Exhibit 10.1

6,250,000 Shares

Blue Capital Reinsurance Holdings Ltd.

Common Shares

($1.00 Par Value)

EQUITY UNDERWRITING AGREEMENT

November 5, 2013

Deutsche Bank Securities Inc.
Barclays Capital Inc.
UBS Securities LLC
As Representatives of the
                        Several Underwriters

c/o Deutsche Bank Securities Inc.
60 Wall Street, 4th Floor
New York, New York 10005

c/o Barclays Capital Inc.
745 7 th  Avenue
New York, New York 10019

c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171

Ladies and Gentlemen:

Blue Capital Reinsurance Holdings Ltd., a Bermuda exempted company (the “ Company ”), proposes to sell to the several underwriters (the “ Underwriters ”) named on Schedule I hereto for whom you are acting as representatives (the “ Representatives ”) an aggregate of 6,250,000 common shares (the “ Firm Shares ”) of the Company’s common shares, $1.00 par value (the “ Common Shares ”).  The respective amounts of the Firm Shares to be so purchased by the several Underwriters are set forth opposite their names on Schedule I hereto.  The Company also proposes to sell at the Underwriters’ option an aggregate of up to 937,500 additional Common Shares (the “ Option Shares ”) as set forth below.

As the Representatives, you have advised the Company that the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names on Schedule I hereto, plus their pro rata portion of the Option Shares if you elect to exercise the option in whole or in part for the accounts of the

several Underwriters.  The Firm Shares and the Option Shares (to the extent the aforementioned option is exercised) are herein collectively called the “ Shares ”.

Concurrently with the closing of the public offering by the Underwriters of the Common Shares (the “ Public Offering ”):

(a)                                  the Company and Blue Capital Management Ltd., a Bermuda exempted company (the “ Investment Manager ”), expect to enter into an Investment Management Agreement dated November 12, 2013 (the “ Investment Management Agreement ”);

(b)                                  the Company, Blue Capital Re Ltd., a Bermuda exempted company (“ Blue Capital Re ”), and Blue Capital Insurance Managers Ltd., a Bermuda exempted company (the “ Reinsurance Manager ”), expect to enter into an Underwriting and Insurance Management Agreement dated November 12, 2013 (the “ Underwriting and Insurance Management Agreement ”);

(c)                                   the Company and the Investment Manager expect to enter into an Administrative Services Agreement dated November 12, 2013 (the “ Administrative Services Agreement ”);

(d)                                  the Company and Montpelier Re Holdings Ltd., a Bermuda exempted company, expect to enter into a Trademark License Agreement dated November 12, 2013 (the “ Trademark License Agreement ”); and

(e)                                   the Company and Montpelier Re Holdings Ltd. expect to enter into a Reimbursement Agreement dated November 12, 2013 (the “ Reimbursement Agreement ”).

For purposes of this agreement, the Investment Management Agreement, the Underwriting and Insurance Management Agreement, the Administrative Services Agreement, the Trademark License Agreement and the Reimbursement Agreement are referred to collectively as the “ Specified Agreements ”.

Concurrently with the closing of the Public Offering, the Company expects to enter into a shareholder and registration rights agreement (the “ Shareholder Agreement ”) with Montpelier Reinsurance Ltd., a wholly owned subsidiary of Montpelier Re Holdings Ltd., pursuant to which Montpelier Reinsurance Ltd. has agreed to purchase 2,500,000 Common Shares (the “ Private Placement Shares ”) at a price per share equal to the initial public offering price in a private placement transaction (the “ Concurrent Private Placement ”).

In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:

1.                                       REPRESENTATIONS AND WARRANTIES OF THE COMPANY .

The Company represents and warrants to each of the Underwriters as follows:

(a)                                  A registration statement on Form S-1 (File No. 333-191586) with respect to the Shares has been prepared by the Company in conformity in all material respects with the

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requirements of the Securities Act of 1933, as amended (the “ Act ”), and the rules and regulations (the “ Rules and Regulations ”) of the Securities and Exchange Commission (the “ Commission ”) thereunder and has been filed with the Commission.  Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of the Rules and Regulations in all material respects) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you.  Such registration statement, together with any registration statement filed by the Company pursuant to Rule 462(b) under the Act, is herein referred to as the “ Registration Statement ”, which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A, 430B or 430C under the Act and contained in the Prospectus referred to below.  The Registration Statement has become effective under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this equity underwriting agreement (this “ Agreement ”).  “ Prospectus ” means the form of prospectus relating to the Shares first filed with the Commission pursuant to and within the time limits described in Rule 424(b) under the Act.  Each preliminary prospectus included in the Registration Statement prior to the time it becomes effective is herein referred to as a “ Preliminary Prospectus ”.  Any reference herein to the Registration Statement, any Preliminary Prospectus or to the Prospectus or to any amendment or supplement to any of the foregoing documents shall be deemed to refer to and include supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rule 424(b) under the Act, and prior to the termination of the offering of the Shares by the Underwriters.

(b)                                  As of the Applicable Time (as defined below) and as of the Closing Date or the Option Closing Date (each as defined below), as the case may be, neither (i) the General Use Free Writing Prospectus(es) (as defined below) issued prior to the Applicable Time, the Statutory Prospectus (as defined below) and the information specified in Schedule II, all considered together (collectively, the “ General Disclosure Package ”), nor (ii) any individual Limited Use Free Writing Prospectus (as defined below), when considered together with the General Disclosure Package, included or will include any untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that the Company makes no representations or warranties as to information contained in or omitted from the General Disclosure Package or any Limited Use Free Writing Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representatives, specifically for use therein, it being understood and agreed that the only such information is that described in Section 13 hereof.

As used in this subsection and elsewhere in this Agreement:

“ Applicable Time ” means 6:00 p.m. (New York time) on the date of this Agreement or such other time as agreed to by the Company and the Representatives.

“ General Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “bona fide electronic road show,” as defined in Rule 433 under the Act (the “ Bona Fide Electronic Road Show ”), as identified on Schedule III hereto.

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“ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus”, as defined in Rule 433 under the Act, including without limitation any “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations of the Act (“ Rule 405 ”)) relating to the Shares that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) under the Act, whether or not required to be filed with the Commission or (iii) excepted from filing with the Commission pursuant to Rule 433(d)(5)(i) under the Act because it contains a description of the Shares or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Act.

“ Limited Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

“ Statutory Prospectus ” means the Preliminary Prospectus dated November 1, 2013.

(c)                                   The Company has been duly organized and is validly existing as an exempted company in good standing under the laws of Bermuda, with requisite power and authority to own or lease its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus.  Each of the subsidiaries of the Company as listed in Exhibit 21.1 to Item 16(a) of the Registration Statement (collectively, the “ Subsidiaries ”) has been duly organized and is validly existing as an exempted company in good standing under the laws of Bermuda with requisite power and authority to own or lease its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus.  The Subsidiaries are the only subsidiaries, direct or indirect, of the Company.  The Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification, except where the failure to be so qualified would not (i) have, or reasonably be expected to have, individually or in the aggregate, a material adverse effect on the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and of the Subsidiaries taken as a whole or (ii) prevent the consummation of the transactions contemplated hereby (the occurrence of any such effect or any such prevention described in the foregoing clauses (i) and (ii) being referred to as a “ Material Adverse Effect ”).  The outstanding shares of capital stock of or other ownership interests in each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of all liens, encumbrances and equities and claims; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock of or ownership interests in the Subsidiaries are outstanding, except as described in the Registration Statement, the General Disclosure Package and the Prospectus.

(d)                                  From the time of initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly or through any Person authorized to act on its behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Act (an “ Emerging Growth Company ”).

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“ Testing-the-Waters Communication ” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act.

(e)                                   The outstanding Common Shares of the Company have been duly authorized and validly issued and are fully paid and non-assessable; the Shares have been duly authorized and when issued and paid for as contemplated hereby will be validly issued, fully paid and non-assessable; and no preemptive or similar rights of stockholders exist with respect to any of the Shares or the issue and sale thereof.  The Private Placement Shares have been duly authorized and, when issued and paid for as contemplated by the Shareholder Agreement, the Registration Statement, the General Disclosure Package and the Prospectus, will be validly issued, fully paid and non-assessable.  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, neither the filing of the Registration Statement, nor the offering or sale of the Shares as contemplated by this Agreement or the Private Placement Shares, gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any Common Shares.  Registration of the Private Placement Shares under the Act is not required in connection with the offer, sale, issuance or delivery of the Private Placement Shares in the manner contemplated by the Share Purchase Agreement, the Registration Statement, the General Disclosure Package and the Prospectus.

(f)                                    The information set forth under the caption “Capitalization” in the Registration Statement and the Prospectus (and any similar section or information contained in the General Disclosure Package) is true and correct.  All of the Shares conform to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus.  The form of certificates for the Shares conforms to the corporate law of Bermuda and to any requirements of the Company’s organizational documents.  Subsequent to the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, except as otherwise specifically stated in the Registration Statement, the General Disclosure Package and the Prospectus, the Company has not:  (i) issued any securities; (ii) incurred any liability or obligation, direct or contingent, for borrowed money; or (iii) declared or paid any dividend or made any other distribution on or in respect to of capital stock.

(g)                                   The Commission has not issued a stop order with respect to the Registration Statement or an order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus relating to the proposed offering of the Shares, and no proceeding for that purpose or pursuant to Section 8A of the Act has been instituted or, to the Company’s knowledge, threatened by the Commission.  The Registration Statement complies as to form with, and the Prospectus and any amendments or supplements thereto will comply as to form with, the requirements of the Act and the Rules and Regulations in all material respects.  The Registration Statement and any amendments thereto do not contain, and will not contain, on the date that any of the foregoing were declared or became effective, as the case may be, on the Closing Date or on the Option Closing Date, any untrue statement of a material fact and do not omit, and will not omit, to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus and any amendments and supplements thereto do not contain, and will not contain, on the date of any of the foregoing, any untrue statement of a material fact and do not omit, and will not omit, to state a material fact necessary in order to make the statements therein, in the light of the

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circumstances under which they were made, not misleading; provided , however , that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representatives, specifically for use therein, it being understood and agreed that the only such information is that described in Section 13 hereof.

(h)                                  No Issuer Free Writing Prospectus conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.  The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) such that no filing of any “road show” (as defined in Rule 433(h)) is required in connection with the offering of the Shares.

(i)                                      The Company (a) has not engaged in any Testing-the-Waters Communication, other than the Written Testing-the-Waters Communications listed on Schedule IV hereto, with entities that are qualified institutional buyers within the meaning of Rule 144A under the Act or institutions that are accredited investors within the meaning of Rule 501 under the Act and (b) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications.  The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters Communications.  The Company has not distributed any Written Testing-the-Waters Communications other than those listed on Schedule IV hereto.  “ Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act.

(j)                                     Any individual Written Testing-the-Waters Communication, when considered together with the General Disclosure Package as of the Applicable Time, did not and as of the Closing Date and the Option Closing Date, as the case may be, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(k)                                  The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Shares other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Act and consistent with Section 4(b)  hereof.  The Company will file with the Commission all Issuer Free Writing Prospectuses in the time required under Rule 433(d) under the Act.

(l)                                      (i) At the time of filing the Registration Statement and (ii) as of the date hereof (with such date being used as the determination date for purposes of this clause (ii)), the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Act, without taking into account any determination by the Commission pursuant to Rule 405 under the Act that it is not necessary that the Company be considered an ineligible issuer), including, without limitation, for purposes of Rules 164 and 433 under the Act with respect to the offering of the Shares as contemplated by the Registration Statement.

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(m)                              The balance sheet of the Company as of June 30, 2013, together with related notes and schedules as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, comply in all material respects with the applicable requirements of the Act and present fairly in all material respects the financial position of the Company, at the indicated date.  Such balance sheet has been prepared in accordance with United States generally accepted principles of accounting (“ GAAP ”), consistently applied throughout the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made.  The selected consolidated financial data included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. All disclosures contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the Rules and Regulations) comply with Regulation G of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and Item 10 of Regulation S-K under the Act, to the extent applicable.  The Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations or any “variable interest entities” within the meaning of Financial Accounting Standards Board Interpretation No. 46), not disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.  There are no financial statements (historical or pro forma) that are required under the Act or the Rules and Regulations to be included in the Registration Statement, the General Disclosure Package or the Prospectus that are not included as required.

(n)                                  PricewaterhouseCoopers Ltd., who have certified the balance sheet of the Company as of June 30, 2013, filed with the Commission as part of the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the “ PCAOB ”) as required by the Act.

(o)                                  Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the Commission and the New York Stock Exchange thereunder (collectively, the “ Sarbanes-Oxley Act ”) have been applicable to the Company, there is and has been no failure on the part of the Company to comply in all material respects with any provision of the Sarbanes-Oxley Act.  As of the date of the initial filing of the registration statement referred to in Section 1(a)  hereof, there were no outstanding personal loans made, directly or indirectly, by the Company to any director or executive officer of the Company.

(p)                                  There is no legal, governmental, administrative or regulatory investigation, action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries, or to which any property of the Company or its subsidiaries is, or to the knowledge of the Company, would reasonably be expected to be, subject, before any court or regulatory or administrative agency or otherwise which if determined adversely to the Company or any of its subsidiaries would, individually or in the aggregate, have, or reasonably be expected to have,  a Material Adverse Effect.  There are no current or pending legal, governmental, administrative or regulatory investigations, actions, suits,

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claims or proceedings that are required under the Act or the Rules and Regulations to be described in the Registration Statement, the General Disclosure Package or the Prospectus that are not so described in the Registration Statement, the General Disclosure Package or the Prospectus.  There are no contracts that are required under the Act or the Rules and Regulations to be filed as exhibits to the Registration Statement or described in the Registration Statement, the General Disclosure Package or the Prospectus that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the General Disclosure Package or the Prospectus.

(q)                                  The Company and its Subsidiaries have good and marketable title to all of the material properties and assets (other than Intellectual Property which is subject to Section 1(x)) reflected on the balance sheet hereinabove described or described in the Registration Statement, the General Disclosure Package and the Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected on such balance sheet or described in the Registration Statement, the General Disclosure Package and the Prospectus or which (i) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (ii) would not, individually or in the aggregate, have, or be reasonably expected to have, a Material Adverse Effect.

(r)                                     The Company and its Subsidiaries have filed all U.S. federal, state, local and foreign tax returns which have been required to be filed through the date of this Agreement or have requested extensions thereof (except where the failure to file would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect) and have paid all taxes indicated by such returns (except for cases in which the failure to pay would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect, or, except as currently being contested in good faith and for which an adequate reserve or accrual has been established in accordance with GAAP).  Neither the Company nor any of its Subsidiaries knows of any actual or proposed additional tax assessments against the Company or its Subsidiaries (except where such assessments would not, individually or in the aggregate, have or reasonably be expected to have, a Material Adverse Effect).

(s)                                    Since the date of the most recent financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus, (i) there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole, whether or not occurring in the ordinary course of business, (ii) there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Company or its Subsidiaries, other than transactions in the ordinary course of business and changes and transactions described in the Registration Statement, the General Disclosure Package and the Prospectus, and (iii) neither the Company nor any of its Subsidiaries has sustained any loss or interference with its business that is material to the Company and its Subsidiaries taken as a whole and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

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(t)                                     Neither the Company nor any of its Subsidiaries is or with the giving of notice or lapse of time or both, will be, (i) in violation of its memorandum or articles of association, bye-laws or other organizational documents, as applicable, (ii) in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties or assets, is bound or (iii) in violation of any law, order, rule or regulation, judgment, order, writ or decree applicable to the Company or any Subsidiary of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction over the Company or any Subsidiary, or any of their properties or assets, except in the case of clauses (ii) and (iii), for such violations or defaults as would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect.  The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof do not and will not conflict with or result in a breach of (A) any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any of their respective properties or assets is bound, (B) the memorandum or articles of association, bye-laws or other organizational documents, as applicable, of the Company of any Subsidiary or (C) any law, order, rule or regulation judgment, order, writ or decree applicable to the Company or any Subsidiary of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction over the Company or any Subsidiary, or any of their respective properties or assets, except in the case of clauses (A) and (C) for such conflicts or breaches as would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect.

(u)                                  The execution and delivery of, and the performance by the Company of its obligations under, this Agreement have been duly and validly authorized by all necessary corporate action on the part of the Company, and this Agreement has been duly executed and delivered by the Company.

(v)                                  Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated has been obtained or made and is in full force and effect (except such additional steps as may be required by the Commission, the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) or such additional steps as may be necessary to qualify the Shares for public offering by the Underwriters under state securities or Blue Sky laws).

(w)                                Except as would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect, the Company and its Subsidiaries (i) hold all licenses, registrations, certificates and permits from governmental authorities (collectively, “ Governmental Licenses ”) which are necessary to the conduct of their business, (ii) are in compliance with the terms and conditions of all Governmental Licenses, and all Governmental Licenses are valid and in full force and effect, and (iii) have not received any written notice of proceedings relating to the revocation or modification of any Governmental License.

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(x)                                  Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and its Subsidiaries own or possess the right to use all patents, inventions, trademarks, trade names, service marks, logos, trade dress, designs, data, database rights, Internet domain names, rights of privacy, rights of publicity, copyrights, works of authorship, license rights, trade secrets, know-how and proprietary information (including unpatented and unpatentable proprietary or confidential information, inventions, systems or procedures) and other intellectual property rights, as well as registrations and applications for registration of any of the foregoing (collectively, “ Intellectual Property ”) necessary to conduct their business in all material respects as presently conducted and currently contemplated to be conducted in the future.  Neither the Company nor any of the Subsidiaries, whether through their respective products and services or the conduct of their respective businesses, has infringed, misappropriated, conflicted with or otherwise violated, or is currently infringing, misappropriating, conflicting with or otherwise violating, and none of the Company or the Subsidiaries have received any written communication or notice of infringement of, misappropriation of, conflict with or violation of, any Intellectual Property of any other person or entity, which infringement, misappropriation, conflict or other violation would, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect.  Neither the Company nor any of the Subsidiaries has received any written communication or notice alleging that by conducting their business as set forth in the Registration Statement, the General Disclosure Package or the Prospectus, such parties would infringe, misappropriate, conflict with, or violate, any of the Intellectual Property of any other person or entity, which infringement, misappropriation or other violation would, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect.

(y)                                  Neither the Company nor, to the Company’s knowledge, any of its affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the Common Shares to facilitate the sale or resale of the Shares.

(z)                                   Neither the Company nor any Subsidiary is or, immediately after giving effect to the offering and sale of the Shares contemplated hereunder, will be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “ 1940 Act ”).

(aa)                           The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP (it being understood that the Company is not required as of the date hereof to comply with Section 404 of the Sarbanes-Oxley Act), including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that:  (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the

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recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  There are no material weaknesses or significant deficiencies in the Company’s internal control over financial reporting (it being understood that the Company is not required as of the date hereof to comply with Section 404 of the Sarbanes-Oxley Act), and there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus.  The Company’s auditors and Montpelier Re Holdings Ltd. have been advised of:  (i) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting known to management which have adversely affected or are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

(bb)                           The Company has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act).  The Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations under the Exchange Act, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.

(cc)                             The statistical, industry-related and market-related data included in the Registration Statement, the General Disclosure Package and the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes are reasonably reliable and accurate.

(dd)                           The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of jurisdictions where the Company and the Subsidiaries conduct business, the applicable rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any or the Subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s knowledge, threatened.

(ee)                             Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee, affiliate or representative of the Company or any of its Subsidiaries is

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currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”) or any similar sanctions imposed by any other body, governmental or other, to which the Company or any of its Subsidiaries is subject (collectively, “ other economic sanctions ”), and the Company will not directly or indirectly use the proceeds of the offering of the Shares, or lend, contribute or otherwise make available such proceeds to any Subsidiary or other Person or entity, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC or other economic sanctions.

(ff)                               Neither the Company nor any of the Subsidiaries nor any director, officer, agent, employee, affiliate or other person authorized to act on behalf of the Company or any of the Subsidiaries:  (i) has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity;  (ii) has made any direct or indirect unlawful contribution or payment to any official of, or candidate for, or any employee of, any federal, state or foreign office from corporate funds; (iii) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment; or (iv) is aware of or has taken any action, directly or indirectly, that would result in a violation by such Persons of the OECD Convention on Bribery of Foreign Public Officials in International Business Transactions (“ OECD Convention ”), the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “ FCPA ”) or any similar law or regulation to which the Company, any of its Subsidiaries, any director, officer, agent, employee, affiliate or other person authorized to act on behalf of the Company or any of its Subsidiaries is subject.  The Company, the Subsidiaries and their affiliates have each conducted their businesses in compliance with the OECD Convention, the FCPA and any applicable similar law or regulation and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

(gg)                             Except, in each case, for any such matter that would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect, (i) each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ ERISA ”)) for which the Company or any member of its “ Controlled Group ” (defined as any organization that is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “ Code ”)) would have liability (each a “ Plan ”) is in compliance in all material respects with all presently applicable statutes, rules and regulations, including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA (a) no “reportable event” (as defined in Section 4043 of ERISA) has occurred for which the Company or any member of its Controlled Group would have any liability and (b) neither the Company nor any member of its Controlled Group has incurred or expects to incur liability under Title IV of ERISA (other than for contributions to the Plan or premiums payable to the Pension Benefit Guaranty Corporation, in each case in the ordinary course and without default); (iii) no Plan which is subject to Section 412 of the Code or Section 302 of ERISA has failed to satisfy the minimum funding standard within the meaning of such sections of the Code or ERISA; and (iv) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

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(hh)                           Except in each case as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and each Subsidiary have complied and are in compliance, in all material respects, with all applicable federal, state, local, foreign and international laws (including the common law), statutes, rules, regulations, orders, judgments, decrees or other legally binding requirements of any court, administrative agency or other governmental authority relating to pollution or to the protection of the environment, natural resources or human health or safety, or to the manufacture, use, generation, treatment, storage, disposal, release or threatened release of hazardous or toxic substances, pollutants, contaminants or wastes, or the arrangement for such activities (“ Environmental Laws ”).

(ii)                                   The Shares have been approved for listing subject to notice of issuance on the New York Stock Exchange.

(jj)                                 There are no relationships, direct or indirect, or related-party transactions involving the Company or any of the Subsidiaries or any other person required under the Act or the Rules and Regulations to be described in the Registration Statement and the Prospectus which have not been described in such documents and the General Disclosure Package as required.

(kk)                           Except as otherwise disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any of its Subsidiaries is prohibited, directly or indirectly, from paying any dividends to its shareholders, from making any other distribution on its capital stock or other ownership interests, from repaying, in the case of a Subsidiary, to the Company or any other Subsidiary any loans or advances to such Subsidiary from the Company or any other Subsidiary or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company.

(ll)                                   Neither the Company nor any of the Subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement and the Structuring Fee Agreement between Montpelier Re Holdings Ltd. and Deutsche Bank Securities Inc. dated as of the date hereof) that would give rise to a valid claim against the Company or any of the Subsidiaries or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.

(mm)                   Blue Capital Re is duly licensed as a Class 3A insurer under the insurance laws and the rules, regulations and interpretations of the insurance regulatory authorities thereunder of Bermuda, which license is in full force and effect as of the date hereof.  To the Company’s knowledge, neither the Company nor Blue Capital Re has received any notification from any insurance regulatory authority or other governmental authority in the United States or Bermuda to the effect that any additional authorization, approval, order, consent, certificate, permit, registration or qualification is needed to be obtained by either the Company or Blue Capital Re.  To the Company’s knowledge, the Company has not received any written order or decree from any Bermuda insurance regulatory authority impairing, restricting or prohibiting the payment of dividends by the Company or Blue Capital Re.

(nn)                           The Specified Agreements have been duly authorized by the Company as of the Closing Date.

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2.                                       PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES .

(a)  On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Company agrees to sell to the Underwriters and each Underwriter agrees, severally and not jointly, to purchase, at a price of $19.00 per share, the number of Firm Shares set forth opposite the name of each Underwriter on Schedule I hereto, subject to adjustments in accordance with Section 9 hereof.

(b)  Payment for the Firm Shares to be sold hereunder is to be made in federal (same day) funds against delivery of certificates or book-entry equivalents therefor to the Representatives for the several accounts of the Underwriters.  Such payment and delivery are to be made through the facilities of The Depository Trust Company, New York, New York, at 10:00 a.m., New York time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as you and the Company shall agree upon, such time and date being herein referred to as the “ Closing Date ”.  As used herein, “ business day ” means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed.

(c)  In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase the Option Shares at the price per share as set forth in Section 2(a)  hereof.  The option granted hereby may be exercised in whole or in part by giving written notice (i) at any time before the Closing Date and (ii) only once thereafter within 30 days after the date of this Agreement, by you, as Representatives of the several Underwriters, to the Company setting forth the number of Option Shares as to which the several Underwriters are exercising the option and the time and date at which certificates or book-entry equivalents therefor are to be delivered.  The time and date at which the Option Shares are to be delivered shall be determined by the Representatives but shall not be earlier than three nor later than 10 full business days after the exercise of such option, nor in any event prior to the Closing Date (such time and date being herein referred to as the “ Option Closing Date ”).  If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date.  The number of Option Shares to be purchased by each Underwriter shall be in the same proportion to the total number of Option Shares being purchased as the number of Firm Shares being purchased by such Underwriter bears to the total number of Firm Shares, adjusted by you in such manner as to avoid fractional shares.  You, as Representatives of the several Underwriters, may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company.  To the extent, if any, that the option is exercised, payment for the Option Shares shall be made on the Option Closing Date in federal (same day funds) through the facilities of The Depository Trust Company in New York, New York drawn to the order of the Company.

3.                                       OFFERING BY THE UNDERWRITERS .

It is understood that the several Underwriters are to make a public offering of the Firm Shares as soon as the Representatives deem it advisable to do so.  The Firm Shares are to be initially offered to the public at the initial public offering price set forth in the Prospectus.  The

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Representatives may from time to time thereafter change the public offering price and other selling terms.

It is further understood that you will act as the Representatives for the Underwriters in the offering and sale of the Shares in accordance with a Master Agreement Among Underwriters entered into by you and the several other Underwriters.

4.                                       COVENANTS OF THE COMPANY .

The Company covenants and agrees with the several Underwriters that:

(a)                                  The Company will (A) prepare and timely file with the Commission under Rule 424(b) under the Act a Prospectus in a form approved by the Representatives containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B or 430C under the Act and (B) not file any amendment to the Registration Statement or distribute an amendment or supplement to the General Disclosure Package or the Prospectus of which the Representatives shall not previously have been advised and furnished with a copy or to which the Representatives shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations.

(b)                                  The Company will (i) not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Act) required to be filed by the Company with the Commission under Rule 433 under the Act unless the Representatives approve its use in writing prior to first use (each, a “ Permitted Free Writing Prospectus ”); provided that the prior written consent of the Representatives hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included on Schedule III hereto, (ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, (iii) comply with the requirements of Rules 164 and 433 under the Act applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping and (iv) not take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Act a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder.  The Company will satisfy the conditions in Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show.

(c)                                   The Company will promptly notify the Representatives in writing if the Company ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the distribution of the Shares within the meaning of the Act and (b) completion of the 180-day restricted period referred to in Section 4(k)  hereof.

(d)                                  The Company will advise the Representatives promptly (A) when the Registration Statement or any post-effective amendment thereto shall have become effective, (B) of receipt of any comments from the Commission, (C) when any amendment or supplement to the Prospectus, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication has been filed, (D) of any request of the Commission for amendment of the Registration Statement or for supplement to the General Disclosure Package or the Prospectus or

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for any additional information, including, but not limited to, any request for information concerning any Written Testing-the-Waters Communication, (E) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any Written Testing-the-Waters Communication or of the institution of any proceedings for that purpose or pursuant to Section 8A of the Act, (F) of the occurrence of any event or development or existence of any condition within the Prospectus Delivery Period (as defined below) as a result of which the Prospectus, the General Disclosure Package, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the General Disclosure Package, any such Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication is delivered to a purchaser, not misleading, and (G) of the receipt by the Company of any written notice with respect to any suspension of the qualification of the Shares for offer and sale in any jurisdiction or the initiation or, to the knowledge of the Company, threatening of any proceeding for such purpose.  The Company will use its reasonable best efforts to prevent the issuance of any order referred to in clause (E) or (G) of this paragraph and to obtain as soon as possible the lifting thereof, if issued.

(e)                                   The Company will cooperate with the Representatives in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions as the Representatives may reasonably have designated in writing and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose; provided that the Company shall not be required to (x) qualify as a foreign corporation, (y) file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, or (z) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.  The Company will, from time to time, prepare and file such statements, reports, and other documents, as are or may be required to continue such qualifications in effect for so long a period as the Representatives may reasonably request for distribution of the Shares.

(f)                                    The Company will deliver to, or upon the order of, the Representatives, from time to time, as many copies of any Preliminary Prospectus as the Representatives may reasonably request.  The Company will deliver to, or upon the order of, the Representatives, from time to time, as many copies of any Issuer Free Writing Prospectus as the Representatives may reasonably request.  The Company will deliver to, or upon the order of, the Representatives during the period when delivery of a Prospectus (or, in lieu thereof, the notice referred to under Rule 173(a) under the Act) (the “ Prospectus Delivery Period ”) is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representatives may reasonably request.  The Company will deliver to the Representatives at or before the Closing Date, electronic signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Representatives electronic copies of the Registration Statement (including electronic copies of the exhibits filed therewith that may reasonably be requested), and of all amendments thereto, as the Representatives may reasonably request.

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(g)                                   The Company will comply in all material respects with the Act and the Rules and Regulations, and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated by this Agreement and the Prospectus.  If during Prospectus Delivery Period, any event or development shall occur or condition shall exist as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order (i) to correct any untrue statement of material fact therein or (ii) to include any material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply in all material respects with the Act and the Rules and Regulations, the Company promptly will prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply in all material respects with the Act and the Rules and Regulations.

(h)                                  If the General Disclosure Package is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event or development shall occur or condition shall exist as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the General Disclosure Package in order (i) to correct any untrue statement or material fact therein or (ii) to include any material fact necessary in order to make the statements therein, in the light of the circumstances, not misleading, or to make the statements therein not conflict in any material respect with the information contained in the Registration Statement then on file, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply in all material respects with the Act and the Rules and Regulations, the Company promptly will prepare, file with the Commission (if required) and furnish to the Underwriters and any dealers an appropriate amendment or supplement to the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of the circumstances, be misleading or conflict with the Registration Statement then on file, or so that the General Disclosure Package will comply in all material respects with the Act and the Rules and Regulations.

(i)                                      The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earnings statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earnings statement shall satisfy the requirements of Section 11(a) of the Act and Rule 158 under the Act and will advise you in writing when such statement has been so made available; provided that the Company will be deemed to have complied with such requirement by filing such earnings statement on the Commission’s Electronic Data Gathering, Analysis and Retrieval system (or any successor system).

(j)                                     If prior to the Closing Date, any unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements appearing in the Registration Statement, the General Disclosure Package and the Prospectus are prepared by or made available to the Company, the Company will furnish to the

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Underwriters a copy of such unaudited interim financial statements as soon as they have been prepared or made available.

(k)                                  No offering, pledge, sale, contract to sell, short sale, grant of any option to purchase or other disposition of any Common Shares of the Company or other securities convertible into or exchangeable or exercisable for Common Shares or derivative of Common Shares (or agreement for such) and no short sale (whether or not against the box) or any purchase, sale or grant of any right (including any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Common Shares will be made for a period of 180 days after the date of the Prospectus, directly or indirectly, by the Company otherwise than hereunder or with the prior written consent of the Representatives, other than the Private Placement Shares and Common Shares or other securities issued under the Company’s equity incentive plan described in the Registration Statement, the General Disclosure Package and the Prospectus.  Notwithstanding the foregoing, in the event that the Company ceases to be an Emerging Growth Company, if (1) during the last 17 days of the 180-day restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period following the last day of the 180-day restricted period, then in each case the restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of material news or a material event relating to the Company, as the case may be, unless the Representatives waive, in writing, such extension.  The Company shall promptly notify the Representatives of any earnings release, news or event that may give rise to an extension of the initial 180-day restricted period.

(l)                                      The Company will use its reasonable best efforts to list the Shares, subject to notice of issuance, on the New York Stock Exchange and maintain the listing of the Shares on the New York Stock Exchange.

(m)                              The Company has caused each officer and director of the Company to execute and deliver to you, on or prior to the date of this agreement, a letter or letters, substantially in the form attached hereto as Exhibit A (the “ Lockup Agreement ”).  If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in a Lockup Agreement for an officer or director of the Company and provide the Company with notice of the impending release or waiver, substantially in the form attached as Exhibit B hereto, at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit C hereto through a major news service at least two business days before the effective date of the release or waiver.

(n)                                  The Company shall apply the net proceeds of its sale of the Shares as set forth in the Registration Statement, the General Disclosure Package and the Prospectus and shall file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required in accordance with Rule 463 under the Act.

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(o)                                  The Company shall not invest, or otherwise use, the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of the Subsidiaries to register as an investment company under the 1940 Act.

(p)                                  The Company will maintain a transfer agent and a registrar for the Common Shares.

(q)                                  The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

5.                                       REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE UNDERWRITERS .

(a)                                  Each Underwriter hereby represents and agrees that it has not used, authorized use of, referred to or participated in the planning for use of, and will not use, authorize use of, refer to or participate in the planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Act (which term includes use of any written information furnished to the Commission by the Company and any press release issued by the Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined in Rule 433(h)(2) under the Act) that was not included in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus listed on Schedule III or prepared pursuant to Section 4(b) above (including any electronic road show approved by the Company in writing), or (iii) any free writing prospectus prepared by such Underwriter and approved by the Company in advance in writing.

6.                                       COSTS AND EXPENSES .

The Company will pay all costs, expenses and fees incident to the performance of the obligations of the Company under this Agreement, including, without limiting the generality of the foregoing, the following:  (i) accounting fees of the Company; (ii) the fees and disbursements of counsel for the Company; (iii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon; (iv) any road show expenses of the Company ( provided that the Company, on the one hand, and the Underwriters, on the other hand, will each pay 50% of the costs and expenses relating to the chartering of aircraft in connection with the road show); (v) the cost of printing and delivering to, or as reasonably requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Issuer Free Writing Prospectuses and the Prospectus and, in each case, any supplements or amendments thereto; (vi) the filing fees of the Commission; (vii) (A) the FINRA filing fees and (B) reasonable expenses (including reasonable legal fees and disbursements) up to $22,500 incident to securing any required review by FINRA of the terms of the sale of the Shares; (viii) all expenses and application fees related to the listing of the Shares on of the New York Stock Exchange; (ix) the cost of printing certificates, if any, representing the Shares; (x) the costs and charges of any transfer agent, registrar or depositary; (xi) the costs and expenses (including without limitation any damages or other amounts payable in connection with legal or contractual liability) associated with the reforming of any contracts for sale of the Shares made by the Underwriters caused by a breach of the representations in Section 1(b)  hereof; and (xii) the reasonable expenses, including the reasonable fees and disbursements of counsel for the

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Underwriters, incurred in connection with the qualification of the Shares under foreign or state securities or Blue Sky laws (subject to the limitations of Section 4(f)) and the preparation, printing and distribution of a Blue Sky memorandum (including the related fees and expenses of counsel for the Underwriters) up to $2,000.

The Company shall not, however, be required to pay for any of the Underwriter’s costs, expenses and fees, including, without limitation, any road show expenses of the Underwriters, the fees and disbursements of counsel for the Underwriters and any advertising expenses in connection with any offers the Underwriters make (other than those related to qualification under FINRA regulation and state securities or Blue Sky laws as expressly provided in the immediately preceding paragraph), except that, if this Agreement shall not be consummated because the conditions in Section 7 hereof are not satisfied, or because this Agreement is terminated by the Representatives pursuant to Section 11 hereof, or by reason of any failure, refusal or inability on the part of the Company to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on its part to be performed, unless such failure, refusal or inability is due primarily to the default or omission of any Underwriter, the Company shall reimburse the several Underwriters for reasonable out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder; but the Company shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits from the sale by them of the Shares.  In no event shall the Company be obligated to pay or reimburse any costs, expenses or fees of any Underwriter that defaults on its obligations to purchase the Shares pursuant to the terms of this Agreement.

7.                                       CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS .

The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date are subject to the accuracy, as of the Applicable Time, the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company contained herein, and to the performance by the Company of its covenants and obligations hereunder and to the following additional conditions:

(a)                                  The Registration Statement and all post-effective amendments thereto shall have become effective and the Prospectus and each Issuer Free Writing Prospectus required shall have been filed as required by Rule 424, 430A, 430B, 430C or 433 under the Act, as applicable, within the time period prescribed by, and in compliance with, the Rules and Regulations, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Representatives and complied with to their reasonable satisfaction.  No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, and no order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Act shall have been taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission.

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(b)                                  The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion and negative assurance letter of Cravath, Swaine & Moore LLP, counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters and substantially in the form of Annex A hereto.

(c)                                   The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of the General Counsel of Montpelier, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters and substantially in the form of Annex B hereto.

(d)                                  The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Appleby (Bermuda) Limited, Bermuda counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters (and stating that it may be relied upon by counsel to the Underwriters) and substantially in the form of Annex C hereto.

(e)                                   The Representatives shall have received from Sidley Austin LLP, counsel for the Underwriters, an opinion and a disclosure statement, dated the Closing Date or the Option Closing Date, as the case may be, with respect to such matters as the Representatives may reasonably request.

(f)                                    The Representatives shall have received, on each of the date hereof, the Closing Date and, if applicable, the Option Closing Date, a letter dated the date hereof, the Closing Date or the Option Closing Date, as the case may be, in form and substance reasonably satisfactory to you, of PricewaterhouseCoopers Ltd. confirming that they are an independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the Act and the applicable Rules and Regulations and the PCAOB and stating that in their opinion the financial statements and schedules examined by them and included in the Registration Statement, the General Disclosure Package and the Prospectus comply in form in all material respects with the applicable accounting requirements of the Act and the related Rules and Regulations; and containing such other statements and information as is ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial and statistical information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

(g)                                   The Representatives shall have received on the Closing Date and, if applicable, the Option Closing Date, as the case may be, a certificate or certificates of the Chief Executive Officer and the Interim Chief Financial Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, each of them severally represents as follows:

(i)                                      The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement and no order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus has been issued, and no proceedings for such purpose or pursuant to Section 8A of the Act have been taken or are, to his or her knowledge, contemplated or threatened by the Commission;

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(ii)                                   The representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date or the Option Closing Date, as the case may be;

(iii)                                He or she has carefully examined the General Disclosure Package and any individual Limited Use Free Writing Prospectus and, in his or her opinion, as of the Applicable Time, the statements contained in the General Disclosure Package and any individual Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, did not contain any untrue statement of a material fact, and such General Disclosure Package and any individual Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(iv)                               He or she has carefully examined the Registration Statement and, in his or her opinion, as of the effective date of the Registration Statement, the Registration Statement and any amendments thereto did not contain any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and since the effective date of the Registration Statement, no event or development has occurred or condition exists which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment;

(v)                                  He or she has carefully examined the Prospectus and, in his or her opinion, as of its date and as of the Closing Date or the Option Closing Date, as the case may be, the Prospectus and any amendments and supplements thereto did not contain any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(vi)                               Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and Prospectus, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business.

(h)                                  The Company shall have furnished to the Representatives such further certificates and documents confirming the representations and warranties, covenants and conditions contained herein and related matters as the Representatives may reasonably have requested.

(i)                                      The Firm Shares and Option Shares, if any, have been duly listed, subject to notice of issuance, on the New York Stock Exchange.

(j)                                     The Lockup Agreement described in Section 4(m)  hereof are in full force and effect.

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(k)                                  No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or the Option Closing Date, as the case may be, prevent the issuance or sale of the Shares by the Company; and no injunction, restraining order or order of any federal, state or foreign court of competent jurisdiction shall have been issued that would, as of the Closing Date or the Option Closing Date, as the case may be, prevent the issuance or sale of the Shares by the Company.

(l)                                      The Concurrent Private Placement of 2,500,000 Private Placement Shares by the Company to Montpelier Reinsurance Ltd. on the terms described in the Shareholder Agreement, the Registration Statement, the General Disclosure Package and the Prospectus has been consummated or is consummated concurrently with the purchase of the Firm Shares and the Option Shares, if any, on the Closing Date.

(m)                              The Specified Agreements in the forms previously submitted to the Representatives shall have been executed and delivered by all the parties thereto, and shall be in full force and effect.

The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects reasonably satisfactory to the Representatives and to Sidley Austin LLP, counsel for the Underwriters.

If any of the conditions hereinabove provided for in this Section 7 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder may be terminated by the Representatives by notifying the Company of such termination in writing or by telegram at or prior to the Closing Date or the Option Closing Date, as the case may be.

In such event, the Company and the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections 6 and 8 hereof).

8.                                       INDEMNIFICATION .

(a)                                  The Company agrees:

(i)                                      to indemnify and hold harmless each Underwriter, the directors and officers of each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which such Underwriter or any such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, (ii) with respect to the Registration Statement or any amendment or supplement thereto, 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 (iii) with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the Prospectus or any amendment or supplement thereto,

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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 the light of the circumstances under which they were made; provided , however , that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Underwriter consists of the information described as such in Section 13 hereof; and

(ii)                                   to reimburse each Underwriter, each Underwriters’ directors and officers, and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering of the Shares, whether or not such Underwriter or controlling person is a party to any action or proceeding.  In the event that it is finally judicially determined that the Underwriters were not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriters will promptly return all sums that had been advanced pursuant hereto.

(b)                                  Each Underwriter severally and not jointly will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, (ii) with respect to the Registration Statement or any amendment or supplement thereto, 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 (iii) with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, 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 the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided , however , that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Underwriter consists of the information described

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as such in Section 13 hereof.  This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have.

(c)                                   In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8 , such person (the “ indemnified party ”) shall promptly notify the person against whom such indemnity may be sought (the “ indemnifying party ”) in writing.  No indemnification provided for in Section 8(a)  or (b)  hereof shall be available to any party who shall fail to give notice as provided in this Section 8(c)  if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a)  or (b)  hereof.  In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the 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 satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense.  Notwithstanding the foregoing, the indemnifying party shall pay as reasonably incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action.  Such firm shall be designated in writing by you in the case of parties indemnified pursuant to Section 8(a)  hereof and by the Company in the case of parties indemnified pursuant to Section 8(b)   hereof.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.  In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d)                                  To the extent the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a)  or (b)  hereof in respect of any losses, claims, damages or liabilities (or actions or proceedings 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

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liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other, from the offering of the Shares.  If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company, on the one hand, and the Underwriters, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations.  The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(e)  were determined by pro rata allocation (even if the Underwriters 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 above in this Section 8(e) .  The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 8(e)  shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 8(e) , (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The Underwriters’ obligations in this Section 8(e)  to contribute are several in proportion to their respective underwriting obligations and not joint.

(e)                                   In any proceeding relating to the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the exclusive jurisdiction of (i) the federal courts of the United States of America located in the City and County of New York, Borough of Manhattan and (ii) the courts of the State of New York located in the City and County of New York, Borough of Manhattan (collectively, the “ Specified Courts ”), agrees that process issuing from such courts may be served upon it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join it as an additional defendant in any such proceeding in which such other contributing party is a party.

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(f)                                    Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred.  The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter, its directors or officers or any person controlling any Underwriter, the Company, its directors or officers or any persons controlling the Company, (ii) acceptance of any Shares and payment therefor hereunder, and (iii) any termination of this Agreement.  A successor to any Underwriter, its directors or officers or any person controlling any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8 .

9.                                       DEFAULT BY UNDERWRITERS .

If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company), you, as Representatives of the Underwriters, shall use your reasonable best efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company such amounts as may be agreed upon and upon the terms set forth herein, the Shares which the defaulting Underwriter or Underwriters failed to purchase.  If during such 36 hours you, as such Representatives, shall not have procured such other Underwriters, or any others, to purchase the Shares agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of shares with respect to which such default shall occur does not exceed 10% of the Shares to be purchased on the Closing Date or the Option Closing Date, as the case may be, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Shares which they are obligated to purchase hereunder, to purchase the Shares which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of Shares with respect to which such default shall occur exceeds 10% of the Shares to be purchased on the Closing Date or the Option Closing Date, as the case may be, then the Company shall be entitled to a further period of 36 hours within which to procure other persons reasonably satisfactory to the Representatives to purchase the Shares agreed to be purchased by the defaulting Underwriter or Underwriters, if during such 36 hours the Company shall not have procured such other Underwriter or Underwriters, or any others, to purchase the Shares agreed to be purchased by the defaulting Underwriter or Underwriters, then following such further 36 hour period the Company or you as the Representatives of the Underwriters will have the right, by written notice given within the next 36-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company except to the extent provided in Sections 6 and 8 hereof.  In the event of a default by any Underwriter or Underwriters, as set forth in this Section 9 , the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as you, as Representatives, may determine in order that the required changes in the Registration Statement, the General Disclosure Package or in the Prospectus or in any other documents or arrangements may be effected.  The term “Underwriter” includes any person substituted for a defaulting Underwriter.  Any action taken under this

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Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

10.                                NOTICES .

All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered, telecopied or telegraphed and confirmed as follows:  if to the Underwriters, to Deutsche Bank Securities Inc., 60 Wall Street, 4th Floor, New York, New York 10005, Attention:  Equity Capital Markets — Syndicate Desk, fax:  (212) 797-9344, with a copy to Deutsche Bank Securities Inc., 60 Wall Street, 36 th  Floor, New York, New York 10005, Attention:  General Counsel, fax:  (212) 797-4564, with a copy to Barclays Capital Inc., 745 7 th  Avenue, New York, New York 10019, Attention:  Syndicate Registration, fax:  (646) 834-8133 and with a copy to UBS Securities LLC, 1285 Avenue of the Americas, New York, New York 10019, Attention:  Syndicate, fax:  (212) 713-3371; if to the Company, to Blue Capital Reinsurance Holdings Ltd., 94 Pitts Bay Road, Pembroke HM 08, Bermuda, P.O. Box 2079, Attention: Chief Financial Officer.

11.                                TERMINATION .

This Agreement may be terminated by you by notice to the Company (a) at any time prior to the Closing Date or any Option Closing Date (if different from the Closing Date and then only as to Option Shares) if any of the following has occurred:  (i) since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business; (ii) any outbreak or escalation of hostilities or declaration of war or national emergency or other national or international calamity or crisis (including, without limitation, an act of terrorism) or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in your reasonable judgment, materially impair the investment quality of the Shares; (iii) suspension of trading in securities generally on the New York Stock Exchange or the NASDAQ Global Market or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on any such exchange; (iv) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which in your reasonable opinion materially and adversely affects or may materially and adversely affect the business or operations of the Company or any Subsidiary; (v) the declaration of a banking moratorium by the United States or New York State authorities; (vi) any downgrading, or placement on any watch list for possible downgrading, in the rating of any of the Company’s debt securities or preferred stock by any “nationally recognized statistical rating organization” (within the meaning of Rule 15c3 1(c)(2)(vi)(F) under the Exchange Act) or any public announcement by such organization that it has under surveillance or review, or has changed its outlook with respect to, its rating of any such debt securities or preferred stock (other than an announcement with positive implications of a possible upgrading); (vii) the suspension of trading of the Company’s Common Shares by the New York Stock Exchange, the Commission or any other governmental authority; or (viii) the taking of any action by any

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governmental body or agency in respect of its monetary or fiscal affairs which in your reasonable opinion has a material adverse effect on the securities markets in the United States; or

(b) as provided in Sections 7 and 9 of this Agreement.

12.                                SUCCESSORS .

This Agreement has been and is made solely for the benefit of the Underwriters and the Company and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder.  No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign merely because of such purchase.

13.                                INFORMATION PROVIDED BY UNDERWRITERS .

The Company and the Underwriters acknowledge and agree that the only information furnished or to be furnished by any Underwriter to the Company for inclusion in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or the Prospectus consists of (i) the names of the underwriters and their respective participation in the sale of the Firm Shares in the table set forth in the first paragraph under the caption “Underwriting” in the Prospectus, (ii) the information set forth in the last sentence on the cover page of the Prospectus relating to the delivery of the Firm Shares and (iii) the information set forth in the first paragraph, the last sentence of the third paragraph, the fourth paragraph, the ninth paragraph, the fourteenth paragraph, the fifteenth paragraph and the sixteenth paragraph under the caption “Underwriting” in the Prospectus.

14.                                MISCELLANEOUS .

The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its directors or officers, and (c) delivery of and payment for the Shares under this Agreement.

The Company acknowledges and agrees that each Underwriter in providing investment banking services to the Company in connection with the offering of the Shares, including in acting pursuant to the terms of this Agreement, has acted and is acting as an independent contractor and not as a fiduciary and the Company does not intend such Underwriter to act in any capacity other than as an independent contractor, including as a fiduciary or in any other position of higher trust.  Additionally, neither the Representatives nor any other Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  The Company shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company with respect thereto.  Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to

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such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company.

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.

This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, including, without limitation, Section 5-1401 of the New York General Obligations Law.

Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“ Related Proceedings ”) shall be instituted in the Specified Courts, and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “ Related Judgment ”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.  Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.  The Company irrevocably appoints CT Corporation, 111 Eighth Avenue, New York, NY 10011 as its agent to receive service of process or other legal summons for purposes of any such suit, action or proceeding that may be instituted in any state or federal court in the City and County of New York.  With respect to any Related Proceeding, each party irrevocably waives, to the fullest extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, service of process, attachment (both before and after judgment) and execution to which it might otherwise be entitled in the Specified Courts, and with respect to any Related Judgment, each party waives any such immunity in the Specified Courts or any other court of competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or in respect of any such Related Proceeding or Related Judgment, including, without limitation, any immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.

The Underwriters, on the one hand, and the Company, on the other hand, waive any right to trial by jury in any action, claim, suit or proceeding with respect to your engagement as underwriter or your role in connection herewith.

If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company and the several Underwriters in accordance with its terms.

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SCHEDULE II

ORAL PRICING INFORMATION

1.               Number of Firm Shares:  6,250,000 Shares

2.               Price to Public:  $20.00 per Share

SCHEDULE III

PERMITTED FREE WRITING PROSPECTUSES AND GENERAL USE FREE WRITING PROSPECTUSES

1.              Issuer Free Writing Prospectus (November 1, 2013)

SCHEDULE IV

WRITTEN TESTING-THE-WATERS COMMUNICATIONS

1.               Pre-Marketing Investor Presentation (September 2013)

EXHIBIT A

LOCK-UP AGREEMENT

Blue Capital Reinsurance Holdings Ltd.

Deutsche Bank Securities Inc.
Barclays Capital Inc.
UBS Securities LLC

As Representatives of the
                                    Several Underwriters

c/o Deutsche Bank Securities Inc.
60 Wall Street, 4 th  Floor
New York, New York 10005

c/o Barclays Capital Inc.
745 7 th  Avenue
New York, New York 10019

c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171

Ladies and Gentlemen:

The undersigned understands that Deutsche Bank Securities Inc., Barclays Capital Inc. and UBS Securities LLC as representatives (the “ Representatives ”) of the several underwriters (the “ Underwriters ”), propose to enter into an Underwriting Agreement (the “ Underwriting Agreement ”) with Blue Capital Reinsurance Holdings Ltd. (the “ Company ”), providing for the public offering by the Underwriters, including the Representatives, of common shares, par value $1.00 per share (the “ Common Shares ”), of the Company (the “ Public Offering ”).

To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned agrees that, without the prior written consent of the Representatives, the undersigned will not, directly or indirectly, offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase or otherwise dispose of any Common Shares (including, without limitation, Common Shares of the Company

which may be deemed to be beneficially owned by the undersigned currently or hereafter in accordance with the rules and regulations of the Securities and Exchange Commission (the “ Commission ”), Common Shares which may be issued upon exercise of a stock option or warrant and any other security convertible into or exchangeable for Common Shares) or enter into any Hedging Transaction (as defined below) relating to the Common Shares (each of the foregoing referred to as a “ Disposition ”) during the period specified in the following paragraph (the “ Lock-Up Period ”).  The foregoing restriction is expressly intended to preclude the undersigned from engaging in any Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or result in a Disposition during the Lock-Up Period even if the securities would be disposed of by someone other than the undersigned.  “ Hedging Transaction ” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Common Shares.

The initial Lock-Up Period will commence on the date hereof and continue until, and include, the date that is 180 days after the date of the final prospectus relating to the Public Offering (the “ Initial Lock-Up Period ”); provided , however , that, in the event the Company ceases to be an Emerging Growth Company (as defined in the Underwriting Agreement) on or prior to the expiration of the Initial Lock-Up Period, if (1) during the last 17 days of the Initial Lock-Up Period, (A) the Company releases earnings results or (B) material news or a material event relating to the Company occurs, or (2) prior to the expiration of the Initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period following the last day of the Initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of material news or a material event relating to the Company, as the case may be, unless the Representatives waive, in writing, such extension.

The undersigned agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this agreement during the period from the date of this agreement to and including the 34 th  day following the expiration of the Initial Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as may have been extended pursuant to the previous paragraph) has expired.

Notwithstanding the foregoing, the undersigned may transfer any or all of the Common Shares or other Company securities if the transfer does not trigger any filing or reporting requirement or obligation or result in any other voluntary or mandatory public disclosure, including but not limited to Form 4 of Section 16 of the Securities Exchange Act of 1934, as amended, and is (i) by gift, will or intestacy, (ii) by distribution to partners, members or shareholders of the undersigned or (iii) to any immediate family members of the undersigned or any trust for the direct or indirect benefit of the undersigned or any immediate family member of the undersigned (for purposes of this agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); provided , however , it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding the securities subject to the provisions of this Lock-Up Agreement.

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Furthermore, the undersigned may, if permitted by the Company, establish a written trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act; provided that no transfers occur under such plan prior to the 34 th  day following the expiration of the Initial Lock-Up Period.

If the undersigned is an officer or director of the Company, (i) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Common Shares, they will notify the Company of the impending release or waiver, and (ii) the Company has agreed or will agree in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.  Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release.  The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this letter to the extent and for the duration that such terms remain in effect at the time of the transfer.

The undersigned agrees that the Company may, and that the undersigned will, (i) with respect to any Common Shares or other Company securities for which the undersigned is the record holder, cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company and (ii) with respect to any Common Shares or other Company securities for which the undersigned is the beneficial holder but not the record holder, cause the record holder of such securities to cause the transfer agent for the Company to note stop transfer instructions with respect to such securities on the transfer books and records of the Company.

The undersigned hereby agrees that, to the extent that the terms of this Lock-Up Agreement conflict with or are in any way inconsistent with any registration rights agreement to which the undersigned and the Company may be a party, this Lock-Up Agreement supersedes such registration rights agreement.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement.  All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

Notwithstanding anything herein to the contrary, if the closing of the Public Offering has not occurred prior to July 28, 2014, this agreement shall be of no further force or effect.

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EXHIBIT B

FORM OF WAIVER

[Letterhead of DBSI]

Blue Capital Reinsurance Holdings Ltd.

Public Offering of Common Shares

[          ], 2013

[Name and Address of

Officer or Director

Requesting Waiver]

Dear Mr./Ms.  [Name]:

This letter is being delivered to you in connection with the offering by Blue Capital Reinsurance Holdings Ltd. (the “ Company ”) of 6,250,000 common shares, $1.00 par value (the “ Common Shares ”), of the Company and the lock-up letter dated [        ], 20[    ] (the “ Lock-up Letter ”), executed by you in connection with such offering, and your request for a [waiver] [release] dated [        ], 20[    ], with respect to [          ] Common Shares (the “ Shares ”).

Deutsche Bank Securities Inc., Barclays Capital Inc. and UBS Securities LLC hereby agree to [waive] [release] the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares, effective [        ], 20[    ]; provided , however , that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release] by press release through a major news service at least two business days before effectiveness of such [waiver] [release].  This letter will serve as notice to the Company of the impending [waiver] [release].

Except as expressly [waived] [released] hereby, the Lock-up Letter shall remain in full force and effect.

cc:  Company

EXHIBIT C

FORM OF PRESS RELEASE

Blue Capital Reinsurance Holdings Ltd.
[          ], 2013

Blue Capital Reinsurance Holdings Ltd. announced today that Deutsche Bank Securities Inc., Barclays Capital Inc. and UBS Securities LLC, [the lead book-running managers] in the Company’s recent public sale of         common shares, is [waiving] [releasing] a lock-up restriction with respect to      shares of the Company’s common shares held by [certain officers or directors] [an officer or director] of the Company.  The [waiver] [release] will take effect on         ,      20  , and the shares may be sold on or after such date.

This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited , and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933 , as amended.

Exhibit 10.2

UNDERWRITING AND INSURANCE MANAGEMENT AGREEMENT

among

BLUE CAPITAL REINSURANCE HOLDINGS LTD.,

BLUE CAPITAL RE LTD.

and

BLUE CAPITAL INSURANCE MANAGERS LTD.

Dated as of November 12, 2013

TABLE OF CONTENTS

ARTICLE I

Defined Terms

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UNDERWRITING AND INSURANCE MANAGEMENT AGREEMENT (this “ Agreement ”), dated as of November 12, 2013, among BLUE CAPITAL REINSURANCE HOLDINGS LTD., an exempted company incorporated in Bermuda (registered number 47855) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (“ Parent ”), BLUE CAPITAL RE LTD., an exempted company incorporated in Bermuda (registered number 47922) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (“ Blue Capital Re ”), and BLUE CAPITAL INSURANCE MANAGERS LTD., an exempted company incorporated in Bermuda (registered number 35606) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (the “ Reinsurance Manager ”).

WHEREAS Blue Capital Re is organized and existing under the laws of Bermuda and under such laws Blue Capital Re is permitted to engage in Insurance Business (as defined in the Bermuda Insurance Act of 1978) and desires to purchase underwriting and other services in connection with such Insurance Business;

WHEREAS the Reinsurance Manager is authorized under Bermuda law to provide underwriting and other services as manager and agent for companies engaged in Insurance Business; and

WHEREAS Parent and Blue Capital Re desire that the Reinsurance Manager provide certain underwriting, management and administrative services with respect to Blue Capital Re’s business activities, and the Reinsurance Manager is willing to provide such services on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent, Blue Capital Re and the Reinsurance Manager (collectively, the “ Parties ” and each individually a “ Party ”) agree as follows:

ARTICLE I

Defined Terms

SECTION 1.01.  Definitions .  As used in this Agreement, the following terms have the meanings ascribed thereto below.

“ Accounts ” has the meaning ascribed thereto in Section 2.02(c).

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person.  For

this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

“ Applicable Quarterly Growth Amount ” has the meaning ascribed thereto in Section 6.01(d).

“ Applicable Requirements ” means, with respect to any Person, all applicable laws, rules, regulations and requirements, including applicable laws, rules, regulations, requirements and binding requests of any Competent Regulatory Authority, and all applicable orders and decrees.

“ Blue Capital Re ILS ” means Blue Capital Re ILS Ltd., a wholly owned direct subsidiary of Blue Capital Re and an exempted company incorporated in Bermuda (registered number 47964) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

“ Business Day ” means a day other than a Saturday, Sunday or other day on which the SEC or banks in the City of New York or Bermuda are authorized or required by law to be closed.

“ Change of Control ” means the first of the following events to occur:

(a)                                  the consummation of (i) a merger, amalgamation, consolidation, scheme of arrangement, statutory share exchange or similar form of corporate transaction involving Parent (a “ Reorganization ”) or (ii) the sale or other disposition of all or substantially all the assets of Parent (determined on a consolidated basis) to another “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) (a “ Sale ”), unless, immediately following such Reorganization or Sale, (1) individuals and entities who were the “beneficial owners” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) of the securities eligible to vote for the election of the board of directors of Parent (“ Voting Securities ”) outstanding immediately prior to the consummation of such Reorganization or Sale continue to beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of the corporation or other entity resulting from such Reorganization or Sale (including a corporation that, as a result of such transaction, owns Parent or all or substantially all the assets of Parent either directly or through one or more subsidiaries) (the “ Continuing Parent ”) and (2) no “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (excluding any employee benefit plan (or related trust) sponsored or maintained by the Continuing Parent or any corporation controlled by the Continuing Parent) beneficially owns, directly or indirectly, 35% or more

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of the combined voting power of the then-outstanding voting securities of the Continuing Parent; or

(b)                                  any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) is or becomes the beneficial owner (as defined in clause (a) above, except that for purposes of this clause (b) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting securities of Parent.

“ Common Shares ” means the common shares, par value $1.00 per share, of Parent.

“ Competent Regulatory Authority ” means, with respect to any Person, any regulatory authority or analogous Person responsible for regulating, or having jurisdiction over, that Person.

“ Confidential Information ” means information that:

(a)                                  has been disclosed to a Party, or that a Party has or may become aware of in connection with this Agreement, in both cases before or during the term of this Agreement; and

(b)                                  is marked as or otherwise indicated as confidential, or derives value to a Party from being confidential, or would be regarded as confidential by a reasonable business person,

except to the extent that such information is in the public domain (otherwise than by a breach of the confidentiality provisions of this Agreement).

“ Current Period ” has the meaning ascribed thereto in Section 6.01(b).

“ Distributable Income ” has the meaning ascribed thereto in Section 6.01(c).

“ Exchange Act ” means the Securities Exchange Act of 1934 and the rules and regulations thereunder.

“ Force Majeure ” means any cause preventing any Party from performing any or all of its obligations hereunder that arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including strikes, lockouts or other industrial disputes (whether involving the workforce of the Party so prevented or of the other Parties), act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant, machinery or software, fire, flood, storm or default of suppliers or subcontractors.

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“ Hurdle Amount ” has the meaning ascribed thereto in Section 6.01(b).

“ Indemnified Person ” has the meaning ascribed thereto in Section 8.03.

“ Indemnifying Party ” has the meaning ascribed thereto in Section 8.03.

“ Interested Party ” has the meaning ascribed thereto in Section 9.01.

“ Investment Management Agreement ” means the investment management agreement entered into on the date hereof between Parent and the Investment Manager.

“ Investment Manager ” means Blue Capital Management Ltd., a company incorporated in Bermuda (registered number 38829) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

“ NYSE ” means the New York Stock Exchange.

“ Offering ” means the initial public offering of the Common Shares.

“ Parent Indemnitees ” has the meaning ascribed thereto in Section 8.02.

“ Person ” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.

“ Reinsurance Manager Indemnitees ” has the meaning ascribed thereto in Section 8.01.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933 and the rules and regulations thereunder.

“ Shareholders’ Equity ” means, as of the end of any fiscal quarter, Parent’s shareholders’ equity, on a consolidated basis, as reported in Parent’s financial statements prepared in accordance with U.S. GAAP.

“ Termination Fee ” has the meaning ascribed thereto in Section 7.04.

“ Underwriting Guidelines ” means the underwriting guidelines of Parent and its subsidiaries, as the same may be modified by the board of directors of Parent from time to time.

“ U.S. GAAP ” means the generally accepted accounting principles used in the United States of America.

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ARTICLE II

The Reinsurance Manager

SECTION 2.01.  Appointment and Acceptance of Reinsurance Manager .  Parent, on behalf of itself and its subsidiaries, hereby appoints the Reinsurance Manager to undertake the duties normally performed by a reinsurance manager with full power and authority (subject to the Underwriting Guidelines, the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements) to act as reinsurance manager for Blue Capital Re, and the Reinsurance Manager hereby accepts such appointment.

SECTION 2.02.  Services to Be Rendered by the Reinsurance Manager .  Subject to the Underwriting Guidelines, the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements, the Reinsurance Manager shall perform, or shall cause to be performed, the following services:

(a)                                  providing general insurance management services to Blue Capital Re, including making underwriting decisions in accordance with the Underwriting Guidelines;

(b)                                  preparing all financial reports and other filings required by any Competent Regulatory Authority;

(c)                                   depositing and maintaining Blue Capital Re’s funds in one or more accounts established solely in the name and on behalf of Blue Capital Re at such financial institutions as may be approved by the board of directors of Blue Capital Re (the “ Accounts ”), and depositing, investing and reinvesting those funds in collateral arrangements in respect of risks being ceded or retroceded to, or otherwise assumed by, Blue Capital Re;

(d)                                  coordinating with such third party administrators as may be appointed to perform administrative services in connection with the risks being ceded or retroceded to, or otherwise assumed by, Blue Capital Re;

(e)                                   keeping such books, records and statements, separate from the Reinsurance Manager’s other clients and the Reinsurance Manager’s own books and records, as may be required:

(i)                                      to give a true, complete and current record of the reinsurance results, assets and liabilities of Blue Capital Re at all times in accordance with generally accepted accounting principles applicable to the businesses of insurance and reinsurance;

(ii)                                   to enable Parent to publish or provide consolidated reports and accounts of Parent and its subsidiaries (including any financial reports, SEC filings and reports or information required by the Bermuda

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Monetary Authority); and

(iii)                                by any Competent Regulatory Authority from time to time;

(f)                                    using commercially reasonable efforts to ensure that the services rendered by the Reinsurance Manager pursuant to this Agreement are not disrupted or suspended due to an event of Force Majeure, and that any such disruption or suspension is mitigated and brought to an end as soon as practicable, including:

(i)                                      taking reasonable care, where applicable, in its selection, use and monitoring of service providers, contractors, counterparties, agents and delegates; and

(ii)                                   maintaining a business continuity plan to provide for the prompt and efficient handling of any incident that would be likely to impair its ability to perform its obligations under this Agreement, and testing that plan at appropriate intervals;

(g)                                   performing the duties normally performed by a reinsurance manager of a reinsurer of the type and nature of Blue Capital Re; and

(h)                                  for such time as the Common Shares are registered under the Exchange Act or listed on the NYSE, providing all necessary assistance to Parent and its subsidiaries in complying with their obligations under the Securities Act, the Exchange Act or any rules of the NYSE, except that the Reinsurance Manager shall not be in breach of its obligations under this Section 2.02(h) if it is unable to comply with such obligations because, after due and careful inquiry, it has not been given the relevant information or relevant assistance from any third party.

SECTION 2.03.  Powers of the Reinsurance Manager .  Without limiting the generality of Section 2.02, but subject to the Underwriting Guidelines, the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and any Applicable Requirement, the Reinsurance Manager shall have the full discretionary authority, power and right, for the account of Blue Capital Re, to:

(a)                                  prepare and negotiate all agreements and related documents for the risks being ceded or retroceded to or from, or otherwise assumed or ceded by, Blue Capital Re;

(b)                                  determine premium rates and other underwriting terms and conditions with respect to the underwriting of such risks being ceded or retroceded to or from, or otherwise assumed by, Blue Capital Re;

(c)                                   execute, in the name and on behalf of Blue Capital Re, all financial reports and other filings required by any Competent Regulatory Authority, such execution to be binding upon Blue Capital Re;

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(d)                                  establish, determine and agree upon commissions and fees to be paid to producers, intermediaries and brokers;

(e)                                   manage the administrative functions and day-to-day reinsurance operations of Blue Capital Re including:

(i)                                      invoicing and collecting amounts due to Blue Capital Re;

(ii)                                   paying brokerage fees, Federal excise taxes and other reinsurance-related obligations of Blue Capital Re;

(iii)                                reviewing and paying claims on behalf of Blue Capital Re and conducting any claims audits on behalf of Blue Capital Re; and

(iv)                               depositing into the Accounts amounts paid to Blue Capital Re, including reinsurance premiums, interest and fees, and withdrawing from the Accounts funds for the payment of liabilities of Blue Capital Re, including claims, payments, regulatory licensing and filing fees, acquisition and claims-related expenses, accounting and audit fees and expenses, and administrative and management expenses; and

(f)                                    provide any administrative and managerial services necessary to the conduct of the day-to-day affairs of Blue Capital Re, including service as Blue Capital Re’s principal representative and such other functions as may be required under Applicable Requirements.

SECTION 2.04.  Bank Accounts .  As, when and on terms reasonably requested by the Reinsurance Manager, Blue Capital Re shall open, modify or close, and make available for use by the Reinsurance Manager for the payment of amounts to be paid by the Reinsurance Manager on behalf of Blue Capital Re hereunder, one or more Accounts of Blue Capital Re.  Blue Capital Re shall adopt such resolutions and execute such documents as required to designate officers of the Reinsurance Manager (by title) as signatories on such accounts and authorize the Reinsurance Manager to certify to such financial institutions, from time to time, the names of such officers.  The Reinsurance Manager’s access to and use of Blue Capital Re’s Accounts is strictly limited to actions taken by the Reinsurance Manager as required to perform its obligations under this Agreement.

ARTICLE III

Covenants

SECTION 3.01.  Covenants of Parent .  During the term of this Agreement, Parent, on behalf of itself and its subsidiaries, agrees that Parent and its subsidiaries shall:

(a)                                  observe and comply with any Applicable Requirement;

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(b)                                  not, directly or indirectly (including through any of its Affiliates), enter into any other underwriting and insurance management agreement (or similar agreement) with any other entity;

(c)                                   provide the Reinsurance Manager with access to the books and records of Parent and its subsidiaries in respect of the services rendered and to be rendered pursuant to this Agreement (such access to be upon reasonable prior notice and during regular business hours), and otherwise take such action as is reasonably required to allow the Reinsurance Manager to fulfill its obligations hereunder, in each case in a manner that does not unreasonably interfere with the business operations of Parent and its subsidiaries;

(d)                                  notify the Reinsurance Manager in a timely manner of any amendment to the Underwriting Guidelines; and

(e)                                   compensate and reimburse the Reinsurance Manager for its expenses as provided in Article VI hereof.

SECTION 3.02.  Covenants of the Reinsurance Manager .  During the term of this Agreement, the Reinsurance Manager agrees that it shall:

(a)                                  observe and comply with any Applicable Requirement and the organizational documents and known contractual obligations of Blue Capital Re;

(b)                                  act in good faith and with reasonable skill and care in respect of the services rendered or to be rendered pursuant to this Agreement;

(c)                                   comply with the Underwriting Guidelines (as the same may be amended from time to time) and take prompt corrective action if the Underwriting Guidelines are breached;

(d)                                  take into account the liquidity needs of Parent and its subsidiaries solely to the extent Parent and its subsidiaries communicate such needs to the Reinsurance Manager;

(e)                                   have regard to any matter to which a prudent reinsurance manager should reasonably pay regard in accordance with customary industry standards for the provision of such services as those to be rendered pursuant to this Agreement;

(f)                                    not carry on any business if by doing so the Reinsurance Manager shall knowingly cause Parent and its subsidiaries to become liable to pay any taxes that they would not otherwise be liable to pay;

(g)                                   maintain its registrations as an insurance agent and as an insurance manager under the Insurance Act of 1978 under the laws of Bermuda; and

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(h)                                  not knowingly take any action that, in its sole judgment, would cause Parent or any of its subsidiaries to become an investment company under the Investment Company Act of 1940.

SECTION 3.03.  Regulatory Matters .  Each Party agrees promptly to notify the other Parties in writing upon receipt of any written or oral communication from any Competent Regulatory Authority pertaining to the services rendered or to be rendered pursuant to this Agreement.  The Parties agree to cooperate with each other and to use their commercially reasonable efforts in jointly resolving any issue or matter raised by any Competent Regulatory Authority.

SECTION 3.04.  Cooperation .  The Parties shall cooperate with each other as may be reasonably necessary or appropriate to enable the Parties to carry out their respective responsibilities in full and to effectuate the purposes of this Agreement.  Each Party shall do and perform or cause to be done and performed all further acts and shall execute and deliver all other agreements, certificates, instruments and documents as the other Parties may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated by this Agreement.

ARTICLE IV

Limits of the Reinsurance Manager

SECTION 4.01.  Limits of the Reinsurance Manager’s Responsibilities .  The Reinsurance Manager shall not be responsible for and shall have no duty to provide legal counsel, investment management or advice (other than with respect to cash and collateral accounts), tax advice or independent auditing services under this Agreement.  Except as provided herein, the Reinsurance Manager shall not have any other or further obligations or responsibilities to Parent and its subsidiaries, including any liability for the uncollectibility of any insurance or reinsurance premiums; provided , however , that the Reinsurance Manager shall use its commercially reasonable efforts to collect such premiums.

ARTICLE V

Representations and Warranties

SECTION 5.01.  Representations and Warranties .  Each Party hereby represents and warrants to the other Parties that (in respect of itself):

(a)                                  it is duly incorporated and validly existing under applicable laws, with full power and authority to conduct its business, and it has full power and authority to enter into, perform its duties under and exercise its rights under this Agreement;

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(b)                                  assuming the due authorization, execution and delivery of the other Parties, this Agreement constitutes its valid, lawful and binding obligations enforceable against itself in accordance with its terms (except insofar as enforceability may be limited by any bankruptcy laws or principles, or any similar laws or principles);

(c)                                   the execution and delivery of this Agreement and the performance of its obligations under this Agreement do not and shall not constitute a breach of or default under (i) its organizational documents, (ii) any agreement or instrument by which it is bound or (iii) any Applicable Requirement;

(d)                                  no material consent, approval, waiver, license, permit, order or authorization of, or registration, declaration or filing with, any Competent Regulatory Authority is required to be obtained or made by it in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement, other than, in the case of each Party, notification to the Bermuda Monetary Authority; and

(e)                                   no step, application, order, proceeding or appointment has been taken or made by or in respect of it for a distress, execution, composition or arrangement with creditors, winding-up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy, and it is able to pay its debts.

The representations and warranties in this Section 5.01 are made on a continuing basis, and shall remain in full force and effect throughout the duration of this Agreement.  If any Party becomes aware that any of the representations and warranties made by it in this Section 5.01 has ceased to be true, then it shall notify the other Parties promptly.

ARTICLE VI

Fees and Expenses

SECTION 6.01.  Performance Fees .  (a)  With respect to each fiscal quarter that this Agreement is in effect, commencing with the quarter in which this Agreement is executed, the Reinsurance Manager shall receive the Performance Fee (as defined below).  Within 45 calendar days following the last day of each fiscal quarter, the Reinsurance Manager shall make available the quarterly calculation of the Management Fee to Parent with respect to such quarter, and Parent shall pay the Reinsurance Manager the Performance Fee for such quarter in cash within 15 Business Days thereafter.

(b)                                  The “ Performance Fee ” means, with respect to any fiscal quarter, 20% multiplied by

(A)                                the pre-tax Distributable Income, prior to the calculation of the Performance Fee, of Parent as of the end of such fiscal quarter; minus

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(B)                                a hurdle amount (the “ Hurdle Amount ”) calculated as the product of:

(1)                                  (a) the product of (i) the weighted average of the issue price per Common Share of every public or private offering conducted by Parent since its inception, multiplied by (ii) the weighted average number of all Common Shares outstanding as of the end of such fiscal quarter, including any restricted share units, any restricted Common Shares and other Common Shares underlying awards granted under any of Parent’s equity incentive plans minus (b) the amount, if any, by which Parent’s inception-to-date dividends to holders of Common Shares exceeds Parent’s inception-to-date U.S. GAAP net income to holders of Common Shares; multiplied by

(2)                                  2% (equivalent to an 8% annualized hurdle rate);

provided , however , that the Performance Fee shall be (x) in an amount that is not less than zero and (y) subject to a rolling three-year high water mark, such that no Performance Fee will be payable in any quarterly period (the “ Current Period ”) except, and only, to the extent that (i) 20% of the sum of the Applicable Quarterly Growth Amount for the Current Period plus the Applicable Quarterly Growth Amount for each of the 11 preceding quarterly periods exceeds (ii) the aggregate Performance Fees actually paid for the 11 preceding quarterly periods.  Prior to the completion of the three-year period beginning upon completion of the Offering, calculation of the high water mark will be based upon the inception-to-date period, as applicable.  The Performance Fee shall be pro-rated for partial quarterly periods based on the number of days in such partial period compared to a 90-calendar day period.

(c)                                   “ Distributable Income ” means the U.S. GAAP net income of Parent available to holders of Common Shares excluding any non-cash compensation expense, unrealized gains and losses and other non-cash items recorded in net income for such period.

(d)                                  “ Applicable Quarterly Growth Amount ” means, with respect to any quarter, the pre-tax, pre-Performance Fee Distributable Income for such quarter less the Hurdle Amount with respect to such quarter.

SECTION 6.02.  Reinsurance Manager’s Expenses .  The Reinsurance Manager will provide at its own expense:

(a)                                  such staff as may be necessary for the due performance of its duties; and

(b)                                  such office and other accommodation and relevant utilities as may be necessary for the due performance of its duties.

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SECTION 6.03.  Parent’s Expenses .  Parent, on behalf of itself and its subsidiaries, is responsible and, to the extent that the Reinsurance Manager has paid the same on behalf of Parent and its subsidiaries, will reimburse the Reinsurance Manager for all reasonable out-of-pocket expenses (but not overhead costs) incurred by the Reinsurance Manager in connection with the performance of its obligations under this Agreement, including:

(a)                                  fees and expenses in respect of transactions carried out for Parent and its subsidiaries;

(b)                                  all bank charges and expenses of any kind incurred in connection with, or incidental to, deposits of cash;

(c)                                   any costs, including all travel, accommodation and other reasonable costs, incurred by the Reinsurance Manager at the express request of Parent;

(d)                                  the cost of faxes and telephone calls properly incurred in the course of carrying out its duties hereunder;

(e)                                   all legal and professional expenses incurred by the Reinsurance Manager in the furtherance of its duties under this Agreement and all legal and other professional expenses properly incurred, or to be incurred, in the preparation of any documents amending the terms and conditions of this Agreement; and

(f)                                    any costs and expenses properly incurred by Parent and its subsidiaries in the course of its business and not expressly the responsibility of the Reinsurance Manager (to the extent that such amounts have not already been paid).

ARTICLE VII

Term and Termination

SECTION 7.01.  Term .  This Agreement shall remain in full force and effect until terminated or not renewed by Parent or the Reinsurance Manager in accordance with this Article VII, except that Sections 7.01, 7.04, Article VIII and Article X shall survive such termination or non-renewal.  This Agreement shall renew automatically on the fifth anniversary of the completion of the Offering and upon every third anniversary thereafter, unless otherwise terminated or not renewed in accordance with this Article VII.

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SECTION 7.02.  Termination of the Agreement .  (a)  Termination by Parent or the Reinsurance Manager.

(i)                                      If the Investment Management Agreement is terminated or not renewed in accordance with its terms, this Agreement may be terminated by Parent or the Reinsurance Manager upon 30 Business Days’ prior written notice.

(ii)                                   If Parent becomes regulated as an investment company under the U.S. Investment Company Act of 1940, this Agreement shall terminate automatically, with such termination deemed to occur immediately prior to such event.

(b)                                  Termination by the Reinsurance Manager.

(i)                                      If (A) there is a Change of Control of Parent, (B) Blue Capital Re ceases to be an Affiliate of Parent or (C) Blue Capital Re ILS ceases to be an Affiliate of Parent, this Agreement may be terminated by the Reinsurance Manager upon 30 Business Days’ prior written notice.

(ii)                                   If either Parent or Blue Capital Re breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 30 Business Days after giving written notice to Parent of such breach or failure, this Agreement may be terminated by the Reinsurance Manager ( provided that the Reinsurance Manager is not then in material breach of any representations, warranties or covenants contained in this Agreement).

(iii)                                If the Reinsurance Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, this Agreement may be terminated by the Reinsurance Manager upon 30 Business Days’ notice ( provided that the Reinsurance Manager has used commercially reasonable efforts to obtain an approval, waiver or consent, as applicable, to remedy such breach).

(iv)                               If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of Parent or Blue Capital Re for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy or (B) Parent or Blue Capital Re is unable to pay its debts as they become due, this Agreement may be terminated by the Reinsurance Manager upon 30 Business Days’ notice.

(c)                                   Termination by Parent.

(i)                                      If the Reinsurance Manager breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 60 Business Days after giving written notice to the Reinsurance Manager of such

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breach or failure, this Agreement may be terminated by Parent ( provided that neither Parent nor Blue Capital Re is then in material breach of any representations, warranties or covenants contained in this Agreement).

(ii)                                   If the Reinsurance Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, which breach has not been cured within 60 Business Days after giving written notice to the Reinsurance Manager of such breach, this Agreement may be terminated by Parent.

(iii)                                If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of the Reinsurance Manager for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy or (B) the Reinsurance Manager is unable to pay its debts as they become due, this Agreement may be terminated by Parent upon 60 Business Days’ notice.

SECTION 7.03.  Non-Renewal .  The Reinsurance Manager or Parent may elect not to renew this Agreement at the expiration of the initial term or any renewal term for any or no reason, upon not less than nine, but not more than 12, months’ written notice to the other prior to the end of such initial term or renewal term, as applicable.

SECTION 7.04.  Termination Fee .  Upon any termination or non-renewal of this Agreement, Parent will pay a one-time termination fee (the “ Termination Fee ”) equal to 5.0% of the Shareholders’ Equity, calculated as of the most recently completed fiscal quarter prior to the date of termination.  The Termination Fee shall not be payable if this Agreement is terminated pursuant to Section 7.02(c)(i) or 7.02(c)(iii). In the event that this Agreement is terminated pursuant to Section 7.02(a)(i), the Termination Fee is payable only under the terms of the Investment Management Agreement and shall not be payable under the terms of this Agreement, it being understood that in no event shall Parent be required to pay the Termination Fee on more than one occasion.

SECTION 7.05.  Management of Blue Capital Re Upon Termination .  The Parties agree that if the Reinsurance Manager is requested by Parent or Blue Capital Re to continue to manage Blue Capital Re upon the termination of this Agreement, the Reinsurance Manager will continue to be compensated in accordance with the terms of Article VI hereof for the provision of run-off management services by the Reinsurance Manager following the termination of this Agreement.

ARTICLE VIII

Indemnification

SECTION 8.01.  Indemnification of the Reinsurance Manager .  Subject to Section 8.05 hereof, Parent, on behalf of itself and its subsidiaries, unconditionally agrees to indemnify, defend and hold harmless the Reinsurance Manager and its Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “ Reinsurance

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Manager Indemnitees ”) from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur (i) on account of any third-party claim or proceeding arising out of the performance of this Agreement or (ii) from any breach of, or failure to perform, any covenant or obligation of Parent or Blue Capital Re contained in this Agreement (unless caused by the Reinsurance Manager’s breach of, or failure to perform, its covenants or obligations under this Agreement), in each case, unless (a) a court or arbitral panel with appropriate jurisdiction shall have determined by a final judgment which is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Reinsurance Manager Indemnitees or (b) such Reinsurance Manager Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of Parent (such consent not to be unreasonably withheld or delayed).

SECTION 8.02.  Indemnification of Parent .  The Reinsurance Manager unconditionally agrees to indemnify, defend and hold harmless Parent and its subsidiaries and their Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “ Parent Indemnitees ”), from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur from any breach of, or failure to perform, any covenant or obligation of the Reinsurance Manager contained in this Agreement, unless (i) a court or arbitral panel of appropriate jurisdiction shall have determined by a final judgment that is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Parent Indemnitees or (ii) such Parent Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of the Reinsurance Manager (such consent not to be unreasonably withheld or delayed).

SECTION 8.03.  Indemnification Procedure .  Any person who is claiming indemnification from Parent pursuant to the provisions of Section 8.01, or from the Reinsurance Manager pursuant to the provisions of Section 8.02 (the “ Indemnified Person ”) shall promptly deliver a written notification of each claim for indemnification, accompanied by a copy of all papers served, if any, and specifying in detail the nature of, basis for and estimated amount of the claim for indemnification to Parent or the Reinsurance Manager, as applicable (the “ Indemnifying Party ”).  If an Indemnified Person fails to promptly notify the Indemnifying Party, then the obligation to indemnify shall be reduced by the amount of liability that is attributable to or becomes definite as a result of the delay in notification, if the delay in notification has resulted in a material increase in liability or actual prejudice to the Indemnifying Party.  The Indemnifying Party shall have the right to assume the defense of any matter for which a claim of indemnification is made against it with counsel it selects, at its own expense.  The Indemnifying Party in its sole discretion shall have the right to settle, compromise or defend until final adjudication any dispute or alleged liability for which a claim for indemnification has been made;  provided , however , that the Indemnifying Party shall not, except with the consent of each Indemnified Person, which consent shall not be unreasonably withheld or delayed, consent to the entry of any judgment, or enter into any settlement, that does not include the giving by the claimant or plaintiff to the Indemnified

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Person of a release from all liability with respect to the claim or litigation.  Each Indemnified Person shall cooperate in providing information, formulating a defense or as otherwise reasonably requested by the Indemnifying Party.

SECTION 8.04.  Payment of Indemnified Amounts .  Each Indemnified Person shall provide written, detailed statements to the Indemnifying Party on a monthly basis, of any expenses, costs or other liabilities for which indemnification is claimed.  The Indemnifying Party shall reimburse such amounts within ten Business Days of receiving any such statement, or shall notify in writing the Indemnified Person claiming indemnification if it denies liability, and provide the reasons for the denial.

SECTION 8.05.  Limit of Liability .  Notwithstanding anything else in this Agreement to the contrary, the Reinsurance Manager’s aggregate liability during the term of this Agreement with respect to, arising from, or arising out of or attributable to this Agreement, or from all services rendered or omitted to be rendered under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the highest amount actually paid as Performance Fees in any single calendar year during the term of this Agreement.

ARTICLE IX

Conflicts of Interest and Exclusivity

SECTION 9.01.  Non-Exclusivity of Services Rendered by the Reinsurance Manager .  The services provided by the Reinsurance Manager under this Agreement are not exclusive.  None of the services to be provided under this Agreement nor any other matter shall give rise to any fiduciary or equitable duties (to the fullest extent permitted by Applicable Requirements) which would prevent or hinder the Reinsurance Manager, its Affiliates or their respective directors, officers, employees and agents (each an “ Interested Party ”) from providing services to or entering into transactions with or for Parent and its subsidiaries.  An Interested Party may, without prior notice to Parent and its subsidiaries, recommend, effect or enter into transactions or provide services (whether or not similar to the services provided under this Agreement) where an Interested Party has, directly or indirectly, a material interest or a relationship with another person which may involve a conflict with the Reinsurance Manager’s duty to Parent and its subsidiaries.

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SECTION 9.02.  Conflicts of Interest .  The Reinsurance Manager shall take reasonable steps to ensure fair treatment for Parent and its subsidiaries, and shall ensure that any such transactions are effected on terms which are not materially less favorable to Parent and its subsidiaries than if the potential conflict had not existed.  However, neither the Reinsurance Manager nor any other Interested Party shall be liable to Parent and its subsidiaries for any profit, commission or remuneration made or received from or by reason of such transactions or any related transactions.  The Reinsurance Manager hereby notifies Parent and its subsidiaries, and Parent and its subsidiaries hereby acknowledge, that such potential conflicting interests or duties may arise as a result of, among other things:

(a)                                  an Interested Party undertakes investment or other business for other clients;

(b)                                  the transaction relates to an Investment in respect of which an Interested Party may benefit from a commission, fee, mark-up or mark-down payable otherwise than by Parent or its subsidiaries, or the Interested Party may also be remunerated by the counterparty to any such transaction;

(c)                                   the Reinsurance Manager deals on behalf of Parent and its subsidiaries with or through another Interested Party; or

(d)                                  the Reinsurance Manager may act as agent for Parent and its subsidiaries in relation to transactions in which it is also acting as agent for the account of other clients or Interested Parties.

ARTICLE X

Miscellaneous

SECTION 10.01.  Confidentiality .  (a)  No Party shall at any time use, divulge or communicate to any Person any Confidential Information, except:

(i)                                      as agreed by the other Parties;

(ii)                                   where required to perform its duties or exercise its rights under this Agreement (including to its delegates or agents, if applicable);

(iii)                                to its professional representatives or advisers, or to insurance companies, insurance brokers or insurance agents, to the extent required by them to perform their duties, and provided that they are or agree to be bound by a duty of confidentiality;

(iv)                               (when the Reinsurance Manager is transacting business for Parent or its subsidiaries with a counterparty or broker) the identity of Parent and its subsidiaries and such details about Parent and its subsidiaries as the counterparty or broker may reasonably request (in

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accordance with market practice); or

(v)                                  to the extent required by Applicable Requirements or by any Competent Regulatory Authority (including for the purpose of filing tax returns),

and each Party shall use commercially reasonable efforts to prevent the publication or disclosure of any Confidential Information in breach of this Agreement.

(b)                                  The Reinsurance Manager is not required to disclose to Parent and its subsidiaries, or to take into account when performing its obligations under this agreement any information:

(i)                                      the disclosure of which to Parent and its subsidiaries would or might be a breach of duty or confidence to any other Person; or

(ii)                                   which comes to the notice of an employee or agent of the Reinsurance Manager.

SECTION 10.02.  Non-Exclusivity .  This Agreement shall not restrict the rights or ability of the Reinsurance Manager to offer services similar to those contemplated hereby to third parties, including its own Affiliates, or of Parent and its subsidiaries to receive services not contemplated hereby from third party vendors.  Parent and its subsidiaries waive any claim based on any conflict of interest on the part of the Reinsurance Manager or its employees arising from any Affiliate of the Reinsurance Manager carrying on business similar to that of Parent and its subsidiaries or providing similar services to any other Persons, including competitors of Parent or its subsidiaries.

SECTION 10.03.  Specific Performance .  Each of the Parties acknowledges and agrees that in the event of a breach of this Agreement, each non-breaching Party would be irreparably and immediately harmed and could not be made whole by monetary damages.  It is accordingly agreed that the Parties (a) will waive, in any action for specific performance, the defense of adequacy of a remedy at law, (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in respect thereof and (c) will waive, for purposes of this Section 10.03 only, the requirement to submit any dispute arising out of, or related in any way to, this Agreement or the transactions hereunder to arbitration pursuant to Section 10.09.

SECTION 10.04.  Amendment .  This Agreement may be amended by the Parties at any time by an instrument in writing executed by each Party.

SECTION 10.05.  Delegation .  The Reinsurance Manager may, subject to any Applicable Requirement, delegate or sub-contract any of its functions under this Agreement, but any such delegation or sub-contracting shall not affect the Reinsurance Manager’s liability under this Agreement.

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SECTION 10.06.  Assignment .  Subject to Section 10.05, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise, by any of the Parties hereto without the prior written consent of the other Parties hereto. No assignment by any Party shall relieve such Party of any of its obligations hereunder.  Subject to the immediately preceding two sentences, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted assigns.  Any purported assignment not permitted under this Section 10.06 shall be null and void.  All such assignments shall be subject to all necessary regulatory approvals.

SECTION 10.07.  Counterparts .  This Agreement may be executed in one or more counterparts (including by facsimile or e-mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party hereto and delivered to the other Parties hereto.

SECTION 10.08.  Entire Agreement; No Third-Party Beneficiaries .  This Agreement constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the Parties and their Affiliates, or any of them, with respect to the subject matter hereof and thereof and is not intended to confer upon any Person other than the Parties any rights or remedies.  Each Party acknowledges and agrees that (i) it has not relied on or been induced to enter into this Agreement by any undertaking, promise, assurance, statement, representation, warranty, undertaking or understanding which is not expressly included in this Agreement and (ii) it shall have no claim or remedy in respect of any undertaking, promise, assurance, statement, representation, warranty, undertaking or understanding which is not expressly included in this Agreement.  Nothing in the immediately preceding sentence shall operate to limit or exclude any liability for fraud.

SECTION 10.09.  Arbitration .  (a) Any dispute arising out of, or related in any way to, this Agreement or the transactions hereunder, including its formation and validity, shall be determined by arbitration in accordance with Bermuda law. The dispute shall be submitted to a panel of arbitrators and the seat of arbitration shall be in Bermuda.  The panel shall be composed of three arbitrators, one arbitrator shall be chosen by Parent, one arbitrator shall be chosen by the Reinsurance Manager and one arbitrator shall be chosen by the mutual agreement of the two arbitrators selected by each of Parent and the Reinsurance Manager.  The arbitrators shall be disinterested, active or retired executive officers of property or casualty insurance or reinsurance companies, not under the control or management of any Party to this Agreement.

(b)                                  Any Party requesting arbitration shall provide the other Parties with a written notice that includes reasonable detail of the dispute such Party intends to submit for arbitration.  During the 45 days following receipt of such notice, the Parties shall use their respective commercially reasonable efforts to negotiate an amicable resolution of such dispute ( provided that the use of commercially reasonable efforts shall not be deemed to require the Parties to agree to any resolution).  If the Parties have not resolved such dispute in writing within 45 days of receipt of such written notice by the

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other Parties, Parent and the Reinsurance Manager shall each select an arbitrator within 30 days after the expiration of such 45-day period.  If either Parent or the Reinsurance Manager fails to appoint its arbitrator within such 30-day period, Parent or the Reinsurance Manager, as applicable, shall also appoint such Party’s arbitrator.

(c)                                   The panel shall make its decision in the context of the custom and usage of the insurance and reinsurance industry.  They shall interpret this Agreement as an honorable engagement, and shall settle any dispute under this Agreement according to an equitable, rather than strictly legal, interpretation of its terms with a view to effecting the general purpose of this Agreement.  The panel is relieved of all judicial formality and may abstain from following the strict rules of law.  The panel shall have the power to fix all procedural rules for the arbitration, including the discretionary power to make orders regarding any matters which it may consider proper under the circumstances of the case relating to pleadings, discovery, inspection of documents and examination of witnesses.  The panel shall have the power to receive and act upon such evidence, whether oral or written, as it in its sole discretion shall deem relevant to the dispute.

(d)                                  The panel shall render a decision in writing within 60 days after the matter is finally submitted to it unless the Parties agree to an extension.  Any decision by a majority of the panel members shall be final and binding on the Parties.  If any Party fails to comply with the panel’s decision, the other Parties may apply for its enforcement to a court of competent jurisdiction.

(e)                                   Unless ordered differently by the panel, each of Parent and the Reinsurance Manager shall bear the expenses of its own arbitrator, and shall jointly and equally bear with the other the expenses of the third arbitrator.  In the event two or more arbitrators are chosen by either Parent or the Reinsurance Manager, the fees of all three arbitrators shall be equally divided between Parent and the Reinsurance Manager.  The remaining costs of the arbitration proceeding shall be allocated by the panel as part of its award.

SECTION 10.10.  Governing Law .  This Agreement shall be governed by, and construed in accordance with, the laws of Bermuda applicable to contracts and made and performed entirely within Bermuda.

SECTION 10.11.  WAIVER OF JURY TRIAL .  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO

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ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10.11.

SECTION 10.12.  Notices .  All notices, requests and other communications to either Party hereunder shall be in writing and shall be deemed given if delivered personally, facsimiled (which is confirmed) or sent by overnight courier (providing proof of delivery) to the Parties at the following addresses:

or such other address or facsimile number as such Party may hereafter specify by like notice to the other Parties hereto.  All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

SECTION 10.13.  Severability .  If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the terms of this Agreement are fulfilled to the extent possible.

SECTION 10.14.  No Waiver/Cumulative Remedies .  Any waiver of a breach of any of the terms of this Agreement or of any default under this Agreement shall not be deemed a waiver of any subsequent breach or default and shall in no way affect the other terms of this Agreement.  No failure on the part of a Party to exercise, and no delay on its part in exercising, any right or remedy under this Agreement shall operate as a waiver of that right or remedy, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of that right or remedy or the exercise of

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any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

SECTION 10.15.  Relationship of Parties .  The Reinsurance Manager shall perform its duties hereunder as an independent contractor.  Nothing in this Agreement shall be construed to create the relationship of employer or employee, partnership or any type of joint venture relationship, between Parent and its subsidiaries, on the one hand, and the Reinsurance Manager, on the other hand.

SECTION 10.16.  Interpretation .  (a)  When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “ include ”, “ includes ” or “ including ” are used in this Agreement, they shall be deemed to be followed by the words “ without limitation ”.  The words “ hereof ”, “ herein ” and “ hereunder ” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The words “ date hereof ” when used in this Agreement shall refer to the date of this Agreement.  The terms “ or ”, “ any ” and “ either ” are not exclusive.  The word “ extent ” in the phrase “ to the extent ” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “ if ”.  The word “ will ” shall be construed to have the same meaning and effect as the word “ shall ”.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  Unless otherwise specifically indicated, all references to “ dollars ” or “ $ ” shall refer to the lawful money of the United States.  References to a Person are also to its permitted assigns and successors.

(b)                                  The Parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties hereto and no presumption or burden of proof shall arise favoring or disfavoring either Party hereto by virtue of the authorship of any provision of this Agreement.

[ signature page follows ]

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IN WITNESS WHEREOF, this Agreement has been entered into by the duly authorized representatives of the Parties on the day and year first above written.

[Signature Page to Underwriting and Insurance Management Agreement]

Exhibit 10.3

INVESTMENT MANAGEMENT AGREEMENT

between

BLUE CAPITAL REINSURANCE HOLDINGS LTD.

and

BLUE CAPITAL MANAGEMENT LTD.

Dated as of November 12, 2013

TABLE OF CONTENTS

i

ii

iii

INVESTMENT MANAGEMENT AGREEMENT (this “ Agreement ”), dated as of November 12, 2013, between BLUE CAPITAL REINSURANCE HOLDINGS LTD., an exempted company incorporated in Bermuda (registered number 47855) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (“ Parent ”), and BLUE CAPITAL MANAGEMENT LTD., an exempted company incorporated in Bermuda (registered number 38829) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (the “ Investment Manager ”).

WHEREAS Parent wishes to appoint the Investment Manager to act as investment manager on behalf of Parent and its subsidiaries, and to identify, select and negotiate potential investments for Parent and its subsidiaries in accordance with the Underwriting Guidelines (as defined below), and the Investment Manager has agreed to act as an investment manager on the terms and subject to the conditions of this Agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent and the Investment Manager (collectively, the “ Parties ” and each individually a “ Party ”) agree as follows:

ARTICLE I

Defined Terms

SECTION 1.01.  Definitions .  As used in this Agreement, the following terms have the meanings ascribed thereto below.

“ Accounts ” has the meaning ascribed thereto in Section 2.02(c).

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person.  For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

“ Applicable Requirements ” means, with respect to any Person, all applicable laws, rules, regulations and requirements, including applicable laws, rules, regulations, requirements and binding requests of any Competent Regulatory Authority, and all applicable orders and decrees.

“ Blue Capital Re ” means Blue Capital Re Ltd., a wholly owned direct subsidiary of Parent and an exempted company incorporated in Bermuda (registered number 47922) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

“ Blue Capital Re ILS ” means Blue Capital Re ILS Ltd., a wholly owned direct subsidiary of Blue Capital Re and an exempted company incorporated in Bermuda (registered number 47964) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

“ Business Day ” means a day other than a Saturday, Sunday or other day on which the SEC or banks in the City of New York or Bermuda are authorized or required by law to be closed.

“ Change of Control ” means the first of the following events to occur:

(a) the consummation of (i) a merger, amalgamation, consolidation, scheme of arrangement, statutory share exchange or similar form of corporate transaction involving Parent (a “ Reorganization ”) or (ii) the sale or other disposition of all or substantially all the assets of Parent (determined on a consolidated basis) to another “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) (a “ Sale ”), unless, immediately following such Reorganization or Sale, (1) individuals and entities who were the “beneficial owners” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act ) of the securities eligible to vote for the election of the board of directors of Parent (“ Voting Securities ”) outstanding immediately prior to the consummation of such Reorganization or Sale continue to beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of the corporation or other entity resulting from such Reorganization or Sale (including a corporation that, as a result of such transaction, owns Parent or all or substantially all the assets of Parent either directly or through one or more subsidiaries) (the “ Continuing Parent ”) and (2) no “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (excluding any employee benefit plan (or related trust) sponsored or maintained by the Continuing Parent or any corporation controlled by the Continuing Parent) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then-outstanding voting securities of the Continuing Parent; or

(b) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) is or becomes the beneficial owner (as defined in clause (a) above, except that for purposes of this clause (b) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable

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immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting securities of Parent.

“ Common Shares ” means the common shares, par value $1.00 per share, of Parent.

“ Competent Regulatory Authority ” means, with respect to any Person, any regulatory authority or analogous Person responsible for regulating, or having jurisdiction over, that Person.

“ Confidential Information ” means information that:

(a) has been disclosed to a Party, or that a Party has or may become aware of in connection with this Agreement, in both cases before or during the term of this Agreement; and

(b) is marked as or otherwise indicated as confidential, or derives value to a Party from being confidential, or would be regarded as confidential by a reasonable business person,

except to the extent that such information is in the public domain (otherwise than by a breach of the confidentiality provisions of this Agreement).

“ Custodian ” means any Person or Persons responsible for the custody of the Portfolio from time to time.

“ Exchange Act ” means the Securities Exchange Act of 1934 and the rules and regulations thereunder.

“ Force Majeure ” means any cause preventing either Party from performing any or all of its obligations hereunder that arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including strikes, lockouts or other industrial disputes (whether involving the workforce of the Party so prevented or of the other Party), act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant, machinery or software, fire, flood, storm or default of suppliers or subcontractors.

“ Indemnified Person ” has the meaning ascribed thereto in Section 8.03.

“ Indemnifying Party ” has the meaning ascribed thereto in Section 8.03.

“ Interested Party ” has the meaning ascribed thereto in Section 9.01.

“ Investment ” means any investment of any kind, including any asset, right or interest, whether held directly or indirectly.

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“ Investment Manager Indemnitees ” has the meaning ascribed thereto in Section 8.01.

“ Management Fee ” has the meaning ascribed thereto in Section 6.01(b).

“ NYSE ” means the New York Stock Exchange.

“ Offering ” means the initial public offering of the Common Shares.

“ Parent Indemnitees ” has the meaning ascribed thereto in Section 8.02.

“ Person ” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.

“ Portfolio ” means all Investments and any other assets of Blue Capital Re ILS, including cash.

“ Proper Instructions ” means:

(a) instructions given by or on behalf of Parent or to the Investment Manager in accordance with any procedures agreed in writing between the Parties for the giving of such instructions; or

(b) (in the absence of any such agreed procedures) instructions given to the Investment Manager in accordance with Section 3.02 by an individual who Parent has designated by notice to the Investment Manager as being authorized to give instructions in connection with this Agreement, unless the Investment Manager has been notified that such authorization has been revoked.

“ Reinsurance Manager ” means Blue Capital Insurance Managers Ltd., a company incorporated in Bermuda (registered number 35606) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933 and the rules and regulations thereunder.

“ Shareholder’s Equity ” has the meaning ascribed thereto in Section 6.01(c).

“ Termination Fee ” has the meaning ascribed thereto in Section 7.04.

“ Underwriting and Insurance Management Agreement ” means the underwriting and insurance management agreement entered into on the date hereof between Blue Capital Re and the Reinsurance Manager.

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“ Underwriting Guidelines ” means the underwriting guidelines of Parent and its subsidiaries, as the same may be modified by the board of directors of Parent from time to time.

“ U.S. GAAP ” means the generally accepted accounting principles used in the United States of America.

ARTICLE II

The Investment Manager

SECTION 2.01.  Appointment and Acceptance of the Investment Manager .  Parent, on behalf of itself and its subsidiaries, hereby appoints the Investment Manager to undertake the duties normally performed by an investment manager with respect to the Portfolio with full power and authority (subject to the Underwriting Guidelines, the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements) to act as investment manager, and the Investment Manager hereby accepts such appointment.

SECTION 2.02.  Services to Be Rendered by the Investment Manager .  Subject to the Underwriting Guidelines, the terms and conditions of this Agreement (including Sections 3.06 and 3.07), the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements, the Investment Manager shall perform, or shall cause to be performed, the following services:

(a)  managing the Portfolio in such manner to facilitate the attainment of the Underwriting Guidelines and any other investment, divestment or distribution policies;

(b)  evaluating, selecting and effecting transactions in Investments;

(c)  depositing and maintaining the funds of Parent and its subsidiaries, including the proceeds of realization of Investments and all dividends, interest and other income received by Parent and its subsidiaries, in one or more deposit and other bank accounts, including accounts for the purpose of holding collateral, established solely in the name and on behalf of Parent and its subsidiaries, as applicable, at such financial institutions as may be approved by the board of directors of Parent (the “ Accounts ”), and depositing, investing and reinvesting those funds as may be considered necessary or desirable by the Investment Manager;

(d)  advising Parent and its board of directors in respect of the formulation and attainment of the Underwriting Guidelines and any other investment, divestment or distribution policies;

(e)  recommending to Parent and its board of directors any developments or changes to the Underwriting Guidelines that the Investment Manager may consider to be advisable;

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(f)  providing a statement of compliance with the Underwriting Guidelines (including details of any breaches and corrective action taken to remedy such breaches) quarterly;

(g)  keeping the Portfolio and the other assets of Parent and its subsidiaries, under review and analyze the performance of the Portfolio and such other assets from time to time;

(h)  monitoring the liquidity of the Portfolio and the other assets of Parent and its subsidiaries;

(i)  providing monthly reports to Parent with respect to the investment activities and performance of the Portfolio, or more frequently at the reasonable request of Parent;

(j)  if requested and given reasonable notice, providing a representative of appropriate seniority to attend meetings of the board of directors of Parent or its subsidiaries, to report on investment management-related issues;

(k)  preparing material to be included in reports (including financial reports and SEC filings) provided to direct or indirect investors in Parent or its subsidiaries, to the extent reasonably requested by Parent or its subsidiaries;

(l)  assisting Parent and its subsidiaries in fulfilling any obligations under Applicable Requirements to disclose Investments or other holdings;

(m)  keeping such books, records and statements, separate from the Investment Manager’s other clients and the Investment Manager’s own books and records, as may be required:

(i)  to give a true, complete and current record of all orders and transactions effected at the request of the Investment Manager, its delegates or agents, on behalf of Parent in connection with the management of the Portfolio;

(ii)  to enable Parent to publish or provide consolidated reports and accounts of Parent and its subsidiaries (including any financial reports, SEC filings and reports or information required by the Bermuda Monetary Authority); and

(iii)  by any Competent Regulatory Authority from time to time;

(n)  cooperating with and assist Parent’s and its subsidiaries’ accountants, auditors, lawyers, administrator, Custodian and any other professionals, advisers and third-party service providers engaged by Parent or its subsidiaries from time to time with a view to ensuring, so far as is practicable, the smooth operation of Parent and its subsidiaries;

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(o)  using commercially reasonable efforts to ensure that the services rendered by the Investment Manager pursuant to this Agreement are not disrupted or suspended due to an event of Force Majeure, and that any such disruption or suspension is mitigated and brought to an end as soon as practicable, including:

(i)  taking reasonable care, where applicable, in its selection, use and monitoring of service providers, contractors, counterparties, agents and delegates; and

(ii)  maintaining a business continuity plan to provide for the prompt and efficient handling of any incident that would be likely to impair its ability to perform its obligations under this Agreement, and testing that plan at appropriate intervals;

(p)  performing the duties normally performed by an investment manager of an entity of the type and nature of Parent and its subsidiaries and of an investment portfolio comprising Investments of the kind comprised in the Portfolio; and

(q)  for such time as the Common Shares are registered under the Exchange Act or listed on the NYSE, providing all necessary assistance to Parent and its subsidiaries in complying with their obligations under the Securities Act, the Exchange Act or any rules of the NYSE, except that the Investment Manager shall not be in breach of its obligations under this Section 2.02(q) if it is unable to comply with such obligations because, after due and careful inquiry, it has not been given the relevant information or relevant assistance from any third party.

SECTION 2.03.  Powers of the Investment Manager .  Without limiting the generality of Section 2.02, but subject to the Underwriting Guidelines, the terms and conditions of this Agreement (including Sections 3.06 and 3.07), the oversight of the boards of directors of Parent and its subsidiaries and any Applicable Requirement, the Investment Manager shall have the full discretionary authority, power and right to:

(a)  buy, sell, retain, exchange or otherwise deal and transact in Investments and to determine all matters relating to the manner, method and timing of such transactions, including lending securities from the Portfolio;

(b)  advise on or execute transactions and negotiate and execute counterparty documentation;

(c)  deposit, invest and reinvest the funds of Parent and its subsidiaries in the Accounts;

(d)  operate and administer the Underwriting Guidelines, and any other investment, divestment or distribution policy;

(e)  subscribe to issues and offers for sale of, and accept placings, underwritings and sub-underwritings of, any Investments;

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(f)  deal with corporate actions and exercise voting rights relating to any Investments in the Portfolio in such manner as it thinks fit;

(g)  exercise any borrowing powers of Parent and its subsidiaries, including negotiating borrowing arrangements ( provided , however , that any borrowing arrangements must be approved by the board of directors of Parent or the board of directors of the relevant subsidiary of Parent);

(h)  instruct the Custodian (if any) and any brokers, dealers, counterparties, advisers, consultants and analysts in connection with its services under this Agreement, including the appointment of any subadvisers at the Investment Manager’s discretion; and

(i)  enter into, make and perform on behalf of Parent and its subsidiaries all contracts, agreements and other undertakings and to transact, carry on and do any matter or thing that the Investment Manager reasonably considers appropriate in connection with the services rendered by the Investment Manager pursuant to this Agreement.

SECTION 2.04.  Authorization of the Investment Manager .  Subject to Article III:

(a)  in connection with all purchases, sales or trades, Parent authorizes the Investment Manager to act for Parent and its subsidiaries, and at Parent’s risk, and in its name and on its behalf, in the same manner and with the same force and effect as Parent and its subsidiaries might or could do with respect to such purchases, sales and trades;

(b)  Parent also appoints the Investment Manager as agent and attorney-in-fact to vote on behalf of itself and its subsidiaries, and to execute proxies, waivers, consents and other instruments with respect to, the Investments and other assets of Parent and its subsidiaries; and

(c)  all rights of voting, consent, waiver or other action conferred by the Investments or other assets of Parent and its subsidiaries shall be exercised in such manner as the Investment Manager may determine in its discretion, and the Investment Manager may determine in its discretion to refrain from the exercise of such rights to vote, consent, waiver or take other action.

ARTICLE III

Covenants

SECTION 3.01.  Covenants of Parent .  During the term of this Agreement, Parent, on behalf of itself and its subsidiaries, agrees that Parent and its subsidiaries shall:

(a)  observe and comply with any Applicable Requirement;

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(b)  not, directly or indirectly (including through any of its Affiliates), enter into any other investment management agreement (or similar agreement) with any other entity;

(c)  provide the Investment Manager with access to the books and records of Parent and its subsidiaries in respect of the services rendered and to be rendered pursuant to this Agreement (such access to be upon reasonable prior notice and during regular business hours), and otherwise take such action as is reasonably required to allow the Investment Manager to fulfill its obligations hereunder, in each case in a manner that does not unreasonably interfere with the business operations of Parent and its subsidiaries;

(d)  notify the Investment Manager in a timely manner of any amendment to the Underwriting Guidelines; and

(e)  compensate and reimburse the Investment Manager for its expenses as provided in Article VI hereof.

SECTION 3.02.  Covenants of the Investment Manager .  During the term of this Agreement, the Investment Manager agrees that it shall:

(a)  observe and comply with any Applicable Requirement and the organizational documents and known contractual obligations of Parent and its subsidiaries;

(b)  act in good faith and with reasonable skill and care in respect of the services rendered or to be rendered pursuant to this Agreement;

(c)  comply with the Underwriting Guidelines (as the same may be amended from time to time) and take prompt corrective action if the Underwriting Guidelines are breached;

(d)  take into account the liquidity needs of Parent and its subsidiaries;

(e)  have regard to any matter to which a prudent investment manager of an investment portfolio comprising investments of the kind comprised in the Portfolio should reasonably pay regard;

(f)  not carry on any business if by doing so the Investment Manager shall knowingly cause Parent and its subsidiaries to become liable to pay any taxes that it would not otherwise be liable to pay; and

(g)  not knowingly take any action that, in its sole judgment, would cause Parent or any of its subsidiaries to become an investment company under the Investment Company Act of 1940.

SECTION 3.03.  Regulatory Matters .  Each Party agrees promptly to notify the other in writing upon receipt of any written or oral communication from any

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Competent Regulatory Authority pertaining to the services rendered or to be rendered pursuant to this Agreement.  The Parties agree to cooperate with each other and to use their commercially reasonable efforts in jointly resolving any issue or matter raised by any Competent Regulatory Authority.

SECTION 3.04.  Cooperation .  The Parties shall cooperate with each other as may be reasonably necessary or appropriate to enable the Parties to carry out their respective responsibilities in full and to effectuate the purposes of this Agreement.  Each Party shall do and perform or cause to be done and performed all further acts and shall execute and deliver all other agreements, certificates, instruments and documents as the other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated by this Agreement.

SECTION 3.05.  Proper Instructions of the Investment Manager .  (a)  The Investment Manager shall act in accordance with the Proper Instructions, which it shall acknowledge by acting on them unless it notifies Parent otherwise.  The Investment Manager shall be entitled to treat any instructions which it reasonably believes to be Proper Instructions as Proper Instructions.

(b)  The Investment Manager shall not be required to act on any Proper Instructions if it reasonably believes that such action may not be practicable or may involve a breach of Applicable Requirements by either Party.  In such cases the Investment Manager shall promptly advise Parent of such circumstances.

SECTION 3.06.  Control of the Investment Manager .  All activities hereunder shall at all times be subject to the control of and review by the boards of directors of Parent and its subsidiaries and, without limiting the generality of the foregoing, the boards of directors of Parent and its subsidiaries may from time to time:

(a)  prohibit the Investment Manager from investing in any Investment or in any currency or country or with any institution;

(b)  require the Investment Manager to sell any Investment or (subject to the availability of funds) to purchase any Investment;

(c)  define or redefine the Underwriting Guidelines and specify the manner in which they wish the Investment Manager to give effect thereto;

(d)  withdraw from the management of the Investment Manager money or other assets; and

(e)  instruct the Investment Manager as to the exercise of the rights attached to the Investments managed by the Investment Manager and the Investment Manager shall and shall procure that any Person, firm or company to whom it delegates any of its functions hereunder shall give effect to all such decisions.

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ARTICLE IV

Custody and Settlement

SECTION 4.01.  Limits of the Investment Manager’s Responsibilities .  The Investment Manager shall not be responsible for and shall have no duty to supervise:

(a)  the custody, safekeeping, registration or settlement of the Portfolio;

(b)  the collection of income or other entitlements;

(c)  the carrying out of any foreign exchange transactions; or

(d)  any other administrative functions in relation to Investments, except as expressly provided in this Agreement or customarily performed by an investment manager.

SECTION 4.02.  Appointment of a Custodian .  Where a Custodian is appointed in respect of the Portfolio, the Investment Manager shall instruct the Custodian to settle all transactions made by it hereunder and to hold all Investments acquired hereunder under the terms of any agreement entered into by Parent or its subsidiaries and the Custodian and Parent and its subsidiaries shall use commercially reasonably efforts to ensure that the Custodian complies with instructions of the Investment Manager as contemplated by this Agreement, and shall take all other steps as the Investment Manager may reasonably request to enable the Investment Manager to perform its functions under this Agreement.  Where Parent or its subsidiaries gives any instruction or communication to or receives any communication from the Custodian (if any) in respect of the Portfolio it shall either copy the instruction or communication to the Investment Manager at the same time, or shall procure that the Custodian promptly does so.

SECTION 4.03.  Settlement .  If any counterparty fails to deliver any necessary documents or to complete any transaction, the Investment Manager shall take all reasonable steps on behalf of Parent and its subsidiaries to rectify such failure or obtain compensation in lieu thereof (subject to being indemnified by Parent for all resulting costs and expenses incurred by the Investment Manager).  The Investment Manager shall be entitled to assume that all transactions are settled on the due dates, unless it is notified to the contrary.

ARTICLE V

Representations and Warranties

SECTION 5.01.  Representations and Warranties .  Each Party hereby represents and warrants to the other that (in respect of itself):

(a)  it is duly incorporated and validly existing under applicable laws, with full power and authority to conduct its business, and it has full power and authority to enter into, perform its duties under and exercise its rights under this

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Agreement;

(b)  assuming the due authorization, execution and delivery of the other Party, this Agreement constitutes its valid, lawful and binding obligations enforceable against itself in accordance with its terms (except insofar as enforceability may be limited by any bankruptcy laws or principles, or any similar laws or principles);

(c)  the execution and delivery of this Agreement and the performance of its obligations under this Agreement do not and shall not constitute a breach of or default under (i) its organizational documents, (ii) any agreement or instrument by which it is bound or (iii) any Applicable Requirement;

(d)  no material consent, approval, waiver, license, permit, order or authorization of, or registration, declaration or filing with, any Competent Regulatory Authority is required to be obtained or made by it in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement, other than, in the case of each Party, notification to the Bermuda Monetary Authority; and

(e)  no step, application, order, proceeding or appointment has been taken or made by or in respect of it for a distress, execution, composition or arrangement with creditors, winding-up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy, and it is able to pay its debts.

The representations and warranties in this Section 5.01 are made on a continuing basis, and shall remain in full force and effect throughout the duration of this Agreement.  If either Party becomes aware that any of the representations and warranties made by it in this Section 5.01 has ceased to be true, then it shall notify the other Party promptly.

ARTICLE VI

Fees and Expenses

SECTION 6.01.  Management Fee .  (a)  With respect to each fiscal quarter that this Agreement is in effect, commencing with the quarter in which this Agreement is executed, the Investment Manager shall receive the Management Fee (as defined below).  Within 45 calendar days following the last day of each fiscal quarter, the Investment Manager shall make available the quarterly calculation of the Management Fee to Parent with respect to such quarter, and Parent shall pay the Investment Manager the Management Fee for such quarter in cash within 15 Business Days thereafter.

(b)  The “ Management Fee ” means, with respect to any fiscal quarter, (1) the Shareholders’ Equity as of the end of such fiscal quarter, multiplied by (2) one-fourth of 1.5%.  The Management Fee shall be pro-rated for partial quarterly periods based on the number of days in such partial period compared to a 90-calendar day quarter.

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(c)  “ Shareholders’ Equity ” means, as of the end of any fiscal quarter

(i)  the net proceeds from all issuances of the Common Shares or any other equity securities of Parent since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus

(ii)  Parent’s retained earnings as of the end of the most recently completed calendar quarter (without taking into account any non-cash compensation expense incurred in current or prior periods), minus

(iii)  any amount that Parent may have paid to repurchase Common Shares on a cumulative basis since inception.

Notwithstanding the foregoing, Shareholders’ Equity excludes (1) any unrealized gains and losses and other non-cash items that have impacted Shareholders’ Equity as reported in Parent’s financial statements prepared in accordance with U.S. GAAP (other than unrealized gains and losses and other non-cash items relating to insurance-linked instruments) and (2) one-time events pursuant to changes in U.S. GAAP, in each case after discussions between the Investment Manager and the independent members of the board of directors of Parent and approval by both the Investment Manager and a majority of the independent members of the board of directors of Parent.

SECTION 6.02.  Investment Manager’s Expenses .  The Investment Manager will provide at its own expense:

(a)  such staff as may be necessary for the due performance of its duties; and

(b)  such office and other accommodation and relevant utilities as may be necessary for the due performance of its duties.

SECTION 6.03.  Parent’s Expenses .  Parent, on behalf of itself and its subsidiaries, is responsible and, to the extent that the Investment Manager has paid the same on behalf of Parent and its subsidiaries, will reimburse the Investment Manager for all reasonable out-of-pocket expenses (but not overhead costs) incurred by the Investment Manager in connection with the performance of its obligations under this Agreement, including:

(a)  fees and expenses in respect of transactions carried out for Parent and its subsidiaries;

(b)  any stamp and other duties, taxes, governmental charges, commissions, brokerage fees, transfer fees, registration fees and other charges payable in respect of the acquisition, holding or realization of any Investment and any foreign exchange transactions carried out in connection therewith;

(c)  interest on, and charges and expenses of, Parent and its subsidiaries arising out of all borrowings undertaken by Parent and its subsidiaries and charges

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incurred in negotiating, effecting, varying or terminating the terms of such borrowings;

(d)  all bank charges and expenses of any kind incurred in connection with, or incidental to, deposits of cash;

(e)  any costs, including all travel, accommodation and other reasonable costs, incurred by the Investment Manager at the express request of Parent;

(f)  the cost of faxes and telephone calls properly incurred in the course of carrying out its duties hereunder;

(g)  all legal and professional expenses incurred by the Investment Manager in the furtherance of its duties under this Agreement and all legal and other professional expenses properly incurred, or to be incurred, in the preparation of any documents amending the terms and conditions of this Agreement; and

(h)  any costs and expenses properly incurred by Parent and its subsidiaries in the course of its business and not expressly the responsibility of the Investment Manager (to the extent that such amounts have not already been paid).

ARTICLE VII

Term and Termination

SECTION 7.01.  Term .  This Agreement shall remain in full force and effect until terminated or not renewed by Parent or the Investment Manager in accordance with this Article VII, except that Section 7.01, 7.04, Article VIII and Article X shall survive such termination or non-renewal.  This Agreement shall renew automatically on the fifth anniversary of the completion of the Offering and upon every third anniversary thereafter, unless otherwise terminated or not renewed in accordance with this Article VII.

SECTION 7.02.  Termination of the Agreement .  (a)  Termination by either Party.

(i)  If the Underwriting and Insurance Management Agreement is terminated or not renewed in accordance with its terms, this Agreement may be terminated by either Party upon 30 Business Days’ prior written notice.

(ii)  If Parent becomes regulated as an investment company under the U.S. Investment Company Act of 1940, this Agreement shall terminate automatically, with such termination deemed to occur immediately prior to such event.

(b)  Termination by the Investment Manager.

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(i)  If (A) there is a Change of Control of Parent, (B) Blue Capital Re ceases to be an Affiliate of Parent or (C) Blue Capital Re ILS ceases to be an Affiliate of Parent, this Agreement may be terminated by the Investment Manager upon 30 Business Days’ prior written notice.

(ii)  If Parent breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 30 Business Days after giving written notice to Parent of such breach or failure, this Agreement may be terminated by the Investment Manager ( provided that the Investment Manager is not then in material breach of any representations, warranties or covenants contained in this Agreement).

(iii)  If the Investment Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, this Agreement may be terminated by the Investment Manager upon 30 Business Days’ notice ( provided that the Investment Manager has used commercially reasonable efforts to obtain an approval, waiver or consent, as applicable, to remedy such breach).

(iv)  If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of Parent for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy or (B) Parent is unable to pay its debts as they become due, this Agreement may be terminated by the Investment Manager upon 30 Business Days’ notice.

(c)  Termination by Parent .

(i)  If the Investment Manager breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 60 Business Days after giving written notice to the Investment Manager of such breach or failure, this Agreement may be terminated by Parent ( provided that Parent is not then in material breach of any representations, warranties or covenants contained in this Agreement).

(ii)  If the Investment Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, which breach has not been cured within 60 Business Days after giving written notice to the Investment Manager of such breach, this Agreement may be terminated by Parent.

(iii)  If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of the Investment Manager for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or

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bankruptcy or (B) the Investment Manager is unable to pay its debts as they become due, this Agreement may be terminated by Parent upon 60 Business Days’ notice.

SECTION 7.03.  Non-Renewal .  The Investment Manager or Parent may elect not to renew this Agreement at the expiration of the initial term or any renewal term for any or no reason, upon not less than nine, but not more than 12, months’ written notice to the other prior to the end of such initial term or renewal term, as applicable.

SECTION 7.04.  Termination Fee .  Upon any termination or non-renewal of this Agreement, Parent will pay a one-time termination fee (the “ Termination Fee ”) equal to 5.0% of Parent’s shareholders’ equity, on a consolidated basis, as reported in Parent’s financial statements prepared in accordance with U.S. GAAP, calculated as of the most recently completed fiscal quarter prior to the date of termination.  The Termination Fee shall not be payable if this Agreement is terminated pursuant to Section 7.02(c)(i) or 7.02(c)(iii). In the event that this Agreement is terminated pursuant to Section 7.02(a)(i), the Termination Fee is payable only under the terms of the Underwriting and Insurance Management Agreement and shall not be payable under the terms of this Agreement, it being understood that in no event shall Parent be required to pay the Termination Fee on more than one occasion.

SECTION 7.05.  Consequence of Termination .  Following termination of any of its appointments under this Agreement, the Investment Manager shall, in respect of Parent and its subsidiaries and subject to Sections 3.06 and 3.07:

(a)  arrange for any transactions already initiated or outstanding at the time of termination to be completed, so that termination shall not jeopardize the completion of transactions already initiated;

(b)  use its commercially reasonable efforts to close out all open positions;

(c)  be entitled to receive all fees and expenses accrued to the date of termination including any additional expenses necessarily incurred by the Investment Manager in terminating this Agreement;

(d)  provide Parent and its subsidiaries with a complete and accurate up-to-date account of all transactions subsequent to those shown in the last account or report submitted to Parent and its subsidiaries;

(e)  promptly deliver to Parent and its subsidiaries (or as directed by Parent and its subsidiaries) all books of account, records, registers, correspondence, documents and assets belonging to Parent or its subsidiaries in possession of or under the control of the Investment Manager; and

(f)  if requested by Parent and its subsidiaries, take all reasonable steps to vest in Parent and its subsidiaries or as directed by Parent and its subsidiaries any assets previously held in the name of or to the order of the Investment Manager on behalf of Parent and its subsidiaries and to co-operate with Parent and its

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subsidiaries to transfer management of the Portfolio to such other Persons as Parent and its subsidiaries may nominate.

SECTION 7.06.  Survival of Existing Rights and Obligations .  Following termination of this Agreement, Parent and its subsidiaries will satisfy all obligations arising in respect of transactions properly effected by the Investment Manager on their behalf prior to termination.  Termination shall not affect accrued rights, indemnities, existing commitments or any contractual provision intended to survive termination.

ARTICLE VIII

Indemnification

SECTION 8.01.  Indemnification of the Investment Manager .  Subject to Section 8.05 hereof, Parent, on behalf of itself and its subsidiaries, unconditionally agrees to indemnify, defend and hold harmless the Investment Manager and its Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “ Investment Manager Indemnitees ”) from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur (i) on account of any third-party claim or proceeding arising out of the performance of this Agreement or (ii) from any breach of, or failure to perform, any covenant or obligation of Parent contained in this Agreement (unless caused by the Investment Manager’s breach of, or failure to perform, its covenants or obligations under this Agreement), in each case, unless (a) a court or arbitral panel with appropriate jurisdiction shall have determined by a final judgment which is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Investment Manager Indemnitees or (b) such Investment Manager Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of Parent (such consent not to be unreasonably withheld or delayed).

SECTION 8.02.  Indemnification of Parent .  The Investment Manager unconditionally agrees to indemnify, defend and hold harmless Parent and its subsidiaries and their Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “ Parent Indemnitees ”), from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur from any breach of, or failure to perform, any covenant or obligation of the Investment Manager contained in this Agreement, unless (i) a court or arbitral panel of appropriate jurisdiction shall have determined by a final judgment that is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Parent Indemnitees or (ii) such Parent Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of the Investment Manager (such consent not to be unreasonably withheld or delayed).

SECTION 8.03.  Indemnification Procedure .  Any person who is claiming indemnification from Parent pursuant to the provisions of Section 8.01, or from the

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Investment Manager pursuant to the provisions of Section 8.02 (the “ Indemnified Person ”) shall promptly deliver a written notification of each claim for indemnification, accompanied by a copy of all papers served, if any, and specifying in detail the nature of, basis for and estimated amount of the claim for indemnification to Parent or the Investment Manager, as applicable (the “ Indemnifying Party ”).  If an Indemnified Person fails to promptly notify the Indemnifying Party, then the obligation to indemnify shall be reduced by the amount of liability that is attributable to or becomes definite as a result of the delay in notification, if the delay in notification has resulted in a material increase in liability or actual prejudice to the Indemnifying Party.  The Indemnifying Party shall have the right to assume the defense of any matter for which a claim of indemnification is made against it with counsel it selects, at its own expense.  The Indemnifying Party in its sole discretion shall have the right to settle, compromise or defend until final adjudication any dispute or alleged liability for which a claim for indemnification has been made; provided , however , that the Indemnifying Party shall not, except with the consent of each Indemnified Person, which consent shall not be unreasonably withheld or delayed, consent to the entry of any judgment, or enter into any settlement, that does not include the giving by the claimant or plaintiff to the Indemnified Person of a release from all liability with respect to the claim or litigation.  Each Indemnified Person shall cooperate in providing information, formulating a defense or as otherwise reasonably requested by the Indemnifying Party.

SECTION 8.04.  Payment of Indemnified Amounts .  Each Indemnified Person shall provide written, detailed statements to the Indemnifying Party on a monthly basis, of any expenses, costs or other liabilities for which indemnification is claimed.  The Indemnifying Party shall reimburse such amounts within ten Business Days of receiving any such statement, or shall notify in writing the Indemnified Person claiming indemnification if it denies liability, and provide the reasons for the denial.

SECTION 8.05.  Limit of Liability .  Notwithstanding anything else in this Agreement to the contrary, the Investment Manager’s aggregate liability during the term of this Agreement with respect to, arising from, or arising out of or attributable to this Agreement, or from all services rendered or omitted to be rendered under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the highest amount actually paid as Management Fees in any single calendar year during the term of this Agreement.

ARTICLE IX

Conflicts of Interest and Exclusivity

SECTION 9.01.  Non-Exclusivity of Services Rendered by the Investment Manager .  The services provided by the Investment Manager under this Agreement are not exclusive.  None of the services to be provided under this Agreement nor any other matter shall give rise to any fiduciary or equitable duties (to the fullest extent permitted by Applicable Requirements) which would prevent or hinder the Investment Manager, its Affiliates or their respective directors, officers, employees and agents (each an “ Interested Party ”) from providing services to or entering into transactions with or for

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Parent and its subsidiaries.  An Interested Party may, without prior notice to Parent and its subsidiaries, recommend, effect or enter into transactions or provide services (whether or not similar to the services provided under this Agreement) where an Interested Party has, directly or indirectly, a material interest or a relationship with another person which may involve a conflict with the Investment Manager’s duty to Parent and its subsidiaries.

SECTION 9.02.  Conflicts of Interest .  The Investment Manager shall take reasonable steps to ensure fair treatment for Parent and its subsidiaries, and shall ensure that any such transactions are effected on terms which are not materially less favorable to Parent and its subsidiaries than if the potential conflict had not existed.  However, neither the Investment Manager nor any other Interested Party shall be liable to Parent and its subsidiaries for any profit, commission or remuneration made or received from or by reason of such transactions or any related transactions.  The Investment Manager hereby notifies Parent and its subsidiaries, and Parent and its subsidiaries hereby acknowledge, that such potential conflicting interests or duties may arise as a result of, among other things:

(a)  an Interested Party undertakes investment or other business for other clients;

(b)  an Interested Party is a director of, holds or deals in securities of or is otherwise interested in any Person whose securities are held or dealt in on behalf of Parent or its subsidiaries;

(c)  the transaction relates to an Investment in respect of which an Interested Party may benefit from a commission, fee, mark-up or mark-down payable otherwise than by Parent or its subsidiaries, or the Interested Party may also be remunerated by the counterparty to any such transaction;

(d)  the Investment Manager deals on behalf of Parent and its subsidiaries with or through another Interested Party;

(e)  the Investment Manager may act as agent for Parent and its subsidiaries in relation to transactions in which it is also acting as agent for the account of other clients or Interested Parties;

(f)  the transaction is in securities in respect of which a client of an Interested Party has given instructions to buy or sell or carry out any other transaction;

(g)  the transaction is in shares or interests of any Person of which an Interested Party is the manager, investment manager, adviser, investment adviser, operator, banker or trustee, or acts in some other capacity or holds some other position that could lead to a conflict of interest;

(h)  the Investment Manager may affect transactions involving placings or new issues with an Interested Party who may be acting as principal or receiving agent’s commission;

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(i)  the transaction is in the securities of a company for which an Interested Party has underwritten, managed or arranged an issue or offer for sale within a period of 12 months before the date of the transaction;

(j)  an Interested Party may receive remuneration or other benefits by reason of acting in corporate finance or similar transactions involving persons whose securities are held by Parent or its subsidiaries; or

(k)  the transaction is in securities in respect of which an Interested Party is contemporaneously trading or has traded on its own account or has either a long or short position.

ARTICLE X

Miscellaneous

SECTION 10.01.  Confidentiality .  (a)  No Party shall at any time use, divulge or communicate to any Person any Confidential Information, except:

(i)  as agreed by the other Party;