EXHIBIT 10.1

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is entered into by and between Max Re
Capital Ltd. (the “Company”) and Robert Cooney (“Executive”).

WHEREAS, the Company has employed Executive as its President and Chief Executive
Officer and Chairman of its Board of Directors pursuant to an Amended and
Restated Employment Agreement, dated as of August 1, 2004 (the “Amended
Employment Agreement”); and

WHEREAS, Executive has decided to resign his position as Chief Executive
Officer, President, and Chairman of the Board of the Company for Good Reason in
accordance with the terms of the Amended Employment Agreement; and

WHEREAS, the Company desires to retain the services of Executive as a Consultant
and Executive desires to provide such services to the Company; and

WHEREAS, the parties now desire to enter into this Agreement to set forth the
terms and conditions of the termination of Executive’s position as Chief
Executive Officer, President, and Chairman of the Board of Directors of the
Company and of the terms and conditions under which Executives will provide
consulting services to the Company;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
below, it is hereby agreed as follows:

1. Executive has resigned as a director, officer, and representative of the
Company and its affiliates, including but not limited to his position as
President, Chief Executive Officer, and Chairman of the Board of Directors,
effective October 29, 2006. Upon the execution of this Agreement, Executive
shall sign the letter attached as Schedule A documenting his resignation from
any and all positions he previously held. Executive also represents and warrants
that all pre-termination transactions involving the Company’s common shares and
other securities during the current fiscal year that are reportable under
Section 16 of the Securities Exchange Act have been reported on a Form 4 or
Form 5, as applicable, or have been reported by Executive to the Company, prior
to Executive’s termination.

2. Executive shall continue as a non-employee Consultant to the Company from
October 30, 2006 through December 31, 2006 (the Consulting Period). As a
Consultant, Executive shall perform such services as are reasonably requested of
him by the Company and shall use his best efforts to assist in the orderly
transition of his former duties and responsibilities. While serving as a
Consultant during the Consulting Period, Executive shall receive a consulting
fee at a rate of $58,333 per month and the following additional items of
benefit: (a) as long as Executive remains a resident of Bermuda through the
Consulting Period, he shall receive continued benefits under the health, vision,
and dental plans in which he participated up to the date of his resignation or
an individual replacement plan(s) purchased at the Company’s expense for
Executive, his wife, and his two children; (b) a car allowance of $1,000 per
month; (c) a housing allowance of $10,000 per month; and (d) reimbursement of
country club dues up to a maximum of $833.33 per month through the Consulting
Period. Within ten (10) days of the effective date of this Agreement, Executive
shall be paid any accrued but unpaid amounts due to him under this Paragraph 2
for full months worked as a Consultant since October 30, 2006. Within ten
(10) days of the effective date of this Agreement, Executive also shall receive
an amount representing his accrued but unused vacation time for 2006 (if any) as
determined by the Company.

3. In lieu of the payments and benefits described in the Amended Employment
Agreement upon a termination of employment, including, without limitation,
Section 5.10(c) thereof, the parties have agreed that in consideration of the
benefits provided in this Agreement, Executive shall receive the following
payments and benefits. Accordingly, the severance pay provisions of the Amended
Employment Agreement, including, without limitation, Section 5.10(c), shall be
null and void.

(a) Severance payments of $58,333 per month, minus applicable taxes and
withholdings, payable in accordance with the Company’s regular payroll schedule
for the period January 1, 2007 through June 30, 2008 (the “Severance Pay
Period”); provided however that the Company shall deduct a total of $200,000
from the payments under this Paragraph 3(a) in coequal installments over the
eighteen (18) month period in satisfaction of the fine imposed on Executive by
the Company’s Audit Committee on or about September 17, 2006.

(b) Executive also shall receive the following benefits throughout the Severance
Pay Period: (i) so long as Executive remains a resident of Bermuda through the
Severance Pay Period, he shall receive continued benefits under the health,
vision, and dental plans in which he participated up to the date of his
resignation or through an individual replacement plan(s) purchased at the
Company’s expense for Executive, his wife, and his two children; (ii) a car
allowance of $1,000 per month; (iii) a housing allowance of $10,000 per month;
and (iv) reimbursement of country club dues capped at a maximum of $833.33 per
month through the Severance Pay Period.

(c) In exchange for the additional covenants regarding non-competition and
non-solicitation granted by Executive to the Company as set forth in
Paragraph 4, below, Executive shall receive an additional monthly payment of
$40,000, minus applicable taxes and withholdings, through the Severance Pay
Period. Executive agrees that he resigned from the Company of his own free will,
and that the terms of his various restrictive covenants, as set forth in
Paragraph 4 below, are valid and enforceable. Executive acknowledges that the
Company is relying on his representations in this Paragraph 3(c) in entering
into this Agreement, and it shall have the right to recoup all amounts and
benefits (including, without limitation, the vesting of 100,000 of the
Restricted Stock Awards) provided to Executive under this Agreement, as well as
obtaining injunctive relief as set forth in Section 4.2 of the Amended
Employment Agreement, should Executive breach any of the restrictive covenants
referenced in Paragraph 4 (or directly or indirectly challenge the lawfullness
of any of these covenants).

4. Executive acknowledges that as the Company’s President and Chief Executive
Officer, he had access to substantial Confidential Information, including but
not limited to information regarding the Company’s clients, customers, goals,
strategies, pricing, and trade secrets. Executive further acknowledges that
should he become employed by or in any way affiliated with a competitor of the
Company, he inevitably would disclose the Company’s Confidential Information in
the course of providing services to such competitor. Therefore, and in light of
the substantial compensation and severance payments Executive is eligible to
receive under this Agreement, Executive hereby covenants as follows: All terms
and covenants in Article IV of the Amended Employment Agreement (including
Sections 4.1(a), (b), (c), (d), and (e) and Section 4.2 thereof) shall continue
in full force and effect; provided however that Executive’s obligations to the
Company under Section 4.1(c) shall continue only until June 30, 2008. In
addition, from the date of his resignation through June 30, 2008, Executive
shall not directly or indirectly (a) solicit, hire, attempt to hire, retain,
contract with, compensate, or work at the same business or venture with any
individual who (i) as of December 31, 2006, is an employee, officer, director,
or consultant of any of the Designated Entities (as defined in the Amended
Employment Agreement) or (ii) has been an employee, officer, director, or
consultant of any of the Designated Entities at any time since January 1, 2006;
(b) solicit, interfere with, contract with, or endeavor to entice away from any
of the Designated Entities (i) any of the Designated Entities’ current clients
or customers, (ii) any persons or entities that were customers or clients of any
of the Designated Entities at any time since January 1, 2006, or (iii) any
potential client or customer that any of the Designated Entities were actively
pursuing or contemplating actively pursuing during Executive’s employment; or
(c) compete with, or participate in any business or venture that competes with,
any of the Designated Entities, including but not limited to participating in
any business or venture in the insurance or reinsurance industry, any business
or venture that underwrites insurance or reinsurance, or any business or venture
that focuses in whole or in part on risk transfer for clients in the property &
casualty or life & annuity insurance markets.

5. Equity Awards.

(a) Warrants. Nothing in this Agreement shall have any effect on the terms and
conditions of the Warrants the Company has issued to Executive to purchase the
Company’s Common Shares, and those Warrants shall continue to be governed under
the terms and conditions of the applicable Warrant Agreement.

(b) Stock Options. Nothing in this Agreement shall have any effect on the terms
and conditions of the Nonqualified Stock Options the Company has granted
Executive pursuant to the terms and conditions of the Company’s 2000 Stock
Incentive Plan (the “Plan”). Such stock options shall continue to be governed
under the terms and conditions of the applicable stock option agreement.

(c) Restricted Stock. Notwithstanding the terms and conditions of the Amended
Employment Agreement, the Restricted Stock Award Agreement, dated February 16,
2006, between the Company and Executive; the Restricted Stock Award Agreement,
dated February 7, 2005, between the Company and Executive; the Restricted Stock
Award Agreement, dated August 1, 2004, between the Company and Executive; and
the Restricted Stock Award Agreement, dated January 30, 2004, between the
Company and Executive (collectively, the “Restricted Stock Awards”), in final
and complete settlement of Executive’s rights under the Restricted Stock Awards,
the parties agree that of the 295,000 shares of the Company’s common stock
subject to restriction, 219,163 vested on October 29, 2006 and 75,837 were
permanently forfeited on October 29, 2006, all as set forth in Schedule B.

(d) Schedule B. Schedule B hereto sets forth all of Executive’s outstanding
equity awards with the Company and his rights with respect thereto as of his
termination of employment.

6. Any rights Executive may have to indemnification or advancement of expenses
to which he is otherwise entitled under applicable law, the Company’s Bye-Laws,
or the Amended Employment Agreement shall be unaffected by this Agreement. As of
the date of this Agreement, the Company has made no determination that Executive
is not entitled to indemnification or advancement of expenses.

7. Following the Consulting Period set forth in Paragraph 2, above, and through
the Severance Pay Period, Executive agrees that he will make reasonable efforts
to answer Company inquiries that may arise regarding matters on which he may
have knowledge or information. Company agrees that Executive’s cooperation shall
be subject to reasonable accommodations that will avoid or minimize disruption
of his personal or professional obligations.

8. In consideration of the mutual promises and covenants contained in this
Agreement, and after consultation with counsel:

(a) Executive for himself and each of his respective heirs, representatives,
agents, successors, and assigns, irrevocably and unconditionally releases and
forever discharges the Company and its respective current and former officers,
directors, shareholders, employees, representatives, heirs, attorneys, and
agents, as well as its respective predecessors, parent companies, subsidiaries,
affiliates, divisions, successors, and assigns and its respective current and
former officers, directors, shareholders, employees, representatives, attorneys,
and agents, from any and all causes of action, claims, actions, rights,
judgments, obligations, damages, demands, accountings, or liabilities of
whatever kind or character, which Executive may have against them, or any of
them, by reason of or arising out of, touching upon, or concerning Executive’s
employment and/or directorship with the Company or his separation from the
Company, or any statutory claims, or any and all other matters of whatever kind,
nature, or description, whether known or unknown. Executive acknowledges that
this release of claims specifically includes, but is not limited to, any and all
claims for fraud; breach of contract; breach of the implied covenant of good
faith and fair dealing; inducement of breach; interference with contractual
rights; wrongful or unlawful discharge or demotion; violation of public policy;
invasion of privacy; intentional or negligent infliction of emotional distress;
intentional or negligent misrepresentation; conspiracy; failure to pay wages,
benefits, vacation pay, expenses, severance pay, attorneys’ fees, or other
compensation of any sort; defamation; unlawful effort to prevent employment;
discrimination on the basis of race, color, sex, sexual orientation, national
origin, ancestry, religion, age, disability, handicap, medical condition, or
marital status; any claim under Title VII of the Civil Rights Act of 1964 (Title
VII, as amended), 42 U.S.C. § 2000, et seq., the Civil Rights Act of 1991, the
Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621, et seq., the
Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 626(f), the Equal
Pay Act, the Family and Medical Leave Act (“FMLA”), the Fair Labor Standards Act
(“FLSA”), the Americans with Disabilities Act (“ADA”), the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), the Occupational Safety and Health
Act (“OSHA”) or any other health and/or safety laws, statutes, or regulations,
the Employee Retirement Income Security Act of 1974 (“ERISA”), the Internal
Revenue Code of 1986, as amended; the Bermuda Employment Act 2000; the Bermuda
Human Rights Act 1981; and any and all other foreign, federal, state, or local
laws, common law, or case law, including but not limited to all statues,
regulations, common law, and other laws in place in Bermuda or the state of New
York.

(b) Executive shall have up to twenty-one (21) days from the date of his receipt
of this Agreement to consider its terms and conditions. If Executive does not
sign and return this Agreement within twenty-one (21) days, the Company’s offer
to enter into this Agreement shall be withdrawn and the Agreement shall be null
and void. This Agreement shall not become effective until the eighth (8th) day
following Executive’s signing of the Agreement. Executive may revoke this
Agreement by delivering written notice of revocation before the end of the
seventh (7th) day following his signing of this Agreement (the “Revocation
Period”) to: Sarene Bourdages, General Counsel, Max Re Capital Ltd. If the last
day of the Revocation Period falls on a Saturday, Sunday or holiday, the last
day of the Revocation Period will be deemed to be the next business day
thereafter. In the event that Executive revokes this Agreement prior to the
eighth (8th) day after signing it, this Agreement and the promises contained
herein (including, but not limited to the obligation of the Company to provide
the severance payments, benefits and other things of value set forth in this
Agreement or the Amended Employment Agreement) shall automatically be null and
void.

(c) Executive agrees never to file a lawsuit of any kind with any court or
arbitrator against the Company or any Company Released Parties, asserting any
claims that are released in this Agreement. Executive represents and agrees
that, prior to signing this Agreement, he has not filed or pursued any
complaints, charges, or lawsuits of any kind with any court, governmental or
administrative agency, or arbitrator against the Company, or any other person or
entity released under Paragraph 8(a) above, asserting any claims whatsoever.

(d) Executive represents and warrants that he has not assigned or subrogated any
of his rights, claims, and/or causes of action, including any claims referenced
in this Agreement, or authorized any other person or entity to assert such claim
or claims on his behalf, and he agrees to indemnify and hold harmless the
Company against any assignment of said rights, claims, and/or causes of action.

(e) If Executive should breach any of his obligations under this Agreement or
the terms of Section 4.1 of the Amended Employment Agreement, the Company shall
have no further obligation to make the payments and benefits described in this
Agreement or the Amended Employment Agreement, and Executive shall return all
amounts paid or provided to him thereunder (including, without limitation, the
fair market value of 100,000 shares of the Restricted Stock Awards that vested
in accordance herewith).

9. Any disputes arising under this Agreement shall be subject to the same terms
set forth in the Amended Employment Agreement.

10. No failure by either party hereto at any time to give notice of any breach
by the other party of, or to require compliance with, any condition or provision
of this Agreement shall (i) be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time or
(ii) preclude insistence upon strict compliance in the future.

11. If a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability
of that provision shall not affect the validity or enforceability of any other
provision of this Agreement, and all other provisions shall remain in full force
and effect and such invalid or unenforceable provision shall be reformulated by
such court to preserve the intent of the parties hereto.

12. All of the terms and provisions contained in this Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors, and assigns.

13. This Agreement may be executed in counterparts, each of which shall be
deemed an original.

14. This Agreement shall not in any way be construed as an admission that the
Company, Executive, or any other individual or entity has any liability to or
acted wrongfully in any way with respect to Executive, the Company, or any other
person.

15. The Company represents that it has the authority to enter into this
Agreement and has obtained all necessary corporate approvals necessary to do so.
Executive represents and warrants that he has been advised in writing to consult
with an attorney before signing this Agreement; that he has had an opportunity
to be represented by independent legal counsel of his own choosing throughout
all of the negotiations preceding the execution of this Agreement; that he has
executed this Agreement after the opportunity for consultation with his
independent legal counsel; that he is of sound mind and body, competent to enter
into this Agreement, and is fully capable of understanding the terms and
conditions of this Agreement; that he has carefully read this Agreement in its
entirety; that he has had the opportunity to have the provisions of the
Agreement explained to him by his own counsel, who has answered to his
satisfaction any questions he has asked with regard to the meaning of any of the
provisions of the Agreement; that he fully understands the terms and
significance of all provisions of this Agreement; that he voluntarily assents to
all the terms and conditions contained in this Agreement; and that he is signing
the Agreement of his own force and will, without any coercion or duress.

16. This Agreement shall be deemed to satisfy all Notice requirements under the
Employment Agreement, including but not limited to those regarding the
termination of Executive’s employment, and no additional notices shall be
required to or by either the Company or Executive.

17. Nothing in this Agreement shall have any effect on the terms and conditions
of any loans previously made by the Company to Executive which shall continue to
be governed under the terms and conditions of the applicable loan agreements,
including, without limitation, accelerated payment upon a termination of
employment.

18. Except as otherwise specifically provided herein, this Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof,
contains all the covenants, promises, representations, warranties, and
agreements between the parties with respect to Executive’s resignation from the
Company and all positions therewith, and supersedes all prior employment or
severance or other agreements between Executive and the Company, whether written
or oral, or any of its predecessors or affiliates, including, but not limited
to, the Amended Employment Agreement. Executive acknowledges and agrees that the
consideration provided for herein is adequate consideration for Executive
waiving his rights under any other agreement, whether written or oral, between
Executive and the Company. Except as otherwise provided herein, Executive
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party, or by anyone acting on behalf of either
party, which is not embodied herein, and that no agreement, statement, or
promise relating to Executive’s resignation from the Company that is not
contained in this Agreement shall be valid or binding. Except as specifically
provided herein, Executive acknowledges and agrees that he is not entitled to
any other payments or benefits from the Company upon his termination of
employment (or in conjunction with his termination of service as a director).
Any modification of this Agreement will be effective only if it is in writing
and signed by both parties.

19. This Agreement is entered into under, and shall be governed for all purposes
by, the laws of the State of New York without giving effect to any choice of law
principles.

WHEREFORE, the parties, by their signatures below, evidence their agreement to
the provisions stated above:

MAX RE CAPITAL LTD.

Dated: By:      

Signature:      

Title:      

I HAVE READ AND UNDERSTOOD THIS AGREEMENT AND AM IN AGREEMENT WITH ITS TERMS.

Dated:      

Robert Cooney

1

SCHEDULE A

October 29, 2006

Max Re Ltd.
Max Re House
2 Front Street
Hamilton HM 11
Bermuda
Attn: Sarene A. Bourdages

Senior Vice President & General Counsel

To Whom It May Concern:

Effective as of October 29, 2006, I hereby tender my resignations from any and
all positions I hold as a director, officer, employee, agent, or representative
of Max Re Capital Ltd. and/or its subsidiaries, including but not limited to the
following:

President of Max Re Capital Ltd.
Chief Executive Officer of Max Re Capital Ltd.
Chairman of Max Re Capital Ltd.
President of Max Re Ltd.
Chief Executive Officer of Max Re Ltd.
Chairman of Max Re Ltd.
Director of Max Re Capital Ltd. (including but not limited to my positions on
the Executive Committee and the Finance and Investment Committee of the Board of
Directors of Max Re Capital Ltd.)
Director of Max Re Ltd.
Director of Max Europe Holdings
Director of Max Insurance Europe
Director of Max Re Diversified
Director of Grand Central Re Limited (Grand Central Re)
Director of Re Managers
Director of Max Re Europe

Sincerely,

Robert J. Cooney, Esq.

2

SCHEDULE B

1. Warrants.

                                                                               
              Post-Termination                                            
Exercise Period                     Shares Subject to   Number Still          
(w/o cause or for Grant Date   Grant Number   Exercise Price ($)   Award  
Outstanding   Vested Status   good reason)
 
                                          6-months from
December 22, 1999
            15       397,227       397,227     Vested
  termination

 
                                               
 
                                          6-months from
March 31, 2000
    W 21A       15       228,109       228,109     Vested
  termination

 
                                               
 
                                          6-months from
June 29, 2000
    W 24       15       864       864     Vested
  termination

 
                                               
 
                                          6-months from
January 1, 2001
    W 31       16       8,081       8,081     Vested
  termination

 
                                               
 
                                          6-months from
May 22, 2001
    W 38       18       15,000       15,000     Vested
  termination

 
                                               
 
                                          6-months from
August 17, 2001
    W 45       16       233,000       233,000     Vested
  termination

 
                                               

2. Stock Options.

                                      Shares Subject to   Number Still          
    Post-Termination Grant Date   Option   Outstanding   Exercise Price ($)  
Vested Status   Exercise Period
January 1, 2001
    90,000       90,000       16     Vested   90-days from termination
 
                               
 
                               
January 1, 2002
    160,000       160,000       15.66     Vested   90-days from termination
 
                               

3. Restricted Stock.

                                      Shares Subject to   Vesting Date set  
Amount Vested on   Amount Forfeited on Grant Date   Awards   forth in Agreement
  October 29, 2006   October 29, 2006
 
          100% on January 30,                
January 30, 2004
    84,000       2007       77,020       6,980  
 
                               
August 1, 2004
    100,000     Performance Vesting
    100,000       N/A  
 
                               
 
          100% on February 7,                
February 7, 2005
    48,000       2008       27,529       20,471  
 
                               
 
          100% on February                
February 16, 2006
    63,000       16, 2009       14,614       48,386  
 
                               
Total
    295,000               219,163       75,837  
 
                               

3