the nature or timing of investments for our account and for DME Advisors’ own account or other accounts which DME Advisors or its affiliates may manage. In addition, DME Advisors can outsource to subadvisors without our consent or approval. In the event that DME Advisors and any of its affiliates attempt to simultaneously invest in the same opportunity, the opportunity will be allocated pro rata as reasonably determined by DME Advisors and its affiliates. Affiliates of DME Advisors presently serve as general partner or investment advisor of Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd., Greenlight Masters, L.P., Greenlight Masters Qualified, L.P., Greenlight Masters Offshore, Ltd. and Greenlight Masters Offshore I, Ltd., which each utilize an investment strategy that may compete with our investment strategy.

The advisory agreement provides that DME Advisors and its principals, employees or agents are not liable to us or our shareholders for any acts or omissions in the performance of their services in the absence of:


	•	willful misconduct, gross negligence, reckless disregard of any of their obligations under the advisory agreement. Additionally, the advisory agreement contains provisions for the indemnification of DME Advisors by us against certain liabilities to third parties arising in connection with the performance of its services to us;


	•	breaches of our investment guidelines that are not cured within 15 days of the day on which DME Advisors becomes aware of the breach; or


	•	the failure by DME Advisors to timely return or deliver assets to us if so requested.

We have agreed to use commercially reasonable efforts to cause all of our respective future subsidiaries to enter into substantially similar advisory agreements, provided that any such agreement shall be terminable on the same date that the advisory agreement is terminable. In addition, we have agreed that we will, at the written request of DME Advisors 90 days prior to any January 1 during the term of the advisory agreement, amend the advisory agreement so as to transform this agreement into a joint venture or partnership between us and DME Advisors so long as the creation of a joint venture or partnership does not, in the opinion of our legal counsel, create any material adverse tax, legal or regulatory consequences to us.

The advisory agreement term is January 1, 2007 through December 31, 2009 and will automatically renew for successive three year terms unless we or DME notify the other at least

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90 days prior to the end of the three-year term of its desire to terminate. We may terminate the advisory agreement prior to the expiration of its term only ‘‘for cause,’’ which is defined as:


	•	a material violation of applicable law relating to DME Advisors’ advisory business;


	•	DME Advisors’ gross negligence, willful misconduct or reckless disregard of its obligations under the advisory agreement;


	•	a material breach by DME Advisors of our investment guidelines that is not cured within a 15-day period; or


	•	a material breach by DME Advisors’ of its obligations to return and deliver assets as we may request.

Investment Strategy

Our investment portfolio is managed by DME Advisors. DME Advisors is an investment advisor that implements an absolute return, value-oriented investment approach. Our Board of Directors conducts reviews of our investment portfolio activities and oversees our investment guidelines to meet our investment objectives. We believe, while less predictable, the investment approach complements our reinsurance business, optimizes risk-adjusted returns and will achieve higher rates of return over the long-term than traditional income-oriented investment strategies. Our investment guidelines are designed to maintain adequate liquidity to fund our reinsurance operations and to protect against unexpected events.

Under the advisory agreement, DME Advisors, which is contractually obligated to adhere to our investment guidelines, makes investment decisions on our behalf, which include buying public or private corporate equities and current-pay debt securities, selling securities short, and investing in trade claims, debt securities of distressed issuers, arbitrages, bank loan participations, derivatives (including options, warrants and swaps), leases, break-ups, consolidations, reorganizations, limited partnerships and similar securities of foreign issuers.

David Einhorn manages DME Advisors, as well as Greenlight Capital, Inc. and its affiliates, a value-oriented investment advisor founded in 1996 with over $4 billion under management as of December 31, 2006. Our investment guidelines, which DME Advisors is contractually obligated to follow, may diverge significantly from those guidelines historically followed by Greenlight Capital, Inc.

Investment Guidelines

The investment guidelines adopted by our Board of Directors, which may be amended from time to time as our Board of Directors deems appropriate, take into account restrictions imposed on us by regulators, our liability mix, requirements to maintain an appropriate claims paying rating by ratings agencies and requirements of lenders. The investment guidelines currently provide, among other things:


	•	Quality Investments. At least 80% of the assets in the investment portfolio are to be held in debt or equity securities (including swaps) of publicly-traded companies and governments of the Organization of Economic Co-operation and Development, or the OECD, high income countries and cash, cash equivalent or United States government obligations.


	•	Concentration of Investments: Other than cash, cash equivalents and United States government obligations, no single investment in the investment portfolio may constitute more than 20% of the portfolio. No more than 10% of the assets in the investment portfolio will be held in private equity securities.


	•	Liquidity: Assets will be invested in such fashion that we have a reasonable expectation that we can meet any of our liabilities as they become due. We periodically review with the investment advisor the liquidity of the portfolio.


	•	Monitoring: We require our investment advisor to re-evaluate each position in the investment portfolio and to monitor changes in intrinsic value and trading value and provide monthly reports on the investment portfolio to us as we may reasonably determine.

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	•	Leverage: The investment portfolio may not employ greater than 5% indebtedness for borrowed money, including net margin balances, for extended time periods. The investment advisor may use, in the normal course of business an aggregate of 20% margin leverage for periods of less than 30 days.

Investment Results

Composition

Our investment portfolio managed by DME Advisors contains investments in securities, cash and funds held with brokers, swaps and securities sold, not yet purchased. The following table represents the total long positions as reported in the financial statements as of September 30, 2006 and December 31, 2005:


	Fair value as of September 30, 2006							Fair value as of December 31, 2005
	$ in thousands				% of total			$ in thousands				% of total
Fixed income		$	—			—	%		$	238			0.1	%
Equities – listed			273,827			98.3				216,702			97.8
Equities – unlisted			4,291			1.5				1,777			0.8
Options			606			0.2				494			0.2
Investments in securities		$	278,724			100.0	%		$	219,211			98.9	%
Cash and funds held with brokers			4,665			1.7				3,094			1.4
Swaps			(4,638	)		(1.7	)			(722	)		(0.3	)
Total long investments		$	278,751			100.0	%		$	221,583			100.0	%

The following table represents the securities sold, not yet purchased as reported in the financial statements as of September 30, 2006 and December 31, 2005:


	Fair value as of September 30, 2006						Fair value as of December 31, 2005
	$ in thousands			% of total			$ in thousands			% of total
Equities – listed		$	97,671		98.8	%		$	87,075		99.5	%
Derivatives and other			1,194		1.2				443		0.5
Total securities sold, not yet purchased		$	98,865		100.0	%		$	87,518		100.0	%

DME Advisors also reports the composition of our total managed portfolio on a notional exposure basis, which it believes is the appropriate manner in which to assess the exposure and profile of investments and is the way in which it manages the portfolio. Under this methodology, swaps and futures contracts are reported at their full notional basis and options are reported on a delta-adjusted basis. The following table represents the composition of our investment portfolio based on the holdings in our investment account managed by DME Advisors as of September 30, 2006 and December 31, 2005:


	As of September 30, 2006						As of December 31, 2005
	Long %			Short %			Long %			Short %
Fixed income		0.0	%		0.0	%		0.1	%		0.0	%
Equities & related derivatives		102.5			(40.8	)		99.1			(46.8	)
Equity – unlisted		1.5			0.0			0.0			0.0
Other investments		0.9			0.0			0.0			0.0
Total		104.9	%		(40.8	)%		99.2	%		(46.8	)%

Investment Returns

A summary of our consolidated net investment income, including the interest on the promissory note, for the nine months ended September 30, 2006 and 2005, the year ended December 31, 2005 and the period from July 13, 2004 to December 31, 2004 is as follows:

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	Nine Months Ended September 30,								Year ended December 31, 2005				Period Ended July 13, 2004 – December 31, 2004
	2006				2005				Year ended December 31, 2005				Period Ended July 13, 2004 – December 31, 2004
	($ in thousands, except per share data)
	(unaudited)
Investment income		$	55,916			$	29,516			$	38,815			$	13,314
Investment expenses			(1,749	)			(419	)			(698	)			(161	)
Investment advisor fees			(13,139	)			(7,705	)			(10,183	)			(3,517	)
Net investment income		$	41,028			$	21,392			$	27,934			$	9,636

The investment return reported by DME Advisors is based on the total assets in our investment account, which includes the majority of our equity capital and collected premiums. Investment returns net of all fees and expenses for the nine months ended September 30, 2006 and 2005 were 17.5% and 10.8%, respectively. Investment returns net of all fees and expenses for the year ended December 31, 2005 and the period from July 13, 2004 to December 31, 2004 were 14.2% and 5.2%, respectively. The investment returns by quarter since inception are as follows:


Quarter	2006			2005			2004
1 ^st		7.5	%		2.2	%		—	%
2 ^nd		2.9			5.4			—
3 ^rd		6.2			3.0			1.3
4 ^th		—			2.9	%		3.9
Full Year		17.5	% ⁽¹⁾		14.2	%		5.2	% ⁽²⁾


(1)	Reflects first three fiscal quarters. Full year results are not yet available.


(2)	Represents the return for the period from July 13, 2004 (date of incorporation) to December 31, 2004.

Internal Risk Management

Our Board of Directors reviews our investment portfolio together with our reinsurance operations on a periodic basis. With the assistance of DME Advisors, we periodically produce risk reports for review by our Board of Directors, analyzing both our assets and liabilities. The reports focus on numerous components of risk in our portfolio, including concentration risk and liquidity risk.

Information Technology

Our information technology infrastructure is currently housed in our corporate offices in Grand Cayman, Cayman Islands. We have implemented backup procedures to ensure that data is backed up on a daily basis and can be quickly restored as needed. Backup information is stored off-site in order to minimize the risk of a loss of data in the event of a disaster.

We have a disaster recovery plan with respect to our information technology infrastructure that includes arrangements with an offshore data center in Jersey, Channel Islands. We can access our systems from this offshore facility in the event that our primary systems are unavailable due to a disaster or otherwise.

Legal Proceedings

We are not currently involved in any litigation or arbitration. We anticipate that, similar to the rest of the reinsurance industry, we will be subject to litigation and arbitration in the ordinary course of business.

Properties

We currently lease office space in Grand Cayman, under an operating lease which expires on August 31, 2010. We believe that for the foreseeable future this office space will be sufficient for us to conduct our operations.

Employees

As of December 31, 2006, we had nine employees, all of whom were based in Grand Cayman. We believe that our employee relations are good. None of our employees are subject to collective bargaining agreements, and we are not aware of any current efforts to implement such agreements.

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REGULATION

Greenlight Reinsurance, Ltd. holds an Unrestricted Class B Insurer’s License issued in accordance with the terms of the Insurance Law (as revised) of the Cayman Islands, or the Law, and is subject to regulation by the Cayman Islands Monetary Authority, or CIMA, in terms of the Law.

As the holder of an Unrestricted Class B Insurers’ License, Greenlight Reinsurance, Ltd. is permitted to undertake insurance business from the Cayman Islands, but, other than with the prior written approval of CIMA, may not engage in any Cayman Islands domestic business except to the extent that such business forms a minor part of the international risk of a policyholder whose main activities are in territories outside the Cayman Islands.

Greenlight Reinsurance, Ltd. is required to comply with the following principal requirements under the Law:


	•	the maintenance of a net worth (defined in the Law as the excess of assets, including any contingent or reserve fund secured to the satisfaction of CIMA, over liabilities other than liabilities to partners or shareholders) of at least 100,000 Cayman Islands dollars (which is equal to approximately US$120,000), subject to increase by CIMA depending on the type of business undertaken;


	•	to carry on its insurance business in accordance with the terms of the license application submitted to CIMA, to seek the prior approval of CIMA to any proposed change thereto, and annually to file a certificate of compliance with this requirement, in the prescribed form, signed by an independent auditor, or other party approved by CIMA;


	•	to prepare annual accounts in accordance with generally accepted accounting principles, audited by an independent auditor approved by CIMA;


	•	to seek the prior approval of CIMA in respect of the appointment of directors and officers and to provide CIMA with information in connection therewith and notification of any changes thereto;


	•	to notify CIMA as soon as reasonably practicable of any change of control of Greenlight Reinsurance, Ltd., the acquisition by any person or group of persons of shares representing more than ten percent of Greenlight Reinsurance, Ltd.’s issued share capital or total voting rights and to provide such information as CIMA may require for the purpose of enabling an assessment as to whether the persons acquiring control or ownership are fit and proper persons to acquire such control or ownership;


	•	to maintain appropriate business records in the Cayman Islands; and


	•	to pay an annual license fee.

The Law requires that the holder of an Unrestricted Class B Insurance License engage a licensed insurance manager operating in the Cayman Islands to provide insurance expertise and oversight, unless exempted by CIMA. Greenlight Reinsurance, Ltd. has been exempted from this requirement.

It is the duty of the CIMA:


	•	to maintain a general review of insurance practice in the Cayman Islands;


	•	to examine the affairs or business of any licensee or other person carrying on, or who has carried on, insurance business in order to ensure that the Law has been complied with and that and the licensee is in a sound financial position and is carrying on its business in a satisfactory manner;


	•	to examine and report on the annual returns delivered to CIMA in terms of the Law; and


	•	to examine and make recommendations with respect to, among other things, proposals for the revocation of licenses and cases of suspected insolvency of licensed entities.

Where CIMA believes that a licensee is committing, or is about to commit or pursue, an act that is an unsafe or unsound business practice, CIMA may request that the licensee cease or refrain from

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committing the act or pursuing the offending course of conduct. Failures to comply with CIMA regulation may be punishable by a fine of up to one hundred thousand Cayman Islands dollars (US$121,951 based on the Cayman Islands’ pegged exchange rate of CI$0.82 per US$1.00), and an additional ten thousand Cayman Islands dollars (US$12,195 based on the Cayman Islands’ pegged exchange rate of CI$0.82 per US$1.00) for every day after conviction that the breach continues.

Whenever CIMA believes that a licensee is or may become unable to meet its obligations as they fall due, is carrying on business in a manner likely to be detrimental to the public interest or to the interest of its creditors or policyholders, has contravened the terms of the Law, or has otherwise behaved in such a manner so as to CIMA to call into question the licensee’s fitness, CIMA may take one of a number of steps, including requiring the licensee to take steps to rectify the matter, suspending the license of the licensee, revoking the license imposing conditions upon the license and amending or revoking any such condition, requiring the substitution of any director, manager or officer of the licensee, at the expense of the licensee, appointing a person to advise the licensee on the proper conduct of its affairs and to report to CIMA thereon, at the expense of the licensee, appointing a person to assume control of the licensee’s affairs or otherwise requiring such action to be taken by the licensee as CIMA considers necessary.

Other Regulations in the Cayman Islands

As a Cayman Islands exempted company, we may not carry on business or trade locally in the Cayman Islands except in furtherance of our business outside the Cayman Islands and we are prohibited from soliciting the public of the Cayman Islands to subscribe for any of our securities or debt. We are further required to file a return with the Registrar of Companies in January of each year and to pay an annual registration fee at that time.

The Cayman Islands has no exchange controls restricting dealings in currencies or securities.

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MANAGEMENT


Name	Age		Position
Leonard Goldberg		44	Chief Executive Officer and Director
Tim Courtis		45	Chief Financial Officer
Barton Hedges		41	President and Chief Underwriting Officer of Greenlight Reinsurance, Ltd.
David Einhorn		38	Director and Chairman of the Board
Alan Brooks		60	Director
Ian Isaacs		51	Director
Frank D. Lackner		38	Director
Joseph Platt, Jr.		59	Director
Daniel Roitman		37	Alternate Director

Executive Officers

Our senior management includes the following individuals:

Leonard Goldberg has served as our Chief Executive Officer and a director since August 2005. Mr. Goldberg has more than 20 years of insurance and reinsurance experience. He worked with the Alea Group, a reinsurance company, from August 2000 to August 2004, including serving as Chief Executive Officer of Alea North America Insurance Company and Alea North America Specialty Insurance Company from March 2002 to August 2004. Prior to working with the Alea Group, Mr. Goldberg served as chief actuary and senior vice president—Financial Products of Custom Risk Solutions, a managing general agency company, from April 1999 to August 2000. From May 1995 to December 1998, Mr. Goldberg provided various actuarial services to Zurich Group, a reinsurance company, including acting as chief actuary of Zurich Re London. Mr. Goldberg received his B.A. in Mathematics from Rutgers University in 1984 and MBA, Finance Concentration, from Rutgers Executive MBA program in 1993 and is a Fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries.

Tim Courtis has served as our Chief Financial Officer since May 2006. Mr. Courtis has 18 years experience in the property and casualty reinsurance, captive and insurance industry. Most recently Mr. Courtis was President and Chief Financial Officer of European International Reinsurance Company Ltd., a subsidiary of Swiss Re, where he was responsible for the management and financial analysis of Swiss Re’s Barbados based entities. Prior to joining Swiss Re in 1994, Mr. Courtis also worked for Continental Insurance in Barbados and International Risk Management Company in Bermuda where he performed duties as senior account manager to various captive insurance companies. Mr. Courtis is a Canadian Chartered Accountant and has a MBA from York University, Toronto and a Bachelor of Business from Wilfrid Laurier University, Waterloo.

Barton Hedges has served as President and Chief Underwriting Officer of Greenlight Reinsurance, Ltd. since January 2006. Mr. Hedges has 20 years experience in the property and casualty insurance and reinsurance industry and is a Fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries. Prior to joining Greenlight Reinsurance, Ltd., Mr. Hedges served as President and Chief Operating Officer of Platinum Underwriters Bermuda, Ltd., a property, casualty and finite risk reinsurer where he was responsible for the initial start-up of the company and managed the company’s day-to-day operations. Mr. Hedges previous experience includes serving as executive vice president and Chief Operating Officer of Bermuda-based Scandinavian Re, actuarial consultant at Tillinghast—Towers Perrin, Senior Manager at Deloitte & Touche LLP and actuarial manager at United States Fidelity and Guaranty Company, where he began his career in 1987. Mr. Hedges has a B.A. in Mathematics from Towson State University.

Directors

In addition to Mr. Goldberg, our board of directors includes the following individuals:

David Einhorn has been a director since July 2004, and Chairman of the Board since August 6, 2004. Mr. Einhorn is president of Greenlight Capital, Inc. which he co-founded in

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January 1996, and senior managing member of DME Advisors. Greenlight Capital, Inc. and DME Advisors are our affiliates. Mr. Einhorn graduated summa cum laude with distinction from Cornell University in 1991 where he earned a BA from the College of Arts and Sciences. Mr. Einhorn serves as a director of New Century Financial Corp. (NYSE:NEW).

Alan Brooks has been a director since July 2004. Mr. Brooks was the insurance practice partner at KPMG in the Cayman Islands from 1984 to 1999 and was then engaged as a Consultant by KPMG from February 2001 until July 2003. During the past 20 years, Mr. Brooks has specialized in providing audit and liquidation services to the offshore insurance industry. Mr. Brooks has been the audit partner to over 150 licensed insurance companies in the Cayman Islands, ranging from companies writing property and casualty, life and credit as well as special purpose vehicles formed to insure catastrophe risks. Mr. Brooks has significant experience in the preparation of financial statements in accordance with United States, United Kingdom, Canadian and International GAAP. He has been the voluntary liquidator to numerous offshore property and casualty insurance companies, and has assisted in the formation of offshore catastrophe insurance companies. Prior to qualifying as a Chartered Accountant, Mr. Brooks received a Diploma of Education from the North Buckinghamshire College of Education in 1968. Mr. Brooks has been a Fellow of the Institute of Chartered Accountants of England & Wales since 1979.

Ian Isaacs has been a director since July 2004. Mr. Isaacs has served as a senior vice president, Investments, with UBS Financial Services, a subsidiary of UBS AG, a Zurich based investment bank since November 2000. At UBS Financial Services, Mr. Isaacs conducts market research for institutional investors, including those of our affiliates, and provides investment advice to individual investors. Mr. Isaacs was employed by PaineWebber in the private client group from May of 1990, becoming senior vice president of Investments in 1995, until its acquisition by UBS AG in November 2000. Prior to Paine Webber, Mr. Isaacs was employed by Hambrecht and Quist, an investment bank based in San Francisco, where he worked in the private client division from 1985 to 1990. Mr. Isaacs received his Bachelor of Arts from Carleton College in 1977.

Frank D. Lackner has been a director since July 2004. Mr. Lackner served as a managing director of Torsiello Securities Inc., an investment banking and financial advisory services company to the global insurance and financial services industry, and its predecessor firm from October 2001 until October 2006. From January 1998 to October 2001, Mr. Lackner was a founder and Chief Executive Officer of RiskContinuum, Inc., an online reinsurance trading exchange. During such time, Mr. Lackner also provided consulting services to First International Capital LLC and to other clients in the insurance industry. From September 1993 to December 1997, Mr. Lackner was a vice president with Insurance Partner Advisors, L.P., a private equity investment partnership formed by the Centre Reinsurance Companies, Chase Manhattan Bank and the Robert Bass Group, which made equity investments in insurance, reinsurance and healthcare companies worldwide. From 1992 to 1993, Mr. Lackner was a finite risk reinsurance underwriter at the Centre Reinsurance Companies, where he worked on both corporate development projects and structuring and pricing finite risk insurance and reinsurance products. From 1990 to 1992, Mr. Lackner was an investment banker at Donaldson, Lufkin & Jenrette Securities Corp., where he advised both property/casualty and life insurance companies on strategic acquisitions, divestitures and capital markets-related activities, including IPOs, debt offerings and restructurings. Mr. Lackner received his BBA in Banking and Finance from Hofstra University in 1989. Mr. Lackner also serves as a director of American Safety Insurance Holdings, Ltd. (NYSE:ASI).

Joseph Platt, Jr. has been a director since July 2004. Currently, Mr. Platt is a partner at Amarna Corporation, LLC, a private investment company. In 1971, Mr. Platt joined Johnson and Higgins, or J&H. In 1990, Mr. Platt was appointed a director of J&H. Mr. Platt’s career at J&H spanned 26 years until the sale of J&H to Marsh & McLennan Companies in March 1997. While at J&H, Mr. Platt’s responsibilities ranged from trainee to executive vice president responsible for United States and Canada and the firm’s marketing and sales activities throughout the world. He was a member of the Executive and Operating Committees of J&H. Mr. Platt received his BA from Manhattan College in 1968 and his JD from Fordham University Law School in 1971. Mr. Platt also attended Harvard Business School’s Advanced Management Program in 1983. Mr. Platt is active in the community and

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has served as Trustee to a number of organizations. He serves as chairman of the Board of Directors of Restaurant Insurance Holdings, Inc. He is on the Board of Jones Brown, a private Canadian insurance broker, and has served as an independent Trustee of the BlackRock Liquidity Funds since 1999. He is a member of the New York State Bar Association.

Daniel Roitman is an alternate Director appointed by Mr. Einhorn and has been an alternate Director since September 2004. Mr. Roitman has served as Chief Operating Officer of Greenlight Capital, Inc. since January 2003 and is a partner. From 1996 through 2002 Mr. Roitman worked at Goldman Sachs. Before joining Goldman Sachs, Mr. Roitman was employed as a member of the New York technology practice at Andersen Consulting, now Accenture. Mr. Roitman earned a B.S. with distinction in electrical engineering from Cornell University in 1991 and a M.Eng. in 1992. Mr. Roitman graduated with distinction from the New York University Stern School of Business in 2002, earning an MBA in Finance.

As an alternate Director Mr. Roitman is entitled to receive notice of all meetings of Directors and of all meetings of Committees of the Board of which his appointer is a member, to attend and vote at every such meeting at which the Director appointing him is not personally present, and generally to perform all the functions of his appointer as a Director in his absence. An alternate Director ceases to be an alternate Director if written notice to that effect is given to the Company by his appointer. Our Articles provide that an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.

Composition of the Board of Directors

Our Board of Directors is currently comprised of six directors, one of whom has appointed an alternate director.

Our Board of Directors reviewed the materiality of any relationship each our six directors has or had with our company either directly or indirectly through another organization. The criteria applied included the director independence requirements set forth under the Nasdaq Stock Market Rules and with respect to the Audit Committee, the SEC’s independence rules. Based on this review, our Board of Directors has determined that Messrs. Brooks, Isaacs, Lackner and Platt are independent directors and that Messrs. Goldberg and Einhorn, as well as Mr. Roitman are not independent directors.

Board Committees

There are currently five committees of our Board of Directors: the Audit Committee, the Compensation Committee, the Finance Committee, the Nominating and Governance Committee and the Underwriting Committee.

Audit Committee

Our Audit Committee is composed of Messrs. Brooks, Isaacs and Lackner. Upon pricing of this offering, all members of the Audit Committee will be ‘‘independent’’ as defined under The NASDAQ Stock Market and SEC rules. Each member of the Audit Committee is financially literate. In addition, Mr. Brooks will serve as chairman of the Audit Committee and the ‘‘financial expert’’ within the meaning of Item 401(h) of Regulation S-K of the Securities Act and has the financial sophistication under The NASDAQ Stock Market Rules. Our Audit Committee will approve in advance all audit services to be provided to us and all permissible non-audit services, other than de minimus non-audit services, to be provided to us by our independent auditors.

Compensation Committee

The Compensation Committee is composed of Messrs. Brooks, Isaacs and Platt. All of these members of our Compensation Committee are ‘‘independent’’ as defined under The NASDAQ Stock Market rules. The purpose of our Compensation Committee is to discharge the responsibilities of our

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Board of Directors relating to compensation of our executive Officers. Our Board of Directors has adopted a charter for our Compensation Committee. Our Compensation Committee, among other things, assists our Board of Directors in ensuring that a proper system of compensation is in place to provide performance-oriented incentives to management, and makes recommendations to the Board with respect to incentive-compensation plans and equity-based plans.

Finance Committee

The Finance Committee is composed of Messrs. Einhorn, Goldberg and Lackner. The Finance Committee, among other things, provides advice and assistance to our Board of Directors concerning proposed issuances of equity, debt or other securities and proposed credit and similar facilities, including an initial public offering in the United States of America or any other appropriate jurisdiction, reviews the adequacy of existing financing facilities, and reviews short-term and long-term financing plans.

Nominating and Governance Committee

The Nominating and Governance Committee is composed of Messrs. Platt, Isaacs, and Lackner. The Nominating and Governance Committee has responsibility for identifying individuals qualified to become board members consistent with the criteria established by the Board of Directors from time to time, recommending director nominees to the Board of Directors, recommending corporate governance guidelines to the Board of Directors and overseeing the evaluation of the Board of Directors and our management.

Underwriting Committee

The Underwriting Committee is composed of Messrs. Brooks, Einhorn, Goldberg, Lackner and Platt. The Underwriting Committee, among other things, advises our Board of Directors and management concerning the establishment and review of our underwriting policies and guidelines, oversees our underwriting process and procedures, monitors our underwriting performance and oversees our underwriting risk management exposure.

Code of Ethics

On or before pricing of this offering, we will adopt a written code of ethics applicable to our directors, officers and employees in accordance with the rules of The NASDAQ Stock Market and SEC. Our code of ethics will be designed to deter wrongdoing and to promote ethical conduct. The code of ethics will be published on our corporate website at www.greenlightre.ky.

Compensation Discussion and Analysis

Our performance-driven compensation policy consists of the following three components:


	•	base salary;


	•	bonuses; and


	•	stock incentive plan awards.

We use short-term compensation comprised of base salary and annual cash bonuses and long-term compensation comprised of deferred bonuses, stock options and restricted stock in an effort to align our employees’ and executives’ interests with those of our shareholders and to increase long-term growth in book value per share. We compensate our current executive officers, Messrs. Goldberg, Hedges and Courtis, whom we refer to as Named Executive Officers, according to the terms of their employment agreements.

Our Compensation Committee reviews all recommendations made with respect to discretionary compensation and approves all discretionary compensation decisions for our Named Executive Officers. No member of our Compensation Committee has ever been one of our officers or employees.

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Base Salary. We use base salary to recognize the experience, skills, knowledge, roles and responsibilities of our employees and executive officers. When establishing the 2006 base salaries of our Named Executive Officers, our Compensation Committee considered a number of factors including:


	•	the individual’s years of underwriting and actuarial experience;


	•	the functional role of the position;


	•	the level of the individual’s responsibility;


	•	our ability to replace the individual; and


	•	the limited number of well-qualified candidates available in or willing to relocate to the Cayman Islands.

Base salaries, which may include a living allowance, are reviewed by the Compensation Committee for possible increases at least every three years.

Bonuses. We use bonuses to reward individual and company performance. We expect our bonuses to be highly variable from year to year. Our Compensation Committee determines each Named Executive Officer’s target bonus, expressed as a percentage of his base salary. As an inducement for our Named Executive Officers to relocate to the Cayman Islands and to join our company, we agreed to pay guaranteed and special one-time bonuses for 2006.

Mr. Goldberg’s employment agreement specifies a target bonus of 100% of base salary. Mr. Hedges’ employment agreement specifies a target bonus of 100% of base salary which is guaranteed for 2006. Mr. Hedges also received a signing bonus of $50,000 in January 2006. Mr. Courtis’ employment agreement specifies a target bonus of 50% of base salary with a guaranteed minimum bonus for 2006 of $83,333. None of the Named Executive Officers has a guaranteed minimum bonus for 2007.

Our Compensation Committee approved a bonus program effective for 2007 in which our Named Executive Officers will participate. Under this bonus program, each employee’s target bonus consists of two components:


	•	a quantitative component based on return on deployed equity; and


	•	a discretionary component based on a qualitative assessment of each employee’s performance.

Compensation under our 2007 bonus program is based on the ultimate underwriting returns of our business measured over a multi-year period rather than premium targets or estimated underwriting profitability for the year in which we initially underwrote the business.

Each employee will be assigned a quantitative bonus participation percentage that may be adjusted annually and will be based on return on deployed equity compared to target return on deployed equity for all contracts bound by us during a particular year or underwriting year. The remaining portion of the target bonus will be determined based on a qualitative assessment of the employee’s performance in relation to certain pre-established performance goals.

An employee must be employed by us or one of our subsidiaries on the last day of the year in order to receive the discretionary component of his or her bonus for the year. All discretionary bonuses will be paid no later than March 15 ^th of the following year.

The Compensation Committee has the discretion to reduce or increase any employee’s bonus award based on his or her individual performance.

Stock Incentive Plan Awards. In 2004, we adopted a stock incentive plan. We have historically granted stock options to our employees including our Named Executive Officers, at employment inception that vest ratably over three years. Pursuant to the terms of his employment agreement, Mr. Goldberg also receives annual option grants. On October 5, 2006, our Board of Directors granted Mr. Goldberg an additional 10,000 options that were not contemplated by his employment agreement. The Compensation Committee determined to grant these additional options to Mr. Goldberg after his

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2006 option grant was delayed, and the fair market value of the Class A Ordinary Shares, and thus Mr. Goldberg’s exercise price, increased. The additional option award was thus intended to compensate Mr. Goldberg for the diminution in value of his 2006 option grant and to recognize and reward his extraordinary performance throughout the year.

The Compensation Committee has decided that over the long term, restricted stock will be the preferred form of equity compensation as it better aligns management with long-term shareholder value creation. The Compensation Committee has established the target value of restricted stock grants that each Named Executive Officer may receive. The actual value of restricted stock grants will depend upon each Named Executive Officer’s performance, as determined by the Compensation Committee and may be less than or greater than the target value. The restricted stock will be subject to three-year cliff vesting. Unvested restricted shares will be forfeited if a Named Executive Officer terminates employment for any reason.

Compensation Mix and Other Compensation

We compensate our Named Executive Officers in the following ways:


	•	base salary including living expenses;


	•	bonuses, a portion of which will be deferred beginning in 2007; and


	•	stock incentive awards, including stock options and restricted stock.

In general, we seek to pay salaries and living expenses that are commensurate with the salaries and living expenses paid by other reinsurance companies to executives in similar positions. However, as we are the first global reinsurer in the Cayman Islands, no direct comparisons may be made. In addition, our Named Executive Officers receive bonus awards. Beginning in 2007, a significant part of each Named Executive Officer’s bonus will be deferred until the underwriting results of our reinsurance business are more fully developed. In addition, we anticipate granting awards of restricted stock subject to three year cliff vesting in order to retain our Named Executive Officers and align their interests with those of our shareholders. We expect long-term compensation or the deferred portion of our bonus program and stock incentive plan awards to represent the majority of each Named Executive Officer’s compensation.

Our Named Executive Officers are currently parties to employment agreements that will continue in effect following this offering. We do not contemplate amending those agreements. In addition, we intend to continue to maintain our current benefits and perquisites for our executive officers. However, the Compensation Committee may revise, amend or add to these benefit programs at its discretion.

Because we are not a U.S. taxpayer, our compensation program has not been designed to comply with Section 162(m) of the Code.

Ordinary Share Ownership Guidelines

We believe that broad-based share ownership by our employees, including our Named Executive Officers, is the most effective method to deliver superior shareholder returns by increasing the alignment between the interests of our employees and our shareholders. We do not, however, have a formal requirement for share ownership by any group of employees.

Change in Control and Severance

Upon termination of employment or a change in control, the Named Executive Officers may receive accelerated vesting of awards granted under our stock incentive plan and severance payments under their employment agreements.

Under our stock incentive plan, the Compensation Committee generally has the discretion to vest unvested awards upon a change in control as described in ‘‘—The Stock Incentive Plan’’. This discretion allows the Compensation Committee to determine at the time of the change in control

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whether, and the extent to which, additional vesting is warranted. In addition, Mr. Goldberg’s option agreement provides for accelerated vesting upon his termination of employment under certain circumstances, including in connection with a change in control. For more details on these termination provisions, see ‘‘Potential Payments upon Termination or Change in Control.’’

Upon termination of employment, our Named Executive Officers are eligible for severance payments which, depending upon the circumstances surrounding termination, may include:


	•	a cash payment equal to one year’s annual salary and bonus;


	•	a pro-rated target bonus for the year of termination; and


	•	one year of continued health benefits.

The amount of our severance obligations is designed to be competitive with the amounts payable to executives in similar positions at similar companies. Severance payments are made monthly and are contingent upon the Named Executive Officer’s continued compliance with the restrictive covenants in his employment agreement. Mr. Goldberg’s agreement contains a special provision whereby he may terminate his employment and receive severance benefits in the event of a change in control. We agreed to this provision in consideration of the risk Mr. Goldberg took by joining us in our formation stages and our recognition of his willingness to take the risk and his confidence in both our overall strategy and the strength of our Board of Directors.

Summary Compensation Table

The following Summary Compensation Table summarizes the total compensation awarded to our Named Executive Officers in 2006.


Name and Principal Position	Year		Salary ($)		Bonus ($)			Stock Awards ($)		Option Awards ($) ⁽⁵⁾		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($) ⁽⁶⁾			Total ($)
Leonard Goldberg, CEO		2006		500,000			⁽¹ ⁾		⁽⁴ ⁾		1,469,246		—		—		124,268	⁽⁷ ⁾		2,093,514
Barton Hedges, CUO		2006		450,000		500,000	^(1,2,3 ⁾		⁽⁴ ⁾		898,264		—		—		76,268	⁽⁸ ⁾		1,924,532
Tim Courtis, CFO		2006		166,667		83,333	^(1,2 ⁾		⁽⁴ ⁾		208,712		—		—		77,268	⁽⁹ ⁾		535,980


⁽¹⁾	We have not determined the amounts of the bonuses that we will pay to our Named Executive Officers for 2006. The Compensation Committee expects to determine total bonus amounts for our Named Executive Officers on or before February 28, 2007 and, if required, we will file a current report on Form 8-K with this information when those amounts are determined.

⁽²⁾

In accordance with the terms of their employment agreements, Mr. Hedges and Mr. Courtis are guaranteed a bonus of $450,000 and $83,333, respectively, for 2006. Mr. Courtis’ guaranteed bonus amount was calculated by multiplying $125,000 (his target bonus of 50% of base salary) by 2/3 (the portion of the year he was employed by us in 2006). These guaranteed bonus amounts are included in this column.


⁽³⁾	Includes a signing bonus of $50,000 which Mr. Hedges received in accordance with the terms of his employment agreement.


⁽⁴⁾	We have not determined the amounts, if any, of the stock awards that we will grant to our Named Executive Officers for performance related to 2006. The Compensation Committee expects to determine those amounts, if any, on or before February 28, 2007 at which time the awards, if any, will be granted.


⁽⁵⁾	All stock options were granted under our stock incentive plan at fair value on the date of grant. We account for the stock incentive plan under SFAS No. 123R, ‘‘Share Based Payments.’’ The value reported above under Option Awards is the amount we expensed during 2006 for each Named Executive Officer’s stock option award.


⁽⁶⁾	The amounts shown in this column include the amounts we contributed to our defined contribution pension plan on behalf of each Named Executive Officer.


⁽⁷⁾	Includes a $120,000 housing allowance and $4,268 that we contributed to our defined contribution pension plan on behalf of Mr. Goldberg.


⁽⁸⁾	Includes a $72,000 housing allowance and $4,268 that we contributed to our defined contribution pension plan on behalf of Mr. Hedges.


⁽⁹⁾	Includes a $25,000 relocation allowance, a $48,000 living allowance and $4,268 that we contributed to our defined contribution pension plan on behalf of Mr. Courtis.

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Grants of Plan Based Awards

The Compensation Committee, or our Board of Directors acting as the Compensation Committee, granted stock option awards under our stock incentive plan to our Named Executive Officers in 2006. We did not grant any restricted stock awards to any of our Named Executive Officers in 2006. Set forth below is information regarding stock option awards granted in 2006.


			Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards						All other Stock Awards: Number of Shares of Stock or Units (#)		All other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($ / Sh)		Grant Date Fair Value of Stock and Option Awards
Name	Grant Date	Approval Date	Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)						Exercise or Base Price of Option Awards ($ / Sh)		Grant Date Fair Value of Stock and Option Awards
Leonard Goldberg	Oct. 5, 2006	Oct. 5, 2006		—		—		—		—		—		—		—		110,000		13.48		761,200
Barton Hedges	Jan. 2, 2006	Dec. 28, 2005		—		—		—		—		—		—		—		250,000		11.63		1,462,500
Tim Courtis	May 1, 2006	March 22, 2006		—		—		—		—		—		—		—		75,000		12.72		504,000

Outstanding Equity Awards at Fiscal Year-End


	Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exerciseable		Number of Securities Underlying Unexercised Options (#) Unexerciseable			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Leonard Goldberg		166,667		333,333	⁽¹ ⁾		—		11.10	Aug. 15, 2015		—		—		—		—
Leonard Goldberg		—		110,000	^(2,5 ⁾		—		13.48	Oct. 5, 2016		—		—		—		—
Barton Hedges		—		250,000	^(3,5 ⁾		—		11.63	Jan. 2, 2016		—		—		—		—
Tim Courtis		—		75,000	^(4,5 ⁾		—		12.72	May 1, 2016		—		—		—		—


⁽¹⁾	166,667 of the Class A Ordinary Shares become exercisable on August 15, 2007 and the remaining 166,666 shares become exercisable on August 15, 2008.

⁽²⁾

Mr. Goldberg was granted an option to purchase 110,000 Class A Ordinary Shares, 100,000 of which were granted in accordance with the terms of his employment agreement and another 10,000 of which were granted at the discretion of the Compensation Committee. The option becomes exercisable with respect to 36,667 shares on October 5, 2007, another 36,667 shares on October 5, 2008 and the remaining 36,666 shares on October 5, 2009.


⁽³⁾	The option becomes exercisable with respect to 83,334 Class A Ordinary Shares on January 2, 2007, and with respect to an additional 83,333 shares on each of January 2, 2008 and January 2, 2009.


⁽⁴⁾	The option becomes exercisable with respect to 25,000 Class A Ordinary Shares on each of May 1, 2007, May 1, 2008 and May 1, 2009.


⁽⁵⁾	The options reported in this column have also been reported in the Summary Compensation Table under the ‘‘Option Awards’’ column.

Option Exercises and Stock Vested

No stock options were exercised during 2006. To date, no Named Executive Officer has received a restricted stock award.

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Equity Compensation Plan Information


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders		—			—		—
Equity compensation plans not approved by securityholders		1,537,668		$	11.31		135.332
Total		1,537,668		$	11.31		135.332

Pension Benefits

None of our Named Executive Officers participates in a qualified or non-qualified defined benefit pension plan sponsored by us. In accordance with the National Pensions Law (2000 Revision) of the Cayman Islands, all Cayman Islands-based employers are required to make a contribution to a pension plan for each person they employ. As of June 1, 2006, we adopted a defined contribution pension plan. The amounts contributed to this plan on behalf of the Named Executive Officers are set forth in the table below.

Nonqualified Deferred Compensation


Name	Executive Contributions in Last Fiscal Year ($)		Registrant Contributions in Last Fiscal Year ($) ⁽¹⁾		Aggregate Earnings in Last Fiscal Year ($) ⁽²⁾	Aggregate Withdrawals /Distributions ($)	Aggregate Balance at Last Fiscal Year-End ($) ⁽²⁾
Leonard Goldberg		—		4,268				4,268
Barton Hedges		—		4,268				4,268
Tim Courtis		—		4,268				4,268


⁽¹⁾	The amounts provided in this column represent the amount of the contributions we made on behalf of each Named Executive Officer to our defined contribution pension plan. These amounts are also reported as compensation in the Summary Compensation Table under the ‘‘All Other Compensation’’ column.


⁽²⁾	Earnings are measured based on the Named Executive Officer’s individual investment selections. The aggregate earnings and aggregate balance data for each Named Executive Officer under the defined contribution pension plan is not available at this time.

Employment Agreements

The following paragraphs summarize the employment agreements of our Named Executive Officers.

Chief Executive Officer

Leonard. Goldberg. We have entered into an employment agreement with Leonard Goldberg under which he serves as our Chief Executive Officer for a term beginning on August 15, 2005 and ending on August 15, 2008. Under the terms of his employment agreement, Mr. Goldberg is entitled to receive an annual salary of not less than $500,000, subject to increase as determined by our Board of Directors, and an annual performance-based bonus with a target equal to 100% of base salary which, in 2007 and subsequent years, will be under the bonus program described above. Mr. Goldberg receives a Cayman Islands housing allowance of $10,000 per month and is entitled to participate in our employee benefit plans and insurance programs. Mr. Goldberg is also reimbursed for certain tax preparation expenses. Under the terms of his employment agreement, on August 15, 2005, Mr. Goldberg was granted an option to acquire 500,000 Class A Ordinary Shares. On October 5, 2006, Mr. Goldberg was granted an additional option to acquire 110,000 Class A Ordinary Shares, 100,000

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of which were granted pursuant to the terms of his employment agreement and a further 10,000 of which were granted at the discretion of the Compensation Committee. Commencing in 2007, on each August 15 on which Mr. Goldberg is employed by us, he will be granted an additional option to acquire 50,000 Class A Ordinary Shares. All shares subject to an option must have an exercise price equal to the fair market value per share on the date of grant.

Mr. Goldberg is subject to a six-month post-termination non-competition restriction and a one-year post-termination non-solicitation restriction in addition to perpetual confidentiality and non-disparagement requirements. The non-competition restriction does not apply if Mr. Goldberg’s employment terminates at the end of its term under circumstances that do not entitle him to receive severance payments.

Executive Officers

Barton Hedges. We have entered into an employment agreement effective January 10, 2006 with Barton Hedges under which he serves as our President and Chief Underwriting Officer. The employment agreement does not have a fixed term. Under the terms of his employment agreement, Mr. Hedges is entitled to receive an annual salary of not less than $450,000, subject to increase as determined by our Board of Directors, and an annual performance-based bonus with a target equal to 100% of base salary which, in 2007 and subsequent years, will be under the bonus program described above. For 2006, Mr. Hedges will receive a guaranteed bonus equal to 100% of base salary. Mr. Hedges receives a Cayman Islands housing allowance of $6,000 per month and is entitled to participate in our employee benefit plans and insurance programs. Mr. Hedges is also reimbursed for certain tax preparation expenses. Under the terms of his employment agreement, on January 2, 2006, Mr. Hedges received an option to acquire 250,000 Class A Ordinary Shares with an exercise price equal to the fair market value per share on the date of grant. In January 2006, Mr. Hedges received a signing bonus of $50,000.

Tim. Courtis. We have entered into an employment agreement effective May 1, 2006 with Tim Courtis under which he serves as our Chief Financial Officer. The employment agreement does not have a fixed term. Mr. Courtis receives an annual base salary of not less than $250,000, subject to increase as determined by our Board of Directors, and an annual performance-based bonus with a target equal to 50% of base salary which, in 2007 and subsequent years, will be under the bonus program described above. For 2006, Mr. Courtis will receive a guaranteed minimum bonus equal to $83,333. Mr. Courtis receives a Cayman Islands housing allowance of $6,000 per month and is entitled to participate in our employee benefit plans and insurance programs. Upon commencement of his employment, Mr. Courtis received a relocation allowance of $25,000. Under the terms of his employment agreement, on May 1, 2006, Mr. Courtis received an option to acquire 75,000 Class A Ordinary Shares with an exercise price equal to the fair market value per share on the date of grant.

Mr. Hedges and Mr. Courtis are also subject to a six-month post-termination non-competition restriction and a one-year post-termination non-solicitation restriction in addition to perpetual confidentiality and non-disparagement requirements. The non-competition and non-solicitation restrictions in Mr. Hedges’ agreement are not applicable if there is a dissolution of Greenlight Reinsurance, Ltd.

The Stock Incentive Plan

General

On August 11, 2004, we adopted the Greenlight Capital Re, Ltd. 2004 stock incentive plan, which was amended and restated on August 15, 2005, which we refer to as, the stock incentive plan. The general purpose of the stock incentive plan is to enable us and our affiliates to retain the services of eligible employees, directors and consultants through the grant of stock options, stock bonuses and rights to acquire restricted stock (collectively referred to as the awards).

Subject to adjustment in accordance with the terms of the stock incentive plan, 1,273,000 Class A Ordinary Shares are available for the grant of awards under the stock incentive plan. The maximum

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number of Class A Ordinary Shares with respect to which options may be granted to any participant during any calendar year is 500,000 Class A Ordinary Shares. As of December 31, 2006, 1,137,668 options have been granted under the stock incentive plan. On January 8, 2007, our Board of Directors approved an increase in the stock incentive plan’s share reserve from 1,273,000 Class A Ordinary Shares to 2,000,000 Class A Ordinary Shares, which remains subject to approval by our shareholders. The record date for the extraordinary meeting of shareholders was established as January 8, 2007. The meeting date is yet to be determined.

Administration

The Compensation Committee administers the stock incentive plan and has broad discretion, subject to the terms of the stock incentive plan, to determine which eligible participants will be granted awards, prescribe the terms and conditions of awards, establish rules and regulations for the interpretation and administration of the stock incentive plan and adopt any modifications, procedures or sub-plans that may be necessary or desirable to comply with the laws of foreign countries in which we or our affiliates operate to assure the viability of awards granted under the stock incentive plan.

Options

Options are subject to such terms and conditions as the Compensation Committee deems appropriate. The Compensation Committee determines the per share exercise price of options which will not be less than 100% of the fair market value of the Class A Ordinary Shares on the date of grant. Options expire ten years from the date of grant and vest and become exercisable as determined by the Compensation Committee on the date of grant.

Unless otherwise provided in an individual option agreement and subject to the stock incentive plan’s adjustment provision, a change in control of the Company will not affect any options granted under the stock incentive plan. For purposes of the stock incentive plan, a change in control generally means any person or group becomes the beneficial owner of 51% or more of the Class A Ordinary Shares, or the Company consolidates or merges with or into any other person or group or the Company sells or otherwise disposes of all or substantially all of its assets and the assets of its subsidiaries.

Restricted Stock Awards

Restricted stock awards are subject to such terms and conditions as the Compensation Committee deems appropriate as set forth in individual award agreements. Participants may be entitled to vote the restricted stock while it is held in our custody. The Compensation Committee determines the purchase price of restricted Class A Ordinary Shares, which will not be less than the par value per Class A Ordinary Share ($0.10).

Stock Bonus Awards

Stock bonus awards are subject to such terms and conditions as the Compensation Committee deems appropriate. To the extent permitted so that the Class A Ordinary Shares awarded will be treated as fully paid, a stock bonus may be awarded in consideration for past services rendered.

Adjustments

The Compensation Committee will determine the appropriate adjustments to be made in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available with respect to an award upon the occurrence of certain events affecting our capitalization such as a dividend or other distribution, recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, spin-off or sale, transfer or disposition of all or substantially all of our assets or stock. For example, the Compensation Committee may adjust the number of Class A Ordinary Shares subject to outstanding awards and the exercise price of outstanding options.

Amendment/Termination

Our Board of Directors may amend the stock incentive plan at any time. Except as provided in the stock incentive plan, no amendment will be effective unless approved by our shareholders to the

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extent shareholder approval is necessary to satisfy any applicable law or any national securities exchange listing requirements and no amendment will be made that would adversely affect rights under an award previously granted under the stock incentive plan without the consent of the affected participants. The Compensation Committee may suspend or terminate the stock incentive plan at any time.

Unless sooner terminated, the stock incentive plan will terminate on August 10, 2014.

Withholding

We have the right to require any participant to pay to us any amount of taxes which we or one of our affiliates will be required to withhold with respect to any award.

Section 409A

To the extent applicable, we intend for the stock incentive plan to comply with Section 409A of the Code, and we will interpret and administer it accordingly.

Potential Payments Upon Termination or Change in Control

Employment Agreements

In the event that we terminate Mr. Goldberg’s employment without cause (as defined below), Mr. Goldberg terminates for good reason (as defined below) or his employment terminates at the end of the term of his employment agreement without an offer from us of continued employment on substantially similar terms, we will pay Mr. Goldberg a lump sum payment as soon as practicable following termination equal to accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming targets had been achieved. In addition, we will pay him as severance in twelve monthly installments the sum of his annual base salary and target bonus provided that he does not breach the restrictive covenants in his employment agreement. These payments will be delayed for six months if the Board of Directors determines that Mr. Goldberg is a ‘‘specified employee’’ within the meaning of Section 409A of the Code.

If Mr. Goldberg’s employment terminates as a result of his death or permanent retirement from the reinsurance industry, Mr. Goldberg and/or his beneficiary, legal representatives or estate are entitled to accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming targets had been achieved, as soon as practicable following termination. In addition, if Mr. Goldberg’s employment terminates as a result of his death, his spouse and dependents are entitled to receive health benefits for one year. We may terminate Mr. Goldberg’s employment agreement upon thirty days’ prior written notice if he becomes disabled. If Mr. Goldberg’s employment terminates because of disability (as defined below), in addition to the accrued but unpaid compensation discussed above and pro-rated bonus, Mr. Goldberg is entitled to receive base salary and continued health benefits for the lesser of one year or until Mr. Goldberg is eligible to receive long term disability benefits under any long term disability plan that we may establish. Continued base salary payments will be paid in accordance with our regular payroll schedule. If we are not able to provide Mr. Goldberg, his spouse, or dependents with continued participation in our health plan, we will pay Mr. Goldberg for the cost of such benefits which does not exceed the amount which we would have paid if they had been entitled to participate. The cost of such benefits will be paid in accordance with the procedures we establish.

We may require that Mr. Goldberg execute a release of claims against us as a condition for compensation or benefits payable upon any termination of employment.

In the event that we terminate Mr. Courtis’ or Mr. Hedges’ employment without cause, as defined below, or either Named Executive Officer terminates his employment for good reason, as defined

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below), we will pay him accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which he was terminated assuming targets had been achieved, as soon as practicable following termination. In addition, we will pay him severance in twelve monthly installments equal to the sum of his annual base salary and target bonus assuming targets had been achieved, provided that he does not breach the restrictive covenants in his employment agreement. Because he would need to relocate upon his termination from the Company, Mr. Courtis is also entitled to receive an additional $25,000 lump sum payment at the same time he receives his first monthly severance payment. Payments will be delayed for six months if the Board of Directors determines that Mr. Courtis or Mr. Hedges is a ‘‘specified employee’’ within the meaning of Section 409A of the Code.

If either Mr. Courtis’ or Mr. Hedges’ employment terminates as a result of his death, his beneficiary, legal representatives or estate are entitled to accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming targets had been achieved, as soon as practicable following termination. In addition, his spouse and dependents are entitled to receive health benefits for one year. We may terminate Mr. Courtis’ or Mr. Hedges’ employment agreement upon thirty days’ prior written notice if he becomes disabled. If Mr. Courtis’ or Mr. Hedges’ employment terminates because of disability, he is entitled to accrued but unpaid base salary, bonus, and vacation pay; a pro-rated portion of the target bonus that would have been paid for the year in which his employment was terminated assuming targets had been achieved, as soon as practicable following termination; and base salary and continued health benefits for the lesser of one year or until he is eligible to receive long term disability benefits under any long term disability plan that we may establish. Continued base salary payments will be paid in accordance with our regular payroll schedule. If we are not able to provide either Mr. Courtis or Mr. Hedges, their spouses, or dependents with continued participation in our health plan, we will pay for the cost of such benefits which does not exceed the amount which we would have paid if they have been entitled to participate. The cost of such benefits will be paid in accordance with the procedures we establish. If Mr. Hedges’ employment is terminated without cause in connection with a dissolution of Greenlight Reinsurance, Ltd. which occurs prior to January 10, 2009, he is entitled to receive accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming targets had been achieved, as soon as practicable following termination. In addition, under such circumstances, Mr. Hedges will receive a lump sum cash payment on the same date severance would otherwise be payable equal to the greater of the sum of his annual base salary and target bonus for the year of termination or the aggregate sum of base salary which Mr. Hedges would have received from the date of termination through January 10, 2009.

We may require that Mr. Courtis or Mr. Hedges execute a release of claims against us as a condition for compensation or benefits payable upon any termination of employment.

For purposes of the employment agreements, cause generally means:


	•	the Named Executive Officer’s drug or alcohol use which impairs his ability to perform his duties;


	•	conviction by a court, or plea of ‘‘no contest’’ or guilty to a criminal offense;


	•	engaging in fraud, embezzlement or any other illegal conduct with respect to us and/or any of our affiliates;


	•	willful violation of the restrictive covenants set forth in his employment agreement;


	•	willful failure or refusal to perform the duties under his employment agreement; or


	•	breach of any material provision of his employment agreement or any of our or any of our affiliate’s policies related to conduct which is not cured, if curable, within ten days after written notice is given.

For purposes of the employment agreements, good reason generally means any of the following events which is not cured, if curable, within 30 days after the Named Executive Officer has given notice thereof:

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	•	any material and adverse change to the Named Executive Officer’s duties or authority which are inconsistent with his title and position;


	•	a reduction of the Named Executive Officer’s base salary; or


	•	a failure by us to comply with any other material provisions of the employment agreement.

In addition to the above provisions, the definition of ‘‘good reason’’ in Mr. Goldberg’s employment agreement also includes a diminution of his title or position; or a change in control (change in control has the same definition as in the stock incentive plan discussed above).

For purposes of the employment agreements, disability generally means if, as a result of incapacity due to physical or mental illness, the Named Executive Officer is substantially unable to perform his duties for an entire period of at least 90 consecutive days or 180 non-consecutive days within any 365-day period.

Stock Incentive Plan and Options Awarded Thereunder

Under the terms of the stock incentive plan, unless an option award provides otherwise, upon termination other than for cause death or disability (as defined below), all unvested options terminate and the participant may exercise his or her vested options within the period ending upon the earlier of three months following termination or ten years from the date of grant of the option (i.e., the option’s expiration date). Unless an option award provides otherwise, upon termination for cause, all vested and unvested options will terminate. Unless an option award provides otherwise, upon termination for death or disability, all unvested options will terminate, and the vested portion of the option may be exercised for the period ending upon the earlier of twelve months following termination or the option’s expiration date.

Under the terms of the option grants which Mr. Goldberg received in 2005 and 2006, any unvested portion of each option award vests upon our termination of his employment without cause, (as defined in his employment agreement, see description above), or Mr. Goldberg’s termination of employment for good reason (as defined in his employment agreement, see description above), or when his employment period expires if we do not offer Mr. Goldberg continued employment on substantially similar terms, and the option will remain exercisable until the expiration date. Upon Mr. Goldberg’s termination for death or disability (as defined in his employment agreement, see description above), any unvested portion of the option will terminate and any vested portion of the option will remain exercisable until the expiration date. If we terminate Mr. Goldberg’s employment due to his permanent retirement from the reinsurance industry, any unvested portion of the option will terminate, and the vested portion will remain exercisable until the tenth anniversary of the date of grant, unless Mr. Goldberg becomes employed by an entity which competes with any aspect of our or our affiliate’s business, in which case, the option will immediately terminate. If we terminate Mr. Goldberg’s employment for cause, all vested and unvested portions of the option will terminate. If Mr. Goldberg’s employment terminates under any other circumstances, the unvested portion of the option will terminate and the vested portion will remain exercisable for ninety days, but no later than the expiration date.

Under the terms of the option grants awarded to Mr. Courtis and Mr. Hedges, upon termination of employment, the awards remain exercisable in accordance with the terms of the stock incentive plan, except that upon termination other than for cause, death, or disability each as defined below, all vested options remain exercisable for the period ending upon the earlier of ninety days or the expiration date.

Upon a change in control (as defined in the stock incentive plan, see description above), the Compensation Committee has the discretion to vest unvested awards. In the tables below, it is assumed that the Compensation Committee exercised this discretion.

For purposes of the stock incentive plan, ‘‘cause’’ generally means: if the participant is a party to an employment agreement or other agreement with us or an affiliate and such agreement provides for a definition of cause, the definition contained in the agreement, or, if no such agreement or definition exists, cause means a participant’s:

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	•	material breach of his employment or other agreement;


	•	continued failure to satisfactorily perform assigned job responsibilities or to follow the reasonable instructions of his superiors, including, without limitation, the Board of Directors;


	•	commission of a crime constituting a criminal offense or felony (or its equivalent) or other crime involving moral turpitude; or


	•	material violation of any material law or regulation or any policy or code of conduct adopted by the Company or engaging in any other form of misconduct which, if it were made public, could reasonably be expected to adversely affect our or an affiliate’s business reputation or affairs.

For purposes of the stock incentive plan, ‘‘disability’’ generally means, if the participant is a party to an employment agreement or other agreement with us or an affiliate and the agreement provides for a definition of disability, the definition contained in the agreement, or, if no such agreement or definition exists, disability will mean the failure of the participant to perform his duties due to physical or mental incapacity as determined by the Compensation Committee.

Assuming Mr. Goldberg’s employment terminates under each of the circumstances described above on December 31, 2006, such payments and benefits have an estimated value of:


Event	Pro- Rated Bonus			Total Cash Severance				Value of Medical Continuation			Value of Accelerated Equity ⁽³⁾
Termination without Cause, for Good Reason, or upon expiration of the Agreement without similar offer of employment		$	500,000		$	1,000,000	⁽¹ ⁾			N/A
Death		$	500,000			N/A			$	9,891		N/A
Permanent Resignation from the Reinsurance Industry		$	500,000			N/A				N/A		N/A
Disability		$	500,000		$	500,000	⁽² ⁾		$	9,891		N/A
Change in Control			N/A			N/A				N/A


⁽¹⁾	Calculated as the sum of base salary ($500,000) and target bonus ($500,000).


⁽²⁾	Calculated as one times base salary.


⁽³⁾	Calculated as the spread value of the options subject to accelerated vesting if a change in control occurred on December 31, 2006 but using the mid-point range in the offering.

Assuming Mr. Hedges’ employment terminates under each of the circumstances described above on December 31, 2006, such payments and benefits have an estimated value of:


Event	Pro- Rated Bonus			Total Cash Severance				Value of Medical Continuation			Value of Accelerated Equity ⁽³⁾
Termination without Cause or for Good Reason		$	450,000		$	900,000	⁽¹ ⁾			N/A		N/A
Death		$	450,000			N/A			$	7,381		N/A
Disability		$	450,000		$	450,000	⁽² ⁾		$	7,381		N/A
Change in Control			N/A			N/A				N/A
Termination without Cause in Connection with Dissolution of Greenlight Reinsurance, Ltd.		$	450,000		$	912,329	⁽⁴ ⁾			N/A		N/A


⁽¹⁾	Calculated as the sum of base salary ($450,000) and target bonus ($450,000).


⁽²⁾	Calculated as one times base salary.

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⁽³⁾	Calculated as the spread value of the options subject to accelerated vesting if a change in control occurred on December 31, 2006 but using the mid-point range in the offering.


⁽⁴⁾	Calculated as the aggregate base salary that would have been paid from January 1, 2007 through January 10, 2009.

Assuming Mr. Courtis’ employment terminates under each of the circumstances described above on December 31, 2006, such payments and benefits have an estimated value of:


Event	Pro- Rated Bonus			Total Cash Severance				Value of Medical Continuation			Value of Accelerated Equity ⁽³⁾
Termination without Cause or for Good Reason		$	83,904		$	400,000	⁽¹ ⁾			N/A		N/A
Death		$	83,904			N/A			$	9,891		N/A
Disability		$	83,904		$	250,000	⁽² ⁾		$	9,891		N/A
Change in Control			N/A			N/A				N/A


⁽¹⁾	Calculated as the sum of base salary ($250,000) and target bonus ($125,000) plus an additional $25,000.


⁽²⁾	Calculated as one times base salary.


⁽³⁾	Calculated as the spread value of the options subject to accelerated vesting if a change in control occurred on December 31, 2006 but using the mid-point range in the offering.

Director Compensation

We currently have four independent directors that qualify for compensation. Under our Articles, our directors may receive such compensation for their services as may be determined by the Board of Directors. Neither Mr. Einhorn nor Mr. Goldberg is eligible for compensation as a member of the Board of Directors. Prior to this offering, we paid our directors, excluding Mr. Einhorn and Mr. Goldberg, an annual retainer of $10,000, a per meeting fee of $2,000, and a per committee meeting fee of $1,000. A Board member who attends a meeting telephonically receives one-half of the scheduled fee. We reimburse directors for usual and customary expenses while on company business.

In addition to cash compensation, our directors received an initial grant of restricted stock when they joined the Board of Directors, and may receive additional equity grants at the discretion of the Board of Directors.

After becoming a public company, we expect to increase the compensation of our directors in order to provide them with compensation comparable to directors of publicly traded companies of similar size.

Director Compensation Table

The following Director Compensation Table summarizes the compensation paid to our directors in 2006.


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($) ⁽¹⁾		Option Awards ($) ⁽²⁾		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Alan Brooks		27,500		16,666		6,410		—		—		—		50,576
Ian Isaacs		29,000		16,666		6,410		—		—		—		52,076
Frank Lackner		26,500		16,666		6,410		—		—		—		49,576
Joseph Platt		30,000		16,666		6,410		—		—		—		53,076


⁽¹⁾	The aggregate number of stock awards held by each director on December 31, 2006 was 5,000. All awards were granted under our stock incentive plan. We account for the stock incentive plan under SFAS No. 123R, ‘‘Share-Based Payments.’’ The value reported above in the ‘‘Stock Awards’’ column is the amount we expensed during 2006 for each director’s stock award.

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⁽²⁾

The aggregate number of option awards held by each director on December 31, 2006 was 2,000. All awards were granted under our stock incentive plan. The full grant date fair value of the options computed in accordance with FAS No. 123R is $12,340 per director listed in this table. We account for the stock incentive plan under SFAS No. 123R, ‘‘Share-Based Payments.’’ The value reported above in the ‘‘Option Awards’’ column is the amount we expensed during 2006 for each director’s option award.

Directors’ Option Exercises and Stock Vested

On September 20, 2004, we granted restricted stock awards to four directors, Messrs. Platt, Lackner, Isaacs and Brooks, in respect of 5,000 Class A Ordinary Shares each under our stock incentive plan. The restricted stock awards vest one third on each of September 20, 2005, September 20, 2006 and September 20, 2007, subject to the director’s continued service. All of the shares subject to the restricted stock award will vest upon the director’s death or disability or upon a change in control (each as defined in the stock incentive plan, see description above). If the director’s service terminates for any other reason prior to the vesting dates, the unvested shares subject to the restricted stock award will be repurchased by us at par value and cancelled.

On February 28, 2006, we granted options to four directors, Messrs. Platt, Lackner, Isaacs and Brooks, to acquire 2,000 Class A Ordinary Shares with a per share exercise price of $12.05. Each of the options vests and becomes exercisable with respect to 666 shares on each of February 28, 2007, February 28, 2008 and February 28, 2009, subject to the director’s continued service with us.

The following table summarizes the options exercised and the Class A Ordinary Shares vested during 2006.


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($) ⁽¹⁾
Alan Brooks		—		—		1,666		21,158
Ian Isaacs		—		—		1,666		21,158
Frank Lackner		—		—		1,666		21,158
Joseph Platt		—		—		1,666		21,158


⁽¹⁾	The value realized on vesting represents the number of Class A Ordinary Shares vested multiplied by the adjusted book value of the shares on the month-end prior to the vesting date.

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PRINCIPAL SHAREHOLDERS

The following table shows information known to us with respect to the beneficial ownership of our Ordinary Shares as of January 15, 2007, and as adjusted to reflect the sale of Class A Ordinary Shares offered in the public offering under this prospectus and the concurrent private placement of Class B Ordinary Shares for:


	•	each person or group who beneficially owns more than 5% of our Ordinary Shares;


	•	each of our named Executive Officers;


	•	each of our directors; and


	•	all of our directors and Executive Officers as a group.

Beneficial ownership of shares is determined under the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment power with respect to all Ordinary Shares held by them. Class A Ordinary Shares subject to options and warrants currently exercisable or exercisable within 60 days of January 15, 2007, and not subject to repurchase as of that date, are deemed to be outstanding for calculating the percentage of outstanding shares of the person holding these options, but are not deemed to be outstanding for calculating the percentage of any other person. Applicable percentage ownership in the following table is based on 21,563,900 Ordinary Shares outstanding as of January 15, 2007. Unless otherwise indicated, the address of each of the named individuals is c/o 802 West Bay Road, The Grand Pavilion, Grand Cayman, KY1-1205, Cayman Islands.


						Beneficial ownership of principal shareholders after this offering and the concurrent private placement offering
Name and address of beneficial owner	Beneficial ownership of principal shareholders prior to the offering and the concurrent private placement					Excluding Exercise of Underwriters’ Option		Including Exercise of Underwriters’ Option
	Number		%			Number of Shares	%	Number of Shares	%
David Einhorn ⁽¹⁾		3,623,370		16.80	%
Montpellier International LDC ⁽²⁾		2,000,000		9.27	%
Keren Ohr Lanoar ‘‘B’’ ⁽³⁾		1,500,000		6.96	%
United Congregation Mesorah ⁽⁴⁾		1,500,000		6.96	%
Seneca Capital International Ltd. ⁽⁵⁾		1,250,000		5.80	%
Scoggin International Fund, Ltd. ⁽⁶⁾		1,100,000		5.10	%
Leonard Goldberg ⁽⁷⁾		246,667			*
Daniel Roitman		145,670			*
Barton Hedges ⁽⁸⁾		114,133			*
Joseph Platt ⁽⁹⁾		75,667			*
Frank D. Lackner ⁽¹⁰⁾		68,667			*
Alan Brooks ⁽¹¹⁾		61,667			*
Ian Isaacs ⁽¹²⁾		55,667			*
Tim Courtis		50,000			*
All directors and Executive Officers as a group (9 persons)		4,441,507		20.34	%


*	Represents less than 1% of the outstanding Ordinary Shares.


⁽¹⁾	Prior to this offering, David Einhorn owns 3,623,370 Class B Ordinary Shares. Generally, each Class B Ordinary Share is entitled to ten votes per share. However, Mr. Einhorn, together with his affiliates, is limited to voting the number of Class B Ordinary Shares equal to 9.5% of the total voting power of the total issued and outstanding Ordinary Shares.

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⁽²⁾	Montpellier International LDC, Q&H Corporate Services, Ltd. P.O. Box 1348GT, Grand Cayman, Cayman Islands.


⁽³⁾	6 Belilus Street, Jerusalem 94704, Israel


⁽⁴⁾	One State Street Plaza, 29 ^th Floor, New York, NY 10004


⁽⁵⁾	950 Third Avenue, 29 ^th Floor, New York, NY 10022


⁽⁶⁾	109 Shirley Street, P.O. Box EE-17758, Nassau, Bahamas


⁽⁷⁾	Includes 166,667 shares subject to options held by Mr. Goldberg.


⁽⁸⁾	Includes 83,333 shares subject to options held by Mr. Hedges.


⁽⁹⁾	Includes 667 shares subject to options held by Mr. Platt and 70,000 shares held by a partnership of which Mr. Platt is the general partner.


⁽¹⁰⁾	Includes 667 shares subject to options held by Mr. Lackner.


⁽¹¹⁾	Includes 667 shares subject to options held by Mr. Brooks.


⁽¹²⁾	Includes 667 shares subject to options held by Mr. Isaacs, 25,000 shares held in a trust of which Mr. Isaacs is a trustee, and 25,000 shares held in an individual retirement account.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Advisory Agreement

DME Advisors receives two forms of compensation:


	•	a 1.5% annual fee payable monthly based on net assets value of our investment account, excluding assets used to collateralize Regulation 114 Trusts; and


	•	performance compensation based on the appreciation in the value of our investment account equal to 20% of net profits calculated per annum, subject to a loss carryforward provision. The loss carryforward provision allows DME Advisors to earn a reduced incentive fee of 10% in any year after our investments managed by the investment advisor incur a loss, until all the losses are recouped and an additional amount equal to 150% of the loss is earned.

The advisory agreement requires that DME Advisors follow our investment guidelines and act in a manner that it considers fair and equitable in allocating investment opportunities to us, but does not otherwise impose any specific obligations or requirements concerning the allocation of time, effort or investment opportunities to us or any restrictions on the nature or timing of investments for our account and for DME Advisors’ own account or other accounts which DME Advisors or its affiliates may manage. In addition, DME Advisors can outsource to subadvisors without our consent or approval. In the event that DME Advisors and any of its affiliates attempt to simultaneously invest in the same opportunity, the opportunity will be allocated pro rata as reasonably determined by DME Advisors and its affiliates. Affiliates of DME Advisors presently serve as general partner or investment advisor of Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd., Greenlight Masters, L.P., Greenlight Masters Qualified, L.P., Greenlight Masters Offshore, Ltd. and Greenlight Masters Offshore I, Ltd. which each utilize an investment strategy that may compete with our investment strategy.


	•	willful misconduct, gross negligence, reckless disregard of any of its obligations under the advisory agreement. Additionally, the advisory agreement contains provisions for the indemnification of DME Advisors by us against certain liabilities to third parties arising in connection with the performance of its services to us;


	•	breaches of our investment guidelines that are not cured within 15 days of the day on which DME Advisors became aware of the breach; or


	•	the failure by DME Advisors to timely return or deliver assets to us if so requested.

We have agreed to use commercially reasonable efforts to cause all of our respective future subsidiaries to enter into substantially similar advisory agreements, provided that any such agreement shall be terminable on the same date that the advisory agreement is terminable. In addition, we have agreed that we will, at the written request of DME Advisors 90 days prior to any January 1 during the term of the advisory agreement, amend the advisory agreement so as to create a joint venture or partnership between us and DME Advisors so long as the creation of a joint venture or partnership does not, in the opinion of our legal counsel, create any material adverse tax, legal or regulatory consequences to us.

The advisory agreement term is January 1, 2007 through December 31, 2009 and will automatically renew for successive three year terms unless we or DME notify the other at least 90 days prior to the end of the three year term of its desire to terminate. We may terminate the advisory agreement prior to the expiration of its term only ‘‘for cause,’’ which is defined as:


	•	a material violation of applicable law relating to DME Advisors’ advisory business;

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	•	DME Advisors’ gross negligence, willful misconduct or reckless disregard of its obligations under the advisory agreement;


	•	a material breach by DME Advisors of our investment guidelines that is not cured within a fifteen day period; or


	•	a material breach by DME Advisors’ of its obligations to return and deliver assets as may request.

For the nine months ended September 30, 2006 and year ended December 31, 2005, we paid $2.8 million and $3.2 million, respectively in management fees and $10.3 million and $7.0 million in performance fees to DME Advisors.

Consulting Agreement

In August 2002, prior to our formation, Greenlight Capital, Inc., an affiliate of GCI, entered into a consulting agreement with First International. First International received a cash payment of $75,000 for the preparation and delivery of a feasibility study relating to the formation, capitalization, licensing and operation of the Company. Additionally, First International received 10-year share purchase options to purchase 400,000 Class A Ordinary Shares, upon consummation of the initial private placement of our Ordinary Shares. First International assigned the share purchase options to its successor First International Capital Holdings Ltd. on June 30, 2003. The share purchase options were granted on September 20, 2004 at an exercise price of $10.00 per share. The share purchase options expire on August 11, 2014 and are not transferable unless approved by our Board. The share purchase options are subject to the Shareholders’ Agreement dated as of August 11, 2004 by and among the Company and each of the other signatories thereto. As of September 30, 2006, Frank Lackner, one of our directors, owns share purchase options on 20,000 Class A Ordinary Shares because he was an independent contractor to First International.

Promissory Note

Pursuant to a Securities Purchase Agreement dated August 11, 2004, between us and GCI, an entity managed and controlled by David Einhorn, we issued to GCI 5,050,000 Class B Ordinary Shares for an aggregate consideration of $50.5 million composed of $26.0 million in cash and a $24.5 million aggregate principal amount promissory note. The promissory note provided that GCI pay interest to the Company annually at a rate of the 1-year London Interbank Offered Rate, or LIBOR, plus 3% per annum accrued daily. During the year ended December 31, 2005, GCI repaid $8.3 million of the principal. During the nine months ended September 30, 2006 GCI repaid a further $2.9 million of the principal. On December 6, 2006, GCI repaid the entire remaining principal amount due under the GCI promissory note of $13.3 million and the promissory note was cancelled.

Shareholders’ Agreement

Pursuant to our Shareholders’ Agreement, GCI had the right to unlimited demand registration rights once we are eligible to use Form S-3 (or similar short form registration forms). GCI assigned its demand registration rights under the Shareholders’ Agreement, with our consent, to David Einhorn on January 3, 2007.

Concurrent Private Placement Stock Purchase Agreement

In connection with our concurrent private placement, we entered into a stock purchase agreement on January 11, 2007 with David Einhorn, the Chairman of our Board of Directors. Under the terms of the stock purchase agreement, we agreed to sell $50 million of our Class B Ordinary Shares to Mr. Einhorn at a price per share equal to the per share price of the Class A Ordinary Shares that we are offering under this prospectus. Mr. Einhorn is obligated to complete the concurrent private placement unless this offering has not been consummated on or before September 30, 2007. At the completion of the concurrent private placement, Mr. Einhorn will own all of the Class B Ordinary Shares. See ‘‘Description of Capital Stock—Class B Ordinary Shares.’’

Mr. Einhorn will have registration rights for all of his Class B Ordinary Shares, as contemplated under the Shareholders’ Agreement, including the Class B Ordinary Shares that he will acquire in connection with the concurrent private placement. See ‘‘—Shareholders’ Agreement.’’

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DESCRIPTION OF SHARE CAPITAL

The following description of our share capital summarizes certain provisions of our Articles which will be in effect upon the closing of this offering, assuming we receive the requisite shareholder approval. This is a summary and does not contain all of the information that may be important to prospective investors.

Ordinary Shares

Our authorized share capital consists of:


	•	125,000,000 Ordinary Shares, par value $0.10 per share, of which (subject to adjustment) will be issued following the consummation of this offering and the concurrent private placement of Class B Ordinary Shares; and


	•	50,000,000 Preferred Shares, par value $0.10 per share, none of which will be issued following the consummation of this offering.

Our Board of Directors may create classes and series of shares and may increase or decrease the number of shares of any class or series as they see fit. They also may, subject to the provisions of the Companies Law and the Law and to any rights attaching to the issued and outstanding shares, cancel, redeem or purchase any shares and shares of any class or series and further terminate any class or series of shares.

Our Ordinary Shares are divided into 100,000,000 Class A Ordinary Shares, of which will be issued and outstanding following the consummation of this offering, and 25,000,000 Class B Ordinary Shares, of which will be issued and outstanding after the consummation of the concurrent private placement of Class B Ordinary Shares. Except as set forth in ‘‘Class B Ordinary Shares’’ below, the holders of all Ordinary Shares are entitled:


	(i)	to share equally share for share in dividends (whether payable in cash, property or our securities) as our Board of Directors may from time to time declare in accordance with the provisions of our Articles and the Companies Law;


	(ii)	in the event of our winding-up or dissolution, whether voluntary or involuntary or for the purpose of an amalgamation, reorganization or otherwise or upon any distribution of share capital and surplus, to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities and the liquidation preference of any issued and outstanding Preferred Shares; and


	(iii)	generally to enjoy all of the rights attaching to such shares.

Holders of Ordinary Shares have no pre-emptive, redemption, conversion or sinking fund rights.

Dividend Policy

Since inception, we have not paid any dividends and we expect we will not pay any dividends for the foreseeable future. Our ability to pay dividends depends on the ability of Greenlight Reinsurance, Ltd. to pay dividends to us. Greenlight Reinsurance, Ltd. is subject to the Cayman Islands regulatory constraints that affect its ability to pay dividends to us. Under the Law and related regulations, Greenlight Reinsurance, Ltd. must maintain a minimum net worth and may not declare or pay dividends that would result in non-compliance with such requirements. In addition, under the Companies Law, we or Greenlight Reinsurance, Ltd. may not pay or declare a dividend unless immediately following the date on which the dividend is proposed to be paid by us or Greenlight Reinsurance, Ltd., as the case may be, we are able to pay our debts as they fall due in the ordinary course of business. Accordingly, we may not be able to declare or pay dividends on the Ordinary Shares.

Holders of Ordinary Shares are entitled to receive dividends when, as and if declared by the Board of Directors in accordance with the provisions of our Articles and the Companies Law. In the event of a liquidation, dissolution or winding-up of the company, the holders of Ordinary Shares are entitled to share equally and ratably in our assets, if any remain after the payment of all of our debts and liabilities and the liquidation preference of any outstanding Preferred Shares.

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Voting – General

All matters placed on the agenda of any general meeting of our shareholders generally require the affirmative vote of a majority of the votes cast at a meeting at which a quorum is present. The removal of a Director for cause requires the affirmative vote of not less than fifty percent (50%) of the total voting power entitled to vote at a meeting at which a quorum is present, and certain material actions to be taken by us require the affirmative vote of sixty-six and two thirds percent (66 2/3%) of the votes cast at a meeting at which a quorum is present. The quorum required for a general meeting of shareholders is two or more persons present in person and representing in person or by proxy more than 50% of the issued and outstanding Ordinary Shares.

Class A Ordinary Shares

Generally, each Class A Ordinary Share is entitled to one vote per share. However, except upon unanimous consent of the Board of Directors, no holder shall be permitted to vote an amount of shares which would cause any United States person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) more than 9.9% of the total voting power of the total issued and outstanding Ordinary Shares. Due to the voting limitations on our Class B Ordinary Shares described below, immediately after the offering and the concurrent private placement, each Class A Ordinary Share will be effectively entitled to more than one vote per share subject to the 9.9% restriction in this paragraph.


Class B Ordinary Shares

Generally, each Class B Ordinary Share is entitled to ten votes per share. However, holders of Class B Ordinary Shares together with their affiliates, and with any persons whose shares would be attributable to such shareholders under United States tax attribution and constructive ownership rules, will be limited to voting that number of Class B Ordinary Shares equal to 9.5% of the total voting power of the total issued and outstanding Ordinary Shares.

In the event of a sale, transfer, exchange or other disposition, a transfer of any Class B Ordinary Shares by a holder thereof, other than a transfer to a permitted transferee, as defined in our Articles, the Class B Ordinary Shares shall be automatically converted into an equal number of Class A Ordinary Shares.

The one-for-one conversion ratio for the conversion of Class B Ordinary Shares into Class A Ordinary Shares will be equitably adjusted in the event of any recapitalization of the company by means of a share dividend on, or a share split or combination of, outstanding Class A Ordinary Shares or Class B Ordinary Shares, or in any amalgamation, or other reorganization of the company with another company.

We will reserve and keep available sufficient authorized but unissued Class A Ordinary Shares to effectuate the conversion of Class B Ordinary Shares into Class A Ordinary Shares. If any Class B Ordinary Shares are converted, the converted Class B Ordinary Shares will be cancelled.

Limitation on Share Ownership

Under our Articles, except upon unanimous consent by the Board of Directors:


	•	no person shall be allowed to acquire Class A Ordinary Shares if such acquisition would cause any person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) more than 9.9% of the issued and outstanding Ordinary Shares; and


	•	no person shall be allowed to acquire Class A Ordinary Shares if such acquisition would cause such person to own directly more than 9.9% of the issued and outstanding Ordinary Shares.

Under our Articles, our Board of Directors may send a repurchase notice in the event that it determines in its absolute discretion that:

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	•	a transfer would violate the ownership limitations described above; or


	•	a transfer would result in an increased risk of adverse tax, regulatory or legal consequences to us. In the event the Board of Directors determines an ownership limitation has been violated, we have the option, but not the obligation, to purchase all or any part of the shares, to the extent we determine it is necessary or advisable to avoid or cure any adverse or potentially adverse consequences.

Preferred Shares

Pursuant to our Articles and Cayman Islands law, the Board of Directors may establish one or more series of preferred shares having such number of shares, designations, relative voting rights, dividend rates, liquidation and other rights, preferences, powers and limitations as may be fixed by the Board of Directors without any further shareholder approval. Any preferred shares issued will include restrictions on voting and transfer intended to avoid having us constitute a ‘‘controlled foreign corporation’’ for United States federal income tax purposes. Such rights, preferences, powers and limitations as may be established could have the effect of discouraging an attempt to obtain control of us. The issuance of preferred shares could also adversely affect the voting power of the holders of the Ordinary Shares, deny shareholders the receipt of a premium on their Ordinary Shares in the event of a tender or other offer for the Ordinary Shares and have a depressive effect on the market price of the Ordinary Shares. We have no present plan to issue any preferred shares.

Corporate Governance

Our Articles provide for the corporate governance of the Company, including the establishment of share rights, modification of such rights, issuance of share certificates, the transfer of shares, alterations to capital, the calling and conduct of general and special meetings, proxies, the appointment and removal of directors, conduct and powers of directors, the payment of dividends and the winding-up of the Company.

Our Articles provide that the Board of Directors will be elected annually. Shareholders may remove a director for cause as defined in the Articles prior to the expiration of such director’s term at a meeting of shareholders at which a quorum is present and more than 50% of the total voting power entitled to vote is cast in favor of such action. A general meeting of shareholders may be convened by the Chairman or any two directors or any director and the secretary of the Board of Directors.

Certain provisions of our Articles may only be amended upon the affirmative vote of sixty-six and two thirds percent of the votes cast at a meeting of shareholders where a quorum is present. A copy of our Articles will be sent to any prospective investor that requests a copy.

Subject to the provisions of our Articles, the directors, secretary and officers shall be held harmless for any acts or omissions in the performance of their duties in the absence of willful negligence, willful default, fraud or dishonesty. Our Articles contain provisions for the indemnification of directors, officers and the secretary against liabilities to third parties arising in connection with the performance of their services by us, to the extent approved by a majority of the disinterested members of the Board of Directors. Expenses may be advanced to indemnified parties if approved by a majority of the disinterested directors.

Registration Rights

The holders of our Ordinary Shares prior to this offering have certain registration rights pursuant to the Shareholders’ Agreement, dated August 11, 2004. Following the consummation of the offering described in the prospectus, these holders of Ordinary Shares are entitled to ‘‘piggyback’’ registration rights on certain of our registrations, including a registration pursuant to the exercise of the demand rights described below.

Additionally, one hundred eighty days after the consummation of this offering, the holders of at least 50% of the Ordinary Shares, will have a one-time right to require us to register Ordinary Shares on Form S-1 (or other similar long form registration forms); provided that the aggregate offering

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proceeds from the registered Ordinary Shares is expected to exceed $30 million. David Einhorn, pursuant to an assignment, dated January 3, 2007, by GCI of its rights under the Shareholder’s Agreement, also has the right to unlimited demand registrations once we are eligible to use Form S-3 (or similar short form registration forms). We will not be required to effect more than two registrations pursuant to the demand rights in any 12 month period.

The registration rights described above can be modified on a pro rata basis if the managing underwriters for the registered offering believe modification is necessary due to market considerations. With the exception of David Einhorn, a shareholder will not be permitted to participate in any demand or piggyback registrations if such shareholder may freely trade its Ordinary Shares under the Securities Act and the rules promulgated thereunder. In general, persons who are not affiliates of an issuer may freely trade unregistered securities in the United States two years after the date such securities were initially acquired and paid for in full.

We are required to bear all expenses of all registration (exclusive of underwriting discounts and commissions, transfer taxes and fees and expenses of more than one counsel (and one local counsel, as reasonably required) for all selling shareholders).

Transfer Restrictions

Our Articles contain several provisions restricting the transferability of our Ordinary Shares. Our Articles provide that, if our Board of Directors determines in its sole and absolute discretion that:


	•	any transfer of shares would violate the ownership limitations described above; or


	•	the transfer would result in an increased risk of adverse tax, regulatory or legal consequences to us or any or our shareholders,

the transfer may not be registered on our share register and, if not registered, would be void and of no effect. Our Articles also provide that in the event that our Board of Directors determines that an ownership limitation has been violated as a result of any transfer, we shall have the option, but not the obligation, to purchase all or any part of the Ordinary Shares, to the extent we determine it is necessary or advisable to avoid or cure any adverse or potentially adverse consequences resulting from such transfer.

In connection with any transfer of Ordinary Shares, and in addition to the certification requirement described above, holders of Ordinary Shares will only be able to transfer their Ordinary Shares in compliance with the provisions of the Securities Act. Pursuant to the Shareholders’ Agreement, if a holder of Ordinary Shares desires to transfer its Ordinary Shares and they have not been registered under the Securities Act, the Company will be permitted to ask such holder to provide an opinion of counsel that the transfer may be effected without registration under the Securities Act. The transferee of such Ordinary Shares may be required to provide the Company with a representation letter that it is acquiring the Ordinary Shares for investment purposes only and not with a view to distribute the Ordinary Shares it purchases.

Differences in Corporate Law

The Companies Law, which applies to us, differs in certain material respects from laws generally applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant provisions of Companies Law (including modifications adopted pursuant to our Articles) applicable to us which differ in certain respects from provisions of Delaware corporate law. Because the following statements are summaries, they do not purport to deal with all aspects of Cayman Islands law that may be relevant to us and our shareholders.

Interested Party Transactions

No one will be disqualified from being elected Director or appointed an alternate Director because he has contracted with us. Likewise, none of our contracts will be deemed void because any Director or alternate Director is an interested party in such transaction. We will not hold any interested party liable for monies owed to us under such contract or transaction. A Director (or his

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alternate Director in his absence) may participate in the vote in respect of the contract or transaction in which he is interested as long as he disclosed his interest before that matter is considered or voted upon.

A Director or alternate Director may vote on a contract or transaction where he has an interest as a shareholder, director, officer or employee provided he disclosed the interest.

Under Delaware law such a transaction would be voidable unless:


	•	the material facts as to such interested director’s relationship or interests are disclosed or are known to the Board of Directors and the Board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors;


	•	such material facts are disclosed or are known to the stockholder entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon; or


	•	the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, such interested director could be held liable for a transaction in which such director derived an improper personal benefit.

Mergers and Similar Arrangements

We may petition the Cayman Islands courts to allow us to enter into a scheme of arrangement whereby we amalgamate with another Cayman Islands company or with a body incorporated outside of the Cayman Islands if each class of shareholders representing 75% in value of each class of shareholder of the Company is present and voting at a general meeting of each class of shareholders’ vote in favor of the proposed scheme. Assuming that shareholder approval is obtained, we must request a court hearing sanctioning the scheme of arrangement. Any shareholder may attend and be heard at this hearing to argue that the scheme ought not to be sanctioned and the Cayman Islands court can take any matter into account when considering whether or not to sanction the scheme of arrangement. If the court sanctions such a scheme then it becomes binding on all the shareholders whether or not they voted for or voted against the scheme. If the scheme of arrangement receives sanction of the Cayman Islands court, the court order must be filed with the Cayman Islands Registrar of Companies in order to become effective. Thereafter, the provisions of the scheme of arrangement can be put into place.

Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the Board of Directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a stockholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such stockholder may receive cash in the amount of the fair value of the shares held by such stockholder (as determined by a court) in lieu of the consideration such stockholder would otherwise receive in the transaction.

Shareholder’s Suit

Under Cayman Islands law the general principle is that a shareholder cannot bring an action in his own name against those in control of the company if the cause of action is vested in the company and relief is accordingly sought on behalf of the company.

The exceptions to this general principle are:


	•	where the alleged wrong is illegal or ultra vires the company;


	•	where the applicable transaction required, but did not receive, sanction by a special resolution or special majority of shareholders;


	•	where what has been done amounts to a fraud on the minority shareholders and the wrongdoers are in control of the company as directors or majority shareholder (in this context, fraud has its wider equitable meaning); or

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	•	where the act complained of infringes a personal right of the shareholder seeking to bring the action. In any of these situations, the Grand Court may grant permission for the aggrieved shareholder(s) to bring a derivative action for the benefit of the company against the wrongdoers. The court may order the legal costs of commencing and progressing the action to be paid by the company.

Class actions are generally not available to shareholders under the laws of the Cayman Islands, although there is power under the Grand Court rules to make a representation order pursuant to which one person is appointed to represent other persons who have the same interest in the proceedings. The Grand Court rules also provide a regime for the recovery of costs by a successful party in litigation against an unsuccessful party. Although an order for costs is at the discretion of the court, a winning party will usually be entitled to recover a portion of attorneys’ fees for the litigation.

An alternative remedy available to shareholders under Cayman Islands law is to petition the Grand Court for an order that it is just and equitable to wind up the company. If a winding up order is made, the company will go into liquidation.

Indemnification of Directors

We may indemnify our Directors or officers in their capacity as such in respect of any loss arising or liability attaching to them by virtue of any rule of law in respect of any willful negligence, willful default, breach of duty or breach of trust of which a Director or officer may be guilty in relation to us other than in respect of his own fraud or dishonesty. Under Delaware law, a corporation may indemnify a director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if:


	•	such director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; and


	•	with respect to any criminal action or proceeding, such director or officer had no reasonable cause to believe his or her conduct was unlawful.

We will indemnify each of our Directors, agent’s and officers out of our assets against any liability incurred by them as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by their own willful neglect or default. No such Director, agent or officer shall be liable to us for any loss or damage in carrying out his functions unless their liability arises through the willful neglect or default of such Director, agent or officer.

Inspection of Corporate Records

Members of the general public do not have the right to inspect our corporate or constitutive documents. A shareholder of a Cayman Islands company has the right to request the Company send him a copy of its memorandum and articles of association in force, on payment of a maximum sum of one Cayman Islands dollar for each copy. In addition, our Articles provide that our Board of Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations our accounts and books or any of them shall be open to the inspection of shareholders and no shareholder shall have any right of inspecting any of our accounts or books or documents except as conferred by statute, or authorized by our Board of Directors or by us in general meeting. Also, the Directors may from time to time cause to be prepared and to be laid before us in general meeting financial statements and such other reports and accounts as may be required by law. We are also required to keep a register of mortgages and charges, which is open to inspection by any creditor or shareholder at all reasonable times.

We are not required to, but may, maintain our share register in the Cayman Islands. We are required to keep at our registered office a register of our directors and officers, which is not open for inspection by members of the public. Our registered office is located at 802 West Bay Road, The Grand Pavilion, Grand Cayman, KY1-1205 , Cayman Islands.

Delaware law permits any shareholder to inspect or obtain copies of a corporation’s shareholder list and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our Class A Ordinary Shares. Future sales of substantial amounts of our Class A Ordinary Shares in the public market could reduce prevailing market prices. Furthermore, since a substantial number of shares will be subject to contractual and legal restrictions on resale as described below, sales of substantial amounts of our Class A Ordinary Shares in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of Class A Ordinary Shares, assuming no exercise of the underwriters’ option to purchase additional Class A Ordinary Shares and no exercise of outstanding options and Class B Ordinary Shares, assuming the consummation of the concurrent private placement to David Einhorn. Of these shares, all of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless these shares are purchased by affiliates. The remaining Class A Ordinary Shares held by existing shareholders are restricted securities. No shareholder other than David Einhorn and certain permitted transferees may hold Class B Ordinary Shares following this offering. Restricted securities may be sold in the public market only if registered or if the transaction qualifies for an exemption from registration described below under Rules 144, 144(k) or 701 promulgated under the Securities Act.

As a result of the contractual restrictions described below and the provisions of Rules 144, 144(k) and 701, the restricted shares will be available for sale in the public market as follows:


	•	shares will be eligible for sale upon completion of this offering;


	•	shares will be eligible for sale upon the expiration of the lock-up agreements, described below, beginning 180 days after the date of this prospectus; and


	•	shares will be eligible for sale upon the exercise of vested options 180 days after the date of this prospectus.

Lock-Up Agreements

We, all of our directors and executive officers, and shareholders holding an aggregate of approximately % of our currently outstanding Class A Ordinary Shares (and % of our currently outstanding Ordinary Shares) have agreed that, subject to certain exceptions, without the prior written consent of each of Lehman Brothers Inc. and UBS Securities LLC, we and they will not directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by an person at any time in the future of) any Ordinary Shares (including, without limitation, ordinary shares that may be deemed to beneficially owned by us or them in accordance with the rules and regulations of the SEC and Ordinary Shares that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for Class A Ordinary Shares, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic consequences of ownership of the Class A Ordinary Shares, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any Class A Ordinary Shares or securities convertible, exercisable or exchangeable into Class A Ordinary Shares or any of our other securities or (4) publicly disclose the intention to do any of the foregoing for a period of 180 days after the date of this prospectus.

The 180-day restricted period described in the preceding paragraph will be extended if:


	•	During the last 17 days of the 180-day restricted period we issue any earnings release or material news or a material event relating to us occurs; or


	•	Prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 180-day period beginning on the issuance of the earnings release or the

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announcement of the material news or occurrence of a material event, unless such extension is waived in writing by Lehman Brothers Inc. and UBS Securities LLC.

Lehman Brothers Inc. and UBS Securities LLC, in their sole discretion, may release the Ordinary Shares and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice. When determining whether or not to release Class A Ordinary Shares and other securities from lock-up agreements, Lehman Brothers Inc. and UBS Securities LLC will consider, among other factors, the holder’s reasons for requesting the release, the number of Class A Ordinary Shares and other securities for which the release is being requested and market conditions at the time.

Any participants in the Directed Share Program will be subject to an 180-day lock-up with respect to any Ordinary Shares sold to them pursuant to the program. This lock-up will have similar terms and conditions as described above. Any Ordinary Shares sold in the Directed Share Program to our directors or officers shall be subject to the lock-up agreement described above.

Rule 144

In general, under Rule 144 as currently in effect, after the expiration of any applicable lock-up agreement, a person (or persons whose shares are aggregated) who has beneficially owned restricted securities for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:


	•	1% of the number of ordinary shares then outstanding, which will equal approximately shares immediately after this offering; or


	•	the average weekly trading volume of our ordinary shares on Nasdaq Global Select Market during the four calendar weeks preceding the sale, so long as requirements concerning availability of public information, manner of sale and notice of sale are satisfied.

Sales under Rule 144 are also subject to requirements with respect to the manner of sale, notice and the availability of current public information about us.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell these shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

Rule 701

Rule 701 of the Securities Act, as currently in effect, permits any of our employees, officers, directors or consultants who purchased or received shares from us pursuant to a written compensatory plan or contract to resell such shares in reliance upon Rule 144, but without compliance with certain restrictions. Subject to any applicable lock-up agreements, Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 beginning 90 days after the date of this prospectus without complying with the holding period requirement of Rule 144 and that non-affiliates may sell such shares in reliance on Rule 144 beginning 90 days after the date of this prospectus without complying with the holding period, public information, volume limitation or notice requirements of Rule 144.

Registration Rights

Upon completion of this offering, the holders of an aggregate of Ordinary Shares, or their transferees, will be entitled to rights with respect to the registration of their shares under the Securities Act. Holders of at least 50% of the Ordinary Shares outstanding prior to this offering can request to have their shares registered at any time 180 days after the consummation of this offering. Upon receipt of such a request for a demand registration, we must file a registration statement for these securities within the later of 90 days of the date of delivery to us of the demand request and 180

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days after the effectiveness of registration statement as defined in the Shareholders’ Agreement. After consummation of this offering, if we propose to file any registration statement under the Securities Act for the purposes of a public offering of our securities (except for on Forms S-4 or S-8), we must give prompt written notice to our initial shareholders of our intent to effect such a registration and shall include those who respond within 30 days. Registration of these shares under the Securities Act would result in these shares becoming freely tradeable without restriction under the Securities Act immediately upon the effectiveness of such registration. Pursuant to our Shareholders’ Agreement, GCI had the right to unlimited demand registration rights once we are eligible to use Form S-3 (or similar short form registration forms). GCI assigned its demand registration rights under the Shareholders’ Agreement, with our consent, to David Einhorn on January 3, 2007.

Transfer Agent and Registrar

will serve as transfer agent and registrar for our Class A Ordinary Shares. Its principal executive office is located at .

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CERTAIN CAYMAN ISLANDS TAX CONSIDERATIONS

The following discussion summarizes Cayman Islands income tax considerations currently in effect that are relevant to us and Cayman Islands income tax consequences of buying, holding or selling our Class A Ordinary Shares. It is not intended to be tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law. Prior to making an investment in our Class A Ordinary Shares, we advise you to consult with your own professional advisors on the possible tax consequences of buying, holding or selling our Class A Ordinary Shares under the laws of your country of citizenship, residence or domicile.

Cayman Islands Taxation of Greenlight Re

Under current Cayman Islands law, there is no Cayman Islands income tax, withholding tax, capital gains tax or capital transfer tax payable by us on our income. The Cayman Islands currently impose stamp duties on certain categories of documents; however, we do not anticipate that our operations will involve the payment of any material amount of stamp duties. The Cayman Islands currently impose an annual corporate fee upon all exempted companies. Our current annual corporate fee rate is approximately $10,000.

Cayman Islands Taxation of Shareholders

Under current Cayman Islands laws, payments of dividends on our Ordinary Shares will not be subject to taxation in the Cayman Islands. In addition, no withholding tax is required on the payment of dividends, nor are gains derived from the sale of Ordinary Shares subject to Cayman Islands income or corporation tax. The Cayman Islands currently has no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax. No stamp duty is payable with respect to the issue or transfer of our Ordinary Shares.

Tax Undertaking

We have an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to us or our operations, or to our Ordinary Shares or obligations, for a period of 20 years from February 1, 2005.

We do not consider ourselves to be engaged in a trade or business in any other jurisdiction other than the Cayman Islands and, accordingly, do not expect to be subject to net income taxes of any other jurisdiction other than the Cayman Islands. If we are deemed to be engaged in trade or business in any jurisdiction, we could be subject to taxes in that jurisdiction.

CERTAIN UNITED STATES TAX CONSIDERATIONS

The following discussion summarizes the material United States federal income tax considerations that are relevant to us and the material United States federal income tax consequences of buying, holding and selling our Class A Ordinary Shares. Unless otherwise expressly provided herein, the tax consequences under United States state and local tax laws and foreign tax laws are not addressed. This summary is not a complete analysis of all of the tax considerations that may be relevant to you or your decision to acquire Class A Ordinary Shares.

Unless otherwise expressly stated herein, this summary only discusses United States federal income tax considerations relevant to United States persons who own our Class A Ordinary Shares as ‘‘capital assets’’ within the meaning of Section 1221 of the Code. Unless otherwise noted, this summary does not address aspects of United States federal income taxation that may be relevant to a shareholder that is subject to special rules such as:


	•	an investor that is not a citizen or resident of the United States;

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	•	a financial institution or insurance company;


	•	a mutual fund;


	•	a tax-exempt organization;


	•	a broker or dealer in securities or foreign currencies;


	•	traders in securities that elect to apply a mark to market method of tax accounting;


	•	a shareholder that holds our Class A Ordinary Shares as part of a hedge, appreciated financial position, straddle, conversion or other risk reduction transaction; or


	•	United States persons who own more than 9.9% of the total combined voting power of all classes of our share capital (whether directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules).

In this summary, we refer to a United States person. We use this term to mean an investor who beneficially owns our Class A Ordinary Shares and who is:


	•	an individual citizen or resident of the United States;


	•	a corporation or other entity treated as a corporation for United States federal income tax purposes that was created or organized in the United States or under the laws of the United States or of any political subdivision thereof;


	•	an estate whose income is includible in gross income for United States federal income tax purposes regardless of its source; or


	•	any trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds our Class A Ordinary Shares, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. If you are a partnership or a partner in a partnership, you should consult your own tax advisor regarding the particular consequences to you of owning our Class A Ordinary Shares.

This summary is based on the Code, applicable Treasury regulations promulgated under the Code, or Regulations, court decisions and administrative interpretations currently in effect. Court decisions and administrative interpretations are not necessarily binding on the IRS. We note that the Code, Regulations, administrative interpretations and court decisions are subject to change, possibly with retroactive effect. Future legislative, judicial or administrative changes could affect the information, beliefs and conclusions in this summary.

This discussion is not intended to be tax advice. Prior to making an investment in our Class A Ordinary Shares, we advise you to consult with your own tax advisors in order to understand fully the United States federal, state, local and foreign tax consequences of buying, holding or selling our Class A Ordinary Shares in your particular situation.

United States Federal Income Taxation of Greenlight Re and Greenlight Reinsurance, Ltd.

We do not believe we currently operate or will operate in the future in a manner that constitutes being engaged in the conduct of a trade or business in the United States, although we cannot assure you that the IRS will not successfully assert that we are engaged in a trade or business in the United States. Because we believe we do not operate in a manner that constitutes being engaged in the conduct of a trade or business in the United States, we do not expect to be subject to United States federal income tax, except as described below.

The determination as to whether we are engaged in a United States trade or business is factual in nature and must be made annually. Neither the Code nor the applicable Regulations provide a general definition of what constitutes being engaged in a trade or business within the United States, and the limited case law regarding what constitutes being engaged in a United States trade or business does

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not provide definitive guidance. The case law that exists generally provides that a foreign corporation will be treated as engaged in a United States trade or business if it regularly and continuously carries out business activities in the United States.

If we were deemed to be engaged in a trade or business in the United States, we generally would become subject to United States federal income tax on any taxable income treated as ‘‘effectively connected’’ to such trade or business and such income would be taxed at regular corporate rates. In addition, we would become subject to United States branch profits tax on our earnings and profits that are both ‘‘effectively connected’’ with our trade or business in the United States, with certain adjustments, and deemed repatriated out of the United States. The highest marginal United States federal income tax rates currently are 35% for a corporation’s effectively connected income and 30% for the ‘‘branch profits’’ tax. Our United States federal income tax liability would generally be computed in the same manner that applies to the income of a United States corporation, except that deductions and credits would generally only be available if we filed a United States income tax return.

If we were deemed to be engaged in a trade or business in the United States, we may be subject to penalties if we failed to file tax returns. In an attempt to mitigate this risk and to preserve our ability to claim tax deductions and credits in the event we are subsequently determined to be subject to United States federal income tax, we have timely filed, and intend to continue to timely file, protective United States federal income tax returns.

Even if we are not engaged in a trade or business in the United States, we are subject to United States federal income tax on certain fixed or determinable annual or periodical gains, profits and income, such as dividends and certain interest on investments, if any, from sources within the United States. Generally, this tax is imposed by withholding 30% of the payments, or deemed payments, to us that are subject to this tax, and is eliminated with respect to certain types of United States source income, such as interest on certain debt instruments. If we are treated as engaged in the conduct of a trade or business in the United States, the 30% withholding tax only applies to payments to us that are not effectively connected with such trade or business.

The United States also imposes an excise tax on insurance and reinsurance premiums paid to us with respect to insureds located in the United States at a rate of (i) 4% for direct casualty insurance and indemnity bond premiums and (ii) 1% for reinsurance premiums and for direct insurance premiums for life, sickness and accident policies and annuity contracts.

United States Federal Taxation of Holders

Taxation of Dividends

Subject to the discussion below regarding passive foreign investment companies, controlled foreign corporations and related person insurance income, cash distributions paid with respect to our Class A Ordinary Shares will constitute ordinary dividend income to you to the extent paid out of our current or accumulated earnings and profits, and you generally will be subject to United States federal income tax upon your receipt of such dividends. If you are not a corporation or an entity treated as a corporation under United States federal income tax law, dividends paid to you in taxable years beginning on or before December 31, 2010 generally will be taxable to you at a maximum rate of 15% if:


	•	the dividends constitute ‘‘qualified dividend income;’’ and


	•	you hold our Class A Ordinary Shares for more than 60 days out of the 121-day period that begins 60 days before the ex-dividend date and meet other holding period requirements.

Any dividends paid on our Class A Ordinary Shares generally will be ‘‘qualified dividend income,’’ provided that our Class A Ordinary Shares are readily tradable on an established securities market in the United States. Under current United States Treasury guidance, our Class A Ordinary Shares would be so treated if they are listed on the Nasdaq Global Select Market. Dividends paid on our Class A Ordinary Shares generally will not be eligible for the dividends received deduction.

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To the extent we make distributions on our Class A Ordinary Shares that exceed our current and accumulated earnings and profits, you will be treated as having received a return of your tax basis in our Class A Ordinary Shares, and any amount we distribute in excess of your tax basis generally will be treated as gain from the sale of a capital asset.

We advise you to consult with your tax advisor regarding the taxation of any dividends on our Class A Ordinary Shares.

Passive Foreign Investment Companies

In general, a foreign corporation is deemed to be passive foreign investment company, or PFIC, if:


	•	75% or more of its gross income constitutes ‘‘passive income;’’ or


	•	50% or more of its assets produce, or are held for the production of, ‘‘passive income.’’

In determining whether Greenlight Re and/or Greenlight Reinsurance, Ltd. is a PFIC, each of Greenlight Re and Greenlight Reinsurance, Ltd. is treated as if it directly owned its proportionate share of the assets and received its proportionate share of the income of any other corporation of which it is a 25% or greater shareholder (by value). Under this look-through rule, Greenlight Re is deemed to own its proportionate share of the assets and to have received its proportionate share of the income of Greenlight Reinsurance, Ltd. As long as Greenlight Re does not hold assets other than the shares of Greenlight Reinsurance, Ltd., Greenlight Re is not considered a PFIC if Greenlight Reinsurance, Ltd. is not considered a PFIC.

For purposes of the PFIC tests, ‘‘passive income’’ generally includes interest, dividends, annuities and other investment income. The PFIC rules contain an express exception for income that is derived in the active conduct of an insurance business by a corporation predominantly engaged in an insurance business, which we refer to as the Insurance Company Exception.

The Insurance Company Exception is intended to ensure that income derived by a bona fide insurance company is not treated as passive income. However, there is very little authority as to what constitutes the active conduct of an insurance business or being predominantly engaged in such business. In particular, there is uncertainty as to what constitutes the appropriate levels of financial reserves and risk transfer with respect to an insurance contract. Therefore, our income could be considered passive income derived outside of the active conduct of our insurance business if it is earned from:


	•	investments that are attributable to financial reserves in excess of the reasonable needs of our insurance business; or


	•	non-traditional insurance activities that do not contain sufficient risk transfer.

We believe that our current financial reserves are and will be consistent with industry standards and are not and will not be in excess of the reasonable needs of our insurance business. We also believe that we are and will be engaged in insurance activities that involve sufficient transfer of risk. For these reasons, we do not expect to be treated as having passive income or holding assets for the production of passive income. However, we cannot assure you that the IRS will not disagree with our interpretation of the Insurance Company Exception and successfully challenge our position that we qualify for the exception in 2007 or any later years. In addition, the IRS may issue regulatory or other guidance that applies on either a prospective or retroactive basis under which we may fail to qualify for the Insurance Company Exception. The IRS announced in Notice 2003-34 that it intends to scrutinize the activities of purported insurance companies organized outside the United States, including insurance companies that invest a significant portion of their assets in alternative investment strategies, and will apply PFIC rules where it determines a foreign corporation is not an insurance company for United States federal income tax purposes. You should consult your own tax advisor to assess your tolerance of this risk.

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If we are PFICs, you may be able to mitigate certain of the negative tax consequences if you are able to make:


	•	a timely qualified electing fund election with respect to our Class A Ordinary Shares, which we refer to as a QEF election;


	•	a protective QEF election with respect to our Class A Ordinary Shares; or


	•	a mark to market election with respect to the first taxable year in which we are considered PFICs during your holding period in our Class A Ordinary Shares.

As described below, the availability of these elections is uncertain as a matter of law and in certain cases requires that we provide certain information. We will notify you if we conclude in any year that we are likely to be treated as PFICs. In addition, we intend to provide you each year with the information required for you to make a QEF election or protective QEF election. However, we cannot assure you that we will be able to provide information necessary for you to make a QEF election with respect to certain lower-tier PFICs, which generally would be our direct and indirect subsidiaries that are also PFICs.

Timely QEF Election

If we are PFICs and you do not make a QEF election, you generally will be subject to a special tax and an interest charge at the time you:


	•	sell our Class A Ordinary Shares; or


	•	receive an ‘‘excess distribution’’ with respect to our Class A Ordinary Shares. You will be treated as if you received an ‘‘excess distribution’’ if the amount of the distributions that you receive are more than 125% of the average distributions with respect our Class A Ordinary Shares during the three preceding taxable years (or the period in which you held our Class A Ordinary Shares if shorter).

In addition, a portion of any gain you recognize upon sale of our Class A Ordinary Shares may be recharacterized as ordinary income. Further, any dividends you receive from us if we are PFICs will not constitute qualified dividend income and will not be eligible for the reduced 15% rate of tax. If you own our Class A Ordinary Shares during any taxable year in which we are PFICs, your Class A Ordinary Shares will generally be treated as stock in a PFIC for all subsequent years. In addition, if you hold our Class A Ordinary Shares during any period we are PFICs, you will be treated as owning a proportionate amount of any stock we own. Therefore, if we are PFICs, you would also be subject to the PFIC rules on a separate basis with respect to your indirect interests in any lower-tier PFICs we own.

Although we may conclude in any year that we reasonably believe that we are not PFICs, the application of the PFIC rules to us may be uncertain. The IRS might ultimately conclude that we and our subsidiaries are PFICs in any such tax year, which would create significant adverse tax consequences for you.

If we are PFICs and you make a QEF election, you will be currently taxable on your pro rata share of our ordinary earnings and net capital gain regardless of whether or not we make any distributions. Your basis in our Class A Ordinary Shares will be increased to reflect such taxed but undistributed income and any subsequent distributions of previously taxed income will reduce your basis and will not be taxed again as a distribution to you.

In general, you must annually file a separate Form 8621 for each PFIC in which you are a direct or indirect owner during the year with your United States federal income tax return. If you wish to make a QEF election, you must make such election on a timely filed Form 8621 for the first taxable year to which the election is to be effective. In certain circumstances, you may be able to make a retroactive QEF election at a later date. Unless you own, directly, indirectly or through attribution, less than 2% of the vote and value of each class of our shares for any taxable year, which we refer to as a 2% United States shareholder, a retroactive QEF election may not be available to you if you have not previously preserved your right to make a retroactive QEF election.

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Protective QEF Election

You may preserve your right to make a retroactive QEF election by filing a protective statement signed under penalty of perjury with the IRS for the first taxable year in which you acquire our Class A Ordinary Shares and you reasonably believe that we are not PFICs for the taxable year. The protective statement must generally contain statements describing:


	•	your basis (including application of the 75% income and 50% asset tests and other factors) for your reasonable belief that we were not PFICs for our taxable year ending with or within your first taxable year to which the protective statement applies;


	•	your agreement extending the periods of limitations on the assessment of your PFIC related taxes for all taxable years to which the protective statement applies;


	•	your name, address and certain identifying information with respect to you and us; and


	•	information and representations regarding the highest percentage of shares of each class of our stock that you held directly or indirectly during your first taxable year to which the protective statement applies.

In general, filing the protective statement with respect to a taxable year by itself does not obligate you to include your pro rata share of our earnings into income for such taxable year if we are not PFICs for such taxable year. The filing simply preserves your ability to make a retroactive QEF election with respect to such taxable year and may protect you from some of the more severe penalties under the PFIC rules. If you make a valid retroactive QEF election with respect to our shares and we are treated as PFICs, you will be taxed on your cumulative annual pro rata share of our ordinary earnings and net capital gains (regardless of whether any distributions were received) as if you made such elections on a timely basis ( i.e., on a non-retroactive basis), plus an interest charge to eliminate the tax deferral arising from the retroactive election.

In general, if you are a 2% United States shareholder, you are not always required to file a protective statement in order to preserve your ability to make a retroactive QEF election with respect to such taxable year. If you are a 2% United States shareholder, you generally may make a retroactive QEF election with respect to Class A Ordinary Shares in a taxable year if we have indicated in a public document that, with respect to that taxable year:


	•	we reasonably believe that we should not be PFICs; or


	•	in certain circumstances, we are unable to conclude whether we are PFICs, but reasonably believe that, more likely than not, we ultimately will not be PFICs.

In light of the uncertainty and lack of guidance regarding the application of the PFIC rules to companies engaged in an insurance business, you may wish to consider filing a protective statement with respect to us for the first taxable year in which you hold our Class A Ordinary Shares in order to preserve your ability to make a retroactive QEF election, if otherwise eligible to make the such election. You are advised to consult with your own tax advisor regarding the mechanics and effects of filing a protective statement with respect to your ownership of our Class A Ordinary Shares and making a retroactive QEF election in the event it is subsequently determined that we are deemed to be PFICs in any particular year.

Mark to Market Election

If our Class A Ordinary Shares are treated as ‘‘marketable stock’’, you may make a mark to market election. If you do so, you will not be subject to the PFIC rules described above. Instead, you will include as ordinary income or loss the difference between the fair market value of our Class A Ordinary Shares at the end of the taxable year and your adjusted basis. However, ordinary losses are limited by the net amount you previously included in income as a result of the mark to market election. Your basis in the Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts.

The mark to market election is only available if our Class A Ordinary Shares are regularly traded on certain United States securities exchanges, including the Nasdaq Global Select Market, or other

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exchanges designated by the United States Treasury. Our Class A Ordinary Shares will be treated as regularly traded for a calendar year if they are traded for at least 15 days during each calendar year quarter. Because our Class A Ordinary Shares were not traded on the Nasdaq Global Select Market in the first quarter of 2007, it is unclear whether such election is available in 2007.

In addition, the benefit of a mark to market election may not be available at all. This is because it is unclear whether the mark to market election is available to a publicly-traded holding company, which Greenlight Re will be when the offering is consummated, that becomes a PFIC because of its lower-tier PFIC subsidiaries. The Code and the Regulations currently do not allow a mark to market election with respect to the stock of lower-tier PFICs that are non-marketable. There is also no provision that specifically provides that a mark to market election with respect to the stock of a publicly-traded holding company effectively exempts the lower-tier PFICs from the negative tax consequences arising from the general PFIC rules. We believe that, because the fair market value of the stock of a holding company generally includes the fair market value of the stock of its subsidiaries, the better view is that a mark to market election made with respect to the stock of the holding company should apply to remove the lower-tier PFICs from the general PFIC rules. However, we cannot assure you that the IRS agrees with our position.

If:


	•	we and our subsidiaries are PFICs during the first year after this offering;


	•	the mark to market tax election is not available; and


	•	you acquire our Class A Ordinary Shares during such first year,

you may be subject to special rules when making a mark to market election in the following year. If you have not made a proper QEF election in the first year but you make a mark to market election in the following year, then, with respect to that following year:


	•	gain upon disposition of our Class A Ordinary Shares;


	•	deemed gain under the mark to market regime; or


	•	‘‘excess distributions’’

generally will be subject to the special tax and interest charges of the PFIC rules.

We advise you to consult your own tax advisor to determine whether the mark to market tax election is available to you and the consequences resulting from such election.

Possible Classification of Greenlight Re and/or Greenlight Reinsurance, Ltd. as Controlled Foreign Corporations

In this section of the summary, we refer to ‘‘United Stated 10% shareholders’’ as United States persons who:


	•	own, directly or indirectly through foreign entities 10% or more of the total combined voting power of all classes of stock of a foreign corporation; or


	•	are considered to own, generally through attributions from family members, partnerships, estates, trusts or 10% controlled corporations, 10% or more of the total combined voting power of all classes of stock of a foreign corporation.

Certain United States 10% shareholders that own, directly or indirectly through foreign entities, shares of a foreign corporation that is a ‘‘controlled foreign corporation,’’ or CFC, for an uninterrupted period of 30 days or more during any taxable year, are required to include in their gross income for United States federal income tax purposes their pro rata share of the CFC’s ‘‘subpart F income’’ for such year.

Subpart F income generally includes:


	•	passive investment income, such as interest, dividends or certain rent or royalties; and

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	•	certain insurance income, including underwriting and investment income that is attributable to the issuing or reinsuring of any insurance or annuity contract, and that, absent an exception, generally would be taxed under the insurance company provisions of the Code if such income were the income of a United States insurance company.

We expect that all of our income will be subpart F income. Subpart F income inclusion generally is applicable to United States 10% shareholders that have a direct or indirect ownership interest in a CFC on the last day of the taxable year of the CFC. The subpart F income inclusion is required even if the subpart F income is not distributed. In addition, United States 10% shareholders of a CFC may be deemed to receive taxable distributions to the extent the CFC increases the amount of its earnings that are invested in certain specified types of United States property.

In general, a foreign corporation is treated as a CFC only if its United States 10% shareholders collectively own more than 50% of the total combined voting power or total value of the corporation’s stock. However, for purposes of taking into account subpart F insurance income, a foreign corporation such as Greenlight Reinsurance, Ltd., generally will be treated as a CFC if more than 25% of the total combined voting power or total value of its stock is owned by United States 10% shareholders.

Our Articles provide voting and ownership limitations designed to reduce the risk that we would be considered CFCs. With those limitations, we do not believe that we should be CFCs. However, because of the complexity of the attribution rules contained in the Code and the uncertainty of the effectiveness of these voting and ownership limitations, we cannot assure investors that this will be the case.

If you are a United States 10% shareholder and we are CFCs, the rules relating to PFICs generally would not apply to you. However, certain subpart F income may be taxable at higher rates than if such income were taxable under the PFIC regime where a valid QEF election has been made

We advise you to consult your own tax advisor to determine whether your ownership of our Class A Ordinary Shares will cause you to become a United States 10% shareholder and the impact of such a classification.

Related Person Insurance Income

A different definition of CFC is applicable in the case of a foreign corporation which earns related person insurance income, or RPII. RPII is subpart F insurance income attributable to insurance policies or reinsurance contracts where the person that is directly or indirectly insured or reinsured is a RPII shareholder or a related person to the RPII shareholder. A RPII shareholder is a United States person who owns, directly or indirectly through foreign entities, any amount of our Class A Ordinary Shares. Generally, for purposes of the RPII rules, a related person is someone who controls or is controlled by the RPII shareholder or someone who is controlled by the same person or persons which control the RPII shareholder. Control is measured by either more than 50% in value or more than 50% in voting power of stock after applying certain constructive ownership rules.

For purposes of taking into account RPII, and subject to the exceptions described below, Greenlight Reinsurance, Ltd. will be treated as a CFC if our RPII shareholders collectively own, indirectly, 25% or more of the total combined voting power or value of Greenlight Reinsurance, Ltd.’s stock on any day during a taxable year. If Greenlight Reinsurance, Ltd. is a CFC for an uninterrupted period of at least 30 days during any taxable year under the special RPII rules, and you own Class A Ordinary Shares on the last day of any such taxable year, you must include in gross income for United States federal income tax purposes your allocable share of RPII of Greenlight Reinsurance, Ltd. for the entire taxable year, subject to certain modifications.

RPII Exceptions

The RPII rules do not apply if:


	•	direct and indirect insureds and persons related to such insureds, whether or not United States persons, are treated at all times during the taxable year as owning, directly or indirectly through foreign entities, less than 20% of the voting power and less than 20% of the value of our shares;

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	•	Greenlight Reinsurance, Ltd.’s RPII, determined on a gross basis, is less than 20% of Greenlight Reinsurance, Ltd.’s gross insurance income for such taxable year; or


	•	certain other exceptions apply.

We believe that Greenlight Reinsurance, Ltd. will fall within the RPII exceptions set forth above. However, if you own Class A Ordinary Shares on the last day of Greenlight Reinsurance, Ltd.’s taxable year, and no exception to the RPII rules applies, you will be required to include your share of Greenlight Reinsurance, Ltd.’s RPII for the entire taxable year in your gross income for United States federal income tax purposes. The amount includible will be determined as if all such RPII were distributed proportionately only to United States persons at that date, but limited by Greenlight Reinsurance, Ltd.’s current-year earnings and profits and reduced by your share, if any, of prior-year deficits in earnings and profits.

Computation of RPII

In order to determine how much RPII Greenlight Reinsurance, Ltd. has earned in each taxable year, we intend to obtain and rely upon information from Greenlight Reinsurance, Ltd.’s insureds to determine whether any of the insureds or persons related to such insureds are direct or indirect United States shareholders. We likely will not be able to determine whether any of the underlying insureds of our clients are RPII shareholders or related persons to such shareholders. Accordingly, we may not be able to determine accurately:


	•	whether Greenlight Reinsurance, Ltd. qualifies for any RPII exception; or


	•	what the gross amount of RPII earned by Greenlight Reinsurance, Ltd. in a given taxable year would be.

We will take reasonable steps that we believe to be advisable to obtain the necessary information to determine the availability of the RPII exceptions and the amount of insurance income that is RPII. However, we cannot assure you that we will be able to obtain all necessary information to make the determinations.

Apportionment of RPII to United States Persons

If we determine that neither the RPII 20% ownership exception nor the RPII 20% gross income exception is applicable for any taxable year, we may seek information from our shareholders as to whether direct or indirect owners of Class A Ordinary Shares at the end of the year are United States persons. This information would allow us to determine and apportion RPII among the United States persons. In any such year, to the extent possible, we will inform you of the amount of RPII per share and you will be obligated to file a return reporting such amount. To the extent we are unable to determine whether a direct or indirect owner of Class A Ordinary Shares is a United States person, we may assume that such owner is not a United States person for the purpose of allocating RPII, and, accordingly, increase the amount of RPII per share for shareholders whom we believe are United States persons.

The amount of RPII includible in your income, as a United States person, would be based upon the net RPII for the year after deducting related expenses such as losses, loss reserves and operating expenses and determined by multiplying the net RPII for such taxable year by a fraction equal to:


	•	the total earnings and profits that would be distributed indirectly through Greenlight Re with respect to our Class A Ordinary Shares if all earnings and profits of Greenlight Reinsurance, Ltd. were distributed on the last day of that taxable year; over


	•	the total earnings and profits of Greenlight Reinsurance, Ltd. for that taxable year that would be distributed with respect to all shares of Greenlight Reinsurance, Ltd. owned, directly or indirectly through Greenlight Re, by United States shareholders.

If Greenlight Reinsurance, Ltd. has RPII and Greenlight Re makes a distribution of RPII to you with respect to your Class A Ordinary Shares, the distribution will not be taxable to the extent such

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RPII has been allocated to and included in your gross income for the taxable year in which the distribution was paid or for any prior year.

Uncertainty as to Application of RPII

The courts have not interpreted the RPII provisions and there are not definitive Regulations interpreting the RPII provisions, although proposed Regulations have existed since 1991. We cannot tell you whether the IRS will adopt the proposed Regulations or what changes or clarifications might ultimately be made to the proposed Regulations. Additionally, we cannot predict whether any changes to the proposed Regulations, or any interpretation or application of RPII by the IRS, the courts or otherwise, might have retroactive effect. Accordingly, the meaning and application of the RPII provisions are uncertain. Finally, we cannot assure you that any amounts of RPII inclusions we report to you will not be subject to adjustment based upon subsequent IRS examination. We advise you to consult your own tax advisor as to the effects of these uncertainties.

We advise you to consult your own tax advisor as to the effects that the RPII provisions may have on you and your investment in our Class A Ordinary Shares.

Basis Adjustments

Your tax basis in your Class A Ordinary Shares will be increased by the amount of any RPII that you include in income. Similarly, your tax basis in your shares will be reduced by the amount of distributions of RPII that are excluded from income.

Information Reporting

A United States person that owns, directly or by attribution, more than 50% of the total combined voting power of all classes of a foreign corporation’s voting stock or more than 50% of the total value of shares of all classes of a foreign corporation’s stock, for an uninterrupted period of 30 days or more during the corporation’s taxable year, must file a Form 5471 with its United States income tax return. In addition, under certain circumstances, United States 10% shareholders and RPII shareholders of a CFC that own shares directly or indirectly through a foreign entity may also be required to file a Form 5471. Furthermore, United States persons that directly or indirectly acquire 10% or more of the value of shares of a foreign corporation may be required to file Form 5471 in certain circumstances even if the entity is not a CFC.

Accordingly, if Greenlight Reinsurance, Ltd.’s gross RPII for a taxable year constitutes 20% or more of its gross insurance income for the period, and the 20% ownership exception described above does not apply, any United States person treated as owning, directly or indirectly, any of Greenlight Reinsurance, Ltd.’s ordinary shares on the last day of Greenlight Reinsurance, Ltd.’s taxable year, will be subject to the RPII rules and will be required to file a Form 5471. In addition, if you own, directly or indirectly, more than 10% in value of our outstanding Ordinary Shares at any time during our taxable year, you will be required in certain circumstances to file a Form 5471 even we are not CFCs. If we determine that for any taxable year Greenlight Reinsurance, Ltd. does not meet either the RPII 20% gross income or the RPII 20% ownership exceptions described above, we intend to mail to all shareholders of record, and will make available at the transfer agent with respect to the Class A Ordinary Shares, Forms 5471, completed with the relevant information. However, our determination of the amount of Greenlight Reinsurance, Ltd.’s gross RPII for a given taxable year may not be accurate because of our inability to gather the information necessary to make such determination. Failure to file Form 5471 may result in penalties.

Tax-Exempt Shareholders

Under Section 512(b)(17) of the Code, a tax-exempt entity that owns, directly or indirectly through a non-U.S. entity or through attribution, any of our Class A Ordinary Shares is required to treat as unrelated business taxable income, or UBTI, the portion of any deemed distribution to such shareholder of subpart F insurance income if such insurance income would be treated as UBTI if derived directly by such tax-exempt shareholder. Exceptions are provided for income attributable to an insurance policy or reinsurance contract with respect to which the person, directly or indirectly, insured is:

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	•	the tax-exempt shareholder;


	•	an affiliate of the tax-exempt shareholder which itself is exempt from tax under Section 501(a) of the Code; or


	•	a director or officer of, or an individual who (directly or indirectly) performs services for, the tax-exempt shareholder or an exempt affiliate but only if the insurance covers primarily risks associated with the performance of services in connection with the tax-exempt shareholder or exempt affiliate.

Section 512(b)(17) of the Code applies to amounts included in gross income in any taxable year. If Greenlight Reinsurance, Ltd.’s gross RPII were to equal or exceed 20% of its gross insurance income and the 20% ownership exception for RPII did not apply, or if we were otherwise treated as a CFCs for a taxable year, then tax-exempt entities owning our Class A Ordinary Shares would be required to treat a portion of our subpart F income as UBTI. Additionally, a tax-exempt entity that is treated as a United States 10% shareholder or a RPII shareholder must file Form 5471 in the circumstances described above.

If you are a tax-exempt entity, we advise you to consult your own tax advisor as to the potential impact of Section 512(b)(17) of the Code and the UBTI provisions of the Code.

Dispositions of Class A Ordinary Shares

Generally, the difference between your basis in the Class A Ordinary Shares and the amount realized on the sale, exchange or other disposition of the Class A Ordinary Shares will be includible in gross income as capital gain or loss, subject to the relevant discussion in this summary relating to the potential application of the CFC and PFIC rules. If your holding period for the Class A Ordinary Shares is more than one year, any gain will be subject to United States federal income tax as long-term capital gain.

Under Section 1248 of the Code, any gain from the sale or exchange by a United States 10% shareholder of shares in a CFC may be treated as a dividend to the extent of the CFC’s earnings and profits during the period that the shareholder held the shares, subject to certain adjustments. If gain from the sale or exchange of our Class A Ordinary Shares is recharacterized as dividend income under Section 1248 of the Code, the gain generally should be treated as ‘‘qualified dividend income’’ to non-corporate taxpayers and eligible for a reduced 15% rate of taxation, subject to the holding period requirements and PFIC provisions discussed above. Section 953(c)(7) of the Code generally provides that Section 1248 also applies to the sale or exchange of shares by a United States person in a foreign corporation that earns RPII and is characterized as a CFC under the RPII rules if the foreign corporation would be taxed as an insurance company if it were a United States corporation. The dividend treatment applies to a United States person subject to the RPII rules regardless of whether the United States person is a United States 10% shareholder or whether the CFC meets either one of the first two RPII exceptions described above (i.e., the 20% ownership exception and the RPII 20% gross income exception). The proposed Regulations do not specifically address whether Section 1248 of the Code applies when a foreign corporation is not a CFC but the foreign corporation has an insurance company subsidiary that is a CFC for purposes of requiring United States persons to take into account RPII.

We believe that a strong argument exists that Section 1248 of the Code should not apply to dispositions of our Class A Ordinary Shares because Greenlight Re will not have any United States 10% shareholders and is not directly engaged in the insurance business. However, we cannot assure you that the IRS will interpret the proposed Regulations under Section 953 of the Code in this manner or that the Treasury Department will not amend such Regulations, or issue other Regulations, to provide that Section 1248 of the Code applies to dispositions of our Class A Ordinary Shares

We advise you to consult your own tax advisor regarding the applications of these provisions to the disposition of our Class A Ordinary Shares.

Foreign Tax Credit

Because we anticipate that United States persons will own a majority of our Class A Ordinary Shares after this offering is consummated and because a substantial part of our business includes the

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reinsurance of United States risks, only a portion of the RPII and dividends we pay, if any, will be treated as foreign source income for purposes of computing your United States foreign tax credit limitation. This foreign source limitation also applies to any gain from your sale of our Class A Ordinary Shares that is treated as a dividend under Section 1248 of the Code. It is likely that substantially all of our RPII and dividends that are foreign source income will constitute ‘‘passive’’ income for foreign tax credit limitation purposes. Thus, it may not be possible for you to utilize excess foreign tax credits to reduce United States tax on such income.

Information Reporting and Backup Withholding

Paying agents and custodians located in the United States will be required to comply with certain IRS information reporting requirements with respect to payments of dividends, if any, on the Class A Ordinary Shares payable to you or to paying agents or custodians located in the United States. In addition, you may be subject to backup withholding at the rate of 28% with respect to dividends paid by such persons, unless you:


	•	are a corporation or come within certain other exempt categories and, when required, demonstrate this fact; or


	•	provide a taxpayer identification number, certify as to no loss of exemption from backup withholding and otherwise comply with applicable requirements of the backup withholding rules.

The backup withholding tax is not an additional tax and may be credited against your regular United States federal income tax liability.

Sales of Class A Ordinary Shares through brokers by certain United States holders also may be subject to backup withholding (subject to the exceptions described above). Sales by corporations, certain tax-exempt entities, individual retirement plans, real estate investment trusts, certain financial institutions, and other ‘‘exempt recipients’’ as defined in applicable Regulations currently are not subject to backup withholding.

We advise you to consult with your own tax advisor regarding the possible applicability of the backup withholding provisions to sales of Class A Ordinary Shares.

THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY. WE ADVISE YOU TO CONSULT YOUR OWN TAX ADVISOR CONCERNING THE UNITED STATES FEDERAL, STATE, AND LOCAL AND FOREIGN TAX CONSEQUENCES TO YOU OF BUYING, HOLDING, AND SELLING OUR CLASS A ORDINARY SHARES.

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UNDERWRITING

Lehman Brothers Inc. and UBS Securities LLC are acting as joint book-running managers, and along with , are acting as representatives of the underwriters under this offering. Under the terms of an underwriting agreement, each of the underwriters named below has severally agreed to purchase from us the respective number of Class A Ordinary Shares shown opposite its name below:


Underwriters			Number of shares
Lehman Brothers Inc.
UBS Securities LLC
Total

The underwriting agreement provides that the underwriters’ obligation to purchase Class A Ordinary Shares depends on the satisfaction of the conditions contained in the underwriting agreement, including:


	•	the obligation to purchase all of the Class A Ordinary Shares offered hereby (other than those Class A Ordinary Shares covered by the underwriters’ option to purchase additional Class A Ordinary Shares as described below), if any of the Class A Ordinary Shares are purchased;


	•	the representations and warranties made by us to the underwriters are true;


	•	there is no material change in our business or the financial markets; and


	•	we deliver customary closing documents to the underwriters.

Commissions and Expenses

The following table summarizes the underwriting discounts and commissions we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to additional Class A Ordinary Shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay to us for the Class A Ordinary Shares.

No exercise

Full exercise

Per Class A Ordinary Share

Total

The expenses of the offering that are payable by us are estimated to be $ (exclusive of underwriting discounts and commissions).

The representatives of the underwriters have advised us that the underwriters propose to offer the Class A Ordinary Shares directly to the public at the public offering price presented on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $ per Class A Ordinary Share. After the offering, the representatives may change the offering price and other selling terms.

The underwriters are not participating in the concurrent private placement of the Class B Ordinary Shares and will not receive any fees, discounts or commissions with respect to the private placement.

Option to Purchase Additional Class A Ordinary Shares

We have granted the underwriters an option exercisable for 30 days after the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of Class A Ordinary Shares at the public offering price per share less underwriting discounts and commissions. To the extent that this option is exercised, each underwriter will be obligated, subject to certain

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conditions, to purchase its pro rata portion of these additional Class A Ordinary Shares based on the underwriter’s percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting section.

Lock-Up Agreements

We, all of our directors and executive officers, and shareholders holding an aggregate of approximately % of our currently outstanding Class A Ordinary Shares (and % of our currently outstanding Ordinary Shares) have agreed that, subject to certain exceptions without the prior written consent of each of Lehman Brothers Inc. and UBS Securities LLC, we and they will not directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any Ordinary Shares (including, without limitation, ordinary shares that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and Ordinary Shares that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for Class A Ordinary Shares, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic consequences of ownership of the Class A Ordinary Shares, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any Class A Ordinary Shares or securities convertible, exercisable or exchangeable into Class A Ordinary Shares or any of our other securities, or (4) publicly disclose the intention to do any of the foregoing for a period of 180 days after the date of this prospectus.

The 180-day restricted period described in the preceding paragraph will be extended if:


	•	during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs; or


	•	prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or occurrence of a material event, unless such extension is waived in writing by Lehman Brothers Inc. and UBS Securities LLC.

Offering Price Determination

Prior to this offering, there has been no public market for our Class A Ordinary Shares. The initial public offering price will be negotiated between the underwriters and us. In determining the initial public offering price of our Class A Ordinary Shares, the underwriters will consider:


	•	the history and prospects for the industry in which we compete;


	•	our financial information;

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	•	the ability of our management and our business potential and earning prospects;


	•	the prevailing securities markets at the time of this offering; and


	•	the recent market prices of, and the demand for, publicly-traded shares of generally comparable companies.

Indemnification

We have agreed to indemnify the underwriters against certain liabilities relating to the offering, including liabilities under the Securities Act and liabilities incurred in connection with the Directed Share Program referred to below, or to contribute to payments that the underwriters may be required to make for these liabilities.

Directed Share Program

At our request, the underwriters have reserved for sale at the initial public offering price up to five percent of the Class A Ordinary Shares offered hereby for officers, directors, employees and certain other persons associated with us and with whom we do business. The number of Class A Ordinary Shares available for sale to the general public will be reduced to the extent such persons purchase such reserved Class A Ordinary Shares. Any reserved Class A Ordinary Shares not so purchased will be offered by the underwriters to the general public on the same basis as the other Class A Ordinary Shares offered hereby. The participants in this program have entered into lock-up agreements. See ‘‘—Lock-Up Agreements.’’

Stabilization, Short Positions and Penalty Bids

The underwriters may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the Class A Ordinary Shares, in accordance with Regulation M under the Exchange Act:


	•	Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.


	•	A short position involves a sale by the underwriters of ordinary shares in excess of the number of ordinary shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of ordinary shares involved in the sales made by the underwriters in excess of the number of ordinary shares they are obligated to purchase is not greater than the number of ordinary shares that they may purchase by exercising their option to purchase additional ordinary shares. In a naked short position, the number of ordinary shares involved is greater than the number of ordinary shares in their option to purchase additional ordinary shares. The underwriters may close out any short position by either exercising their option to purchase additional ordinary shares and/or purchasing ordinary shares in the open market. In determining the source of ordinary shares to close out the short position, the underwriters will consider, among other things, the price of ordinary shares available for purchase in the open market as compared to the price at which they may purchase ordinary shares through their option to purchase additional ordinary shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the ordinary shares in the open market after pricing that could adversely affect investors who purchase in the offering.


	•	Syndicate covering transactions involve purchases of the ordinary shares in the open market after the distribution has been completed in order to cover syndicate short positions.


	•	Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the ordinary shares originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

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These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ordinary shares or preventing or retarding a decline in the market price of the ordinary shares. As a result, the price of the ordinary shares may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the Nasdaq Global Select Market or otherwise and, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the ordinary shares. In addition, neither we nor any of the underwriters make representation that the representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any underwriter’s or selling group member’s web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

Nasdaq Global Select Market

We have applied to have our Class A Ordinary Shares listed for quotation on the Nasdaq Global Select Market under the symbol ‘‘GLRE.’’ In connection with that listing, the underwriters have undertaken to sell the minimum number of Class A Ordinary Shares to the minimum number of beneficial owners necessary to meet the Nasdaq listing requirements.

Discretionary Sales

The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares offered by them.

Stamp Taxes

If you purchase ordinary shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Relationships/NASD Conduct Rules

Ian Isaacs, a senior vice president (Investments group) with UBS Financial Services and who, in his role as such, conducts market research for our affiliates, is one of our directors. UBS Financial Services is an affiliate of UBS Securities LLC. UBS Financial Services and other predecessors and affiliates of the underwriters have, from time to time, provided, and may in the future continue to provide, various financial advisory and investment banking services for us or our affiliates, for which they received or will receive customary fees and commissions.

Foreign Selling Restrictions

United Kingdom

Shares of our Class A Ordinary Shares may not be offered or sold and will not be offered or sold to any persons in the United Kingdom other than to persons whose ordinary activities involve them in

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acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses and in compliance with all applicable provisions of the Financial Service and Markets Act 2000, or FSMA, with respect to anything done in relation to our Class A Ordinary Shares in, form or otherwise involving the United Kingdom. In addition, any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of shares of our common stock may only be communicated or caused to be communicated and will only communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to us. Without limitation to the other restrictions referred to herein, this prospectus is directed only at (1) persons outside the United Kingdom, (2) persons having professional experience in matters relating to investments who fall within the definition of ‘‘investment professionals’’ in Article 19(5) of the FSMA (Financial Promotion) Order 2005; or (3) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the FSMA (Financial Promotion) Order 2005. Without limitation to the other restrictions referred to herein, any investment or investment activity to which this prospectus relates is available only to, and will be engaged in only with, such persons, and persons within the United Kingdom who receive this communication (other than persons who fall within (2) or (3) above) should not rely or act upon this communication.

European Economic Area

With respect to each Member State of the European Economic Area which has implemented Prospectus Directive 2003/71/EC, including any applicable implementing measures, from and including the date on which the Prospectus Directive is implemented in that Member State, the offering of our Class A Ordinary Shares in this offer is only being made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover of more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

Switzerland

Our Class A Ordinary Shares may be offered in Switzerland only on the basis of a non-public offering. This prospectus does not constitute an issuance prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations or a listing prospectus according to Article 32 of the Listing Rules of the Swiss exchange. Our Class A Ordinary Shares may not be offered or distributed on a professional basis in or from Switzerland and neither this prospectus nor any other offering material relating to our Class A Ordinary Shares may be publicly issued in connection with any such offer or distribution. The shares have not been and will not be approved by any Swiss regulatory authority. In particular, the shares are not and will not be registered with or supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act.

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LEGAL MATTERS

Certain matters as to U.S. law in connection with this offering will be passed upon for us by Akin Gump Strauss Hauer & Feld LLP. Legal matters in connection with this offering will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP as to U.S. law. The validity of the Class A Ordinary Shares under Cayman Islands law will be passed upon for us by Turner & Roulstone, Attorneys-at-Law, George Town, Grand Cayman.

EXPERTS

The consolidated financial statements and schedules for each of the periods listed in the index to the consolidated financial statements under the heading ‘‘Audited Consolidated Financial Statements’’ have been audited by BDO Seidman, LLP, an independent registered public accounting firm to the extent and for the periods set forth in their report appearing elsewhere, and are included in reliance upon such report given upon the authority of said firm as experts in accounting and auditing.

On December 12, 2006, our Audit Committee determined that our relationship with KPMG LLP, or KPMG, should cease due to an independence issue with respect to the chairman of our Audit Committee who was formerly a partner at KPMG. Accordingly, the Audit Committee appointed BDO Seidman, LLP as our independent auditors. During the two most recent fiscal years and the interim period preceding this determination by our Audit Committee, there were no (i) disagreements with KMPG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused it to make reference to the subject matter of the disagreements in connection with its report or (ii) ‘‘reportable events’’ as such term is used in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934.

WHERE TO FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the issuance of our ordinary shares being offered hereby. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and our Class A Ordinary Shares, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made.

We are not currently subject to the informational requirements of the Exchange Act. As a result of this offering, we will become subject to the informational requirements of the Exchange Act and, in accordance therewith, will file reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC’s home page on the Internet ( http://www.sec.gov ).

We intend to furnish our shareholders with annual reports containing financial statements audited by our independent registered public accounting firm and quarterly reports for the first three fiscal quarters of each fiscal year containing unaudited interim financial information. Our telephone number is (345) 745-4573.

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ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. FEDERAL
SECURITIES LAWS AND OTHER MATTERS

We are incorporated as an exempted company limited by shares under the laws of the Cayman Islands. In addition, some of our directors and officers reside outside the United States and a significant portion of their and our assets are located outside of the United States. As a result, it may be difficult for persons purchasing the Class A Ordinary Shares to effect service of process within the United States upon us or to enforce judgments against us or judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States or any state of the United States. However, we may be served with process in the United States with respect to actions against us arising out of or in connection with violations of U.S. federal securities laws relating to offers and sales of ordinary shares made hereby by serving Corporation Service Company, 1133 Avenue of the Americas, Suite 3100, New York, New York 10036-6710, our U.S. agent irrevocably appointed for that purpose.

Turner & Roulstone, our Cayman Islands counsel, has advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign judgment of a court of competent jurisdiction if such judgment is final, for a liquidated sum, provided it is not in respect of taxes or a fine or penalty, is not inconsistent with a Cayman Islands judgment in respect of the same matters, and was not obtained in a manner which is contrary to the public policy of the Cayman Islands. It is doubtful the courts of the Cayman Islands will, in an original action in the Cayman Islands, recognize or enforce judgments of U.S. courts predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States on the grounds that such provisions are penal in nature.

A Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2005 and 2004			F-3
Consolidated Statements of Income for the year ended December 31, 2005 and the period from July 13, 2004 (date of incorporation) to December 31, 2004			F-4
Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2005 and the period from July 13, 2004 (date of incorporation) to December 31, 2004			F-5
Consolidated Statements of Cash Flows for the year ended December 31, 2005 and the period from July 13, 2004 (date of incorporation) to December 31, 2004			F-6
Notes to the Consolidated Financial Statements			F-7
Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005			F-18
Consolidated Statements of Income for the nine months ended September 30, 2006 and 2005			F-19
Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2006 and 2005			F-20
Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005			F-21
Notes to the Consolidated Financial Statements			F-22
Financial Statement Schedules
Schedule I: Summary of Investments Other than Investments in Related Parties			F-35
Schedule II: Condensed Financial Information of Registrant			F-36

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Greenlight Capital Re, Ltd. and its Subsidiary
Grand Cayman, Cayman Islands

We have audited the accompanying consolidated balance sheets of Greenlight Capital Re, Ltd. and its Subsidiary as of December 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity and cash flows for the year ended December 31, 2005 and the period from July 13, 2004 (date of incorporation) through December 31, 2004. We have also audited the schedules listed in the accompanying index. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedules are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedules, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Greenlight Capital Re, Ltd. and its Subsidiary as of December 31, 2005 and 2004, and the results of their operations and their cash flows for the year ended December 31, 2005 and the period July 13, 2004 (date of incorporation) through December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the schedules present fairly, in all material respects, the information set forth therein.

/s/ BDO Seidman, LLP
Grand Rapids, Michigan

January 11, 2007

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


	2005				2004
ASSETS
Cash and cash equivalents		$	7,218			$	30,664
Restricted cash and cash equivalents			99,719				96,791
Investments in securities, at fair value			219,211				162,205
Interest receivable on related party note receivable			479				516
Investment income receivable			850				148
Other assets			458				440
Total assets		$	327,935			$	290,764
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Securities sold, not yet purchased, at fair value		$	87,518			$	91,147
Dividends payable on securities sold, not yet purchased			101				78
Financial contracts payable, at fair value			722				—
Accounts payable and accrued expenses			790				74
Performance fee payable to related party			6,982				2,405
Accounts payable to related party			—				54
Management fee payable to related party			—				482
Total liabilities			96,113				94,240
Shareholders’ equity
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)			—				—
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 16,181,666 (2004: 16,175,000); and Class B: par value $0.10; authorized, 25,000,000; issued and outstanding 5,050,000)			2,123				2,122
Additional paid-in capital			212,871				212,127
Less: Related party promissory note receivable			(16,212	)			(24,500	)
Retained earnings			33,040				6,775
Total shareholders’ equity			231,822				196,524
Total liabilities and shareholders’ equity		$	327,935			$	290,764

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF INCOME

Year ended December 31, 2005 and period from July 13, 2004 (date of incorporation)
to December 31, 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


	2005			2004
Revenues
Net underwriting income		$	—		$	—
Net investment income			27,934			9,636
Interest income on related party promissory note receivable			1,323			516
Total revenues			29,257			10,152
Expenses
General and administrative expenses			2,992			3,377
Net income		$	26,265		$	6,775
Earnings per share
Basic		$	1.24		$	0.32
Diluted			1.24			0.32
Weighted average number of ordinary shares used in the determination of:
Basic			21,226,868			21,225,000
Diluted			21,265,801			21,234,350

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Year ended December 31, 2005 and period from July 13, 2004 (date of incorporation)
to December 31, 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


	Ordinary shares issued
	Number of shares		Share capital			Additional paid-in capital				Related party promissory note receivable				Retained earnings			Total shareholders’ equity

Balance at July 13, 2004		—		$	—		$	—			$	—			$	—		$	—
Issue of Class A Ordinary share capital		16,175,000			1,617			160,133				—				—			161,750
Issue of Class B Ordinary share capital		5,050,000			505			49,995				(24,500	)			—			26,000
Options and awards expense		—			—			1,999				—				—			1,999
Net income		—			—			—				—				6,775			6,775
Balance at December 31, 2004		21,225,000			2,122			212,127				(24,500	)			6,775			196,524
Issue of Class A Ordinary share capital		6,666			1			(1	)			—				—			—
Options and awards expense		—			—			745				—				—			745
Principal repayments received		—			—			—				8,288				—			8,288
Net income		—			—			—				—				26,265			26,265
Balance at December 31, 2005		21,231,666		$	2,123		$	212,871			$	(16,212	)		$	33,040		$	231,822

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31, 2005 and period from July 13, 2004 (date of incorporation)
to December 31, 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


	2005				2004
Cash provided by (used in):
Operating activities
Net income		$	26,265			$	6,775
Adjustments to reconcile net income to net cash provided by operating activities:
Net change in unrealized gains on securities			(22,202	)			(15,438	)
Net realized (gains) losses on securities			(11,403	)			2,365
Net gain on foreign exchange			(1,141	)			(131	)
Stock options and stock awards expense			745				1,999
Depreciation			2				—
Purchase of securities—trading			(174,138	)			(155,627	)
Proceeds on sale of securities—trading			148,249				97,773
Net change in investment income receivable			(702	)			(148	)
Net change in other assets			20				(440	)
Net change in dividends payable on securities sold, not yet purchased			23				78
Net change in financial contracts payable, at fair value			722				—
Net change in accounts payable and accrued expenses			716				74
Net change in performance fee payable to related party			4,577				2,405
Net change in accounts payable to related party			(54	)			54
Net change in management fee payable to related party			(482	)			482
Net cash used in operating activities			(28,803	)			(59,779	)
Investing activities
Purchase of fixed assets			(40	)			—
Net change in restricted cash and cash equivalents			(2,928	)			(96,791	)
Net cash used in investing activities			(2,968	)			(96,791	)
Financing activities
Proceeds from share issue			—				187,750
Collection of related party promissory note receivable			8,288				—
Net change in interest receivable on related party promissory note receivable			37				(516	)
Net cash provided by financing activities			8,325				187,234
Net (decrease) increase in cash and cash equivalents			(23,446	)			30,664
Cash and cash equivalents at beginning of period			30,664				—
Cash and cash equivalents at end of period		$	7,218			$	30,664
Supplementary information:
Interest paid in cash		$	518			$	108
Interest received in cash			2,676				270

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


1.	DESCRIPTION OF BUSINESS

Greenlight Capital Re, Ltd. (the ‘‘Company’’) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004. The Company incorporated a wholly owned subsidiary, Greenlight Reinsurance, Ltd. (the ‘‘Subsidiary’’), to provide global property and casualty reinsurance. The Subsidiary has an unrestricted Class ‘‘B’’ insurance license under Section 4(2) of the Cayman Islands Insurance Law.

Effective August 11, 2004, the Company raised $212.2 million in a private placement, of which $24.5 million was paid for with a note receivable (see note 6). The Company invested a portion of the above noted proceeds into its Subsidiary. As of December 31, 2005, the Subsidiary had not entered into any reinsurance or insurance agreements.


2.	SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). Since the Subsidiary has not engaged in any insurance business, no insurance related accounting policies have been established. The significant accounting policies adopted by the Company are as follows:

Basis of Presentation

The consolidated financial statements include the accounts of the Company and the Subsidiary. All significant intercompany transactions are eliminated on consolidation.

Use of Estimates in Financial Statements

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the year. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and certain short-term, highly liquid investments with original maturity dates of three months or less.

Investments in Securities and Securities Sold, Not Yet Purchased

The Company’s investments in bonds and equities are considered ‘‘trading securities’’ and valued based on the last reported sales price on the balance sheet dates as reported by a recognized exchange. Securities for which recognized exchange quotations are not readily available (e.g., private equity) are valued at management’s best estimate (utilizing the services of an investment advisor) of the fair market value based on prices received from market makers.

Premiums and discounts on fixed income securities are amortized into investment income over the life of the security.

Any realized and unrealized gains or losses are determined on the basis of the specific identification method (by reference to cost and amortized cost, as appropriate) and included in investment income in the consolidated statements of income.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)

Dividend income and expense are recorded on the ex-dividend date.

Interest income and interest expense are recorded on an accrual basis.

Investments in Options

Amounts invested in exchange traded call and put options are recorded as an asset or liability at inception. Subsequent to initial recognition, unexpired option contracts are recorded at fair market value which is based upon the last quoted bid and ask prices of the call and put options. Realized and unrealized gains and losses are included in net investment income in the consolidated statements of income.

Investments in Total Return Swap Agreements

Total return swap agreements, included in financial contracts payable, are derivative financial instruments entered into whereby the Company is either entitled to receive or obligated to pay the product of a notional amount multiplied by the movement in an underlying security, which the Company does not own, over a specified time frame. In addition, the Company may also be obligated to pay or receive other payments based on either interest rate, dividend payments and receipts, or foreign exchange movements during a specified period. The Company measures its rights or obligations to the counterparty based on the fair market value movements of the underlying security together with any other payments due. These contracts are carried at estimated fair value, with the resultant unrealized gains and losses reflected in net investment income. Additionally, any changes in the value of amounts received or paid on swap contracts are reported as a gain or loss in net investment income.

Derivative Financial Instruments

Statement of Financial Accounting Standards (SFAS) No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities,’’ establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives in the balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in income or comprehensive income, depending on whether the instrument qualifies as a hedge transaction, and if so, the type of hedge transaction. The Company’s derivatives do not constitute hedges for financial reporting purposes. Derivative financial instrument assets are generally included in investments in securities or financial contracts receivable. Derivative financial instrument liabilities are generally included in financial contracts payable.

Net Investment Income

Net investment income is stated net of investment management and custody fees. As all the investments are classified as trading securities, net investment income includes both realized and unrealized gains and losses.

Share Based Compensation

The Company has established a Stock Incentive Plan for directors, employees and consultants. In addition, the Company granted share purchase options in 2004 to a service provider in exchange for services received (see note 6).

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)

In 2004, the Company adopted SFAS No. 123 (Revised 2004) (‘‘SFAS 123R’’), ‘‘Share Based Payments,’’ to account for the Company’s Stock Incentive Plan. SFAS 123R requires the Company to recognize share-based compensation transactions using the fair value at the grant date of the award. Determining the fair value of share based awards at the grant date requires judgment. The Company uses an option-pricing model (Black-Scholes pricing model) to assist in the calculation of fair value. Due to the limited history of the Company, the Company also uses the ‘‘calculated value method’’ which relies on historical industry volatility and uses the full life of the option, ten years, as the estimated term of the option. Additionally, the Company has assumed that dividends will not be paid. If actual results differ significantly from these estimates and assumptions, share based compensation expense could be materially impacted.

Service provider share purchase options are expensed in the consolidated statements of income when services are rendered. For the employee Stock Incentive Plan, compensation cost is calculated and expensed over the vesting periods on a graded vesting basis (see note 6).

Director Stock Awards

In 2004, the Company granted certain directors a total of 20,000 Class A Ordinary shares, which vest over a three-year period. The directors paid $0.10 per share and each share is valued at $10 per share. Director stock awards are expensed on a straight-line basis over the vesting period.

Foreign Exchange

The reporting currency of the Company is the U.S. dollar. Transactions in foreign currencies are recorded in United States dollars at the exchange rates in effect on the transaction date. Monetary assets and liabilities in foreign currencies at the balance sheet date are translated at the exchange rate in effect at the balance sheet date and translation exchange gains and losses, if any, are included in the statement of income.

Other Assets

Other assets consist primarily of prepaid expenses and fixed assets. Fixed assets are recorded at cost and depreciated over the estimated useful life of the assets using the straight-line method.

Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the consolidated statements of income. Therefore, a separate statement of comprehensive income has not been prepared.

Earnings Per Share

Basic earnings per share is based on weighted average ordinary shares outstanding and excludes dilutive effects of stock options and stock awards. Diluted earnings per share assumes the exercise of all dilutive stock options and stock awards using the treasury method.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)


	2005		2004
Weighted average shares outstanding		21,226,868		21,225,000
Effect of dilutive service provider stock options		36,859		8,035
Effect of dilutive employee and director options and stock awards		2,074		1,315
		21,265,801		21,234,350

There were 530,000 anti-dilutive stock options outstanding at December 31, 2005. There were no anti-dilutive stock options outstanding at December 31, 2004.

Segment Information

Under SFAS No. 131, ‘‘Disclosures about Segments of an Enterprise and Related Information’’ (‘‘SFAS 131’’), operating segments are based on the internal organization management uses for allocating resources to and assessing performance as the source of the Company’s reportable segments.

The Company manages its business on the basis of one operating segment, Property and Casualty Reinsurance, in accordance with the qualitative and quantitative criteria established by SFAS 131.


3.	CASH AND CASH EQUIVALENTS


	2005				2004
Cash at banks		$	4,124			$	1,023
Cash held with brokers			(49	)			6,072
Money market funds held with brokers			3,143				23,569
		$	7,218			$	30,664

Due to the short term nature of cash and cash equivalents, management believes the above noted carrying values approximate their fair market value.


4.	RESTRICTED CASH AND CASH EQUIVALENTS

The Company is required to maintain certain cash in segregated accounts with prime brokers and swap counter-parties. The amount of restricted cash held by prime brokers is primarily used to support the liability created from securities sold, not yet purchased. The amount of cash encumbered varies depending on the market value of the securities sold, not yet purchased. Swap counter-parties require cash collateral to support the current value of any amounts that may be due to the counter-party based on the value of the underlying security.


	2005			2004
Cash held by prime brokers		$	88,979		$	91,976
Cash held by swap counter-parties			10,740			4,815
		$	99,719		$	96,791

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS

Investments in Securities


	2005 Fair market value			2004 Fair market value
Bonds and equities		$	218,717		$	162,205
Options			494			—
		$	219,211		$	162,205

In the normal course of its business, the Company purchases and sells various financial instruments which include listed and unlisted bonds, equities, put and call options and similar instruments sold, not yet purchased. These financial instruments may result in market and credit risks, the amounts of which are not apparent from the financial statements.

The Company is exposed to market risk including interest rate and foreign exchange fluctuations on financial instruments that are valued at market prices. Market movements can be volatile and difficult to predict. This may affect the ultimate gains or losses realized upon the sale of its holdings. Management utilizes the services of its investment advisor to monitor its positions to reduce the risk of potential loss due to changes in market values.

Purchases and sales of investments are disclosed in the consolidated statements of cash flows. Net realized gains on the sale of investments and investments sold, not yet purchased during the year were $11.4 million (2004: net realized loss of $2.4 million). Gross realized gains were $28.7 million (2004: $2.1 million) and gross realized losses were $17.3 million (2004: $4.5 million).

Investment in Bond and Equity Securities

At December 31, 2005 and 2004, included in investment securities are the following long positions:


2005	Cost/ amortized cost			Unrealized gains			Unrealized losses				Fair market value
U.S. Corporate bonds		$	241		$	3		$	(6	)		$	238
Equities—listed and unlisted			181,175			46,709			(9,405	)			218,479
		$	181,416		$	46,712		$	(9,411	)		$	218,717


2004	Cost/ amortized cost			Unrealized gains			Unrealized losses				Fair market value
Non-U.S. Corporate bonds		$	751		$	—		$	(14	)		$	737
Equities—listed and unlisted			132,020			29,488			(40	)			161,468
		$	132,771		$	29,488		$	(54	)		$	162,205

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS (Continued)

The contractual maturity of corporate bonds at December 31, 2005 is as follows:


	Cost/ amortized cost			Fair market value
Due between 5 and 10 years		$	1		$	1
Due 10 years and thereafter			240			237
		$	241		$	238

Investment in Options

Options are derivative financial instruments that give the buyer, in exchange for a premium payment, the right, but not the obligation, to either purchase from (call option) or sell to (put option) the writer a specified underlying security at a specified price on or before a specified date. The Company enters into exchange traded option contracts to meet certain investment objectives. For these exchange traded option contracts, the exchange acts as the counterparty to specific transactions and therefore bears the risk of delivery to and from counterparties of specific positions. The Company is subject to market risk as it may incur a loss if the market price of the security changes and the option is not exercised. Management utilizes the services of its investment advisor to monitor its positions continuously to reduce the risk of potential loss.

At December 31, 2005, included in investment securities were the following call and put options:


	Cost			Unrealized gains (losses)				Fair market value
Call options		$	87		$	365			$	452
Put options			123			(81	)			42
		$	210		$	284			$	494

There were no options at December 31, 2004.

Investment in Securities Sold, not yet purchased


	2005 Fair market value				2004 Fair market value
Equities		$	(87,075	)		$	(91,147	)
Options			(443	)			—
		$	(87,518	)		$	(91,147	)

Securities sold, not yet purchased are securities sold that the Company does not own in anticipation of a decline in the market value of the security. The Company’s risk is that the value of the security will increase rather than decline. Consequently, the settlement amount of the liability for securities sold, not yet purchased may exceed the amount recorded in the consolidated balance sheet as the Company is obligated to purchase the securities sold, not yet purchased in the market at prevailing prices to settle its obligations. To sell a security, not yet purchased, the Company may need to borrow the security for delivery to the buyer. On each day the transaction is open, the liability for the obligation to replace the borrowed security is marked-to-market and an unrealized gain or loss is recorded. At the time the transaction is closed, the Company realizes a gain or loss equal to the

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS (Continued)

difference between the price at which the security was sold and the cost of replacing the borrowed security. While the transaction is open, the Company will also incur an expense for any dividends or interest which will be paid to the lender of the securities.

At December 31, 2005 and 2004, the Company’s investment portfolio included the following securities sold, not yet purchased:


2005	Cost				Unrealized gains			Unrealized losses				Fair market value
Equities—listed		$	(86,447	)		$	5,351		$	(5,979	)		$	(87,075	)


2004	Cost				Unrealized gains			Unrealized losses				Fair market value
Equities—listed		$	(77,152	)		$	193		$	(14,188	)		$	(91,147	)

At December 31, 2005, included in the securities sold, not yet purchased were the following call and put options written:


	Cost				Unrealized gains (losses)				Fair market value
Call options		$	(103	)		$	(321	)		$	(424	)
Put options			(53	)			34				(19	)
		$	(156	)		$	(287	)		$	(443	)

There were no options written at December 31, 2004.

Investment in Total Return Swap Contracts

During the year ended December 31, 2005, the Company entered into total return swap contracts with various financial institutions. Under the terms of each of these swap contacts, the Company is either entitled to receive or obligated to make payments which are based on the product of a formula contained within the contract that uses the change in the fair market value of the underlying security and the notional value of the swap contract. Each total return swap contract relates to a specified security. The Company enters into total return swap contracts to meet certain investment objectives.


Underlying security	Position		Listing currency		Fair market value of underlying				Obligations on swap contracts
Equities—listed		Long		USD		$	5,692			$	(76	)
Non-U.S equities—listed		Short		JPY			(14,179	)			(332	)
Non-U.S equities—listed		Short		SEK			(2,900	)			(314	)
										$	(722	)

The Company is subject to market risk on the underlying security as the Company may incur an obligation if the market price of the security decreases or increases. Management utilizes the services of its investment advisor to monitor its positions to reduce the risk of potential loss.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


6.	SHARE CAPITAL

The holders of all ordinary shares are entitled to share equally in dividends declared by the board of directors. In the event of a winding-up or dissolution of the Company, the ordinary shareholders share equally and rateably in the assets of the Company, after payment of all debts and liabilities of the Company and after liquidation of any issued and outstanding preferred shares. At December 31, 2005, no preferred shares had been issued or outstanding. The board of directors is authorized to establish the rights and restrictions for preferred shares as they deem appropriate.

The Second Amended and Restated Memorandum and Articles of Association (the ‘‘Articles’’) provide that the holders of Class A Ordinary shares generally are entitled to one vote per share. However, except upon unanimous consent of the board of directors, no Class A shareholder is permitted to vote an amount of shares which would cause any United States person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) 9.9% or more of the total voting power of all issued and outstanding ordinary shares.

The Articles further provide that the holders of Class B Ordinary shares generally are entitled to ten votes per share. However, holders of Class B Ordinary shares, together with their affiliates, are limited to voting that number of Class B Ordinary shares equal to 23.0% of the total voting power of the total issued and outstanding ordinary shares.

Shares reserved for issuance is comprised of 400,000 Class A Ordinary shares in relation to options granted to a service provider and 1,273,000 Class A Ordinary shares reserved for the Company’s Stock Incentive Plan for eligible directors, employees and consultants. The Stock Incentive Plan is administered by the compensation committee of the board of directors.

During the year ended December 31, 2004, the Company issued 5,050,000 Class B Ordinary shares valued at $50.5 million to GCI. The Company received $26.0 million in cash and the remaining balance of $24.5 million was secured by a promissory note receivable. The promissory note receivable provides that GCI is to pay interest calculated as the one-year London Interbank Offered Rate (‘‘LIBOR’’) plus 3% per annum and accrued daily. Interest is to be paid annually on the anniversary date (August 11), and the principal is to be repaid no later than August 11, 2009. During the year ended December 31, 2005, GCI repaid $8.3 million of the principal and $1.4 million of interest relating to the promissory note receivable. No principal or interest payments were made in 2004.

Additional paid-in capital includes the premium of $9.90 per share paid by the subscribing shareholders for Class A and B Ordinary shares which have a par value of $0.10 each.

During the year ended December 31, 2005, the Company issued 6,666 Class A Ordinary shares. These represent the vesting of directors’ stock awards.

The Subsidiary is subject to a minimum shareholders’ equity balance of $120 as determined by the Cayman Islands Monetary Authority.

Service Provider Share Purchase Options

An affiliate of GCI entered into a consulting agreement (the ‘‘Consulting Agreement’’) with First International Securities Ltd. (‘‘First International’’) in August 2002. First International received a cash payment of $75 for the preparation and delivery of a feasibility study relating to the formation, capitalization, licensing and operation of the Company. Additionally, it was agreed that upon consummation of the initial private placement, First International Capital Holdings Ltd., the successor to First International, would receive, in consideration for First International’s assistance to GCI with the establishment of the Company, a 10-year share purchase option to purchase 400,000 Class A

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


6.	SHARE CAPITAL (Continued)

Ordinary Shares. These share purchase options were granted on September 20, 2004 and have an exercise price of $10 per share (see note 10).

As discussed in note 2, the Company uses the Black-Scholes option pricing model to determine the valuation of these options. In doing so, an industry volatility figure of 30% and a risk-free rate of 4.1% were used to derive the calculated value of the options, which were ultimately valued at $4.95 per option. A representative sample of select property and casualty reinsurers was used by the Company in determining volatility. The total value of these options, amounting to $2.0 million, is included in additional paid-in capital and was expensed in the year ended December 31, 2004.

In the opinion of the Company, the option value of $4.95 per option represents a reasonable estimate of the valuation of each option at grant date. However, due to the limited history of the Company and the fact that the historical industry volatility had to be used to derive an implied long term volatility for the Company, it is reasonably possible that the expectations associated with these amounts could change in the near term.

Employee Stock Options

The Company has a Stock Incentive Plan for directors, employees and consultants. The Company has reserved for issuance 1,273,000 Class A Ordinary shares for eligible employees and directors. During the year ended December 31, 2005, two employees were granted options to purchase a total of 530,000 Class A Ordinary shares. These options vest over three years and expire 10 years from grant date. The Company uses the Black-Scholes option pricing model to determine the valuation of these options.

Using a risk free rate of 4.36%, an estimated volatility of 30% and an expected term of 10 years, the employee options have been valued at $5.57 per share. As noted above, due to the limited history of the Company, historical industry volatility had to be substituted for the Company’s volatility. At the present time, the board of directors does not anticipate any dividends will be declared during the expected term of the options. The Company uses graded vesting for expensing employee stock options. The total compensation cost expensed for the year ended December 31, 2005 under the employee stock option plan is $0.7 million (2004: $0). At December 31, 2005, the total compensation cost related to non-vested options not yet recognized is $2.3 million to be recognized over a weighted average period of 2.63 years assuming the employees complete their service period for vesting of the options.

Employee stock option activity (all of which remain non-vested) during the year is as follows:


	Number of shares		Weighted average exercise price			Weighted average grant date calculated value
Balance at December 31, 2004		—		$	—		$	—
Granted		530,000			11.12			5.57
Exercised		—			—			—
Forfeited		—			—			—
Expired		—			—			—
Balance at December 31, 2005		530,000		$	11.12		$	5.57

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


7.	NET INVESTMENT INCOME


Period ended December 31,	2005				2004
Change in net unrealized gains		$	22,202			$	15,438
Net realized gains (losses) on securities			11,403				(2,365	)
Dividend income, net of withholding taxes			4,825				493
Interest income			2,017				419
Net gain on foreign exchange relating to investments			1,141				131
Other investment expenses			(180	)			(53	)
Interest expense			(518	)			(108	)
Change in financial contracts payments			(722	)			—
Dividends paid on securities sold, not yet purchased			(2,051	)			(802	)
Investment fees to a related party (see note 10)			(10,183	)			(3,517	)
		$	27,934			$	9,636


8.	GENERAL AND ADMINISTRATIVE EXPENSES


Period ended December 31,	2005			2004
General expenses		$	2,247		$	393
Stock compensation expense			745			1,999
Organizational costs			—			985
		$	2,992		$	3,377


9.	TAXATION

Under current Cayman Islands Law, the Company is not obligated to pay any taxes in the Cayman Islands on either income or capital gains. Accordingly, no provision for income taxes is made in these consolidated financial statements. If any form of taxation were to be enacted, the Company has been granted an exemption and any such tax will not be applicable until February 2025.


10.	RELATED PARTY TRANSACTIONS

Director Stock Awards

During the year ended December 31, 2004, certain directors received a stock award of 5,000 Class A Ordinary shares, vesting equally over three years. The directors each paid five hundred dollars to acquire the right to the stock award.

For the year ended December 31, 2005, 6,666 shares vested and were issued to the directors and as a result, $67 (2004: $17) has been expensed and added to shareholders’ equity.

Director Fees

During the year ended December 31, 2005, director fees of $76 (2004: $116) were paid. The amount was split amongst the four non-employee directors not affiliated with GCI.

Investment Advisory Agreement

The Company has entered into an Investment Advisory Agreement (the ‘‘Investment Agreement’’) with DME Advisors, LP (‘‘DME’’), formerly Greenlight Capital Advisors, LLC. DME is

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2005 and 2004
(expressed in thousands of U.S. dollars, except per share and share amounts)


10.	RELATED PARTY TRANSACTIONS (Continued)

a related party and an affiliate of David Einhorn, the Chairman of the Company’s Board of Directors, and a principal shareholder of the Company.

Pursuant to the Investment Agreement, a performance fee equal to 20% of the income of the account managed by DME is payable, subject to a loss carryforward provision, to DME. Included in investment fees is a performance fee of $7.0 million (2004: $2.4 million) which remains payable at December 31, 2005.

Additionally, pursuant to the Investment Agreement, a monthly management fee equal to 0.125% (1.5% on an annual basis) of the account managed by DME is paid to DME. Included in investment fees is management fee of $3.2 million (2004: $1.1 million) of which $0 (2004: $0.5 million) remains payable at December 31, 2005.

Other Transactions

Included in the consolidated statements of income is interest income of $1.3 million (2004: $0.5 million) pertaining to the related party promissory note. Also included in shareholders’ equity is a promissory note receivable in the amount of $16.2 million (2004: $24.5 million). Both these amounts relate to a promissory note issued by GCI in exchange for Class B Ordinary shares (see note 6). At December 31, 2005, interest receivable from GCI is $0.5 million (2004: $0.5 million).


11.	COMMITMENTS AND CONTINGENCIES

Operating Lease

Effective September 1, 2005, the Company entered into a five-year non-cancelable lease agreement to rent office space.

The total rent expense charged for the year ended December 31, 2005 was $49 (2004: $0).

The following is a schedule of future minimum rental payments required under the operating lease for the next five years:


Year	Total
2006		$	89
2007			90
2008			95
2009			99
2010			69
		$	442

Letters of Credit

Effective October 15, 2005, the Company signed a letter of credit agreement with an S&P AA rated U.S. bank, for a facility of up to $200 million. At December 31, 2005, no letters of credit had been drawn and $0 had been secured against the letter of credit.

Litigation

In the normal course of business, the Company may become involved in various claims litigation and legal proceedings. As of December 31, 2005, the Company was not a party to any litigation or arbitration proceedings.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED BALANCE SHEETS

September 30, 2006 and December 31, 2005
(expressed in thousands of U.S. dollars, except per share and share amounts)


	2006				2005
	(unaudited)
ASSETS
Cash and cash equivalents		$	5,718			$	7,218
Restricted cash and cash equivalents			116,190				99,719
Investments in securities, at fair value			278,724				219,211
Financial contracts receivable, at fair value			159				—
Interest receivable on related party note receivable			161				479
Investment income receivable			1,154				850
Reinsurance balances receivable			14,061				—
Deferred acquisition costs			6,767				—
Other assets			251				458
Total assets		$	423,185			$	327,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Securities sold, not yet purchased, at fair value		$	98,865			$	87,518
Dividends payable on securities sold, not yet purchased			228				101
Financial contracts payable, at fair value			4,797				722
Loss and loss adjustment expense reserves			1,872				—
Unearned premium reserves			23,769				—
Reinsurance balances payable			3,640				—
Accounts payable and accrued expenses			1,254				790
Performance fee payable to related party			10,250				6,982
Total liabilities			144,675				96,113
Shareholders’ equity
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)			—				—
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding 16,349,728 (2005: 16,181,666) Class B: par value $0.10; authorized 25,000,000; issued and outstanding 5,050,000)			2,140				2,123
Additional paid-in capital			217,072				212,871
Less: Related party promissory note receivable			(13,313	)			(16,212	)
Retained earnings			72,611				33,040
Total shareholders’ equity			278,510				231,822
Total liabilities and shareholders’ equity		$	423,185			$	327,935

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

For the nine months ended September 30, 2006 and 2005
(expressed in thousands of U.S. dollars, except share and per share data)


	2006				2005
Revenues
Premiums written		$	36,223			$	—
Change in unearned premiums			(23,769	)			—
Premiums earned			12,454				—
Net investment income			41,028				21,392
Interest income on related party promissory note receivable			827				965
Total revenues			54,309				22,357
Expenses
Loss and loss adjustment expenses incurred			5,512				—
Acquisition costs			2,787				—
General and administrative expenses			6,439				1,683
Total expenses			14,738				1,683
Net income		$	39,571			$	20,674
Earnings per share
Basic		$	1.86			$	0.97
Diluted			1.85				0.97
Weighted average number of ordinary shares used in the determination of:
Basic			21,326,111				21,225,245
Diluted			21,408,898				21,258,760

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

For the nine months ended September 30, 2006 and 2005
(expressed in thousands of U.S. dollars, except share and per share data)


	Ordinary shares issued
	Number of shares		Share capital			Additional paid-in capital				Related party promissory note receivable				Retained earnings			Total shareholders’ equity
Balance at December 31, 2004		21,225,000		$	2,122		$	212,127			$	(24,500	)		$	6,775		$	196,524
Issue of Class A Ordinary share capital		6,666			1			(1	)			—				—			—
Options and awards expense		—			—			268				—				—			268
Principal repayments received		—			—			—				5,361				—			5,361
Net income		—			—			—				—				20,674			20,674
Balance at September 30, 2005		21,231,666		$	2,123		$	212,394			$	(19,139	)		$	27,450		$	222,827


Balance at December 31, 2005		21,231,666		$	2,123		$	212,871			$	(16,212	)		$	33,040		$	231,822
Issue of Class A Ordinary share capital		168,062			17			1,975				—				—			1,992
Options and awards expense		—			—			2,226				—				—			2,226
Principal repayments received		—			—			—				2,899				—			2,899
Net income		—			—			—				—				39,571			39,571
Balance at September 30, 2006		21,399,728		$	2,140		$	217,072			$	(13,313	)		$	72,611		$	278,510

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the nine months ended September 30, 2006 and 2005
(expressed in thousands of U.S. dollars, except per share and share amounts)


	2006				2005
Cash provided by (used in):
Operating activities
Net income		$	39,571			$	20,674
Adjustments to reconcile net income to net cash provided by operating activities:
Net change in unrealized gains on securities			828				(25,302	)
Net realized gains on securities			(50,923	)			(539	)
Stock options and stock awards expense			2,226				268
Depreciation			17				—
Purchase of securities—trading			(189,880	)			(144,658	)
Proceeds on sale of securities—trading			191,957				109,497
Net change in change in financial contracts receivable, at fair value			(159	)			—
Net change in investment income receivable			(305	)			148
Net change in reinsurance balances receivable			(14,061	)			—
Net change in deferred acquisition costs			(6,767	)			—
Net change in other assets			207				365
Net change in dividends payable on securities sold, not yet purchased			127				204
Net change in financial contracts payable at fair value			4,075				—
Net change in loss and loss adjustment expense reserves			1,872				—
Net change in unearned premium reserves			23,769				—
Net change in reinsurance balances payable			3,640				—
Net change in accounts payable and accrued expenses			463				(610	)
Net change in performance fee payable to related party			3,268				3,637
Net cash provided by (used in) operating activities			9,925				(36,316	)
Investing activities
Purchase of fixed assets			(200	)			—
Proceeds on disposal of fixed assets			38				—
Net change in restricted cash and cash equivalents			(16,471	)			2,790
Net cash (used in) provided by investing activities			(16,633	)			2,790
Financing activities
Proceeds from share issue			1,991				—
Collection of related party promissory note receivable			2,899				5,361
Net change in interest receivable on related party promissory note receivable			318				322
Net cash provided by financing activities			5,208				5,683
Net decrease in cash and cash equivalents			(1,500	)			(27,843	)
Cash and cash equivalents at beginning of the period			7,218				30,664
Cash and cash equivalents at end of the period		$	5,718			$	2,821
Supplementary information:
Interest paid in cash		$	1,326			$	298
Interest received in cash			1,145				1,287

The accompanying Notes to the Consolidated Financial Statements are an integral part of the Consolidated Financial Statements.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


1.	DESCRIPTION OF BUSINESS

Effective August 11, 2004, the Company raised $212.2 million in a private placement, of which $24.5 million was paid for with a note receivable (see note 7). The Company invested a portion of the above noted proceeds into its Subsidiary. The Subsidiary commenced underwriting during 2006.


2.	SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). The significant accounting policies adopted by the Company are as follows:

Basis of Presentation

The consolidated financial statements include the accounts of the Company and the Subsidiary. All significant intercompany transactions are eliminated on consolidation.

Use of Estimates

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and certain short-term, highly liquid investments with original maturity dates of three months or less.

Premium Revenue Recognition

The Company accounts for reinsurance contracts that it writes in accordance with SFAS No. 60, ‘‘Accounting and Reporting by Insurance Enterprises’’ and SFAS No. 113, ‘‘Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts.’’ In the event that a reinsurance contract does not transfer sufficient risk, deposit accounting will be used and the contract will be reported as a deposit liability.

Premiums are recorded when written and include an estimate for premiums receivable at period end. Changes in premium estimates are expected and may result in significant adjustments in any period. These estimates change over time as additional information regarding the underlying business volume of clients is obtained. Any subsequent differences arising on such estimates are recorded in the period they are determined.

Premiums written are generally recognized as revenue over the contract period in proportion to the period of protection. Unearned premiums consist of the unexpired portion of reinsurance provided.

Acquisition Costs

Policy acquisition costs, such as commission and brokerage, in connection with acquiring new business are deferred subject to ultimate recoverability and amortized over the same period as premiums earned.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss and Loss Adjustment Expense Reserves

The Company establishes reserves for contracts based on estimates of the ultimate cost of all losses including losses incurred but not reported. These estimated ultimate reserves are based on reports received from ceding companies, historical experience as well as the Company’s own actuarial estimates. These estimates are continually reviewed and adjusted when necessary. Since reserves are estimates, the final settlement of losses may vary from the reserves established and any adjustments to the estimates are recorded in the period they are determined.

Investments in Securities and Securities Sold, Not Yet Purchased

Premiums and discounts on fixed income securities are amortized into investment income over the life of the security.

Dividend income and expense are recorded on the ex-dividend date.

Interest income and interest expense are recorded on an accrual basis.

Investments in Options

Investments in Total Return Swap Agreements

Derivative Financial Instruments

Statement of Financial Accounting Standards (SFAS) No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities’’ establishes accounting and reporting standards for derivative

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)

instruments and hedging activities. It requires that an entity recognize all derivatives in the balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in income or comprehensive income, depending on whether the instrument qualifies as a hedge transaction, and if so, the type of hedge transaction. The Company’s derivatives do not constitute hedges for financial reporting purposes. Derivative financial instrument assets are generally included in investments in securities or financial contracts receivable. Derivative financial instrument liabilities are generally included in financial contracts payable.

Net Investment Income

Share Based Compensation

In 2004, the Company adopted SFAS No. 123 (Revised 2004) (‘‘SFAS 123R’’), ‘‘Share Based Payments,’’ to account for the Company’s Stock Incentive Plan. SFAS 123R requires the Company to recognize share based compensation transactions using the fair value at the grant date of the award. Determining the fair value of share-based awards at the grant date requires judgment. The Company uses an option-pricing model (Black-Scholes pricing model) to assist in the calculation of fair value. Due to the limited history of the Company, the Company also uses the ‘‘calculated value method’’ which relies on historical industry volatility and uses the full life of the option, ten years, as the estimated term of the option. Additionally, the Company has assumed that dividends will not be paid. If actual results differ significantly from these estimates and assumptions, share based compensation expense could be materially impacted.

Director Stock Awards

In 2004, the Company granted certain directors a total of 20,000 Class A Ordinary shares which vest over a three-year period. The directors paid $0.10 per share and each share is valued at $10.00 per share. Director stock awards are expensed on a straight-line basis over the vesting period.

Foreign Exchange

Other Assets

Other assets consist primarily of prepaid expenses and fixed assets. Fixed assets are recorded at cost and depreciated over the estimated useful life of the assets using the straight-line method.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

The Company has no comprehensive income other than the net income disclosed in the consolidated statements of income. Therefore, a separate statement of comprehensive income has not been prepared.

Earnings Per Share


	September 30,
	2006		2005
Weighted average shares outstanding		21,326,111		21,225,245
Effect of dilutive service provider stock options		81,359		32,353
Effect of dilutive employee and director options and stock awards		1,468		1,162
		21,408,898		21,258,760

There were 1,073,000 and 530,000 anti-dilutive stock options outstanding as of September 30, 2006 and 2005, respectively.

Segment Information

The Company manages its business on the basis of one operating segment, Property and Casualty Reinsurance, in accordance with the qualitative and quantitative criteria established by SFAS 131.

Recently Issued Accounting Standards

In September 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurements.’’ The Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement applies to other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. This Statement does not require any new fair value measurements. This Statement is effective for the Company beginning January 1, 2008. Management has not completed its review of the new guidance; however, the effect of the Statement’s implementation in not expected to be material to the Company’s financial statements or results of operations.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


3.	CASH AND CASH EQUIVALENTS


	September 30, 2006			December 31, 2005
Cash at banks		$	1,053		$	4,124
Cash held with brokers			1,887			(49	)
Money market funds held with brokers			2,778			3,143
		$	5,718		$	7,218

Due to the short term nature of cash and cash equivalents, management believes the above noted carrying values approximate their fair market value.


4.	RESTRICTED CASH AND CASH EQUIVALENTS


	September 30, 2006			December 31, 2005
Cash held by prime brokers		$	97,954		$	88,979
Cash held by swap counter-parties			18,236			10,740
		$	116,190		$	99,719


5.	FINANCIAL INSTRUMENTS

Investments in Securities


	September 30, 2006				December 31, 2005
	Fair market value				Fair market value
Bonds and equities		$	278,118			$	218,717
Options			774				494
Futures			(168	)			—
		$	278,724			$	219,211

The Company is exposed to market risk including interest rate and foreign exchange fluctuations on financial instruments that are valued at market prices. Market movements can be volatile and difficult to predict. This may affect the ultimate gains or losses realized upon the sale of its holdings. Management utilizes the services of its investment advisor to monitor its positions continuously to reduce the risk of potential loss due to changes in market values.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS (Continued)

Purchases and sales of investments are disclosed in the consolidated statements of cash flows. Net realized gains on the sale of investments and investments sold, not yet purchased during the period were $50.9 million (2005: net realized gains of $0.5 million). Gross realized gains were $57.6 million (2005: $15.4 million) and gross realized losses were $6.7 million (2005: $14.9 million).

At September 30, 2006 investments with a fair market value of $54.0 million have been pledged as security against letters of credit issued.

Investment in Bond and Equity Securities

At September 30, 2006 and December 31, 2005, included in investment securities are the following long positions:


September 30, 2006	Cost/ amortized cost			Unrealized gains			Unrealized losses				Fair market value
Equities—listed and unlisted		$	234,020		$	55,199		$	(11,101	)		$	278,118


December 30, 2005	Cost/ amortized cost			Unrealized gains			Unrealized losses				Fair market value
Non-U.S. corporate bonds		$	241		$	3		$	(6	)		$	238
Equities—listed and unlisted			181,175			46,709			(9,405	)			218,479
		$	181,416		$	46,712		$	(9,411	)		$	218,717

Investment in Options

At September 30, 2006, included in investment securities are the following call and put options:


	Cost			Unrealized gains (losses)				Fair market value
Call options		$	367		$	175			$	542
Put options			748			(516	)			232
		$	1,115		$	(341	)		$	774

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS (Continued)

At December 31, 2005, included in investment securities are the following call and put options:


	Cost			Unrealized gain/ (loss)				Fair market value
Call options		$	87		$	365			$	452
Put options			123			(81	)			42
		$	210		$	284			$	494

Investments in Securities Sold, not yet purchased


	September 30, 2006 Fair market value				December 31, 2005 Fair market value
Equities		$	(97,671	)		$	(87,075	)
Options			(1,194	)			(443	)
		$	(98,865	)		$	(87,518	)

At September 30, 2006 and December 31, 2005, the Company’s investment portfolio includes the following equities sold, not yet purchased:


September 30, 2006	Cost				Unrealized gains			Unrealized losses				Fair market value
Equities—listed		$	(94,834	)		$	5,594		$	(9,623	)		$	(97,671	)


December 31, 2005	Cost				Unrealized gains			Unrealized losses				Fair market value
Equities—listed		$	(86,447	)		$	5,351		$	(5,979	)		$	(87,075	)

At September 30, 2006, included in the securities sold, not yet purchased are the following call and put options written:


	Cost				Unrealized gains (losses)				Fair market value
Call options		$	(400	)		$	(703	)		$	(1,103	)
Put options			(309	)			218				(91	)
		$	(709	)		$	(485	)		$	(1,194	)

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


5.	FINANCIAL INSTRUMENTS (Continued)

At December 31, 2005, included in the securities sold, not yet purchased are the following call and put options written:


	Cost				Unrealized gains (losses)				Fair market value
Call options		$	(103	)		$	(321	)		$	(424	)
Put options			(53	)			34				(19	)
		$	(156	)		$	(287	)		$	(443	)

Investment in Total Return Swap Contracts

During the periods, the Company entered into total return swap contracts with various financial institutions. Under the terms of each of these swap contacts, the Company is either entitled to receive or obligated to make payments which are based on the product of a formula contained within the contract that uses the change in the fair market value of the underlying security and the notional value of the swap contract. Each total return swap contract relates to a specified security. The Company enters into total return swap contracts to meet certain investment objectives.

The fair value of total return swaps outstanding at September 30, 2006 is as follows:


Underlying security	Position		Listing currency		Fair market value of underlying				Obligations on swap contracts
Equities—listed		Long		USD		$	27,742			$	(2,984	)
Non-U.S equities—listed		Short		JPY			(9,572	)			(1,129	)
Non-U.S equities—listed		Short		SEK			(2,239	)			(525	)
										$	(4,638	)

The fair value of total return swaps outstanding at December 31, 2005 is as follows:


Underlying security	Position	Listing currency	Fair market value of underlying				Obligations on swap contracts
Equities—listed	Long	USD		$	5,692			$	(76	)
Non-U.S Equities—listed	Short	JPY			(14,179	)			(332	)
Non-U.S Equities—listed	Short	SEK			(2,900	)			(314	)
								$	(722	)

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


6.	LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

The summary of changes in outstanding loss and loss adjustment expense reserves is as follows:


	2006				2005
Gross balance at January 1		$	—			$	—
Incurred losses, including profit commissions, related to:
Current year			5,512				—
Prior year			—				—
Total incurred			5,512				—
Less: Profit commissions			(2,504	)			—
Paid losses related to:
Current year			(1,136	)			—
Prior year			—				—
Total paid			(1,136	)			—
Gross balance at September 30		$	1,872			$	—


7.	SHARE CAPITAL

The holders of all ordinary shares are entitled to share equally in dividends declared by the board of directors. In the event of a winding-up or dissolution of the Company, the ordinary shareholders share equally and rateably in the assets of the Company, after payment of all debts and liabilities of the Company and after liquidation of any issued and outstanding preferred shares. At September 30, 2006, no preferred shares had been issued or outstanding. The board of directors is authorized to establish the rights and restrictions for preferred shares as they deem appropriate.

The Second Amended and Restated Memorandum and Articles of Association (the ‘‘Articles’’) provides that the holders of Class A Ordinary shares generally are entitled to one vote per share. However, except upon unanimous consent of the board of directors, no Class A shareholder is permitted to vote an amount of shares which would cause any United States person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) 9.9% or more of the total voting power of all issued and outstanding ordinary shares. The Articles further provide that the holders of Class B Ordinary shares generally are entitled to ten votes per share. However, holders of Class B Ordinary shares, together with their affiliates, are limited to voting that number of Class B Ordinary shares equal to 23.0% of the total voting power of the total issued and outstanding ordinary shares.

During the year ended December 31, 2004, the Company issued 5,050,000 Class B Ordinary shares valued at $50.5 million to GCI. The Company received $26.0 million in cash and the remaining balance of $24.5 million was secured by a promissory note receivable. The promissory note receivable provides that GCI is to pay interest calculated as the one-year London Interbank Offered Rate (‘‘LIBOR’’) plus 3% per annum and accrued daily. Interest is to be paid annually on the anniversary date (August 11), and the principal is to be repaid no later than August 11, 2009. During the period ended September 30, 2006, GCI repaid $2.9 million (2005: $5.4 million) of the principal and $1.1 million (2005: $1.3 million) of interest relating to the promissory note receivable.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


7.	SHARE CAPITAL (Continued)

During the nine months ended September 30, 2006, 161,400 Class A Ordinary shares were issued to certain directors and employees for a total cash consideration of $2.0 million.

During the nine-month period ended September 30, 2006, the Company issued 6,662 (2005: 6,666) Class A Ordinary shares. These represent the vesting of directors’ stock awards.

The Subsidiary is subject to a minimum shareholder’s equity balance of $120 as determined by the Cayman Islands Monetary Authority.

Additional paid-in capital includes the premium of $9.90 per share paid by the subscribing shareholders for Class A and B Ordinary shares which have a par value of $0.10 each.

Service Provider Share Purchase Options

An affiliate of GCI entered into a consulting agreement (the ‘‘Consulting Agreement’’) with First International Securities Ltd. (‘‘First International’’) in August 2002. First International received a cash payment of $75 for the preparation and delivery of a feasibility study relating to the formation, capitalization, licensing and operation of the Company. Additionally, it was agreed that upon consummation of the initial private offering, First International Capital Holdings Ltd., the successor to First International, would receive, in consideration for First International’s assistance to GCI with the establishment of the Company, a 10-year share purchase option to purchase 400,000 Class A ordinary shares. These share purchase options were granted on September 20, 2004 and have an exercise price of $10 per share (see note 7).

Employee and Director Stock Options

The Company has a Stock Incentive Plan for directors, employees and consultants. The Company has reserved for issuance 1,273,000 Class A Ordinary shares for eligible employees and directors. During the period ended September 30, 2006, seven (2005: two) employees and directors were granted options to purchase a total of 443,000 (2005: 530,000) Class A Ordinary shares. These options vest over three years and expire 10 years from grant date. The Company uses the Black-Scholes option pricing model to determine the valuation of these options.

Using a risk free rate varying between 4.36% – 5.14% (2005: 4.36%), an estimated volatility of 30% and an expected term of 10 years, the employee options have been valued at $5.57 – $6.75 (2005: $5.57) per share. As noted above, due to the limited history of the Company, historical industry volatility had to be substituted for the Company’s volatility.

At the present time, the board of directors does not anticipate any dividends will be declared during the expected term of the options. The Company uses graded vesting for expensing employee stock options. The total compensation cost expensed for the period ended September 30, 2006 under the Stock Incentive Plan is $2.2 million (2005: $0.3 million). At September 30, 2006, the total compensation cost related to non-vested options not yet recognized is $3.5 million (2005: $2.3 million) to be recognized over a weighted average period of 2.14 (2005: 2.63) years assuming the employees complete their service period for vesting of the options.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


7.	SHARE CAPITAL (Continued)

Employee stock option activity during the period is as follows:


	Number of shares		Weighted average exercise price			Weighted average grant date fair value
Balance at December 31, 2004		—		$	—		$	—
Granted		530,000			11.12			5.57
Exercised		—			—			—
Forfeited		—			—			—
Expired		—			—			—
Balance at September 30, 2005		530,000		$	11.12		$	5.57
Balance at December 31, 2005		530,000		$	11.12		$	5.57
Granted		443,000			12.09			6.20
Exercised		—			—			—
Forfeited		—			—			—
Expired		—			—			—
Balance at September 30, 2006		973,000		$	11.56		$	5.85

During the period ended September 30, 2006, 17,667 options vested. None of the options vested during the previous nine month period.


8.	NET INVESTMENT INCOME


Nine months ended September 30,	2006				2005
Change in net unrealized gains (losses)		$	(828	)		$	25,302
Net realized gains on securities			50,923				539
Dividend income, net of withholding taxes			5,104				2,490
Interest income			3,931				1,329
Net gain (loss) on foreign exchange relating to investments			(851	)			1,462
Other investment expenses			(125	)			(121	)
Interest expense			(1,624	)			(298	)
Dividends paid on securities sold, not yet purchased			(2,363	)			(1,606	)
Investment fees to a related party (see note 11)			(13,139	)			(7,705	)
		$	41,028			$	21,392


9.	GENERAL AND ADMINISTRATIVE EXPENSES


Nine months ended September 30,	2006			2005
General expenses		$	4,213		$	1,415
Stock compensation expense			2,226			268
		$	6,439		$	1,683

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


10.	TAXATION


11.	RELATED PARTY TRANSACTIONS

Director Stock Awards

For the period ended September 30, 2006, 6,666 (2005: 6,666) shares vested and were issued to the directors and as a result, $67 (2005: $67) has been expensed and added to shareholders’ equity.

Director Fees

During the period ended September 30, 2006, director fees of $76 (2005: $68) were paid. The amount was split amongst the four non-employee directors not affiliated with GCI.

Investment Advisory Agreement

The Company has entered into an Investment Advisory Agreement (the ‘‘Investment Agreement’’) with DME Advisors, LP (‘‘DME’’). DME is a related party and an affiliate of David Einhorn, the Chairman of the Company’s Board of Directors and a principal shareholder of the Company.

Pursuant to the Investment Agreement, a performance fee equal to 20% of the income of the account managed by DME is payable, subject to a loss carryforward provision, to DME. Included in investment fees (see note 9) is a performance fee of $10.2 million (2005: $5.3 million) all of which remains payable at September 30, 2006 and 2005.

Additionally, pursuant to the Investment Agreement, a monthly management fee equal to 0.125% (1.5% on an annual basis) of the account managed by DME is paid to DME. Included in investment fees (see note 9) are management fees of $2.9 million (2005: $2.4 million). The investment fees have been fully paid as of September 30, 2006 and 2005.

Other Transactions

Included in the consolidated statements of income is interest income of $0.8 million (2005: $1.0 million). Also included in shareholders’ equity at September 30, 2006 is a related party promissory note receivable in the amount of $13.3 million (December 31, 2005: $16.2 million). Both these amounts relate to the related party promissory note issued by GCI in exchange for Class B Ordinary shares (see note 7). At September 30, 2006, interest receivable from GCI is $0.2 million (December 31, 2005: $0.5 million).


12.	COMMITMENTS AND CONTINGENCIES

Operating Lease

Effective September 1, 2005, the Company entered into a five-year non-cancelable lease agreement to rent office space.

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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(expressed in thousands of U.S. dollars, except per share and share amounts)


12.	COMMITMENTS AND CONTINGENCIES (Continued)

The total rent expense charged for the periods ended September 30, 2006 is $89 (2005: $7).

The following is a schedule of future minimum rental payments required under the operating lease for the next five years:


Year	Total
2007		$	90
2008			95
2009			99
2010			69
2011			—
		$	353

Private Equity

Periodically, the Company makes investments in private equity vehicles. As part of the Company’s participation in such private equity investments, the Company may make funding commitments. As of September 30, 2006, the Company had commitments to invest an additional $6.2 million in private equity investments.

Letters of Credit

Effective October 15, 2005, the Company signed a letter of credit agreement with an S&P AA rated U.S. bank, for a facility of up to $200 million. At September 30, 2006, letters of credit totaling $53.9 million had been issued. At September 30, 2006, investments with a fair market value of $54.0 million have been pledged as security against the letters of credit.

There were no letters of credit issued at December 31, 2005.

Litigation

In the normal course of business, the Company may become involved in various claims litigation and legal proceedings. As of September 30, 2006, the Company was not a party to any litigation or arbitration proceedings.

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SCHEDULE I

GREENLIGHT CAPITAL RE, LTD.
SUMMARY OF INVESTMENTS—OTHER THAN INVESTMENTS IN RELATED PARTIES

AS OF DECEMBER 31, 2005
(expressed in thousands of U.S. dollars)


Type of Investment	Cost			Fair Value			Balance Sheet Value
Fixed Maturities:
U.S. Corporate bonds		$	241		$	238		$	238
Equity Securities:
Common stocks			181,175			218,479			218,479
Equity Options:
Call options			87			452			452
Put options			123			42			42
			210			494			494
Total Investments		$	181,626		$	219,211		$	219,211

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SCHEDULE II

GREENLIGHT CAPITAL RE, LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET—PARENT COMPANY ONLY

(expressed in thousands of U.S. dollars)


	December 31, 2005				December 31, 2004
Assets
Cash and cash equivalents		$	186			$	835
Interest receivable			479				516
Investment in subsidiary			231,216				194,778
Other assets			—				440
Total Assets		$	231,881			$	196,569
Liabilities and shareholders’ equity
Liabilities
Accounts payable		$	59			$	45
Shareholders’ Equity
Share capital			2,123				2,122
Additional paid in capital			212,871				212,127
Less: Related party promissory note receivable			(16,212	)			(24,500	)
Retained earnings			33,040				6,775
			231,822				196,524
Total liabilities and shareholders’ equity		$	231,881			$	196,569

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SCHEDULE II (continued)

GREENLIGHT CAPITAL RE, LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENT OF INCOME—PARENT COMPANY ONLY

(expressed in thousands of U.S. dollars)


	Year Ended December 31, 2005				Period from July 13, 2004 (date of incorporation) to December 31, 2004
Revenue
Investment income		$	1,326			$	532
Expenses
Administrative expenses			1,949				3,335
Net Loss before equity in earnings of consolidated subsidiary			(623	)			(2,803	)
Equity in earnings of consolidated subsidiary			26,888				9,578
Consolidated net income		$	26,265			$	6,775

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SCHEDULE II (continued)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENT OF CASH FLOWS—PARENT COMPANY ONLY

(expressed in thousands of U.S. dollars)


	Year Ended December 31, 2005				Period from July 13, 2004 (date of incorporation) to December 31, 2004
Operating activities
Net income		$	26,265			$	6,775
Adjustments to reconcile net income to cash provided by operating activities
Equity in earnings of consolidated subsidiary			(26,888	)			(9,578	)
Stock options and stock awards expense			745				1,999
Interest receivable			(479	)			(516	)
Other assets			440				(440	)
Accounts payable and accrued expenses			14				45
			97				(1,715	)
Investing activity
Contributed surplus to subsidiary			(9,550	)			(185,200	)
Financing activities
Proceeds from share issue			—				187,750
Collection of note receivable			8,804				—
			8,804				187,750
Net (decrease) increase in cash and cash equivalents			(649	)			835
Cash and cash equivalents at beginning of the period			835				—
Cash and cash equivalents at end of the period		$	186			$	835

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GLOSSARY OF SELECTED REINSURANCE TERMS


Acquisition costs		Ceding commission, brokerage fees, premium taxes and other direct expenses relating directly to the production of premiums.


Acquisition cost ratio		A ratio calculated by dividing the acquisition expenses by the net premiums earned.


Actuary		A person professionally trained in the mathematical and technical aspects of insurance and related fields particularly in the calculation of premiums, actuarial liabilities and other values.


Alien reinsurer		A reinsurance company formed under the laws of a jurisdiction other than a state of the United States. A reinsurance company formed under the laws of a state in the United States that transacts reinsurance in countries other than the United States is also an alien reinsurer.


Broker		An intermediary who negotiates contracts of insurance or reinsurance, receiving a commission for placement and other services rendered, between (1) a policyholder and a primary insurer, on behalf of the policyholder, (2) a primary insurer and a reinsurer, on behalf of the primary insurer, or (3) a reinsurer and a retrocessionaire, on behalf of the reinsurer.


Capacity		Capacity is the percentage of surplus, that an insurer or reinsurer is willing or able to place at risk or the dollar amount of exposure it is willing to assume. Capacity may apply to a single risk, a program, a line of business or an entire book of business. Capacity may be constrained by legal restrictions, corporate restrictions, or indirect financial restrictions such as capital adequacy requirements.


Casualty reinsurance		Casualty reinsurance is primarily concerned with the losses caused by injuries to third persons (persons other than the policyholder) and the legal liability imposed on the policyholder resulting therefrom. This includes, but is not limited to workers’ compensation, automobile liability, and general liability. A greater degree of unpredictability is generally associated with casualty risks known as ‘‘long-tail risks,’’ where losses take time to become known and a claim may be separated from the circumstances that caused it by several years. An example of a long-tail casualty risk includes the use of certain drugs that may cause cancer or birth defects. There tends to be greater delay in the reporting and settlement of casualty reinsurance claims due to the long-tail nature of the underlying casualty risks and their greater potential for litigation.

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Catastrophe		A severe loss, typically involving multiple claimants. Common perils include earthquakes, hurricanes, tsunamis, hailstorms, tornados, severe winter weather, floods, fires, explosions, volcanic eruptions and other natural or man-made disasters. Catastrophe losses may also arise from acts of war, acts of terrorism and political instability.


Cede; ceding company		When a party reinsures its liability to another party, it ‘‘cedes’’ business to the reinsurer and is referred to as the ‘‘ceding company.’’


Claim		Request by an insured or reinsured for indemnification by an insurance or reinsurance company for loss incurred from an insured peril or event.


Client		A party whose liability is reinsured by a reinsurer. Also known as a cedent or ceding company.


Combined ratio		The ratio of underwriting losses and loss adjustment expenses, acquisition expenses and general and administrative expenses to net premiums earned, or equivalently, the sum of the loss ratio, acquisition cost ratio, and expense ratio. The combined ratio of an insurance company is generally viewed as an indication of underwriting profitability of that insurance company, but does not take into account the effect of investing activities on net income.


Composite ratio		The sum of the underwriting losses incurred and acquisition costs divided by the net premiums earned or equivalently, the sum of the loss ratio and acquisition cost ratio.


Co-participation		The payment by the insured of a predetermined proportion of all losses above the predetermined amount.


Credit insurance		Credit insurance is associated with a specific loan or line of credit which pays back some or all of any monies owed should certain events happen to the borrower, such as death, disability, or unemployment of the borrower.


Development		The difference between the amount of reserves for losses and loss adjustment expenses initially estimated by an insurer or reinsurer and the amount re-estimated in an evaluation at a later date.


Directors and officers liability		Insurance that covers liability for corporate directors and officers for wrongful acts, subject to applicable exclusions, terms and conditions of the policy.


Excess of loss reinsurance		Reinsurance that indemnifies the reinsured against all or a specified portion of losses in excess of a specified dollar or percentage loss ratio amount.

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Financial strength rating		The opinion of rating agencies regarding the financial ability of an insurance or reinsurance company to meet its financial obligations under its policies.


Frequency business		Insurance/reinsurance that is characterized by contracts containing a potential large number of smaller losses emanating from multiple events.


Gross premiums written		Total premiums for assumed reinsurance during a given period.


Incurred but not reported (IBNR)		Reserves for estimated loss and loss adjustment expenses that have been incurred by insureds and reinsureds but not yet reported to the insurer or reinsurer, including unknown future developments on loss and loss adjustment expenses which are known to the insurer or reinsurer.


Internal expense ratio		A ratio calculated by dividing general and administrative expenses by premiums earned.


Loss adjustment expenses		The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs. Also known as claim adjustment expenses.


Loss ratio		A ratio calculated by dividing underwriting losses incurred and loss adjustment expenses by premiums earned.


Loss reserves and loss adjustment expense reserves		Liabilities established by insurers and reinsurers to reflect the estimated cost of claims payments and the related expenses that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance contracts it has written. Reserves are established for losses and for loss adjustment expenses, and consist of reserves established with respect to individual reported claims and incurred but not reported losses.


Medical malpractice insurance		Medical malpractice insurance provides an indemnity to physicians and their employees for losses related to patient injuries arising from medical advice rendered or procedures performed.


Natural peril		Damage or loss caused by natural circumstances related to natural occurrences, such as hurricanes, hailstorms, tornados, windstorms, severe winter weather, earthquakes, floods, fires, explosions, volcanic eruptions and other natural or man-made disasters.


Non-admitted insurers		An insurer not licensed to do business in the jurisdiction in question. Also known as an unauthorized insurer and unlicensed insurer.

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Premiums; written, earned and unearned		Premiums represent the cost of insurance that is paid by the cedent or insurer to the insurer or reinsurer. Written represents the complete amount of premiums received, and earned represents the amount recognized as income over a period of time. Unearned is the difference between written and earned premiums.


Probable maximum loss		The maximum amount of loss that one would expect under ordinary circumstances based on computer or actuarial modeling techniques.


Professional liability insurance		Professional liability insurance protects a company and its representatives against legal claims arising from error or misconduct in providing or failing to provide professional services. This type of coverage includes errors and/or omissions policies, directors and officers coverage and specialty coverage like employment practices liability insurance.


Profit commission		A commission paid by a reinsurer to a ceding insurer based on a predetermined percentage of the profit realized by the reinsurer on the ceded business.


Property insurance		Property insurance covers a business’s building and its contents—money and securities, records, inventory, furniture, machinery, supplies and even intangible assets such as trademarks—when damage, theft or loss occurs. Peril reinsurance is a subset of property reinsurance.


Property catastrophe reinsurance		Property catastrophe reinsurance contracts are typically ‘‘all risk’’ in nature, meaning that they protect against losses from natural and man-made catastrophes. Losses on these contracts typically stem from direct property damage and business interruption.


Proportional reinsurance		All forms of reinsurance in which the reinsurer shares a proportional part of the original premiums and losses of the reinsured. In proportional reinsurance, the reinsurer generally pays the ceding company a ceding commission. The ceding commission generally is based on the ceding company’s cost of acquiring the business being reinsured (including commissions, premium taxes, assessments and miscellaneous administrative expenses) and also may include a profit component. Frequently referred to as quota-share reinsurance.


Quota-share reinsurance		A form of proportional reinsurance in which the reinsurer assumes an agreed percentage of each underlying insurance contract being reinsured.

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Regulation 114 trusts		A three way investment trust agreement involving a cedent or client, a financial institution and a non-admitted reinsurer governed by Regulation 114 of the Official Compilation of Codes, Rules and Regulations (11 NYCRR4) of the New York State Insurance Department. Regulation 114 Trusts, also known as Reg 114 Trusts, must be maintained in the United States in an approved financial institution. Securities used to collateralize the trust are limited to cash and cash equivalents, U.S. Treasury securities, and fixed income securities rated ‘‘A’’ or higher.


Reinstatement premium		A Premium charged for the reinstatement of the amount of reinsurance coverage to its full amount reduced as a result of a reinsurance loss payment.


Reinsurance		An arrangement in which a reinsurer agrees to indemnify an insurance company, the ceding company, against all or a portion of the insurance risks underwritten by the ceding company under one or more policies. Reinsurance can provide a ceding company with several benefits, including a reduction in net liability on individual risks and catastrophe protection from large or multiple losses. Reinsurance also provides a ceding company with additional underwriting capacity by permitting it to accept larger risks and write more business than would be possible without a related increase in capital and surplus, and facilitates the maintenance of acceptable financial ratios by the ceding company. Reinsurance does not legally discharge the ceding company from its liability with respect to its obligations to the insured.


Reinsurer		An insurance company that assumes part of the risk in exchange for part of the premium to a primary insurer.


Retrocession; retrocessional coverage		A transaction whereby a reinsurer cedes to another reinsurer, commonly referred to as the retrocessionaire, all or part of the reinsurance that the first reinsurer has assumed. Retrocessional reinsurance does not legally discharge the ceding reinsurer from its liability with respect to its obligations to the reinsured.


Risk-free rate		The interest rate on a riskless, or safe, asset, usually taken to be a short-term U.S. government security.


Risk transfer		The shifting of all or a part of a risk to another party.


Self-insured retention		A potential loss retained by an organization, i.e. not insured. The self-insured retention (SIR) differs from a deductible because the insured performs all the functions normally undertaken by an insurance company for losses within the SIR, including claims adjusting and audits, funding and paying claims, and complying with applicable state and federal laws and regulations.

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Severity business		Insurance/reinsurance that is characterized by contracts containing the potential for significant losses emanating from one event.


Structured reinsurance		Structured reinsurance is also known as alternative risk transfer reinsurance. Structured reinsurance products contain several features that differ from traditional reinsurance products. These features require the client to share in its own loss results and include: (1) premium refunds if losses incurred by the reinsurer are more favorable than those projected at the time of execution of the reinsurance contract; (2) loss sharing contract provisions that may require a ceding company to share in a portion of the losses resulting from ceded risks; (3) additional premium amounts if the reinsurer incurs losses that are less favorable than those projected at the time of execution of the reinsurance contract; and (4) underwriting terms that limit the reinsurer’s exposure to high volatility in underwriting results. Structured reinsurance products may also contain payment triggers that require the reinsurer to pay losses upon the occurrence of certain specified events.


Surety and fidelity insurance		Surety and fidelity includes (1) insurance guaranteeing the fidelity of persons holding positions of public or private trust; (2) insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings and contracts of suretyship; and (3) insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss.


Total aggregate limits		Maximum amount of coverage that the cedent or client has under the reinsurance contract for a specific period of time, usually the contract period, no matter how many separate accidents may occur.


Underwriter		An employee of an insurance or reinsurance company who examines, accepts or rejects risks and classifies risks in order to charge an appropriate premium for each accepted risk.


Underwriting		The process of evaluating, defining, and pricing reinsurance risks including, where appropriate, the rejection of such risks, and the acceptance of the obligation to pay the reinsured under the terms of the contract.


Whole book of business		The portfolio of business that a broker has placed with an insurer or reinsurer.


Workers’ compensation insurance		Workers’ compensation insurance provides medical, disability and lost-wage benefits to employees for injuries and illness sustained in the course of their employment.

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Class A Ordinary Shares

PROSPECTUS

, 2007

Joint Book-Running Managers

L EHMAN B ROTHERS UBS I NVESTMENT B ANK

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the underwriting discounts and commissions payable by us, in connection with the sale of Class A Ordinary Shares being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq Global Select Market listing fee.


SEC Registration Fee		$	18,725
NASD filing fee			18,000
Nasdaq Global Select Market listing fee	*
Blue sky fees and expenses	*
Transfer agent and registrar fees	*
Accounting fees and expenses	*
Legal fees and expenses	*
Printing and engraving costs	*
Miscellaneous expenses	*
Total		$


*	To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article 34 of our Second Amended and Restated Memorandum and Articles of Association currently provides and our Third Amended and Restated Memorandum and Articles of Association will provide, among other things, that: our directors, officers, secretary, any person appointed to a committee by the Board of Directors, and employees and agents and our liquidator or trustees (if any) who have acted in relation to any of the affairs of our company and their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators shall or may incur or sustain by or by reason of any act done, concurred in or omitted (actual or alleged) in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom moneys or effects belonging to us shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to us shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto; provided, that , this indemnity shall not extend to any matter in respect of any willful negligence, willful default, fraud or dishonesty which may attach to such persons.

Article 3 of the Deed of Indemnity by and between us and each indemnitee provides contractual indemnification for such indemnitee meant to supplement that indemnification found in the Articles. The Deed of Indemnity provides that we will indemnify and hold harmless any Indemnitee to the fullest extent permitted by law, against any and all expenses and losses, and any local or foreign stamp duties or taxes imposed as a result of the actual or deemed receipt of any payments under this Deed, that are paid or incurred by the indemnitee in connection with such proceeding. We will indemnify and hold harmless any indemnitee for all expenses paid or incurred by indemnitee in connection with each successfully resolved claim, issue or matter on which indemnitee was successful. The Deed of Indemnity further provides that we will not provide indemnification for any proceeding initiated or brought voluntarily by the indemnitee against us or our directors, officers or employees, or for any accounting of profits made from the purchase and sale by the indemnitee of our securities.

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Article 4 provides that we will advance, to the fullest extent permitted by law, to the indemnitee any and all expenses paid or incurred by indemnitee in connection with any proceeding (whether prior to or after its final disposition), provided that the indemnitee is otherwise entitled to indemnification under the Deed.

Article 5 of the Deed of Indemnity provides that to the fullest extent permitted by law, if the indemnification provided for in the Deed is unavailable to the indemnitee for any reason whatsoever, we in lieu of indemnifying indemnity, will contribute the amount of expenses or losses incurred or paid by indemnitee in connection with any proceeding in proportion to the relative benefits received by us and all of our officers, directors, and employees of the Company other than the indemnitee who are or would be jointly liable with indemnitee, on the one hand, and indemnitee, on the other hand, from the transaction from which such proceeding arose; provided, however , that the proportion determined on the basis or relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative our fault and all of our officers, directors, and employees other than the indemnitee who are jointly liable with indemnitee, on the one hand, and indemnitee, on the other hand, in connection with the events that resulted in such expenses and losses, as well as any other equitable considerations which applicable law may require to be considered.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since inception, we have sold and issued the following unregistered securities:


	(1)	On August 11, 2004, we sold 16,175,000 Class A ordinary shares to certain accredited investors for an aggregate price of $161,750,000.


	(2)	On August 11, 2004, we sold 5,050,000 Class B ordinary shares to certain accredited investors for cash in the amount of $26,000,000 and a related party promissory note for an aggregate principal amount of $24,500,000 for total aggregate consideration of $50,500,000.


	(3)	On March 30, 2006, we sold 91,800 Class A ordinary shares for an aggregate price of $1,106,190.


	(4)	On May 31, 2006, we sold 69,600 Class A ordinary shares for an aggregate price of $885,312.


	(5)	On October 31, 2006, we sold 97,200 Class A ordinary shares for an aggregate price of $1,310,256.


	(6)	On November 30, 2006, we sold 60,300 Class A ordinary shares for an aggregate price of $835,155.

No underwriters were involved in the foregoing sales of securities. The issuance of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of such Securities Act as transactions by an issuer not involving any public offering, or, in the case of options to purchase Class A Ordinary Shares, Rule 701 of the Securities Act. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and warrants issued in such transactions. All recipients had adequate access, through their relationships with us, to information about us.

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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)	Exhibits.

A list of exhibits filed herewith is contained in the exhibit index that immediately precedes such exhibits and is incorporated herein by reference.


(b)	Financial Statement Schedules


Description of Financial Statement Schedules			Schedule Number
Summary of Investments – other than Investments in Related Parties***			I
Condensed Financial Information of Registrant***			II


***	Included in the prospectus which is included in this registration statement starting on page F-35.

Other financial statement schedules have been omitted because the required information is either not applicable, not deemed material or is shown in the respective financial statements or in the notes thereto.

ITEM 17. UNDERTAKINGS

The registrant hereby undertakes to provide to the underwriters, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Georgetown, Cayman Islands, on the 16 ^th day of January, 2007.

GREENLIGHT CAPITAL RE, LTD.

By: /s/ Leonard Goldberg

Name: Leonard Goldberg
Title: Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Leonard Goldberg and Tim Courtis, and each of them, his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Leonard Goldberg	Chief Executive Officer (Principal Executive Officer) and Director	January 16, 2007

Leonard Goldberg

/s/ Tim Courtis	Chief Financial Officer (Principal Financial and Accounting Officer)	January 16, 2007

Tim Courtis

/s/ David Einhorn	Director and Chairman	January 16, 2007

David Einhorn

/s/ Alan Brooks	Director	January 16, 2007

Alan Brooks

/s/ Ian Isaacs	Director	January 16, 2007

Ian Isaacs

/s/ Frank D. Lackner	Director	January 16, 2007

Frank D. Lackner

/s/ Joseph Platt, Jr.	Director	January 16, 2007

Joseph Platt, Jr.

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EXHIBIT INDEX


Exhibit Number			Description of Exhibit
	1	.1*	Underwriting Agreement
	3	.1	Second Amended and Restated Memorandum and Articles of Association of Greenlight Capital Re, Ltd.
	3	.2*	Third Amended and Restated Memorandum and Articles of Association of Greenlight Capital Re, Ltd.
	4	.1*	Form of Specimen Certificate of Class A Ordinary Shares
	4	.2	Share Purchase Option, dated August 11, 2004, by and between the Registrant and First International Capital Holdings, Ltd.
	5	.1*	Opinion of Akin Gump Strauss Hauer & Feld LLP
	5	.2*	Opinion of Turner & Roulstone
	10	.1	$200,000,000 Letter of Credit Facility, dated October 12, 2005, by Citibank, N.A. to Greenlight Reinsurance, Ltd., as amended
	10	.2	Form of Securities Purchase Agreement for Class A Ordinary Shares by and between the Registrant and each of the subscribers thereto
	10	.3	Promissory Note, dated August 11, 2004, for $24,500,000 by and between the Registrant, as payee, and Greenlight Capital Investors, LLC, as maker
	10	.4	Second Amended and Restated Investment Advisory Agreement, dated January 1, 2007, by and between Greenlight Reinsurance, Ltd. and DME Advisors, LP
	10	.5	Greenlight Capital Re, Ltd. Amended and Restated 2004 Stock Incentive Plan
	10	.6	Form of Restricted Stock Award Agreement by and between the Registrant and the Grantee
	10	.7	Form of Stock Option Agreement
	10	.8	Form of Shareholders’ Agreement, dated August 11, 2004, by and among the Registrant and each of the subscribers
	10	.9	Administration Agreement, dated August 11, 2004, between the Registrant and HSBC Financial Services (Cayman) Limited
	10	.10	Administration Agreement, dated August 11, 2004, between Greenlight Reinsurance, Ltd. and HSBC Financial Services (Cayman) Limited
	10	.11	Form of Deed of Indemnity between the Registrant and each of its directors and certain of its officers
	10	.12	Amended and Restated Employment Agreement, dated January 10, 2007, by and among the Registrant, Greenlight Reinsurance, Ltd. and Leonard Goldberg
	10	.13	Employment Agreement, dated May 1, 2006, by and among the Registrant, Greenlight Reinsurance, Ltd. and Tim Courtis
	10	.14	Employment Agreement, dated December 12, 2005, by and between Greenlight Reinsurance, Ltd. and Barton Hedges

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Exhibit Number			Description of Exhibit
	10	.15	Lease, dated August 25, 2005, by and between Greenlight Reinsurance, Ltd. and Grand Pavilion Ltd.
	10	.16	Concurrent Private Placement Stock Purchase Agreement for Class B Ordinary Shares, dated January 11, 2007, by and between the Registrant and David Einhorn
	14	.1*	Code of Ethics
	21	.1	Subsidiaries of the registrant
	23	.1*	Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 5.1)
	23	.2*	Consent of Turner & Roulstone (included in Exhibit 5.2)
	23	.3	Consent of BDO Seidman, LLP
	24	.1	Power of Attorney (included as part of the signature page)
	99	.1*	Audit Committee Charter
	99	.2*	Compensation Committee Charter
	99	.3*	Finance Committee Charter
	99	.4*	Nominating and Governance Charter
	99	.5*	Form F-N


*	To be filed by amendment.

Exhibit 3.1

EXECUTION COPY

THE COMPANIES LAW (2003 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

SECOND AMENDED AND RESTATED

MEMORANDUM AND ARTICLES

ASSOCIATION

____________________________________

GREENLIGHT CAPITAL RE, LTD.

____________________________________

THE COMPANIES LAW (2003 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

SECOND AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION

GREENLIGHT CAPITAL RE, LTD.

The name of the Company is Greenlight Capital Re, Ltd.

The registered office for the time being of the Company shall be Strathvale House, 90 North Church Street, P.O. Box 1109GT, George Town, Grand Cayman, Cayman Islands or at such other place as the Board may from time to time decide.

The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (2003 Revision) or as the same may be revised from time to time, or any other law of the Cayman Islands.

The liability of each Member is limited to the amount from time to time unpaid on such Member's Shares.

The share capital of the Company is 125,000,000 Ordinary Shares, par value US$0.10 divided into 100,000,000 Class A Ordinary Shares and 25,000,000 Class B Ordinary Shares and 50,000,000 Preferred Shares, par value of US$0.10 each.

The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

Capitalised terms that are not defined in this Memorandum of Association bear the same meaning as those given in the Articles of Association of the Company.

THE COMPANIES LAW (2003 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

SECOND AMENDED & RESTATED

ARTICLES OF ASSOCIATION

GREENLIGHT CAPITAL RE, LTD.

INTERPRETATION

Interpretation

(1)

In these Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:

(a)

“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person, provided that no Member of the Company shall be deemed an Affiliate of another Member solely by reason of an investment in the Company. For purposes of this definition, the term “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities, by contract or otherwise;

(b)

“Articles” means these articles of association of the Company;

(c)

“Auditor” means the person for the time being performing the duties of auditor of the Company;

(d)

“Audit Committee” means the audit committee appointed by the Board in accordance with these Articles, provided that in the event that the Board shall not have appointed an Audit Committee, the Board shall constitute the Audit Committee;

(e)

“Board” means the board of Directors appointed or elected pursuant to these Articles and acting by resolution in accordance with the Statute and these Articles or the Directors present at a meeting of Directors at which there is a quorum;

(f)

“Business Day” means any day, other than a Saturday, a Sunday or any day on which banks in the Cayman Islands or New York, New York, United States, are authorised or obligated by law or executive or other order to close;

(g)

“Cause” means (i) habitual drug or alcohol use which impairs the ability of the Director to perform his/her duties hereunder; (ii) Director’s conviction by a court of competent jurisdiction, or a pleading of “no contest” or guilty to a felony or the equivalent if outside the United States; (iii) Director’s engaging in fraud, embezzlement or any other illegal conduct with respect to the Company which acts are materially harmful to, either financially, or to the business reputation of, the Company; (iv) Director’s wilful failure or refusal to perform his duties as a director, or (vi) the Director otherwise breaches any material written Company policy regarding the conduct of its Directors and such breach results in material economic or reputational harm to the Company;

(h)

“Class A Ordinary Shares” means the Class A Ordinary Shares of the Company, initially having a par value of $0.10 per Share, and includes a fraction of a Class A Ordinary Share;

(i)

“Class B Ordinary Shares” means the Class B Ordinary Shares of the Company, initially having a par value of $0.10 per Share, and includes a fraction of a Class B Ordinary Share;

(j)

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time, or any federal statute from time to time in effect that has replaced such statute, and any reference in these Articles to a provision of the Code or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a federal law, or any federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(k)

“Company” means the above named company;

(l)

“Directors” means the directors for the time being of the Company;

(m)

“Dividend” includes an interim dividend;

(n)

“Electronic Record”

has the same meaning as in the Electronic Transactions Law (2003 Revision);

(o)

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time, or any federal statute from time to time in effect that has replaced such statute, and any reference in these Articles to a provision of the Exchange Act or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a federal law, or any federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(p)

“Fair Market Value” means (i) if such shares are listed on a securities exchange (or quoted in a securities quotation system), the average closing sale price of the shares on the principal securities exchange (or quotation system) on which such shares are then traded, or, if such shares are not then listed on a securities exchange (or quotation system) but are traded in the over-the-counter market, the average of the latest bid and asked quotations for such shares in such market, in each case for the last five trading days immediately preceding the day on which notice of the repurchase of such shares is sent pursuant to the Memorandum and Articles of Association or (ii) if no such closing sales prices or quotations are available because such shares are not publicly traded or otherwise, the fair market value of such shares shall equal the book value as computed in accordance with United States GAAP less the transaction costs incurred in connection with such repurchase (including internal expenses and reasonable attorneys’ fees);

(q)

“GAAP” means generally accepted accounting principles;

(r)

“general meeting” , “general meeting of the Company” , “Extraordinary general meeting” and “extraordinary general meeting of the Company” each means a meeting of the Members of the Company having the right to attend and vote thereat;

(s)

“Greenlight Reinsurance” means Greenlight Reinsurance, Ltd., a Cayman Islands insurance company and wholly-owned subsidiary of the Company;

(t)

“Member” has the same meaning as in the Statute;

(u)

“Memorandum” means the memorandum of association of the Company;

(v)

“Notice” means written notice as further defined in these Articles unless otherwise specifically stated;

(w)

“Officer” means any Person appointed by the Board to hold an office in the Company;

(x)

“Ordinary Resolution” means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded, or on a show of hands, regard shall be had to the number of votes to which each Member is entitled by the Articles;

(y)

“Ordinary Shares” means collectively, the Class A Ordinary Shares and the Class B Ordinary Shares and includes a fraction of an Ordinary Share;

(z)

“Person” means any individual, company, corporation, firm, partnership, trust or any other business, enterprise, entity or person, whether or not recognised as constituting a separate legal entity;

(aa)

“Permitted Transferee” means any Affiliate of a Member of the Company which has been approved by the Board as a “Permitted Transferee” in writing prior to a Transfer, which approval shall be granted by the Board unless the Board determines, in its sole and absolute discretion, that the applicable Transfer would result in an increased risk of adverse tax, regulatory or legal consequences to the Company, any of its subsidiaries or any of its Members;

(bb)

“Preferred Shares” means the preferred Shares of the Company and includes a fraction of a Preferred Share;

(cc)

“Register of Directors and Officers” means the Register of Directors and Officers maintained in accordance with Statute and referred to in these Articles;

(dd)

“Register of Members” means the register maintained in accordance with the Statute and includes (except where otherwise stated) any duplicate Register of Members;

(ee)

“Secretary” means the person appointed to perform any or all the duties of secretary of the Company and includes any deputy or assistant secretary;

(ff)

“Securities Act” means the United States Securities Act of 1933, as amended from time to time, or any federal statute from time to time in effect which has replaced such statute, and any reference in these Articles to a provision of the Securities Act or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a federal law, or any federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(gg)

“Share” means any share or any class or series of shares in the share capital of the Company, whether issued and outstanding or not, and includes a fraction of a share;

(hh)

“Special Resolution”

has the same meaning as in the Statute, and includes a unanimous written resolution;

(ii)

“Statute” means the Companies Law (2003 Revision) of the Cayman Islands;

(jj)

“Subsidiary” , with respect to any Person, means a company, more than fifty percent (50%) (or, in the case of a wholly owned subsidiary, one hundred percent (100%)) of the outstanding Voting Shares of which are owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or any such Person and one or more other Subsidiaries;

(kk)

“Transfer” means any direct or indirect sale, exchange, transfer (including, without limitation, any transfer by gift or operation of law, or any transfer of an economic interest in any derivative security of any security), assignment, distribution or other disposition, or issuance or creation of any option or any voting proxy, voting trust or other transfer of interest, in whole or in part, whether in a single transaction or a series of related transactions and whether voluntarily or involuntarily or by operation of law or at a judicial sale or otherwise;

(ll)

“Unadjusted Basis” , when used with respect to the aggregate voting rights held by any Member, refers to the determination of such rights without reference to the provisions relating to the adjustment of voting rights contained in Article 54(1);

(mm)

“United States” and “U.S.” each means the United States of America and any territory and political subdivision thereof;

(nn)

“U.S. Person” means a “United States Person” as defined in Section 7701(a)(30) of the Code;

(oo)

“Voting Share” of any Person means any share in such Person conferring voting rights on the holder thereof (other than such voting rights as would exist solely in relation to a proposal to alter or vary the rights attaching to such shares solely upon the future occurrence of a contingency or voting rights attaching solely by virtue of the provisions of the Statute).

(2)

In these Articles, where not inconsistent with the context:

(a)

words denoting the plural number include the singular number and vice versa;

(b)

words denoting the masculine gender include the feminine gender;

(c)

words importing persons include companies, associations or bodies of persons whether corporate or not;

(d)

the word:

(i)

“may” shall be construed as permissive;

(ii)

“shall” shall be construed as imperative; and

(e)

unless otherwise provided herein words or expressions defined in the Statute shall bear the same meaning in these Articles.

(3)

Expressions referring to writing or written shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words including in the form of an Electronic Record in a visible form.

(4)

Headings used in these Articles are for convenience only and are not to be used or relied upon in the construction hereof.

(5)

References to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced from time to time.

(6)

Any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

(7)

In these Articles Section 8 of the Electronic Transactions Law shall not apply.

(8)

In these Articles, (i) powers of delegation shall not be restrictively construed but the widest interpretation shall be given thereto, (ii) the word “Board” in the context of the exercise of any power contained in these Articles includes any committee consisting of one or more individuals appointed by the Board, manager or agent of the Company to which or, as the case may be, to whom the power in question has been delegated in accordance with these Articles, (iii) no power of delegation shall be limited by the existence of any other power of delegation and (iv) except where expressly provided by the terms of delegation, the delegation of a power shall not exclude the concurrent exercise of that power by any Person who is for the time being authorised to exercise it under these Articles.

POWERS OF THE BOARD

Board of Directors

(1)

Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by resolution of the Company’s Members, the business of the Company shall be managed by the Board who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Board which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of the Board at which a quorum is present may exercise all powers exercisable by the Board.

(2)

All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Board shall determine by resolution.

(3)

The Board on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants

and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

Management of the Company

(1)

In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by Statute or by these Articles, required to be exercised by the Company in general meeting and the business and affairs of the Company shall be so controlled by the Board, subject, nevertheless, to these Articles, the provisions of any Statute and to such directions as may be prescribed by the Company in general meeting. The Board also may present any declaration in relation to a request to have the Company struck from the Cayman Islands register of companies pursuant to Section 175 of the Statute and make recommendations to the Company’s Members with respect to the winding up or liquidation of the Company.

(2)

The Board may procure that the Company pays all expenses incurred in promoting and incorporating the Company.

Power to appoint managing director

The Board may from time to time appoint one or more Directors to the office of managing director of the Company who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company.

Power to appoint manager or chief executive officer

The Board may appoint a Person or a body of Persons to act as manager or chief executive officer of the Company’s day to day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business.

Power to authorise specific actions

The Board may from time to time and at any time authorise any Director or Officer, company, firm, Person or body of Persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any agreement, document or instrument in the name and on behalf of the Company.

Power to appoint attorney

The Board may from time to time and at any time by power of attorney appoint any company, firm, Person or body of Persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Articles and for such period (or for unspecified length of time)) and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney.

Power to delegate to a committee

The Board may delegate any of its powers, authorities and discretion to a committee, as it deems necessary, appointed by the Board (and the Board may appoint alternative committee members or authorise the committee members to appoint their own alternates), which shall consist of Directors and

every such committee shall conform to such directions as the Board shall impose on them. Any such appointment may be made subject to any conditions the Board may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying. The meetings and proceedings of any such committee shall be governed by the Articles, so far as the same are applicable and are not superseded by directions imposed by the Board. Without limiting the foregoing, such committees may include:

(a) an Audit Committee, which shall, among other things, have direct authority to: (i) appoint the independent Auditors of the Company and the Company’s Subsidiaries on behalf of the Board, subject to the powers of the Members; (ii) set compensation for, subject to Article 80, and oversee the work of independent Auditors of the Company and the Company’s Subsidiaries; (iii) adopt procedures for receiving accounting complaints and anonymous submissions from the employees of the Company or the Company’s Subsidiaries regarding questionable accounting practices; (iv) establish pre-approval procedures for all audit and non-audit services provided by the independent Auditors, or any of their Affiliates, to the Company or the Company’s Subsidiaries; and (v) establish an internal audit function of the Company and the Company’s Subsidiaries;

(b) a Compensation Committee, which shall, among other things, establish and review the compensation policies and procedures of the Company and the Company’s Subsidiaries and make recommendations to the Board with respect to compensation of Officers and Directors, and set the compensation of other employees subject to Article 9; and

(c) an Underwriting Committee, which shall, among other things, establish, review and monitor the underwriting policies of the Company’s Subsidiaries or other companies associated with the Company, review underwriting decisions, monitor any appointed underwriting services provider, advise the Board with respect to actuarial services, review actuarial decisions, monitor any provider of actuarial services and otherwise monitor the risks insured or reinsured by the Company’s Subsidiaries or other companies associated with the Company.

Power to appoint and dismiss employees

The Board may appoint, suspend or remove any officer, manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties.

10.

Power to borrow and charge property

The Board may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party.

11.

Exercise of power to purchase Shares

(1)

Purchase of Ordinary Shares

(a)

Subject to the limitations set forth below and the provision of the Statute, the Company shall have the power to purchase its Ordinary Shares (including any redeemable Shares) provided that the Members shall have approved the manner of purchase by Ordinary Resolution.

(b)

Notwithstanding (a) above, if the Board in its absolute and unfettered discretion, on behalf of the Company, determines that ownership of Class A Ordinary Shares of the Company by any Member (1) would violate the ownership limitations described in Article 11(1)(d) or (2) would result in an increased risk of adverse tax, regulatory or legal consequences to the Company, any of its Subsidiaries or any of the Members; the Company will have the option, but not the obligation, subject to Statute to purchase all or part of the Class A Ordinary Shares of the Company held by such Member (to the extent the Board, in the reasonable exercise of its discretion, determines it is necessary to avoid or cure such adverse consequences) with funds available therefor in an amount equal to the Fair Market Value of such Shares on the date the Company sends the Repurchase Notice referred to below (the “Repurchase Price”); provided, that the Board will use reasonable efforts to exercise this option equally among similarly situated Persons (to the extent possible under the circumstances). In that event, the Company will also be entitled to assign its purchase right to a third party or parties including one or more of the other Persons, with the consent of such assignee. Each Member shall be bound by the determination by the Company to purchase or assign its right to purchase such Member’s Shares and, if so required by the Company, shall sell the number of Shares of the Company that the Company requires it to sell. This authorisation is in accordance with Section 37(2) of the Statute. This Article authorises the purchase by the Company in accordance with the provisions of the Statute of such of its own Shares (including any redeemable Shares) in such manner as referred to in Section 37(d) of the Statute.

(c)

Notwithstanding (a) above, after the Company receives notice of a proposed Transfer of Ordinary Shares pursuant to Article 66, the Company will have the exclusive right, but not the obligation, to purchase the offered shares at the proposed price, unless the prospective purchaser is a Permitted Transferee.

(d)

The ownership limitations described in this Article 11(1)(d) are as follows: except upon unanimous consent by the Board (i) no Person shall be allowed to acquire Class A Ordinary Shares if such acquisition would cause any individual to own (directly, indirectly or constructively under applicable U.S. tax attribution and constructive ownership rules) more than 6% of the issued and outstanding Ordinary Shares; (ii) no Person shall be allowed to acquire Class A Ordinary Shares if such acquisition would cause any U.S. Person to own (directly, indirectly or constructively under applicable U.S. tax attribution and constructive ownership rules) more than 9.9% of the issued and outstanding Ordinary Shares; and (iii) no Person other than a U.S. Person shall be allowed to acquire Class A Ordinary Shares if such acquisition would cause such Person to own directly more than 9.9% of the issued and outstanding Ordinary Shares.

(e)

In the event that the Company or its assignee(s) determines to purchase any such Shares subject to this Article 11, the Company shall provide each Person concerned with written notice of such determination (a “Repurchase Notice”) at least seven (7) calendar days prior to such purchase or such shorter period as each such Person may authorise, specifying the date on which any such Shares are to be purchased and the Repurchase Price. The Company may revoke the Repurchase Notice at any time before it (or its assignee(s)) pays for the Shares. Neither the Company nor its assignee(s) shall be obliged to give general notice to the Members of any intention to purchase or the conclusion of any purchase of Shares of the Company. Payment of the Repurchase Price by the Company or its assignee(s) shall be by wire transfer or certified check and made at a closing to be held no less than seven (7) calendar days, unless such Person agrees to a shorter period, after receipt of the Repurchase Notice by the Member.

(2)

Subject to the provisions of the Statute and to this Article 11, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner as the Company may, by Special Resolution, determine before the issue of the Shares.

(3)

The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.

12.

Election of Directors

(1)

The Board shall be elected annually. The Board shall consist of not less than five (5) and not more than twenty-one (21) Directors, the exact number to be determined from time to time by resolution adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the Directors then in office; provided, however, that if no such resolution shall be in effect the number of Directors shall be five (5) Directors. Any increase in the size of the Board pursuant to this Article 12(1) shall be deemed to be a vacancy and may be filled in accordance with Article 16 hereof. Directors shall be elected, except in the case of a vacancy (as provided for in Article 15 or 16, as the case may be), by the Members in the manner set forth in paragraph (2) of this Article 12 at an annual general meeting or any extraordinary general meeting called for the purpose .

(2)

Subject to the terms of any class or series of Shares issued by the Company, no Person shall, unless recommended by the Board or a committee thereof, be eligible for election as a Director at any general meeting unless not less than 120 days before the date appointed for the meeting there shall have been lodged at the Company notice in writing signed by not less than 10 Members holding Shares representing at least 50% of the voting rights attached to all of the issued and outstanding Shares entitled to vote at the meeting for which such notice is given of their intention to propose such person for election and also notice in writing signed by the person to be proposed of his or her willingness to be elected. Each such notice shall also include (i) the names and addresses, as they appear in the Register of Members, of the Members who intend to make the nomination and of the person or persons to be nominated, (ii) a representation that the Members are holders of record of Shares entitled to vote at such meeting and intend to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (iii) the class and number of Shares which are beneficially owned by the Members, (iv) a description of all arrangements or understandings between the Members and each nominee and any other Person or Persons in respect of whom nominations are to be made by the Members and (v) such other information regarding each nominee proposed by such Members as would be required to be included in a proxy statement filed pursuant to Regulation 14A under the Exchange Act, whether or not the Company is then subject to such regulation. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

(3)

No Member of the Company shall be permitted to vote any Class A Ordinary Shares for or against Directors of the Company or directors of any subsidiary of the Company that is treated as a corporation for U.S. federal tax purposes if the vote of such shares would cause any Person to be a 9.9% U.S. Member (as defined in Article 54) of the Company or such subsidiary. All votes referred to the Company’s Members pursuant to Article 97 shall be subject to this Article 12(3). See also Article 54.

13.

Defects in appointment of Directors

All acts done bona fide by any meeting of the Board or by a committee of the Board or by any person acting as an alternate Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.

14.

Alternate Directors

(1)

Any Director (other than an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by him.

(2)

An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of the Board of which his appointor is a member, to attend and vote at every such meeting at which the Director appointing him is not personally present, and generally to perform all the functions of his appointor as a Director in his absence.

(3)

An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director.

(4)

Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Board.

(5)

An alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.

15.

Removal of Directors

(1)

Subject to any provision to the contrary in these Articles, removal of a Director of the Company without Cause requires the affirmative vote of not less than 80% of the votes cast at a meeting at which a quorum is present provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention to do so and be served on such Director not less than 60 days before the meeting and at such meeting such Director shall be entitled to be heard on the motion for such Director’s removal.

(2)

Subject to any provision to the contrary in these Articles, removal of a Director of the Company for Cause requires the affirmative vote of not less than 50% of the votes cast at a meeting at which a quorum is present provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 60 days before the meeting and at such meeting such Director shall be entitled to be heard on the motion for such Director’s removal. Members shall not be entitled to remove a Director pursuant to this Article 15(2) other than for Cause.

(3)

A vacancy on the Board created by the removal of a Director under the provisions of subparagraphs (1) or (2) of this Article may be filled by a person nominated by Ordinary Resolution and, in the absence of such election or appointment, the Board may fill the vacancy in accordance with Article 16. A Director so appointed shall hold office for the balance of the term of such vacant Board position, or until such Director’s successor is elected or appointed or such Director’s office otherwise vacated.

16.

Other Vacancies on the Board

(1)

The Board shall have the power from time to time and at any time to appoint any person as a Director to fill a vacancy on the Board occurring as the result of an increase in the size of the Board pursuant to Article 12(1), the death, disability, disqualification, resignation or removal of any Director or if such Director’s office is otherwise vacated. A Director so appointed shall hold office for the balance of the term of such vacant Board position, or until such Director’s successor is elected or appointed or such Director’s office is otherwise vacated. The Board shall also have the power from time to time to fill any vacancy left unfulfilled at a general meeting.

(2)

The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Articles as the quorum necessary for the transaction of business at

meetings of the Board, the continuing Directors or Director may, notwithstanding that the number of Directors is below the number fixed by or in accordance with these Articles as the quorum or that there is only one continuing Director, act for the purpose of (i) filling vacancies on the Board, (ii) summoning a general meeting of the Company or circulating a proposed written resolution of the Members and (iii) preserving the assets of the Company.

(3)

The office of Director shall be deemed to be vacated if the Director:

(a)

is removed from office pursuant to these Articles or is prohibited from being a Director by law;

(b)

is or becomes bankrupt or makes any arrangement or composition with his creditors generally;

(c)

is or becomes disqualified, of unsound mind or dies;

(d)

resigns his or her office by notice in writing to the Company.

17.

Notice of meetings of the Board

(1)

A Director may, and the Secretary on the requisition of a majority of the Directors shall, at any time summon a meeting of the Board. Notice of a meeting of the Board must be provided at least two (2) days in advance of such meeting, and must state the date, time, place (which shall not be in the United States) and the general nature of the business to be considered at the meeting unless the Directors unanimously agree to waive notice of such meeting (either at, before or after the meeting is held).

(2)

Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally in person or by telephone or otherwise communicated or sent to such Director by post, electronic mail, facsimile or other mode of representing words in a visible form at such Director’s last known address or any other address given by such Director to the Company for this purpose.

18.

Quorum at meetings of the Board

(1)

The quorum necessary for the transaction of business at a meeting of the Board shall be a majority of the Directors then in office, provided that at least two Directors are present in person, by proxy or by teleconference. A person who holds office only as an alternate Director shall, if his appointor is not present, be counted in the quorum.

(2)

The continuing Directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number, summoning a general meeting of the Company and preserving the assets of the Company, but for no other purpose.

19.

Meetings of the Board

(1)

Subject to the provisions of these Articles, the Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit.

(2)

Directors may participate in any meeting of the Board by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other

simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting; provided, however, that no Director may participate in any meeting of the Board while physically present in the United States or its territories.

(3)

A resolution put to the vote at a meeting of the Board shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.

20.

Unanimous written resolutions

A resolution in writing signed by all the Directors which may be in counterparts, shall be as valid as if it had been passed at a meeting of the Board duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution, provided that no such resolution shall be valid unless the last signature of a Director is affixed outside the United States (but, notwithstanding Article 19(2), a Director who is not the last Director to sign may sign a resolution in writing even though he or she is in the United States). Such resolution shall be deemed to be adopted as an act of the Board, at the place where, and at the time when, the last signature of a Director is affixed thereto.

21.

Proxy

A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.

22.

Presumption of Assent

A Director of the Company who is present at a meeting of the Board at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.

23.

Contracts and disclosure of Directors’ interests

(1)

Any Director, or any Person associated, related or affiliated with whom any Director is associated, may act in a professional capacity for the Company and such Director or such Person shall be entitled to remuneration for professional services as if such Director were not a Director, provided that nothing herein contained shall authorise a Director or Director’s firm, partner or such company to act as Auditor of the Company.

(2)

A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Board may determine.

(3)

A Director or alternate Director of the Company may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as Member or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.

(4)

No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or transaction by reason of such Director holding office or of the fiduciary relation thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.

(5)

A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.

24.

Remuneration of Directors

(1)

The remuneration and benefits (if any) of the Directors, including without limitation, participation in any share option or incentive plan and loans shall be determined by the Board and shall be deemed to accrue from day to day. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from meetings of the Board, any committee appointed by the Board, general meetings of the Company, or in connection with the business of the Company or their duties as Directors generally.

(2)

The Board may award special remuneration and benefits to any Director undertaking any special work or services for, or undertaking any special mission on behalf of, the Company other than his or her ordinary routine work as a Director. Any fees paid to a Director who is also counsel or attorney to the Company, or otherwise serves it in a professional capacity, shall be in addition to his or her remuneration as a Director.

25.

Other interests of Directors

A Director may be or become a director or other officer of or otherwise interested in any company or Person promoted by the Company or in which the Company may be interested as member or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him or her as a director or officer of, or from his or her interest in, such other company or Person.

26.

No Minimum Shareholding

The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.

OFFICERS

27.

Officers of the Company

The Officers of the Company may consist of any of the following Officers: a chairman, a president and one or more vice presidents, a Secretary and such additional Officers, as the Board may from time to time determine all of whom shall be deemed to be Officers for the purposes of these Articles.

Subject to compliance with any requirement of the Statute, the same individual may hold two (2) or more offices in the Company.

28.

Appointment of Officers

The Secretary and additional Officers, if any, shall be appointed by the Board from time to time.

29.

Remuneration of Officers

The Officers shall receive such remuneration and benefits as the Board may determine from time to time in accordance with their employment contracts or otherwise.

30.

Duties of Officers

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.

31.

Chairman of meetings

Unless otherwise agreed by a majority of those attending and entitled to attend and vote thereat, the chairman, if there be one, and if not, the president shall act as chairman at all meetings of the Members and of the Board at which such person is present. In their absence, the vice president, if present, shall act as chairman and in the absence of all of them a chairman shall be appointed or elected by those present at the meeting and entitled to vote.

32.

The Company shall keep at the registered office for the time being of the Company a register containing the names and addresses of its Directors and Officers, and shall send to the Registrar of Companies in the Cayman Islands a copy of such register, and shall, within thirty days notify the Registrar of Companies of the Cayman Islands of any change which takes place in such Directors or Officers.

MINUTES

33.

Obligations of Board to keep minutes

(1)

The Company shall cause minutes of all resolutions and proceedings of its Members, whether at general meetings or otherwise, and of its Directors or managers (where there are managers), whether at meetings or otherwise, to be duly kept in writing.

(2)

Any minute of a general meeting of the Company or a meeting of the Directors or managers (if any), if purporting to be signed by the chairman of the meeting, or by the chairman of the next succeeding meeting, shall be received as evidence of the proceedings at that meeting; and until the contrary is proved, every general meeting of the Company or meeting of the Directors or managers in respect of the proceedings of which minutes have been so made, shall be deemed to have been duly held and convened and all resolutions passed thereat, or proceedings had, to have been duly passed and had, and all appointments of Directors, Officers, managers or liquidators shall be deemed to be valid, and all acts done by such Directors, Officers, managers and liquidators shall be valid, notwithstanding any defect that may afterwards be discovered in their appointments or qualifications.

INDEMNITY

34.

Indemnification of Directors and Officers of the Company

(1)

The Directors, Secretary and other Officers (such term to include, for the purposes of Article , any person appointed to any committee by the Board) and employees and agents of the Company who have acted or are acting in relation to any of the affairs of the Company and the liquidator or trustees (if any) who has acted or is acting in relation to any of the affairs of the Company, and every one of them, and their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted (actual or alleged) in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, provided, that, this indemnity shall not extend to any matter in respect of any willful negligence, willful default, fraud or dishonesty which may attach to any of said persons.

(2)

Any indemnification under this Article 34, unless ordered by a court, shall be made by the Company only as authorised in the specific case upon a determination that indemnification of such Person is proper in the circumstances because such Person has met the applicable standard of conduct set forth in paragraph of this Article 34. Such determination shall be made (i) by the Board by a majority vote of disinterested Directors or (ii) if a majority of the disinterested Directors so directs, by independent legal counsel in a written opinion or (iii) by the Members. The Company may purchase and maintain insurance to protect itself and any Director, Officer or other Person entitled to indemnification pursuant to this Article , to the fullest extent permitted by law.

(3)

Expenses (including, without limitation, attorneys’ fees) actually and reasonably incurred by any Director, Secretary, other Officer or employee of the Company in defending any civil, criminal, administrative or investigative action, suit or proceeding or threat thereof for which indemnification is sought pursuant to paragraph (1) of this Article shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall be ultimately determined that such Person is not entitled to be indemnified by the Company as authorised in these Articles or otherwise pursuant to applicable law; provided, that if it is determined by either (i) a majority vote of Directors who were not parties to such action, suit or proceeding or (ii) if a majority of the disinterested Directors so directs, by independent legal counsel in a written opinion, that there is no reasonable basis to believe that such Person is entitled to be indemnified by the Company as authorised in these Articles or otherwise pursuant to applicable law, then no expense shall be advanced in accordance with this paragraph of this Article 34. Such expenses (including attorneys’ fees) incurred by agents of the Company may be paid upon the receipt of the aforesaid undertaking and such terms and conditions, if any, as the Board deems appropriate.

(4)

The indemnification and advancement of expenses provided in these Articles shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may now or hereafter be entitled under any statute, agreement, vote of Members or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.

(5)

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorised or ratified, continue as to a Person who has ceased to hold the position for which such Person is entitled to be indemnified or advanced expenses and shall inure to the benefit of the heirs, executors and administrators of such a Person.

(6)

No amendment or repeal of any provision of this Article 34 shall alter, to the detriment of any Person, the right of such Person to the indemnification or advancement of expenses related to a claim based on an act or failure to act which took place prior to such amendment, repeal or termination.

MEETINGS

35.

Notice of annual general meeting

(1)

All general meetings other than annual general meetings shall be an extraordinary general meetings.

(2)

The Company shall hold an annual general meeting of its Members once every financial year.

(3)

Any annual general meeting of the Company shall be held at such time and place (which shall not be in the United States) as the president or the chairman or any two Directors or any Director and the Secretary or the Board shall decide. At least five (5) days’ notice of such meeting shall be given to each Member entitled to vote thereat as at the relevant record date determined pursuant to Article 64 stating the date, place (which shall not be in the United States) and time at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting.

(4)

Notwithstanding any other provision of these Articles, in addition to any other applicable requirements, in order for a resolution to be properly moved by Members in accordance with the Statute and these Articles at an annual general meeting of Members where such business is not brought by or at the direction of the Board, such resolution may be introduced by such Members at such meeting only if 120 days’ prior written notice thereof is given by such Members to the Secretary of the Company at the Company’s registered office for the time being of the Company setting forth as to each matter such Members propose to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and record address of such Member; (c) the class or series and the number of Shares of capital stock of the Company which are owned beneficially or of record by such shareholder; (d) a description of all arrangements and understandings between such Member and any other person (including his or her name and address) in connection with the proposal of such business by such Member and any material interest of such Member in such business; and (e) a representation that such Member intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. The chairman of an annual general meeting may, if the facts warrant, determine and declare that any business was not properly brought before the meeting and such business will not be transacted.

36.

Notice of extraordinary general meeting

The Board may convene an extraordinary general meeting of the Company whenever in their judgement such a meeting is necessary, upon not less than five (5) days’ notice to each Member entitled to vote thereat as at the relevant record date determined pursuant to Article 64 which shall state the date, time, place (which shall not be in the United States) and the general nature of the business to be considered at the meeting.

37.

Accidental omission of notice of general meeting; Business to be conducted

(1)

The accidental omission to give notice of a general meeting to, or the non-receipt of notice of a general meeting by, any Person entitled to receive notice shall not invalidate the proceedings at that meeting.

(2)

Business to be brought before a general meeting of the Company must be specified in the notice of the meeting. Only business that the Board has determined can be properly brought before a general meeting in

accordance with these Articles and applicable law shall be conducted at any general meeting, and the chairman of the general meeting may refuse to permit any business to be brought before such meeting that has not been properly brought before it in accordance with these Articles and applicable law.

38.

Meeting called on requisition of Members

Subject to the terms of any class or series of Shares issued by the Company and notwithstanding anything herein, the Board shall, on the requisition of Members holding at the date of the deposit of the requisition not less than one-tenth in par value of the share capital of the Company as at the date of the deposit carries the right to vote at general meetings of the Company, forthwith proceed to convene an extraordinary general meeting of the Company. The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the registered office for the time being of the Company, and may consist of several documents in like form each signed by one or more requisitionists. If the Directors do not within twenty-one days from the date of the deposit of the requisition duly proceed to convene an extraordinary general meeting to be held within a further twenty-one days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting (which shall not take place in the United States), but any meeting so convened shall not be held after the expiration of three months after the expiration of the said twenty-one days.

39.

Short notice

Subject to the terms of any class or series of Shares issued by the Company, a general meeting of the Company shall, notwithstanding that it is called by shorter notice than that specified in these Articles, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than 95% in par value of the Shares giving a right to attend and vote thereat in the case of an extraordinary general meeting.

40.

Quorum for general meeting

At any general meeting of the Company two or more persons present in person and representing in person or by proxy in excess of 50% of the total issued and outstanding voting Shares in the Company as at the relevant record date determined pursuant to Article 64 throughout the meeting shall form a quorum for the transaction of business, provided, however, that if the Company shall at any time have only one Member, one Member present in person or by proxy shall form a quorum for the transaction of business at any general meeting of the Company held during such time. If within a half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Secretary may determine. Unless the meeting is so adjourned to a specific date and time, fresh notice of the date, time and place for the resumption of the adjourned meeting shall be given to each Member in accordance with the provisions of these Articles. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business and continues throughout the meeting, but the absence of a quorum shall not preclude the appointment, choice or election of a chairman of the meeting which shall not be treated as part of the business of the meeting.

41.

Adjournment of meetings

The chairman of a general meeting may, with the consent of 50% of the Members present in person or by proxy at any general meeting whether or not a quorum is present (and shall if so directed by the Meeting), adjourn the meeting. Unless the meeting is adjourned to a specific date and time, fresh

notice of the date, time and place for the resumption of the adjourned meeting shall be given to each Member in accordance with the provisions of these Articles with respect to an extraordinary general meeting of the Company.

42.

Attendance at meetings

Members may participate in any meeting by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting, provided, however, that no Member may participate in any general meeting while that Member (or, if any Member is an entity, its representative) is physically present in the United States or its territories.

43.

Written resolutions

(1)

Anything which may be done by resolution of the Company in a general meeting or by resolution of a meeting of any class of the Members of the Company, may, without a meeting and without any previous notice being required, be done by resolution in writing signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Statute, on behalf of, all the Members who at the date of the resolution or the record date determined pursuant to Article 64 (if earlier) would be entitled to attend the meeting and vote on the resolution.

(2)

A resolution in writing may be signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Statute, on behalf of, all the Members, or any class thereof, in as many counterparts as may be necessary.

(3)

For the purposes of this Article, the date of the resolution is the date when the resolution is signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Statute, on behalf of, the last Member to sign and any reference in any Article to the date of passing of a resolution is, in relation to a resolution made in accordance with this Article, a reference to such date. Any resolution in writing may be signed within or outside the United States; provided, that the last Member to sign the resolution must sign such resolution outside of the United States.

(4)

A resolution in writing made in accordance with this Article is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be, provided that no such resolution shall be valid unless the last signature of a Member is offered outside the United States, and any reference in any Article to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.

44.

Attendance of Directors

The Directors of the Company shall be entitled to receive notice of and to attend and be heard at any general meeting.

45.

Voting at meetings

(1)

Subject to the provisions of the Statute and these Articles, any question proposed for the consideration of the Members at any general meeting shall be decided by Ordinary Resolution in accordance with the provisions of these Articles and in the case of an equality of votes the resolution shall fail.

(2)

Generally, each Class A Ordinary Share is entitled to one (1) vote per share. However, except upon unanimous consent of the Board, no Class A Ordinary Share holder shall be permitted to vote an amount of shares which would cause any United States person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) more than 9.9% of the total voting power of all issued and outstanding Ordinary Shares (see Article 54).

(3)

Generally, each Class B Ordinary Share is entitled to ten (10) votes per share. However, holders of Class B Ordinary Shares, will, together with their Affiliates, be limited to voting that number of Class B Ordinary Shares equal to 23% of the total voting power of the Ordinary Shares issued and outstanding.

(4)

Notwithstanding any other provisions of these Articles to the contrary, a Director may only be removed in accordance with Article 15(1) and 15(2).

(5)

Notwithstanding any other provisions of these Articles to the contrary, with respect to any matter required to be submitted to a vote of the shareholders of Greenlight Reinsurance, the Company shall be required to submit a proposal relating to such matters to the Members of the Company and shall vote all the shares of Greenlight Reinsurance owned by the Company in accordance with and proportional to such vote of the Company’s Members; provided, however, that the Board shall not be required to submit such a proposal contemplated by this Article 45(5) to the Members of the Company at such time as Greenlight Reinsurance shall no longer be a Subsidiary of the Company.

(6)

No Member shall be entitled to vote at any general meeting or at any separate meeting of the holders of a class of Shares unless such Member has paid all the calls on all Shares held by such Member.

46.

Voting on show of hands

At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to any rights or restrictions for the time being lawfully attached to any class of Shares and subject to the provisions of these Articles, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to that number of votes prescribed by the Ordinary Shares held by such Member and shall cast such votes by raising his or her hand.

47.

Decision of chairman

At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to the provisions of these Articles, be conclusive evidence of that fact.

48.

Demand for a poll

(1)

At any general meeting of the Company, in respect of any question proposed for the consideration of the Members (whether before or on the declaration of the result of a show of hands as provided for in these Articles), a poll may be demanded by any of the following persons:

(a)

the chairman of such meeting; or

(b)

any one Member present in person or represented by proxy.

The demand for a poll may be withdrawn by such person that made the demand.

(2)

Where, in accordance with the provisions of subparagraph (1) of this Article, a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of Shares, every person present at such meeting shall have the number of votes corresponding each for such Share of which such person is the holder or for which such person holds a proxy and such vote shall be counted in the manner set out in subparagraph (4) of this Article or in the case of a general meeting at which one or more Members are present by telephone in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands.

(3)

A poll demanded in accordance with the provisions of subparagraph (1) of this Article, for the purpose of electing a chairman of the meeting or on a question of adjournment, shall be taken forthwith and a poll demanded on any other question shall be taken in such manner and at such time and place as the chairman (or acting chairman) may direct and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.

(4)

Where a vote is taken by poll, each Person present and entitled to vote shall be furnished with a ballot paper on which such person shall record his or her vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. The Board may appoint one or more inspectors to act at any general meeting where a vote is taken by a poll. Each inspector shall take and sign an oath faithfully to exercise the duties of inspector at such meeting with strict impartiality and according to the best of his, her or its ability. The inspectors shall determine the number of Shares issued and outstanding and the voting power of each, by reference to the Register of Members as at the relevant record date determined pursuant to Article , the number of Shares represented at the meeting, the existence of a quorum, the validity and effect of proxies and examine and count all ballots and determine the results of any vote. The inspector shall also hear and determine challenges and questions arising in connection with the right to vote. No Director or candidate for the office of Director shall act as an inspector. The determination and decision of the inspectors shall be final and binding.

49.

Seniority of joint holders voting

(1)

In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

(2)

A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person on such Member's behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.

(3)

No person shall be entitled to vote at any general meeting or at any separate meeting of the holders of a class of Shares unless he is registered as a Member on the record date for such meeting.

(4)

No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the chairman whose decision shall be final and conclusive.

(5)

On a poll or on a show of hands votes may be cast either personally or by proxy. A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting.

Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands.

(6)

A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting.

50.

Instrument of proxy

(1)

Every Member entitled to vote has the right to do so either in person or by one or more Persons authorised by a written proxy executed and delivered in accordance with these Articles. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his or her attorney authorised by him or her in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

(2)

Any Member may appoint one or more Persons a standing proxy or (if a corporation) a standing representative by depositing at the registered office for the time being of the Company, or at such place or places as the Board may otherwise specify for the purpose, a proxy or (if a corporation) a written authorisation. Such proxy or authorisation shall be valid for all general meetings and adjournments thereof or, resolutions in writing, as the case may be, until notice of revocation is received at the registered office for the time being of the Company, or at such place or places as the Board may otherwise specify for the purpose. Where a standing proxy or authorisation exists, its operation shall be deemed to have been suspended at any general meeting or adjournment thereof at which the Member is present or in respect to which the Member has specially appointed a proxy or representative. The Board may from time to time require such evidence as it shall deem necessary as to the due execution and continuing validity of any such standing proxy or authorisation and the operation of any such standing proxy or authorisation shall be deemed to be suspended until such time as the Board determines that it has received the requested evidence or other evidence satisfactory to it. A Person so authorised as a representative of a corporation shall be entitled to exercise the same power on behalf of the grantor of the authority as the grantor could exercise if it were an individual Member and the grantor shall for the purposes of these Articles be deemed to be present in person at any such meeting if the Person so authorised is present at the meeting.

(3)

Subject to paragraph (2) of this Article 50, the instrument appointing a proxy together with such other evidence as to its due execution as the Board may from time to time require shall be delivered at the registered office for the time being of the Company (or at such place or places as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case or the case of a written resolution, in any document sent therewith) not less than 24 hours or such other period as the Board may determine, prior to the holding of the relevant meeting or adjourned meeting at which the individual named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.

(4)

Instruments of proxy shall be in any common form or other form as the Board may approve and the Board may, if it thinks fit, send out with the notice of any meeting forms of instruments of proxy for use at that meeting. The instrument of proxy shall be deemed to confer authority to demand or join in demanding a poll or amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall unless the contrary is stated therein be valid as well for any adjournment of the meeting as for the meeting to which it relates.

(5)

A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or unsoundness of mind of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, provided, that no intimation in writing of such death, insanity or revocation shall have been received by the Company at the registered office for the time being of the Company (or such other place as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other documents sent therewith) at least one hour before the commencement of the meeting or adjourned meeting, or the taking of the poll at which the instrument of proxy is used.

51.

Representation of corporations at meetings

A corporation which is a Member may, by written instrument, authorise one or more Persons as it thinks fit to act as its representative at any meeting of the Members and the Person or Persons so authorised shall be entitled to exercise the same powers on behalf of the corporation which such Person or Persons represent as that corporation could exercise if it were an individual Member. Such corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a Person so authorised is present at the meeting. Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he or she thinks fit as to the right of any Person to attend and vote at general meetings on behalf of a corporation which is a Member.

52.

Shares that may not to be voted

Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.

SHARE CAPITAL AND SHARES

53.

Rights of Shares

(1)

Upon adoption of these Articles, the share capital of the Company shall consist of 125,000,000 Ordinary Shares, par value US$0.10 divided into 100,000,000 Class A Ordinary Shares and 25,000,000 Class B Ordinary Shares and 50,000,000 Preferred Shares, par value of US$0.10 each

(2)

The holders of Class A Ordinary Shares shall be entitled to one vote per Class A Ordinary Share subject to a reduction as a result of the voting power ascribed to the Class B Ordinary Shares, or in the case of Controlled Shares (as defined in Article 54), if applicable, a fraction of a vote per Controlled Share as determined pursuant to Article 54. The Class B Ordinary Shares rights and preferences are set forth in Schedule A to these Articles, but otherwise the holders of all Ordinary Shares shall:

(a)

be entitled to share equally Share for Share in dividends (whether payable in cash, property or securities of the Company) as the Board may from time to time declare;

(b)

in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of an amalgamation, reorganisation or otherwise or upon any distribution of share capital and surplus to share equally and ratably in the assets of the Company, if any, remaining after the payment of all debts and liabilities of the Company and the liquidation preference of any issued and outstanding Preferred Shares; and

(c)

generally to enjoy all of the rights attaching to Shares.

(3)

The Board is authorised, subject to limitations prescribed by law, to issue Preferred Shares in classes or series, to establish from time to time the number of Preferred Shares to be included in each such class or series, and to fix the designation, powers, preferences redemption provisions, restrictions and rights to the Preferred Shares of each such class or series and the qualifications, limitations or restrictions thereof. The terms of any class or series of Preferred Shares shall be set forth in a Certificate of Designation in the minutes of the Board authorising the issuance of such Preferred Shares and such Certificate of Designations shall be attached as an exhibit to these Articles, but shall not form part of these Articles, and may be examined by any Member on request. The rights attaching to any Ordinary Share or other Share shall be deemed not to be altered by the allotment of any Preferred Share even if such Preferred Share does or will rank in priority for payment of a dividend or in respect of capital or surplus or which confer on the holder thereof voting rights more favourable than those conferred by such Ordinary Share and shall not otherwise be deemed to be altered by the creation or issue of further Shares ranking pari passu therewith.

(4)

The authority of the Board with respect to each class or series of Preferred Shares shall include, but not be limited to, determination of the following:

(a)

the number of Preferred Shares constituting that class or series and the distinctive designation of that class or series;

(b)

the rate of dividend, and whether (and if so, on what terms and conditions) dividends shall be cumulative (and if so, whether unpaid dividends shall compound or accrue interest) or shall be payable in preference or in any other relation to the dividends payable on any other class or classes of Shares or any other class or series of the Preferred Shares;

(c)

whether that class or series shall have voting rights in addition to the voting rights provided by law and, if so, the terms and extent of such voting rights, provided that if the Preferred Shares shall have voting rights, such Preferred Shares shall be included in the number of Voting Shares of the Company held by any Person for the purposes of Article 53(2) hereof;

(d)

whether such Preferred Shares may be redeemed and, if so, the terms and conditions on which they may be redeemed (including, without limitation, the dates upon or after which they may be redeemed and the price or prices at which they may be redeemed, which price or prices may be different in different circumstances or at different redemption dates);

(e)

whether such Preferred Shares shall be issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange (including, without limitation the price or prices or the rate or rates of conversion or exchange or any terms for adjustment thereof);

(f)

the amounts, if any, payable upon such Preferred Shares in the event of voluntary liquidation, dissolution or winding up of the Company in preference of Shares of any other class or series and whether such Preferred Shares shall be entitled to participate generally in distributions on the Ordinary Shares under such circumstances; and

(g)

any other relative rights, preferences, limitations and powers of that class or series.

(5)

The rights attaching to any Preferred Shares, or any class or series of Preferred Shares, shall be deemed not to be altered by the allotment of any other class or series of Preferred Shares even if such class or series does or will rank in priority for payment of a dividend or in respect of capital or surplus or which confer on the holder thereof voting rights more favourable than those conferred by such existing Preferred Shares or class

or series of Preferred Shares and shall not otherwise be deemed to be altered by the creation or issue of further Shares ranking pari passu therewith.

54.

Limitation on voting rights of Controlled Shares.

(1)

General . Subject to the provisions of Articles 12(3), 45(3), and 54(1)-(4) (as well as the restrictions and rights of the Class B Ordinary Shares set forth in Schedule A hereto), and subject to any rights and restrictions for the time being attached to any class or classes of Shares, every Member and every Person representing a Member by proxy shall have one vote for each Class A Ordinary Share carrying the right to vote on the matter in question of which he or the Person represented by proxy is the holder. Notwithstanding any other provisions of these Articles, all determinations in these Articles that are made by or subject to a vote or approval of Members shall be based upon the voting power of such Members’ Shares as determined pursuant to Articles 12(3), 45(3), and 54(1)-(4) (as well as the restrictions and rights of the Class B Ordinary Shares set forth in Schedule A hereto).

(2)

Adjustment of Voting Power . Except upon unanimous consent of the Board, the voting power of each Class A Ordinary Share is hereby adjusted (and shall be automatically adjusted in the future) to the extent necessary so that no U.S. Person is a 9.9% U.S. Member (as defined below). This Article 54 shall be applied prior to the application of Article 12(3). The Board shall implement the foregoing in the manner provided herein.

The Board shall from time to time, including prior to any time at which a vote of Members is taken, take all reasonable steps necessary to ascertain through communications with Members or otherwise, whether there exists, or will exist at the time any vote of Members is taken, a Tentative 9.9% U.S. Member (as defined below).

In the event that a Tentative 9.9% U.S. Member exists, the aggregate votes conferred by Class A Ordinary Shares held by a Member and treated as Controlled Shares of that Tentative 9.9% U.S. Member shall be reduced to the extent necessary such that the Controlled Shares of the Tentative 9.9% U.S. Member will constitute less than 9.9% of the voting power of all Ordinary Shares. In applying the previous sentence where Class A Ordinary Shares held by more than one Member are treated as Controlled Shares of such Tentative 9.9% U.S. Member, the reduction in votes shall apply to such Members in descending order according to their respective Attribution Percentages (as defined below), provided that, in the event of a tie, the reduction shall apply first to the Member whose Shares are Controlled Shares of the Tentative 9.9% U.S. Member by virtue of the Tentative 9.9% U.S. Member’s economic interest in (as opposed to voting control with respect to) such Ordinary Shares. The votes attributable to Class A Ordinary Shares of Members owning no Class A Ordinary Shares treated as Controlled Shares of any Tentative 9.9% U.S. Member shall, in the aggregate, be increased by the same number of votes subject to reduction as described above. Such increase shall apply to all such Members in proportion to their voting power at that time, provided that such increase shall be limited to the extent necessary to avoid causing any person to be a 9.9% U.S. Member. The adjustments of voting power described in this Article shall apply repeatedly until there would be no 9.9% U.S. Member. The Board may deviate from any of the principles described in this Article and determine that Class A Ordinary Shares held by a Member shall carry different voting rights as it determines appropriate (1) to avoid the existence of any 9.9% U.S. Member or (2) to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any other Member or its affiliates. For the avoidance of doubt, in applying the provisions of Articles 12(3), 45(3), and 54(1)-(4), a Class A Ordinary Share may carry a fraction of a vote.

“Attribution Percentage” shall mean, with respect to a Member and a Tentative 9.9% Member, the percentage of the Member’s Shares that are treated as Controlled Shares of such Tentative 9.9% Member.

“Controlled Shares” in reference to any Person means all Class A Ordinary Shares of the Company directly, indirectly or constructively owned by such Person as determined pursuant to Section 958 of the Code.

“9.9% U.S. Member” means a U.S. Person whose Controlled Shares constitute nine and nine-tenths percent (9.9%) or more of the voting power of all Ordinary Shares of the Company and who would be generally required to recognize income with respect to the Company under Section 951(a)(1) of the Code if the Company were a controlled foreign corporation as defined in Section 957 of the Code and if the ownership threshold under Section 951(b) of the Code were 9.9%.

“Tentative 9.9% U.S. Member” means a Person that, but for adjustments to the voting rights of Shares pursuant to Article 54(1)-(4), would be a 9.9% U.S. Member.

(3)

Other Adjustments of Voting Power . In addition to the provisions of Article , any Class A Ordinary Shares shall not carry any right to vote to the extent that the Board determines, in its sole discretion, that it is necessary that such Class A Ordinary Shares should not carry the right to vote in order to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any Member, provided that no adjustment pursuant to this sentence shall cause any person to become a 9.9% U.S. Member.

(4)

Requirement to Provide Information and Notice .

(a)

The Board shall have the authority to request from any Member holding, directly or indirectly, Class A Ordinary Shares, and such Member shall provide, such information as the Board may request for the purpose of determining whether any Member’s voting rights are to be adjusted. If such Member fails to respond to such a request, or submits incomplete or inaccurate information in response to such a request, the Board may in its sole and absolute discretion determine that such Member’s Class A Ordinary Shares shall carry no voting rights in which case such Class A Ordinary Shares shall not carry any voting rights until otherwise determined by the Board in its sole and absolute discretion.

(b)

Any Member shall give notice to the Company within ten days following the date that such Member acquires actual knowledge that it is a Tentative 9.9% U.S. Member or that its Class A Ordinary Shares are Controlled Shares of a Tentative 9.9% U.S. Member.

(c)

Notwithstanding the foregoing, no Member shall be liable to any other Member or the Company for any losses or damages resulting from such Member’s failure to respond to, or submission of incomplete or inaccurate information in response to, a request under paragraph (4)(a) or from such Member’s failure to give notice under paragraph (4)(b) of this Article.

(d)

The Board may rely on the information provided by a Member under this Article in the satisfaction of its obligations under Article 12(3) and this Article .

(e)

The Company may, but shall have no obligation to provide notice to any Member of any adjustment to its voting power that may result from the application of Article 45(3), Article 12(3), and/or this Article 54.

(f)

One of the purposes of the voting limitation set forth in this Article is to seek to lessen the likelihood the Company will be characterized as a controlled foreign corporation as defined in the Code. Nevertheless, the Board will not be liable to the Company, its Members or any other Person whatsoever for any errors in judgment made by its interpreting or enforcing this Article or in granting any

waiver or waivers to the foregoing restrictions in any case so long as the Board shall have acted in good faith.

55.

Power to issue Shares

(1)

Subject to the provisions of these Articles and to any rights attaching to issued and outstanding Shares, the unissued Shares (whether forming part of the original share capital or any increased share capital) shall be at the disposal of the Board, which may issue, offer, allot, grant options over, exchange or otherwise dispose of Shares or options warrants or other rights to purchase Shares or securities convertible into or exchangeable for Shares (including any employee benefit plan providing for the issuance of Shares or options, warrants or other rights in respect thereof), at such times, for such consideration and on such terms and conditions as it may determine (including, without limitation, such preferred or other special rights or restrictions with respect to dividend, voting, liquidation or other rights of the Shares as may be determined by the Board). The Board may issue Shares as a new or existing class or series of Shares.

(2)

The Company shall not issue Shares to bearer.

(3)

At the discretion of the Board, the Company shall not issue any Shares in a manner that the Board believes would cause, by reason of such issuance, the total Ordinary Shares of any Person to equal or exceed nine and nine-tenths percent (9.9%) of the total of Ordinary Shares of the Company then issued and outstanding.

Notwithstanding the foregoing provisions of this Article, the restrictions of this Article shall not apply to any issuance of Shares to a person acting as an underwriter in the ordinary course of its business, purchasing such Shares pursuant to a purchase agreement to which the Company is a party, for resale.

(4)

The Board shall, in connection with the issue of any Share, have the power to pay such commission and brokerage as may be permitted by law.

(5)

The Company may from time to time do any one or more of the following things:

(a)

issue partly paid Shares;

(b)

accept from any Member the whole or a part of the amount remaining unpaid on any Shares held by such Member, although no part of that amount has been called up;

(c)

pay dividends in proportion to the amount paid up on each Share; and

(d)

issue Shares in fractional denominations and deal with such fractions to the same extent as its whole Shares and Shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole Shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding up.

56.

Variation of rights and alteration of Share capital

(1)

Subject to the provisions of the Statute any Preferred Shares may be issued or converted into Ordinary Shares that, at a determinable date or at the option of the Company, are able to be redeemed on such terms and in such manner as the Company before the issue or conversion may by resolution of the Members determine.

(2)

While the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued and outstanding Shares of that class or with the sanction of a Special Resolution cast at a separate general meeting of the holders of the Shares of that class. The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith.

(3)

The Company may from time to time by resolution of the Company in general meeting alter the conditions of its Memorandum and accordingly may change the currency denomination of, increase, alter or reduce its share capital in accordance with the provisions of Section 13 of the Statute. Where, on any alteration of share capital, fractions of Shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit including, without limiting the generality of the foregoing, the issue to Members, as appropriate, of fractions of Shares and/or arranging for the sale or Transfer of the fractions of Shares of Members.

57.

Registered holder of Shares

(1)

The Company shall be entitled to treat the registered holder of any Share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable or other claim to, or interest in, such Share on the part of any other person.

(2)

Any dividend, interest or other moneys payable in cash in respect of Shares may be paid by cheque or draft sent through the post directed to the Member at such Member’s address in the Register of Members or, in the case of joint holders, to such address of the holder first named in the Register of Members, or to such person and to such address as the holder or joint holders may in writing direct. If two or more persons are registered as joint holders of any Shares any one can give an effectual receipt for any dividend paid in respect of such Shares.

58.

Death of a joint holder

(1)

Where two or more persons are registered as joint holders of a Share or Shares then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said Share or Shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

(2)

The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares of the Company. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.

59.

Share certificates

(1)

A Member shall only be entitled to a share certificate if the Board resolves that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Board may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Board. The Board may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for Transfer shall be cancelled and subject to these Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.

(2)

The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom such Shares have been allotted.

(3)

The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Board may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.

60.

Calls on Shares

(1)

Subject to the terms of the allotment, with respect to any Shares which are not fully paid (whether in respect of par value or premium), the Board may from time to time make such calls as it thinks fit upon the Members in respect of any monies unpaid on the Shares allotted to or held by such Members and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The joint holders of any such Share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent Transfer of the Shares in respect of which the call was made.

(2)

A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.

(3)

An amount payable in respect of a Share on allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of these Articles shall apply as if that amount had become due and payable by virtue of a call.

(4)

The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.

(5)

The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.

(6)

No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend declared in respect of any period prior to the date upon which such amount would, but for such payment, become payable.

61.

Forfeiture of Shares

(1)

If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any Share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward to such Member a notice in the form, or as near thereto as circumstances admit, of Form “A” in the Schedule hereto.

(2)

If the requirements of such notice are not complied with, any such Share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to

that effect. Such forfeiture shall include all dividends or other monies declared payable in respect of the forfeited Share and not paid before the forfeiture.

(3)

A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Board thinks fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Board thinks fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Board may authorise some person to execute an instrument of transfer of the Share in favour of that person.

(4)

A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.

(5)

A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the fact as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.

(6)

The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.

62.

[Reserved]

REGISTER OF MEMBERS

63.

Contents of Register of Members

The Board shall maintain or cause to maintain the Register of Members in accordance with Statute and in particular shall enter therein the following particulars:

(1)

the name and address of each Member, the number and, where appropriate, the class of Shares held by such Member;

(2)

the date on which each person was entered in the Register of Members; and

(3)

the date on which any person ceased to be a Member.

64.

Determination of record dates

Notwithstanding any other provision of these Articles, the Board may fix any date as the record date for:

(1)

determining the Members entitled to receive any Dividend;

(2)

determining the Members entitled to receive notice of and to vote at any general meeting of the Company (and the Board may determine a different record date for any adjournment or postponement thereof);

(3)

determining the Members entitled to execute a resolution in writing; and

(4)

determining the number of issued and outstanding Shares for or in connection with any purpose.

(5)

If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend, the date on which notice of the meeting is sent or the date on which the resolution of the Board declaring such Dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.

TRANSFER OF SHARES

65.

Instrument of transfer

(1)

An instrument of transfer shall be in the form or as near thereto as circumstances admit of Form “B” in the Schedule hereto or in such other common form as the Board may accept. Such instrument of transfer shall be signed by or on behalf of the transferor and transferee provided that, in the case of a fully paid Share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such Share until the same has been transferred to the transferee in the Register of Members.

(2)

Shares are transferable subject to the consent of the Board which may in its sole and absolute discretion, decline to register any Transfer of Shares for any reason, including if a lien exists on the Shares or if such Transfer would result in an increased risk of adverse tax, regulatory or legal consequences to the Company, a Subsidiary of the Company, or a Member of the Company. If the Board refuses to register a Transfer it shall notify the transferor and transferee within one month of such refusal.

66.

Restrictions on transfer

(1)

Subject to the Statute, this Article 66 and such other of the restrictions contained in these Articles and elsewhere as may be applicable, and except, in the case of any Shares other than the Ordinary Shares, as may otherwise be provided by the terms of the issuance thereof, any Member may sell, assign, Transfer or otherwise dispose of Shares of the Company at the time owned by it and, upon receipt of a duly executed form of transfer in writing, the Board shall, subject to this Article 66 procure the timely registration of the same.

(2)

Prior notice of all proposed transfers of Ordinary Shares (such prior notice to include the number of Ordinary Shares proposed to be transferred and Transfer price per Ordinary Share) shall be given to the Board. After the Board receives such notice, the Company will have the exclusive right, but not the obligation, to purchase the offered Ordinary Shares at the proposed Transfer price, unless the prospective purchaser is a Permitted Transferee.

(3)

If the Company opts not to exercise this right of first refusal, the Board shall require certification from each prospective purchaser, in a form it deems necessary in its absolute discretion, to ensure that such Transfer will not violate any of the ownership limitations described in Article 11(1)(d). In general, the Board may preclude any Transfer if the Board determines in its sole and absolute discretion that such Transfer would violate the ownership limitations described in Article 11(1)(d). However, if the prospective purchaser is a Permitted Transferee, then the preceding sentence shall not apply and the Board may preclude any Transfer if the Board

determines in its sole and reasonable discretion that such Transfer would violate the ownership limitations described in Article 11(1)(d).

(4)

In the event the Board determines that an ownership limitation described in Article 11(1)(d) has been violated as a result of such transfer, the Company shall have the option, but not the obligation, to purchase all or any part of the Ordinary Shares, to the extent the Company determines it is necessary or advisable to avoid or cure any adverse or potentially adverse consequences resulting from such transfer. If the Company exercises an option to purchase all or part of the Ordinary Shares held by such Member, the Company shall repurchase the shares at the lower of (1) the original transaction price giving rise to the Transfer violation and (2) the Fair Market Value of such Ordinary Shares.

(5)

The Board may, in its absolute and unfettered discretion, decline to register the Transfer of any Shares if the Board has reason to believe (i) that such Transfer may expose the Company, any subsidiary thereof, any Member or any Person ceding insurance to the Company (if so licensed) or any such Subsidiary (if so licensed) to adverse tax or regulatory treatment in any jurisdiction or (ii) that registration of such Transfer under the Securities Act or under any “blue sky” or other United States state securities laws or under the laws of any other jurisdiction is required and such registration has not been duly effected (provided, however, that in this case (ii) the Board shall be entitled to request and rely on an opinion of counsel to the transferor or the transferee, in form and substance satisfactory to the Board, that no such approval or consent is required and no such violation would occur, and the Board shall not be obligated to register any Transfer absent the receipt of such an opinion).

(6)

Without limiting the foregoing, the Board shall decline to approve or register a Transfer of Ordinary Shares unless all applicable consents, authorisations, permissions or approvals of any governmental body or agency in the Cayman Islands, the United States or any other applicable jurisdiction required to be obtained prior to such Transfer shall have been obtained.

(7)

The registration of Transfers may be suspended at such time and for such periods as the Board may from time to time determine; provided , however , that such registration shall not be suspended for more than forty-five (45) days in any period of three hundred and sixty five (365) consecutive days.

67.

Transfers by joint holders

The joint holders of any Share or Shares may Transfer such Share or Shares to one or more of such joint holders, and the surviving holder or holders of any Share or Shares previously held by them jointly with a deceased Member may Transfer any such Share to the executors or administ rators of such deceased Member.

68.

Lien on Shares

(1)

The Company shall have a first and paramount lien and charge on all Shares (whether fully paid-up or not or whether subject to a condition or contingency) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not or whether subject to a condition or contingency) by such Member or his or her estate, either alone or jointly with any other Person, whether a Member or not, but the Board may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a Transfer of any such Share shall operate as a waiver of the Company’s lien (if any) thereon. The Company’s lien (if any) on a Share shall extend to all dividends or other monies payable in respect thereof.

(2)

The Company may sell or purchase, in such manner and on such terms (including price) as the Board think fit, any Shares on which the Company has a lien, but no sale or purchase shall be made unless a sum in respect of which the lien exists is then presently payable, nor until the expiration of fourteen days after a notice in

writing stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the relevant Member, or the Person, of which the Company has notice, entitled thereto by reason of such Member’s death or bankruptcy. Effective upon such sale or purchase, any certificate representing such Shares prior to such sale shall become null and void, whether or not it was actually delivered to the Company.

(3)

To give effect to any such sale the Board may authorise any Person to Transfer the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his or her title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the Company’s power of sale under these Articles.

(4)

The proceeds of such sale or purchase shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the relevant Member or the Person entitled to the Shares at the date of the sale.

TRANSMISSION OF SHARES

69.

Representative of deceased Member

In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the Shares held by that deceased Member. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any Share which had been jointly held by such deceased Member with other persons. For the purpose of this Article, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may in its absolute discretion decide as being properly authorised to deal with the Shares of a deceased Member.

70.

Registration on death or bankruptcy

(1)

Any person becoming entitled to a Share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such Share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of Transfer in the form, or as near thereto as circumstances admit, of Form “C” in the Schedule hereto. On the presentation thereof to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member but the Board shall, in either case, have the same right to decline or suspend registration as it would have had in the case of a Transfer of the Share by that Member before such Member’s death or bankruptcy, as the case may be.

(2)

If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.

(3)

A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of the holder (or in any other case than by transfer) shall be entitled to the same Dividends and other advantages to which he would be entitled if he were the registered holder of the Share. However, he shall not, before being registered as a Member in respect of the Share, be entitled in respect of it to exercise any right

conferred by membership in relation to meetings of the Company and the Board may at any time give notice requiring any such person to elect either to be registered himself or to Transfer the Share. If the notice is not complied with within ninety days the Board may thereafter withhold payment of all Dividends, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.

DIVIDENDS AND OTHER DISTRIBUTIONS

71.

Declaration of Dividends by the Board

The Board may, subject to any rights or restrictions at the time lawfully attached to any class or series of Shares and subject to these Articles and in accordance with the Statute, declare Dividends and distributions on Shares in issue and authorise payment of the Dividends or distributions out of the funds of the Company lawfully available therefor. No Dividend or distribution shall be paid except out of the realised or unrealised profits of the Company, or out of the share premium account or as otherwise permitted by the Statute.

72.

Deduction of amounts due to the Company

(1)

The Board may deduct from the Dividends or distributions payable to any Member all sums of money due (if any) from such Member to the Company on account of calls or otherwise.

(2)

Except as otherwise provided by the rights attached to Shares, all Dividends shall be declared and paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.

(3)

The Board may declare that any Dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of Shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Directors.

(4)

Any Dividend, distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, bonuses, or other monies payable in respect of the Share held by them as joint holders.

73.

Unclaimed Dividends

Any Dividend which cannot be paid to a Member and/or which remains unclaimed after six months from the date of declaration of such Dividend may, in the discretion of the Board, be paid into a separate account in the Company's name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend shall remain as a debt due to the Member. Any Dividend which remains unclaimed after a period of six years from the date of declaration of such Dividend shall be forfeited and shall revert to the Company.

74.

Interest on Dividends

No Dividend or distribution shall bear interest against the Company.

CAPITALISATION

75.

Issue of Dividend Shares

The Board may capitalise any sum standing to the credit of any of the Company’s reserve accounts (including share premium account and capital redemption reserve fund) or any sums standing to the credit of the profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of Dividend and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit for the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.

ACCOUNTS AND FINANCIAL STATEMENTS

76.

Records of account

The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

(1)

all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;

(2)

all sales and purchases of goods by the Company; and

(3)

the assets and liabilities of the Company.

Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company's affairs and to explain its transactions.

Such records of account shall, subject to Statute, be kept at such place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours. No Member in its capacity as a Member shall have any right to inspect any accounting record or book or document of the Company except as conferred by the Statute or as authorised by the Board.

77.

Financial year end

The financial year end of the Company may be determined by the Board and failing such resolution shall be 31st December in each year.

78.

Financial statements

The Directors may from time to time cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.

AUDIT

79.

Appointment and Remuneration of Auditor

The Directors may appoint an Auditor of the Company who shall hold office until removed from office by a resolution of the Directors, and may fix his or their remuneration. Any Auditor appointed by the Members shall, prior to such appointment, have been appointed by the Audit Committee. Such Auditor may be a Member but no Director, Officer or employee of the Company shall, during his or her continuance in office, be eligible to act as an Auditor of the Company.

80.

[Reserved]

81.

Access to books of the Company

The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers of the Company for any information and explanation as may be necessary relating to the books or affairs of the Company for the performance of the duties of the Auditor.

82.

Report of the Auditor

(1)

Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.

(2)

The financial statements provided for by these Articles shall be prepared in accordance with United States GAAP, audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the Auditor shall be submitted to the Members in general meeting.

(3)

The generally accepted auditing standards referred to in subparagraph of this Article may be those of a country or jurisdiction other than the Cayman Islands, which shall be disclosed in the financial statements and the report of the Auditor.

NOTICES

83.

Notices to Members of the Company

(1)

A notice may be given by the Company to any Member either by delivering it to such Member in person or by sending it to such Member’s address in the Register of Members or to such other address given for the purpose. For the purposes of this Article, a notice may be sent by post, courier service, facsimile, electronic

mail or other mode of representing words in a legible and non-transitory form. If such notice is sent by next-day courier, facsimile or electronic-mail, it shall be deemed to have been given the Business Day following the sending thereof and, if by registered post, three Business Days following the sending thereof.

(2)

A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under these Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

(3)

Notice of every general meeting shall be given in any manner hereinbefore authorised to every person shown as a Member in the Register of Members on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member of record where the Member of record but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.

84.

Service and delivery of notice

Subject to Statute and Article 83, any notice shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted, and the time when it was posted, delivered to the courier or transmitted by facsimile or other method as the case may be.

85.

Seal of the Company

(1)

The Company may, if the Board so determines, have a seal. The seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the seal has been affixed shall be signed by at least one person who shall be either a Director or some officer or other person appointed by the Directors for the purpose.

(2)

The Company may have for use in any place or places outside the Cayman Islands a duplicate seal or seals each of which shall be a facsimile of the common seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.

(3)

A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.

BENEFITS, PENSIONS AND INSURANCE

86.

Benefits

The Board may (by establishment of or maintenance of schemes or otherwise) provide benefits, whether by share options or incentive plans and loans to acquire Shares, the payment of gratuities or pensions or by insurance or otherwise, for any past or present Director, Officer or employee of the

Company or any of its Subsidiaries or Affiliates and for any member of his or her family (including a spouse and a former spouse) or any individual who is or was dependent on him or her, and may (as well before as after he ceases to hold such office or employment) contribute to any fund and pay premiums for the purchase or provision of any such benefit.

87.

Insurance

Without prejudice to the provisions of Article , the Board shall have the power to purchase and maintain insurance for or for the benefit of any individuals who are or were at any time Directors, Officers or employees of the Company, or of any of its Subsidiaries or Affiliates, or who are or were at any time trustees of any pension fund in which Directors, Officers or employees of the Company or any such Subsidiary or Affiliate are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such individuals in respect of any act or omission in the actual or purported execution or discharge of their duties or in the exercise or purported exercise of their powers or otherwise in relation to their duties, powers or offices in relation to the Company or any such Subsidiary, Affiliate or pension fund.

88.

Limitation on Accountability

No Director or former Director shall be accountable to the Company or the Members for any remuneration or benefit provided pursuant to Articles 23(2), 86 or 87 and the receipt of any such benefit shall not disqualify any individual from being or becoming a Director of the Company.

UNTRACED MEMBERS

89.

Sale of Shares

The Company shall be entitled to sell at the best price reasonably obtainable, or if the Shares are listed on a stock exchange to purchase at the trading price on the date of purchase, the Shares of a Member or the Shares to which a Person is entitled by virtue of transmission on death, bankruptcy or otherwise by operation of law; provided, that:

(1)

during the period of 12 years prior to the date of the publication of the advertisements referred to in paragraph (2) of this Article 89 (or, if published on different dates, the first thereof) at least three Dividends in respect of the Shares in question have been declared and all Dividends, warrants and checks (cheques) that have been sent in the manner authorised by these Articles in respect of the Shares in question have remained uncashed;

(2)

the Company shall as soon as practicable after expiry of the said period of 12 years have inserted advertisements both in a national daily newspaper and in a newspaper circulating in the area of the last known address of such Member or other Person giving notice of its intention to sell or purchase the Shares;

(3)

during the said period of 12 years and the period of three months following the publication of the said advertisements the Company shall have received no indication either of the whereabouts or of the existence of such Member or Person; and

(4)

if the Shares are listed on a stock exchange, notice shall have been given to the relevant department of such stock exchange of the Company’s intention to make such purchase prior to the publication of advertisements.

If during any 12-year period referred to above, further Shares have been issued in right of those held at the beginning of such period or of any previously issued during such period and all the other

requirements of this Article 89 (other than the requirement that they be in issue for 12 years) have been satisfied in regard to the further Shares, the Company may also sell or purchase the further Shares.

90.

Instrument of Transfer

To give effect to any such sale or purchase under Article 89, the Board may authorise some person to execute an instrument of transfer of the Shares sold or purchased to, or in accordance with the directions of, the purchaser and an instrument of transfer executed by that person shall be as effective as if it had been executed by the holder of, or person entitled by transmission to, the Shares. The transferee of any Shares sold shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity in, or invalidity of, the proceedings relating to the sale.

91.

Proceeds of Sale

The net proceeds of sale or purchase of Shares pursuant to Article 89 shall belong to the Company which, for the period of six years after the Transfer or purchase, shall be obliged to account to the former Member or other Person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former Member or other Person in the books of the Company as a creditor for such amount. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments as the Board from time to time thinks fit. After the said six-year period has passed, the net proceeds of Share shall become the property of the Company, absolutely, and any rights of the former Member or other Person previously entitled as aforesaid shall terminate completely.

WINDING UP

92.

Determination to liquidate

Subject to the Statute, the Company may be wound up voluntarily by its Members. If the Company shall be wound up, and the assets available for distribution amongst the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them. If in a winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions.

93.

Winding up/distribution by liquidator

If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution of the Members and any other sanction required by Statute, divide amongst the Members or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he or she deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall

think fit, but so that no Member shall be compelled to accept any Shares or other securities or assets whereon there is any liability.

AMENDMENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND ALTERATION OF CAPITAL

94.

The Company may by Ordinary Resolution:

(1)

increase the share capital by such sum as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;

(2)

consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;

(3)

by subdivision of its existing Shares or any of them divide the whole or any part of its Share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and

(4)

cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person.

All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, Transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.

95.

Subject to the provisions of the Statute and the provisions of these Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution:

(1)

change its name;

(2)

alter or add to these Articles;

(3)

alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and

(4)

reduce its share capital and any capital redemption reserve fund.

REGISTERED OFFICE FOR THE TIME BEING OF THE COMPANY

96.

Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of the registered office for the time being of the Company.

CERTAIN SUBSIDIARIES

97.

Voting of subsidiary shares

Notwithstanding any other provision of these Articles to the contrary, if the Company is required or entitled to vote at general meetings of (i) Greenlight Reinsurance or (ii) any Designated Subsidiary (as defined in Article 98), the Directors shall refer the subject matter of the vote to the Members on a poll and

seek authority from the Members to have the Company’s corporate representative or proxy vote in favour of the resolution proposed by Greenlight Reinsurance and/or such Designated Subsidiary. The Directors shall cause the Company’s corporate representative or proxy to vote the Company’s shares in Greenlight Reinsurance and/or such Designated Subsidiary pro rata to the votes received at the general meeting of the Company, with votes for or against the directing resolution being taken, respectively, as an instruction for the Company’s corporate representative or proxy to vote the appropriate proportion of its shares for and the appropriate proportion of its shares against the resolution proposed by Greenlight Reinsurance and/or such Designated Subsidiary. All votes referred to the Company’s Members pursuant to this Article 97 shall be subject to the voting power restrictions of Articles 12(3), 45(3), and 54 (and the restrictions and rights of the Class B Ordinary Shares set forth in Schedule A hereto).

98.

Articles or Articles of Association of certain subsidiaries

The Board shall require that the Articles of Association of Greenlight Reinsurance and may require that the Articles or Articles of Association of each other direct or indirect subsidiary of the Company organized under the laws of a jurisdiction outside the United States that is treated as a corporation for U.S. federal tax purposes and designated by the Board, contain provisions substantially similar to Article 97, herein (any such subsidiary so designated by the Board is referred to herein as a “Designated Subsidiary”). If the Board designates any indirect subsidiary of the Company as a Designated Subsidiary, the Board shall also designate each intermediate subsidiary between such Designated Subsidiary and the Company (other than Greenlight Reinsurance) as a Designated Subsidiary hereunder. The Company in its discretion may enter into agreements with each Designated Subsidiary, as reasonably necessary, to effect or implement this Article.

TRANSFER BY WAY OF CONTINUATION

99.

Continuation

If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

SCHEDULE – FORM A (Article 61)

NOTICE OF LIABILITY TO FORFEITURE FOR NON PAYMENT OF CALL

You have failed to pay the call of [amount of call] made on the day of , 2004, in respect of the number Share(s) [numbers in figures] standing in your name in the Register of Members of the Company, on the day of , 2004 the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of per annum computed from the said day of , 2004, on or before the day of , 2004 at the place of business of the Company the Share(s) will be liable to be forfeited.

Dated this day of , 20

Signature of Secretary

By order of the Board

SCHEDULE – FORM B (ARTICLE 65)

TRANSFER OF A SHARE OR SHARES

FOR VALUE RECEIVED ......................................................................................................... [amount]

.................................................................................................................................................. [transferor]

hereby sell assign and transfer unto ........................................................................................ [transferee]

of ................................................................................................................................................. [address]

..................................................................................................................................... [number of Shares]

Shares of .................................................................................................................... [name of Company]

Dated ...................................................

...................................................

(Transferor)

In the presence of:

...................................................

(Witness)

...................................................

(Transferee)

In the presence of:

..............................................................

(Witness)

SCHEDULE – FORM C (Article 70)

TRANSFER BY A PERSON BECOMING ENTITLED ON DEATH/BANKRUPTCY

OF A MEMBER

I/We have become entitled in consequence of the death/bankruptcy of name of the deceased Member to number Share(s) standing in the register of members of Company in the name of the said name of deceased Member instead of being registered myself/ourselves elect to have name of transferee (the “Transferee”) registered as a transferee of such Share(s) and I/we do hereby accordingly transfer the said Share(s) to the Transferee to hold the same unto the Transferee his or her executors administrators and assigns subject to the conditions on which the same were held at the time of the execution thereof; and the Transferee does hereby agree to take the said Share(s) subject to the same conditions.

WITNESS our hands this ........ day of ..........., 20...

Signed by the above-named

)

person or persons entitled

)

in the presence of:

)

Signed by the above-named

)

transferee

)

in the presence of:

)

SCHEDULE A TO ARTICLES

DESIGNATIONS, NUMBER, VOTING POWERS;
PREFERENCES AND RIGHTS OF CLASS B ORDINARY SHARES

Designation and Amount .

The Shares of this series shall be designated the Class B Ordinary Shares, par value $0.10 per Share (the “Class B Ordinary Shares”).

General .

Except as provided in items 3 and 4 below, each Class B Ordinary Share shall be entitled to the same rights, and be subject to the same restrictions, as the Class A Ordinary Shares as set forth in these Articles.

Voting .

Generally, each Class B Ordinary Share is entitled to ten (10) votes per Class B Ordinary Share. However, the holder of Class B Ordinary Shares, will, together with their Affiliates, be limited to voting that number of Class B Ordinary Shares equal to 23% of the total voting power of the Ordinary Shares issued and outstanding.

Requirement to Provide Information and Notice .

(a)

The Board shall have the authority to request from any Member holding Class B Ordinary Shares, and such Member shall provide, such information as the Board may request for the purpose of determining whether any Member’s voting rights are to be adjusted. If such Member fails to respond to such a request, or submits incomplete or inaccurate information in response to such a request, the Board may in its sole and absolute discretion determine that such Member’s Class B Ordinary Shares shall carry no voting rights in which case such Class B Ordinary Shares shall not carry any voting rights until otherwise determined by the Board in its sole and absolute discretion.

(b)

(c)

The Company may, but shall have no obligation to provide notice to any Member of any adjustment to its voting power.

(d)

One of the purposes of the voting limitation set forth in this paragraph is to seek to lessen the likelihood the Company will be characterized as a controlled foreign corporation as defined in the Code. Nevertheless, the Board will not be liable to the Company, its Members or any other Person whatsoever for any errors in judgment made by its interpreting or enforcing this paragraph or in granting any waiver or waivers to the foregoing restrictions in any case so long as the Board shall have acted in good faith.

Conversion

Following a sale, transfer, exchange or other disposition of any Class B Ordinary Shares by a holder thereof to a purchaser or other transferee, the Class B Ordinary Shares shall immediately and automatically convert into an equal number of Class A Ordinary Shares on a one-for-one basis, except for those transfers to a Permitted Transferee.

Exhibit 4.2

EXECUTION COPY

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES AN OPINION OF COUNSEL OF THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE PRIOR APPROVAL OF THE CAYMAN ISLANDS MONETARY AUTHORITY.

IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S ARTICLES OF ASSOCIATION AND PURSUANT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF AUGUST 11, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

OWNERSHIP OF OPTIONS BY UNITED STATES PERSONS (AS DEFINED IN SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED) MAY SUBJECT SUCH PERSONS TO SIGNIFICANT ADVERSE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES, INCLUDING ADVERSE CONSEQUENCES ARISING UNDER THE UNITED STATES PASSIVE FOREIGN INVESTMENT COMPANY RULES. UNITED STATES PERSONS THAT OWN OPTIONS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH OWNERSHIP OF THE OPTIONS.

GREENLIGHT CAPITAL RE, LTD.

SHARE PURCHASE OPTION

Certificate No.: W-1

Date: August 11, 2004

FOR VALUE RECEIVED, GREENLIGHT CAPITAL RE, LTD., a company organized under the laws of the Cayman Islands with limited liability (the “ Company ”), hereby grants to First International Capital Holdings, Ltd. (“FIC”) (the “ Option Holder ”) this option certificate (this “ Option ”) to purchase, in accordance with the terms set forth herein, FOUR HUNDRED THOUSAND (400,000) shares of the Company’s Class A Ordinary Shares, initially having a par value of US$0.10 per share (the “ Class A Ordinary Shares ”), at a price per share equal to US$10.00 as adjusted from time to time pursuant to Section 2 hereof (the “ Exercise Price ”) but at no time shall the Exercise Price be less than the then current par value of any share to be issued pursuant hereto.

This Option is issued pursuant to that certain letter agreement, dated as of August 5, 2002 (the “ Letter Agreement ”), between Greenlight Capital, Inc., the sponsor of the Company (“ Greenlight Capital ”) and First International Securities, Ltd. (“ FIS ”). Greenlight Capital assigned all of its rights, title and interests under the first paragraph of the section of the letter entitled “FIS’ Incentive Compensation” to the Company as of the date hereof. FIS assigned all of its rights, title and interest

under the Letter Agreement to FIC on June 30, 2003. Each capitalized term used in this Option but not otherwise defined herein has the meaning given to such term in the Letter Agreement.

This Option is subject to the following provisions:

Section 1. Option Terms .

(a) This Option is for the purchase of FOUR HUNDRED THOUSAND (400,000) Class A Ordinary Shares at the Exercise Price, as such price may be adjusted from time to time under the terms hereof.

(b) This Option shall expire at 5:00 p.m. Cayman Islands time, on the tenth anniversary of the date that this Option is exercisable (the “ Expiration Date ”).

Section 2. Anti-dilution Provisions . In order to prevent dilution of the purchase rights granted under Section 1 hereof, the Exercise Price shall be subject to adjustment from time to time pursuant to this Section 2.

(a) Effect on Exercise Price of Certain Events . For purposes of determining the adjusted Exercise Price, the following shall be applicable:

(i) Subdivision or Combination of Ordinary Shares . If the Company, at any time while this Option is outstanding (a) shall pay a stock or bonus share dividend on its Class A Ordinary Shares or Class B Ordinary Shares, par value $0.10 per share (the “ Class B Ordinary Shares ” and, collectively with the Class A Ordinary Shares, the “ Ordinary Shares ”), (b) subdivide the class of Ordinary Shares into a larger number of shares or (c) combine the Ordinary Shares into a smaller number of shares then (i) the Exercise Price thereafter shall be determined by multiplying the Exercise Price by a fraction the numerator of which shall be the number of Ordinary Shares (excluding treasury shares, if any) issued and outstanding before such event and the denominator of which shall be the number of Ordinary Shares issued and outstanding after such event and (ii) the number of Ordinary Shares issuable upon exercise of the Option shall be multiplied by a fraction, the numerator of which shall be the number of Ordinary Shares (excluding treasury shares, if any) issued and outstanding after such event and the denominator of which shall be the number of Ordinary Shares (excluding treasury shares, if any) issued and outstanding before such event. Any adjustment made pursuant to this Section 2(a)(1) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

(ii) Amalgamation, Reorganization, Reclassification, Consolidation, Merger or Sale . Any amalgamation, recapitalization, reorganization, reclassification, consolidation, scheme, arrangement, merger of the Company or sale of all or substantially all of the Company’s assets or other transaction, in each case which is effected in such a manner that the holders of Ordinary Shares are entitled to receive (either directly or upon subsequent liquidation) shares, securities or assets with respect to or in exchange for Ordinary Shares is referred to herein as an “ Organic Change .” Prior to the consummation of any Organic Change, the Company shall make appropriate provisions to insure that the Option Holder shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) Class A Ordinary Shares immediately theretofore acquirable and receivable upon the exercise of this Option, such shares, securities or assets as such Option Holder would have received in connection with such Organic Change if such Option Holder had exercised this Option immediately prior to such Organic Change. In each such Organic Change, the Company shall also make appropriate provisions to insure that the provisions of this Section 2 shall thereafter be applicable to this Option (including, in the

case of any such amalgamation, consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company) and that there is an immediate adjustment of the Exercise Price to the value for the Class A Ordinary Shares reflected by the terms of such amalgamation, consolidation, merger or sale, and a corresponding immediate adjustment in the number of Class A Ordinary Shares acquirable and receivable upon exercise of this Option, if the value so reflected is less than the Exercise Price in effect immediately prior to such amalgamation, consolidation, merger or sale. Prior to the consummation of any such consolidation, merger or sale, the Company shall use its reasonable efforts to cause the successor entity (if other than the Company resulting from amalgamation, consolidation, merger or sale) or the entity purchasing such assets to assume, by written instrument, the obligation to deliver to each such Option Holder such shares, securities or assets as, in accordance with the foregoing provisions, the Option Holder may be entitled to acquire; provided, however that any such assumption shall not relieve the Company of its obligations hereunder.

(b) Notices . Immediately upon any adjustment of the Exercise Price, the Company shall give, or cause to be given, written notice thereof to the Option Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. The Company shall give, or cause to be given, written notice to the Option Holder at least five (5) business days prior to the date on which the Company closes its books or takes a record (i) with respect to any dividend or distribution upon Ordinary Shares, (ii) with respect to any pro rata subscription offer to holders of Ordinary Shares or (iii) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. The Company shall also give, or cause to be given, written notice to the Option Holder at least five (5) business days prior to the date on which any Organic Change shall take place

Section 3. Exercise of Option .

(a) Exercise Procedure : The Option Holder may exercise any portion of this Option at any time and from time to time, commencing after the date hereof until 5:00 p.m. Cayman Islands time, on the Expiration Date by surrendering at the registered office of the Company this Option and a completed Exercise Agreement (substantially in the form of Exhibit A attached hereto) and by paying the Exercise Price in one of the following manners:

(i) Cash Exercise . The Option Holder shall deliver immediately available funds or a cashiers check payable to the Company; or

(ii) Cashless Exercise . After the date of issuance of this Option, if all of the Class A Ordinary Shares underlying this Option (the “ Option Shares ”) are registered pursuant to an effective registration statement and the provisions of the Companies Law (2003 Revision) as from time to time amended or replaced (the “ Companies Law ”) may be satisfied by the Company, the Option Holder shall have the right to surrender this Option to the Company together with a notice of cashless exercise, in which event the Company shall issue to the Option Holder the number of Option Shares determined as follows:

X = Y (A-B)/A

Where:

X = the number of Option Shares to be issued to the Option Holder

Y = the number of Option Shares with respect to which this Option is being exercised

A = the average of the per share Market Price of the Ordinary Shares for the five (5) trading days immediately prior to (but not including) the date of exercise (but not less than the then par value of the Ordinary Shares)

B = the Exercise Price

For purposes of Rule 144 promulgated under the United States Securities Act of 1933, as amended, it is intended, understood and acknowledged that the Option Shares issued in a cashless exercise transaction shall be deemed to have been acquired and paid the full purchase price therefor by the Option Holder, and the holding period for the Option Shares shall be deemed to have been commenced on the issue date to the extent permitted by Rule 144. The consideration to the Company for the issue of the Option Shares shall be the surrender of the Option and the rights of the Option Holder hereunder.

For purposes hereof, “Market Price” means on any particular date (i) the closing bid price per Class A Ordinary Share on such date on the national securities exchange or automated quotation system on which the Class A Ordinary Shares are then listed or if there is no such price on such date, then the closing bid price on such exchange or quotation system on the date nearest preceding such date, or (ii) if the Class A Ordinary Shares are not listed then on a national securities exchange or automated quotation system, the closing bid price for each Ordinary Share in the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date.

(b) Certificates for the Class A Ordinary Shares acquired through exercise of this Option shall be delivered by the Company to the Option Holder within five (5) business days after (i) notice of request for such certificates by the Option Holder, (ii) receipt by the Company of the items required by Section 3(a) for the respective method or methods of exercise, and (iii) where applicable, compliance with any required approval under the Companies Law (and the Company shall use reasonable efforts to assist in obtaining any required approval of the Cayman Islands Monetary Authority as promptly as practicable). Upon a partial exercise of this Option, unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Option, substantially identical hereto, representing the rights formerly represented by this Option which have not expired or been exercised and shall, within such five-day period, deliver such new Option to such Option Holder.

(c) The Class A Ordinary Shares issuable upon exercise of this Option shall be deemed to have been issued to the Option Holder on the date by which the Company receives the completed Exercise Agreement and payment of the Exercise Price, if any, and the register of members of the Company has recorded such issue of shares and, where applicable, has received any required approval under the Companies Law and the Option Holder shall be deemed for all purposes to have become the record holder of such Class A Ordinary Shares on such date.

(d) The issuance of certificates for the Class A Ordinary Shares issuable upon exercise of this Option shall be made without charge to the Option Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of the Class A Ordinary Shares.

(e) The Company shall at all times reserve and keep available authorized but unissued Class A Ordinary Shares, solely for the purpose of issuance upon exercise of this Option, such number of Class A Ordinary Shares as are issuable upon exercise of this Option. All Class A Ordinary

Shares shall, when issued, be duly and validly issued, fully paid and nonassessable (meaning that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all taxes, liens and charges. The Company shall take such actions as may be necessary to assure that the Class A Ordinary Shares may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which their shares may be listed (except for official notice of issuance which shall be -immediately delivered by the Company upon each such issuance).

Section 4. Option Not Transferable .

(a) Except as permitted by Section 4(b), this Option is not transferable by the Option Holder.

(b) The restrictions set forth in 4(a) above shall not apply to any transfer by the holder of this Option to any Person approved by the Board of Directors of the Company in its sole and reasonable discretion; provided that prior to such transfer, each proposed transferee (i) delivers a written notice to the Company, which notice shall disclose in reasonable detail the identity of such transferee, (ii) delivers an opinion of counsel which (to the Company’s reasonable satisfaction) is knowledgeable in securities and tax matters and that such transfer would not likely cause adverse tax, regulatory or legal consequences to the Company, any of its subsidiaries or any of its shareholders and (iii) executes that certain Shareholders’ Agreement dated as of August 11, 2004 by and among the Company and each of the other signatories to the Shareholders’ Agreement. “Person” means an individual, a partnership, a company, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental or quasi-governmental entity or any department, agency or political subdivision thereof.

Section 5. Option Exchangeable for Different Denominations . This Option is exchangeable, upon the surrender hereof by the Option Holder at the registered office of the Company, for new options in different denominations, substantially identical hereto, representing in the aggregate the rights formerly represented by this Option, and each of such new options shall represent such portion of such rights as is designated by the Option Holder at the time of such surrender. The date the Company initially issues this Option shall be the date of issuance of such new options regardless of the number of times new certificates representing the unexpired and unexercised rights formerly represented by this Option shall be issued.

Section 6. Replacement; Taxes . Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Option Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing this Option, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company (provided that if such Option Holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a new certificate, substantially identical hereto, representing the rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. The Company shall pay all taxes (other than securities transfer taxes) and all other expenses and charges payable in connection with the preparation, execution, and delivery of options pursuant to Sections 4, 5 and 6.

Section 7. Successors and Assigns . This instrument is intended to bind and inure to the benefit of and be enforceable by the Option Holder and its respective heirs, executors, administrators and successors.

Section 8. Amendment and Waiver . Except as otherwise provided herein, the provisions of this Option may be amended only if the Company has obtained the written consent of the Option Holder, which consent shall not be unreasonably withheld.

Section 9. Descriptive Headings . The descriptive headings of this Option are inserted for convenience only and do not constitute a part of this Option.

Section 10. Governing Law . This Option shall be governed by and construed and enforced in accordance with the laws of the Cayman Islands. Each party, for the benefit of the other, hereby irrevocably submits to the nonexclusive jurisdiction of the courts of the Cayman Islands for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Option and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

Section 11. Complete Agreement; Severability . Except as otherwise expressly set forth herein, this Option and any other agreement or instrument executed by the parties and contemplated by the Letter Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. In case any provision of this Option shall be invalid, illegal or unenforceable, such invalidity, illegality, or unenforceability shall not in any way affect or impair any other provision of this Option.

Section 12. Notices . All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid:

If to the Company:		Greenlight Capital Re, Ltd. HSBC Financial Services (Cayman) Limited 2nd Floor, Strathvale House, 90 North Church Street P.O. Box 1109GT Grand Cayman, Cayman Islands Attn: Tom Clark
In each case with a copy to:		Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, New York 10022 Attention: Kerry E. Berchem, Esq.
If to the Purchaser:		First International Capital Holdings, Ltd. c/o Caribbean Corporate Services Ltd. Omar Hodge Building Road Town Tortola, British Virgin Islands Attention: Joseph Taussig

All such notices and communications shall be deemed to have been duly given when delivered by hand, if personally delivered; five business days after the date of deposit in the Cayman Islands or United States of America mail, if mailed by first-class certified air mail; when receipt is acknowledged by the recipient facsimile machine, if sent by facsimile; and one business day after being delivered via a next-day air courier.

IN WITNESS WHEREOF, the Company has caused this Option to be executed on a deed the date first written above.

			GREENLIGHT CAPITAL RE, LTD.
			By:	/s/ David Einhorn
				Name: David Einhorn
				Title: Director

Accepted and Agreed to: As of August 27, 2004
FIRST INTERNATIONAL CAPITAL HOLDINGS, LTD.
By:	/s/ Joseph F. Taussig
	Name: Joseph F. Taussig
	Title: President

EXHIBIT A

EXERCISE AGREEMENT

To:	GREENLIGHT CAPITAL RE, LTD.

1. The undersigned hereby: (1) irrevocably elects to subscribe for and offers to purchase Class A Ordinary Shares of Greenlight Capital Re, Ltd., pursuant to Option No. W-1 heretofore issued to ______________ on __________, 2004; (2) encloses a payment of $ _________ for these shares at a price of $ ______ per share (as adjusted pursuant to the provisions of the Option); and (3) requests that a certificate for the shares be issued in the name of the undersigned and delivered to the undersigned at the address specified below.

2. The undersigned hereby: (1) irrevocably elects to exchange Option(s) to purchase _______ Class A Ordinary Shares of Greenlight Capital Re, Ltd., pursuant to Option No. W-1 heretofore issued to ____________ on ________, 2004; (2) encloses Option(s) as a payment of $___________ for these shares at a price of $____ per share (as adjusted pursuant to the provisions of the Option); and (3) requests that a certificate for the shares be issued in the name of the undersigned and delivered to the undersigned at the address specified below.

Dated:		Signature
		Address

Exhibit 10.1

October 12, 2005

Greenlight Reinsurance, Ltd.

Strathvale House

90 North Church Street

P.O. Box 1109 GT

Georgetown, Grand Cayman, Cayman Islands

Re: US$200,000,000 Letter of Credit Facility

Gentlemen :

We are pleased to confirm that we have established for the account of Greenlight Reinsurance, Ltd. (“Greenlight”) a letter of credit facility (the “Facility”) in a maximum amount of US$200,000,000, available for use by Greenlight until October 11, 2006, as such date may be extended in accordance with the following sentence (the “Facility Termination Date”). The Facility Termination Date shall be extended by 364 days beyond the then effective Facility Termination Date unless we or Greenlight delivers a written notice of cancellation to the other party at least 120 days before the then effective Facility Termination Date. Availments under the Facility shall be in the form of letters of credit (“Letters of Credit”).

The issuance of each Letter of Credit will be governed by our standard form of Application and Agreement for Standby Letter of Credit, a form of which is annexed hereto as Exhibit A (each as amended, supplemented or otherwise modified, a “Letter of Credit Agreement”). Greenlight will be required to pay us (i) with respect to any issuance or amendment of each Letter of Credit during any calendar month, $250 per each such issuance or amendment payable on the 10 ^th day of the next following calendar month and (ii) a commission equal to 1.15% per annum of the outstanding amount of each Letter of Credit, payable quarterly in advance. Each Letter of Credit shall be issued solely to support Greenlight’s reinsurance or insurance obligations incurred in its ordinary course of business and shall be for the duration set forth in the applicable Letter of Credit Agreement, but in no event shall the expiration date of any Letter of Credit be more than three years after the date on which it was issued, subject to extensions (not to exceed three years so long as the remaining tenor of such Letter of Credit does not exceed three years at any time) at any time prior to the Facility Termination Date, provided that no Event of Default (as defined in the Hypothecation Agreement referred to below) has occurred and is continuing. Letters of Credit may be cancelled at any time, without penalty, upon request by Greenlight and with the applicable beneficiary’s prior written consent. Upon any such termination of a Letter of Credit, we shall refund to Greenlight the unearned portion of the commission received by us with respect thereto. We agree that, within two Business Days (as defined in a Letter of Credit Agreement) of our receipt of a Letter of Credit Agreement, duly completed with respect to the Credit (as defined in such Letter of Credit Agreement) and executed by Greenlight, we will issue the Credit so long as no Event of Default has occurred and is continuing. Letters of Credit may be denominated in U.S. Dollars, Canadian Dollars, Cayman Dollars, Bermuda Dollars, Pounds Sterling, Swiss Francs, Euros, Japanese Yen or such other currency requested by Greenlight as is reasonably acceptable to us.

Availability under the Facility will be subject to the advance rates and value ascribed to the securities and other financial assets pledged by Greenlight as security under the Hypothecation Agreement referred to below. At all times after the Facility Termination Date, we shall have the option to require Greenlight to pledge, under the Hypothecation Agreement, cash

Greenlight Reinsurance , Ltd.

October 12, 2005

Page 2

collateral in an amount not less than 100% of the outstanding amount of each Letter of Credit having an expiration date longer than one year following the first anniversary of the date of issuance of such Letter of Credit.

As a condition to the effectiveness of the Facility, Greenlight shall furnish us with each of the following, each dated as of the date hereof or as of another date satisfactory to us:

(a) a hypothecation agreement (the “Hypothecation Agreement”), a form of which is annexed hereto as Exhibit B, duly executed by Greenlight, pledging to us Greenlight’s Collateral Account number 522-96812 (the “Account”) maintained by Citigroup Global Markets Inc. (“CGMI”) as security for, among other things, Greenlight’s reimbursement obligations under the Letter of Credit Agreements;

(b) a control agreement (the “Control Agreement”), a form of which is annexed hereto as Exhibit C, duly executed by Greenlight and CGMI;

(c) an agreement with Corporation Service Company providing for it to serve as agent for the service of process under the Letter of Credit Agreements, the Hypothecation Agreement and the Control Agreement;

(d) a certificate of the Secretary or an Assistant Secretary of Greenlight certifying:

(i)

that attached thereto are true and complete copies of:

(A)

the Amended and Restated Articles of Association of Greenlight;

(B)

the Amended and Restated Memorandum of Association of Greenlight; and

(C)

resolutions of the board of directors of Greenlight approving the Facility and authorizing the execution, delivery and performance by Greenlight of this letter agreement, the Letter of Credit Agreements, the Hypothecation Agreement and the Control Agreement and the transactions contemplated hereby and thereby; and

(ii)

the incumbency of the officers of Greenlight authorized to execute and deliver this letter agreement, the Letter of Credit Agreements, the Hypothecation Agreement, the Control Agreement and the documents delivered in connection herewith and therewith;

(e) a Certificate of Good Standing for each of Greenlight and Greenlight Capital Re, Ltd. issued by the Registrar of
Companies; and

(f) opinions of New York and Cayman Islands counsel to Greenlight, in form and substance reasonably satisfactory to us.

Greenlight Reinsurance , Ltd.

October 12, 2005

Page 3

You shall also pay or reimburse us for the costs and reasonable out-of-pocket expenses (including, without limitation, attorneys’ fees and expenses) of the preparation, negotiation, execution and delivery of this letter agreement, the Letter of Credit Agreements, the Hypothecation Agreement, the Control Agreement and the agreements and other documents executed and delivered in connection herewith and therewith.

Each of the parties hereto agrees that if CGMI materially breaches its duties under the Prime Broker Agreement, dated August 12, 2005, between Greenlight and CGMI, Greenlight may transfer the Account and all of the collateral therein into a cash securities account with The Goldman Sachs Group, Inc., Bank of America, N.A. or any of their respective affiliates, or any other financial institution reasonably satisfactory to us, subject to such financial institution entering into a control agreement, in substantially the form of Exhibit A hereto, with Greenlight and us before or concurrently with such transfer.

This letter agreement shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the conflicts of law principles thereof).

Greenlight Reinsurance, Ltd.

October 12, 2005

Page 4

Please acknowledge your acceptance of the terms and conditions hereof by signing this letter agreement in the signature block below.

		Sincerely, CITIBANK, N.A.
		By:	/s/ Michael Lonie
			Michael Lonie Vice President

Attachments ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST SET FORTH ABOVE: GREENLIGHT REINSURANCE, LTD.
By:	/s/ Leonard Goldberg
	Leonard Goldberg Chief Executive Officer

EXHIBIT A

CITIBANK, N.A.

NEW YORK

APPLICATION FOR STANDBY LETTER OF CREDIT

Citibank, N.A., New York, NY 10043 Attn: Standby Letter of Credit Dept., FLA-1, 2/A		Letter of Credit Reference No.
Advising Bank (Name and Address)		Applicant: Greenlight Reinsurance, Ltd. Strathvale House 90 North Church Street P.O. Box 1109 GT Georgetown, Grand Cayman, Cayman Islands
Beneficiary (Name and Address)		Amount (In specific currency):
Beneficiary (Name and Address)		Expiry Date and Place:

This Application is for the issuance of a standby letter of credit under and subject to the terms and conditions of (select one):

The Agreement for Standby Letter of Credit attached hereto:

The Continuing Agreement for Commercial and/or Standby Letters of Credit dated ____*

Other (describe): ____

Subject to the following terms and conditions, please issue your irrevocable Letter of Credit (hereinafter called the “Credit”) to be available by the beneficiary’s draft(s):

Drawn at sight on:

Citibank, N.A., New York, NY.

	________
	(Name and Address of Paying Bank, if any)

______________

* If a Continuing Agreement is already in place, submit only this Application, with customer’s signature and relationship manager’s approvals reflected on page 2 of this form.

Accompanied by Beneficiary’s written statement that the amount of any draft(s) drawn hereunder represent funds due __________ and payable because of the following reasons (select one):

Applicant of the Credit has failed to comply with terms or conditions of a contract described as: __________

Applicant of the Credit has been awarded a contract under an offer to bid and has failed to become a party to the contract related thereto (describe): __________

It has become necessary for the Beneficiary bank or other financial entity to make payment under its undertaking issued on behalf of Applicant of this Credit, with an expiration date of __________, at its counters, in favor of __________, in relation to

Description of transaction if other than described above: __________

Automatic extension available with __________ day notification of non-renewal, and with a final expiration date of __________

Credit to be issued in transferable form.

Any transfer(s) of this Credit to be effective by __________

(Indicate an appropriate transferring bank name and location)

Attachments hereto impose additional terms and conditions on Applicant and/or Citibank and are incorporated into this Application and Agreement as if fully set forth herein.

All banking, charges, other than Citibank, N.A. charges, are for account of: Beneficiary Applicant

Transmit the Credit by:

Cable/SWIFT

Airmail

Courier Service

All drafts and documents called for under the Credit are to be delivered by the negotiating or paying bank to Citibank, N.A. New York by airmail in a single mailing.

GREENLIGHT REINSURANCE, LTD.

By:

Name:	Date	Account Manager’s Signature	Date
Title:		and Stamp

CITIBANK, N.A

NEW YORK

AGREEMENT FOR STANDBY LETTER OF CREDIT

In consideration of your issuance of an irrevocable letter of credit (the “Credit”) substantially in accordance with the terms and conditions provided by the undersigned (the “Applicant”) on the Application attached hereto or as otherwise requested by Applicant in writing, Applicant unconditionally agrees with you (“Citibank”) as follows:

1. Reimbursement. Applicant will pay Citibank the amount of each draft or other request for payment (each, a “Draft”) drawn under the Credit, whether drawn before, on or, if in accordance with applicable law, after the expiry date stated in the Credit. Each such payment shall be made within five Business Days (a day of the year on which banks in New York, New York are not required or permitted to close) after the date of payment by Citibank of a Draft together with interest accrued on such amount at a daily fluctuating interest rate per annum equal to the rate of interest announced publicly from time to time by Citibank in New York, New York as Citibank’s Base Rate. The Credit may be denominated in U.S. Dollars, Canadian Dollars, Cayman Dollars, Bermuda Dollars, Pounds Sterling, Swiss Francs, Euros, Japanese Yen or such other currency requested by Applicant as is reasonably acceptable to Citibank.

2. Commissions, Fees, Charges and Expenses. Applicant will pay Citibank (a) commissions, fees and other charges on the Credit (for so long as Citibank shall be obligated under the Credit in accordance with applicable law) at such rates and times as specified in the letter agreement dated October 12, 2005 (as amended, supplemented or otherwise modified from time to time, the “Facility Agreement”) between Applicant and Citibank and (b) on demand, and without limitation of paragraph 6 hereof, all expenses which Citibank may reasonably pay or incur in connection with the Credit.

3. Payments. Interest on Past Due Amounts; Computations. All amounts due from Applicant shall be paid to Citibank at 399 Park Avenue, New York, New York 10043 (or such other address notified to Applicant in writing), without defense, set-off, cross-claim, or counterclaim of any kind, in United States Dollars and in same day funds, provided, however, that if the Credit is denominated in a currency other than United States Dollars, Applicant will pay the equivalent of such amount in United States Dollars computed at Citibank’s selling rate for cable transfers to the place where and in the currency in which such amount is payable, or in the currency in which the Credit is denominated, or at or in such other place, form or manner as is acceptable to Citibank in its sole discretion. Any amount not paid when due shall bear interest until paid in full at a daily fluctuating interest rate per annum equal to two percent per annum above the rate of interest announced publicly from time to time by Citibank in New York as Citibank’s Base Rate, but in no event in excess of the maximum rate permitted by applicable law. Applicant authorizes Citibank to charge the demand deposit account of Applicant with Citibank for any amount when due. Unless otherwise agreed in writing as to the Credit, all computations of commissions, fees and interest shall be based on a 360-day year and actual days elapsed; provided, however, that if such computation shall cause the amount of interest payable hereunder to exceed the maximum rate of interest permitted by applicable law, all computations of interest shall be made upon the basis of a year of 365 or 366 days.

4. Additional Costs. If Citibank determines that the introduction or effectiveness of, or any change in, any law or regulation or compliance with any guideline or request from any central bank or other governmental or quasi-governmental authority (whether or not having the force of law) after the date hereof affects or would affect the amount of capital or reserves required or expected to be maintained by Citibank or any corporation controlling Citibank and Citibank determines that the amount of such capital or reserve is increased by or based upon the existence of the Credit, then Applicant shall pay Citibank on demand from time to time additional amounts sufficient in Citibank’s reasonable, Good Faith (as defined below) judgment to compensate for the increase. Citibank’s certificate as to amounts due shall be conclusive, in the absence of manifest error.

5. Taxes. All payments made to Citibank shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges, or withholdings, and all related liabilities, excluding income and franchise taxes imposed by the jurisdiction of Citibank’s head office issuing the Credit or any of its political subdivisions (all non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities are called “Taxes”). If any Taxes shall be required by law to be deducted from or in respect of any sum payable under this Agreement, (a) the sum payable under this Agreement shall be increased as may be necessary so that after making all required deductions Citibank receives an amount equal to the sum Citibank would have received had no such deductions been required, (b) Applicant shall be responsible for payment of the amount to the relevant taxing authority, (c) Applicant shall indemnify Citibank on demand for any Taxes paid by Citibank and any liability (including penalties, interest and expenses) arising from its payment or in respect of such Taxes, whether or not such Taxes were correctly or legally asserted, and (d) Applicant shall provide Citibank with the original or a certified copy of the receipt evidencing each payment of Taxes within 30 days of the tax payment date.

6. Indemnification. Applicant will indemnify and hold Citibank and its officers, directors, affiliates, employees, attorneys and agents (each, an “Indemnified Party”) harmless from and against any and all claims, liabilities, losses, damages, costs and expenses including without limitation, reasonable attorneys’ fees and disbursements, other dispute resolution expenses (including fees and expenses in preparation for a defense of any investigation, litigation or proceeding) and costs of collection that arise out of or in connection with or by reason of: (a) the issuance of the Credit, (b) any payment or action taken or omitted to be taken (including, without limitation, any failure to make payment on the Credit) in connection with the Credit including any action or proceeding seeking (i) to restrain any drawing under the Credit, (ii) to compel or restrain the payment of any amount or the taking of any other action under the Credit, (iii) to compel or restrain the taking of any action under this Agreement, or (iv) to obtain similar relief (including by way of interpleader, declaratory judgment, attachment, or otherwise, regardless of who the prevailing party is in any such action or proceeding), (c) the enforcement of this Agreement, (d) any change in the value of a foreign currency covered by the Credit or (e) any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority relating to the Credit, except, in each case, to the extent such claim, liability, loss, damage, cost or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. Applicant will pay on demand from time to time all amounts owing under this section.

7. Obligations Absolute: Limitations of Liability. (a) Applicant’s obligations under this Agreement (the “Obligations”) shall be unqualified, irrevocable and payable in the manner and method provided for under this Agreement irrespective of any one or more of the following circumstances: (i) any lack of validity or enforceability of this Agreement, the Credit, or any other agreement, application, amendment, guaranty, document, or instrument relating thereto, (ii) any change in the time, manner or place of payment of or in any other term of all or any of the Obligations of Applicant or the obligations of any person or entity that guarantees the Obligations, (iii) the existence of any claim, set-off, defense or other right that Applicant may have at any time against any beneficiary or any transferee of the Credit (or any person or entity for whom any such beneficiary or transferee may be acting), Citibank or any other person or entity, whether in connection with any transaction contemplated by this Agreement or any unrelated transaction, or any claim by Citibank or Applicant against the beneficiary of the Credit for breach of warranty, (iv) any exchange, release or non-perfection of any security interest in any Property (as hereafter defined) or other collateral, or release or amendment or waiver of or consent to departure from the terms of any guaranty or security agreement, for all or any of the Obligations, (v) any Draft, or other document presented under the Credit being forged, fraudulent, invalid, or insufficient or any statement therein being untrue or inaccurate, (vi) any failure by Citibank to issue the Credit (or any amendment thereof) in the specific form requested by Applicant, unless Citibank receives written notice from Applicant of such failure within five Business Days after Applicant shall have received a copy of the Credit (or such amendment) as actually issued by Citibank and such failure is material and consequential, it being understood that Citibank shall have no obligation to issue any Credit in violation of any applicable law or regulation, (vii) any previous Obligation, whether or not paid, arising from Citibank’s payment against any Draft, certificate or other document which appeared on its face to be signed or presented by the proper party but was in fact signed or presented by a party posing as the proper party, (viii) payment by Citibank under the Credit against presentation of a Draft or other document that in Citibank’s Good Faith judgment appeared to comply with the terms and conditions of the Credit but in fact did not comply with the terms and conditions of the Credit unless Citibank receives written notice from Applicant of such discrepancy within three Business Days following Applicant’s receipt of such Draft or other document, and (ix) any action or inaction taken or suffered by Citibank or any of its correspondents in connection with the Credit or any relevant Draft, certificate, other document or Property, if taken in good faith (i.e. honesty in fact in the conduct or transaction concerned, “Good Faith”) and in conformity with applicable U.S. or foreign law or letter of credit practices and all of the documents covering the Credit. (b) Without limiting any other provision of this Agreement, Citibank and any of its correspondents: (i) may rely upon any telephonic, telegraphic, facsimile, electronic, written or other communication believed in Good Faith to have been authorized by Applicant, whether or not given or signed by an authorized person, (ii) shall not be responsible for errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document in connection with the Credit, whether transmitted by courier, mail, telex, any other telecommunication, or otherwise (whether or not they be in cipher), or for errors in interpretation of technical terms or in translation (and Citibank and its correspondents may transmit Credit terms without translating them), (iii) shall not be responsible for the identity or authority of any signer or the form, accuracy, genuineness, falsification or legal effect of any Draft, certificate or other document presented under the Credit if such Draft, certificate or other document on its face appears to be in accordance with the terms and conditions of the Credit, (iv) shall not be responsible for any acts or omissions by or the solvency of the beneficiary of the Credit or any other person or entity having any role in any transaction underlying the Credit, (v) may accept or pay as complying with the terms and conditions of the Credit any Draft, certificate or other document appearing on its face as determined by Citibank in Good Faith (A) substantially to comply with the terms and conditions of the Credit, (B) to be signed or presented by or issued to any successor of the beneficiary or any other person in whose name the Credit requires or authorizes that any Draft, certificate or other document be signed, presented or issued, including any administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, receiver, or successor by merger or consolidation, or any other person or entity purporting to act as the representative of or in place of any of the foregoing, or (C) to have been signed, presented or issued after a change of name of the beneficiary, (vi) may disregard (A) any requirement stated in the Credit that any Draft, certificate or other document be presented to it at a particular hour or place and (B) any discrepancies that do not reduce the value of the beneficiary’s performance to Applicant in any transaction underlying the Credit, (vii) may accept as a Draft any written or electronic demand or other request for payment under the Credit, even if such demand or other request is not in the form of a negotiable draft, (viii) shall not be responsible for the effectiveness or suitability of the Credit for Applicant’s purpose, or be regarded as the drafter of the Credit regardless of any assistance that Citibank may, in its discretion, provide to Applicant in preparing the text of the Credit or amendments thereto, (ix) shall not be liable to Applicant for any consequential or special damages, or for any damages resulting from any change in the value of any foreign currency, services or goods or other property covered by the Credit, (x) may assert or waive application of UCP (as defined below) Articles 17 (force majeure) and 45 (hours of presentation) and all other UCP articles primarily benefiting bank issuers, (xi) may honor a previously dishonored presentation under the Credit, whether pursuant to court order, to settle or compromise any claim that it wrongfully dishonored, or otherwise, and shall be entitled to reimbursement to the same extent as if it had initially honored plus reimbursement of any interest paid by it, (xii) may honor, upon receipt, any drawing that is payable upon presentation of a statement advising negotiation or payment (even if such statement indicates that a Draft, certificate or other document is being separately delivered) and shall not be liable for any failure of any Draft, certificate or document to arrive or to conform in any way with the Draft, certificate or other document referred to in the statement or any underlying contract, and (xiii) may pay any paying or negotiating bank (designated or permitted by the terms of the Credit) claiming that it rightfully honored under the laws or practices of the place where it is located. None of the circumstances described in this section shall place Citibank or any of its correspondents under any resulting liability to Applicant.

8. Independence. Applicant acknowledges that the rights and obligations of Citibank under the Credit are independent of the existence, performance or nonperformance of any contract or arrangement underlying the Credit, including contracts or arrangements between Citibank and Applicant and between Applicant and the beneficiary of the Credit. Citibank shall have no duty to notify Applicant of its receipt of a Draft, certificate or other document presented under the Credit or of its decision to honor the Credit. Citibank may, without incurring any liability to Applicant or impairing its entitlement to reimbursement under this Agreement, honor the Credit despite notice from Applicant of, and without any duty to inquire into, any defense to payment or any adverse claims or other rights against the beneficiary of the Credit or any other person. Citibank shall have no duly to request or require the presentation of any document, including any default certificate, not required to be presented under the terms and conditions of the Credit. Citibank shall have no duty to seek any waiver of discrepancies from Applicant, nor any duty to grant any waiver of discrepancies which Applicant approves or requests . Each Credit may be extended at any time before the Facility Termination Date (as defined in the Facility Agreement) in

accordance with the terms and conditions of the Facility Agreement.

9. Non-Documentary Conditions. Citibank is authorized (but shall not be required) to disregard any non-documentary conditions stated in the Credit.

10. Transfers. If, at Applicant’s request, the Credit is issued in transferable form, Citibank shall have no duty to determine the proper identity of anyone appearing in any transfer request, Draft, or other document as transferee, nor shall Citibank be responsible for the validity or correctness of any transfer.

11. Extensions and Modifications of the Credit. This Agreement shall be binding upon Applicant with respect to any extension or modification of the Credit made at Applicant’s written request or with Applicant’s written consent. Applicant’s Obligations shall not be reduced or impaired in any way by any agreement by Citibank and the beneficiary of the Credit extending Citibank’s time to honor or to give notice of discrepancies and any such agreement shall be binding upon Applicant.

12. Additional Bond. If at any time Applicant shall seek to restrain or preclude payment of or drawing under the Credit or any court shall extend the term of the Credit or take any other action which has a similar effect, then, in each case, Applicant shall provide Citibank with a bond or other collateral of a type and value, not exceeding the outstanding amount of the Credit, satisfactory to Citibank as security for the Obligations.

13. Set-off. If any Event of Default (as defined in the Hypothecation Agreement dated October 12, 2005, as amended, supplemented or otherwise modified from time to time, by Applicant In favor of Citibank) shall occur and be continuing, Citibank may set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Citibank or Citigroup Global Markets Inc. to or for the credit or the account of Applicant (“Deposits”) against any and all of the Obligations, irrespective of whether or not Citibank shall have made any demand under this Agreement and although such Deposits or Obligations may be unmatured or contingent. Citibank’s rights under this section are in addition to other rights and remedies (including other rights of set-off) which Citibank may have under this Agreement or applicable law.

14. Waiver of Immunity. Applicant acknowledges that this Agreement Is, and the Credit will be, entered into for commercial purposes and, to the extent that Applicant now or later acquires any immunity from jurisdiction of any court or from any legal process with respect to itself or its property, Applicant now irrevocably waives its immunity with respect to the Obligations.

15. Notices; Interpretation; Severability. Notices and other communications hereunder shall be in writing and sent by overnight courier mall, by telecopier, or by hand-delivery to the address of Citibank, at Citibank, N.A., 388 Greenwich Street, New York, New York 10013, telecopier no. (212) 816-3133, Attention: Product Manager, Standby Letters of Credit, and, if to Applicant, to the address specified for it below. All such notices shall be deemed given (i) if sent by overnight courier mail or by hand-delivery, when received at such address or when delivery is refused or (ii) if sent by telecopied transmission, when transmission is confirmed. Headings are included only for convenience are not interpretative. The term “including” means “including without limitation.” If any provision of this Agreement is held illegal or unenforceable, the validity of the remaining provisions shall not be affected.

16. Successors and Assigns. This Agreement shall be binding upon Applicant and its successors and permitted assigns, and shall inure to the benefit of and be enforceable by Citibank, its successors and permitted assigns. Applicant shall not voluntarily transfer or otherwise assign any of its obligations under this Agreement. Citibank may, with the consent of Applicant, which shall not be unreasonably withheld or delayed, assign or otherwise transfer all or any of its rights under this Agreement (it being understood that Citibank may not, without Applicant’s prior written consent, assign any of its obligations (including, without limitation, its obligation to issue the Credit) under this Agreement, all without prejudice to the retention by Citibank of all rights not so transferred, except that the consent of Applicant shall not be required hereunder in the case of an assignment, (i) at any time that an Event of Default has occurred and is continuing, (ii) to an affiliate of Citibank, or (iii) which constitutes a pledge to a Federal Reserve Bank in accordance with applicable law. Citibank may, in connection with any such assignment, transfer or delivery, disclose to the assignee or transferee or proposed assignee or proposed transferee any information relating to Applicant furnished to Citibank by or on behalf of Applicant, provided that, prior to any such disclosure, the assignee or transferee or proposed assignee or proposed transferee shall agree to be subject to the confidentiality obligations applicable to Citibank under paragraph 24 hereof with respect to any confidential information related to Applicant and shall enter into a confidentiality agreement to such effect with Citibank under which Applicant is designated a third party beneficiary with the right to enforce the terms of such confidentiality agreement. Citibank shall be forever relieved from any liability with respect to the portion of Citibank’s rights transferred or assigned in accordance herewith. This Agreement shall not be construed to confer any right or benefit upon any person or entity other than Applicant and Citibank and their respective successors and permitted assigns.

17. Modification; No Waiver. None of the terms of this Agreement may be waived or amended except in a writing signed by the party against whose interest the term is waived or amended. Forbearance, failure or delay by Citibank in the exercise of a remedy shall not constitute a waiver, nor shall any exercise or partial exercise of any remedy preclude any further exercise of that or any other remedy. Any waiver or consent by Citibank shall be effective only in the specific instance and for the specific purpose for which it is given and shall not be deemed, regardless of frequency given, to be a further or continuing waiver or consent.

18. Multiple Role Disclosure. Citibank and its affiliates offer a wide range of financial services, including back-office letter of credit processing services on behalf of financial institutions and letter of credit beneficiaries. Our services are provided internationally to a wide range of customers, some of whom may be Applicant’s counter-parties or competitors. Applicant acknowledges and accepts that Citibank and its affiliates may perform more than one role in relation to a particular Credit.

19. Other Agreements; Remedies Cumulative; Delivery by Facsimile. This Agreement (and any controlling agreement described in the preceding sentence) constitutes the entire agreement between the parties concerning Citibank’s issuance of a letter or letters of credit for Applicant’s account and supersedes all prior simultaneous agreements, written or oral. All rights and remedies of Citibank under this Agreement and other documents delivered in connection with this Agreement are cumulative and in addition to any other right or remedy under this Agreement, the Credit or applicable law. Delivery of a signed signature page to this Agreement by facsimile transmission shall be effective as, and shall constitute physical delivery of, a signed original counterpart of this Agreement.

20. Termination; Surviving Provisions. This Agreement shall be terminated only upon the extinguishment of Citibank’s liability under the Credit and payment in full to Citibank of all Obligations hereunder. Indemnity, tax, immunity, and jurisdiction provisions shall survive termination of this Agreement. If the Credit is issued in favor of any bank or other financial or commercial entity in support of an undertaking issued by such bank or entity on behalf of Applicant or Citibank, Applicant shall remain liable under this Agreement (even after expiry of the Credit) for amounts paid and expenses incurred by Citibank with respect to the Credit or the undertaking until Citibank is released by such other bank or entity.

21. Governing Law; Governing Guidelines. (a) This Agreement and the rights and obligations of Applicant and Citibank hereunder shall be governed by and subject to the laws of the State of New York and applicable U.S. Federal laws. (b) Applicant agrees that Citibank may issue any Credit subject to the Uniform Customs and Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500 (the “UCP”) or the International Standby Practices, International Chamber of Commerce No. 590 (the “ISP”) or, at Citibank’s option, such later revision thereof in effect at the time of issuance of the Credit. The UCP or the ISP, as applicable, shall serve, in the absence of proof to the contrary, as evidence of general banking usage with respect to the subject matter thereof. (c) Applicant agrees that (i) each Credit shall be interpreted in accordance with the laws of the State of New York and (ii) for matters not addressed by the UCP or the ISP, each Credit shall be subject to and governed by the laws of the State of New York and applicable U.S. Federal laws if, at Applicant’s request, a Credit expressly chooses a state or country law other than New York, U.S.A., or is silent with respect to UCP, ISP or governing law, Citibank shall not be liable for any payment, cost, expense or loss resulting from any action or inaction taken by Citibank if such action or inaction is justified under UCP, ISP, New York law or the law governing the Credit.

22. Jurisdiction; Service of Process. Applicant now irrevocably submits to the non-exclusive jurisdiction of any state or federal court sitting in New York, New York, for itself, and in respect of any of its property and, if a taw other than New York, U.S.A. has been chosen to govern the Credit, Applicant also now irrevocably submits to the non-exclusive jurisdiction of any state or federal court sitting in such jurisdiction. Applicant agrees not to bring any action or proceeding against Citibank in any jurisdiction not described in the immediately preceding sentence. Applicant irrevocably waives any objection to venue or any claim of inconvenience. Applicant agrees that any service of process or other notice of legal process may be served upon it by mail or hand delivery if sent to it at:

Corporation Services Company

1133 Avenue of the Americas

New York, New York 10036

which Applicant now designates its authorized agent for the service of process in the courts in the State of New York. (If no authorized agent is designated in the space provided above, Applicant agrees that process shall be deemed served if sent to its address given for notices under this Agreement.) Applicant agrees that nothing in this Agreement shall affect Citibank’s right to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Applicant in any other jurisdiction. Applicant agrees that final judgment against it in any action or proceeding shall be enforceable in any other jurisdiction within or outside the United States of America by suit on the judgment, a certified copy of which shall be conclusive evidence of the judgment.

23. JURY TRIAL WAIVER. APPLICANT AND CITIBANK (BY ITS RECEIPT HEREOF) EACH IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM, COUNTERCLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE CREDIT OR ANY DEALINGS WITH ONE ANOTHER RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.

24. Confidentiality. Citibank agrees to take and to cause its affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information provided by Applicant or any of its affiliates under this Agreement or any other agreement or document relating to the Credit (“Information”), and neither it nor any of its affiliates shall use any Information other than in connection with or in enforcement of this Agreement and the other agreements and documents relating to the Credit, except to the extent Information (a) was or becomes generally available to the public other than as a result of disclosure by Citibank or its affiliates, or (b) was or becomes available on a non-confidential basis from a source other than Applicant or its affiliates, provided that such source is not bound by a confidentiality agreement with Applicant known to Citibank; provided, however, that Citibank may disclose Information (i) at the request or pursuant to any requirement of any governmental authority to which Citibank is subject, in each case upon prior notice to Applicant unless prohibited by law or the rules governing the process requiring such disclosure; (ii) pursuant to subpoena or other court process, upon prior notice to Applicant unless prohibited by law or the rules governing the process requiring such disclosure; (iii) when required to do so in accordance with the provisions of any applicable requirement of law, upon prior notice to Applicant unless prohibited by law or the rules governing the process requiring such disclosure; (iv) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other agreement or document relating to the Credit; and (v) to Citibank’s independent auditors and other professional advisors who agree or are directed to maintain the confidentiality of the Information.

Very truly yours, GREENLIGHT REINSURANCE, LTD.

By:
	Leonard Goldberg Chief Executive Officer

Address:

Strathvale House

90 North Church Street

P.O. Box 1109 GT

Georgetown, Grand Cayman, Cayman Islands

Telecopier No.: (345) 949-7634

Telephone No.: (345) 914-7500

Attention: Leonard Goldberg

ACKNOWLEDGED AND AGREED AS OF OCTOBER 12, 2005 CITIBANK, N.A.

By:
	Vice President
(For Citibank Use Only)

Item #305524 (REV 02/99)

Approvals to Issue

Relationship Manager (Signature & Stamp)

(Other required Signature & Stamp)

[Citigroup Logo]

Citibank N.A.

388 Greenwich Street

New York, NY 10013

September 19, 2006

Greenlight Reinsurance, Ltd

Strathvale House

90 North Church Street

P.O. Box 1109 GT

Georgetown, Grand Cayman, Cayman Islands

Re: US$200,000,000 Letter of Credit Facility dated October 12, 2005 for the account of Greenlight Reinsurance, Ltd.

Gentlemen:

We are pleased to advise that we have amended the Letter of Credit Facility currently available for use until October 11, 2007 such that the commission of 1.15% per annum is reduced to a new rate of .90% per annum effective October 1, 2006.

All other conditions remain unchanged.

Sincerely,

CITIBANK, N.A.

/s/ John Ahearn

-----------------------------------------

Vice-President

September 22, 2006

Acknowledged & Agreed

Greenlight Reinsurance, Ltd.

/s/ Tim Courtis

--------------------------------------

Chief Financial Officer

Exhibit 10.2

EXECUTION COPY

FORM OF SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT, dated as of (this “ Agreement ”), is made by and between Greenlight Capital Re, Ltd., a corporation organized under the laws of the Cayman Islands (the “ Company ”), and each individual identified on Exhibit A hereto (each, a “ Purchaser ” and, collectively, the “ Purchasers ”).

WITNESSETH :

WHEREAS, the Company desires to issue to each Purchaser, and each Purchaser agrees to accept Class A Ordinary Shares, par value US$0.10 per share (the “ Class A Ordinary Shares ”) of the Company, on the terms and conditions specified herein; and

NOW, THEREFORE, in consideration of the promises, mutual covenants and agreements hereinafter contained and the transactions contemplated by the Offering, the parties hereto hereby agree as follows:

Sale and Purchase of Shares.

1.1

Sale and Purchase of the Class A Ordinary Shares.

Subject to the terms and conditions of this Agreement, on the Closing Date (as defined below), the Company shall sell and issue to each Purchaser, and each Purchaser shall purchase and accept from the Company, that number of Class A Ordinary Shares set forth opposite his or her name on Exhibit A hereto at per share (collectively, the “ Shares ”). Upon the consummation of the transactions contemplated hereby, the Company shall register the appropriate number of Class A Ordinary Shares in the name of each Purchaser.

Purchase Price.

2.1

Payment of the Purchase Price.

On or prior to the Closing (as defined below) each Purchaser shall pay to the Company that amount as set forth opposite his or her name in Exhibit A hereto (the “ Purchase Price ”) in United States dollars by wire transfer of immediately available funds, or by such other method as may be reasonably acceptable to the Company and each Purchaser, to the account designated in Exhibit B hereto.

Closing.

3.1

Closing Date.

The closing of the sale and purchase of the securities provided for in Sections 1.1 (the “ Closing ”) shall take place simultaneously with the execution of this Agreement and upon the satisfaction or waiver of all of the conditions set forth in Section 7 hereof and shall occur at 10:00 a.m. at the offices of Akin Gump Strauss Hauer & Feld LLP, 590 Madison Avenue, New York, New York (or at such other place as the parties hereto may mutually agree) on March 30, 2006, or on such other date as the parties hereto may mutually agree. The date on which the Closing is held is referred to in this Agreement as the “ Closing Date .”

Representations and Warranties of the Company.

The Company hereby represents and warrants to each Purchaser that:

4.1

Corporate Existence and Power; Capitalization.

(a) The Company is duly organized, validly existing and in good standing under the laws of the Cayman Islands (meaning that it has not failed to make any filing with any Cayman Islands governmental authority or pay any Cayman Islands government fee or tax which would make it liable to be struck off the Cayman Islands Register of Companies and therefore cease to exist), and has all corporate powers required to carry on its business as now being, and as proposed to be, conducted. The Company is authorized or duly qualified to do business as a foreign corporation and in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary.

(b) The authorized share capital of the Company as of the date hereof will be as set forth on Schedule 4.1 attached hereto. Upon the consummation of this Agreement and assuming the issuances contemplated hereby of an aggregate of 91,800 Class A Ordinary Shares, the pro forma issued and outstanding shares of the Company and options to purchase Ordinary Shares will be as set forth on Schedule 4.1 attached hereto. Except as set forth in Schedule 4.1, there are no outstanding options, options, rights to subscribe to, or securities or rights convertible or exercisable into or exchangeable for any shares of capital stock of the Company, or arrangements by which the Company is or may become bound to issue additional shares of its capital stock.

4.2

Corporate Authorization.

The execution, delivery and performance by the Company of its obligations under this Agreement and the shareholders’ agreement dated August 11, 2004 among the Company and the shareholders of the Company (the “ Shareholders’ Agreement ”) and the consummation by the Company of the transactions contemplated hereby and thereby, are within the Company’s corporate power and have been duly authorized by all necessary corporate action on the part of the Company. Each of this Agreement and the Shareholders’ Agreement has been duly and validly executed by the Company and constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, amalgamation, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general

principles of equity (regardless of whether enforcement is sought in a proceeding of law or in equity).

4.3

Governmental and Court Authorization.

The execution, delivery and performance by the Company of this Agreement and the Shareholders’ Agreement do not require consent, approval or authorization of, or filing, registration or qualification with, any governmental body, agency, official, court or other authority that has not been obtained or made.

4.4

Non-Contravention.

The execution, delivery and performance by the Company of its obligations under this Agreement and the Shareholders’ Agreement do not and will not (A) contravene or conflict with the Company’s organizational documents or (B) (i) contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company, (ii) require any consent, approval or other action by any person or constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Company to a loss of any benefit to which the Company is entitled under any provision of any agreement, contract, indenture, lease or other instrument binding upon the Company or any license, franchise, permit or other similar authorization held by the Company or (iii) result in the creation or imposition of any encumbrances.

4.5

Authorization of the Shares.

When issued, sold, and delivered in accordance with this Agreement, the Shares will be validly issued and outstanding with no personal liability attaching to the ownership thereof and not subject to preemptive or similar rights of the shareholders of the Company or others, except as provided in the Shareholders’ Agreement and the Memorandum and Articles of Association of the Company.

4.6

Litigation.

There is no action, suit, investigation or proceeding pending against, or to the best knowledge of the Company threatened against or affecting, the Company or any of its properties before any court or arbitrator or any governmental body, agency, official or authority that (i) could reasonably be expected to have a material adverse effect or (ii) in any manner would enjoin, alter, call into question, affect or delay the transactions contemplated by this Agreement or the Shareholders’ Agreement.

Representations and Warranties of the Purchaser.

Each Purchaser hereby represents and warrants to the Company, severally and not jointly, that:

5.1

Governmental and Court Authorization.

The execution, delivery and performance by such Purchaser of this Agreement does not require the consent, approval or authorization of, or filing, registration or qualification with, any governmental body, agency, official, court or authority that has not been obtained or made.

5.2

Non-Contravention.

The execution, delivery and performance by such Purchaser of this Agreement does not and will not contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Purchaser or his or her properties.

5.3

Purchase for Investment; Legend.

(a) The Class A Ordinary Shares are being acquired for such Purchaser’s own account, and not with a view to making a public distribution thereof in violation of the United States Securities Act of 1933, as amended (the “ Securities Act ”).

(b) Other than as set forth on Schedule 5.3 (b) hereto, such Purchaser is an “accredited investor” as defined in Rule 501 under the Securities Act.

(c) Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Shares shall bear a legend substantially in the following form:

IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S ARTICLES OF ASSOCIATION AND PURSUANT TO A SHAREHOLDERS’

AGREEMENT DATED AS OF AUGUST 11, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

5.6

Access to Information.

Such Purchaser has been afforded an opportunity to investigate the properties, businesses and operations of the Company and examine the books, records and financial condition of the Company and to make extracts and copies of any such books and records. No investigation by such Purchaser prior to or after the date of this Agreement shall diminish or obviate any of the representations, warranties, covenants or agreements of the Company contained in this Agreement or the documents related thereto.

Further Agreements of the Parties.

6.1

Other Actions.

The Company and each of the Purchasers, severally and not jointly, agree to execute and deliver such other documents and take such other actions, as a party hereto may reasonably request for the purpose of carrying out the intent of this Agreement and the documents relating thereto. The provisions of this Section 6.1 shall survive the consummation of the transactions contemplated hereby.

6.2

Acknowledgement of Voting Restrictions.

Each Purchaser acknowledges and agrees to be bound by the voting rights and restrictions with respect to the Class A Ordinary Shares as described in the Memorandum and Articles of Association of the Company.

Conditions to and Documents to be Delivered at the Closing.

The obligation of the parties to consummate the transactions contemplated by this Agreement is subject to the satisfaction on or prior to the Closing Date of each of the conditions set forth below. Any such condition may be waived by the other parties hereto by proceeding with the Closing.

7.1

Documents to be Delivered by the Company.

At the Closing, the Company shall deliver to each Purchaser the following:

(a) A certificate of good standing or compliance of the Company issued by the appropriate official from the jurisdiction of its formation issued not more than fifteen (15) calendar days prior to the Closing Date;

(b) A copy of the Memorandum and Articles of Association of the Company certified by the secretary or assistant secretary of the Company, as being true and complete as of the Closing Date;

(c) (i) A copy of resolutions of the board of directors of the Company, authorizing the execution, delivery and performance of this Agreement and the documents related thereto and the issuance of the Shares and (ii) a certificate of the secretary or assistant secretary of the Company, dated as of the Closing Date certifying that such resolutions were duly adopted and are in full force and effect; and

(d) Such other documents as each Purchaser shall reasonably request.

7.2

Documents to be Delivered by each Purchaser.

At the Closing, each Purchaser shall deliver to the Company his or her respective Purchase Price.

7.3

Documents to be Delivered by both the Company and each of the Purchasers.

At the Closing, each of the Company and each Purchaser shall execute and deliver a Joinder Agreement to the Shareholders’ Agreement, a copy of which is attached hereto as Exhibit C .

Miscellaneous

8.1

Specific Performance.

Each of the parties hereto acknowledge and agree that the breach of this Agreement would cause irreparable damage to the other parties hereto and that the other parties hereto will not have an adequate remedy at law. Therefore, the obligations of each of the parties hereto under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

8.2

Notices.

All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid:


	To the Company:
		Greenlight Capital Re, Ltd. The Grand Pavilion 7 Mile Beach

P.O. Box 1109, GT, Grand Cayman

Attn: Leonard Goldberg

Facsimile Number: (345) 745-4576

with a copy to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attn: Kerry E. Berchem, Esq.

Facsimile Number: (212) 872-1002

To the Purchaser:

At the address set forth below his name on Exhibit A hereto

8.3

Entire Agreement; Amendments and Waivers.

This Agreement (including the schedules and exhibits hereto) represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the parties hereto. No action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

8.4

Governing Law.

This Agreement shall be governed by and construed and enforced in accordance with the laws of the Cayman Islands. Each party, for the benefit of the other, hereby irrevocably submits to the exclusive jurisdiction of the courts of the Cayman Islands for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

8.5

Section Headings.

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise effect the meaning hereof.

8.6

Severability.

If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

8.7

Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.

8.8

Counterparts.

This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

* * * * *

(The Signature Page Follows)

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized signatories on the date first written above.

			GREENLIGHT CAPITAL RE, LTD.
			By:
				Name:
				Title:


		By:
			Name:

Exhibit 10.3

PROMISSORY NOTE

US$24,500,000.00

August 11, 2004

ARTICLE I

PAYMENT OBLIGATION

FOR VALUE RECEIVED, the undersigned, Greenlight Capital Investors, LLC, a Delaware limited liability company (“ Maker ”), unconditionally promises to pay to the order of Greenlight Capital Re, Ltd., a Cayman Islands exempted company with limited liability, or its registered assigns (“ Payee ”), the sum of Twenty Four Million Five Hundred Thousand Dollars (US $24,500,000.00), together with interest on the unpaid principal balance from time to time outstanding at a rate per annum equal to LIBOR (as defined herein) plus 3.0%, which interest shall accrue daily, commencing on the date hereof (and, thereafter, from the most recent date that interest was paid) and shall be payable in cash annually on August 11 of each year (or the immediately succeeding Business Day (as defined herein), if such day is not a Business Day) (such date, the “ Anniversary Date ”), commencing on the Anniversary Date in 2005, until the principal amount hereof shall have been paid in full. The principal of, and accrued and unpaid interest on, this Promissory Note (this “ Note ”) shall be due and payable in lawful money of the United States on the earlier of (a) the Anniversary Date in 2009 or (b) the making of demand therefor by Payee following the occurrence and during the continuance of an Event of Default (as defined in Article III hereof) or as otherwise provided in Article III hereof. Interest hereunder shall be calculated on the basis of a year of 360 days and the actual number of days elapsed.

This Note has been executed and delivered pursuant to that certain securities purchase agreement by and between Maker and Greenlight Capital Re, Ltd., dated as of the date hereof, pursuant to which Maker purchased 5,050,000 newly issued Class B ordinary shares, par value $0.10 per share, of Greenlight Capital Re, Ltd. (the “ Class B Ordinary Shares ”).

For the purposes of this Note: (1) “ LIBOR ” means the one-year British Bankers Association London Interbank Offered Rate Fixing of U.S. Dollar, as published in the Wall Street Journal on the first Business Day immediately following the Anniversary Date of each year during the term of this Note; provided, that LIBOR for the period from the date hereof through the Anniversary Date in 2005 shall be 2.34125% and (2) “ Business Day ” means every day other than a Saturday, Sunday, or legal holiday in New York, New York or in the Cayman Islands.

Maker shall have the right to prepay the principal of this Note in full or in part at any time and from time to time without premium or penalty, provided, however, that accrued interest on the portion of principal being prepaid shall be due and payable contemporaneously with such prepayment of principal.

ARTICLE II

AFFIRMATIVE AND NEGATIVE COVENANTS

So long as any of the principal of and accrued interest on this Note is outstanding, Maker will comply with each of the following covenants:

1. Transfer of Class B Ordinary Shares . In the event that Maker proposes to sell, assign, exchange or otherwise transfer or dispose of, directly or indirectly (each, a “ Transfer ”) any Class B Ordinary Shares (including any Class A ordinary shares of Payee issuable upon conversion of Class B Ordinary Shares) Maker shall (i) provide Payee with notice of such Transfer at least five (5) Business Days prior to the closing of such Transfer and (ii) contemporaneously with the closing of such Transfer, remit to Payee the proceeds (the “ Proceeds ”) received by Maker in connection therewith, provided that the amount of such Proceeds remitted to Payee shall not exceed the outstanding principal of, and accrued interest on, this Note as of the date of application of such Proceeds. The Proceeds shall first be applied to the accrued interest on this Note and, if there is any excess, to the outstanding principal of this Note as of the date of application of such Proceeds. Notwithstanding the foregoing, Maker shall not be permitted to Transfer any Class B Ordinary Shares unless (a) such Transfer is made pursuant to a bona fide transaction with a third party, which transaction shall have been negotiated in good faith on an arm’s-length basis and (b) the consideration to be paid to Maker in connection with such Transfer shall be paid in cash at the closing of such Transfer. In furtherance of the foregoing Maker hereby acknowledges the lien on the Class B Ordinary Shares granted to Payee pursuant to Article 68 of Greenlight Capital Re, Ltd.’s Memorandum and Articles of Association, as the same shall exist on the date hereof (the “ Memorandum and Articles ”).

2. Limitation on Indebtedness . Maker will not, without the prior written consent of Payee, incur any indebtedness for borrowed money senior or pari passu in right of payment to this Note.

ARTICLE III

EVENTS OF DEFAULT

Each of the following shall constitute an Event of Default (each, an “ Event of Default ” and, collectively, the “ Events of Default ”):

default in making due and punctual payment of the principal of this Note, or any interest accrued hereon, or any other amount payable hereunder, when and as such payment shall become due and payable, whether at maturity or by acceleration or otherwise, and such payment is not made within five (5) days of written notice received by Maker specifying such default; or

the failure by Maker to comply with any of the covenants set forth in (i) Article II of this Note or (ii) the Memorandum and Articles with respect to the Transfer of Class B Ordinary Shares; or

the Transfer by Maker, whether in one or in a series of transactions, of all or substantially all of its assets including, without limitation, the Transfer of all or substantially all of the Class B Ordinary Shares (including any Class A Ordinary Shares of the Company issuable upon conversion of the Class B Ordinary Shares); or

Maker shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or

Maker shall (i) apply for or consent in writing to the appointment of, or taking possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) file a petition seeking to take advantage of any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts or (iv) take any action for the purpose of effecting any of the foregoing; or

a proceeding or case shall be commenced, without the application or consent of the Maker, in any court of competent jurisdiction, seeking (i) Maker’s liquidation, reorganization, dissolution, or winding-up, or the composition or adjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of Maker or all or any substantial part of its assets, or (iii) similar relief in respect of Maker under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continued unstayed and in effect, for a period of sixty (60) days; or an order for relief against Maker shall be entered in an involuntary case under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; or

the security interest of Payee in the Class B Ordinary Shares pursuant to Article 68 of the Memorandum and Articles shall at any time fail to constitute a first and paramount lien and charge in such Class B Ordinary Shares, or Maker shall so assert in writing; or

either this Note or Article 68 of the Memorandum and Articles shall at any time be declared to be invalid or unenforceable in any material respect, or Maker shall so assert in writing.

If an Event of Default occurs under paragraphs 1, 2, 3, 7 or 8 above, then and in any such case Payee may declare the outstanding principal amount of this Note to be due and payable immediately, upon written notice to Maker and, upon any such declaration, the outstanding principal amount of this Note, and the interest--accrued thereon, together with all costs of collection, including reasonable attorneys’ fees if collected by law or through an attorney at law (as further set forth in Section IV(4) hereof), shall be and become immediately due and payable. If an Event of Default occurs under paragraphs 4, 5 or 6 above, then the outstanding principal of and all accrued and unpaid interest on this Note shall automatically be and become immediately due and payable, without presentment, demand, protest, notice of dishonor or other formalities or notice of any kind, all of which are hereby expressly waived by Maker.

ARTICLE IV

GENERAL

1. Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier (with receipt confirmed), courier service or personal delivery as follows: (a) if to the Maker, at 140 East 45th Street, Floor 24, New York, NY 10017, facsimile 1-212-973-9219 attention: Daniel Roitman, or at such other address or number as the Maker shall have furnished to the Payee in writing, or (b) if to the Payee, at Greenlight Capital Re, Ltd., c/o HSBC Financial Services (Cayman) Limited, P.O. Box 1109GT, Strathvale House, 90 North Church Street, Grand Cayman, Cayman Islands, facsimile 1-345-949-7634, attention: Tom Clark, or at such other address or number as the Payee shall have furnished to the Maker in writing. All such notices and communications shall be deemed to have been duly given when: delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; if mailed, five Business Days after being deposited in the mail, postage prepaid; or if telecopied to the telecopy number set forth above, when receipt is acknowledged by the recipient’s telecopier machine.

2. Renunciation . Maker hereby waives presentment, demand, protest and notice of dishonor or refusal, protest or notice of protest and delay of grace.

3. Waiver . No failure on the part of Payee to exercise and no delay in exercising, and no course of dealing with respect to, any right, power, privilege or remedy under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, privilege or remedy under this Note preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

4. Expenses . Maker agrees to pay or reimburse Payee for (a) all reasonable out-of-pocket costs and expenses of Payee (including, without limitation, the reasonable fees and expenses of counsel to Payee), in connection with any amendment, supplement, modification or waiver of any of the terms of this Note and (b) all reasonable costs and expenses of Payee (including the reasonable fees and expenses of counsel) in connection with any default hereunder or Event of Default and any enforcement or collection proceedings resulting therefrom. The obligations of Maker under this Section (IV)(4) shall survive the repayment of the principal amount of this Note.

5. Amendments . This Note may be amended or modified only by an instrument in writing duly executed by Maker and Payee. Any amendment or modification effected in accordance with this Section IV(5) shall be binding upon Maker and Payee.

6. Successors and Assigns . This Note shall be binding upon; and inure to the benefit of, Maker and Payee and their respective successors and assigns. Maker may not assign its rights or obligations under this Note without the prior written consent of the Payee. Payee may assign or transfer this Note or any rights or obligations hereunder without the prior written consent of Maker.

7. Headings . The section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Note.

8. Severability . If one or more provisions of this Note are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Note and the balance of this Note shall be interpreted as if such provision(s) were so excluded and shall otherwise be enforceable in accordance with its terms.

9. Usury. Maker covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive Maker from paying all or any portion of the principal of or interest on this Note, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note.

10. Governing Law; Consent to jurisdiction . This Agreement shall be governed by and construed and enforced in accordance with the laws of the Cayman Islands. Maker hereby irrevocably submits to the exclusive jurisdiction of the courts of the Cayman Islands for the adjudication of any dispute hereunder or in connection herewith, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Maker hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to Maker at the address set forth in paragraph 1 of this Article IV and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the undersigned have executed this Note as of the date first above written.

GREENLIGHT CAPITAL INVESTORS, LLC
By:	/s/ David Einhorn
Name:	David Einhorn
Title:	Manager

Exhibit 10.4

EXECUTION COPY

SECOND AMENDED AND RESTATED

INVESTMENT ADVISORY AGREEMENT

by and among

DME ADVISORS, LP,

GREENLIGHT REINSURANCE, LTD.

and, for limited purposes,

GREENLIGHT CAPITAL RE, LTD.

Amended and Restated as of

January 1, 2007

This SECOND AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT (this “ Agreement ”), dated as of January 1, 2007, by and among GREENLIGHT REINSURANCE, LTD. , an insurance company organized under the laws of the Cayman Islands (the “ Company ”), DME ADVISORS, LP, a Delaware limited partnership (as successor to Greenlight Capital Advisors, LLC, the “ Investment Advisor ”) and, solely for the limited purposes set forth in Sections 1(d)(iii) and 14 hereof, GREENLIGHT CAPITAL RE, LTD. , a Cayman Islands exempted company with limited liability (“ Greenlight Capital Re” ).

WHEREAS , Greenlight Capital Advisors, LLC filed Articles of Conversion on February 28, 2005 with the Secretary of State of the State of Delaware and became DME Advisors, LP, a Delaware limited partnership and successor to the rights and liabilities of Greenlight Capital Advisors, LLC; and

WHEREAS , the Company, the Investment Advisor and Greenlight Capital Re were parties to that certain Investment Advisory Agreement, dated as of August 11, 2004, among the Company, Greenlight Capital Advisors, LLC and Greenlight Capital Re (the “Original Investment Advisory Agreement” );

WHEREAS , the Company, the Investment Advisor and Greenlight Capital Re amended and restated the Original Investment Advisory Agreement as of February 28, 2005 to acknowledge the changed name and form of the Investment Advisor and to ensure that the deferral provisions of the Fee Schedule annexed thereto comply with the newly enacted Section 409A of the Internal Revenue Code of 1986, as amended (the “ Amended and Restated Investment Advisory Agreement ”); and

WHEREAS, the Company, the Investment Advisor and Greenlight Capital Re desire to amend and restate the Amended and Restated Investment Advisory Agreement as provided herein.

NOW THEREFORE , in consideration of the premises set forth above, hereby agree as follows:

Investment Program; Authority and Duties of the Investment Advisor; Exclusivity.

(a)

Subject to the investment guidelines of the Company attached hereto as Exhibit A , as amended from time to time by the Company’s board of directors (the “ Board ”) and provided in writing to the Investment Advisor (the “ Guidelines” ), the Investment Advisor shall be empowered (a) to formulate the overall trading and investment strategy of the Company (and the limited related borrowing activities of the Company in order to implement such strategy) and (b) to exercise full discretion in the management of the trading and investment transactions and related activities of the Company in order to implement such strategy, including the authority to allocate a portion of the Company’s assets to other trading advisors through managed accounts or collective investment vehicles.

(b)

In furtherance of the foregoing, the Company hereby designates and appoints the

Investment Advisor as its agent and attorney-in-fact, with full power and authority, subject to the Guidelines, and without the need for further approval of the Company (except as may be required by applicable law) to have the exclusive power on behalf of the Company to (i) effect any and all transactions in equity and debt securities (including derivatives thereon), currencies and commodities (and options, futures, derivatives, swaps, and forward contracts thereon), trade claims, arbitrages, bank loan participations, leases, tax liens, break-ups, consolidations, reorganizations and similar securities of non-United States issuers, and everything connected therewith in the broadest sense ; (ii) determine all matters relating to the manner, method and timing of investment transactions and to engage consultants and analysts in connection therewith; (iii) select brokers (including prime brokers), dealers, banks and other intermediaries by or through whom such investment transactions will be executed or carried out; (iv) make short sales; (v) purchase or write options (including uncovered options); (vi) trade on margin (as permitted by the Guidelines); (vii) draw funds on accounts of the Company and to direct banks, brokers or other custodians to effect deliveries of funds or assets, but only in the course of effecting investment transactions for the account of the Company hereunder; (viii) exercise all voting and other powers and privileges attributable to any securities or other property held for the account of the Company hereunder; and (ix) make and execute all such documents and to take all such other actions as the Investment Advisor considers necessary or appropriate to carry out its investment advisory duties hereunder, including opening brokerage (including prime brokerage) accounts and any other required documentation, including, without limitation, swaps, securities lending arrangements and similar agreements on behalf of the Company.

(c)

The Investment Advisor’s investment authority and discretion shall be subject to the following restrictions: The Investment Advisor shall not effect any investment transactions for the account of the Company that are inconsistent with the Guidelines or other investment restrictions from time to time imposed by regulation or adopted by the Board, or as set forth in any other written statement of investment restrictions; provided that such Guidelines and investment restrictions are communicated in writing to the Investment Advisor by the Company.

(d) (i)

During the term of this Agreement, the Company shall engage the Investment Advisor to be the Company’s exclusive investment advisor. In furtherance of the foregoing, during the term of this Agreement, the Company shall use its commercially reasonable efforts to cause substantially all of its investable assets to be directed to such accounts in which the Investment Advisor has sole investment discretion; provided , however , that the term “investable assets” shall not be deemed to include either (x) any assets of the Company which are, in the good faith determination of the Board, necessary for the operation of the Company’s business, or (y) up to 10% (20% if approved by the Board and

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communicated in writing to the Investment Advisor) of the Company’s investable assets that are used to collateralize Regulation 114 trusts.

(ii)

Notwithstanding the provisions of clause (i) above, the Company may voluntarily withdraw, and the Investment Advisor shall, subject to the provisions of this clause (ii), cause the return or delivery of, any assets from the managed account as of the close of business on any business day. The Company must give written notice to the Investment Advisor at least three business days prior to the proposed withdrawal date indicating the amount to be withdrawn in such notice. The Investment Advisor may, in its reasonable discretion, waive the foregoing notice requirement. The Investment Advisor shall not be liable for failure to perform or delay in performing under this clause (ii) when such failure or delay is due to Force Majeure, so long as the Investment Advisor uses its commercially reasonable efforts to cure such event or occurrence as practicably as possible. For purposes of this clause (ii), the term “ Force Majeure ” shall mean fires, floods, acts of God or the public enemy, interference by civil or military authorities, terrorist acts, governmental actions, orders or requests.

(iii)

Greenlight Capital Re agrees that during the term of this agreement, it will not engage any third-party investment advisor.

(e)

In connection with the execution of transactions hereunder on behalf of the Company, the Company acknowledges and agrees that in the course of selecting brokers, dealers, banks and financial intermediaries to effect such transactions, the Investment Advisor may agree to such commissions, fees and other charges on behalf of the Company’s account as it shall deem reasonable under the circumstances, taking into consideration all such factors as the Investment Advisor deems relevant, including the following: the ability to effect prompt and reliable executions at favorable prices; the operational efficiency with which transactions are effected; the financial strength, integrity and stability of the broker; the quality, comprehensiveness and frequency of available research and other services considered to be of value (even if such research and other services are not for the exclusive benefit of the Company’s account); and the competitiveness of commission rates in comparison with other brokers satisfying the Investment Advisor’s other selection criteria. It is understood that the costs of such services will not necessarily represent the lowest costs available and that the Investment Advisor is under no obligation to combine or arrange orders so as to obtain reduced charges.

Fees and Expenses.

The Investment Advisor shall be entitled to fees and to reimbursement of expenses in accordance with the Fee Schedule annexed hereto as Exhibit B (the “ Fee Schedule ”).

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Other Activities and Investments.

(a)

This Agreement shall not restrict in any way the ability of the Investment Advisor and its affiliates to engage in any other business or investment activities. It is expressly understood that the Investment Advisor and its affiliates may effect investment transactions for their own account and for the accounts of other customers (generally, “ Clients ”) which may or may not be affiliated with the Company, and the Company further understands and agrees that nothing herein shall restrict the ability of the Investment Advisor and its affiliates to engage in any such transactions notwithstanding the fact that the Company may have or may take a position of any kind; provided , however , that the Investment Advisor shall not, without the consent of the Board (whether consented to before or ratified after the fact), cause the Company to purchase any asset from, or sell any asset to, the Investment Advisor or any Client account which the Investment Advisor is the investment advisor to or is otherwise a beneficial owner of. Notwithstanding the foregoing, the Investment Advisor may cause the Company and Clients that invest in parallel with the Company to enter into book account trades in the ordinary course of business transferring portions of investments among all such Clients’ accounts in order to reflect changes in the size of the Company relative to the size of such Clients’ accounts without the need for consent or ratification by the Board of any such trades.

(b)

It is understood that when the Investment Advisor determines that it would be appropriate for the Company and one or more of the Investment Advisor’s (or its affiliates’) other Clients to participate in an investment opportunity, the Investment Advisor will seek to execute orders for, or otherwise allocate such opportunities to, the Company and such Clients on an equitable basis. In such situations, the Investment Advisor may place orders for the Company and each Client simultaneously and if all such orders are not filled at the same price, the Investment Advisor may cause the Company and each Client to pay or receive the average of the prices at which such orders were filled for the Company and all other Clients. If all such orders cannot be fully executed under prevailing market conditions, the Investment Advisor may allocate among the Company and the Clients the securities traded in a manner which the Investment Advisor considers equitable, taking into account the size of the order placed for the Company and each such Client as well as any other factors which the Investment Advisor deems relevant. However, the Investment Advisor is not obligated to devote any specific amount of time to the affairs of the Company and is not required to accord exclusivity or priority to the Company in the event of limited investment opportunities arising from the application of speculative position limits or other factors.

Account and Other Information; Custody.

(a)

The Investment Advisor shall send or arrange to be sent to the Company, within 5 business days after each calendar month end, monthly statements of the Company’s managed account, valued as set forth in Section 15 hereof. The

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monthly statements shall include, but not be limited to, balance sheet, income statement, trial balance and detailed holdings report of the managed account. The Investment Advisor shall furnish such further information concerning activities undertaken for the Company’s account as the Company may reasonably request.

(b)

The Investment Advisor shall retain, or arrange for the retention, for a period of at least two years, copies of any documents it deems pertinent generated or received by the Investment Advisor in the ordinary course of business pertaining to the financial condition of the Company’s investment accounts or to the compensation payable to the Investment Advisor. At the request of the Company, the Investment Advisor shall afford to the Company’s independent auditors reasonable access to such documents during customary business hours and shall permit the Company’s auditors to make copies thereof or extracts therefrom.

(c)

The assets in the Company’s investment portfolio shall be held in the custody of one or more custodians (or other independent institutions performing the functions of custodian, with respect to the assets which are held by such institutions) selected by the Investment Advisor. The Investment Advisor will notify the Company in writing following the selection of any custodians hereunder.

Scope of Liability.

The Company agrees that none of the Investment Advisor, the general partner of the Investment Advisor, nor any of their respective members, managers, partners, directors, officers, employees or agents, or any person or entity that controls the Investment Advisor or the general partner (collectively, “ Covered Persons ”), shall be liable to the Company or its shareholders for any losses, damages, expenses or claims occasioned by any act or omission of the Covered Person in connection with the performance of the Investment Advisor’s services hereunder, except that the Investment Advisor shall be liable to the Company:

(a)

for acts or omissions by the Covered Persons which constitute gross negligence, willful misconduct or reckless disregard of any of the Investment Advisor’s obligations under this Agreement;

(b)

for breaches of the Guidelines by the Investment Advisor, which breaches are not cured within 15 days of the earlier of (i) the date on which the Investment Advisor becomes aware of such breach, and (ii) the date on which the Investment Advisor receives a notice of such breach from the Company; or

(c)

for breaches of Section 1(d)(ii) by the Investment Advisor;

in each case, as finally determined by a court having proper jurisdiction and after all appeals are resolved or exhausted. The Company explicitly recognizes that the investment advisory opinions, recommendations and actions of the Investment Advisor will be based on advice and information deemed to be reliable, but not guaranteed by or to the Investment Advisor.

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Indemnification.

(a) (i)

The Company shall indemnify and hold harmless the Investment Advisor and each other Covered Person (each an “ IA Indemnitee ”) from and against any expense, loss, liability or damage arising out of any claim asserted or threatened to be asserted in connection with the Investment Advisor’s serving or having served as such pursuant to this Agreement; provided , however , that the IA Indemnitee shall not be entitled to any such indemnification with respect to any expense, loss, liability or damage which was caused by:

(A)

any misstatement of any material fact or any other misrepresentation concerning the Company by the IA Indemnitee (other than misstatement or misrepresentation contained in any document approved by the Company);

(B)

the IA Indemnitee’s gross negligence, willful misconduct or reckless disregard of any of the Investment Advisor’s obligations under this Agreement;

(C)

breaches of the Guidelines by the Investment Advisor, which breaches are not cured within 15 days of the earlier of (i) the date on which the Investment Advisor becomes aware of such breach, and (ii) the date on which the Investment Advisor receives a notice of such breach from the Company; or

(D)

breaches of Section 1(d)(ii) by the Investment Advisor.

(ii)

The Company shall advance to the IA Indemnitee the reasonable costs and expenses of investigating and/or defending such claim, subject to receiving a written undertaking from the IA Indemnitee to repay such amounts if and to the extent of any subsequent determination by a court or other tribunal of competent jurisdiction that the IA Indemnitee was not entitled to indemnification hereunder.

(iii)

The Company shall not be liable hereunder for any settlement of any action or claim effected without its written consent thereto, which will not be unreasonably withheld.

(b) (i)

The Investment Advisor shall indemnify and hold harmless the Company, and its directors, officers and employees (each a “ Company Indemnitee ”) from and against any expense, loss, liability or damage which was caused by:

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(A)

the Investment Advisor’s or any of the other Covered Person’s gross negligence, willful misconduct or reckless disregard of any of the Investment Advisor’s obligations under this Agreement;

(B)

(C)

breaches of Section 1(d)(ii) by the Investment Advisor.

(ii)

The Investment Advisor shall not be liable hereunder for any settlement of any action or claim effected without its written consent thereto, which will not be unreasonably withheld.

Meetings.

At the request of the Company and subject to reasonable prior notice, the Investment Advisor shall endeavor to make one of the Investment Advisor’s representatives available to attend either meetings of the Board or meetings with Company management (in either case either in person or telephonically) to report on the Investment Advisor’s results and activities and on other matters pertaining to the Investment Advisor’s engagement hereunder.

Independent Contractor.

For all purposes of this Agreement, the Investment Advisor shall be an independent contractor and not an employee or dependent agent of the Company; nor shall anything herein be construed as making the Company a partner or co-venturer with the Investment Advisor or any of the Investment Advisor’s affiliates or other Clients. Except as provided in this Agreement, the Investment Advisor shall have no authority to bind, obligate or represent the Company.

Term; Termination; Renewal.

(a)

This Agreement has a term expiring on December 31, 2009, provided , however , that the term of this Agreement shall be renewed for successive three-year periods unless either the Company or the Investment Advisor shall notify the other party hereto at least 90 days prior to the end of the then current term that it wishes to terminate this Agreement.

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(b)

This Agreement shall be subject to early termination at any time by the Company for Cause (as defined below). For purposes of this Agreement, “ Cause ” means:

(i)

a material violation of applicable law relating to the Investment Advisor’s advisory business;

(ii)

the Investment Advisor’s gross negligence, willful misconduct or reckless disregard of any of the Investment Advisor’s obligations under this Agreement;

(iii)

the material breach of the Guidelines by the Investment Advisor, which breach is not cured within 15 days of the earlier of (i) the date on which the Investment Advisor becomes aware of such breach, and (ii) the date on which the Investment Advisor receives a notice of such breach from the Company; or

(iv)

the material breach of Section 1(d)(ii) by the Investment Advisor.

For the avoidance of doubt, any early termination hereof by the Company shall require the approval of the Board.

(c)

Upon the termination of this Agreement, the Company will be liable to the Investment Advisor for any performance fees accrued until the termination date. Upon any termination of this Agreement the Investment Advisor will use all commercially reasonable efforts to follow the direction of the Company with respect to the disposition of the assets in the Company’s account; provided , however , that the Investment Advisor makes no guarantee that it can comply with such directions.

(d) (i)

Notwithstanding any provision of this Agreement to the contrary, the Company and the Investment Advisor hereby agree that, subject to the satisfaction of the condition set forth in clause (d)(ii) below, if the Investment Advisor provides written notice to the Company no less than 90 days prior to any January 1 during the term of this Agreement of its election to create a joint venture or partnership between the Company and the Investment Advisor (the “ Venture ”), the Company and the Investment Advisor shall amend this Agreement so as to create a Venture, effective as of such January 1; provided , however , that the Company shall be entitled to extend such date for a period of not more than 60 days in the event that the Company can not form the Venture due to a material transaction or other material regulatory impediment, in each case, involving the Company; it being understood and agreed that (v) a Venture shall be created and qualify as a “partnership” for US federal tax purposes and the Investment Advisor will contribute 1% of the assets of the Venture, (w) the performance fee payable to the Investment Advisor pursuant to the amended and restated agreement shall become an allocation to the Investment Advisor from the

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Venture, (x) the other terms and provisions of the Venture shall be substantially the same as under this Agreement, with such modifications as may be required to reflect the change from an investment advisory arrangement to the Venture, with each party agreeing to negotiate reasonably in good faith to agree on such modifications, (y) each of them will use their respective commercially reasonable efforts to (I) resolve any issues that may arise in connection with the formation of the Venture, and (II) amend this Agreement so as to create a Venture as provided herein, and (z) the Investment Advisor shall pay the reasonable fees and expenses of counsel to the Company incurred in connection with the formation and documentation of the Venture.

(ii)

Notwithstanding the foregoing, the Company shall not be required to enter into the Venture unless the Company shall receive an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Company and counsel shall be reasonably satisfactory to the Investment Advisor, that the amendment and restatement of this Agreement to create a Venture will not create any materially adverse tax, legal or regulatory consequences to the Company.

10.

Amendment; Modification; Waiver.

Except as otherwise expressly provided herein, this Agreement shall not be amended, nor shall any provision of this Agreement be considered modified or waived, unless evidenced by a writing signed by the party to be charged with such amendment, waiver or modification.

11.

Binding Effect; Assignment.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, but the rights and obligations hereunder shall not, except as otherwise expressly provided herein, be assignable, transferable or delegable without the written consent of the other party hereto and any attempted assignment, transfer or delegation thereof without such consent shall be void. The foregoing shall not prevent an assignment by the Investment Advisor in connection with any transaction that does not result in a change of its actual control or management.

12.

Governing Law; Submission to Jurisdiction.

(a)

This Agreement shall be governed by and construed in accordance with the substantive laws of the State of New York which are applicable to contracts made and entirely to be performed therein, without regard to the place of performance hereunder.

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(b)

Each party hereto submits to the jurisdiction of any state or federal court sitting in New York, New York in any action arising out of or relating to this Agreement and agrees that all claims in respect of any such action may be heard and determined in any such court. Each party hereto agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party hereto waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto.

13.

No Guarantees.

All transactions effected for the Company’s account by the Investment Advisor shall be for the Company’s account and risk. The Investment Advisor has made and makes no guarantee whatsoever as to the success or profitability of the Investment Advisor’s trading methods and strategies, and the Company acknowledges that it has received no such guarantee from the Investment Advisor or any of the Investment Advisor’s employees, principals or agents, and has not entered into this Agreement in consideration of or in reliance upon any such guarantee or similar representation from the Investment Advisor or any of the Investment Advisor’s employees, principals or agents.

14.

Subsidiaries .

During the term hereof (including, for the avoidance of doubt, during any renewal term), the Company and Greenlight Capital Re shall each use their commercially reasonable efforts to cause any of their respective subsidiaries that are formed after the date hereof to enter into an investment advisory agreement with the Investment Advisor on substantially the same terms and conditions as set forth herein; provided , that any such agreement(s) shall be terminable on the same date that this Agreement is terminable.

15.

Valuation .

(a)

The Investment Advisor shall value or have valued the Company’s investment portfolio as of the close of business on the last day of each month, and on any other dates reasonably requested by the Board. In addition, the Investment Advisor shall value any securities that are distributed in kind as of the date of distribution in accordance with this Section 15. In determining the value of the assets in the Company’s investment portfolio, the Investment Advisor will take into consideration any items of income earned but not received, expenses incurred but not yet paid, liabilities fixed or contingent, prepaid expenses to the extent not otherwise reflected in the books of account, and the value of options or commitments to purchase or sell securities pursuant to agreements entered into on or prior to such valuation date. Valuation of the Company’s investment portfolio made pursuant to this Section 15 must be based on all relevant factors and is expected to comply generally with the following guidelines:

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(i)

The market value of each security listed or traded on any recognized national securities exchange will be the last reported sale price at the relevant valuation date on the composite tape or on the principal exchange on which such security is traded. If no such sale of such security was reported on that date, the market value will be the last reported bid price (in the case of securities held long), or last reported ask price (in the case of securities sold short). The market value of any security designated as a United States Nasdaq National Market Security will be determined in like manner by reference to the last reported sale price or, if none is available, to the last reported bid price (in the case of securities held long), or last reported ask price (in the case of securities sold short).

(ii)

Dividends declared but not yet received, and rights in respect of securities that are quoted ex-dividend or ex-rights, will be recorded at the fair value thereof, as determined by the Investment Advisor, which may (but need not) be the value so determined on the day such securities are first quoted ex-dividend or ex-rights.

(iii)

Listed options, or over-the-counter options for which representative brokers’ quotations are available, will be valued in the same manner as listed or over-the-counter securities as hereinabove provided. Premiums for the sale of such options written by the Company will be included in the assets of the Company, and the market value of such options will be included as a liability.

(b)

The fair value of any assets not referred to in paragraph (a) (or the valuation of any assets referred to therein in the event that the Investment Advisor determines in its sole and reasonable discretion, that market prices or quotations do not fairly represent the value of particular assets) will be determined by or pursuant to the direction of the Investment Advisor. In these circumstances, the Investment Advisor will attempt to use consistent and fair valuation criteria and may (but is not required to) obtain independent appraisals at the expense of the Company.

(c)

Except as otherwise determined by or at the direction of the Investment Advisor, investment and trading transactions are accounted for on the trade date. Accounts shall be maintained in U.S. dollars and except as otherwise determined by or at the direction of the Investment Advisor: (i) assets and liabilities denominated in currencies other than U.S. dollars shall be translated at the rates of exchange in effect at the close of the relevant valuation period (and exchange adjustments are recorded in the results of operations); and (ii) investment and trading transactions and income and expenses are translated at the rates of exchange in effect at the time of each transaction.

(d)

The value of the Company’s investment portfolio, as determined by the Investment Advisor pursuant to this Section 15, will be, in the absence of bad faith or manifest error and subject to any audit verification, conclusive and binding on the Company and any parties claiming through the Company.

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16.

Entire Agreement; Integration of Rights.

This Agreement contains the entire understanding of hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings between hereto relating to the subject matter hereof (including, without limitation, the Original Investment Advisory Agreement and the Amended and Restated Investment Advisory Agreement), and each of hereto agrees that each and every such prior agreement is terminated and replaced in its entirety by the rights created by this Agreement.

17.

Notices.

Unless otherwise provided, all notices and other communications required or permitted under this Agreement shall be in writing and shall be mailed by first-class mail, postage prepaid, sent by facsimile, sent by electronic mail, or delivered personally by hand or by a nationally recognized courier addressed to the party to be notified at the address, facsimile number or e-mail address indicated for such party set forth below, or at such other address, facsimile number or e-mail address as such party may designate by ten days advance written notice to the other parties hereto. All such notices shall be effective upon receipt. Unless otherwise provided in writing to the other parties, all notices shall be sent to the following addresses, facsimile numbers or e-mail addresses:

If to the Investment Advisor:

DME Advisors, LP

140 East 45 ^th Street, 24 ^th Floor

New York, New York 10017

Attention: Daniel Roitman

Facsimile No.: 212-973-9219

E-Mail: droitman@greenlightcapital.com

With a copy to (which shall not constitute notice):

DME Advisors, LP

140 East 45 ^th Street, 24 ^th Floor

New York, New York 10017

Attention: Andrew M. Weinfeld

Facsimile No.: 212-973-9219

E-Mail: aweinfeld@greenlightcapital.com

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If to the Company or to Greenlight Capital Re:

Greenlight Reinsurance, Ltd.

802 West Bay Road, The Grand Pavilion

Grand Cayman, KY 1-1205

Cayman Islands

Attention: Len Goldberg

Facsimile No.:

E-Mail: len@greenlightre.ky

With a copy to (which shall not constitute notice):

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attention: Kerry Berchem

Facsimile No.: 212-872-1002

E-Mail: kberchem@akingump.com

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

DME ADVISORS, LP

By: DME Advisors GP, LLC, its General Partner

By: /s/ David Einhorn

Name: David Einhorn

Title: Senior Managing Member

GREENLIGHT REINSURANCE, LTD.

By: /s/ Leonard Goldberg

Name: Leonard Goldberg

Title: CEO

GREENLIGHT CAPITAL RE, LTD., solely for the limited purposes of Sections 1(d)(iii) and 14 hereof:

By: /s/ Leonard Goldberg

Name: Leonard Goldberg

Title: CEO

Signature Page for Investment Advisory Agreement

Exhibit A

GUIDELINES

•

Composition of Investments: At least 80% of the assets in the investment portfolio will be held in debt or equity securities (including swaps) of publicly traded companies and governments of OECD (the Organization of Economic Co-operation and Development) high income countries and cash, cash equivalents or United States Government obligations.

•

Concentration of Investments: Other than cash, cash equivalents and United States government obligations, no single investment in the investment portfolio will constitute more than 20% of the portfolio. No more than 10% of the assets in the investment portfolio will be held in private equity securities.

•

Liquidity: Assets will be invested in such fashion that the Company has a reasonable expectation that it can meet any of its liabilities as they become due. The Company will review with the Investment Advisor the liquidity of the portfolio on a periodic basis.

•

Monitoring: The Company will require the Investment Advisor to re-evaluate each position in the investment portfolio and to monitor changes in intrinsic value and trading value and provide monthly reports on the investment portfolio to the Company as the Company may reasonably determine.

•

Leverage: The investment portfolio may not employ greater than 5% indebtedness for borrowed money, including net margin balances, for extended time periods. The Investment Advisor may use, in the normal course of business, an aggregate of up to 20% net margin leverage for periods of less than 30 days.

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Exhibit B

FEE SCHEDULE

Definitions

Capitalized terms not otherwise defined in this Fee Schedule shall have the meanings provided in the Agreement to which this Fee Schedule is attached. The following definitions shall apply for purposes of determining the Investment Advisor’s fees hereunder:

“Annual Deferral Account” means an account established by the Company on its books and records, for bookkeeping purposes only, which sets forth the Deferral Amount on an annual basis. Such Annual Deferral Account shall be deemed to be invested side by side with the Investment Account, or such other investment options approved by the Board.

“ Business Day ” means any day on which banks are open for business in New York, New York and the Cayman Islands.

“ Carryforward Account ” means an account established by the Company on its books and records , for bookkeeping purposes only, which will have an initial balance of zero and which will be adjusted as follows:

(1)

At the end of each Year (prior to giving effect to the performance fees, if any) the balance of the Carryforward Account (a) will be increased by the amount, if any, of two and one half times the Loss, if any, for such Year and (b) will be reduced (but not below zero) by the Income, if any, for such Year.

(2)

At the end of each Year any positive balance of the Carryforward Account will be reduced ratably as result of any net distributions or withdrawals from the Investment Account during such Year.

“ Code ” means the Internal Revenue Code of 1986, as amended, and any guidance and/or regulations promulgated thereunder.

“ Deferral Amount ” means, with respect to each Year, the amount of the annual performance fees and/or management fees earned for such Year that has been deferred by the Investment Advisor pursuant to Section 4(c) of this Fee Schedule.

“ Deferral Date ” has the meaning set forth in Section 4(f) of this Fee Schedule.

“ Deferral Election Notice ” has the meaning set forth in Section 4(c) of this Fee Schedule.

“ Determination Date ” means the date on which any performance fees and/or management fees, the payment of which is generally deferred hereunder, become payable due to the occurrence of an event set forth in Section 4(g) of this Fee Schedule.

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“Distribution Event” shall have the same meaning as in the Plan.

“ Entry Date ” means, with respect to each Deferral Amount, the date as of which such amount is recorded in the appropriate sub-account on the books and records of the Company

“ Income ” means

(1)

the positive amount, if any, that the Net Asset Value of the Investment Account (before accrual or deduction of the performance fee for such Year) on the last day of the applicable Year; plus

(2)

any withdrawals or distribution by the Company from the Investment Account during such Year;

exceeds the sum of

(3)

the Net Asset Value of the Investment Account as of the commencement of such Year; plus

(4)

any contributions by the Company to the Investment Account during such Year.

“ Investment Account ” means the Company’s investment account with the Investment Advisor, as set forth on the books and records of the Company, not including assets used to collateralize Regulation 114 Trusts established by the Company, such assets in the aggregate not to exceed 10% (20% if approved by the Board and communicated in writing to the Investment Advisor) of the Company’s investable assets.

“ Loss ” means

(1)

the absolute value of the negative amount, if any, that the Net Asset Value of the Investment Account (before accrual or deduction of the performance fee for such Year) on the last day of the applicable Year; plus

(2)

any withdrawals or distributions by the Company to the Investment Account during such Year;

exceeds the sum of

(3)

the Net Asset Value of the Investment Account as of the commencement of such Year; plus

(4)

any contributions by the Company to the Investment Account during such Year.

“ Net Asset Value ” at any date means the net asset value of the Investment Account, or any

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specified sub-account, as determined by the Investment Advisor in accordance with the valuation methodology set forth in Section 15 of the Agreement.

“ Payment Date ” with respect to any Deferral Amount shall mean the date specified in Section 4(f) of this Fee Schedule.

“ Plan” means the DME Advisors, LP Amended and Restated Participation, Bonus and Deferred Compensation Plan, as amended from time to time.

“ Year ” means the period commencing on January 1 of each calendar year and ending on the earlier of (a) December 31 of such calendar year or (b) the date on which this Agreement is terminated and not immediately renewed.

Management Fees

(a)

The Investment Advisor shall be entitled to receive management fees calculated and payable monthly at an annual rate equal to one and one half of one percent (1.5%) of the Net Asset Value of the Investment Account as of the first trading day of each calendar month.

(b)

All management fees shall be payable by the Company in accordance with Section 4 of this Fee Schedule. Subject to Sections 4(c) and 4(d) below, the management fees shall be calculated and payable monthly in advance.

(c)

If this Agreement is terminated in accordance with its terms as of a date other than the last day of a month, the management fee for the final month shall be prorated to the date of termination.

Performance Fees

(a)

The Investment Advisor shall be entitled to a performance fee for each Year equal to 20% of the Income, if any, that is greater than the positive balance in the Carryforward Account for such Year.

(b)

The Investment Advisor shall be entitled to a performance fee for each Year equal to 10% of the Income, if any, that is less than or equal to the positive balance in the Carryforward Account for such Year.

(c)

The performance fee shall be paid in accordance with Section 4 of this Fee Schedule.

Payments of Fees

(a)

The Investment Advisor shall furnish to the Company a statement setting forth the computation of (i) management fees within 10 Business Days following the

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beginning of each month, and (ii) performance fees within 30 days after the close of each Year. If the amount calculated pursuant to this Section 4(a) does not agree with the management fees and performance fees as noted in the Company’s annual audited financial statements, the parties shall adjust the management and/or performance fee by increasing or decreasing the applicable fee to match the relevant fee set forth on the audited financial statements, and such adjustment payment shall be made by the applicable party within 10 Business Days after such adjustment is made.

(b)

The Investment Advisor may, prior to the commencement of any Year, elect to have all or any portion of the management fees and/or performance fees for such Year paid in cash when due in accordance with Section 4(a) in which case the Company shall pay to the order of the Investment Advisor, via cash payment or wire transfer of immediately available funds, the management fees and/or performance fees for such period, as determined in accordance with Section 4(a). The payment of management fees shall be made within 5 Business Days of the receipt of the statement delivered to the Company in accordance with Section 4(a) above. The payment of performance fees shall be made on or before January 30 of the Year following the Year to which such fees relate. For any Year with respect to which the Investment Advisor makes an election pursuant to this Section 4(b), any amounts not covered by such election or by a Deferral Election Notice pursuant to Section 4(c) shall be paid to the Investment Advisor in accordance with the provisions of this Section 4(b).

(c)

Notwithstanding Section 4(b) above, the Investment Advisor may, prior to the commencement of any Year, elect to defer all or a portion of its management fees and/or performance fees for such Year by submitting an irrevocable written election notice (the “ Deferral Election Notice ”) to the Company. The Investment Advisor may, but need not, make an election pursuant to this Section 4(c) which is coordinated with, and which reflects, the deferral elections made by participants in the Plan (a “ Back to Back Election ”) such that all or a portion of the Deferral Amounts shall be paid by the Company to the Investment Advisor in accordance with such participant elections. The Deferral Election Notice shall state the amount, percentage or formula for determining the Deferral Amount (including, without limitation, the amounts involved and the vesting schedule of such amounts) and the Deferral Date(s) with respect thereto. Deferral Amounts shall be deferred until the Deferral Date(s) specified by the Investment Advisor in the Deferral Election Notice (subject to earlier distribution in accordance with this Fee Schedule). For any Year with respect to which the Investment Advisor submits a Deferral Election Notice pursuant to this Section 4(c), any amounts not deferred pursuant to a Deferral Election Notice shall be paid in accordance with Section 4(b) above.

(d)

If the Investment Advisor does not make an election to be paid currently pursuant to Section 4(b) above or to defer pursuant to Section 4(c) above, all management

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fees and performance fees for such Year shall be paid to the Investment Advisor as provided in Section 4(b).

(e)

For each Year with respect to which amounts are deferred pursuant to Section 4(c) or 4(d) above, the Company shall establish an account on the books of the Company, known as the Annual Deferral Account. All Deferral Amounts shall be recorded when payable, for bookkeeping purposes only, in the Annual Deferral Account and shall be payable only as provided herein. If any adjustment to the fees is made pursuant to Section 4(a) after receipt of the audit, the corresponding Annual Deferral Account will be increased or decreased accordingly.

(f)

Deferral Amounts shall be deferred until the date (the “ Deferral Date ”) specified by the Investment Advisor in its Deferral Election Notice, if any (which date may be no sooner than the day after the second anniversary nor later than the day after the tenth anniversary of the close of the Year with respect to which such amounts relate) and in the absence of a Deferral Election Notice, the Deferral Date shall be the day after the fifth anniversary of the close of the Year to which such amounts relate.

(g)

A Determination Date shall occur on the last day of any month during which any of the following events first occurs:

(i)

the occurrence of the Deferral Date with respect to any Deferral Amount;

(ii)

termination of the Agreement; provided, that, the event described in this clause (ii) shall result in a Determination Date only to the extent it constitutes a “separation from service” of the Investment Advisor from the Company within the meaning of Proposed Treasury Regulation Section 1.409A-1(h) and any final regulations promulgated under Section 409A of the Code;

(iii)

dissolution of the Company; provided, that, the event described in this clause (iii) shall result in a Determination Date only to the extent it constitutes a “separation from service” of the Investment Advisor from the Company within the meaning of Proposed Treasury Regulation Section 1.409A-1(h) and any final regulations promulgated under Section 409A of the Code;

(iv)

to the extent permitted by Proposed Treasury Regulation Section 1.409A-3(g)(6) and any final regulations promulgated under Section 409A of the Code; and provided that the Investment Advisor has made a Back to Back Election, with respect to the amount allocable to a participant in the Plan, as determined by the Investment Advisor, the occurrence of a Distribution Event; or

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(v)

the deferral arrangement contemplated by this Section 4 fails to meet the requirements of Section 409A of the Code, resulting in income inclusion under Section 409A of the Code; provided, that, any distribution made pursuant to this clause (v) shall not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.

(h)

Following the occurrence of a Determination Date, and notification by the Investment Advisor to the Company that a Determination Date has occurred, a distribution shall be made by the Company to the Investment Advisor equal to the value of the entire amount in the affected Annual Deferral Account or the amount allocable to a participant in the Plan as determined by the Investment Advisor. Such amount shall be payable in cash on January 31 of the Year following the Year during which the Determination Date occurs or, to the extent permitted under Section 409A of the Code such that amounts will not be subject to any taxes or penalties thereunder, within 5 Business Days following the Company’s annual audit for such Year.

(i)

The amount due and payable as of any Determination Date with respect to each Annual Deferral Account shall be equal to the Net Asset Value of such Annual Deferral Account.

(j)

In accordance with Section 409A(a)(4)(C) of the Code, the Investment Advisor may elect to make additional deferral elections with respect to Deferral Amounts by filing a written election with the Company; provided , that , the following conditions are met:

(i)

the election may not take effect until at least 12 months after the date on which such election is made;

(ii)

the first payment with respect to which such election is made must be deferred for a period of not less than 5 years from the date such payment would otherwise have been made; and

(iii)

the election must be made at least 12 months prior to the date of the first scheduled payment.

(k)

Nothing contained herein or elsewhere in the Agreement and no action taken pursuant to the Agreement shall create or be construed to create a trust of any kind, a separate fund or a fiduciary relationship on the part of the Company with respect to the Investment Advisor. All payments measured by reference to the Annual Deferral Accounts recorded on the books of the Company shall be made in cash from the general assets of the Company, which may make such investments as it may deem advisable to meet its obligations hereunder. Any such investments shall continue for all purposes to be part of the general funds of the Company, and

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no person other than the Company shall by virtue of the provisions of this Agreement have any interest in such investments. The right of the Investment Advisor to receive payments from the Company pursuant to the Agreement shall be no greater than, nor have any priority over, the right of any unsecured general creditor of the Company. It is acknowledged that the recordation of the Annual Deferral Account consists of bookkeeping entries which do not represent any other interest in the Company. The Company shall not recognize any attempt to effect a transfer of any portion of the Annual Deferral Account prior to the Determination Date with respect thereto.

(l)

Notwithstanding any other provision herein contained, this Section 4 is intended to comply with Section 409A of the Code and shall at all times be interpreted consistently with such intent such that amounts credited to the Annual Deferral Account shall not be taxable to the Investment Advisor until such amounts are paid to the Investment Advisor in accordance with the terms hereof. To the extent that any provision of the Agreement (including this Fee Schedule) violates Section 409A of the Code such that amounts would be taxable to the Investment Advisor prior to payment, such provision shall be automatically reformed or stricken to preserve the intent hereof.

Expenses.

(a)

All expenses incurred directly in connection with transactions effected or positions held for the account of the Company pursuant to the Investment Advisor’s exercise of its duties hereunder (including, without limitation, custodial fees, brokerage commissions, research costs, market data fees, interest on debit balances and withholding or transfer taxes) shall be paid or reimbursed by the Company. In addition, the Investment Advisor shall be entitled to be paid or reimbursed for other out-of-pocket expenses (other than its own salary, office rental and other customary general administrative and overhead costs) properly allocable to the performance of its duties pursuant to the Agreement.

(b)

The Investment Advisor shall be entitled to use “soft dollars” generated by the Company to pay for certain of its own operating and overhead costs, including payment of all or a portion of its costs and expenses of operation to the extent that the Investment Advisor, in its reasonable discretion, determines that any such costs and expenses are reasonably related to the investment decision-making process. Use of “soft dollars” by the Investment Advisor as described herein shall not constitute a breach by it of any fiduciary or other duty which the Investment Advisor may be deemed to owe to the Company or its shareholders.

(c)

Except as provided in paragraph (a) and (b) of this Section 5, the Investment Advisor shall provide its advisory services hereunder at its own expense.

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Exhibit 10.5

GREENLIGHT CAPITAL RE, LTD.

AMENDED AND RESTATED

2004 STOCK INCENTIVE PLAN

Purposes.

(a) Eligible Award Recipients . The persons eligible to receive Awards are the Employees, Directors and Consultants of the Company and its Affiliates.

(b) Available Awards . The purpose of the Plan is to provide a means by which eligible Employees, Directors and Consultants may be given an opportunity to benefit from increases in value of the Shares through the granting of the following awards: (i) stock options, (ii) stock bonuses and (iii) restricted stock (collectively, “Awards”).

(c) General Purpose . The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

2.	Definitions.

(a) “ Affiliate ” means any subsidiary of the Company or any entity selected by the Board to participate in this Plan.

(b) “ Agreement ” means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Award. Each Award Agreement shall be subject to the terms and conditions of the Plan (and in the event of any inconsistency between the terms of an Agreement and the Plan, the terms of the Plan will override).

(d) “ Board ” means the board of directors of the Company.

(e) “ Cause ” means, if the Participant is a party to an employment agreement or other agreement for services with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition therein contained, or, if no such agreement or definition exists, it shall mean a Participant’s (i) material breach of any of such Participant’s covenants or obligations under any applicable employment agreement or agreement for services or non-compete agreement; (ii) continued failure after written notice from the Company or any applicable Affiliate to satisfactorily perform assigned job responsibilities or to follow the reasonable instructions of such Participant’s superiors, including, without limitation, the Board; (iii) commission of a crime constituting a criminal offense or felony (or its equivalent) under the laws of any jurisdiction in which the Company or any applicable Affiliate conducts its business or other crime involving moral turpitude; or (iv) material violation of any material law or regulation (including, without limitation, the Foreign Corrupt Practices Act or any similar non-U.S. statute) or any policy or code of conduct adopted by the Company or engaging in any other form of misconduct which, if it were made public, could reasonably be expected to adversely

affect the business reputation or affairs of the Company or of an Affiliate. The Board or Committee, in good faith, shall determine all matters and questions relating to whether a Participant has been discharged for Cause.

(f) “ Change in Control ” means the occurrence of one of the following events:

(i) any “person” or “group” becomes the “beneficial owner” (as such terms are used in Rule 13d-3 promulgated under the U.S. Securities Exchange Act of 1934, as amended, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 51% or more of the Shares (measured by voting power rather than number of shares); provided , however , that an event described in this paragraph (i) shall not be deemed to be a Change in Control if any of following becomes such a beneficial owner: (A) any tax-qualified, broad-based employee benefit plan sponsored or maintained by the Company or any majority-owned subsidiary, (B) any Company underwriter temporarily holding securities pursuant to an offering of such securities, or (C) any person or group pursuant to a Non-Qualifying Transaction (as defined in paragraph (ii)); or

(ii) the Company consolidates or merges with or into any other person or group or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets and the assets of the Company’s direct and indirect subsidiaries (on a consolidated basis) to any other person or group, in either one transaction or a series of related transactions which occur within six months, other than a consolidation or merger or disposition of assets: (A) of or by the Company into or to a 100% owned subsidiary of the Company, or (B) pursuant to a transaction in which the outstanding Shares are changed into or exchanged for securities or other property with the effect that the beneficial owners of the outstanding Shares immediately prior to such transaction, beneficially own, directly or indirectly, at least a majority of the Shares (measured by voting power rather than number of shares) of the surviving corporation or the person or group to whom the Company’s assets are transferred immediately following such transaction (any transaction which satisfies the criteria specified in (A) or (B) above shall be deemed to be a “Non-Qualifying Transaction”).

(g) “ Code ” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(h) “ Committee ” means the Board, unless and until a committee of one or more members of the Board is appointed by the Board in accordance with Section 3(c) of the Plan.

(i) “ Company ” means Greenlight Capital Re, Ltd., its successors and assigns.

(j) “ Consultant ” means any person, including an advisor, who is engaged by the Company or an Affiliate to render consulting or advisory services and who is not either an Employee or Director.

(k) “ Continuous Service ” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, has not been interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely

because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service. The Board or the Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted.

(l) “ Covered Employee ” means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

(m) “ Director ” means a member of the Board or any member of the board of directors of any Affiliate.

(n) “ Disability ” means, if the Participant is a party to an employment agreement or other agreement for services with the Company or its Affiliates and such agreement provides for a definition of Disability, the definition therein contained, or, if no such agreement or definition exists, it shall mean the failure of any Participant to perform his or her duties due to physical or mental incapacity as determined by the Committee.

(o) “ Effective Date ” shall mean August 12, 2004.

(p) “ Employee ” means any person employed by the Company or an Affiliate.

(q) “ Event ” has the meaning set forth in Section 11(a) of the Plan.

(r) “ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended.

(s) “ Fair Market Value ” per share as of a particular date shall mean the last reported sale price (on the day immediately preceding such date) of the Shares on any national securities exchange or national market system upon which price quotations for the Company’s Shares are regularly available; provided , however , that at any time that the Shares of the Company are not traded on a public exchange, Fair Market Value per share shall mean, as of any date, except as may otherwise be provided in an Award Agreement, the fair market value on such date as determined in good faith by the Board.

(t) “ Foreign Corrupt Practices Act ” means the U.S. Foreign Corrupt Practices Act.

(u) “ Initial Public Offering ” means the consummation of the first public offering of the Shares pursuant to a registration statement filed with, and declared effective by, the applicable regulatory and/or governing body.

(v) “ Non-Employee Director ” means a Director who serves on the Board and who is a “non-employee director” within the meaning of Rule 16b-3 and who is also an “outside director” within the meaning of Section 162(m) of the Code.

(w) “ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.

(x) “ Option ” means a non-qualified stock option to purchase Shares which is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

(y) “ Option Agreement ” means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Option Agreements shall be subject to the terms and conditions of the Plan and need not be identical (and may include a term to the effect that, in the event of any inconsistency between the terms of an Option Agreement and the Plan, the terms of the Plan will prevail);

(z) “ Optionee ” means a person holding an Option granted pursuant to the Plan.

(aa) “ Participant ” means a person holding an Award granted pursuant to the Plan.

(bb) “ Plan ” means the Greenlight Capital Re, Ltd. Amended and Restated 2004 Stock Incentive Plan.

(cc) “ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

(dd) “ Sarbanes-Oxley Act of 2002 ” means that certain U.S. federal legislation adopted on July 30, 2002, as amended or supplemented from time to time, or any U.S. federal statute or regulation adopted by the U.S. Securities and Exchange Commission in effect that has replaced, amended or supplemented or will replace, amend or supplement such statute, and any reference in this Plan to a provision of the Sarbanes-Oxley Act of 2002 or a rule or regulation promulgated thereunder or in connection therewith means such provision, rule or regulation as amended or supplemented from time to time or any provision of a federal law, or any federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation.

(ee) “ SEC ” means the U.S. Securities and Exchange Commission.

(ff) “ Securities Act ” means the U.S. Securities Act of 1933, as amended.

(gg) “ Shares ” means the Class A ordinary shares of the Company, $0.10 par value per share.

3.	Administration.

(a) Administration . The Plan shall be administered by the Board and, if and when appointed, the Committee.

(b) Powers of Committee . The Committee shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine from time to time which of the persons eligible under the Plan shall be granted Awards; when and how each Award shall be granted; what type or

combination of types of Awards shall be granted; the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Shares pursuant to an Award; and the number of Shares with respect to which an Award shall be granted to each such person.

(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective, but it may not do so to the extent that such correction materially prejudices the recipients of any Awards. The Committee shall expressly have the authority to adopt any modifications, procedures and sub-plans as may be necessary or desirable to comply with provisions of the law of foreign countries in which the Company or its Affiliates may operate to assure the viability of the benefits from Awards granted to Participants employed or providing services in such countries and to meet the objectives of the Plan. If, in connection with the adoption of a sub-plan of the Plan, approval is required from any applicable agency of any other country or jurisdiction, the Committee shall have the authority to seek such approval and the adoption of the sub-plan shall be conditioned on such approval being obtained.

(iii) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

(c) Delegation to Committee . The entire Board may comprise the Committee or the Board may delegate administration of the Plan to a Committee which, if required under applicable law, shall consist of two (2) or more Non-Employee Directors. In such event, the term “Committee” shall apply to any person or persons to whom such authority has been delegated. Furthermore, unless a Committee has been appointed by the Board, any reference to the Committee in the Plan shall mean the Board. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to the Committee) subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and re-vest in the Board the administration of the Plan. The Board may also (A) delegate to a committee of one or more members of the Board who are not “outside directors” within the meaning of Section 162(m) of the Code the authority to grant Awards to eligible persons who are either (1) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award or (2) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code or (B) delegate to a committee of one or more members of the Board who are not “non-employee directors” within the meaning of Rule 16b-3 the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

(d) Effect of Committee’s Decision . All determinations, interpretations and constructions made by the Committee in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons. Members of the Committee and any officer or employee of the Company or any Affiliate acting at the direction of the Committee

shall (as far as permitted by applicable law) not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified by the Company with respect to any such action or determination.

4.	Shares Subject to the Plan.

Subject to the provisions of Section 11, the total number of Shares that shall be available for the grant of Awards under the Plan shall not exceed in the aggregate 1,273,000 Shares. If any Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised or realized in full, the Shares not acquired under such Award shall again become available to be made subject to Awards under the Plan. The Shares subject to the Plan may be authorized but unissued shares or shares reacquired by the Company in any manner.

5.	Eligibility.

(a) Eligibility for Options . Options may be granted to Employees, Directors and Consultants.

(b) Section 162(m) Limitation . Subject to the provisions of Section 11, no Employee shall be eligible to be granted Options to acquire more than 500,000 Shares during any calendar year.

(i) At any time that the Shares are not publicly traded, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, either the offer or the sale of the Company’s securities to such Consultant is not exempt under Rule 701 of the Securities Act (“ Rule 701 ”) because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Committee determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.

(ii) At any time that Shares are publicly traded, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“ Form S-8 ”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (A) that such grant either (1) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (2) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (B) that such grant complies with the securities laws of all other relevant jurisdictions.

(iii) Rule 701 and Form S-8 generally are available to Consultants and advisors only if (a) they are natural persons; (b) they provide bona fide services to the issuer, its parent, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent; and (c) the

services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer’s securities.

6.	Option Provisions.

Each Option shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

(a) Term . No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

(b) Exercise Price of an Option . The exercise price of each Option shall be established by the Committee but shall be not less than one hundred percent (100%) of the Fair Market Value of the Shares subject to the Option on the date the Option is granted (and not less than the par value of the Shares).

(c) Consideration . The purchase price of Shares acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash or cashiers’ check at the time the Option is exercised or (ii) at the discretion of the Committee at the time of the grant of the Option or subsequently (A) by delivery to the Company of other Shares having an aggregate Fair Market Value equal to the exercise price to be satisfied by their delivery or (B) in any other form of legal consideration that may be acceptable to the Committee, including, without limitation, a “cashless” exercise program established with a broker that does not violate the Sarbanes-Oxley Act of 2002. Unless otherwise specifically provided in the Option, the purchase price of Shares acquired pursuant to an Option that is paid by delivery to the Company of other Shares acquired, directly or indirectly from the Company, shall be paid only by Shares that have been held by the Optionee for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).

(d) Transferability of Options . An Option shall be transferable to the extent provided in the Option Agreement. If the Option does not provide for transferability, then the Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee. Notwithstanding the foregoing, the Optionee may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death or incapacity of the Optionee, shall thereafter be entitled to exercise the Option.

(e) Vesting . The total number of Shares subject to an Option may, but need not, vest and become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(e) are subject to any Option provisions governing the minimum number of Shares as to which an Option may be exercised. No Option may be exercised for a fraction of a Share.

(f) Termination of Continuous Service . Unless otherwise provided in an Option Agreement, in the event an Optionee’s Continuous Service terminates (other than upon the Optionee’s death or Disability), all unvested Options shall terminate and the Optionee may exercise his or her vested Options, but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionee’s Continuous Service, or (ii) the expiration of the term of the Option as set forth in the Option Agreement; provided , that , if the termination of Continuous Service is by the Company for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.

(g) Disability of Optionee . Unless otherwise provided in an Option Agreement, in the event that an Optionee’s Continuous Service terminates as a result of the Optionee’s Disability, all unvested Options shall terminate and the Optionee (or a person designated to exercise the Option upon the Optionee’s Disability pursuant to Section 6(d)) may exercise his or her vested Options, but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate.

(h) Death of Optionee . Unless otherwise provided in an Option Agreement, in the event an Optionee’s Continuous Service terminates as a result of the Optionee’s death, then all unvested Options shall terminate and the vested Options may be exercised by the Optionee’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionee’s death pursuant to Section 6(d), but only within the period ending on the earlier of (i) the date twelve (12) months following the date of death or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.

(i) Change in Control . Unless otherwise provided in an Option Agreement and except as otherwise provided in the Plan, a Change in Control shall not effect any Options granted under the Plan.

7.	Provisions of Awards Other Than Options .

(a) Stock Bonus Awards . Each Agreement evidencing a stock bonus shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The terms and conditions of such Agreements may change from time to time, and the terms and conditions of separate Agreements need not be identical, but each such Agreement shall include (through incorporation of provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

(i) Consideration . A stock bonus may be awarded in consideration for past services actually rendered to the Company or an Affiliate.

(ii) Vesting . Shares awarded under the stock bonus Agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Committee.

(iii) Termination of Participant’s Continuous Service . In the event a Participant’s Continuous Service terminates, the Company may reacquire, for par value, any or all of the Shares held by the Participant which have not vested as of the date of termination under the terms of the applicable Agreement.

(iv) Transferability . Shares under the applicable Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Agreement, as the Committee shall determine in its discretion, so long as the Shares awarded under the Agreement remains subject to the terms of the Agreement.

(b) Restricted Stock Awards . Each such Agreement evidencing a grant of restricted Shares shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The terms and conditions of such Agreements may change from time to time, and the terms and conditions of separate Agreements need not be identical, but each such Agreement shall include (through incorporation of provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

(i) Purchase Price . The purchase price of Awards of restricted Shares shall be determined by the Committee, which shall in no event be less than the par value per share.

(ii) Consideration . The purchase price of Shares acquired pursuant to the applicable Agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Committee, according to a deferred payment or other similar arrangement with the Participant to the extent it does not violate the Sarbanes-Oxley Act of 2002 or any other applicable law; or (iii) in any other form of legal consideration that may be acceptable to the Committee in its discretion.

(iii) Vesting . Restricted Shares shall vest in accordance with a vesting schedule to be determined by the Committee under the applicable Agreement and may, but need not, be subject to a share repurchase option in favor of the Company.

(iv) Termination of Participant’s Continuous Service . In the event a Participant’s Continuous Service terminates, the Company may repurchase or otherwise reacquire, for par value, any or all of the Shares held by the Participant which have not vested as of the date of termination under the terms of the applicable Agreement.

(v) Transferability . Restricted Shares under the Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Agreement, as the Committee shall determine in its discretion, so long as Shares awarded under the Agreement remain subject to the terms of the Agreement.

8.	Covenants of the Company

(a) Availability of Shares . During the terms of the Awards, the Company shall keep available at all times the number of Shares required to satisfy such Awards.

(b) Securities Law Compliance . The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell Shares upon exercise of the Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act or any other applicable law of the United States or otherwise the Plan, any Awards or any Shares issued or issuable pursuant to any such Awards. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Shares under the Plan, the Company shall be relieved from any liability for failure to issue and sell Shares upon grant or exercise of such Awards unless and until such authority is obtained.

9.	Use of Proceeds from Stock.

Proceeds from the sale of Shares pursuant to the grant or exercise of Awards shall constitute general funds of the Company.

10.	Miscellaneous.

(a) Acceleration of Exercisability and Vesting . The Committee shall have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

(b) Shareholder Rights . No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Shares subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and has become the registered holder of such shares.

(c) No Employment or other Service Rights . Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without Cause, (ii) the service of a Consultant with or without notice and with or without Cause or (iii) the service of a Director pursuant to the Memorandum and Articles of Association of the Company or an Affiliate, and any applicable provisions of the corporate law of the jurisdiction in which the Company or the Affiliate is incorporated, as the case may be.

(d) Investment Assurances . The Company may require a Participant, as a condition of exercising or acquiring Shares under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is

knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award; (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Shares subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Shares; and (iii) to execute a Shareholders’ Agreement or such other documentation as the Company may require. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the Shares upon the exercise or acquisition of Shares under the Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Shares.

(e) Withholding Obligations . The Company shall have the right to deduct from any compensation paid to the Participant pursuant to the Plan the amount of taxes required by law to be withheld therefrom, or to require the Participant to pay the Company in cash such amount required to be withheld. To the extent provided by the terms of an Award Agreement, the Participant may satisfy any foreign, federal, state or local tax withholding obligation relating to the exercise or acquisition of Shares under an Award by any of the following means (in addition to the Company’s right to withhold or to direct the withholding from any compensation paid to the Participant by the Company or by an Affiliate) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold Shares from the Shares otherwise issuable to the Participant as a result of the exercise or acquisition of Shares under the Award; provided, however, that no Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company or to an Affiliate, owned and unencumbered Shares not acquired from the Company with a Fair Market Value equal to the amount of tax liability to be satisfied by their delivery.

11.	Adjustments Upon Changes in Stock.

(a) Capitalization Adjustments . In the event of any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets or stock of the Company, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event (an “Event”), and in the Committee’s opinion, such event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Committee shall, in such manner as it may deem equitable, without limitation, adjust any or all of the following: (i) the number and kind of Shares (or other securities or property) with respect to which Awards may be granted or awarded; (ii) the number and kind of Shares (or other securities or property) subject to all or any outstanding Awards; and (iii) the grant or exercise

price with respect to all or any outstanding Awards. The Committee’s determination under this Section 11(a) shall be final, binding and conclusive.

(b) Termination of Awards . Unless otherwise provided in an Award Agreement, upon the occurrence of an Event, or other similar corporate event or transaction in which outstanding Awards are not to be assumed by the surviving entity or otherwise continued following such an Event or other similar corporate event or transaction, the Committee may, in its discretion, terminate any outstanding Award without a Participant’s consent and (i) provide for the purchase of any such Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested (based on the Fair Market Value of the shares on the date of such termination) or the replacement of such Award with other rights or property selected by the Committee in its sole discretion and/or (ii) provide that such Award shall be exercisable (whether or not vested) as to all shares covered thereby for at least thirty (30) days prior to such Event or other similar corporate event or transaction but will terminate at the end of that period.

(c) Future Transactions . The existence of the Plan, the Award Agreements and the Award granted hereunder shall not affect or restrict in any way the right or power of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Shares or the rights thereof or which are convertible into or exchangeable for Shares, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

12.	Amendment of the Plan and Awards.

(a) Amendment of Plan . The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11 relating to adjustments upon changes in Shares, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable law or any national securities exchange listing requirements.

(b) Stockholder Approval . The Board may, in its sole discretion, submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

(c) Contemplated Amendments . It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder and/or to bring the Plan into compliance therewith.

(d) No Impairment of Rights . Subject to Section 11, rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

(e) Amendment of Awards . Subject to Section 11, the Board at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the rights under any Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

13.	Termination or Suspension of the Plan .

(a) Plan Term . The Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) No Impairment of Rights . Subject to Section 11, suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the Participant.

14.	Repurchase Right .

(a) Options . Prior to an Initial Public Offering, to the extent permitted by applicable law, if any Participant (i) resigns or terminates his Continuous Service for any reason or (ii) is discharged by the Company for any reason, the Company shall have the right (but not the obligation) within ninety (90) days following such termination, or such shorter period if required by applicable law, to elect to purchase some or all of the Participant’s outstanding and vested Options held by the Participant upon such termination for an amount in cash, equal to the number of Shares subject to such Option multiplied by the difference between (1) the Fair Market Value of one Share on the date the Company elects to purchase such Option and (2) the exercise price per Share of the Option.

(b) Shares . Prior to an Initial Public Offering, to the extent permitted by applicable law, if any Participant (i) resigns or terminates his Continuous Service for any reason or (ii) is discharged by the Company for any reason, the Company shall have the right (but not the obligation) within ninety (90) days following such termination, or such shorter period if required by applicable law, to elect to purchase some or all of the Shares acquired by the Participant as a result of the grant or exercise of Awards under the Plan, at their then current Fair Market Value.

(c) Closing . In the event the Company elects to purchase Options and/or Shares pursuant to this Section 14, the selling Participant shall sell and the Company shall purchase the Options and/or Shares as soon as administratively feasible following the exercise of the Company’s rights under this Section 14, but in any event no later than ninety (90) days thereafter.

15.	Section 409A of the Code.

This Plan is intended to comply with Section 409A of the Code and shall be administered, construed and interpreted in accordance with such intent. To the extent that an Award, issuance and/or payment under the Plan is subject to Section 409A of the Code, it shall be awarded and/or issued or paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the U.S. Secretary of the Treasury and the Internal Revenue Service with respect thereto (the “Guidance”). Any provision of this Plan that would cause an Award, issuance and/or payment to fail to satisfy Section 409A of the Code shall have no force and effect until amended by the Committee, with or without the consent of any Participant, to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by the Guidance).

16.	Effective Date of Plan.

The Plan shall become effective as of the Effective Date.

17.	Choice of Law.

The laws of the Cayman Islands shall govern all questions concerning the construction, validity and interpretation of this Plan.

Exhibit 10.6

FORM OF GREENLIGHT CAPITAL RE, LTD.

2004 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (the “ Agreement ”), made as of the (the “ Grant Date ”) by and between Greenlight Capital Re, Ltd., a company incorporated under the laws of the Cayman Islands (the “ Company ”), and (the “ Grantee ”), evidences the grant by the Company of a stock award of restricted Shares (the “ Award ”) to the Grantee on such date and the Grantee’s acceptance of the Award in accordance with the provisions of the Amended and Restated 2004 Stock Incentive Plan (the “ Plan ”). Any capitalized terms not defined herein shall have the meaning ascribed to them as set forth in the Plan.

The Company and the Grantee agree as follows:

1. Basis and Payment for Award . This Award is made under the Plan pursuant to Section 7 thereof for services to be rendered to the Company by the Grantee. Upon the Grant Date, the Grantee shall pay the Company $ by check which is equal to the par value of the Shares.

2. Stock Awarded .

(a) The Company hereby awards to the Grantee, in the aggregate, Shares, subject to the restrictions and conditions set forth in the Plan and in this Agreement (“ Restricted Stock ”).

(b) Each certificate issued in respect of the Restricted Stock shall be registered in the Grantee’s name and deposited by him with the Company and shall bear the following (or a similar) legend:

“THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE RESTRICTED STOCK AWARD AGREEMENT DATED AS OF , ENTERED INTO BETWEEN THE REGISTERED OWNER AND GREENLIGHT CAPITAL RE, LTD.”

At the expiration of the restrictions applied to the Restricted Stock pursuant to Section 2(d) of this Agreement, the Company shall redeliver to the Grantee (or his legal representative, beneficiary or heir) share certificates for the Shares deposited with it without any legend except as otherwise provided by the Plan, this Agreement, the Shareholders’ Agreement dated as of August 11, 2004 by and among the Company and each of the signatories thereto (the “ Shareholders’ Agreement ”) or as otherwise required by applicable law. The Grantee shall have the right to receive dividends on and to vote the Restricted Stock while it is held in custody except as otherwise provided by the Plan. Notwithstanding the foregoing, the Company shall retain custody of all dividends made or declared with respect to the Restricted Stock and such retained distributions shall be subject to the same restrictions on terms and conditions as are

applicable to the Restricted Stock. No interest shall be paid on any dividends retained by the Company.

(d) Except as provided in the Plan or this Agreement, the restrictions on the Restricted Stock are that the Shares will be mandatorily repurchased for par value and cancelled by the Company and all of the Grantee’s rights to such Shares shall immediately terminate, in the event of any sale, assignment, transfer, hypothecation, pledge or other alienation of such Restricted Stock made or attempted, whether voluntary or involuntary, and if involuntary whether by process of law in any civil or criminal suit, action or proceeding, whether in the nature of an insolvency or bankruptcy proceeding or otherwise, without the written consent of the Committee, excluding the Grantee if he so serves on the Committee.

3. Vesting . The restrictions described in Section 2 of this Agreement will lapse with respect to 100% of the Restricted Stock upon the third anniversary; provided , that , the Grantee is still in Continuous Service with the Company on such vesting date. Except as otherwise specifically provided herein, if the Grantee’s service terminates for any reason at any time prior to the vesting date, the unvested Restricted Stock shall automatically be repurchased for par value and cancelled by the Company upon such termination of Continuous Service.

4. Compliance with Laws and Regulations . The issuance and transfer of Shares shall be subject to compliance by the Company and the Grantee with the Memorandum and Articles of Association of the Company, all applicable requirements of securities and other applicable laws and with all applicable requirements of any stock exchange on which the Shares may be listed at the time of such issuance or transfer. The Grantee understands that the Company is under no obligation to register or qualify the Shares with the U.S. Securities and Exchange Commission (“SEC”) , any state securities commission or any stock exchange to effect such compliance.

5. Company; Grantee .

(a) The term “ Company ” as used in this Agreement with reference to Continuous Service shall include the Company and its Affiliates, as appropriate.

(b) Whenever the word “ Grantee ” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to the successors, beneficiaries, the executors, the administrators, or the person or persons to whom the Restricted Stock may be transferred by will or by the laws of descent or distribution, the word “ Grantee ” shall be deemed to include such person or persons.

6. Tax Withholding .

(a) To the extent required by law, the Grantee agrees that, subject to clause 6(b) below, no later than the date as of which the restrictions on the Restricted Stock shall lapse with respect to all or any of the Restricted Stock covered by this Agreement, the Grantee shall pay to the Company (in cash or to the extent permitted by the Committee, Shares held by the Grantee whose Fair Market Value is equal to the amount of the Grantee’s tax withholding liability) any federal, state or local taxes of any kind required by law to be withheld, if any, with respect to the Restricted Stock for which the restrictions shall lapse. The Company or its Affiliates shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee any federal, state or local taxes of any kind required by law to be withheld with respect to the Shares of Restricted Stock.

(b) If the Grantee properly elects, within thirty (30) days of the Grant Date, to include in gross income for federal income tax purposes an amount equal to the Fair Market Value as of the Grant Date of the Restricted Stock granted hereunder pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to the extent required by law, the Grantee shall pay to the Company, or make other arrangements satisfactory to the Committee to pay to the Company in the year of such grant, any federal, state or local taxes required to be withheld with respect to such Shares. If the Grantee fails to make such payments, the Company or its Affiliates shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee any federal, state or local taxes of any kind required by law to be withheld with respect to such Shares.

7. Amendment of Award . Subject to Section 15 of this Agreement, the Board at any time, and from time to time, may amend the terms of this Award; provided , however , that the Grantee’s rights under this Award shall not be impaired by any such amendment unless (i) the Company requests the Grantee’s consent and (ii) the Grantee consents in writing.

8. No Impairment of Rights . Subject to Section 15 of this Agreement, suspension or termination of the Plan shall not impair any rights and obligations under this Award while the Plan is in effect except with the Grantee’s written consent.

9. Representations and Warranties of Grantee . The Grantee represents and warrants to the Company that:

(a) Agrees to Terms of the Plan . The Grantee has received a copy of the Plan and has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions. The Grantee acknowledges that there may be adverse tax consequences upon the vesting of Restricted Stock or disposition of the Shares once vested, and that the Grantee should consult a tax advisor prior to such time.

(b) Purchase for Own Account for Investment . The Grantee is receiving the Shares for the Grantee’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”). The Grantee has no present intention of selling or otherwise

disposing of all or any portion of the Shares and no one other than the Grantee has any beneficial ownership of any of the Shares.

(c) Access to Information . The Grantee has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that the Grantee reasonably considers important in making the decision to purchase the Shares, and the Grantee has had ample opportunity to ask questions of the Company’s representatives concerning such matters and this investment.

(d) Understanding of Risks . The Grantee is fully aware of: (i) the highly speculative nature of the investment in the Shares; (ii) the financial hazards involved; (iii) the restrictions on transferability of the Shares ( e.g ., that the Grantee may not be able to sell or dispose of the Shares or use them as collateral for loans); and (iv) the tax consequences of investment in the Shares. The Grantee is capable of evaluating the merits and risks of this investment, has the ability to protect the Grantee’s own interests in this transaction and is financially capable of bearing a total loss of this investment.

(e) No General Solicitation . At no time was the Grantee presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Shares.

(f) Cooperation . The Grantee agrees to sign such additional documentation as may reasonably be required from time to time by the Company.

(g) Residence . The Grantee represents that the address indicated under his name on the signature page of this Agreement is his principal residence.

(h) Accredited Investor . The Grantee represents that he is an “Accredited Investor” within the meaning of Rule 501(a) of Regulation D, as promulgated under Section 5 of the Securities Act.

10. Compliance with Securities Laws . The Grantee understands and acknowledges that the Shares have not been registered with the SEC under the Securities Act and that, notwithstanding any other provision of the Agreement to the contrary, the vesting and holding of the Shares is expressly conditioned upon compliance with the Securities Act and all applicable securities laws. The Grantee agrees to cooperate with the Company to ensure compliance with such laws.

11. Restricted Securities .

(a) No Transfer Unless Registered or Exempt . The Grantee understands that the Grantee may not transfer any Shares unless such Shares are registered under the Securities Act or qualified under applicable securities laws or unless, in the opinion of U.S. counsel to the Company, exemptions from such registration and qualification requirements are also available. The Grantee understands that only the Company may file a registration statement with the SEC and that the Company is under no obligation to do so with respect to the Shares. The Grantee has also been advised that exemptions from registration and qualification may not be available or

may not permit the Grantee to transfer all or any of the Shares in the amounts or at the times proposed by the Grantee.

(b) SEC Rule 144 . In addition, the Grantee has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of one (1) year, and in certain cases two (2) years, after they have been purchased and paid for (within the meaning of Rule 144). The Grantee understands that Rule 144 may indefinitely restrict transfer of the Shares so long as the Grantee remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

(c) SEC Rule 701 . If the Shares are issued pursuant to SEC Rule 701 promulgated under the Securities Act, the Shares may become freely tradeable by non-affiliates (under limited conditions regarding the method of sale) ninety (90) days after the first sale of Shares to the general public pursuant to a registration statement filed with and declared effective by the SEC, subject to the lengthier market standoff agreement contained in Section 13 of this Agreement or any agreement entered into by the Grantee. Affiliates must comply with the provisions (in addition to the holding period requirements) of Rule 144.

12. Restrictions on Transfers.

(a) Disposition of Shares . The Grantee hereby agrees that the Grantee shall make no disposition of the Shares (other than as permitted by this Agreement) unless and until:

The Grantee shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;

The Grantee shall have complied with all requirements of this Agreement, the Shareholders’ Agreement, the Memorandum and Articles of Association of the Company and the Plan applicable to the disposition of the Shares;

The Grantee shall have provided the Company with written assurances, in form and substance satisfactory to U.S. counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or (ii) all appropriate actions necessary for compliance with the registration requirements of the Securities Act or of any exemption from registration available under the Securities Act (including Rule 144) have been taken; and

The Grantee shall have provided the Company with written assurances, in form and substance satisfactory to the Company, that the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Shares pursuant to the provisions of the securities laws referred to herein.

(b) Restriction on Transfer . The Grantee shall not transfer, assign, grant a lien or security interest in, pledge, hypothecate, encumber or otherwise dispose of any of the Shares, except as permitted by this Agreement, the Plan, the Memorandum and Articles of Association of the Company and the Shareholders’ Agreement.

(c) Transferee Obligations . Each person to whom the Shares are transferred by means of one of the permitted transfers specified in this Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Agreement and the Plan and that the transferred Shares are subject to (i) the market stand-off provisions of Section 13 hereof and (ii) the Drag-Along Rights set forth in Section 3 of the Shareholders’ Agreement, to the same extent such Shares would be so subject if retained by the Grantee.

(d) Compliance with Cayman Islands Regulatory Requirements . So long as Greenlight Reinsurance Ltd. is a holder of a Category B Insurance License or any other insurance license granted under the provisions of the Insurance Law or any other insurance license granted under the provisions of the Insurance Law (2004 Revision) of the Cayman Islands, the Grantee shall not without the prior consent of the Cayman Islands Monetary Authority, transfer or dispose of in any manner the legal or beneficial interest in such number of Shares that would constitute a transfer or disposal of more than 5% of the beneficial interest in the issued share capital of Greenlight Reinsurance Ltd.

13. Market Standoff Agreement . In the case of the initial underwritten public offering by the Company of the Shares, if the officers and directors of the Company agree not to effect any disposition of any equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), the Grantee agrees to the same during the 180-day period (or such longer period as may be reasonably requested by the underwriter of such offering) beginning on the effective date of such registration statement (except as a part of such registration); provided , that , the Grantee has received written notice of such registration prior to such effective date; provided , however , that any waiver of the foregoing restriction by the Company or the Company’s underwriters shall apply to all persons subject to such restrictions pro rata based on the number of Shares owned.

14. Restrictive Legends and Stop-Transfer Orders .

(a) Legends . The Grantee understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by state, U.S. Federal or foreign securities laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between the Grantee and the Company or any agreement between the Grantee and any third party:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT

BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES AN OPINION OF COUNSEL OF THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS AND UNLESS, WHERE APPLICABLE, THE PRIOR APPROVAL OF THE CAYMAN ISLANDS MONETARY AUTHORITY HAS BEEN OBTAINED.

IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION, AND PURSUANT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF AUGUST 11, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST. THE SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS IN THE RESTRICTED STOCK AWARD AGREEMENT DATED AS OF SEPTEMBER 20, 2004 ENTERED INTO BETWEEN THE REGISTERED OWNER AND THE COMPANY. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.”

(b) Stop-Transfer Instructions . The Grantee agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer . The Company will not be required (i) to register any transfer of Shares on its register of members any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares, or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.

15. Adjustment Upon Changes in Capitalization . Awards may be adjusted as provided in the Plan, including, without limitation, Section 11 of the Plan. The Grantee, by his execution and entry into this Agreement, irrevocably and unconditionally consents and agrees to any such adjustments as may be made at any time hereafter and hereby undertakes to vote in favor of any such adjustments required to be approved by the members of the Company.

16. Incorporation of Plan by Reference . The Award is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Award shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this Agreement, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.

17. Governing Law; Modification . The validity, construction, interpretation and effect of this Agreement shall exclusively be governed by, and determined in accordance with, the laws of the Cayman Islands.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first above written.

		GREENLIGHT CAPITAL RE, LTD.

		By:
			Name:
			Title:



			Grantee



			Address

Exhibit 10.7

GREENLIGHT CAPITAL RE, LTD.

AMENDED AND RESTATED

2004 STOCK INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT

This Stock Option Agreement (the “ Agreement ”) is made and entered into as of the date of grant set forth below (the “ Date of Grant ”) by and between Greenlight Capital Re, Ltd. (the “ Company ”), and the participant named below (“ Participant ”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s Amended and Restated 2004 Stock Incentive Plan (the “ Plan ”).

Participant:
Address:

Total Option Shares:
Exercise Price Per Share:
Date of Grant:
Expiration Date:

Grant of Option . The Company hereby grants to Participant an option (this “ Option ”) to purchase the total number of Shares set forth above as Total Option Shares (“ Option Shares ”) at the Exercise Price Per Share set forth above (the “ Exercise Price ”), subject to all of the terms and conditions of this Agreement and the Plan.

Exercise Period .

2.1

Provided Participant continues to provide Continuous Service to the Company or any Affiliate, the Option will become vested and exercisable with respect to 33 1/3% of the Option Shares subject thereto on each of the next three anniversaries of the Date of Grant until the Option is 100% vested. Except as provided in this Agreement, any unvested portion of the Option will not be exercisable on or after Participant’s termination of Continuous Service (“ Termination Date ”) and shall immediately terminate on such Termination Date.

2.2

The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 2.1 or 3 of this Agreement or, if applicable, pursuant to Section 11 of the Plan.

Termination .

3.1

If Participant’s Continuous Service is terminated for Cause, the Option, whether or not vested, shall terminate and cease to be exercisable.

3.2

If Participant’s Continuous Service terminates due to his death or Disability, any unvested portion of the Option shall terminate and cease to be exercisable and any vested portion of the Option shall remain exercisable for one-year following such death or Disability, but not beyond the Expiration Date.

3.3

If Participant’s Continuous Service terminates for any reason other than those set forth in Sections 3.1 and 3.2 hereof, the unvested portion of the Option shall automatically terminate and cease to be exercisable and the vested portion of the Option shall remain exercisable by Participant for ninety (90) days after the Termination Date, but in any event no later than the Expiration Date.

3.4

Nothing in the Plan or this Agreement shall confer on Participant any right to continue in the employ of, or other relationship with, the Company or any Affiliate, or limit in any way the right of the Company or any Affiliate to terminate Participant’s Continuous Service, with or without Cause.

Manner of Exercise .

4.1

To exercise this Option, Participant (or in the case of exercise after Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form as may be approved by the Committee from time to time (the “ Exercise Agreement ”), which shall set forth, inter alia, (i) Participant’s election to exercise the Option, (ii) the number of Option Shares being purchased, (iii) any restrictions imposed on the Option Shares, (iv) any representations, warranties and agreements regarding Participant’s investment intent and access to information as may be required by the Company to comply with applicable securities laws and (v) whether the Shares shall be certificated or held in book-form. If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option. The Option may not be exercised unless all necessary regulatory approvals have been obtained and such exercise is in compliance with all applicable securities laws and all regulatory and other applicable laws of the Cayman Islands, as they are in effect on the date of exercise. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Option Shares being purchased in cash or by cashiers’ check, or where permitted by law:

(a)

provided that the shareholders of the Company have approved by ordinary resolution at a general meeting either the Plan which contemplates the manner of repurchase set out herein or the manner of repurchase of Shares contemplated hereby, and to the extent permitted by, and in compliance with, all applicable laws and the Company’s Memorandum and Articles of Association, by delivery to the Company of Shares having an aggregate Fair Market Value equal to the Exercise Price to be satisfied by their delivery which have been held by Participant for at least six (6) months;

(b)

provided that an Initial Public Offering has occurred, through a “same day sale” commitment from Participant and a broker-dealer that is a member of the National Association of Securities Dealers (an “ NASD Dealer ”) whereby

Participant irrevocably elects to exercise the Option and to sell a portion of the Option Shares so purchased sufficient to pay for the total Exercise Price and whereby the NASD Dealer irrevocably commits to forward the total Exercise Price directly to the Company; or

(c)

by any combination of the foregoing.

4.2

At the time of exercise, Participant shall pay to the Company such amount as the Company deems necessary to satisfy its obligation to withhold any applicable income or other taxes incurred by reason of the exercise of the Option granted hereunder. Participant may satisfy any such tax withholding obligation relating to the exercise or acquisition of the Option Shares by any of the following means (in addition to the Company’s right to withhold or to direct the withholding from any compensation paid to Participant by the Company or by an Affiliate) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold Shares from the Shares otherwise issuable to the Participant as a result of the exercise or acquisition of Option Shares hereunder (and payment therefor); provided , however , that no Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) provided that the shareholders of the Company have approved by ordinary resolution at a general meeting either the Plan which contemplates the manner of repurchase set out herein or the manner of repurchase of Shares contemplated hereby, and to the extent permitted by, and in compliance with, all applicable laws and the Company’s Memorandum and Articles of Association, delivering to the Company or to an Affiliate, owned and unencumbered Shares not acquired from the Company with a Fair Market Value equal to the amount of tax liability to be satisfied by their delivery.

Issuance of Shares . Except as otherwise provided in the Plan or this Agreement, as promptly as practicable after receipt of such written notification of exercise, full payment of the Exercise Price, receipt of all regulatory consents, as appropriate, and any required income tax withholding, the Company shall issue or transfer to Participant the number of Shares with respect to which Options have been so exercised (less Shares withheld in satisfaction of tax withholding obligations, if any), and shall deliver to Participant a certificate or certificates therefor, registered in Participant’s name (unless Participant elects to have the Company hold the Shares in book-form).

Compliance with Securities Law . Participant understands and acknowledges that the Option Shares have not been registered with the U.S. Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ Securities Act ”) and that, notwithstanding any other provision of the Agreement to the contrary, the vesting and holding of the Option Shares is expressly conditioned upon compliance with the Securities Act and any other applicable securities laws. Participant agrees to cooperate with the Company to ensure compliance with such laws. In addition, Participant has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Option Shares and, in any event, requires that the Option Shares be held for a minimum of one (1) year, and in certain cases two (2) years, after they have been purchased and paid for (within the meaning of Rule 144). Participant understands that Rule 144 may indefinitely restrict transfer of the Option Shares so long as the Participant remains an “affiliate” of the Company or if “current public information” about the

Company (as defined in Rule 144) is not publicly available. If the Option Shares are issued pursuant to SEC Rule 701 promulgated under the Securities Act, the Option Shares may become freely tradable by non-affiliates (under limited conditions regarding the method of sale) ninety (90) days after the first sale of Option Shares to the general public pursuant to a registration statement filed with and declared effective by the SEC. Affiliates must comply with the provisions (in addition to the holding period requirements) of Rule 144. Participant represents that he is an “Accredited Investor” within the meaning of Rule 501(a) of Regulation D, as promulgated under Section 5 of the Securities Act.

Restrictive Legends and Stop-Transfer Orders .

7.1

Participant understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Option Shares, together with any other legends that may be required by any applicable securities laws, the Company’s Certificate of Incorporation or Memorandum and Articles of Association, any other agreement between Participant and the Company or any agreement between Participant and any third party:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES AN OPINION OF COUNSEL OF THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE PRIOR APPROVAL OF THE CAYMAN ISLANDS MONETARY AUTHORITY.

IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S ARTICLES OF ASSOCIATION AND PURSUANT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF AUGUST 11, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. THE SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS, INCLUDING A REPURCHASE RIGHT FOR THE BENEFIT OF GREENLIGHT CAPITAL RE, LTD., IN THE

GREENLIGHT CAPITAL RE, LTD. AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN. A COPY OF SUCH ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT AND STOCK INCENTIVE PLAN WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.

7.2

Participant agrees that, to ensure compliance with the restrictions imposed by this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

7.3

The Company will not be required (i) to approve nor record the transfer on its books of any Option Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Option Shares, or to accord the right to vote or pay dividends to, any purchaser or other transferee to whom such Shares have been purportedly transferred.

Company; Participant .

8.1

The term “ Company ” as used in this Agreement with reference to Continuous Service shall include the Company and its Affiliates, if any, as appropriate.

8.2

Whenever the word “ Participant ” is used in any provision of this Agreement under circumstances where the provision should logically be construed to apply to the beneficiaries, the executors, the administrators, or the person or persons to whom the Option may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

Non-Transferability . The Option is not transferable by Participant otherwise than to a designated beneficiary upon death or by will or the laws of descent and distribution, and is exercisable during Participant’s lifetime only by him. No assignment or transfer of the Option,

or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option shall terminate and become of no further effect.

10.

Rights as Shareholder . Participant or a transferee of the Option shall have no rights as shareholder with respect to any Option Shares until he shall have become the holder of record of such shares, and no adjustment shall be made for dividends or distributions or other rights in respect of Option Shares for which the record date is prior to the date upon which he shall become the holder of record thereof.

11. .

Adjustments . The Option may be adjusted or terminated in any manner as contemplated by the Plan.

12.

General Compliance . Notwithstanding any of the provisions hereof, Participant hereby agrees that he will not exercise the Option, and that the Company will not be obligated to issue or transfer any Shares to Participant hereunder, if the exercise hereof or the issuance or transfer of such Option Shares shall constitute a violation by Participant or the Company of any provisions of any law or regulation of any governmental authority or a violation of the terms and conditions of the Company’s Memorandum and Articles of Association or Shareholders’ Agreement (as defined below). Any determination in this connection by the Committee shall be final, binding and conclusive. The Company shall in no event be obliged to register any securities pursuant to the Securities Act (as now in effect or as hereafter amended) or to take any other affirmative action in order to cause the exercise of the Option or the issuance or transfer of Shares pursuant thereto to comply with any law or regulation of any governmental authority.

13.

Notice . Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, that, unless and until some other address be so designated, all notices or communications by Participant to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices or communications by the Company to Participant may be given to Participant personally or may be mailed to him at his address as recorded in the records of the Company.

14.

Binding Effect . Subject to Section 9 hereof, this Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

15.

Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands.

16.

Plan . The terms and provisions of the Plan including, without limitation, Section 14 thereof, are incorporated herein by reference, and Participant hereby acknowledges receiving a copy of the Plan. In the event of a conflict or inconsistency between the discretionary terms and provisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.

17.

Tax Consequences . Set forth below is a brief summary as of the Date of Grant of some of the U.S. Federal tax consequences of the grant, vesting and exercise of the Option and disposition of the Option Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. This Agreement is not given in the form of a covered opinion, within the meaning of Circular 230 issued by the U.S. Secretary of the Treasury. Thus, we are required to inform you that you cannot rely upon any tax advice contained in this Agreement for the purpose of avoiding U.S. Federal tax penalties. In addition, any tax advice contained in this Agreement may not be used to promote, market or recommend a transaction to another party.

17.1

The grant and vesting of the Option should not result in any U.S. Federal income tax liability.

17.2

There may be a regular U.S. Federal income tax liability upon the exercise of the Option. Participant may be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Option Shares on the date of exercise over the Exercise Price. If Participant is a current or former employee of the Company, the Company may be required to withhold from Participant’s compensation or collect from Participant and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

17.3

If the Shares delivered upon exercise of the Option are held for more than twelve (12) months, any gain realized on disposition of the Share should be treated as long term capital gain.

18.

Nonqualified Stock Option . The Option granted hereunder is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

19.

Successors and Assigns . The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

20.

Market Standoff Agreement . In the case of an Initial Public Offering, if the underwriters require that any officers and directors of the Company agree not to effect any disposition of any equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), Participant agrees to the same during the 180-day period (or such longer period as may be reasonably requested by the underwriter of such offering) beginning on the effective date of such registration statement (except as a part of such registration).

21.

Shareholders Agreement . Upon the exercise of the Option, the Company shall only be required to issue the Option Shares if Participant signs an instrument of accession pursuant to which Participant will become bound by the terms and conditions of the Company’s

Shareholders Agreement, dated as of August 11, 2004, as it may be amended from time to time (the “Shareholders’ Agreement” ).

[signature page next]

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Participant has executed this Agreement, effective as of the Date of Grant.




GREENLIGHT CAPITAL RE, LTD.	PARTICIPANT
By: ______________________________	____________________________________ (Signature)


____________________________________ (Please print name)	____________________________________ (Please print name)


____________________________________ (Please print title)

Exhibit 10.8

FORM OF SHAREHOLDERS’ AGREEMENT

This SHAREHOLDERS’ AGREEMENT (this “ Agreement ”) is made as of _________, 2004, by and among, Greenlight Capital Re, Ltd., a company organized under the laws of the Cayman Islands (the “ Company ”) and each of the other signatories to this Agreement. Each of the shareholders of the Company that is, or hereafter becomes, bound by this Agreement and each of their respective successors and permitted assignees, are sometimes collectively referred to herein as the “ Shareholders ” and each individually as a “ Shareholder .”

1.	Certain Definitions .

“ Affiliate ” of any Person means any other Person controlling, controlled by or under common control with such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean, with respect to any Person, the possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of such Person. In the case of a natural Person, his or her Affiliates include members of such Person’s immediate family, natural lineal descendants of such Person or a trust or other similar entity established for the exclusive benefit of such Person and his or her immediate family and natural lineal descendants. For the purposes of Section 2(c) herein and with respect to the Sponsor only, the term Affiliate includes (i) the members and former members of the Sponsor and (ii) the Affiliates of the Sponsor.

“ Board ” means the Board of Directors of the Company.

“ Business Day ” means any day other than a Saturday, a Sunday or any day on which banks located in New York, New York or the Cayman Islands are authorized or obliged to close.

“ Cayman Islands Monetary Authority ” means that governmental authority of similar name in the Cayman Islands and, where applicable, includes any Cayman Islands governmental authority, department or agency that performs similar functions.

“ Class A Shares ” means the Class A Ordinary Shares of the Company, initially having a par value of $0.10 per share, and includes a fraction of a Class A Share.

“ Class B Shares ” means the Class B Ordinary Shares of the Company, initially having a par value of $0.10 per share, and includes a fraction of a Class B Share.

“ Commission ” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission promulgated thereunder, as the same may be amended from time to time.

“ IPO ” means the initial registered public offering of the Class A Shares in the United States.

“ Officer ” means an officer of the Company from time to time during the term of this Agreement.

“ Option ” means that certain Option to purchase 400,000 Class A Shares issued by the Company to First International Capital Holdings Ltd. on the date hereof.

“ Ordinary Shares ” means collectively, the Class A Shares and the Class B Shares and includes a fraction of an Ordinary Share.

“ Person ” means an individual, a partnership, a company, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental or quasi-governmental entity or any department, agency or political subdivision thereof.

“ Permitted Transferee ” means, with respect to any Shareholder, any Affiliate of such Shareholder that has been approved by the Board as a “Permitted Transferee” in writing prior to any Transfer of Ordinary Shares or Options, which approval shall be granted by the Board unless the Board determines, in its sole and absolute discretion, that the applicable Transfer would result in an increased risk of adverse tax, regulatory or legal consequences to the Company, any of its subsidiaries or any of its shareholders.

“ Registrable Securities ” means (i) the Class A Shares held by each Shareholder and (ii) any Class A Shares issuable (x) upon conversion of the Class B Shares or (y) upon exercise of any Option and (iii) any Class A Shares issued, issuable, converted, convertible, exchanged or exchangeable in respect of the securities referred to in clauses (i) and (ii) above upon any stock split, stock dividend, recapitalization or similar event; provided , however, that Registrable Securities shall not include any securities referred to in clauses (i), (ii) or (iii) if (A) the holder of such securities, with the exception of the Sponsor, may resell such Registrable Securities pursuant to Rule 144 (or successor rule) under the Securities Act, (B) the sale of such securities has been registered pursuant to the Securities Act or (C) the Registrable Securities have been transferred in a transaction in which registration rights are not transferred pursuant to Section 2 hereof.

“ Register ,” “ registered ” and “ registration ” refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such Registration Statement.

“ Registration Expenses ” shall have the meaning set forth in Section 9 hereof.

“ Securities Act ” means the United States Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission promulgated thereunder, as the same may be amended from time to time.

“ Selling Expenses ” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Shareholders and the costs of any accountants, counsel or other experts retained by the Shareholders.

“ Sponsor ” means Greenlight Capital Investors, LLC, a Delaware limited liability company.

“ Transfer ” means any direct or indirect sale, exchange, transfer (including, without limitation, any transfer by gift or operation of law, or any transfer of an economic interest in any derivative security of any security), assignment, distribution or other disposition, or issuance or creation of any option or any voting proxy, voting trust or other transfer of interest, in whole or in part, whether in a single transaction or a series of related transactions and whether voluntarily or involuntarily or by operation of law or at a judicial sale or otherwise.

“ U.S. GAAP ” means Unites States generally accepted accounting principles.

“ $ ” means the legal currency of the United States of America.

2.	Transfer Restrictions .

(a) General Restrictions . A Shareholder shall not Transfer its Ordinary Shares or Options except in compliance with (i) the Securities Act or an exemption therefrom, (ii) any required approval of the Cayman Islands Monetary Authority, (iii) the Memorandum and Articles of Association of the Company and (iv) and in accordance with the following terms and conditions:

(i) If a Shareholder intends to Transfer any of its Ordinary Shares or Options (such transferring Shareholder, the “ Transferring Shareholder ”), such Transferring Shareholder shall give written notice (an “ Offer Notice ”) to the Company stating the Transferring Shareholder’s bona fide intention to make such a Transfer, describing in reasonable detail the proposed Transfer, including the identity of the proposed transferee (the “ Proposed Transferee ”), the number of Ordinary Shares and/or Options proposed to be Transferred pursuant to the offer (the “ Transfer Securities ”), and specifying the bona fide per share purchase price that the Proposed Transferee has agreed to pay for the Transfer Securities (the “ Sale Price ”), which Sale Price shall be payable in cash at the closing of the transaction.

(ii) Upon receipt of the Offer Notice, the Company shall have the exclusive option to purchase, upon delivery of a notice (the “ Election Notice ”) to the Transferring Shareholder within thirty (30) days of its receipt of the Offer Notice, all or any portion of the Transfer Securities. The Company shall deliver an Election Notice to the Transferring Shareholder of its election to purchase or not purchase any such Transfer Securities within such thirty (30) day period, together with the payment to the Transferring Shareholder of the Sale Price therefor (in the event that the Company so elects to purchase any Transfer Securities). If the Company elects to purchase the Transfer Securities, the Transfer of any Transfer Securities shall be consummated as soon as practicable after delivery of the Election Notice, but in no event later than fifteen (15) Business Days after the delivery of the Election Notice.

(iii) In the event that less than all of the Transfer Securities have been acquired by the Company, the Transferring Shareholder may, no later than 90 calendar days after the expiration of the applicable election period set forth in clause (ii) above, Transfer the Transfer Securities not purchased by the Company to the Proposed Transferee at a price no less than the price per share specified in the Offer Notice and on other terms no more materially favorable to

the Proposed Transferee than offered to the Company in the Offer Notice, provided , that the Company has approved the Proposed Transferee (as required for all transfers pursuant to the Company’s Memorandum and Articles of Association). It shall be a condition precedent to the consummation of any Transfer of Transfer Securities to a Person not a party to this Agreement that such Person executes a signature page to, and be bound by the terms and conditions of, this Agreement. Any Transfer Securities not Transferred to the Proposed Transferee within such 90-day period shall be re-offered (without obligation to purchase) to the Company under this Section 2 prior to any subsequent Transfer pursuant to the terms of this Section 2.

(b) Other Restrictions .

(i) Prior to the Transfer of any Ordinary Shares or Options the Transferring Shareholder shall also deliver to the Company (A) at the Company’s request, an opinion of counsel which, to the Company’s reasonable satisfaction, is knowledgeable in securities law matters to the effect that such Transfer may be effected without registration of such Ordinary Shares or Options under the Securities Act and (B) such certification as may be required by the Board pursuant to the Company’s Memorandum and Articles of Association, as necessary to ensure that such Transfer will not violate any of the ownership limitations set forth in the Company’s Memorandum and Articles of Association. In addition, if so requested in writing by the Company, the Transferring Shareholder shall also provide the Company with a list of affiliates or related parties of the Proposed Transferee.

(ii) Prior to a Transfer by a Shareholder of any Ordinary Shares or Options, such Shareholder shall obtain and, if requested by the Company, provide the Company with copies of, all approvals as may be required by the Cayman Islands Monetary Authority.

(iii) Any Transfer of Ordinary Shares or Options that violates the provisions of this Section 2 shall not be recorded by the Company or any of its agents and shall be deemed void ab initio .

(c) Permitted Transfers . The restrictions set forth in Section 2(a) hereof shall not apply to any Transfer of Ordinary Shares or Options by a Shareholder to its Permitted Transferee(s); provided , that (A) such Transfer is in compliance with any required approval of the Cayman Islands Monetary Authority, (B) such Transfer complies with the transfer restrictions set forth in the Company’s Memorandum and Articles of Association, (C) the provisions of this Agreement shall continue to be applicable to the Ordinary Shares or Options, as applicable, after any Transfer above and (D) the Permitted Transferee(s) thereof shall agree in writing to be bound by the provisions of this Agreement and shall be deemed a “Shareholder” for purposes of this Agreement; provided , further that if a Permitted Transferee ceases to be an Affiliate of the Transferring Shareholder, the Ordinary Shares or Options held by such Person shall be deemed to have been Transferred and shall be subject to the provision of Section 2(a) upon discovery by the Company of such change in status.

(d) Legend . Certificates evidencing Ordinary Shares or Options shall bear the following legend:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR _ HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION. RECEIVES AN OPINION OF COUNSEL OF THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE PRIOR APPROVAL OF THE CAYMAN ISLANDS MONETARY AUTHORITY.

IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION AND PURSUANT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF AUGUST ____, 2004 AMONG THE COMPANY AND CERTAIN OF THE COMPANY’S SHAREHOLDERS. A COPY OF SUCH ARTICLES OF ASSOCIATION AND SHAREHOLDERS’ AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

If any Registrable Securities become eligible for sale pursuant to Rule 144 under the Securities Act, the Company shall, upon the request of a holder of such Registrable Securities and delivery to the Company of an opinion of counsel reasonably satisfactory to the Company, issue new certificates for such Registrable Securities not bearing the first paragraph of the legend set forth above. The Company further agrees to remove such legend at such time as the Registrable Securities are subject to an effective registration statement under the Securities Act.

3.	Drag-Along and Tag-Along Rights .

A. Drag-Along Rights .

(a) Right to Require Sale . Notwithstanding any other provision hereof, if one or more Shareholders (such Shareholders, together with their Affiliates, the “ Selling Shareholders ”) proposes to enter into an agreement to Transfer or otherwise dispose of for value Ordinary Shares held by such Selling Shareholders representing sixty six and two-thirds percent (66 2/3%) of the issued and outstanding Ordinary Shares (on a fully diluted and as converted

basis) to a Person who is not a Permitted Transferee of such Selling Shareholders (any such Person, a “ Third Party Purchaser ”) in a bona fide transaction pursuant to which the Third Party Purchaser will purchase all of the Ordinary Shares on a fully diluted and converted basis (any such transaction, a “ Drag-Along Sale ”) then, subject to any required regulatory approvals, each other Shareholder (the “ Drag Along Shareholders ”) hereby agrees to sell to such Third Party Purchaser, upon the demand of such Selling Shareholders, all of the Ordinary Shares (together with all other securities exercisable or convertible into, or exchangeable, for Ordinary Shares) (such Ordinary Shares and other securities, collectively, the “ Drag-Along Shares ”) held by each such Drag-Along Shareholders on the date of the Drag-Along Notice (as defined in Section 3(A)(b) below), on the same terms and conditions as agreed to by the Selling Shareholders and such Third Party Purchaser; provided , however , that in negotiating such Drag-Along Sale, the Selling Shareholders shall provide (i) that the only representations and warranties or covenants which any Drag-Along Shareholder shall be required to make individually in connection with the Drag-Along Sale are representations and warranties with respect to such Drag-Along Shareholders own ownership of the Drag-Along Shares to be sold by it and its ability to convey title thereto free and clear of liens, encumbrances or adverse claims, its due organization, its due authorization, execution and delivery of the definitive purchase agreement (if applicable), the enforceability of such purchase agreement against it and no conflict of it with such purchase agreement, (ii) that the liability of any Drag-Along Shareholder with respect to any representations or warranties made in connection with the Drag-Along Sale is the several liability of such Drag-Along Shareholder (and not any other person) and that such liability is limited to the amount of proceeds actually received by such Drag-Along Shareholder in the Drag-Along Sale, and (iii) that no Drag-Along Shareholder shall be required to provide any individual indemnification to anyone in connection with the Drag-Along Sale (other than an individual indemnification for damages resulting from the breach of any representations or warranties made by solely by such Drag-Along Shareholder); provided , further , that the foregoing shall not limit the obligations of such Drag-Along Shareholder, and such Drag-Along Shareholder hereby expressly agrees to be bound by and be subject to, any escrow or other holdback arrangement (on a pro rata basis based on the amount of such Drag-Along Shares sold by such Drag-Along Shareholder in proportion to all shares of the Company sold in such Drag-Along Sale) provided for in the agreement relating to the Drag-Along Sale.

(b) Drag-Along Notice . Prior to making any Drag-Along Sale, if the Selling Shareholders elect to exercise the rights afforded under this Section 3(A), the Selling Shareholders shall provide the Drag-Along Shareholders with written notice (the “ Drag Along Notice ”) not less than twenty (20) calendar days prior to the proposed date of the Drag-Along Sale (the “ Drag Along Sale Date ”). The Drag-Along Notice shall set forth: (i) the name and address of the Third Party Purchaser; (ii) the proposed amount and form of consideration to be paid per share and the terms and conditions of payment offered by the Third Party Purchaser; (iii) the Drag-Along Sale Date; and (iv) confirmation that the Third Party Purchaser has agreed to purchase the Drag-Along Shareholders’ Drag-Along Shares in accordance with the terms hereof.

(c) Delivery of Certificates . On the Drag-Along Sale Date, each Drag-Along Shareholder shall deliver all of the certificates representing its Drag-Along Shares, duly endorsed for transfer with signatures guaranteed, to such Third Party Purchaser in the manner and at the

address indicated in the Drag-Along Notice against delivery of immediately available funds in the amount of the applicable purchase price for such Drag-Along Shares.

(d) Costs and Fees . The Selling Shareholders shall bear all costs and fees incurred in connection with a Drag-Along Sale, except each Shareholder shall bear the costs and fees of its own independent advisors. The Company shall have no obligation to bear any costs and fees incurred in connection with a Drag-Along Sale or otherwise under this Section 3(A).

B. Tag-Along Rights .

(a) Tag-Along Sale . If any holder of Class B Shares (a “ Class B Selling Shareholder ”) proposes to enter into an agreement to Transfer or otherwise dispose of for value Class B Shares representing two percent (2%) or more of the issued and outstanding Ordinary Shares (on a fully diluted and as converted basis) (“ Tag-Along Stock ”) to a Person who is not a Permitted Transferee of such Class B Selling Shareholder (any such Person, a “ Tag-Along Purchaser ”) in one or a series of related transactions pursuant to which the Tag-Along Purchaser will purchase such Class B Shares on a fully diluted and as converted basis, then such Class B Selling Shareholder shall promptly give written notice (the “ Tag-Along Notice ”) simultaneously to the Company and to each of the other Shareholders at least thirty (30) calendar days prior to the closing of such Transfer. Simultaneously with delivery of the Tag-Along Notice the Class B Selling Shareholder shall deliver to the Company an opinion of counsel satisfactory to the Company that no registration is required under the Securities Act or any applicable state securities law to effectuate the Transfer. The Tag-Along Notice shall describe in reasonable detail the proposed Transfer, including the number of shares of Tag-Along Stock to be Transferred, the nature of such Transfer, the total consideration to be paid to the Class B Selling Shareholder, and the name and address of each prospective Tag-Along Purchaser.

(b) Notice of Participation . Each Shareholder shall have the right, exercisable upon written notice (the “ Tag-Along Exercise Notice ”) to the Company and the Class B Selling Shareholder within 15 calendar days after the Tag-Along Notice is given, to participate in such Transfer of Tag-Along Stock on the same terms and conditions offered to the Class B Selling Shareholder, subject to any required regulatory approvals. Each Shareholder desiring to participate shall be referred to as a “ Tag-Along Participant ”. Such Tag-Along Exercise Notice shall acknowledge that the consideration received by the Tag-Along Participants shall be the same consideration per share to be received by the Class B Selling Shareholder, and the terms and conditions of such Transfer shall be the same as those upon which the Class B Selling Shareholder Transfers its Class B Shares; provided , however , that: (i) each Tag-Along Participant shall be solely liable with respect to any representations and warranties regarding (A) such Tag-Along Participant’s title and ownership of such Tag-Along Participant’s Class A Shares; (B) the authorization, execution and delivery of relevant documents by such Tag-Along Participant; and (C) the enforceability of such relevant documents against such Tag-Along Participant; (ii) any general indemnity given by any Tag-Along Participants applicable to liabilities not specific to a particular Tag-Along Participant shall be apportioned on a pro rata basis among the Tag-Along Participants and the Class B Selling Shareholder in accordance with the number of Ordinary Shares Transferred by each; (iii) no Tag-Along Participant shall be liable to indemnify the Tag-Along Purchaser or its Affiliates with respect to an amount in excess of the net cash proceeds paid to such Tag-Along Participant in connection with such Transfer; and (iv) if required by the

Transfer agreement and reasonably described in the Tag-Along Notice, any escrow of proceeds shall be withheld on a pro rata basis among the Class B Selling Shareholder and the Tag-Along Participants in accordance with the number of Ordinary Shares Transferred by each.

The Tag-Along-Exercise Notice shall indicate the number of Ordinary Shares such Tag-Along Participant wishes to Transfer under its right to participate, which number shall not be less than the number of Ordinary Shares which such Tag-Along Participant must Transfer to Transfer the same percentage of such Tag-Along Participant’s Ordinary Shares as the Tag-Along Stock represents of the Class B Selling Shareholder’s Ordinary Shares in the aggregate (on a fully-diluted and as converted basis) immediately prior to such Transfer (such number of Ordinary Shares, the “ Participant’s Pro Rata Portion ”). For the avoidance of doubt, the Tag-Along Notice shall indicate what percentage the Tag-Along Stock represents of the Class B Selling Shareholder’s Ordinary Shares (in the aggregate).

(c) Transfer . Within 10 calendar days after the date a Tag-Along Participant provides a Tag-Along Exercise Notice pursuant to Section 3(B)(a), such Tag-Along Participant shall deliver to the Company the duly endorsed certificate or certificates representing the Ordinary Shares held by such Tag-Along Participant to be Transferred and a limited power-of-attorney authorizing the Company to take all actions necessary to sell or otherwise Transfer such Ordinary Shares to the Tag-Along Purchaser. The Company shall thereupon be obligated to deliver any such Ordinary Shares to the Tag-Along Purchaser at such time as the Transfer is consummated, which shall be no later than 90 days following delivery of the Tag-Along Notice. If any Tag-Along Participant who delivers a Tag-Along Exercise Notice (and thereby becomes obligated to Transfer any Ordinary Shares to the Tag-Along Purchaser) fails to deliver such Ordinary Shares in accordance with the terms of this Agreement (a “ Defaulting Participant ”), the Company may, in addition to all other remedies it may have, send to the Defaulting Participant(s) the purchase price for such Ordinary Shares as is herein specified. Thereupon, the Company, upon the written request of the Class B Selling Shareholder and written notice to the Defaulting Participant(s), shall (a) cancel on its books the certificate or certificates representing the Ordinary Shares to be Transferred and (b) in the case of any failure to deliver Ordinary Shares issue, in lieu thereof, in the name of the Tag-Along Purchaser, a new certificate or certificates representing such Ordinary Shares and thereupon all of the Defaulting Participant’s rights in and to such Ordinary Shares shall terminate.

(d) Delivery of Securities . At the closing of such Transfer, which closing shall take place at the location specified by the Class B Selling Shareholder in the Tag-Along Notice, each Tag-Along Participant shall be obligated to execute and deliver such agreements and documentation as may be necessary for such Tag-Along Participant to be subject to the same terms and conditions with respect to the Transfer as apply to the Class B Selling Shareholder.

(e) Reduction in Number of Securities . To the extent that the Tag-Along Purchaser refuses to purchase the number of Ordinary Shares offered after the receipt by the Company of all Tag-Along Exercise Notices from Tag-Along Participants, the number of Ordinary Shares offered shall be reduced as follows:

(i) first, the number of Ordinary Shares offered by each Tag-Along Participant shall be reduced to be a number equal to such Tag-Along Participant’s Pro Rata Portion; and

(ii) second, the number of Ordinary Shares offered by the Class B Selling Shareholder and each Tag-Along Participant shall be reduced, on a pro rata basis among the Tag-Along Participants and the Class B Selling Shareholder in accordance with the number of Ordinary Shares held by each until the total number of Ordinary Shares offered is equal to the number of Ordinary Shares the Tag-Along Purchaser is willing to purchase.

For example (by way of illustration only) , if the Tag-Along Notice contemplates a sale of 100 Ordinary Shares (on an as converted basis) by the Class B Selling Shareholder, and if the Class B Selling Shareholder at such time owns 300 Ordinary Shares (on an as converted basis), and if one Tag-Along Participant elects to participate in such Transfer and at such time owns 200 Ordinary Shares (on an as converted basis), the Class B Selling Shareholder would be entitled to sell 60 Ordinary Shares (300/500 x 100 Ordinary Shares) and the Tag-Along Participant would be entitled to sell 40 Ordinary Shares (200/500 x 100 Ordinary Shares).

(f) No Election to Participate . If none of the other Shareholders elect to participate in the sale of the Tag-Along Stock subject to the Tag-Along Notice, the Class B Selling Shareholder may, not later than sixty (60) calendar days following delivery to the Company of the Tag-Along Notice, enter into an agreement with the Tag-Along Purchaser providing for the closing of the Transfer of the Tag-Along Stock covered by the Tag-Along Notice within 30 days of such agreement on terms and conditions not more favorable to the Tag-Along Purchaser than those described in the Tag-Along Notice. Any proposed Transfer on terms and conditions more favorable than those described in the Tag-Along Notice, as well as any subsequent proposed Transfer of any of the Tag-Along Stock by the Class B Selling Shareholder, shall again be subject to the tag-along rights of the Shareholders and shall require compliance by such Class B Selling Shareholder with the procedures described in this Section 3(B).

(g) Costs and Fees . Each Shareholder Transferring Ordinary Shares pursuant to this Section 3(B) shall bear the same proportion of the expenses of the Transfer as the number of Ordinary Shares Transferred by such Shareholder bears to the aggregate number of Ordinary Shares so Transferred to, the Tag-Along Purchaser, except each such Shareholder shall be solely responsible for the costs and fees of its own independent advisors, if any. For the avoidance of doubt, the Company shall have no obligation to bear any costs or fees incurred in connection with a Tag-Along Sale or otherwise under this Section 3(B).

(h) Remittance of Consideration . Promptly after the consummation of the Transfer the Tag-Along Purchaser shall remit directly to the Class B Selling Shareholder and the Tag-Along Participants the consideration for the Ordinary Shares Transferred pursuant to this Section 3(B).

4.	Compliance with Cayman Islands Law .

The Company shall have no obligation under the provisions of Sections 5, 6, 7, 8, 9 and 10 hereof unless and until all approvals required from the Cayman Islands Monetary Authority are received. The provisions of Section 5, 6, 7, 8, 9 and 10 shall be read subject to the provisions of this Section 4.

5.	Demand Registrations .

(a) Requests for Registration .

(i) Subject to the conditions of this Section 5, the holders of at least 50% of the outstanding Registrable Securities, as calculated on a fully diluted and converted basis, (such holders, the “ Initiating Holders ”), may request, at any time after the earlier to occur of (i) the fifth (5th) anniversary of this Agreement or (ii) the date that is one hundred eighty (180) days after the consummation of an IPO, to have all or part of their Registrable Securities registered on Form S-1, or any similar long-form registration statement (“ Long-Form Registration ”) or, if available, on Form S-2 or S-3 (as such forms are identified in the Exchange Act), or any similar short-form registration statement (“ Short-Form Registration ”). Each request for a Long-Form Demand Registration (as defined below) shall have an aggregate offering price of at least $30 million, inclusive of Registrable Securities included in such Long-Form Demand Registration pursuant to Section 6 hereof, and shall specify the approximate number of Registrable Securities requested to be registered, the proposed manner of disposition and the proposed underwriter, if any. Within ten (10) Business Days after receipt of any such request, the Company shall give written notice of such requested registration to the other Shareholders and, subject to Section 5(b) below, shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) calendar days after the receipt of the Company’s notice. All registrations requested pursuant to a Long-Form Registration are referred to herein as “ Long-Form Demand Registrations ”; and all other registrations requested pursuant to this paragraph 5(a) are referred to herein as a “ Short-Form Demand Registrations ”; Long-Form Demand Registrations and Short-Form Demand Registrations are collectively referred to as “ Demand Registrations .” Subject to the provisions of this Section 5, the Sponsor shall be entitled to an unlimited number of Short-Form Demand Registrations and, pursuant to the provisions of Section 9 hereof, the Company shall be required to pay all Registration Expenses incurred by the Sponsor in connection therewith.

(ii) Upon receipt of a request for a Demand Registration (a “ Demand Request ”) pursuant to Sections 5(a)(i), the Company shall:

(a) cause to be filed, as soon as practicable, but within the later of (x) 90 days (or 45 days with respect to any Short-Form Registration) of the date of delivery to the Company of the Demand Request, or (y) 180 days after the effectiveness of the most recently filed Registration Statement by the Company, a Registration Statement covering such Registrable Securities which the Company has been so requested to register, providing for the registration under the Securities Act of such Registrable Securities to the extent necessary to permit the disposition of such Registrable Securities so to be registered in accordance with the intended method of distribution specified in such Demand Request;

(b) use its commercially reasonable efforts to have such Registration Statement declared effective by the SEC as soon as practicable thereafter; and

(c) refrain from filing any other Registration Statements, other than pursuant to a. Registration Statement on Form S-4 or S-8 (or similar successor forms), with respect to any other securities of the Company until such date which is one hundred and eighty (180) days following the effectiveness of the Registration Statement filed in response to the Demand Request.

(b) Priority on Demand Registrations .

The Company shall not include in any Demand Registration any securities that are not Registrable Securities without the prior written consent of the Sponsor or, in the event of a Long-Form Registration only, the Initiating Holders. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without materially and adversely affecting the marketability of the offering (the “ Offering Quantity ”), the Company shall include in such registration securities in the following priority:

(i) first, before including any securities which are not Registrable Securities, the Company shall include all of the Registrable Securities requested to be included by the Sponsor and, if applicable, the Initiating Holders, and if such number exceeds the Offering Quantity, then the Company shall include only (a) the Sponsor’s Offering Quantity or (b), in the event of a Long-Form Registration only, the Initiating Holders’ pro rata share of the Offering Quantity, based on the number of Registrable Securities then beneficially owned on a fully converted basis by the Initiating Holders;

(ii) second, to the extent (and only to the extent) that the Offering Quantity exceeds the aggregate amount of Registrable Securities which are requested to be included in such registration, the Company shall include in such registration Registrable Securities requested to be included by the non-Initiating Shareholders, and if such number exceeds the Offering Quantity, the Company shall include only such non-Initiating Shareholders’ pro rata share of the Offering Quantity, based on the amount of Registrable Securities beneficially owned by such non-Initiating Shareholders; and

(iii) third, to the extent (and only to the extent) that the Offering Quantity exceeds the aggregate amount of Registrable Securities which are requested to be included in such registration, the Company shall include in such registration any other securities requested to be included in the Offering.

(i) The Company may postpone upon one (1) occasion during any twelve (12) month period for up to 120 days the filing or the effectiveness of a Registration Statement for a Demand Registration if the Board determines, in good faith and at its sole discretion, that such Demand Registration would reasonably be expected to be seriously detrimental to the

Company and would have a material adverse effect on any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, financing, consolidation, tender offer or similar transaction; provided , however , that in such event, the party requesting such Demand Registration shall be entitled to withdraw such request at any time during the 120-day period and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder and the Company shall be responsible for all Registration Expenses (as set forth in Section 9) incurred in connection with the registration prior to the time of withdrawal.

(ii) The Company shall be required to effect and have declared effective only one (1) Long-Form Demand Registration pursuant to this Section 5.

(iii) The Company shall not be obligated to register more than two (2) Demand Registrations in any 12-month period; provided , that no registration shall count as a Demand Registration until it has been declared effective by the Commission.

(d) Selection of Underwriters .

(i) The Sponsor shall have the right to select the investment banker(s) and managing underwriters for any Demand Registration it initiates to administer an offering pursuant to Section 5(a)(i), subject to the Company’s approval, which approval shall not be unreasonably withheld, delayed or conditioned.

(ii) In the event of a Long-From Registration, the Shareholders that hold a majority in interest of the Registrable Securities sought to be registered by the Initiating Holders shall have the right to select the investment banker(s) and managing underwriter(s) to administer the offering, subject to the Company’s approval, which approval shall not be unreasonably withheld, delayed or conditioned.

(e) Other Registration Rights .

Except as provided in this Agreement, the Company shall not grant to any persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities.

6.	Piggyback Registrations .

(a) Right to Piggyback .

After the consummation of an IPO (should one occur), if the Company proposes to file any registration statement under the Securities Act for the purposes of a public offering of its securities (whether or not for sale for its own account and including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration on Form S-4 or S-8 or any successor or similar forms) (a “ Piggyback Registration ”), the Company will give prompt written notice to all the Shareholders of its intention to effect such a registration and shall, subject to 6(b), use all commercially reasonable efforts to include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 30 days

after the receipt of the Company’s notice; provided , however , that the Company may at any time withdraw or cease proceeding with any such Piggyback Registration if it will at the same time withdraw or cease proceeding with the registration of all other Company securities originally proposed to be registered. The rights to Piggyback Registration may be exercised an unlimited number of occasions. Any Shareholder shall have the right to withdraw such Shareholder’s request for inclusion of such Shareholder’s Registrable Securities in any Registration Statement filed in connection with a Piggyback Registration by giving written notice to the Company of such withdrawal within five (5) Business Days prior to the anticipated effectiveness of such registration statement in connection therewith.

(b) Priority on Piggyback Registrations .

If a Piggyback Registration is an underwritten offering and the managing underwriter advises the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of such offering (the “ Company Offering Quantity ”), the Company will include in such registration securities in the following priority:

(i) first, the securities the Company proposes to sell;

(ii) second, to the extent (and only to the extent) that the Company Offering Quantity exceeds the aggregate amount of Registrable Securities which are requested to be included in such registration, the Company shall include in such registration Registrable Securities requested to be included by the other Shareholders, and if such number exceeds the remaining Company Offering Quantity, the Company shall include only such other Shareholders’ pro rata share of the remaining Company Offering Quantity based on the amount of Registrable Securities beneficially owned on a fully converted basis by such other Shareholders; and

(iii) third, to the extent (and only to the extent) that the Company Offering Quantity exceeds the aggregate amount of Registrable Securities which are requested to be included in such registration, the Company shall include in such registration any other securities requested to be included in the offering; provided , that the Company shall not include in any Piggyback Registration any securities that are not Registrable Securities (other than securities the Company proposes to sell) without the prior written consent of Shareholders that hold a majority of the Registrable Securities to be included in the Piggyback Registration.

No registration effected under this Section 6 shall be deemed to have been effected pursuant to Section 5 hereof or shall relieve the Company of its obligation to effect any registration upon request under Section 5 hereof.

(d) Other Registrations .

If the Company has previously filed a Registration Statement with respect to Registrable Securities pursuant to Section 5 or pursuant to this Section 6, and if such previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be

effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4 or S-8 or any successor form), whether on its own behalf or at the request of any holders of the Company’s equity securities, until a period of at least 90 days has elapsed from the effective date of such previous registration.

7.	Holdback Agreements .

(a) To the extent not inconsistent with applicable law, each Shareholder agrees not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during (i) the seven days prior to, and the 180-day period beginning on the effective date of, an IPO or (ii) the 90-day period beginning on the effective date of a firmly underwritten public offering of the Registrable Securities effected pursuant to a Demand Request, as applicable, unless expressly authorized by the underwriters managing the registered public offering; provided that such restrictions shall not be more restrictive in duration or scope than restrictions imposed on (A) any Person which has been granted registration rights by the Company, (B) any officer or director of the Company, or (C) any other holders of at least 5% of the total Ordinary Shares on a fully diluted and converted basis; and provided , further , that nothing herein shall restrict, directly or indirectly:

(i) any bona fide pledge of Ordinary Shares or the subsequent Transfer upon default in connection with any such pledge,

(ii) subject to obtaining any required Cayman Islands Monetary Authority approval, any charitable contribution; or

(iii) the disposition of freely tradable Ordinary Shares that have been acquired by the Shareholder in open market transactions.

The provisions of this Section 7(a) shall expire upon the second anniversary of an IPO.

(b) The Company may impose stop transfer instructions with respect to Registrable Securities or other securities subject to the foregoing Section 7(a) until the end of the relevant period.

(c) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its Ordinary Shares, or any securities convertible into or exchangeable or exercisable for Ordinary Shares, that were purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities

during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

8.	Registration-Procedures .

In connection with any Registration Statement filed pursuant to Section 5(a) or Section 6(a) herein (a “ Registrant Statement ”), the following provisions shall apply:

(a) Copies . The Company shall furnish as promptly as practicable to each selling Shareholder, prior to filing a Registration Statement or any supplement or amendment thereto, a copy of such Registration Statement, supplement or amendment as it is proposed to be filed, and after such filing such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as each Shareholder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such selling Shareholder.

(b) Preparation of Registration Statement; Effectiveness . The Company shall prepare and, within 90 days (or 45 days with respect to any Short-Form Registration) after the end of the period within which requests for registration may be given to the Company, file with the Commission a Registration Statement with respect to such Registrable Securities and thereafter use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as practicable after the initial filing thereof and remain effective for a period of either (i) not less than 180 days or, if such Registration Statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such Registration Statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement (but in any event not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement.

(c) General Notification . The Company shall promptly advise the selling Shareholders, and, if requested by such Shareholders, confirm such advice in writing:

(i) when the Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been fled with the Commission and when the Registration Statement or any post effective amendment thereto has become effective;

(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

(iii) of any notification by the Commission whether there will be a “review” of such Registration Statement;

(iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

(v) of any comments (oral or written) by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto;

(vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(vii) of the happening of any event that requires the making of any changes in the Registration Statement or the prospectus or the filing of any reports under the Exchange Act so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

Each Shareholder agrees that upon receipt of any written notice of the Company pursuant to paragraphs (ii) through (v) of Section 8(c) hereof, such Shareholder shall discontinue offering such Registrable Securities pursuant to the Registration Statement until such Shareholder’s receipt of copies of the supplemental or amended prospectus contemplated by Section 8(b) hereof, or until advised in writing (the “ Advice ”) by the Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 8(c)(ii) - (v) during the registration period, such registration period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by the Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 8(b) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required).

(d) Notification of Stop Orders; Suspensions of Qualifications and Exemptions . Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 8(c) hereof during the period for which the Company is required to maintain an effective Registration Statement, the Company shall (A) use its commercially reasonable efforts to prevent the issuance of a stop order, and in the event of such issuance, to obtain the withdrawal of any stop order or order suspending the effectiveness of the Registration Statement and (B) prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document as soon as possible so that, as thereafter delivered to purchasers of the Registrable Securities, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will comply with the Securities Act and the rules promulgated thereunder.

(e) Copies of the Registration Statement . The Company will furnish to each Shareholder included within the coverage of the Registration Statement, without charge, copies of the Registration Statement and any amendment thereto, including financial statements and schedules, and, if any Shareholder so requests in writing, all exhibits (including those

incorporated by reference) in such number as such Shareholder may reasonably request from time to time.

(f) Copies of the Prospectus . The Company will deliver to each Shareholder included within the coverage of the Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Registration Statement and any amendment or supplement thereto as each such Shareholder may reasonably request; and the Company consents to the use of the prospectus or any amendment or supplement thereto by each Shareholder in connection with the offering and sale of the Registrable Securities covered by the prospectus or any amendment or supplement thereto.

(g) Blue Sky . Prior to any public offering of Registrable Securities pursuant to a Registration Statement, the Company shall use its commercially reasonable efforts to register or qualify (or seek an exemption from registration or qualification) or cooperate with each Shareholder selling Registrable Securities pursuant to such Registration Statement and their respective counsel in connection with the registration or qualification of such securities for offer and sale under the securities laws of such jurisdictions as such counsel reasonably requests in writing on behalf of such Shareholder and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided , however , that the Company will not be required to qualify to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

(h) Certificates . The Company shall cooperate with each Shareholder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to such Registration Statement free of any restrictive legends and registered in such names as such Shareholder may request in writing prior to sales of Registrable Securities pursuant to the Registration Statement. In addition the Company shall, upon request, provide each Shareholder selling Registrable Securities pursuant to such Registration Statement with printed certificates for its Registrable Securities in a form acceptable to such Shareholder.

(i) SEC Compliance; Earnings Statement . The Company shall use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to its Shareholders, as soon as reasonably practicable, but in any event not later than eighteen (18) months after the effective date of the applicable Registration Statement, an earnings statement covering a period of twelve (12) months beginning after the effective date of such Registration Statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder.

(j) Shareholder Information . It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 5 and 6 herein with respect to the Registrable Securities of any Shareholder that such Shareholder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Shareholder’s Registrable Securities.

(k) Agreements . The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Shareholders of a majority of Registrable Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate the disposition of Registrable Securities pursuant to the Registration Statement; provided , however , that the Company shall have no obligation to pay any discounts or underwriting commissions.

(l) Legal Opinion; Certificates; Cold Comfort Letter . The Company, if requested by those Shareholders that together hold a majority in interest of the Registrable Securities being sold, or the managing underwriters (if any) in connection with the Registration Statement, shall cause (i) its counsel to deliver an opinion relating to the Registration Statement and the Registrable Securities, in customary form (and covering such matters of the type customarily covered by legal opinions of such nature) addressed to such Shareholders and the managing underwriters, if any, thereof and dated the effective date of such Registration Statement; (ii) its officers to execute and deliver all customary documents and certificates requested by Shareholders of a majority of the Registrable Securities being sold or the managing underwriters (if any); and (iii) its independent public accountants to provide a “cold comfort” letter in customary form (and covering such matters of the type customarily covered by a “cold comfort” letter).

(m) Listing . The Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed, or if not so listed, to be listed on the NASD automated quotation system, in either case if so requested by Shareholders of a majority in interest of Registrable Securities covered by the Registration Statement, or by the managing underwriters, if any.

(n) Due Diligence . For a reasonable period prior to the filing of a Registration Statement pursuant to this Agreement, the Company shall make available for inspection and copying by any Shareholder or underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such Shareholder or underwriter, all financial and other information and books and records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such Shareholder, underwriter, attorney, accountant or agent in connection with such Registration Statement, as will be reasonably necessary in the judgment of such attorney(s), to conduct a reasonable investigation within the meaning of the Securities Act; provided , however , that if requested by the Company, each Shareholder will enter into a confidentiality agreement with the Company prior to participating in the preparation of the Registration Statement or the Company’s release or disclosure of confidential information to such Shareholder.

(o) Participation . No Shareholder may participate in any registration hereunder which is underwritten unless such Shareholder (i) agrees to sell such Shareholder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Shareholder entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s); provided that no Shareholder will be required to sell more than the number of Registrable

Securities that such Shareholder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreement and other documents reasonably required under the terms of such underwriting arrangements.

(p) 10b-5 Notification . The Company shall promptly notify in writing the selling Shareholder and the managing underwriter of the offering in which Registrable Securities are being sold, pursuant to any Registration Statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act upon discovery that, or upon the happening of an event as a result of which, any prospectus included in such Registration Statement (or amendment or supplement thereto) contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and the Company will promptly prepare a supplement or amendment to such prospectus and file it with the Commission (in any event no later than ten (10) days following notice of the occurrence of such event to each selling Shareholder and the managing underwriter) so that after delivery of such prospectus, as so amended or supplemented, to the purchasers of such Registrable Securities, such prospectus, as so amended or supplemented, will not contain an untrue statement or a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made.

(q) Other Approvals . The Company shall use its commercially reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary to enable the Shareholders and underwriters to consummate the disposition of the Registrable Securities.

(r) NASD . The Company shall cooperate with each Shareholder and each underwriter participating in the disposition of such Registrable Securities and underwriters’ counsel in connection with any filings required to be made with NASD.

(s) Road Show . The Company shall cause the appropriate officers as are requested by a managing underwriter to participate in a “road show” or similar marketing effort being conducted by such underwriter with respect to an underwritten public offering.

(t) Transfer Agent, Register and CUSIP . The Company shall provide a transfer agent and register for all Registrable Securities pursuant hereto and a CUSIP number for all such Registrable Securities, in each case, no later than the effective date of registration.

(u) Other Actions . The Company shall use its commercially reasonable efforts to take all other actions necessary to effect the registration of the Registrable Securities contemplated hereby.

(v) Notice to Discontinue . Each Shareholder whose Registrable Securities are covered by a Registration Statement filed pursuant to this Agreement agrees that, upon receipt of written notice from the Company of the happening of an event of the kind described in Section 8(p), such Shareholder will forthwith discontinue the disposition of Registrable Securities until such Shareholder’s receipt of the copies of the supplemented or amended prospectus

contemplated by Section 8(p) or until it is advised in writing by the Company that the use of the prospectus may be resumed and has received copies of any additional or supplemental filings which are incorporated by reference into the prospectus, and, if so directed by the Company in the case of an event described in Section 8(p), such Shareholder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Shareholder’s possession, of the prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company will give any such notice, the Company will extend the period during which such Registration Statement is to be maintained effective by the number of days during the period from and including the date of the giving of such notice pursuant to Section 8(p) to and including the date when the Shareholder will have received the copies of the supplemented or amended prospectus contemplated by, and meeting the requirements of, Section 8(p).

9.	Registration Expenses .

The Company shall bear all expenses incurred in connection with the performance of its obligations under this Agreement (except as otherwise provided in the proviso to Section 8(k) hereof) and the Company shall reimburse the Shareholders for the fees, disbursements and expenses of one counsel (and one local counsel as reasonably required) chosen by the holders of a majority of the Registrable Securities included in such registration; provided , however , that the Company will not be required to pay for any registration expenses of any registration proceeding commenced as a result of a Demand Request that is subsequently withdrawn or canceled by the Sponsor or, if applicable, the Initiating Holders, in which case the Shareholders who elected to participate in such registration will bear such registration expenses.

10.	Indemnification .

(a) The Company shall, notwithstanding termination of this Agreement, indemnify and hold harmless to the full extent permitted by applicable law, each of the Shareholders to be named in any Registration Statement filed pursuant to Sections 5 or 6 and the officers, directors, members and control shareholders of such Shareholders against any losses, claims, damages or liabilities, joint or several, to which such Shareholder or such other Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement under which such Registrable Securities were registered under the Securities Act, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Shareholder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any violation by the Company of the Securities Act, Exchange Act or any other law promulgated thereunder or otherwise incident to any registration, qualification or compliance and in any such case, the Company shall promptly reimburse such Shareholder for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided , however , that the Company shall not be required to indemnify any such person pursuant to this Section 10(a) to the extent that (i) any such loss, claim, damage or liability (or actions in respect thereof) arises out of or is based upon fraud or dishonesty or an

untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in strict conformity with written information furnished to the Company by, or on behalf of, such person expressly for use in connection therewith or (ii) the Company subsequently corrects the untrue statement or alleged untrue statement or omission or alleged omission made in the preliminary, final or summary prospectus, or amendment or supplement thereto by delivering to such Shareholder an amended prospectus or prospectus supplement that makes such correction and the Shareholder fails timely to deliver such amended prospectus or prospectus supplement to the party or parties making the claim.

(b) The Company shall require, as a condition to including any Registrable Securities in any Registration Statement filed pursuant to this Agreement and to entering into any underwriting agreement with respect thereto, that the Company shall have received an undertaking reasonably satisfactory to it from each Shareholder of Registrable Securities included in any Registration Statement filed pursuant to this Agreement and from each underwriter named in any such underwriting agreement, severally and not jointly, to (i) indemnify and hold harmless the Company and all other Shareholders against any losses, claims, damages or liabilities to which the Company or such other Shareholders may become subject under the Securities Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Shareholder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in strict conformity with written information furnished to the Company by such Shareholder or underwriter expressly for use in connection therewith and (ii) reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided , however , that no such Shareholder shall be required to undertake liability to any Person under this Section 10(b) for any amounts in excess of the dollar amount of the net proceeds to be received by such Shareholder from the sale of such Shareholder’s Registrable Securities pursuant to such registration and such undertaking shall be several, not joint and several, among such Shareholders; provided , further , that no such Shareholder shall be liable in any such case to the extent that prior to the filing of any such Registration Statement or prospectus or amendment thereof or supplement thereto, such Shareholder furnished in writing to the Company information expressly for use in such Registration Statement or prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company.

(c) Promptly after receipt by an indemnified party under Section 10(a) or 10(b) hereof of written notice of the commencement of any action or threat thereof, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 10, notify such indemnifying party in writing of the commencement of such action or threat; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified

party other than under the indemnification provisions of or contemplated by Section 10(a) or 10(b) hereof and unless and to the extent such indemnifying party is materially prejudiced by such failure. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof; with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Such indemnifying party shall not enter into any settlement with a party without obtaining an unconditional release of each indemnified party with respect to any and all claims against each indemnified party. An indemnified party shall not enter into any settlement without the consent of the indemnifying party, which consent shall not be unreasonably withheld.

(d) Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 10(a) or 10(b) hereof are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 10(d) were determined by pro rata allocation (even if the Shareholders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 10(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the foregoing, the liability of any Shareholder hereunder this Section 10(d) shall be limited to the amount of net proceeds received by such Shareholder in the offering giving rise to such liability, less any amounts paid pursuant to Section 10(b). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Shareholders’ and any underwriters’ obligations in this Section 10(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them severally and not jointly.

(e) The obligations of the Company under this Section 10 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each Shareholder, agent and underwriter and each person, if any, who controls any Shareholder, agent or underwriter within the meaning of the Securities Act; and the obligations of the Shareholders and any underwriters contemplated by this Section 10 shall be in addition to any liability which the respective Shareholder or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Securities Act.

11.	Periodic Information Reporting Requirements .

(a) Quarterly Financial Statements . The Company shall prepare condensed, consolidated financial statements for each of the first three fiscal quarters of each fiscal year in accordance with U.S. GAAP consistently applied. The Company shall provide such quarterly financial statements to each Shareholder not later than 45 days after the end of each fiscal quarter.

(b) Annual Financial Statements . The Company shall prepare consolidated financial statements for each fiscal year in accordance with U.S. GAAP consistently applied and shall cause such financial statements to be audited. The Company shall provide such audited financial statements and the auditor’s report thereon to the Shareholders not later than 90 days after the end of each fiscal year.

(c) Additional Information . If a Shareholder requests in writing information about the Company or its subsidiaries in addition to the financial statements made available pursuant to Section 11(a) and 11(b) in order to, among other things, comply with disclosure requirements under laws and regulations applicable to such Shareholder or to meet the tax reporting requirements of such Shareholder, the Company shall use its commercially reasonable efforts to provide such additional information to such Shareholder as soon as practicable after such written request has been received; provided , however , that the Company shall not be required to provide any such additional information if the Company reasonably believes that the disclosure of such information could have a materially adverse impact on the financial condition, business or prospects of the Company on a consolidated basis or is of a confidential nature.

(d) Confidentiality .

Except as authorized in writing by the Company, each of the Shareholders shall not disclose any of the information provided to such Shareholder pursuant to this Section 11 to any Person that is not a director, officer, partner, employee, representative (including any accountant, attorney or other professional) or Affiliate of such Shareholder or a party to this Agreement, and each Shareholder shall use its commercially reasonable efforts to cause its directors, officers, partners, employees, representatives and Affiliates not to disclose such information to any Person that is not a party to this Agreement; provided , however , that such Shareholder shall not be prohibited from disclosing any such information if such information becomes publicly available through no fault of the Shareholder or its directors, officers, partners, employees, representatives or Affiliates or the information is required to be furnished to a governmental agency in

connection with any legal or administrative proceeding or the information is requested by a prospective transferee or purchaser of Ordinary Shares so long as such third party enters into a confidentiality agreement with the Company reasonably satisfactory to the Company. Notwithstanding the foregoing, prospective investors (and their agents) are authorized, without restriction of any kind, to disclose the tax treatment and tax structure of the transactions set forth or contemplated herein.

12.	Rules 144 and 145: Other Exemptions .

With a view to making available to the Shareholders the benefits of Rule 144 and/or Rule 145 promulgated under the Securities Act and other rules and regulations of the Commission that may at any time permit a Shareholder to sell securities of the Company to the public without registration, the Company covenants that, at any time which is ninety (90) days following an IPO, it will (i) file in a timely manner all reports and other documents required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and (ii) take such further action as each Shareholder may reasonably request (including, but not limited to, providing any information necessary to comply with Rule 144 and Rule 145, if available with respect to resales of the Registrable Securities under the Securities Act), to the extent required from time to time to enable such Shareholder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (y) Rule 144 or Rule 145 (if available with respect to resales of the Registrable Securities) under the Securities Act, as such rules may be amended from time to time or (z) any other rules or regulations now existing or hereafter adopted by the Commission. Upon the written request of any Shareholder, the Company will deliver to such Shareholder a written statement as to whether it has complied with such requirements.

13.	Certain Limitations on Registration Rights .

No Shareholder may participate in any Registration Statement hereunder unless such Shareholder completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of underwriting arrangements which are entered into in connection with such Registration Statement and agrees to sell such Shareholder’s Registrable Securities on the basis provided in any underwriting agreement approved by the Shareholder or Shareholders entitled hereunder to approve such arrangements; provided , however , that no such Shareholder will be required to make any representations or warranties to the Company or the underwriters in connection with any such registration other than representations and warranties as to (i) such Shareholder’s ownership of its Registrable Securities to be sold or transferred, (ii) such Shareholder’s power and authority to effect such transfer and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested. Such Shareholders of Registrable Securities to be sold by such underwriters may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of the Company to and for the benefit of such underwriters, will also be made to and for the benefit of such Shareholders and that any or all of the conditions precedent to the obligations of the underwriters under the underwriting agreement be conditions precedent to the obligations of the Shareholders.

14.	Vote on Voluntary Dissolution .

(a) In the event that the Company does not, by the fourth (4 ^th ) anniversary of the date hereof, consummate (i) a private offering of its Ordinary Shares or preferred shares which results in the Company receiving proceeds of at least $50 million at a 15% premium to book value, measured as of the date of the closing of such transaction or (ii) an IPO, the Company shall, at the next regularly scheduled annual shareholders’ meeting following such anniversary date, place on the agenda of such meeting, for vote by the Company’s shareholders, a proposal that the Company voluntarily dissolve.

(b) In the event that the Company does not consummate an IPO by the fifth (5 ^th ) anniversary of the date hereof, the Company shall place on the agenda of each annual meeting of the shareholders following such date a proposal, for vote by the Company’s shareholders, that the Company voluntarily dissolve.

15.	Miscellaneous .

(a) Amendments and Waivers .

The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departure from the provisions hereof may not be given, unless the Company has obtained the written consent of the Shareholders representing a majority of the Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Shareholders whose Registrable Securities are being sold pursuant to the Registration Statement and that does not directly or indirectly affect the rights of other Shareholders may be given by the holders of a majority of the Registrable Securities being sold by such Shareholders pursuant to the Registration Statement.

(b) Entire Agreement .

This Agreement constitutes the entire agreement and understanding of the parties in respect of its subject matters and supersedes all prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they relate in any way to the subject matter hereof. Except as expressly contemplated hereby, there are no third party beneficiaries having rights under or with respect to this Agreement.

This Agreement may be terminated at any time by an instrument in writing signed by all of the parties hereto. This Agreement shall terminate automatically as to any Shareholder that Transfers all of its equity securities of the Company. The provisions of Sections 2, 3 and 14 of this Agreement, other than Section 2(d) of this Agreement shall terminate automatically as to all parties hereto upon the consummation of an IPO. Unless sooner terminated, this Agreement shall terminate ten (10) years after the closing of an IPO, unless, at any time within one (1) year prior to such date, all of the parties extend its duration for as many additional periods, each not to exceed ten (10) years, as they may desire.

(d) Notices .

All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Shareholder then to the address set forth on the signature page or to such address that such Shareholder may subsequently notify the Company in writing or (ii) if to the Company as set forth below:

		c/o HSBC Strathvale House 90 North Church Street P.O. Box 1109GT, George Town Grand Cayman, Cayman Islands
with a copy to:		Akin Gump Strauss Hauer & Feld LLP 590 Madison Avenue New York, New York 10022 Attention: Kerry Berchem, Esq. Facsimile Number: (212) 872-1002

All such notices and communications shall be deemed to have been duly given when delivered by hand, if personally delivered; five (5) Business Days after being deposited in the United States mails, if being mailed by first class mail; two (2) Business Days after being delivered via a next-day air courier; and when receipt is acknowledged by the recipient’s telecopier machine, if telecopied.

(e) Successors and Assigns: Assignment .

This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. No Shareholder may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the Company. The Company may (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases the Company nonetheless will remain responsible for the performance of all of its obligations hereunder).

(f) Specific Performance .

Each party acknowledges and agrees that the other parties would be damaged irreparably if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each party agrees that the other parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity.

(g) Submission to Jurisdiction; No Jury Trial .

(i) Each party submits to the jurisdiction of any state or federal court sitting in New York, New York in any action arising out of or relating to this Agreement and agrees that

all claims in respect of the action may be heard and determined in any such court. Each party agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party waives any defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto.

(ii) THE PARTIES EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS. The scope of this waiver is intended to be all encompassing of any and all action that may be filed in any court and that relate to the subject matter of the transactions contemplated hereby, including, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The parties each acknowledge that this waiver is a material inducement to enter into a business relationship and that they will continue to rely on the waiver in their related future dealings. Each party further represents and warrants that it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of an action, this Agreement may be filed as a written consent to trial by a court.

(h) Counterparts .

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(i) Governing Law .

This Agreement shall be governed by the laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the law of any jurisdiction other than the State of New York.

(j) Headings .

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(k) Construction .

The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local, or foreign law will be deemed also to refer to law as

amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” means “including without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty, or covenant.

(l) Severability .

The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

[REST OF PAGE DELIBERATELY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Shareholders’ Agreement as of the date first written above.

		GREENLIGHT CAPITAL RE, LTD.

		By:
			Name:
			Title:

Signature Page

Shareholder Signature Page:


[Print Name of Purchaser]
By:
Name:
Title:
Date:
Address:





E-mail Address:

Signature Page

Exhibit 10.9

DATED August 11, 2004

GREENLIGHT CAPITAL RE, LTD.

- and -

HSBC FINANCIAL SERVICES (CAYMAN) LIMITED

ADMINISTRATION AGREEMENT

THIS AGREEMENT is made the 11 ^th day of August, 2004

BETWEEN:

(1)	GREENLIGHT CAPITAL RE, LTD. a company incorporated under the laws of the Cayman Islands whose registered office is at the offices of the Administrator specified immediately below (the “Company”); and

(2)	HSBC FINANCIAL SERVICES (CAYMAN) LIMITED, a company incorporated under the laws of the Cayman Islands whose registered office is at Strathvale House, 90 North Church Street, P.O. Box 1109GT, George Town, Grand Cayman, Cayman Islands, British West Indies (the “Administrator”).

WHEREAS:

(A)	The Company is an exempted company established in the Cayman Islands and empowered under the laws of the Cayman Islands to issue and repurchase its own Shares (as defined below).

(B)	The Company has requested the Administrator to provide in the Cayman Islands certain administrative, accounting and banking services which the Administrator has agreed to do subject to the terms and conditions hereinafter appearing.

NOW IT IS HEREBY AGREED as follows:

INTERPRETATION

1.	In this Agreement the following words shall have the following meanings, if not inconsistent with the subject or context:

Words			Meanings

“Articles”			the memorandum of association and articles of association of the Company for the time being in force;

“Directors”			the directors of the Company for the tune being or as the case may be the directors assembled as a board;

“Offering Memorandum”			the offering memorandum or other offering document pursuant to which and on the terms and conditions of which the Shares are offered for subscription, as amended or supplemented from time to time;

“Register”			the register of members of the Company;

“Shareholders’ Agreement”		shareholders’ agreement dated as of Aug. 11, 2004, by and among, the Company and each of the other signatories thereto;

“Shares”		ordinary shares (including Class A Ordinary Shares and Class B Ordinary Shares) of the Company in connection with which the Administrator has been engaged to provide the services contemplated hereby.

“Subscription Agreement”		subscription agreement dated as of the date of the last signature between the Company and the Subscribee thereto.

2.	The clause headings are included for convenience only and shall not affect the interpretation of this Agreement. References to any provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced from time to time.

APPOINTMENT AND CONTROL

3.	The Company hereby appoints the Administrator to be, and the Administrator hereby agrees to act as, administrator of the Company in accordance with the Articles and the terms of this Agreement.

4.	All activities engaged in under the provisions of this Agreement by the Administrator on behalf of the Company shall be subject to the overall policies, directions and control of the Directors.

ADMINISTRATION

The Company hereby retains the Administrator and the Administrator agrees to provide such services as are, and subject to the terms and conditions, hereinafter set forth. The Administrator will not have any responsibility or authority to make investment decisions, nor to render any investment advice. The Company shall promptly supply to the Administrator, or shall arrange for the Administrator to be supplied with, all such information, documents and instructions as are required by the Administrator to fulfil its obligations hereunder.

6.	The Administrator shall:

(a)

provide general banking services in such a manner as may be agreed upon in writing from time to time;

(b)

at its own expense, provide or procure such office accommodation, secretarial staff and other facilities as may be required for the purpose of fulfilling its duties wider this Agreement;

(c)

on behalf of the Company determine in accordance with the Offering Memorandum and the Articles and directions in that regard from the Directors and notify the Company of the book value per share to be used in calculating the issue price and repurchase price (howsoever defined in the Articles) of any Share of the Company to be issued or repurchased in accordance with the Articles;

(d)

in providing the information set forth in clause (c), be allowed to rely upon information provided to it by or on behalf of the Company and/or any investment manager, investment adviser, custodian or other service provider thereto and shall not be required to independently verify or compute such information;

(e)

provide registered office facilities, such facilities will include the filing of the Cayman Islands annual return form, and all necessary filings required by the Companies Law of the Cayman Islands;

(f)

receive on behalf of the Company requests for the issue or repurchase of Shares and promptly notify the Directors of the same and deal therewith in accordance with the provisions of this Agreement, the Articles and the Subscription Agreement and, in particular, on receipt of the relevant subscription moneys or on receipt from the Company of confirmation that the necessary subscription moneys have been received shall arrange to allot and issue Shares and/or transfer previously issued Shares, as appropriate, in order to satisfy the relevant applications;

(g)

prepare and submit regular reports not less frequently than monthly to the Company in respect of the Company’s business in such form as may be agreed upon from time to time;

(h)

maintain adequate systems for the verification or identification of all persons interested in the Shares or other securities of the Company, whether beneficially or otherwise, and record the evidence establishing the identities of such persons and retain or procure the retention of such evidence for a period of not less than seven years from the date on which any such person became so interested and shall, during the said period, promptly provide copies of such evidence to the Directors on request;

(i)

provide shareholder services including, if requested, distribution and solicitation of proxies, the coordination of annual and special shareholder meetings, acting as inspector of elections, responding to shareholder written and telephonic communications, and/or acting as transfer agent;

(j)

forthwith on receipt forward to or deposit with or to the order of the Company all monies, bills and notes received on behalf of the Company;

(k)

perform the duties of keeping the accounts of the Company and such books and records as are required by the law of the Cayman Islands, or as may from time to time be agreed in writing with the Directors, and of preparing and forwarding to shareholders of the Company all contract notes, certificates, cheques, warrants,

statements and notices which the Directors are required to issue, send or serve in accordance with the Articles or the Shareholders’ Agreement;

(l)

deal with and reply to all correspondence and other communications addressed to the Company at its registered office or at the address of the Administrator, whether in relation to the subscription, purchase, transfer or repurchase of Shares or otherwise PROVIDED THAT in the event of any dispute in connection with the issue, ownership, transfer, repurchase or otherwise of any Shares the matter shall be referred to the Directors, and the Administrator shall take such action as may be required by the Company;

(m)

despatch to shareholders of the Company and to the auditors of the Company such notices, reports, financial statements and other written material as may be requested from time to time by the Directors, and to assist as requested in the preparation thereof;

(n)

at any time during business hours to permit any duly appointed agent or representative of the Company, at the expense’ of the Company, to inspect the Register or any other documents or records in relation to the Company kept by and in the possession of the Administrator, and give such agent or representative during business hours all information, explanations and assistance as such agent or representative may reasonably require;

(o)

keep or arrange for the control of the seal and any facsimile seals of the Company and procure that any certificates for Shares (or such other evidence of such shares as the Directors may determine in accordance with the Articles) shall be issued or cancelled only in accordance with the provisions of the Articles and in the case of the issue of Shares, after receipt by or on behalf of the Company of all payments in respect of such issue;

(p)

keep safely such certificates or such other evidence of Shares as aforesaid as may be designated for safekeeping prior to issue from time to time by the Company, accept and keep certificates or such other evidence as aforesaid tendered for replacement, repurchase or transfer by the holders thereof in accordance with the provisions of the Articles and accept and keep safely such forms and certificates as may be submitted to them in connection with any such tender,

(q)

maintain and safeguard the Register and other documents in connection thereto and enter in the Register all original issues of Shares and all transfers and repurchase of such Shares, all in accordance with the provisions of the Articles and to prepare all such lists of Shareholders of the Company as may be required by the Company;

(r)

keep confidential all documents, materials and other information relating to the Company and, except as required by law, not disclose any of the aforesaid without the prior written consent of the Company, unless it shall in good faith determine that such disclosure is necessary to protect the interests of the Administrator or if

the Administrator is required to disclose information by any court or regulatory authority, whether or not in the Cayman Islands, having jurisdiction over the Administrator. In the event such disclosure is necessary, the Administrator, if legally permitted to do so, shall give the Company notice of the information to be disclosed as far in advance of its disclosure as practicable; and

	(s)	to use reasonable efforts to keep the Company informed of all matters necessary to maintain the Company in good standing under the laws of the Cayman Islands and to keep the Company informed of developments in the Cayman Islands which may affect the business of the Company.
	In the execution of its duties set forth above, the Administrator shall have no discretion as to the selection of the securities or any other assets of the Company which may form part of the Company’s investment portfolio from time to time. In addition the Administrator shall not be responsible for ensuring that the Company’s investment transactions comply with the Company’s investment guidelines as described in the Offering Memorandum or as may be amended or modified by the Directors from time to time.

AGENTS AND ADVICE

The Administrator shall be at liberty in the performance of its duties and in the exercise of any of the powers and discretions vested in it hereunder to act by responsible officers or a responsible officer for the time being. Further, the Administrator may act or rely upon the opinion or advice of or any information obtained from any broker, lawyer, valuer or other expert and the Administrator shall not be responsible for any loss occasioned by its so acting.

The Administrator may refer any legal question to the legal advisers of the Company for the time being (whose name shall from time to time be notified by the Company to the Administrator) and may authorise any such legal advisers to take the opinion of counsel on any matter or difficulty and may act on any opinion given by such legal advisers or counsel without being responsible for the correctness thereof or for any result which may follow from so doing.

REGISTRATION OF TRANSFERS

Subject to the overall written direction of the Directors and to any written instructions to the contrary by the Directors, the Administrator shall, on the Directors’ behalf, approve and authorise the transfer of Shares and the issue to the transferee of the appropriate share certificate or other evidence of title as the Directors may permit.

DEALINGS WITH OTHER PERSONS

10.

Its duties hereunder shall not preclude the Administrator from providing services of a like nature to any other person, firm or corporation. In so acting, the Administrator shall not be deemed to be affected with notice of, or be under any duty to disclose to the Company, any fact or thing which may come to the knowledge of the Administrator or its servants or agents. The Administrator may acquire, hold or deal with for its own account or the

account of any customer or other person either in its own name or in the name of such customer or person or a nominee any Shares or securities for the time being issued by the Company or any investment in which the Company is authorised to invest and shall not be required to account to the Company for any profit arising from such acquisition, holding or dealing.

REMUNERATION OF ADMINISTRATOR

11.	In consideration of the provision of services hereunder, the Administrator shall be entitled to receive fees, calculated from the effective date hereof, at the rates specified in the Schedule hereto (or such rates as may from time to time be adjusted pursuant to the terms hereof) comprising:

(a)

a flat fee, payable on the effective date hereof and on the first day of each quarter thereafter (being 1st. January, 1st. April, 1st. July and 1st. October in each year) in respect of the quarter (or partial quarter) in which the same is payable, which fee shall accrue on a daily basis to the date of termination; and

(b)

fees for each manhour worked (calculated on a pro rata basis for any part hours worked) during the preceding quarter or partial quarter, payable on the last day of each quarter and on the date of termination.

Such fees will be automatically debited to the Company’s account with the Administrator on the days on which they are payable as aforesaid and statements in respect of the same will be forwarded to the Company within 28 days of the end of each quarter. The rates of such fees as specified in the Schedule to this Agreement may be amended at any time by the Administrator giving to the Company not less than 90 days notice in writing specifying the new rates which will apply at the expiry of such notice.

12.

In addition to the fees specified in the immediately preceding clause, the Administrator shall be entitled to be reimbursed for all government or similar fees, charges, taxes, duties and imposts whatsoever levied on or in respect of the Company or its business as may be properly incurred, as well as all reasonable out of pocket expenses (including but not limited to telex, telefax, telephone, postage and stationery) as the Administrator may incur in the execution of its duties hereunder. The Administrator may debit the same to the Company’s account with the Administrator at the time they are incurred PROVIDED ALWAYS that the Administrator shall not be obliged to incur any disbursement on the Company’s behalf unless in its sole determination there are sufficient funds standing to the credit of Company’s account with the Administrator to cover the full amount of all outstanding and anticipated fees and disbursements for the Company.

13.	The Administrator shall be entitled to retain for its own benefit and without accounting therefor any profit arising out of its acting as banker of the Company.

DELEGATION

14.	The Administrator shall be entitled to delegate the whole or any part or parts of its functions, powers, discretions, duties and obligations hereunder or any of them to any

person, firm or corporation approved by the Company in writing. In the absence of wilful default of the Administrator in the supervision of any delegate, the Administrator shall not be liable to the Company for the acts or omissions of such delegates and shall be indemnified by the Company in accordance with the terms of this Agreement.

TERMINATION

15.	The Administrator shall be entitled to resign its appointment hereunder:

(a)

by giving not less than ninety (90) days notice in writing to the Company;

(b)

forthwith upon giving notice in writing if the Company shall commit any breach of its obligations under this Agreement and shall fall within thirty (30) days of receipt of written notice served by the Administrator requiring it so to do, to make good such breach;

(c)

forthwith upon giving notice in writing to the Company if the Company shall go into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Administrator) or if a receiver of any assets of the Company is appointed; or

(d)

forthwith, upon giving notice in writing after or repurchase of all of the Shares.

16.	The Company may terminate the appointment of the Administrator:

(a)

by giving not less than ninety (90) days notice in writing to the Administrator,

(b)

forthwith, upon giving notice in writing if the Administrator shall commit any breach of its obligations under this Agreement and shall fail within thirty (30) days of receipt of notice served by the Company requiring it so to do, to make good such breach; or

(c)

forthwith, upon giving notice in writing to the Administrator;

(i)

if the Administrator goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Company) or if a receiver is appointed of any of the assets of the Administrator,

(ii)

on the redemption or repurchase of all of the Shares.

17.

Termination of the appointment of the Administrator under the provisions of the preceding clauses shall be without prejudice to the provisions of clauses 22 and 23 or either party’s rights with respect to any antecedent breach hereof by the other. The Administrator shall be entitled to receive all fees and other monies accrued due up to the date of such termination but shall not be entitled to compensation in respect of such termination.

18.	The Administrator shall, on the termination of its appointment under the provisions of the preceding clauses:

(a)

deliver to such persons, as the Directors may direct, all books of account, registers, correspondence and records of all and every description relating to the affairs of the Company which are in its possession; and

(b)

have the right by written request to require the Company in all letterheads and any other material made available to investors to state in a prominent position and in prominent type (as may reasonably be approved by the Administrator) that the Administrator and its delegate(s) (if any) have ceased to provide any services to the Company.

PROVIDED THAT the Administrator shall have the right at any time within seven (7) years after the termination of its appointment as the Company’s administrator to inspect such books and records of the Company and to make copies thereof or extracts therefrom.

ASSIGNMENT

19.	Without prejudice to clause 14, neither the benefit nor the burden of this Agreement shall be assigned by either party save with the consent of the other party.

INSTRUCTIONS

20.

Until and unless otherwise amended by valid resolution of the Directors (a certified copy of which shall be delivered to the Administrator) the Administrator shall be entitled to assume that the approval and authorisation of the Company of any act, deed, document, matter or thing has been given if it shall have been notified whether in writing, by telephone, telecopier, e-mail, cable or other electronic method of communication by any one of the following (or any person whom the Administrator believes to be one of the following):

Alan Brooks

David Einhorn

Ian Isaacs

Frank Lackner

Joseph Platt

Daniel Roitman

and it shall not be obliged to make further enquiry thereafter of the Company and shall be under no liability or obligation whatsoever to the Company for so assuming and relying whether or not such approval or authorisation has been actually given; provided always that the Administrator shall not act upon any instructions to make payments on behalf of the Company which are notified by e-mail.

NOTICES

21.

Any notice given hereunder shall be in writing and shall be delivered by hand or mailed to the address of the relevant party set out herein or such other address as such party may from time to time notify in writing and where mailed shall be deemed to have been duly given on the fifth day after the date of mailing. In the case of notice to the Company, a copy shall also be delivered by hand or mailed to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attn: Kerry E. Berchem, Esq.

LIABILITY OF ADMINISTRATOR AND INDEMNITY

22.	The Administrator shall not be liable for any damage, loss, costs or expenses whatsoever to or of the Company at any time from any cause whatsoever unless caused by the Administrator’s own negligence, dishonesty, fraud or wilful default.

23.

The Company agrees to indemnify and hold harmless the Administrator, its successors and assigns and their respective directors and officers and employees present and future (collectively, the “Indemnified Persons”) and each of them, as the case may be, against any liability, action, proceedings, claim, demand, costs, damages or expenses whatsoever (including legal costs and expenses arising therefrom or incidental thereto) which they or any of them may incur or be subject to in consequence of this Agreement or as a result of the performance of the functions and services provided for hereunder except as a result of negligence, dishonesty, fraud or wilful default of any of the Indemnified Persons and this indemnity shall expressly inure to the benefit of any such person existing or future.

24.	The Administrator shall not be required to take any legal action on behalf of the Company unless fully indemnified to its satisfaction.

24A	If any third party makes a claim against, or notifies an intention to make a claim against the Company (a “relevant claim”), the Administrator shall:

(a)

as soon as reasonably practicable give written notice of that matter to the Company, specifying in reasonable detail the nature of the relevant claim;

(b)

not make any admission of liability, or come to any agreement or compromise in relation to the relevant claim, without the prior written consent of the Company (such consent not to be unreasonably withheld or delayed);

(c)

give the Company and its professional advisers reasonable access to the premises and personnel of the Administrator and to any relevant assets, accounts, documents and records within the power or control of the Administrator so as to enable the Company and its professional advisers to examine such premises, assets, accounts, documents and records and to take copies at their own expense for the purpose of assessing the merits of the relevant claim;

(d)

subject to the Company indemnifying the Administrator to the Administrator’s reasonable satisfaction against any liability, costs, damages or expenses which may be incurred, take such action as the Company may reasonably request to avoid, dispute, resist, compromise or defend the relevant claim.

RECORDS

25.

The Company specifically grants the Administrator the right to destroy all books of account, correspondence and other records of all and every description relating to the business of the Company which are in the Administrator’s possession on or after the seventh anniversary of the date of the final liquidation of the Company or its striking from the Register of Companies of the Cayman Islands or the lapsing or settlement of any cause of action whichever is the later.

DUTIES OF THE COMPANY

26.	The Company shall:

(a)

provide the Administrator with properly certified copies or authenticated copies of the Articles and all amendments thereto and of such resolutions, votes and other proceedings as may be necessary for the Administrator to carry out its functions hereunder,

(b)

promptly provide the Administrator with any amendments to the Offering Memorandum or any new Offering Memorandum issued by the Company; and

(c)

promptly provide the Administrator with any amendments to the Shareholders’ Agreement.

RIGHTS OF ADMINISTRATOR

27.

Notwithstanding any other provision of this Agreement, the Administrator reserves the right to request such information as is necessary to verify the identity of any investor or prospective investor in the Company or to otherwise comply with the Proceeds of Criminal Conduct Law (2001 Revision) of the Cayman Islands and the Regulations or Guidance Notes issued pursuant thereto or any other law or regulation to which, the Company or the Administrator may be subject. In the event of delay or failure by an investor, the Company or any other person to produce any such information required for verification purposes, the Administrator shall be entitled to refuse to accept or process any application for Shares and the subscription monies relating thereto, and may also refuse to process a repurchase until such proper information has been provided. The Company shall indemnify and hold harmless the Administrator and each of its directors, officers and employees against any loss, claim, cost, damage or expense arising as a result of a failure to process any application or repurchase if such information as has been required by the Administrator has not been provided or which the Company or the Administrator may otherwise suffer as a result of any violations of law committed by an investor or other third party.

CONFIDENTIALITY

28.

Each party undertakes that it will not at any time hereafter use, divulge or communicate to any person, except to its professional representative or advisers or as may be required by law or any legal or regulatory authority, any confidential information concerning the business or affairs of the other party which may have or may in future come to its knowledge and each of the parties shall use its reasonable endeavours to prevent the publication or disclosure of any confidential information concerning such matters.

COUNTERPARTS

29.	This Agreement may be executed in separate counterparts, each of which, when executed and delivered, shall be an original, and all counterparts together shall constitute one and the same instrument.

SEVERANCE

30.

If any provision herein shall be determined to be invalid or unenforceable in whole or in part for any reason whatsoever, such invalidity or unenforceability shall not affect the remaining provisions or any part thereof contained within this Agreement and such invalid or unenforceable provisions shall be deemed to be severable from any other provision or part thereof herein contained.

GOVERNING LAW AND JURISDICTION

31.	This Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands. Each party irrevocably agrees to submit to the non-exclusive jurisdiction of the courts of the Cayman Islands over any claim or matter arising under or in connection with this Agreement.

EFFECTIVE DATE

32.	The effective date of this Agreement shall be July 13, 2004.

The remainder of this page is intentionally left blank.

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first hereinbefore written.

Signed for and on behalf of	)
GREENLIGHT CAPITAL RE, LTD.	)
by Alan Brooks	)	/s/ Alan Brooks
	)
in the presence of:	)	/s/ David Einhorn

/s/ J. Paul Drake
Witness
Address:	PO Box 4484
	Grand Cayman


and by David Einhorn

in the presence of:
/s/ Daniel Roitman
Witness
Address:	140 E. 45 Street
	New York, NY 10017

Signed for and on behalf of		)
HSBC FINANCIAL SERVICES		)
(CAYMAN) LIMITED		)
by		)
		)
in the presence of:		)


Witness
Address:

SCHEDULE 1

It is hereby understood and agreed that the following fees will be payable to the Administrator:

(a)	in respect of clause 11(a) the sum of US$3,740 per annum.

(b)	in respect of clause 11(b) the scale of fees per man hour are deemed to be as follows:

	Director and Assistant Director	US$280.00
	Manager and Assistant Manager	US$190.00
	Account Manager	US$150.00
	Assistant Account Manager	US$105.00

Exhibit 10.10

DATED August 11, 2004

GREENLIGHT REINSURANCE, LTD.

- and -

HSBC FINANCIAL SERVICES (CAYMAN) LIMITED

ADMINISTRATION AGREEMENT

THIS AGREEMENT is made the 11 ^th day of August, 2004

BETWEEN:

(1)	GREENLIGHT REINSURANCE, LTD., a company incorporated under the laws of the Cayman Islands whose registered office is at the offices of the Administrator specified immediately below (the “Company”); and

(2)	HSBC FINANCIAL SERVICES (CAYMAN) LIMITED, a company incorporated under the laws of the Cayman Islands whose registered office is at Strathvale House, 90 North Church Street, P.O. Box 1109GT, George Town, Grand Cayman, Cayman Islands, British West Indies (the “Administrator”).

WHEREAS:

(A)	The Company is duly licensed to carry on insurance business under the laws of the Cayman Islands.

(B)	The Company has requested the Administrator to provide in the Cayman Islands certain administrative, accounting and banking services which the Administrator has agreed to do subject to the terms and conditions hereinafter appearing.

NOW IT IS HEREBY AGREED as follows:

INTERPRETATION

1.	In this Agreement the following words shall have the following meanings, if not inconsistent with the subject or context:

Words		Meanings

“Articles”		the memorandum of association and articles of association of the Company for the time being in force;

“Directors”		the directors of the Company for the time being or as the case may be the directors assembled as a board;

“Law”		the Companies Law (2003 Revision) of the Cayman Islands;

“Register”		the register of members of the Company;

“Regulations”		the Money Laundering Regulations, 2000 of the Cayman Islands.

2.	The clause headings are included for convenience only and shall not affect the interpretation of this Agreement. References to any provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced from time to time.

APPOINTMENT AND CONTROL

3.	The Company hereby appoints the Administrator to be, and the Administrator hereby agrees to act as, administrator of the Company in accordance with the Articles and the terms of this Agreement.

4.	All activities engaged in under the provisions of this Agreement by the Administrator on behalf of the Company shall be subject to the overall policies, directions and control of the Directors.

ADMINISTRATION

The Company hereby retains the Administrator and the Administrator agrees to provide such services as are, and subject to the terms and conditions, hereinafter set forth. The Company shall promptly supply to the Administrator, or shall arrange for the Administrator to be supplied with, all such information, documents and instructions as are required by the Administrator to fulfil its obligations hereunder.

6.	The Administrator hereby agrees:

(a)

to perform and provide the services necessary and appropriate to the business of the Company in and from within the Cayman Islands as follows:

(i)

to provide general banking services in such a manner as may be agreed upon in writing from time to time;

(ii)

subject to the Company complying with its obligations under clause 5 hereof, to maintain all reasonable and necessary records and accounts as may be required in the normal course of the Company’s business and in order to comply with any laws or regulations of the Cayman Islands in such manner as may be agreed upon from time to time and in particular without prejudice to generality of the foregoing to maintain the Register and other statutory registers of the Company as well as the Company’s minute book and other corporate records;

(iii)

subject to the Company complying with its obligations under clause 5 hereof, to prepare and submit regular reports not less frequently than monthly to the Company in respect of the Company’s business in such form as may be agreed upon from time to time;

(iv)

to deal with correspondence relating to the Company’s business;

(v)

to provide the services of secretary and/or assistant secretary to the Company and also to make available such members of its staff as may be necessary to carry out efficiently its duties hereunder;

(vi)

to maintain the registered office of the Company at its own offices as set out above and to make available within its premises such non-exclusive space as may be necessary to carry out efficiently its duties hereunder;

(b)

not on behalf of the Company to enter into any contracts of insurance or reinsurance or enter into any commitments, loans or obligations or any loss adjustment, agency or management agreement whatsoever or settle or agree to any claims, disputes, actions or proceedings or charge, mortgage, pledge, encumber or otherwise restrict or dispose of the Company’s property or assets or generally take any action regarding the business of the Company without the prior written approval of the Company and not to hold itself out as permitted to do any of the aforesaid;

(c)

to maintain adequate systems for the verification or identification of (i) all persons interested in the shares or other securities of the Company, whether beneficially or otherwise, and (ii) all original insureds under any of its insurance programmes (but only so long as any such insurance programme falls within the definition of “insurance business” for the purposes of the Regulations) and shall retain or procure the retention of such evidence for a period of not less than five years from the date on which any such person became so interested or insured (as the case may be);

(d)

to keep confidential all documents, materials and other information relating to the business of the Company and, except as required by law, not to disclose any of the aforesaid without the prior consent of the Company, unless it shall in good faith determine that such disclosure is necessary to protect the interests of the Administrator or if the Administrator is required to disclose information by any court or regulatory authority, whether or not in the Cayman Islands, having jurisdiction over the Administrator. In the event such disclosure is necessary, the Administrator, if legally permitted to do so, shall give the Company notice of the information to be disclosed as far in advance of its disclosure as practicable so that the Company may seek, at its sole expense, a protective order or other appropriate remedy, in its sole discretion. In the event that no such protective order or other remedy is obtained, the Administrator may make such disclosure without liability hereunder, provided that the Administrator will furnish only that portion of the confidential information which the Administrator is advised by counsel is legally required;

(e)

to use reasonable efforts to keep the Company informed of all matters necessary to maintain the Company in good standing under the Laws of the Cayman Islands and to keep the Company informed of developments in the Cayman Islands which may affect the business of the Company.

In the execution of its duties set forth above, the Administrator shall have no discretion as to the selection of the securities or any other assets of the Company which may form part of the Company’s investment portfolio from time to time. In addition the Administrator shall not be responsible for ensuring that the Company’s investment transactions comply with the Company’s investment guidelines as described in the Offering Memorandum or as may be amended or modified by the Directors from time to time.

AGENTS AND ADVICE

The Administrator shall be at liberty in the performance of its duties and in the exercise of any of the powers and discretions vested in it hereunder to act by responsible officers or a responsible officer for the time being. Further, the Administrator may act or rely upon the opinion or advice of or any information obtained from any broker, lawyer, valuer or other expert whether reporting to the Company or to the Administrator or not and the Administrator shall not be responsible for any loss occasioned by its so acting.

DEALINGS WITH OTHER PERSONS

REMUNERATION OF ADMINISTRATOR

10.	In consideration of the provision of services hereunder, the Administrator shall be entitled to receive fees, calculated from the effective date hereof, at the rates specified in the Schedule hereto (or such rates as may from time to time be adjusted pursuant to the terms hereof) comprising:

(a)

a flat fee, payable on the effective date hereof and on the first day of each quarter thereafter (being 1 ^st . January, 1st. April, 1st. July and 1 ^st . October in each year) in respect of the quarter (or partial quarter) in which the same is payable, which fee shall accrue on a daily basis to the date of termination; and

(b)

11.

In addition to the fees specified in the immediately preceding clause, the Administrator shall be entitled to be reimbursed for all government or similar fees, charges, taxes, duties and imposts whatsoever levied on or in respect of the Company or its business as may be properly incurred, as well as all reasonable out of pocket expenses (including but not limited to telex, telefax, telephone, postage and stationery) as the Administrator may incur in the execution of its duties hereunder. The Administrator may debit the same to the Company’s account with the Administrator at the time they are incurred PROVIDED ALWAYS that the Administrator shall not be obliged to incur any disbursement on the Company’s behalf unless in its sole determination there are sufficient funds standing to the credit of the Company’s account with the Administrator to cover the full amount of all outstanding and anticipated fees and disbursements for the Company.

12.	The Administrator shall be entitled to retain for its own benefit and without accounting therefor any profit arising out of its acting as banker of the Company.

DELEGATION

13.

The Administrator shall be entitled to delegate the whole or any part or parts of its functions, powers, discretions, duties and obligations hereunder or any of them to any person, firm or corporation approved by the Company in writing. In the absence of wilful default of the Administrator in the supervision of any delegate, the Administrator shall not be liable to the Company for the acts or omissions of such delegates and shall be indemnified by the Company in accordance with the terms of this Agreement.

TERMINATION

14.	The Administrator shall be entitled to resign its appointment hereunder:

(a)

by giving not less than ninety (90) days notice in writing to the Company;

(b)

forthwith upon giving notice in writing if the Company shall commit any breach of its obligations under this Agreement and shall fail within thirty (30) days of receipt of written notice served by the Administrator requiring it so to do, to make good such breach; or

(c)

15.	The Company may terminate the appointment of the Administrator:

(a)

by giving not less than ninety (90) days notice in writing to the Administrator;

(b)

(c)

forthwith, upon giving notice in writing to the Administrator if the Administrator goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Company) or if a receiver is appointed of any of the assets of the Administrator.

16.

17.	The Administrator shall, on the termination of its appointment under the provisions of the preceding clauses:

(a)

(b)

ASSIGNMENT

18.	Without prejudice to clause 13, neither the benefit nor the burden of this Agreement shall be assigned by either party save with the consent of the other party.

INSTRUCTIONS

19.

one of the following (or any person whom the Administrator believes to be one of the following):

Alan Brooks

David Einhorn

Ian Isaacs

Frank Lackner

Joseph Platt

Daniel Roitman

20.	The Administrator shall not be liable as a result of any failure on the Company’s part promptly to give proper authorisations, instructions, approvals, information and documents as may be necessary to enable the Administrator to carry out its obligations hereunder.

NOTICES

21.

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Ann: Kerry E. Berchem, Esq.

LIABILITY OF ADMINISTRATOR AND INDEMNITY

22.	The Administrator shall not be liable for any damage, loss, costs or expenses whatsoever to or of the Company at any time from any cause whatsoever unless caused by the Administrator’s own negligence, dishonesty, fraud or wilful default.

23.

negligence, dishonesty, fraud or wilful default of any of the Indemnified Persons and this indemnity shall expressly inure to the benefit of any such person existing or future.

24.	The Administrator shall not be required to take any legal action on behalf of the Company unless fully indemnified to its satisfaction.

24A.	If any third party makes a claim against, or notifies an intention to make a claim against the Company (a “relevant claim”), the Administrator shall:

(a)

as soon as reasonably practicable give written notice of that matter to the Company, specifying in reasonable detail the nature of the relevant claim;

(b)

(c)

(d)

RECORDS

25.

DUTIES OF THE COMPANY

26.	The Company shall provide the Administrator with properly certified copies or authenticated copies of the Articles and all amendments thereto and of such resolutions, votes and other proceedings as may be necessary for the Administrator to carry out its functions hereunder.

27.

The parties hereto agree that they will both endeavour to ensure that no breach of any laws or regulations of the Cayman Islands occurs in connection with the operation of the Company’s business in and from within the Cayman Islands. The Company further agrees to ensure that its business is not carried on in breach of the laws of any other

jurisdiction and to keep the Administrator informed on a timely basis of all material developments in its business and other activities. The Company acknowledges the obligation of the Administrator, under Section 9(6) of the Insurance Law (2003 Revision) of the Cayman Islands, to notify the Governor in Council of the Cayman Islands if the Administrator feels cause for concern regarding the probity or soundness of any insurer or reinsurer for whom or with whom the Administrator is carrying on business.

RIGHTS OF ADMINISTRATOR

28.

Notwithstanding any other provision of this Agreement, the Administrator reserves the right to request such information as is necessary (i) to verify the identity of any investor or prospective investor in the Company or of any insured or prospective insured under any insurance programme of the Company and/or (ii) to otherwise comply with the Proceeds of Criminal Conduct Law (2001 Revision) of the Cayman Islands and the Regulations or Guidance Notes issued pursuant thereto or any other law or regulation to which the Company or the Administrator may be subject. The Company shall indemnify and hold harmless the Administrator and each of its directors, officers and employees against any loss, claim, costs, damage or expenses whatsoever (including legal costs and expenses) arising, directly or indirectly, as a result of any delay or failure by any investor or insured, the Company or any other person to produce any such information required for verification purposes or which the Administrator or any of its directors, officers and employees may otherwise suffer as a result of any violations of law committed by an investor or other third party.

NO PARTNERSHIP

29.	Nothing herein contained shall constitute a partnership between the parties hereto nor shall the staff of the Administrator referred to in clause 6(a)(v) hereof be deemed to be employees of the Company or entitled to any remuneration or other benefits from the Company.

COUNTERPARTS

30.	This Agreement may be executed in separate counterparts, each of which, when executed and delivered,. shall be an original, and all counterparts together shall constitute one and the same instrument.

SEVERANCE

31.

GOVERNING LAW AND JURISDICTION

32.	This Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands. Each party irrevocably agrees to submit to the non-exclusive jurisdiction of the courts of the Cayman Islands over any claim or matter arising under or in connection with this Agreement.

EFFECTIVE DATE

33.	The effective date of this Agreement shall be July 13, 2004.

The remainder of this page is intentionally left blank

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first hereinbefore written.

Signed for and on behalf of	)
GREENLIGHT REINSURANCE, LTD.	)
by Alan Brooks,	)	/s/ Alan Brooks
	)
in the presence of:	)	/s/ David Einhorn

/s/	J. Paul Drake
Witness
Address:	PO Box 448 GT
	Grand Cayman
and by David Einhorn

in the presence of:


/s/	Daniel Roitman
Witness
Address:	140 E. 45 St.
	New York, NY 10017

Signed for and on behalf of		)
HSBC FINANCIAL SERVICES		)
(CAYMAN) LIMITED		)
by		)
and		)
in the presence of:		)


Witness

SCHEDULE 1

It is hereby understood and agreed that the following fees will be payable to the Administrator.

(a)

in respect of clause 10(a) the sum of US$3,740 per annum.

(b)

in respect of clause 10(b) the scale of fees per man hour are deemed to be as follows:

	Director and Assistant Director	US$280.00

	Manager and Assistant Manager	US$190.00

	Account Manager	US$150.00

	Assistant Account Manager	US$105.00

Exhibit 10.11

FORM OF DEED OF INDEMNITY

This Deed of Indemnity (this “Deed” ) dated the _______ day of ____________, by and between Greenlight Capital Re, Ltd., a Cayman Islands exempted company (the “ Company ” ), and ____________, an individual ( “Indemnitee” ).

RECITALS

A. Competent and experienced persons are reluctant to serve or to continue to serve as directors and officers of companies or in other capacities unless they are provided with adequate protection through insurance or indemnification (or both) against claims against them arising out of their service and activities on behalf of a company.

B. The Board of Directors of the Company (the “ Board of Directors ” ) has determined that the continuation of present trends in litigation will make it more difficult to attract and retain competent and experienced persons to serve as directors and officers of the Company, that this situation is detrimental to the best interests of the Company’s shareholders and that the Company should act to assure such persons that there will be increased certainty of adequate protection in the future.

C. As a supplement to and in the furtherance of the provisions regarding the indemnification and limitation of liability of directors and officers of the Company that are contained in the Memorandum of Association and Articles of Association of the Company, as amended ( “ Memorandum and Articles ” ), it is reasonable, prudent, desirable and necessary for the Company contractually to obligate itself to indemnify, and to pay in advance expenses on behalf of, officers and directors to the fullest extent permitted by law so that they will serve or continue to serve the Company free from concern that they will not be so indemnified and that their expenses will not be so paid in advance;

D. This Deed is not a substitute for, nor does it diminish or abrogate any rights of Indemnitee under the Memorandum and Articles or any resolutions adopted pursuant thereto (including any contractual rights of Indemnitee that may exist).

E. Indemnitee is a director and/or officer of the Company and his or her willingness to continue to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her to the fullest extent permitted by the laws of the Cayman Islands and upon the other undertakings set forth in this Deed.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and covenants contained herein, the Company and Indemnitee hereby agree as follows:

ARTICLE 1

CERTAIN DEFINITIONS

Capitalised terms used but not otherwise defined in this Deed have the meanings set forth below:

“ Corporate Status ” means the status of a person who is or was a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of the Company or of any other Enterprise which such person is or was serving at the request of the Company. In addition to any service at the actual request of the Company, Indemnitee will be deemed, for purposes of this Deed, to be serving or to have served at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise if Indemnitee is or was serving as a director, officer, employee, partner, member, manager, fiduciary, trustee or agent of such Enterprise and (i) such Enterprise is or at the time of such service was a Controlled Affiliate, (ii) such Enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored on maintained by the Company or a Controlled Affiliate or (iii) the Company or a Controlled Affiliate directly or indirectly caused Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

“ Controlled Affiliate ” means any company, limited liability company, partnership, joint venture, trust or other Enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of an Enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided, however, that direct or indirect beneficial ownership of capital stock or other interests in an Enterprise entitling the holder to cast 30% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such Enterprise will be deemed to constitute “control” for purposes of this definition.

“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

“Enterprise” means the Company and any other company, partnership, limited liability company, joint venture, employee benefit plan, trust or other entity or other enterprise of which Indemnitee is or was serving at the request of the Company in a Corporate Status.

“Expenses” means all reasonable attorney’s fees, disbursements and retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, fax transmission charges, secretarial services,

delivery service fees and all other reasonable disbursements or expenses paid or incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding, or in connection with seeking indemnification under this Deed or under the Memorandum and Articles. Expenses will also include Expenses paid or incurred in connection with any appeal resulting from any Proceeding, including the premium, security for and other costs relating to any appeal bond or its equivalent. Expenses, however, will not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

“Independent Counsel” means an attorney or firm of attorneys that is experienced in matters of company law and neither currently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Deed and/or the indemnification provisions of the Memorandum and Articles, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Deed.

“ Losses ” means any loss, liability, judgments, damages, amounts paid in settlement, fines (including stamp duties, taxes and penalties assessed with respect to employee benefit plans), penalties (whether civil, criminal or otherwise) and all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.

“Proceeding” means any threatened, pending or completed action, suit, claim, demand, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, including any and all appeals, whether brought by or in the right of the Company or otherwise, whether civil, criminal, administrative or investigative, whether formal or informal, and in each case whether or not commenced prior to the date of this Deed, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of or relating to Indemnitee’s Corporate Status and by reason of or relating to either (i) any action or alleged action taken by Indemnitee (or failure or alleged failure to act) or of any action or alleged action (or failure or alleged failure to act) on Indemnitee’s part, while acting in his or her Corporate Status or (ii) the fact that Indemnitee is or was serving at the request of the Company as director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise, in each case whether or not serving in such capacity at the time any Loss or Expense is paid or incurred for which indemnification or advancement of Expenses can be provided under this Deed, except one initiated by Indemnitee to enforce his or her rights under this Deed. For purposes of this definition, the term “threatened” will be deemed to include Indemnitee’s good faith belief that a claim or other assertion may lead to institution of a Proceeding.

References to “ serving at the request of the Company ” include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she

reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan will be deemed to have acted in a manner “ not opposed to the best interests of the Company .”

ARTICLE 2

SERVICES TO THE COMPANY

2.1 Services to the Company. Indemnitee agrees to serve as a director of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company will have no obligation under this Deed to continue Indemnitee in such position. This Deed will not be construed as giving Indemnitee any right to be retained in the employ of the Company (or any other Enterprise).

ARTICLE 3

INDEMNIFICATION

3.1 Company Indemnification. Except as otherwise provided in this Article 3 , if Indemnitee was, is or becomes a party to, or was or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding, the Company will indemnify and hold harmless Indemnitee to the fullest extent permitted by law, against any and all Expenses and Losses, and any local or foreign stamp duties or taxes imposed as a result of the actual or deemed receipt of any payments under this Deed, that are paid or incurred by Indemnitee in connection with such Proceeding.

3.2 Mandatory Indemnification if Indemnitee is Wholly or Partly Successful. Notwithstanding any other provision of this Deed (other than Section 6.9 ), to the extent that Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding or any part thereof, the Company will indemnify Indemnitee against all Expenses that are paid or incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but fewer than all claims, issues or matters in such Proceeding, the Company will indemnify and hold harmless Indemnitee against all Expenses paid or incurred by Indemnitee in connection with each successfully resolved claim, issue or matter on which Indemnitee was successful. For purposes of this Section 3.2 , the termination of any Proceeding, or any claim, issue or matter in such Proceeding, by dismissal with or without prejudice will be deemed to be a successful result as to such Proceeding, claim, issue or matter.

3.3 Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Deed, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, the Company will indemnify Indemnitee against all Expenses paid or incurred by Indemnitee on his or her behalf in connection therewith.

3.4 Exclusions. Notwithstanding any other provision of this Deed, the Company will not be obligated under this Deed to provide indemnification in connection with the following:

(a) Any Proceeding (or part of any Proceeding) initiated or brought voluntarily by Indemnitee against the Company or its directors, officers, employees or other indemnities, unless the Board of Directors has authorised or consented to the initiation of the Proceeding (or such part of any Proceeding); provided, however, that nothing in this Section 3.4(a) shall limit the right of Indemnitee to be indemnified under Section 8.4 .

(b) For an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or any similar successor statute.

ARTICLE 4

ADVANCEMENT OF EXPENSES

4.1 Expense Advances. Except as set forth in Section 4.1 , the Company will, if requested by Indemnitee, advance, to the fullest extent permitted by law, to Indemnitee (hereinafter an “ Expense Advance ”) any and all Expenses paid or incurred by Indemnitee in connection with any Proceeding (whether prior to or after its final disposition). Indemnitee’s right to each Expense Advance will not be subject to the satisfaction of any standard of conduct and will be made without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Deed, or under provisions of the Memorandum and Articles or otherwise. Each Expense Advance will be unsecured and interest free and will be made by the Company without regard to Indemnitee’s ability to repay the Expense Advance.

4.2 Exclusions. Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 3.4 .

4.3 Timing. An Expense Advance pursuant to Section 4.1 will be made within five (5) business days after the receipt by the Company of a written statement or statements from Indemnitee requesting such Expense Advance (which statement or statements will include, if requested by the Company, reasonable detail and proof underlying the Expenses for which the Expense Advance is requested), whether such request is made prior to or after final disposition of such Proceeding.

ARTICLE 5

CONTRIBUTION IN THE EVENT OF JOINT LIABILITY

5.1 Contribution by Company. To the fullest extent permitted by law, if the indemnification provided for in this Deed is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount of Expenses and Losses incurred or paid by Indemnitee in connection with any Proceeding in proportion to the relative benefits received by the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however , that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors and

employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses and Losses, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct was active or passive.

5.2 Indemnification for Contribution Claims by Others. To the fullest extent permitted by law, the Company will fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by other officers, directors or employees of the Company who may be jointly liable with Indemnitee for any Loss or Expense arising from a Proceeding.

ARTICLE 6

PROCEDURES AND PRESUMPTIONS FOR THE

DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION

6.1 Notification of Claims; Request for Indemnification. Indemnitee agrees to notify promptly the Company in writing of any claim made against Indemnitee for which indemnification will or could be sought under this Deed; provided, however , that a delay in giving such notice will not deprive Indemnitee of any right to be indemnified under this Deed unless, and then only to the extent that, the Company did not otherwise learn of the Proceeding and such delay is prejudicial to the Company’s ability to defend such Proceeding; and, provided, further, that notice will be deemed to have been given without any action on the part of Indemnitee in the event the Company is a party to the same Proceeding. The omission to notify the Company will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Deed. Indemnitee may deliver to the Company a written request to have the Company indemnify and hold harmless Indemnitee in accordance with this Deed. Subject to Section 6.9 , such request may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written request for indemnification, Indemnitee’s entitlement to indemnification shall be determined according to Section 6.2 . The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification. The Company will be entitled to participate in any Proceeding at its own expense.

6.2 Determination of Right to Indemnification. Upon written request by Indemnitee for indemnification pursuant to Section 6.1 hereof with respect to any Proceeding, a determination, if, but only if, required by applicable law, with respect to Indemnitee’s entitlement thereto will be made by one of the following, at the election of Indemnitee: (1) so long as there are Disinterested Directors with respect to such Proceeding, a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors or (2) Independent Counsel in a written opinion delivered to the Board of Directors, a copy of which

will also be delivered to Indemnitee. The person, persons or entity chosen to make a determination under this Deed of the Indemnitee’s entitlement to indemnification will act reasonably and in good faith in making such determination.

6.3 Selection of Independent Counsel. If the determination of entitlement to indemnification pursuant to Section 6.2 will be made by an Independent Counsel, the Independent Counsel will be selected as provided in this Section 6.3 . The Independent Counsel will be selected by Indemnitee (unless Indemnitee requests that such selection be made by the Board of Directors, in which event the immediately following sentence will apply) and Indemnitee will give written notice to the Company advising it of the identity of the Independent Counsel so selected. If the Independent Counsel is selected by the Board of Directors, the Company will give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection is given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Deed, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within thirty (30) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6.1 , no Independent Counsel is selected, or an Independent Counsel for which an objection thereto has been properly made remains unresolved, either the Company or Indemnitee may petition the Grand Court of the Cayman Islands or other court of competent jurisdiction for resolution of any objection which has been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court may designate, and the person with respect to whom all objections are so resolved or the person so appointed will act as Independent Counsel under Section 6.2 . The Company will pay any and all fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 6.2 hereof, and the Company will pay all fees and expenses incident to the procedures of this Section 6.3 , regardless of the manner in which such Independent Counsel was selected or appointed.

6.4 Burden of Proof. In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination will presume that Indemnitee is entitled to indemnification under this Deed. Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion, by clear and convincing evidence. In making a determination with respect to entitlement to indemnification hereunder which requires a determination of Indemnitee’s good faith and/or whether Indemnitee acted in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, the person, persons or entity making such determination will presume that Indemnitee has at all times acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption will have the burden of proof and the burden of persuasion, by clear and convincing evidence. Indemnitee will be deemed to have acted in good faith if Indemnitee’s action with respect to a

particular Enterprise is based on the records or books of account of such Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of such Enterprise in the course of their duties, or on the advice of legal counsel for such Enterprise or on information or records given or reports made to such Enterprise by an independent certified public accountant or by an appraiser or other expert selected by such Enterprise; provided, however this sentence will not be deemed to limit in any way the other circumstances in which Indemnitee may be deemed to have met such standard of conduct. In addition, the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of such Enterprise will not be imputed to Indemnitee for purposes of determining the right to indemnification hereunder. To the extent a determination has been made to not provide Indemnitee with indemnification pursuant to this Deed, the party making such determination shall in writing promptly notify Indemnitee and explain in reasonable detail the basis for such determination.

6.5 [RESERVED]

6.6 Timing of Determination. The Company will use its reasonable best efforts to cause any determination required to be made pursuant to Section 6.2 to be made as promptly as practicable after Indemnitee has submitted a written request for indemnification pursuant to Section 6.1 . If the person, persons or entity chosen to make a determination does not make such determination within thirty (30) days after the later of the date (a) the Company receives Indemnitee’s request for indemnification pursuant to Section 6.1 and (b) on which an Independent Counsel is selected pursuant to Section 6.3 , if applicable (and all objections to such person, if any, have been resolved), the requisite determination of entitlement to indemnification will be deemed to have been made and Indemnitee will be entitled to such indemnification, so long as (i) Indemnitee has fulfilled his or her obligations pursuant to Section 6.8 and (ii) such indemnification is not prohibited under applicable law; provided, however, that such thirty (30) day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith require such additional time for the obtaining of or evaluating of documentation and/or information relating thereto.

6.7 Timing of Payments. All payments of Expenses, including any Expense Advance, and other amounts by the Company to the Indemnitee pursuant to this Deed will be made as soon as practicable after a written request or demand therefor by Indemnitee is presented to the Company, but in no event later than thirty (30) days after (i) such demand is presented or (ii) such later date as a determination of entitlement to indemnification is made in accordance with Section 6.6 , if applicable; provided, however , that an Expense Advance will be made within the time provided in Section 4.3 hereof.

6.8 Cooperation. Indemnitee will cooperate with the person, persons or entity making a determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity, upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination will be borne by the Company (irrespective of the determination as to

Indemnitee’s entitlement to indemnification) and the Company will indemnify Indemnitee therefor and will hold Indemnitee harmless therefrom.

6.9 Time for Submission of Request. Indemnitee will be required to submit any request for Indemnification pursuant to this Article 6 within a reasonable time, not to exceed six (6) years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere (or its equivalent) or other full or partial final determination or disposition of the Proceeding (with the first date of the occurrence of any such event to be considered the commencement of the six (6) year period).

ARTICLE 7

[RESERVED]

ARTICLE 8

REMEDIES OF INDEMNITEE

8.1 Action by Indemnitee. In the event that (i) a determination is made pursuant to Article 6 of this Deed that Indemnitee is not entitled to indemnification under this Deed, (ii) an Expense Advance is not timely made pursuant to Section 4.3 of this Deed, (iii) no determination of entitlement to indemnification is made within the applicable time periods specified in Section 6.6 or (iv) payment of indemnified amounts is not made within the applicable time periods specified in Section 6.7 , Indemnitee will be entitled to an adjudication in an appropriate court of the Cayman Islands, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification or payment of an Expense Advance. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The provisions of Cayman Islands law (without regard to its conflict of laws rules) will apply to any such arbitration. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

8.2 De Novo Review if Prior Adverse Determination. In the event that a determination is made pursuant to Article 6 that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Article 8 will be conducted in all respects as a de novo trial or arbitration, as applicable, on the merits and Indemnitee will not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Article 8 , Indemnitee will be presumed to be entitled to indemnification under this Deed, the Company will have the burden of proving Indemnitee is not entitled to indemnification. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Article 8 , Indemnitee will not be required to reimburse the Company for any Expense Advance made pursuant to Article 4 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

8.3 Company Bound by Favorable Determination by Reviewing Party. If a determination is made that Indemnitee is entitled to indemnification pursuant to Article 6 , the Company will be bound by such determination in any judicial proceeding or arbitration

commenced pursuant to this Article 8 , absent (i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee’s statements in connection with the request for indemnification not materially misleading or (ii) a prohibition of such indemnification under law.

8.4 Company Bound by Provisions of this Deed. The Company will be precluded from asserting in any judicial or arbitration proceeding commenced pursuant to this Article 8 that the procedures and presumptions of this Deed are not valid, binding and enforceable and will stipulate in any such judicial or arbitration proceeding that the Company is bound by all the provisions of this Deed.

ARTICLE 9

NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS;

MORE FAVORABLE TERMS

9.1 Non-Exclusivity. The rights of indemnification and to receive Expense Advances as provided by this Deed will not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Memorandum and Articles, any agreement, a vote of shareholders, a resolution of the directors or otherwise. To the extent Indemnitee otherwise would have any greater right to indemnification or payment of any advancement of Expenses under any other provisions under applicable law, the Memorandum and Articles, any agreement, vote of shareholders, a resolution of directors or otherwise, Indemnitee will be entitled under this Deed to such greater right. No amendment, alteration or repeal of this Deed or of any provision hereof limits or restricts any right of Indemnitee under this Deed in respect of any action taken or omitted by such Indemnitee prior to such amendment, alteration or repeal. To the extent that a change in the laws of the Cayman Islands, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Memorandum and Articles and this Deed, it is the intent of the parties hereto that Indemnitee enjoy by this Deed the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy will be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.

9.2 Subrogation. In the event of any payment by the Company under this Deed, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect thereto and Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights (it being understood that all of Indemnitee’s reasonable Expenses related thereto will be borne by the Company).

9.3 No Duplicative Payments. The Company will not be liable under this Deed to make any payment of amounts otherwise indemnifiable (or any Expense for which advancement is provided) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in respect of Proceedings

relating to Indemnitee’s service at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of any other Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other Enterprise.

ARTICLE 10

DEFENSE OF PROCEEDINGS

10.1 Company Assuming the Defense. Subject to Section 10.3 below, in the event the Company is obligated to pay in advance the Expenses of any Proceeding pursuant to Article 4 , the Company will be entitled, by written notice to Indemnitee, to assume the defense of such Proceeding, with counsel approved by Indemnitee, which approval will not be unreasonably withheld. The Company will identify the counsel it proposes to employ in connection with such defense as part of the written notice sent to Indemnitee notifying Indemnitee of the Company’s election to assume such defense, and Indemnitee will be required, within ten days following Indemnitee’s receipt of such notice, to inform the Company of its approval of such counsel or, if it has objections, the reasons therefor. If such objections cannot be resolved by the parties, the Company will identify alternative counsel, which counsel will also be subject to approval by Indemnitee in accordance with the procedure described in the prior sentence.

10.2 Right of Indemnitee to Employ Counsel. Following approval of counsel by Indemnitee pursuant to Section 10.1 and retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Deed for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding; provided, however , that (a) Indemnitee has the right to employ counsel in any such Proceeding at Indemnitee’s expense and (b) the Company will be required to pay the fees and expenses of Indemnitee’s counsel if (i) the employment of counsel by Indemnitee has been previously authorised by the Company, (ii) Indemnitee reasonably concludes that there is an actual or potential conflict between the Company (or any other person or persons included in a joint defense) and Indemnitee in the conduct of such defense or representation by such counsel retained by the Company or (iii) the Company does not continue to retain the counsel approved by Indemnitee.

10.3 Company Not Entitled to Assume Defense. Notwithstanding Section 10.1 , the Company will not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or any Proceeding as to which Indemnitee has reasonably made the conclusion provided for in Section 10.2(b)(ii) .

ARTICLE 11

SETTLEMENT

11.1 Company’s Prior Consent Required. Notwithstanding anything in this Deed to the contrary, the Company will have no obligation to indemnify Indemnitee under this Deed for any amounts paid in settlement of any Proceeding effected without the Company’s prior written consent.

11.2 When Indemnitee’s Prior Consent Required. The Company will not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee

or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, any non-monetary remedy imposed on Indemnitee or a Loss for which Indemnitee is not wholly indemnified hereunder or (ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a party or a participant or may be or is otherwise entitled to seek indemnification hereunder, does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release will be in form and substance reasonably satisfactory to Indemnitee. Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement; provided, however, Indemnitee may withhold consent to any settlement that does not provide a full and unconditional release of Indemnitee from all liability in respect of such Proceeding.

ARTICLE 12

[RESERVED]

ARTICLE 13

DURATION OF DEED

13.1 Duration of Deed. This Deed will continue until and terminate upon the latest of (a) the statute of limitations applicable to any claim that could be asserted against an Indemnitee with respect to which Indemnitee may be entitled to indemnification and/or an Expense Advance under this Deed, (b) ten years after the date that Indemnitee has ceased to serve as a director or officer of the Company or as a director, officer, employee, partner, member, manager, fiduciary or agent of any other Enterprise which Indemnitee served at the request of the Company, or (c) if, at the later of the dates referred to in (a) and (b) above, there is pending a Proceeding in respect of which Indemnitee is granted rights of indemnification or the right to an Expense Advance under this Deed or a Proceeding commenced by Indemnitee pursuant to Article 8 of this Deed, one year after the final termination of such Proceeding, including any and all appeals.

ARTICLE 14

MISCELLANEOUS

14.1 Entire Agreement. This Deed constitutes the entire agreement and understanding of the parties in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate in any way to the subject matter hereof; provided, however , it is agreed that the provisions contained in this Deed are a supplement to, and not a substitute for, any provisions regarding the same subject matter contained in the Memorandum and Articles and any employment or similar agreement between the parties.

14.2 Assignment; Binding Effect; Third Party Beneficiaries. No party may assign either this Deed or any of its rights, interests or obligations hereunder without the prior written approval of the other party and any such assignment by a party without prior written approval of the other parties will be deemed invalid and not binding on such other parties; provided, however, that the Company may assign all (but not less than all) of its rights, obligations and interests hereunder to any direct or indirect successor to all or substantially all of the business or assets of the Company by purchase, merger, consolidation or otherwise and will cause such

successor to be bound by and expressly assume the terms and provisions hereof. All of the terms, agreements, covenants, representations, warranties and conditions of this Deed are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors, permitted assigns, heirs, executors and personal and legal representatives. There are no third party beneficiaries having rights under or with respect to this Deed.

14.3 Notices. All notices, requests and other communications provided for or permitted to be given under this Deed must be in writing and be given by personal delivery, by prepaid first class post, by a internationally recognised courier service, or by facsimile transmission, as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof):

If to:

Greenlight Capital Re, Ltd.

The Grand Pavillion

7 Mile Beach,

P.O. Box 31110 SMB, GT, Grand Cayman

Attention: Mr. Leonard Goldberg, Chief Executive Officer

Facsimile: (345) 745-4576

with a copy (which will not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attention: Kerry E. Berchem, Esq.

Facsimile: (212) 407-3295

If to __________________:

______________________

Attention:

Facsimile:

All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being posted (excluding Saturdays and Sundays and public holidays), (iii) if sent by courier service, on the date of delivery as confirmed by written confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s confirmation of receipt of such facsimile transmission, except that if such confirmation is received after 5:00 p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and other communications sent in any other manner, including by electronic mail, will not be effective.

14.4 Specific Performance; Remedies. Each party acknowledges and agrees that the other party would be damaged irreparably if any provision of this Deed were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties will be

entitled to an injunction or injunctions to prevent breaches of the provisions of this Deed and to enforce specifically this Deed and its provisions in any action or proceeding instituted in any court having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations and remedies created by this Deed are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Except as expressly provided herein, nothing herein will be considered an election of remedies.

14.5 Submission to Jurisdiction. Any action, suit, claim, demand arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, including any and all appeals, seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Deed (an “Enforcement Proceeding” ) may only be brought in the Grand Court of the Cayman Islands, which will be the exclusive and only proper forum for adjudicating such Enforcement Proceeding, and each party consents to the exclusive jurisdiction and venue of such court (and of the appropriate appellate courts therefrom) in any such Enforcement Proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such Enforcement Proceeding in any such court or that any such Enforcement Proceeding brought in any such court has been brought in an inconvenient forum. Process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.

14.6 Headings. The article and section headings contained in this Deed are inserted for convenience only and will not affect in any way the meaning or interpretation of this Deed.

14.7 Governing Law. This Deed will be governed by and construed in accordance with the laws of the Cayman Islands, without giving effect to any choice of law principles, and the parties agree to submit to the exclusive jurisdiction of the Cayman Islands courts in respect of all matters relating hereto.

14.8 Amendment. This Deed may not be amended or modified except by a writing signed by all of the parties.

14.9 Extensions; Waivers. Any party may, for itself only, (i) extend the time for the performance of any of the obligations of any other party under this Deed, (ii) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Deed will operate as a waiver thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy

14.10 Severability. The provisions of this Deed will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Deed, as applied to any party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced.

14.11 Counterparts; Effectiveness. This Deed may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Deed will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, which delivery may be made by exchange of copies of the signature page by facsimile transmission.

14.12 Construction. This Deed has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Deed will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Deed. Any reference to any law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Deed,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Deed as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty, or covenant. Time is of the essence in the performance of this Deed.

[Signature page follows]

IN WITNESS WHEREOF, these presents have been executed as a Deed on the date first written above.

SIGNED for and on behalf of		GREENLIGHT CAPITAL RE, LTD.
GREENLIGHT CAPITAL RE, LTD.
By:		By:
In the presence of:		Name:
		Title:

Witness

SIGNED BY INDEMNITEE		INDEMNITEE
In the presence of:

Witness		Signature

		Print Name

EXHIBIT 10.12

Execution Copy

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “ Agreement ”) , dated as of January 10, 2007 by and between Greenlight Capital Re, Ltd. (the “ Parent ”), Greenlight Reinsurance, Ltd. (the “ Company ”) and Leonard Goldberg (“ Executive ”).

WHEREAS, the Parent, the Company and Executive entered into an employment agreement dated July 26, 2005 which became effective as of August 15, 2005 (the “ Original Agreement ”); and

WHEREAS, the Parent, the Company and Executive desire to amend and restate the Original Agreement as set forth below.

IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows:

1. Employment . The Company hereby agrees to continue to employ Executive as the Chief Executive Officer of the Company (the “ CEO ”), and Executive hereby accepts such continued employment, on the terms and conditions hereinafter set forth.

2. Term . The period of employment of Executive by the Company under this Agreement (the “ Employment Period ”) commenced on August 15, 2005 (the “ Effective Date ”) and shall continue through August 15, 2008. The Employment Period may be sooner terminated by either party in accordance with Section 6 of this Agreement. This Agreement is conditioned upon the Company maintaining a work permit for Executive and Executive complying with the Cayman Islands Immigration laws and regulations from time to time in force.

3. Position and Duties . During the Employment Period, Executive shall serve as CEO and shall report directly to the Board of Directors of the Company (the “ Board ”). Executive shall have those powers and duties normally associated with the position of CEO of entities comparable to the Company and such other powers and duties as may be prescribed by the Board; provided that , such other powers and duties are consistent with Executive’s position as CEO and do not violate any applicable laws or regulations. Executive shall perform his duties to the best of his abilities and shall devote all of his working time, attention and energies to the performance of his duties for the Company. During the first year of the Employment Period, Executive’s duties shall include, without limitation: developing a comprehensive business plan for the Company, to be approved by the Board (the “ Business Plan ”); recruiting and hiring the Company’s management team; supervising the establishment of an appropriate infrastructure to support the long-term goals of the Company; developing long-term bonus and employee incentive plans, subject to approval by the Board; commencing reinsurance operations as per the Business Plan; working closely with the Company’s investment manager to ensure an appropriate asset-liability balance; supervising and directing the Company’s outside service providers; and representing the Company in meetings with regulators and rating agencies. During the Employment Period, it is anticipated that Executive shall also serve as a member of the Board for no additional compensation, subject to his continued election to serve on the Board

by the Company’s shareholders. If requested by the Board of Directors of the Parent, Executive shall also serve as an officer and/or director of the Parent or any other subsidiary or affiliate of the Parent or the Company for no additional compensation.

4. Place of Performance . The Company’s principal place of business is the Cayman Islands. Executive shall be required to travel to the Cayman Islands as necessary to perform his duties hereunder. During the Employment Period, Executive shall comply with all Company and Parent policies, as may be amended from time to time, including, without limitation, conducting the business affairs of the Company and Parent such that neither entity is deemed to be engaging in a trade or business within the United States.

5. Compensation and Related Matters .

(a) Base Salary and Bonus . During the Employment Period, the Company shall pay Executive a base salary at the rate of not less than US $500,000 per year (“ Base Salary ”). Executive’s Base Salary shall be paid in accordance with the Company’s customary payroll practices. The Board shall periodically review Executive’s Base Salary for increase (but not decrease), consistent with the compensation practices and guidelines of the Company. If Executive’s Base Salary is increased by the Company, such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement. In addition to Base Salary, during the Employment Period, Executive shall be eligible for an annual bonus based on pre-established performance metrics established by the Board after consulting with Executive with a target of 100% of Base Salary (the “ Bonus ”). Any Bonus earned during a calendar year shall be paid at such time as the Company customarily pays annual bonuses and shall be subject to such other terms and conditions as are set forth in the Company’s bonus program, as established from time to time.

(b) Expenses . During the Employment Period, the Company shall promptly reimburse Executive for all reasonable business expenses upon the presentation of reasonably itemized statements of such expenses in accordance with the Company’s policies and procedures now in force or as such policies and procedures may be modified with respect to all senior executive officers of the Company.

(c) Vacation . During the Employment Period, Executive shall be entitled to six (6) weeks of paid vacation per year to be used and accrued in accordance with the Company’s policy as it may be established from time to time. In addition to vacation, Executive shall be entitled to the number of sick days, personal days and national holidays per year to which other senior executive officers of the Company with similar tenure are entitled under the Company’s policies, but in no event less that the minimum days mandated by Cayman Islands statutory requirements.

cost of health insurance for himself and his family that is comparable to the health insurance Executive has in effect as of the Effective Date. In addition, during the Employment Period, the Company shall reimburse Executive for his reasonable expenses incurred in having an accountant assist and prepare his annual tax return. The Company will provide a workers’ compensation plan that meets or exceeds the statutory requirements of the Cayman Islands.

(e) Housing Allowance . During the Employment Period, Executive shall be entitled to receive a Cayman Islands housing allowance of US $10,000 per month. Employee will be responsible for any taxes due on such allowance.

(f) Stock Options .

(i) On August 15, 2005, the Parent granted Executive a stock option (an “ Option ”) to acquire 500,000 shares of the Parent’s Class A Ordinary Shares, $0.10 par value per share (“ Shares ”) at an exercise price per Share equal to US $11.10 (i.e., the fair market value per Share as of the date of grant), under such terms and conditions as provided for under the Parent’s then existing stock incentive plan which are not inconsistent with clauses (ii) and (iii) below.

(ii) The Options described herein shall be granted subject to the following terms and conditions: (A) the Options shall be granted under and subject to the Parent’s stock incentive plan (the “ Plan ”); (B) the exercise price per Share subject to the Options shall be equal to the fair market value per Share as of the date of grant; (C) the Options shall be vested as to 33-1/3% of the Shares subject thereto on each of the first three anniversaries of the date of grant; provided , that , the Options shall cease to vest upon Executive’s termination of employment with the Company; (D) the Options shall be exercisable for the ten (10) year period following the date of grant; provided , that , except as otherwise provided herein, upon Executive’s termination of employment with the Company for any reason, any unvested portion of the Options shall automatically terminate and the vested portion of the Options shall remain exercisable for 90 days after Executive’s termination of employment with the Company; and (E) the Options shall be evidenced by, and subject to, a stock option agreement whose terms and conditions are consistent with the terms hereof.

(iii) The Options shall provide that upon a termination of employment by the Company for Cause (as defined below), the Options (whether or not vested) shall terminate. Upon a termination of employment due to Executive’s death or Disability (as defined below), or for Family Reasons (as defined below), any unvested portion of the Options shall terminate and any vested portion shall remain exercisable for the remainder of its term (except that on a termination for Family Reasons, the vested portion shall terminate if the Executive becomes employed by a Competing Entity (as defined below)). Upon a termination of employment by the Company without Cause or by Executive for Good Reason (as defined below), or upon expiration of the Employment Period where the Company has failed to offer Executive continued employment with the Company on substantially comparable terms as provided in this Agreement, any unvested portion of the Options shall vest, and the Options (including the portion which becomes

vested pursuant to this paragraph (iii)) shall remain exercisable for the remainder of its term.

(iv) On October 5, 2006, the Parent granted Executive an additional Option to acquire 100,000 Shares at an exercise price per Share equal to US $13.48 (i.e., the fair market value per Share as of the date of grant). On August 15, 2007 and on each anniversary thereof for the remainder of the Employment Period, the Parent shall grant Executive an additional Option to acquire 50,000 Shares. All Options granted pursuant to this Section 5(f)(iv) shall be subject to the same terms and conditions as provided in Section 5(f) (i) – (iii) above.

(v) The Shares acquired upon exercise of the Options described herein shall be subject to the terms and conditions of the Parent’s Shareholders’ Agreement dated as of August 11, 2004 as it may be amended from time to time and Executive shall become a party to such agreement at such time.

6. Termination . Executive’s employment hereunder may be terminated during the Employment Period under the following circumstances:

(a) Death . Executive’s employment hereunder shall terminate upon his death.

(b) Disability . If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been substantially unable to perform his duties hereunder for an entire period of at least 90 consecutive days or 180 non-consecutive days within any 365-day period, the Company shall have the right to terminate Executive’s employment hereunder for “ Disability ”, and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement.

(c) Cause . The Company shall have the right to terminate Executive’s employment for Cause, and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. For purposes of this Agreement, “ Cause ” shall mean Executive’s (i) drug or alcohol use which impairs the ability of Executive to perform his duties hereunder; (ii) conviction by a court of competent jurisdiction, or plea of “no contest” or guilty to a criminal offense; (iii) engaging in fraud, embezzlement or any other illegal conduct with respect to the Company and/or the Parent or any of their affiliates (collectively, the “ Group ”); (iv) willfully violating the Restrictive Covenants set forth in Section 9 of this Agreement; (v) willful failure or refusal to perform his duties hereunder (other than such failure caused by Executive’s Disability or while on vacation) after a written demand for performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has failed or refused to perform his duties; or (vi) breach of any material provision of this Agreement or any Group policies related to conduct which is not cured, if curable, within 10 days after written notice thereof. The Company shall have the right to suspend Executive with pay in order to investigate any event which it reasonably believes may provide a basis to terminate Executive’s employment for Cause and such action shall not give Executive Good Reason to terminate his employment.

(d) Good Reason . Executive may terminate his employment with the Company for “ Good Reason ” within thirty (30) days after Executive has knowledge of the occurrence, without the Executive’s written consent, of one of the following events that has not been cured, if curable, within thirty (30) days after written notice thereof has been given by Executive to the Company and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. “Good Reason” shall be limited to the following: (i) any material and adverse change to Executive’s duties or authority which are inconsistent with his title and position set forth herein, (ii) a diminution of Executive’s title or position; (iii) a reduction of Executive’s Base Salary, (iv) a failure by the Company to comply with any other material provisions of this Agreement, or (v) upon a Change in Control of the Parent (as defined below). For purposes of this Agreement, the term “ Change in Control of the Parent ” means the occurrence of one of the following events: (i) any “person” or “group” becomes the “beneficial owner” (as such terms are used in Rule 13d-3 promulgated under the U.S. Securities Exchange Act of 1934, as amended, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 51% or more of the Shares (measured by voting power rather than number of shares); provided , however , that an event described in this paragraph (i) shall not be deemed to be a Change in Control if any of following becomes such a beneficial owner: (A) any tax-qualified, broad-based employee benefit plan sponsored or maintained by the Parent, the Company or any other member of the Group, (B) any Parent underwriter temporarily holding securities pursuant to an offering of such securities, or (C) any person or group pursuant to a Non-Qualifying Transaction (as defined in paragraph (ii)); or (ii) the Parent consolidates or merges with or into any other person or group or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets and the assets of the Parent’s direct and indirect subsidiaries (on a consolidated basis) to any other person or group, in either one transaction or a series of related transactions which occur within six months, other than a consolidation or merger or disposition of assets: (A) of or by the Parent into or to a 100% owned subsidiary of the Parent, or (B) pursuant to a transaction in which the outstanding Shares are changed into or exchanged for securities or other property with the effect that the beneficial owners of the outstanding Shares immediately prior to such transaction, beneficially own, directly or indirectly, at least a majority of the Shares (measured by voting power rather than number of shares) of the surviving corporation or the person or group to whom the Parent’s assets are transferred immediately following such transaction (any transaction which satisfies the criteria specified in (A) or (B) above shall be deemed to be a “ Non-Qualifying Transaction ”).

(e) Without Cause . The Company shall have the right to terminate Executive’s employment hereunder without Cause at any time by providing Executive with a Notice of Termination and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement.

(f) Without Good Reason . Executive shall have the right to terminate his employment hereunder without Good Reason by providing the Company with a Notice of Termination at least ninety (90) days prior to such termination, and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement.

(g) Expiration of the Employment Period . Executive’s employment shall automatically terminate upon expiration of the Employment Period and such termination shall not be a breach of this Agreement; provided , that , unless otherwise agreed to by the parties hereto, if the Company fails to offer Executive continued employment with the Company on substantially comparable terms as provided in this Agreement at least six (6) months prior to such expiration, upon such expiration, Executive’s employment shall be deemed to be terminated under Section 6(e) of this Agreement.

(h) Family Reasons . Executive shall have the right to terminate his employment hereunder for Family Reasons by providing the Company with a Notice of Termination at least thirty (30) days prior to such termination, and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement. For purposes of this Agreement, “ Family Reasons ” shall mean Executive’s permanent retirement from the insurance/reinsurance industry. The determination as to whether Executive has retired shall be made solely by the Board in good faith after considering the circumstances surrounding such retirement which shall include, without limitation, a material change in Executive’s immediate family caused by the death or disability of an immediate family member.

7. Termination Procedure .

(a) Notice of Termination . Any termination of Executive’s employment by the Company or by Executive during the Employment Period (other than termination pursuant to Section 6(a)) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13 of this Agreement. For purposes of this Agreement, a “ Notice of Termination ” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b) Date of Termination . “ Date of Termination ” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated pursuant to Section 6(b), thirty (30) days after Notice of Termination (provided that Executive shall not have returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), and (iii) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within ninety (90) days after the giving of such notice) set forth in such Notice of Termination; provided , that , if applicable, the Notice of Termination shall not be effective until the cure period has expired and such event or events leading to such termination have not yet been cured.

8. Compensation Upon Termination . In the event Executive’s employment is terminated during the Employment Period, the Company shall provide Executive with the payments set forth below and shall not be required to provide any other payments or benefits to Executive upon such termination. Executive acknowledges and agrees that the payments set forth in this Section 8 constitute liquidated damages for termination of this employment during the Employment Period and that prior to receiving any such payments under Section 8 and as a material condition thereof, Executive shall, if requested by the Company, sign and agree to be

bound by a general release of claims against the Company and its affiliates related to Executive’s employment (and termination of employment) with the Company in such form as the Company’s Board deems appropriate. Upon Executive’s termination of employment for any reason, upon the request of the Board, he shall resign any membership or positions that he then holds with the Company or any of its affiliates.

(a) Termination By the Company without Cause or By Executive for Good Reason . If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason:

(i) as soon as practical following such termination, the Company shall pay to Executive: (A) his accrued, but unpaid Base Salary earned through the Date of Termination, his accrued, but unpaid Bonus earned for the year immediately prior to the year in which the Date of Termination occurs and any accrued, but unused vacation pay through the Date of Termination (the “ Accrued Obligations ”); (B) the target Bonus Executive would have earned for the year of termination assuming targets had been achieved, pro-rated based on the number of days Executive was employed by the Company during the year over the number of days in such year (the “ Pro-Rated Bonus ”); and

(ii) commencing on the Severance Payment Date (as defined below) and provided Executive does not breach Section 9 of this Agreement following his termination in which case all payments under this clause (ii) shall cease, the Company shall continue to pay Executive the sum of his annual rate of Base Salary and target Bonus (assuming targets had been achieved) in 12 equal monthly installments. For purposes of this Agreement, the “ Severance Payment Date ” shall mean (i) if the Board (or its delegate) determines in its discretion that Executive is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the United States Internal Revenue Code of 1986, as amended (the “ Code ”)) as of the date of termination and that Section 409A of the Code applies with respect to a payment to Executive pursuant to this Section 8(a), the six-month anniversary of the date of termination or (ii) if the Board (or its delegate) determines in its discretion that Executive is not a specified employee as of the date of termination (or that Section 409A of the Code does not apply with respect to a payment to Executive pursuant to this Section 8(a)), the first day following the applicable revocation period set forth in the release contemplated in this Section 8; and

(iii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(iv) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive in accordance with the terms and provisions of any agreements, plans or programs of the Company.

(b) Termination By the Company for Cause, By Executive Without Good Reason or Expiration of Employment Period . If Executive’s employment is terminated by the Company for Cause or by Executive (other than for Good Reason) or upon expiration of the Employment Period (except as provided in Section 6(g)):

(i) the Company shall pay Executive, as soon as practicable following the Date of Termination, the Accrued Obligations; and

(ii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment.

(c) Disability . During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (“ Disability Period ”), Executive shall continue to receive his full Base Salary set forth in Section 5(a) until his employment is terminated pursuant to Section 6(b) off-set, on a dollar for dollar basis, by any insurance or social security payments made to Executive relating to such disability. In the event Executive’s employment is terminated for Disability pursuant to Section 6(b):

(i) the Company shall pay to Executive as soon as practicable following the Date of Termination: (A) the Accrued Obligations and (B) a Pro-Rated Bonus; and

(ii) the Company shall continue to pay Executive his annual rate of Base Salary and provide Executive the health insurance benefits that he was receiving immediately prior to the Date of Termination, for the lesser of (A) one year following the Date of Termination or (B) until such time as any Company long-term disability benefit plan becomes available to Executive; provided , that , if the Company is unable to continue the health insurance benefits following the Date of Termination, the Company shall pay Executive the cost of similar health insurance benefits, not to exceed the cost the Company would incur if Executive had continued to remain in the Company’s health plans; and

(iii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(d) Death . If Executive’s employment is terminated by his death:

(i) the Company shall pay in a lump sum to Executive’s beneficiary, legal representatives or estate, as the case may be, the Accrued Obligations and Pro-Rated Bonus as soon as practicable following such death; and

(ii) the Company shall reimburse Executive’s beneficiary, legal representatives, or estate, as the case may be, pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(iii) Executive’s spouse and dependents shall be entitled to continue receiving health insurance benefits that they were receiving as of the Date of Termination for one (1) year following Executive’s death; provided , that , if the Company is unable to continue the health insurance benefits following the Date of Termination, the Company shall pay Executive’s spouse and dependents the cost of similar health insurance benefits, not to exceed the cost the Company would incur if Executive had continued to remain in the Company’s health plans; and

(iv) Executive’s beneficiary, legal representatives or estate, as the case may be, shall be entitled to any other rights, compensation and benefits as may be due to any such persons or estate in accordance with the terms and provisions of any agreements, plans or programs of the Company.

(e) Family Reasons . If Executive’s employment is terminated for Family Reasons:

(i) the Company shall pay Executive his Accrued Obligations and Pro-Rated Bonus; and

(ii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(iii) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive in accordance with the terms and provisions of any agreements, plans or programs of the Company.

9. Restrictive Covenants .

Parent would not have granted the Options unless he agreed to be bound by the terms hereof; and (vii) the provisions of this Agreement will not preclude Executive from other gainful employment. “ Competing Entity ” as used in this Agreement shall mean any business which competes, directly or indirectly, with any aspect of the Group’s business. “ Confidential Information ” as used in this Agreement shall mean any and all confidential and/or proprietary knowledge, data, or information of the Group including, without limitation, any: (A) trade secrets, drawings, inventions, methodologies, mask works, ideas, processes, formulas, source and object codes, data, programs, software source documents, works of authorship, know-how, improvements, discoveries, developments, designs and techniques, and all other work product of the Group, whether or not patentable or registrable under trademark, copyright, patent or similar laws; (B) information regarding plans for research, development, new service offerings and/or products, marketing, advertising and selling, distribution, business plans, business forecasts, budgets and unpublished financial statements, licenses, prices and costs, suppliers, customers or distribution arrangements; (C) any information regarding the skills and compensation of employees, suppliers, agents, and/or independent contractors of the Group; (D) concepts and ideas relating to the development and distribution of content in any medium or to the current, future and proposed products or services of the Group; (E) information about the Group’s investment program, trading methodology, or portfolio holdings; or (F) any other information, data or the like that is labeled confidential or orally disclosed to Executive as confidential.

(b) Confidentiality . In consideration of the benefits provided for in this Agreement, Executive agrees not to, at any time, either during the Employment Period or thereafter, divulge, use, publish or in any other manner reveal, directly or indirectly, to any person, firm, corporation or any other form of business organization or arrangement and keep in the strictest confidence any Confidential Information, except (i) as may be necessary to the performance of Executive’s duties hereunder, (ii) with the Company’s express written consent, (iii) to the extent that any such information is in or becomes in the public domain other than as a result of Executive’s breach of any of the obligations hereunder, or (iv) where required to be disclosed by court order, subpoena or other government process and in such event, Executive shall cooperate with the Company in attempting to keep such information confidential. Upon the request of the Company, Executive agrees to promptly deliver to the Company the originals and all copies, in whatever medium, of all such Confidential Information.

(c) Non-Compete . In consideration of the benefits provided for in this Agreement, Executive covenants and agrees that during the Employment Period and for a period of six (6) months following the termination of his employment for whatever reason (except for termination under Section 6(g) which is not deemed to be a termination under Section 6(e)), or following the date of cessation of the last violation of this Agreement, or from the date of entry by a court of competent jurisdiction of a final, unappealable judgment enforcing this covenant, whichever of the foregoing is last to occur, he will not, for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement (whether as a shareholder, partner, member, principal, agent, lender, director, officer, manager, trustee, representative, employee or consultant), directly or indirectly, be employed by, provide services to, in any way be connected, associated or have any interest in, or give advice or consultation to any Competing Entity.

(d) Non-Solicitation of Employees . In consideration of the benefits provided for in this Agreement, Executive covenants and agrees that during the Employment Period and for a period of one (1) year thereafter, Executive shall not, without the prior written permission of the Company, (i) directly or indirectly solicit, employ or retain, or have or cause any other person or entity to solicit, employ or retain, any person who is employed or is providing services to the Group at the time of his termination of employment or was or is providing such services within the twelve (12) month period before or after his termination of employment or (ii) request or cause any employee of the Group to breach or threaten to breach any terms of said employee’s agreements with the Group or to terminate his or his employment with the Group.

(e) Non-Solicitation of Clients and Customers . In consideration of the benefits provided for in this Agreement, Executive covenants and agrees that during the Employment Period and for a period of one (1) year thereafter, he will not, for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement (whether as a shareholder, partner, member, lender, principal, agent, director, officer, manager, trustee, representative, employee or consultant), directly or indirectly: (i) solicit or accept any business that is directly related to the business of the Group, from any person or entity who, at the time of, or at the time during the twelve months preceding such termination, was an existing or prospective customer or client of the Group; (ii) request or cause any of the Group’s clients or customers to cancel or terminate any business relationship with the Group involving services or activities which were directly or indirectly the responsibility of Executive during his employment or (iii) pursue any Group project known to Executive upon termination of his employment that the Group is actively pursuing (or was actively pursuing within six months of termination) while the Group is (or is contemplating) actively pursuing such project.

(f) Post-Employment Property . The parties agree that any work of authorship, invention, design, discovery, development, technique, improvement, source code, hardware, device, data, apparatus, practice, process, method or other work product whatever (whether patentable or subject to copyright, or not, and hereinafter collectively called “discovery”) related to the business of the Group that Executive, either solely or in collaboration with others, has made or may make, discover, invent, develop, perfect, or reduce to practice during the Employment Period, whether or not during regular business hours and created, conceived or prepared on the Group’s premises or otherwise shall be the sole and complete property of the Group. More particularly, and without limiting the foregoing, Executive agrees that all of the foregoing and any (i) inventions (whether patentable or not, and without regard to whether any patent therefor is ever sought), (ii) marks, names, or logos (whether or not registrable as trade or service marks, and without regard to whether registration therefor is ever sought), (iii) works of authorship (without regard to whether any claim of copyright therein is ever registered), and (iv) trade secrets, ideas, and concepts ((i) - (iv) collectively, “ Intellectual Property Products ”) created, conceived, or prepared on the Group’s premises or otherwise, whether or not during normal business hours, shall perpetually and throughout the world be the exclusive property of the Group, as shall all tangible media (including, but not limited to, papers, computer media of all types, and models) in which such Intellectual Property Products shall be recorded or otherwise fixed. Executive further agrees promptly to disclose in writing and deliver to the Company all Intellectual Property Products created during his engagement by the

Company, whether or not during normal business hours. Executive agrees that all works of authorship created by Executive during his engagement by the Company shall be works made for hire of which the Group is the author and owner of copyright. To the extent that any competent decision-making authority should ever determine that any work of authorship created by Executive during his engagement by the Company is not a work made for hire, Executive hereby assigns all right, title and interest in the copyright therein, in perpetuity and throughout the world, to the applicable Group entity. To the extent that this Agreement does not otherwise serve to grant or otherwise vest in the Group all rights in any Intellectual Property Product created by Executive during his engagement by the Company, Executive hereby assigns all right, title and interest therein, in perpetuity and throughout the world, to the Company. Executive agrees to execute, immediately upon the Company’s reasonable request and without charge, any further assignments, applications, conveyances or other instruments, at any time after execution of this Agreement, whether or not Executive is engaged by the Company at the time such request is made, in order to permit the Group and/or its respective assigns to protect, perfect, register, record, maintain, or enhance their rights in any Intellectual Property Product; provided , that , the Company shall bear the cost of any such assignments, applications or consequences. Upon termination of Executive’s employment by the Company for any reason whatsoever, and at any earlier time the Company so requests, Executive will immediately deliver to the custody of the person designated by the Company all originals and copies of any documents and other property of the Company in Executive’s possession, under Executive’s control or to which he may have access.

(g) Non-Disparagement . Executive acknowledges and agrees that he will not defame or publicly criticize the services, business, integrity, veracity or personal or professional reputation of the Group and its respective officers, directors, partners, executives or agents thereof in either a professional or personal manner at any time during or following the Employment Period.

(h) Enforcement . If Executive commits a breach, or threatens to commit a breach, of any of the provisions of this Section 9, the Company shall have the right and remedy to have the provisions specifically enforced by any court having jurisdiction, it being acknowledged and agreed by Executive that the services being rendered hereunder to the Company are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Group and that money damages will not provide an adequate remedy to the Group. Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. Accordingly, Executive consents to the issuance of an injunction, whether preliminary or permanent, consistent with the terms of this Agreement. In addition, the Company and Parent shall have the right to cease making any payments or provide any benefits to Executive under this Agreement in the event he breaches or threatens to breach any of the provisions hereof (and such action shall not be considered a breach under the Agreement).

having jurisdiction over the matter and Executive and the Company and Parent agree that this Agreement as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

(j) EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS SECTION 9 AND HAS HAD THE OPPORTUNITY TO REVIEW ITS PROVISIONS WITH ANY ADVISORS AS HE CONSIDERED NECESSARY AND THAT EXECUTIVE UNDERSTANDS THIS AGREEMENT’S CONTENTS AND SIGNIFIES SUCH UNDERSTANDING AND AGREEMENT BY SIGNING BELOW.

10. Resolution of Differences Over Breaches of Agreement . The parties shall use good faith efforts to resolve any controversy or claim arising out of, or relating to this Agreement or the breach thereof, first in accordance with the Company’s internal review procedures, except that this requirement shall not apply to any claim or dispute under or relating to Section 9 of this Agreement. If despite their good faith efforts, the parties are unable to resolve such controversy or claim through the Company’s internal review procedures, then such controversy or claim shall be resolved by binding arbitration for resolution in New York, New York in accordance with the rules and procedures of the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. The decision of the arbitrator shall be final and binding on both parties, and any court of competent jurisdiction may enter judgment upon the award. Each party shall pay its own expenses, including legal fees, in such dispute and shall split the cost of the arbitrator and the arbitration proceedings.

11. Indemnification . The Company and Parent agree that if Executive is made a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Executive is or was a director or officer of the Company or any other entity within the Group or is or was serving at the request of the Parent, Company or any other member of the Group as a director, officer, member, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise, Executive shall be indemnified and held harmless by the Company and/or Parent to the fullest extent authorized by the Company’s and/or Parent’s by-laws and/or charter, as the same exists or may hereafter be amended, against all expenses incurred or suffered by Executive in connection therewith, except for willful misconduct or any acts (or omissions) of gross negligence by Executive.

12. Successors; Binding Agreement . The rights and benefits of Executive hereunder shall not be assignable, whether by voluntary or involuntary assignment or transfer by Executive. This Agreement shall be binding upon, and inure to the benefit of, the successors and assigns of the Company, and the heirs, executors and administrators of Executive, and shall be assignable by the Company to Parent or to any entity acquiring substantially all of the assets of the Company or the Parent, whether by merger, consolidation, sale of assets or similar transactions.

on file with the Company and if to the Company, to its executive offices or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

14. Governing Law . This Agreement is governed by, and is to be construed and enforced in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. If, under such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto or, if that is not possible, to be omitted from this Agreement, and the invalidity of any such portion shall not affect the force, effect and validity of the remaining portion hereof.

15. Amendment . No provisions of this Agreement may be amended, modified, or waived unless such amendment or modification has been approved by the Board and is agreed to in a writing signed by Executive and a member of the Board (excluding Executive or any other member of the Board who is also an employee of the Company), and such waiver is set forth in writing and signed by the party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

16. Survival . The respective obligations of, and benefits afforded to, Executive and the Company and Parent as provided in Section 9 of this Agreement shall survive the termination of this Agreement.

17. No Conflict of Interest . During the Employment Period, Executive shall not, directly or indirectly, render service, or undertake any employment or consulting agreement with another entity without the express written consent of the Board.

18. Counterparts . This Agreement may be executed in two or more-counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

19. Entire Agreement . This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter. Any prior agreement of the parties hereto in respect of the subject matter contained herein including, without limitation, the Original Agreement, is hereby terminated and canceled as of the date hereof.

20. Section Headings . The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

21. Withholding . All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation.

22. Representation . Executive represents and warrants to the Parent and the Company, and Executive acknowledges that the Company has relied on such representations and warranties in employing Executive, that neither Executive’s duties as an employee of the Company nor his performance of this Agreement will breach any other agreement to which Executive is a party, including without limitation, any agreement limiting the use or disclosure of any information acquired by Executive prior to his employment by the Company. In the course of performing Executive’s work for the Company, Executive will not disclose or make use of any information, documents or materials that Executive is under any obligation to any other party to maintain in confidence. In addition, Executive represents and warrants and acknowledges that the Company has relied on such representations and warranties in employing Executive, that he has not entered into, and will not enter into, any agreement, either oral or written, in conflict herewith. If it is determined that Executive is in breach or has breached any of the representations set forth herein, the Company shall have the right to terminate Executive’s employment for Cause.

23. Review by Counsel . Executive represents and warrants that this Agreement is the result of full and otherwise fair faith bargaining over its terms following a full and otherwise fair opportunity to have legal counsel for Executive review this Agreement and verify that the terms and provisions of this Agreement are reasonable and enforceable. Executive acknowledges that he has read and understands the foregoing provisions and that such provisions are reasonable and enforceable. This Agreement has been jointly drafted by both parties.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

		GREENLIGHT CAPITAL RE, LTD.
		By:	/s/ Alan Brooks

			Name: Alan M. Brooks Title: Director

		GREENLIGHT REINSURANCE, LTD.
		By:	/s/ Alan Brooks

			Name: Alan M. Brooks Title: Director


		Leonard Goldberg

		Leonard Goldberg Executive

Exhibit 10.13

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of May 1, 2006 by and between Greenlight Capital Re, Ltd. (the “Parent”), Greenlight Reinsurance, Ltd. (the “Company”) and Tim Courtis (“Executive”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows:

1. Employment . The Company hereby agrees to employ Executive as the Chief Financial Officer of the Company (the “CFO”), and Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.

2. Employment Period . The period of employment of Executive by the Company under this Agreement (the “Employment Period”) shall commence on the later of (a) the date on which the Company obtains all necessary work permits in order for Executive to work in the Cayman Islands including, without limitation, any and all necessary approvals of the Cayman Islands Monetary Authority and (b) the date first written above (the “Effective Date”) and shall continue until terminated by either party in accordance with Section 6 of this Agreement. Executive’s employment shall at all times be “at will” and not for a definite duration, and nothing contained herein shall confer upon Executive any contractual right to continued employment. This Agreement is conditioned upon the Company maintaining a work permit for Executive and Executive complying with the Cayman Islands Immigration laws and regulations from time to time in force.

3. Position and Duties . During the Employment Period, Executive shall serve as CFO and shall report directly to the Company’s Chief Executive Officer (the “CEO”) or such other officer of the Company designated by the CEO or the Board of Directors of the Company (the “Board”). Executive shall have those powers and duties normally associated with the position of CFO of entities comparable to the Company and such other powers and duties as may be prescribed by the Company; provided , that , such other powers and duties are consistent with Executive’s position as CFO and do not violate any applicable laws or regulations. Executive shall perform his duties to the best of his abilities and shall devote all of his working time, attention and energies to the performance of his duties for the Company. If requested by the Board of Directors of the Parent, Executive shall also serve as an officer and/or director of the Parent or any other subsidiary or affiliate of the Parent or the Company for no additional compensation.

5. Compensation and Related Matters .

(a) Base Salary and Bonus . During the Employment Period, the Company shall pay Executive a base salary at the rate of not less than US $250,000 per year (“Base Salary”). Executive’s Base Salary shall be paid in accordance with the Company’s customary payroll practices. The Board shall periodically review Executive’s Base Salary for increase (but not decrease), consistent with the compensation practices and guidelines of the Company. If Executive’s Base Salary is increased by the Company, such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement. In addition to Base Salary, during the Employment Period, Executive shall be eligible for an annual bonus based on pre-established performance metrics established by the Board (the “Bonus”). Executive shall be eligible to receive a discretionary Bonus, based on performance goals established by the Board, with a target of 50% of Base Salary. For calendar year 2006, Executive’s guaranteed minimum bonus shall be $125,000, pro-rated for the portion of the 2006 calendar year he is employed by the Company. Any Bonus earned during a calendar year shall be paid at such time as the Company customarily pays annual bonuses; provided , that , Executive is still employed as of such date. If Executive’s prior employer fails to pay Executive the bonus earned by Executive during the 2005 calendar year, the Company shall pay Executive an additional bonus (the “Additional Bonus”). The Additional Bonus shall be payable in two installments, each in the amount of $125,000, provided , that , Executive is employed by the Company on each of the payment dates. The first installment shall be paid on December 31, 2006, and the second shall be paid on December 31, 2007.

(c) Vacation . During the Employment Period, Executive shall be entitled to five (5) weeks of paid vacation per year to be used and accrued in accordance with the Company’s policy as it may be established from time to time. In addition to vacation, Executive shall be entitled to the number of sick days, personal days and national holidays per year to which other employees of the Company with similar tenure are entitled under the Company’s policies, but in no event less than the minimum days mandated by Cayman Islands statutory requirements.

(e) Living Allowance . During the Employment Period, Executive shall be entitled to receive a Cayman Islands living allowance of US $6,000 per month. Executive will be responsible for any taxes due on such allowance.

(f) Relocation Allowance . Within 30 days of Executive’s first day of employment, Executive shall receive a relocation allowance in the amount of $25,000.

(g) Stock Options .

(i) On the Effective Date or as soon as administratively feasible thereafter, the Parent shall grant Executive a stock option (an “Option”) to acquire 75,000 shares of the Parent’s Class A ordinary shares, $0.10 par value per share (“Shares”) under such terms and conditions as provided for under the Parent’s then existing stock incentive plan which are not inconsistent with clauses (ii) and (iii) below.

(ii) The Option described in paragraph (i) above shall be granted subject to the following terms and conditions: (A) the Option shall be granted under and subject to the Parent’s stock incentive plan (the “Plan”); (B) the exercise price per Share subject to the Option shall be equal to the fair market value per Share as of the date of grant; (C) the Option shall be vested as to 33 1/3 % of the Shares subject thereto on each of the first three anniversaries of the date of grant; provided , that , the Option shall cease to vest upon Executive’s termination of employment with the Company; (D) the Option shall be exercisable for the ten (10) year period following the date of grant; provided , that , upon Executive’s termination of employment with the Company for any reason, any unvested portion of the Option shall automatically terminate and the vested portion of the Option shall remain exercisable for 90 days after Executive’s termination of employment with the Company; and (E) the Option shall be evidenced by, and subject to, a stock option agreement whose terms and conditions are consistent with the terms hereof.

(iii) The Shares acquired upon exercise of the Options shall be subject to the terms and conditions of the Parent’s Shareholders’ Agreement as it may be amended from time to time and Executive shall become a party to such agreement at such time.

6. Termination . Executive’s employment hereunder may be terminated under the following circumstances:

(a) Death . Executive’s employment hereunder shall terminate upon his death.

(b) Disability . If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been substantially unable to perform his duties hereunder for an entire period of at least 90 consecutive days or 180 non-consecutive days within any 365-day period, the Company shall have the right to terminate Executive’s employment hereunder for “Disability”, and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement.

hereunder; (ii) conviction by a court of competent jurisdiction, or plea of “no contest” or guilty to a criminal offense; (iii) engaging in fraud, embezzlement or any other illegal conduct with respect to the Company and/or the Parent or any of their affiliates (collectively, the “Group”); (iv) willfully violating the Restrictive Covenants set forth in Section 9 of this Agreement; (v) willful failure or refusal to perform his duties hereunder (other than such failure caused by Executive’s Disability or while on vacation) after a written demand for performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has failed or refused to perform his duties; or (vi) breach of any material provision of this Agreement or any Group policies related to conduct which is not cured, if curable, within ten (10) days after written notice thereof. The Company shall have the right to suspend Executive with pay in order to investigate any event which it reasonably believes may provide a basis to terminate Executive’s employment for Cause and such action shall not give Executive Good Reason to terminate his employment.

(d) Good Reason . Executive may terminate his employment with the Company for “Good Reason” within thirty (30) days after Executive has knowledge of the occurrence, without Executive’s written consent, of one of the following events that has not been cured, if curable, within thirty (30) days after written notice thereof has been given by Executive to the Company and such termination in .and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement, “Good Reason” shall be limited to the following: (i) any material and adverse change to Executive’s duties which are inconsistent with his duties set forth herein, (ii) a reduction of Executive’s Base Salary, or (iii) a failure by the Company to comply with any other material provisions of this Agreement.

7. Termination Procedure .

(a) Notice of Termination . Any termination of Executive’s employment by the Company or by Executive (other than termination pursuant to Section 6(a)) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13 of this Agreement. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(provided that Executive shall not have returned to the substantial performance of his duties on a full-time basis during such thirty (30) day period), and (iii) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within ninety (90) days after the giving of such notice) set forth in such Notice of Termination; provided , that , if applicable, the Notice of Termination shall not be effective until the cure period has expired and such event or events leading to such termination have not yet been cured.

8. Compensation Upon Termination . In the event Executive’s employment is terminated, the Company shall provide Executive with the payments set forth below and shall not be required to provide any other payments or benefits to Executive upon such termination. Executive acknowledges and agrees that the payments set forth in this Section 8 constitute liquidated damages for termination of his employment and that prior to receiving any such payments under Section 8 and as a material condition thereof, Executive shall, if requested by the Company, sign and agree to be bound by a general release of claims against the Company and its affiliates related to Executive’s employment (and termination of employment) with the Company in such form as the Board deems appropriate. Upon Executive’s termination of employment for any reason, upon the request of the Board, he shall resign any membership or positions that he then holds with the Company or any of its affiliates.

(a) Termination By the Company without Cause or By Executive for Good Reason . If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason:

(i) as soon as practicable following such termination, the Company shall pay to Executive: (A) his accrued, but unpaid Base Salary earned through the Date of Termination, his accrued, but unpaid Bonus earned for the year immediately prior to the year in which the Date of Termination occurs and any accrued, but unused vacation pay through the Date of Termination (the “Accrued Obligations”); (B) the target Bonus Executive would have earned for the year of termination assuming targets had been achieved, pro-rated based on the number of days Executive was employed by the Company during the year over the number of days in such year (the “Pro-Rated Bonus”); and

(ii) commencing on the Severance Payment Date (as defined below) and provided Executive does not breach Section 9 of this Agreement following his termination in which case all payments under this clause (ii) shall cease, the Company shall continue to pay Executive the sum of his annual rate of Base Salary and target Bonus (assuming targets had been achieved) in twelve (12) equal monthly installments. For purposes of this Agreement, the “Severance Payment Date” shall mean (i) if the Board (or its delegate) determines in its discretion that Executive is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the United States Internal Revenue Code of 1986, as amended (the “Code”)) as of the date of termination and that Section 409A of the Code applies with respect to a payment to Executive pursuant to this Section 8(a), the six-month anniversary of the date of termination or (ii) if the Board (or its delegate) determines in its discretion that Executive is not a specified employee as of the date of termination (or that Section 409A of the Code does not apply with respect to a

payment to Executive pursuant to this Section 8(a)), the first day following the applicable revocation period set forth in the release contemplated in this Section 8; and

(iii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(v) on the Severance Payment Date, the Company shall pay Executive the Additional Bonus, to the extent that it has not been paid and is owed to Executive pursuant to the terms of Section 5(a), and an additional lump sum payment in the amount of $25,000.

(b) Termination By the Company for Cause or By Executive Without Good Reason . If Executive’s employment is terminated by the Company for Cause or by Executive (other than for Good Reason):

(i) the Company shall pay Executive, as soon as practicable following the Date of Termination, the Accrued Obligations; and

(ii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment.

(c) Disability . During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (“Disability Period”), Executive shall continue to receive his full Base Salary set forth in Section 5(a) until his employment is terminated pursuant to Section 6(b) off-set, on a dollar for dollar basis, by any insurance or social security payments made to Executive relating to such disability. In the event Executive’s employment is terminated for Disability pursuant to Section 6(b):

(i) the Company shall pay to Executive as soon as practicable following the Date of Termination: (A) the Accrued Obligations and (B) a Pro-Rated Bonus; and

(iii) the Company shall reimburse Executive pursuant to Section 5 for reasonable expenses incurred, but not paid prior to such termination of employment; and

(d) Death . If Executive’s employment is terminated by his death:

9. Restrictive Covenants .

this Agreement will not preclude Executive from other gainful employment. “Competitive Business” as used in this Agreement shall mean any business which competes, directly or indirectly, with any aspect of the Group’s business. “Confidential Information” as used in this Agreement shall mean any and all confidential and/or proprietary knowledge, data, or information of the Group including, without limitation, any: (A) trade secrets, drawings, inventions, methodologies, mask works, ideas, processes, formulas, source and object codes, data, programs, software source documents, works of authorship, know-how, improvements, discoveries, developments, designs and techniques, and all other work product of the Group, whether or not patentable or registrable under trademark, copyright, patent or similar laws; (B) information regarding plans for research, development, new service offerings and/or products, marketing, advertising and selling, distribution, business plans, business forecasts, budgets and unpublished financial statements, licenses, prices and costs, suppliers, customers or distribution arrangements; (C) any information regarding the skills and compensation of employees, suppliers, agents, and/or independent contractors of the Group; (D) concepts and ideas relating to the development and distribution of content in any medium or to the current, future and proposed products or services of the Group; (E) information about the Group’s investment program, trading methodology, or portfolio holdings; or (F) any other information, data or the like that is labeled confidential or orally disclosed to Executive as confidential.

(b) Confidentiality . In consideration of the benefits provided for in this Agreement, Executive agrees not to, at any time, either during the Employment Period or thereafter, divulge, use, publish or in any other manner reveal, directly or indirectly, to any person, firm, corporation or any other form of business organization or arrangement and keep in the strictest confidence any Confidential Information, except (i) as may be necessary to the performance of Executive’s duties hereunder, (ii) with the Company’s express written consent, (iii) to the extent that any such information is in or becomes in the public domain other than as a result of Executive’s breach of any of his obligations hereunder, or (iv) where required to be disclosed by court order, subpoena or other government process and in such event, Executive shall cooperate with the Company in attempting to keep such information confidential. Upon the request of the Company, Executive agrees to promptly deliver to the Company the originals and all copies, in whatever medium, of all such Confidential Information.

(c) Non-Compete . In consideration of the benefits provided for in this Agreement, Executive covenants and agrees that during the Employment Period and for a period of six (6) months following the termination of his employment for whatever reason, or following the date of cessation of the last violation of this Agreement, or from the date of entry by a court of competent jurisdiction of a final, unappealable judgment enforcing this covenant, whichever of the foregoing is last to occur, he will not, for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement (whether as a shareholder, partner, member, principal, agent, lender, director, officer, manager, trustee, representative, employee or consultant), directly or indirectly, be employed by, provide services to, in any way be connected, associated or have any interest in, or give advice or consultation to any Competitive Business.

permission of the Company, (i) directly or indirectly solicit, employ or retain, or have or cause any other person or entity to solicit, employ or retain, any person who is employed or is providing services to the Group at the time of his termination of employment or was or is providing such services within the twelve (12) month period before or after his termination of employment or (ii) request or cause any employee of the Group to breach or threaten to breach any terms of said employee’s agreements with the Group or to terminate his or her employment with the Group.

(e) Non-Solicitation of Clients and Customers . In consideration of the benefits provided for in this Agreement, Executive covenants and agrees that during the Employment Period and for a period of one (1) year thereafter, he will not, for himself, or in conjunction with any other person, firm, partnership, corporation or other form of business organization or arrangement (whether as a shareholder, partner, member, lender, principal, agent, director, officer, manager, trustee, representative, employee or consultant), directly or indirectly: (i) solicit or accept any business that is directly related to the business of the Group, from any person or entity who, at the time of, or at the time during the twelve (12) months preceding such termination, was an existing or prospective customer or client of the Group; (ii) request or cause any of the Group’s clients or customers to cancel or terminate any business relationship with the Group involving services or activities which were directly or indirectly the responsibility of Executive during his employment or (iii) pursue any Group project known to Executive upon termination of his employment that the Group is actively pursuing (or was actively pursuing within six months of termination) while the Group is (or is contemplating) actively pursuing such project.

(f) Post-Employment Property . The parties agree that any work of authorship, invention, design, discovery, development, technique, improvement, source code, hardware, device, data, apparatus, practice, process, method or other work product whatever (whether patentable or subject to copyright, or not, and hereinafter collectively called “discovery”) related to the business of the Group that Executive, either solely or in collaboration with others, has made or may make, discover, invent, develop, perfect, or reduce to practice during the Employment Period, whether or not during regular business hours and created, conceived or prepared on the Group’s premises or otherwise shall be the sole and complete property of the Group. More particularly, and without limiting the foregoing, Executive agrees that all of the foregoing and any (i) inventions (whether patentable or not, and without regard to whether any patent therefor is ever sought), (ii) marks, names, or logos (whether or not registrable as trade or service marks, and without regard to whether registration therefor is ever sought), (iii) works of authorship (without regard to whether any claim of copyright therein is ever registered), and (iv) trade secrets, ideas, and concepts ((i) - (iv) collectively, “Intellectual Property Products”) created, conceived, or prepared on the Group’s premises or otherwise, whether or not during normal business hours, shall perpetually and throughout the world be the exclusive property of the Group, as shall all tangible media (including, but not limited to, papers, computer media of all types, and models) in which such Intellectual Property Products shall be recorded or otherwise fixed. Executive further agrees promptly to disclose in writing and deliver to the Company all Intellectual Property Products created during his engagement by the Company, whether or not during normal business hours. Executive agrees that all works of authorship created by Executive during his engagement by the Company shall be works made for hire of which the Group is the author and owner of copyright. To the extent that any competent

decision-making authority should ever determine that any work of authorship created by Executive during his engagement by the Company is not a work made for hire, Executive hereby assigns all right, title and interest in the copyright therein, in perpetuity and throughout the world, to the applicable Group entity. To the extent that this Agreement does not otherwise serve to grant or otherwise vest in the Group all rights in any Intellectual Property Product created by Executive during his engagement by the Company, Executive hereby assigns all right, title and interest therein, in perpetuity and throughout the world, to the Company. Executive agrees to execute, immediately upon the Company’s reasonable request and without charge, any further assignments, applications, conveyances or other instruments, at any time after execution of this Agreement, whether or not Executive is engaged by the Company at the time such request is made, in order to permit the Group and/or its respective assigns to protect, perfect, register, record, maintain, or enhance their rights in any Intellectual Property Product; provided , that , the Company shall bear the cost of any such assignments, applications or consequences. Upon termination of Executive’s employment by the Company for any reason whatsoever, and at any earlier time the Company so requests, Executive will immediately deliver to the custody of the person designated by the Company all originals and copies of any documents and other property of the Company in Executive’s possession, under Executive’s control or to which he may have access.

(i) Blue Pencil . If, at any time, the provisions of this Section 9 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and Executive and the Company and Parent agree that this Agreement as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

11. Indemnification . The Company and Parent agree that if Executive is made a party or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Executive is or was a director or officer of the Company or any other entity within the Group or is or was serving at the request of the Parent, Company or any other member of the Group as a director, officer, member, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise, Executive shall be indemnified and held harmless by the Company and/or Parent to the fullest extent authorized by the Company’s and/or Parent’s by-laws and/or charter, as the same exists or may hereafter be amended, against all expenses incurred or suffered by Executive in connection therewith, except for willful misconduct or any acts (or omissions) of gross negligence by Executive.

13. Notice . For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by overnight, certified or registered mail, return receipt requested, postage prepaid, addressed, in the case of Executive, to the last address on file with the Company and if to the Company, to its executive offices or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

18. Counterparts . This Agreement may be executed in two or more-counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

19. Entire Agreement . This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter. Any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and canceled as of the date hereof,

20. Section Headings . The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

21. Withholding . All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation.

any information acquired by Executive prior to his employment by the Company. In the course of performing Executive’s work for the Company, Executive will not disclose or make use of any information, documents or materials that Executive is under any obligation to any other party to maintain in confidence. In addition, Executive represents and warrants and acknowledges that the Company has relied on such representations and warranties in employing Executive, that he has not entered into, and will not enter into, any agreement, either oral or written, in conflict herewith. If it is determined that Executive is in breach or has breached any of the representations set forth herein, the Company shall have the right to terminate Executive’s employment for Cause.

23. Review by Counsel . Executive represents and warrants that this Agreement is the result of full and otherwise fair faith bargaining over its terms following a full and otherwise fair opportunity to have legal counsel for Executive review this Agreement and to verify that the terms and provisions of this Agreement are reasonable and enforceable. Executive acknowledges that he has read and understands the foregoing provisions and that such provisions are reasonable and enforceable. This Agreement has been jointly drafted by both parties.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

		GREENLIGHT CAPITAL RE, LTD.
		By:	/s/ Leonard Golberg
			Name: Leonoard Goldberg
			Title: CEO

		GREENLIGHT REINSURANCE, LTD.
		By:	/s/ Leonard Golberg
			Name: Leonoard Goldberg
			Title: CEO

		/s/ Tim Courtis
		Tim Courtis
		Executive

Exhibit 10.14

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of December 12, 2005 by and between Greenlight Reinsurance, Ltd. (the “Company”) and Barton Hedges (“Executive”).

IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows:

1. Employment . The Company hereby agrees to employ Executive as the President and Chief Underwriting Officer of the Company (the “President and CUO”), and Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.

2. Employment Period . The period of employment of Executive by the Company under this Agreement (the “Employment Period”) shall commence on the later of (a) the date on which the Company obtains all necessary work permits in order for Executive to work in the Cayman Islands including, without limitation, any and all necessary approvals of the Cayman Islands Monetary Authority and (b) January 2, 2006 (the “Effective Date”) and shall continue until terminated by either party in accordance with Section 6 of this Agreement. Executive’s employment shall at all times be “at will” and not for a definite duration, and nothing contained herein shall confer upon Executive any contractual right to continued employment. This Agreement is conditioned upon the Company maintaining a work permit for Executive and Executive complying with the Cayman Islands Immigration laws and regulations from time to time in force.

3. Position and Duties . During the Employment Period, Executive shall serve as President and CUO and shall report directly to the Company’s Chief Executive Officer (the “CEO”) or the Board of Directors of the Company (the “Board”). Executive shall have those powers and duties normally associated with the position of President and CUO and such other powers and duties as may be prescribed by the Company; provided that , such other powers and duties are consistent with Executive’s position as President and CUO and do not violate any applicable laws or regulations. Executive shall perform his duties to the best of his abilities and shall devote all of his working time, attention and energies to the performance of his duties for the Company. If requested by the Board of Directors of the Company, Executive shall also serve as an officer and/or director of the Company for no additional compensation.

4. Place of Performance . The Company’s principal place of business is the Cayman Islands. Executive shall be required to travel to the Cayman Islands as necessary to perform his duties hereunder. During the Employment Period, Executive shall comply with all Company policies, as may be amended from time to time, including, without limitation, conducting the business affairs of the Company such that it is not deemed to be engaging in a trade or business within the United States.

5. Compensation and Related Matters .

(a) Base Salary and Bonus. During the Employment Period, the Company shall pay Executive a base salary at the rate of not less than US $450,000 per year (“Base Salary”). Executive’s Base Salary shall be paid in accordance with the Company’s customary payroll practices. The Board shall periodically review Executive’s Base Salary for

increase (but not decrease), consistent with the compensation practices and guidelines of the Company. If Executive’s Base Salary is increased by the Company, such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement. In addition to Base Salary, during the Employment Period, Executive shall be eligible for an annual bonus based on pre-established performance metrics established by the Board (the “Bonus”). With respect to the 2006 calendar year, Executive shall be guaranteed a Bonus equal to 100% of Base Salary. With respect to years thereafter, Executive shall be eligible to receive a discretionary Bonus with a target of 100% of Base Salary. Any Bonus earned during a calendar year shall be paid at such time as the Company customarily pays annual bonuses; provided , that , Executive is still employed as of such date. Executive shall receive a signing bonus in the amount of $50,000 which shall be payable at the end of the first month in which the Effective Date occurs; provided, that, Executive remains employed as of such date.

(d) Welfare, Pension and Incentive Benefit Plans . During the Employment Period, Executive shall be entitled to participate in such employee benefit plans and insurance programs offered by the Company, or which it may adopt from time to time, for its employees, in accordance with Cayman Islands Laws and regulations from time to time in force and in accordance with the eligibility requirements for participation therein. Prior to the time that the Company establishes welfare and health plans, the Company shall reimburse Executive for the cost of health insurance for himself and his family that is comparable to the health insurance Executive has in effect as of the Effective Date. In addition, during the Employment Period, the Company shall reimburse Executive for his reasonable expenses incurred in having an accountant assist and prepare his annual tax return. The Company will provide a workers’ compensation plan that meets or exceeds the statutory requirements of the Cayman Islands.

(e) Housing Allowance . During the Employment Period, Executive shall be entitled to receive a Cayman Islands housing allowance of US $6,000 per month. Executive will be responsible for any taxes due on such allowance.

(f) Stock Options .

(i) On the Effective Date or as soon as administratively feasible thereafter, Greenlight Capital Re, Ltd. (the “Parent”) shall grant Executive a

stock option (an “Option”) to acquire 250,000 shares of the Parent’s Class A ordinary shares, $0.10 par value per share (“Shares”) under such terms and conditions as provided for under the Parent’s then existing stock incentive plan which are not inconsistent with clauses (ii) and (iii) below.

(ii) The Option described in paragraph (i) above shall be granted subject to the following terms and conditions: (A) the Option shall be granted under and subject to the Parent’s stock incentive plan (the “Plan”); (B) the exercise price per Share subject to the Option shall be equal to the fair market value per Share as of the date of grant; (C) the Option shall be vested as to 33 1/3% of the Shares subject thereto on each of the first three anniversaries of the date of grant; provided, that, the Option shall cease to vest upon Executive’s termination of employment with the Company; (D) the Option shall be exercisable for the ten (10) year period following the date of grant; provided , that , upon Executive’s termination of employment with the Company for any reason, any unvested portion of the Option shall automatically terminate and the vested portion of the Option shall remain exercisable for 90 days after Executive’s termination of employment with the Company; and (E) the Option shall be evidenced by, and subject to, a stock option agreement whose terms and conditions are consistent with the terms hereof.

6. Termination . Executive’s employment hereunder may be terminated under the following circumstances:

(a) Death . Executive’s employment hereunder shall terminate upon his death.

(b) Disability . If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been substantially unable to perform his duties hereunder for an entire period of at least 90 consecutive days or 180 non-consecutive days within any 365-day period, the Company shall have the right to terminate Executive’s employment hereunder for “Disability”, and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement.

on vacation) after a written demand for performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has failed or refused to perform his duties; or (vi) breach of any material provision of this Agreement or any Group policies related to conduct which is not cured, if curable, within ten (10) days after written notice thereof. The Company shall have the right to suspend Executive with pay in order to investigate any event which it reasonably believes may provide a basis to terminate Executive’s employment for Cause and such action shall not give Executive Good Reason to terminate his employment.

(d) Good Reason . Executive may terminate his employment with the Company for “Good Reason” within thirty (30) days after Executive has knowledge of the occurrence, without Executive’s written consent, of one of the following events that has not been cured, if curable, within thirty (30) days after written notice thereof has been given by Executive to the Company and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. “Good Reason” shall be limited to the following: (i) any material and adverse change to Executive’s duties which are inconsistent with his duties set forth herein, (ii) a reduction of Executive’s Base Salary, or (iii) a failure by the Company to comply with any other material provisions of this Agreement.

(g) Dissolution of the Company . The Company shall have the right to terminate Executive’s employment hereunder in connection with the Board’s resolution to dissolve the Company by providing Executive with a Notice of Termination, and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement.