Exhibit 99.1

FACTORS AFFECTING FUTURE FINANCIAL RESULTS



This Form 10-K, our Annual Report to Shareholders, any Form 10-Q or Form 8-K or any other written or oral statements made by us or on our behalf may include forward-looking statements that reflect our current views
with respect to future events and financial performance. The forward-looking statements are subject to certain risks and uncertainties, including those discussed below, that could cause actual results to differ materially from historical results or
anticipated results. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



The factors set forth below could cause our actual results to differ materially from historical results or anticipated
results. These risks and uncertainties are not the only ones we face, but represent the risks that we believe are material. However, there may be additional risks that we currently consider not to be material or of which we are not currently aware,
and any of these risks could have the effects set forth above.



Risks Related to Our Business



Our losses and benefits may
exceed our loss and benefit reserves, which could significantly increase our liabilities and reduce our profits.



Our success depends on our ability to assess accurately the risks associated with the business that we insure and reinsure. If we fail to assess these
risks accurately, or if events or circumstances cause our estimates to be incorrect, we may not establish appropriate premium rates and our reserves may be inadequate to cover our losses. If our actual claims experience is less favorable than our
underlying assumptions, we will be required to increase our liabilities, which will reduce our profits.



As of December 31, 2004, we had loss and benefit reserves of $2,121.2 million. During the year ended December 31, 2004, we incurred loss and benefit
expenses of $764.3 million. We periodically review and, where appropriate, adjust our loss and benefit reserves in the period in which this review occurs.



Reserves are actuarial and statistical projections at a given point in time of what we ultimately expect to pay on claims
and benefits, based on facts and circumstances then known, predictions of future events, estimates of future trends in claim frequency and severity, mortality, morbidity and other variable factors such as inflation. Reinsurance has inherently
greater uncertainties of loss and benefit reserves as compared to insurance, primarily due to:



| |  |  | the necessary reliance on the ceding company or insurer for information regarding losses and benefits; and
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| |  |  | the lapse of time from the occurrence of the event to the reporting of the loss or benefit to the reinsurer and the ultimate resolution or settlement of the loss or benefit.
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Our estimation of reserves is inherently less
reliable than the reserve estimations of a reinsurance and insurance company with a greater volume of business and a more established loss history. Our actual losses and benefits may deviate, perhaps substantially, from the reserve estimates
contained in our financial statements. In addition, although we conduct due diligence on the transactions that we underwrite, in connection with our reinsurance business we are also dependent on the original underwriting decisions made by ceding
companies. Specifically, we are subject to the risk that the ceding clients may not have adequately evaluated the risks to be reinsured by us and that the premiums ceded may not adequately compensate us for the risks that we assume.



In addition, as industry practices and legal, judicial and social conditions
change, unexpected issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond the period which we intended or by increasing the number or size of claims. In some instances,
these changes may not manifest themselves until many years after we issue insurance or reinsurance contracts affected by these changes. As a result, we may not be able to ascertain the full extent of our liabilities under our insurance or
reinsurance contracts for many years following the issuance of these contracts.



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If we determine that our reserves are inadequate, we will increase our reserves with a corresponding
reduction in net income for the period in which the deficiency is identified.



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



The reinsurance and insurance industry is highly competitive. Competition in the types of business that we currently
underwrite and intend to underwrite in the future is based principally on:



| |  |  | premium rates;
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| |  |  | ability to structure innovative terms and conditions in product offerings;
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| |  |  | the general reputation and perceived financial strength of the insurer or reinsurer;
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| |  |  | relationships with reinsurance and insurance intermediaries;
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| |  |  | ratings assigned by independent rating agencies;
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| |  |  | speed of claims payment and administrative activities; and
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| |  |  | experience in the particular line of insurance or reinsurance to be written.
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We compete directly with numerous independent reinsurance companies, captive insurance companies, insurance companies, subsidiaries or affiliates of
established insurance companies or newly formed companies, reinsurance departments of primary insurance companies and underwriting syndicates from countries throughout the world in our chosen product lines. Many of these competitors are well
established, have significant operating histories and have developed longstanding customer relationships. Our worldwide reinsurance competitors include ACE Limited, American International Group, Inc., Berkshire Hathaway, Inc., Swiss Reinsurance
Company and XL Capital Ltd, all larger companies, with higher credit ratings and greater credit capacity. Additionally, competitors such as AXIS Capital Holdings Limited, Arch Capital Group Ltd., Endurance Specialty Insurance Ltd. and Platinum
Underwriters Reinsurance, Inc. entered the market following the improvement in pricing levels and contract terms for property and casualty business primarily as a result of the September 11, 2001 terrorist attacks.



We believe that our innovative product structuring and ability to respond
quickly to client needs enable us to compete effectively in the markets in which we operate. However, we cannot assure you that we will be able to compete effectively in the future.



Our ability to write reinsurance and insurance in the property and casualty market may be affected by cyclical trends and in the life and
annuity market by global economic conditions and fluctuations in interest rates.



The property and casualty reinsurance and insurance industry has historically been affected by cyclical trends. Demand for property and casualty reinsurance and insurance is influenced significantly by underwriting
results of primary insurers and prevailing general economic and market conditions, all of which affect reinsurance and insurance premium rates and liability retention decisions of companies and primary insurers. The supply of property and casualty
reinsurance and insurance is directly related to prevailing prices and levels of surplus available to support assumed business that, in turn, may fluctuate in response to changes in rates of return on investments being realized in the reinsurance
and insurance industry, the frequency and severity of losses and prevailing general economic and market conditions. The cyclical trends in the property and casualty reinsurance and insurance industries and the profitability of these industries can
also be significantly affected by volatile and unpredictable developments, including what our management believes to be a trend of courts to grant increasingly larger awards for certain damages, natural disasters such as catastrophic hurricanes,
windstorms, tornadoes, earthquakes, floods



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and fires, fluctuations in interest rates, changes in the investment environment that affect market prices of investments
and inflationary pressures that may tend to affect the size of losses experienced by insureds and primary insurance companies. We cannot predict whether market conditions will remain constant, improve or deteriorate. Adverse market conditions may
lead to a significant reduction in property and casualty premium rates, less favorable policy terms and/or less premium volume.



With respect to the types of life and annuity contracts we offer, although we are beginning to see more opportunities in the market, we remain cautious
about whether these opportunities will result in additional business for us in the near term. We cannot predict how market conditions will develop or the magnitude of their effect on our life and annuity business in the future.



A downgrade or withdrawal of any of our ratings would significantly and negatively affect
our ability to implement our business strategy successfully.



Companies, insurers and reinsurance and insurance intermediaries use financial ratings as an important means of assessing the financial strength and quality of insurers and reinsurers. An unfavorable rating or the lack of a rating of its
reinsurer or insurer may adversely affect the rating of a company purchasing reinsurance or insurance.



A.M. Best and Fitch have assigned Max Re insurer financial strength ratings of A- (Excellent) and A (Strong), respectively. The
ratings assigned by rating agencies to reinsurance companies are based upon factors relevant to policyholders and are not directed toward the protection of investors or a recommendation to buy, sell or hold securities. To date, none of our ratings
issued by an independent rating agency has been downgraded. However, if an independent rating agency downgrades or withdraws any of our ratings, we could be severely limited or prevented from writing any new reinsurance and insurance contracts,
which would significantly and negatively affect our ability to implement our business strategy successfully.



A limited number of reinsurance and insurance brokers broker transactions accounting for a large portion of our revenues, and a loss of all or a substantial portion of this brokered business could have a material
adverse effect on our business and results of operations.



A substantial portion of our reinsurance and insurance business is primarily placed through brokered transactions, which involve a limited number of reinsurance and insurance brokers. During the years ended December 31, 2004, 2003, and
2002, the top three independent producing intermediaries and brokerage firms accounted for 27%, 25% and 8%; 36%, 15% and 11%; and 25%, 24% and 18%, respectively, of gross premiums written. Loss of all or a substantial portion of the brokered
business provided through one or more of these brokers could have a material adverse effect on our business and results of operations.



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



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



Current proceedings by regulatory agencies into insurance practices could adversely affect the industry in which we operate.



The New York State Attorney General filed suit against an
insurance broker alleging illegal conduct including the manipulation of the insurance market. In addition, other regulatory authorities have also launched investigations. We are not a party to any of the litigation and have not received any subpoena
or information requests. We have reviewed the allegations contained in the filed complaint and have conducted an internal review of our business arrangements. While we have discovered no evidence that we are involved in the type of conduct that is
the subject of the complaint, it is not possible to predict the ultimate effect of the current litigation or its impact on the reinsurance industry and our business.



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We have entered into a limited number of Placement Service Agreements (PSAs) with insurance brokers. The
fees incurred under these PSAs are accounted for as acquisition costs and are expensed as the associated premium is earned. We terminated our PSAs with effect from September 30, 2004. While we do not believe that issues facing major producing
brokers or the termination of our PSAs will have a material adverse effect on our business or financial condition, we cannot assure shareholders that this will be the case.



In the event that we are unable to purchase reinsurance or retrocessional reinsurance on acceptable terms, or if we purchase reinsurance
or retrocessional reinsurance but are unable to collect, we may have difficulty mitigating the effect of large or multiple losses which, in turn, could have a significant and negative effect on our business.



We purchase reinsurance and retrocessional reinsurance for our own account
in order to mitigate the effect of large and multiple losses. A reinsurers insolvency or inability or refusal to make payments under the terms of its reinsurance or retrocessional agreement with us could have an adverse effect on our company
because we remain liable to our client irrespective of our reinsurance or retrocessional reinsurance.



From time to time, market conditions have limited, and in some cases have prevented, insurers and reinsurers from obtaining the types and amounts of
reinsurance that they consider adequate for their business needs. Accordingly, as a result of these unfavorable market conditions, we may be unable to obtain desired amounts of reinsurance or retrocessional reinsurance. In addition, even if we are
able to obtain such reinsurance or retrocessional reinsurance, we may not be able to negotiate appropriate or acceptable terms or obtain reinsurance or retrocessional reinsurance from entities with satisfactory creditworthiness. If we fail to obtain
reinsurance or retrocessional reinsurance at all or on acceptable terms, our capacity to underwrite new business may be limited. In addition, if we purchase reinsurance or retrocessional reinsurance but are unable to collect, we may have difficulty
mitigating the effect of large or multiple losses which, in turn, could have a significant and negative effect on our business.



If we lose or are unable to retain our senior management and other key personnel, or if we are unable to renew the Bermudian work permits of any members of our senior
management or other key personnel, our ability to implement our business strategy could be delayed or hindered, which, in turn, could significantly and negatively affect our business.



Our future success depends to a significant extent on the efforts of our
senior management and other key personnel to implement our business strategy. Substantially all of the members of our senior management have entered into employment contracts containing incentives for their continued employment and none have
indicated an intention to leave our company or are nearing retirement age. We do not currently maintain key man life insurance with respect to any of our senior management.



In addition, under Bermuda law, non-Bermudians, other than spouses of Bermudians, may not engage in any gainful occupation
in Bermuda without an appropriate governmental work permit. A work permit may be granted or renewed only upon showing that, after proper public advertisement, no Bermudian, spouse of a Bermudian, holder of a permanent residents certificate or
holder of a working residents certificate is available who meets the minimum standards reasonably required by the employer. The Bermuda government limits the term of work permits to six years, subject to certain exemptions for key employees.
Each of the members of our senor management and professional staff who needs a work permit has obtained one. Our President and Chief Executive Officer is Bermudian and, accordingly, does not need a work permit.



We believe there are only a limited number of available, qualified executives
with substantial experience in our industry. Accordingly, the loss of the services of one or more of the members of our senior management or other key personnel (including as a result of our inability to renew the Bermudian work permit of such
individual), or our inability to hire and retain other senior management and other key personnel, could delay or prevent us from fully implementing our business strategy and, consequently, significantly and negatively affect our business.



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Currency fluctuations could result in exchange losses and our failure to effectively hedge against these fluctuations
could significantly and negatively impact our business.



We operate with multiple currencies. As of December 31, 2004, approximately 88.9% of our reinsurance and insurance reserves were denominated in U.S. dollars. However, because our business strategy includes reinsuring and insuring
financial obligations issued outside of the United States, we expect that certain underlying losses may be denominated in currencies other than U.S. dollars. In the event that we write business in currencies other than U.S. dollars or underlying
liabilities are denominated in currencies other than U.S. dollars, we will attempt to hedge our foreign currency exposure. We anticipate that our principal hedging mechanism will be to purchase fixed maturities denominated in the currencies of the
relevant reinsurance liabilities. In addition, we may use forward currency exchange contracts in an effort to hedge against movements in the value of foreign currencies relative to the U.S. dollar. A forward foreign exchange contract involves an
obligation to purchase or sell a specified currency on a future date at a price set at the time of the contract. Foreign currency exchange contracts cannot eliminate fluctuations in the value of our assets and liabilities denominated in foreign
currencies. Rather, these contracts allow us to establish a rate of exchange for a future point in time. In the event that we are unable to hedge against foreign currency exposures adequately, our business could be significantly and negatively
affected. Moreover, if we hedge our foreign currency exposure through the use of forward foreign currency exchange contracts or foreign currency swaps, we will be subject to the risk that our counterparties to the contracts do not perform their
obligations under these contracts.



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



We are not licensed or admitted as an insurer in any jurisdictions other
than Bermuda and Ireland. Further, many jurisdictions do not permit insurance companies to take credit for reinsurance obtained from unlicensed or non-admitted insurers on their statutory financial statements unless appropriate security measures are
implemented. Consequently, the majority of our reinsurance customers typically require us to obtain a letter of credit or provide other collateral through funds withheld or trust arrangements. When we obtain a letter of credit facility, we are
required to provide collateral to secure our obligations under the facility.



As of December 31, 2004, we had three letter of credit facilities totaling $370.0 million. However, we may need additional letter of credit capacity as we grow. Our failure to maintain our letter of credit facilities
or to increase our letter of credit capacity on commercially acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy.



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



Our results of operations may fluctuate significantly
from period to period. These fluctuations result from a variety of factors, including the seasonality of the reinsurance and insurance business, the volume and mix of reinsurance and insurance products that we write, loss experience on our
reinsurance and insurance liabilities, the performance of our investment portfolio and our ability to assess and integrate our risk management strategy effectively. In particular, we seek to underwrite products and make investments to achieve
long-term results. As a result, our short-term results of operations may not be indicative of our long-term prospects.



There is uncertainty as to the effect on the insurance industry of the Terrorism Risk Insurance Act of 2002.



The supply of reinsurance and insurance coverage has decreased due to
withdrawal of capacity and substantial reductions in capital resulting from, among other things, the September 11, 2001 terrorist attacks. This tightening of supply has resulted in governmental intervention in the reinsurance and insurance markets,
both in the United States and worldwide. For example, on November 26, 2002, the United States enacted the Terrorism Risk Insurance Act to ensure the availability of insurance coverage for terrorist acts in the United States. This law, which expires
at the end of 2005, requires insurers writing certain lines of property and casualty insurance to offer coverage against certain acts of terrorism causing damage within the United States or to U.S. flagged vessels or aircraft. In return, the U.S.
government is required to indemnify insurers for 90% of insured losses resulting from covered acts of terrorism, subject to a premium-based deductible. Currently there remains a great deal of uncertainty as to what effect the application of this law
will have on the insurance industry.



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Our financial condition and results of operations could be negatively affected to the extent that we sustain losses
from our reinsurance and insurance of terrorist attacks and similar risks.



Worldwide terrorist attacks, threats of future terrorist attacks and the military initiatives and political unrest in the Middle East have all adversely affected general economic, market and political conditions,
increasing many of the risks associated with the insurance markets worldwide. Although we may attempt to exclude losses from terrorism and certain other similar risks from some coverage that we write, we may not be successful in doing so. In
addition, we have written and will continue to write some policies explicitly covering acts of terrorism. These risks are inherently unpredictable and recent events may lead to increased frequency and severity of losses. It is difficult to predict
the timing of such events with statistical certainty or to estimate the amount of loss that any given occurrence will generate. Our financial condition and results of operations could be negatively affected to the extent that we sustain losses from
our reinsurance and insurance of terrorist attacks and similar risks.



Max
Re Capital has no significant operations other than its ownership of share capital of its subsidiaries and may be restricted from declaring or paying dividends.



Max Re Capital has no significant operations or assets other than its ownership of the voting common shares of Max Re and
its other subsidiaries. Dividends and other permitted payments from its subsidiaries are expected to be its sole source of funds to pay expenses and dividends, if any. The payment of dividends and making of distributions by Max Re, Max Re Managers
and Max Re Diversified are limited under Bermuda law and regulations. Under the Insurance Act 1978 of Bermuda and related regulations (together, the Bermuda Insurance Act), Max Re must maintain specified minimum solvency levels and is
prohibited from declaring or paying dividends that would result in noncompliance. Further, as a long-term insurer, Max Re must maintain long-term business assets of a value at least $250,000 greater than its long-term business liabilities and is
prohibited from declaring or paying dividends if it does not comply or such action would result in noncompliance with the Bermuda Insurance Act. Additionally, under the Companies Act 1981 of Bermuda, each of Max Re Capital, Max Re, Max Re Managers
and Max Re Diversified may only declare or pay a dividend if, among other things, it has reasonable grounds for believing that it is, or would after the payment be, able to pay its respective liabilities as they become due. Under the Irish Insurance
Acts 1909 to 2000, each of Max Re Europe and Max Insurance Europe may only declare a dividend if, among other matters, such payment would not reduce its statutory surplus below the required minimum. In addition, each of our letter of credit
facilities prohibits Max Re from paying dividends at any time that it is in default under the respective facility, which will occur if Max Re Capitals shareholders equity or Max Res shareholders equity is less than a
specified amount as well as in certain other circumstances. Accordingly, we cannot assure shareholders that Max Re Capital or its subsidiaries will declare or pay dividends in the future.



Risks Related to Our Investment Strategy



If our calculations with respect to our liabilities are incorrect, or if we do not appropriately structure our investments in relation to
our anticipated liabilities, we could be forced to liquidate investments at a significant loss.



Our ability to measure and manage risk and to implement our investment strategy is crucial to our success. We cannot assure investors that we will
successfully structure our investments in relation to our anticipated liabilities under our reinsurance and insurance policies. If our calculations with respect to these liabilities are incorrect, or if we do not properly structure our investments
to satisfy such liabilities, we could be forced to liquidate investments at a significant loss.



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Unexpected volatility or illiquidity associated with our alternative investment portfolio or in the financial markets
could significantly and negatively affect our ability to conduct business.



Our investment guidelines permit us to invest up to 50% of our investment portfolio in an alternative investment portfolio, which we principally invest through Max Re Diversified. Max Re Diversified invests in various
investment funds, which follow investment strategies that involve investing in a broad range of investments, some of which may be volatile. We invest the remainder of our alternative investment portfolio through Max Re, which makes strategic
investments in reinsurance companies. Although we believe that our investment portfolio assists us in maintaining low overall volatility, the risks associated with our alternative investment portfolio may be substantially greater than the risks
associated with fixed maturities investments. Further, because many of the alternative investment funds in which we invest impose limitations on the timing of withdrawals, we may be unable to withdraw our investment from a particular alternative
investment fund on a timely basis. Unexpected volatility or illiquidity associated with our alternative investment portfolio could significantly and negatively affect our ability to conduct business.



The success of our investment strategy is also affected by general economic
conditions, including volatility in interest rates and the price of securities. Unexpected volatility or illiquidity in the financial markets could significantly and negatively affect our ability to conduct business.



The failure of our investment managers to perform their services in a manner consistent
with our expectations and investment objectives, or the termination of our agreements with one or more of these investment managers, could significantly and negatively affect our ability to conduct business.



We have entered into an investment management agreement with each of General
Re New England Asset Management, Inc., Conning Asset Management and Asset Allocation and Management to manage our fixed maturities portfolio. We have also entered into a customer agreement and trading authorization contract with Alstra Capital
Management, LLC, which we refer to in this annual report as Alstra, to act as a fund of funds advisor for our alternative investment portfolio invested through Max Re Diversified. Alstra is an affiliate of Moore Capital Management, LLC, which we
refer to in this annual report as Moore Capital and which, through affiliates, is a significant shareholder of Max Re Capital. Additionally, each underlying alternative investment fund manager has discretionary authority over the portion of our
underlying alternative investment portfolio that it manages. As a result, the aggregate performance of our investment portfolio depends to a significant extent on the ability of our investment managers, and the investment managers of each underlying
alternative investment fund, to select and manage appropriate investments. We cannot assure you that any or all of these investment managers will be successful in meeting our investment objectives, or that these investment managers will not
terminate their respective agreements with our company. The failure of these investment managers to perform their services in a manner consistent with our expectations and investment objectives, or the termination of our agreements with one or more
of these investment managers, could significantly and negatively affect our ability to conduct our business.



We do not control our fixed maturities portfolio allocations and therefore cannot control our level of risk exposure with respect to our fixed maturities investments.



Our investment managers are contractually obligated to follow our investment
guidelines. However, we cannot assure you as to how our assets will be allocated among different securities or as to our level of risk exposure. Further, while the securities in our fixed maturities portfolio are all investment grade, these
securities are still subject to credit risk, interest rate risk and currency risk.



Alstras ability to identify alternative investment fund managers and obtain access for our company to the funds managed by these fund managers may have a significant effect on the performance of our alternative investment
portfolio.



Alstra recommends appropriate alternative
investment strategies and alternative investment fund managers and is contractually obligated to follow our investment guidelines. We cannot assure you, however, as to how assets will be allocated among funds with different investment strategies. In
connection with our alternative investment portfolio invested through Max Re Diversified, we depend on Alstra to identify investment managers who Alstra believes are best able to achieve superior risk-adjusted returns in their chosen strategy.
Further, because these investment managers are not obligated to accept investments and may restrict access to their investment funds, we rely on Alstra to obtain access for us to these funds. Alstras ability to identify these fund managers and
to obtain access for us to the funds managed by these fund managers may have a significant effect on the performance of our alternative investment portfolio.



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Changes in market interest rates could have a material adverse effect on our investment portfolio, investment income
and results of operations.



Increasing market interest
rates reduce the value of our fixed maturities, and we may realize a loss if we sell fixed maturities whose value has fallen below their acquisition cost. Declining market interest rates can have the effect of reducing our investment income, as we
invest proceeds from positive cash flows from operations and reinvest proceeds from maturing and called investments in new investments that may yield less than our investment portfolios average rate of return. Accordingly, changes in interest
rates could have a material adverse effect on our investment portfolio, investment income and results of operations.



Members of our board of directors may have conflicts of interests.



Mr. Zack Bacon III, a member of our board of directors and its Finance Committee, is also a principal of Alstra. Given Alstras role as the fund of
funds advisor of Max Re Diversified and the ownership by affiliates of Moore Capital of a significant amount of our common shares, Mr. Bacon may have interests that are different from, or in addition to, the interests of our shareholders generally.



Risks Related to Regulation of Our Company



We are subject to insurance laws and regulations in Bermuda and
Ireland, which may restrict our ability to conduct our operations, distribute funds and pursue our investment strategy.



The Bermuda Insurance Act regulates the reinsurance and insurance business of Max Re and the reinsurance and insurance management business of Max Re
Managers. The Bermuda Insurance Act imposes solvency and liquidity standards and auditing and reporting requirements on Max Re and grants to the Bermuda Monetary Authority the power to supervise, investigate and intervene in the affairs of Bermuda
reinsurance and insurance companies. Max Re is required to prepare annual statutory financial statements, file an annual statutory financial return and have its statutory reserves actuarially certified. In addition, Max Re Capital, Max Re, Max Re
Managers and Max Re Diversified are each required to comply with the provisions of the Bermuda Companies Act regulating, among other things, the payment of dividends and making of distributions from contributed surplus.



Our Irish operating subsidiaries, Max Insurance Europe and Max Re Europe, are
subject to regulation by the Irish Financial Services Regulatory Authority, or IFSRA, under the Irish Insurance Acts 1909 to 2000, regulations promulgated thereunder, regulations relating to insurance business promulgated under the European
Communities Act 1972, directions issued under regulations and guidelines issued by IFSRA. Max Insurance Europe is required to maintain statutory reserves in respect of underwriting liabilities and a solvency margin as provided for in the Insurance
Acts and regulations. Assets constituting statutory reserves must comply with admissibility, diversification, localization and currency matching rules, and statutory reserves must be actuarially certified annually.



These laws and regulations may restrict our ability to conduct our
operations, distribute funds and pursue our investment strategy.



If
we become subject to insurance laws and regulations other than those of Bermuda or Ireland our business and results of operations could be significantly and negatively affected.



We do not expect to engage in insurance underwriting activities other than in Bermuda and Ireland and anticipate conducting
our business in a manner so that we will not be subject to licensing requirements or insurance regulations other than in Bermuda and Ireland.



The insurance laws of each U.S. state and many non-U.S. jurisdictions regulate the sale of insurance within that state or jurisdiction by alien insurers,
such as Max Re, which are not authorized or admitted to do business in that jurisdiction. We do not intend to maintain an office or to solicit, advertise, settle claims or conduct other



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insurance activities in any jurisdiction other than Bermuda and Ireland where our activities would require us to be so authorized or admitted. However, we
cannot assure you that insurance regulators in the United States or elsewhere will not review our activities or, that if there were such a review, that they would not be successful in claiming that we are subject to the licensing requirements of the
particular jurisdiction. If we were to become subject to any U.S. federal or state laws and regulations or the laws and regulations of any other jurisdiction in the future, we may consider various alternatives to our operations, including:



| |  |  | modifying or restricting the manner in which we conduct our business in order to avoid being subject to, and the necessity of complying with, the laws and regulations; or
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| |  |  | obtaining licenses to enable us to transact reinsurance or insurance in the particular jurisdiction.
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However, modifying or restricting the manner in which we conduct our business in other jurisdictions could significantly and
negatively affect our business, including subjecting our company to risk-based capital and other regulations that could substantially affect the composition of, and returns on, our investment portfolio. In addition, our failure to comply with
insurance statutes and regulations could significantly and negatively affect our company by limiting our ability to conduct business as well as subjecting us to penalties and fines. If we choose to attempt to underwrite business in a jurisdiction
other than Bermuda or Ireland, we would likely need to become licensed in such jurisdiction. However, we may not be able to obtain such a license as the process of obtaining licenses is often costly and time consuming. Accordingly, we may not be
able to execute a business plan that incorporates the underwriting of business in a jurisdiction in which we are not currently licensed.



Generally, Bermuda insurance statutes and regulations applicable to Max Re are less restrictive than those that would be applicable to Max Re if it was
subject to the insurance laws of any state in the United States. In the past, there have been Congressional and other initiatives in the United States regarding proposals to supervise and regulate insurers domiciled outside the United States. If in
the future Max Re became subject to any insurance laws of the United States or any state thereof or of any other jurisdiction, we cannot assure you that we would be able to comply with these laws or that complying with these laws would not
significantly and negatively affect our business or results of operations.



In addition, the European Commission is currently considering proposals the effect of which would be to harmonize the regulation of reinsurers across the European Union, or EU, and to permit a reinsurer authorized in
one EU member state to carry on business in any other EU member state on a freedom of services basis. If these proposals were to become law in Ireland, Max Re Europe would become subject to a higher level of regulation than the level of regulation
to which it is currently subject.



You may have difficulty effecting service
of process on us or enforcing judgments against us in the United States.



We are incorporated pursuant to the laws of Bermuda and our business is based in Bermuda. In addition, certain of our directors and officers reside outside the United States, and all or a substantial portion of our
assets and the assets of such persons are located in jurisdictions outside the United States. As such, we have been advised that there is doubt as to whether:



| |  |  | a holder of our common shares would be able to enforce, in the courts of Bermuda, judgments of U.S. courts based upon the civil liability provisions of the U.S. federal securities
laws;
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| |  |  | a holder of our common shares would be able to bring an original action in the Bermuda courts to enforce liabilities against us or our directors and officers who reside outside the
United States, based solely upon U.S. federal securities laws.
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We have also been advised that there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments of U.S. courts, and there are grounds upon which Bermuda courts may not
enforce judgments of U.S. courts. Further, certain remedies available under U.S. federal and state laws, including U.S. federal securities laws, may not be available under Bermuda law. Because judgments of U.S. courts are not automatically
enforceable in Bermuda, it may be difficult for you to recover against us based upon such judgments.



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Risks Related to Taxation of Our Company



We may be subject to U.S. federal income taxation.



We are organized under the laws of Bermuda and intend to operate in a manner
such that we will not be treated as being engaged in the conduct of a trade or business in the United States. Accordingly, we do not believe that we are subject to U.S. federal income taxation on net income. However, this determination
is essentially factual in nature, and there are no definitive standards provided by the Internal Revenue Code, regulations or court decisions as to what activities constitute being engaged in the conduct of a trade or business within the
United States. Accordingly, there can be no assurance that the U.S. Internal Revenue Service, or IRS, would not find that we are engaged in the conduct of a trade or business in the United States. If the IRS were to make such a
finding, we would become subject to U.S. federal income taxation on net income.



Shareholders who are U.S. persons may recognize income for U.S. federal income tax purposes on our undistributed earnings.



Shareholders who are U.S. persons may recognize income for U.S. federal income tax purposes on our undistributed earnings if we are treated as a passive foreign
investment company or a controlled foreign corporation or if we have generated more than a permissible amount of related person insurance income. In addition, gain on the disposition of our common shares may be treated as ordinary income.



Passive Foreign Investment Company. In order to avoid significant potential
adverse U.S. federal income tax consequences for any U.S. person who owns our common shares, we must not constitute a passive foreign investment company in any year in which such U.S. person is a shareholder. In general, a non-U.S. corporation is a
passive foreign investment company for a taxable year if 75% or more of its income constitutes passive income or 50% or more of its assets produce passive income. Passive income generally includes interest, dividends and other investment income.
However, passive income does not include income derived in the active conduct of an insurance business by a company that is predominantly engaged in an insurance business. This exception is intended to ensure that income derived by a bona fide
insurance company is not treated as passive income, except to the extent such income is attributable to financial reserves in excess of the reasonable needs of the insurance business. Currently, we do not maintain financial reserves in excess of the
reasonable needs of our insurance business. If, because of a change in the business plan or for any other reason, we maintain excess financial reserves, we may be characterized as a passive foreign investment company. Although Max Re, Max Insurance
Europe and Max Re Europe expect to engage predominantly in insurance activities that involve significant risk transfer, and do not expect to have financial reserves in excess of the reasonable needs of their insurance businesses, we could
nonetheless be deemed to be a passive foreign investment company. We may be characterized as a passive foreign investment company if Max Re, Max Insurance Europe or Max Re Europe engages in certain non-traditional insurance activities that do not
involve sufficient transfer of risk or if any of the companies maintains financial reserves in excess of the reasonable needs of its respective insurance business. In addition, there may be other circumstances that may cause Max Re, Max Insurance
Europe or Max Re Europe not to satisfy the exception for insurance companies. For example, the IRS may disagree with our interpretation of the current scope of the active insurance company exception and successfully challenge our position that Max
Re, Max Insurance Europe and Max Re Europe qualify for the exception. In addition, the IRS may issue regulatory or other guidance that applies on either a prospective or retroactive basis under which Max Re, Max Insurance Europe or Max Re Europe may
fail to qualify for the active insurance company exception. While we do not believe that we are or will be a passive foreign investment company, we cannot assure shareholders that the IRS or a court will concur that we are not a passive foreign
investment company with respect to any given year. If we were treated as a passive foreign investment company, the availability of the mark to market election is uncertain for shareholders who are U.S. persons. This election may under certain
circumstances mitigate the negative tax consequences of an investment in a passive foreign investment company.



Controlled Foreign Corporation. U.S. persons who, directly or indirectly or through attribution rules, own 10% or more of our common shares should consider the possible application of the controlled foreign
corporation rules.



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Each U.S. 10% shareholder of a controlled foreign corporation on the last day of the controlled foreign
corporations taxable year generally must include in its gross income for U.S. federal income tax purposes its pro-rata share of the controlled foreign corporations subpart F income, even if the subpart F income has not been distributed.
In general, a non-U.S. insurance company is treated as a controlled foreign corporation only if such U.S. 10% shareholders collectively own more than 25% of the total combined voting power or total value of the companys capital stock for an
uninterrupted period of 30 days or more during any year. We believe that, because of the anticipated dispersion of share ownership among holders and because of the restrictions in our bye-laws on transfer, issuance or repurchase of our common
shares, shareholders will not be subject to treatment as U.S. 10% shareholders of a controlled foreign corporation. In addition, because under our bye-laws no single shareholder is permitted to exercise more than 9.5% of the total combined voting
power, unless such provision is waived by the unanimous consent of the Board of Directors, we believe that our shareholders should not be viewed as U.S. 10% shareholders of a controlled foreign corporation for purposes of the controlled foreign
corporation rules. We cannot assure shareholders, however, that these rules will not apply to our shareholders.



Related Person Insurance Income. If Max Res, Max Insurance Europes or Max Re Europes related person insurance income determined on a gross basis were to
equal or exceed 20% of its gross insurance income in any taxable year and direct or indirect insureds and persons related to such insureds were directly or indirectly to own more than 20% of the voting power or value of Max Res, Max Insurance
Europes or Max Re Europes capital stock, a U.S. person who owns our common shares directly or indirectly on the last day of the taxable year most likely would be required to include in income for U.S. federal income tax purposes the U.S.
persons pro-rata share of Max Res, Max Insurance Europes and/or Max Re Europes related person insurance income for the taxable year, determined as if such related person insurance income were distributed proportionately to
such U.S. person at that date. Related person insurance income is generally underwriting premium and related investment income attributable to insurance or reinsurance policies where the direct or indirect insureds are direct or indirect U.S.
shareholders or are related to such direct or indirect U.S. shareholders. We do not expect that Max Re, Max Insurance Europe or Max Re Europe will knowingly enter into reinsurance agreements in which, in the aggregate, the direct or indirect
insureds are, or are related to, owners of 20% or more of our common shares. Currently, we do not believe that the 20% gross insurance income threshold has been met. However, we cannot assure shareholders that this is or will continue to be the
case. Consequently, we cannot assure shareholders that a person who is a direct or indirect U.S. shareholder will not be required to include amounts in its income in respect of related person insurance income in any taxable year.



If a U.S. shareholder is treated as disposing of shares in a non-U.S. insurance corporation
that has related person insurance income and in which U.S. persons own 25% or more of the voting power or value of the companys capital stock, any gain from the disposition will generally be treated as ordinary income to the extent of the U.S.
shareholders portion of the corporations undistributed earnings and profits that were accumulated during the period that the U.S. shareholder owned the shares. In addition, such a shareholder will be required to comply with certain
reporting requirements, regardless of the amount of shares owned by the direct or indirect U.S. shareholder. These rules should not apply to dispositions of our common shares because Max Re Capital is not itself directly engaged in the insurance
business and because proposed U.S. Treasury regulations applicable to this situation appear to apply only in the case of shares of corporations that are directly engaged in the insurance business. We cannot assure shareholders, however, that the IRS
will interpret the proposed regulations in this manner or that the proposed regulations will not be promulgated in final form in a manner that would cause these rules to apply to dispositions of our common shares.



U.S. tax-exempt organizations who own our common shares may recognize unrelated business
taxable income.



A U.S. tax-exempt organization may recognize unrelated
business taxable income if a portion of our subpart F insurance income is allocated to the organization. In general, subpart F insurance income will be allocated to a U.S. tax-exempt organization if either we are a controlled foreign corporation and
the tax-exempt shareholder is a U.S. 10% shareholder or there is related person insurance income and certain exceptions do not apply. Although we do not believe that any U.S. persons will be allocated subpart F insurance income, we cannot assure
shareholders that this will be the case.



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Changes in U.S. tax laws may be retroactive and could subject us and/or U.S. persons who own our common shares to U.S.
income taxation on our undistributed earnings.



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



We may become subject to taxes in Bermuda after March 28, 2016, which would have a
material adverse effect on our business and results of operations.



Under current Bermuda law, there is no income, corporate, profits, withholding, capital gains or capital transfer tax payable by Max Re Capital, Max Re, Max Re Managers or Max Re Diversified. Each of these entities has obtained from the
Minister of Finance under The Exempted Undertaking Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax computed on profits, income, any capital asset, gain or appreciation, or any tax in
the nature of estate duty or inheritance, then the imposition of any such tax shall not be applicable to any of these entities, their operations or their shares, debentures or other obligations, until March 28, 2016. Given the limited duration of
the Minister of Finances assurance we cannot be certain that we will not be subject to any Bermuda taxes after March 28, 2016. Our business and results of operations would be materially and adversely affected if we were to become subject to
taxes in Bermuda.



The Organization for Economic Cooperation and Development
and the European Union are considering measures that might increase our taxes and reduce our net income.



A number of multinational organizations, including the European Union, the Organization for Economic Cooperation and Development, also referred to in this
annual report as OECD, the Financial Action Task Force and the Financial Stability Forum, also referred to in this annual report as FSF, have all recently identified some countries as not participating in adequate information exchange, engaging in
harmful tax practices or not maintaining adequate controls to prevent corruption, such as money laundering activities. Recommendations to limit such harmful practices are under consideration by these organizations, and a report published on November
27, 2001 by the OECD at the behest of FSF titled Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes, contains an extensive discussion of specific recommendations. The OECD has threatened non-member jurisdictions
that do not agree to cooperate with the OECD with punitive sanctions by OECD member countries, though specific sanctions have yet to be adopted by OECD member countries. It is as yet unclear what these sanctions will be, who will adopt them and when
or if they will be imposed. In a June 26, 2000 report, Bermuda was not listed as a tax haven jurisdiction by the OECD because it previously signed a letter committing itself to eliminating harmful tax practices by the end of 2005 and to embrace
international tax standards for transparency, exchange of information, and the elimination of regimes for financial and other services that attract businesses with no substantial domestic activity. In the OECDs report dated June 26, 2000,
Bermuda was not listed as a tax haven jurisdiction because it had previously signed a letter committing itself to eliminate harmful tax practices by the end of 2005 and to embrace international tax standards for transparency, exchange of information
and the elimination of any aspects of the regimes for financial and other services that attract business with no substantial domestic activity. We cannot assure you, however, that the action taken by Bermuda would be sufficient to preclude all
effects of the measures or sanctions described above, which, if ultimately adopted, could adversely affect Bermuda companies such as us.