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                                                                    EXHIBIT 10.3


                              RETROCESSION CONTRACT
                   (hereinafter referred to as the "Contract")

In consideration of the mutual covenants hereinafter contained and upon the
terms and conditions hereinafter set forth

                              PXRE REINSURANCE LTD.
                  (hereinafter referred to as the "Reinsurer")
             does hereby reinsure, as herein provided and specified
                           SELECT REINSURANCE LIMITED
                    (hereinafter referred to as the "Company")


                                    ARTICLE 1

BUSINESS AND TERRITORY COVERED

The Reinsurer agrees to reinsure the Company for the Ultimate Net Loss arising
from Loss Occurrences commencing during the term of this Contract in respect of
the Company's liability under the separate Amended and Restated Facultative
Obligatory Quota Share Retrocessional Agreement between the Company, the
Reinsurer and PXRE Reinsurance Company and the separate Variable Quota Share
Retrocessional Agreement between the Company, the Reinsurer and PXRE Reinsurance
Company (together, the "Quota Share Treaties").

The liability of the Reinsurer shall follow that of the Company in every case
and shall be subject in all respects to all the general and specific
stipulations, clauses, waivers, extensions, modifications and endorsements of
the Quota Share Treaties subject to the exclusions set forth in the Exclusions
Article; and the other terms and conditions of this Contract as set forth
herein.

This Contract is solely between the Company and the Reinsurer, and in no
instance shall any insured, claimant or other third party have any rights under
this Contract except as may be expressly provided otherwise herein.


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                                    ARTICLE 2

TERM

This Contract shall be applicable to Loss Occurrences commencing between12:01
a.m., Eastern Standard Time, January 1, 2003, and 12:01 a.m., Eastern Standard
Time, January 1, 2004 ,such period is the term of this Contract. The Obligations
of the Reinsurer under this Contract shall continue for Loss Occurrences
commencing during the term of this Contract until Company has no further
liability therefore under the Quota Share Treaties or the Limit of this Contract
has been exhausted.


                                    ARTICLE 3

EXCLUSIONS

This Contract shall be subject to the exclusions referred in Article V of the
Quota Share Treaties. This Contract shall also not provide coverage for any
losses incurred by the Company under any policies of insurance or reinsurance
assumed by the Company other than under the Quota Share Treaties which exclusion
shall include, without limitation, any contracts or policies for financial
guarantee or credit enhancement insurance written by the Company and any
reinsurance treaties assumed from cedents other than PXRE Reinsurance Ltd. or
PXRE Reinsurance Company.


                                    ARTICLE 4

DEFINITION OF "LOSS OCCURRENCE" AND "ULTIMATE NET LOSS"

The term "Loss Occurrence" as used herein shall mean any event or occurrence
which gives rise to liability of the Company under the Quota Share Treaties.
When an event or occurrence commences and whether an event or occurrence is one
or more Loss Occurrences shall be determined for this Contract as if it is
determined under the Quota Share Treaties.


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The term "Ultimate Net Loss" shall mean the actual amount paid or payable by the
Company under the Quota Share Treaties, including payments by the Company for
Extra Contractual Obligations and Judgments in Excess of Policy Limits as those
terms are used in the Quota Share Treaties, the Company's expenses of
litigation, if any, all loss, and other loss expenses payable by the Company
(however not to include the office expenses and salaries of officials of the
Company). All salvages, recoveries and payments recovered or received subsequent
to a loss settlement under this Contract, and for the account of Company, shall
be applied as if recovered or received prior to the said settlement and all
necessary adjustments shall be made by the parties hereto.


                                    ARTICLE 5

LIMIT AND RETENTION

It is hereby understood and agreed that this reinsurance shall respond up to an
Ultimate Net Loss limit of $8,000,000 each and every Loss Occurrence in excess
of $22,000,000 (such amount to be called the "Retention") Ultimate Net Loss each
and every Loss Occurrence provided that the Reinsurer's liability under this
Contract shall not exceed $16,000,000 in the aggregate for all Loss Occurences
during the term of this Contract (the "Limit").


                                    ARTICLE 6

PREMIUM

The Company shall pay to the Reinsurer a flat premium of $1,520,000 payable in
four quarterly installments of $380,000 on January 1, April 1, July 1 and
October 1, 2003.


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                                    ARTICLE 7

EARLY TERMINATION OR REDUCTION OF LIMIT

The Company shall have the unilateral ability to either terminate this Contract
or reduce the amount of Limit for this Contract on a quarterly basis beginning
on April 1, 2003 subject to 30 days advance written notice.

Reduction of Limit shall be done in increments of no less than $1,000,000 with a
corresponding pro-rata reduction of premium. For each $1,000,000 reduction of
the going forward Limit, the Company's Retention per Loss Occurrence shall
increase by $1,000,000.

Upon the effective date of early termination, the Company shall pay a
Termination Fee to the Reinsurer of $90,000. For each $1,000,000 reduction in
Limit, the Company shall pay the Reinsurer a Limit Reduction Fee of $5,000 upon
the effective date of such reduction.

Early termination shall not relieve the Reinsurer of its obligations under the
terms of this Contract for Loss Occurrences prior to the effective date and time
of early termination and any Loss Occurrence prior to the effective date and
time of reduction of Limit shall be covered under the terms of this Contract at
the Limit in effect at the time of such Loss Occurrence with the Retention
applicable at such time.


                                    ARTICLE 8

REINSTATEMENT

Each claim heron reduces the amount of reinsurance provided under this Contract
from the time of occurrence of the loss by the amount paid; any amount so
exhausted will be immediately reinstated. For each amount so reinstated the
Company agrees to pay an additional premium calculated at pro rata of the
premium heron, being 100% as to time and pro rata as to the fraction of
$8,000,000 reinstated to be paid simultaneously with the payment of loss by the
Reinsurers. Nevertheless, the Reinsurers' liability hereunder in respect of any
one Loss Occurrence shall never exceed $8,000,000 nor more than $16,000,000 in
the aggregate for all Loss Occurrences under this Contract during the term of
this Contract.



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                                    ARTICLE 9

TWO ORIGINAL RISK WARRANTY

It is warranted that no loss shall be payable hereunder unless the Company
sustains Ultimate Net Loss from two or more original risks involved in the same
Loss Occurrence.

For the purposes of this Reinsurance, any one risk is defined as all values at
one location including all business interruption and/or time element exposures
whether by way of contingent business interruption, suppliers or customers
extensions.


                                   ARTICLE 10

NET RETAINED LINES

This Contract applies only to that portion of any Ultimate Net Loss which the
Company retains net for its own account; and in calculating the amount of such
loss and also in computing the amount of Retention only loss or losses in
respect of that portion of any Ultimate Net Loss which the Company retains net
for its own account shall be included. For purposes of this paragraph the
reinsurance provided herein shall be disregarded.

In applying the preceding paragraph, Ultimate Net Loss shall not be increased by
reason of the inability of the Company to collect from any other reinsurers
whether specific or general, any amounts which may have become due from them
with regard to Company's exposure under the Quota Share Treaties, whether such
inability arises from the insolvency of such other reinsurers or otherwise.



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                                   ARTICLE 11

EXTRA CONTRACTUAL OBLIGATIONS

The Reinsurer shall not reinsure the Company for any amount paid by the Company
under the Quota Share Treaties for Extra Contractual Obligations or Judgements
in Excess of Policy Limits when the related loss has been incurred due to fraud
by a member of the Board of Directors or a corporate officer of the Company
acting individually or collectively or in collusion with any individual or
corporation or any other organization or party involved in the presentation,
defense or settlement or any claim covered under the Quota Share Treaties. This
exclusion shall not apply if the Company Director or corporate officer acted in
concert with any director, employee or agent of Reinsurer or any of its
Affiliates. Affiliates, as used in this Contract, shall mean any person or
entity controlling, controlled by or under common control with Reinsurer.


If any provision relating to Extra Contractual Obligations or Judgements in
Excess of Policy Limits shall be rendered illegal or unenforceable by the laws,
regulations or public policy of any jurisdiction, such provision shall be
considered void in such jurisdiction, but this shall not affect the validity or
enforceability of any other provision relating thereto or the enforceability of
such provision in any other jurisdiction.


                                   ARTICLE 12

SALVAGE AND SUBROGATION

The Reinsurer shall be credited with subrogation and salvage on any claims or
settlements involving this Contract (i.e., reimbursement obtained or recoveries
made by the Company, less the actual cost of obtaining such reimbursement or
making such recoveries excluding salaries of officers and employees of the
Company but including sums paid relating thereto to attorneys and other
professionals and agents) ("Recoveries"). . Recoveries shall be applied in the
following order. First, to Company for any loss it sustains which it would not
have sustained under the terms of this Contract except for the Limit, second, to


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the Reinsurer up to the amount it has paid Company under this Contract and
third, any remainder to Company. The Company shall reasonably enforce its rights
to Recoveries relating to any loss, a part of which loss was sustained by the
Reinsurer under this Contract, and to reasonably prosecute all claims arising
out of those rights. In the event the Company shall refuse or neglect to enforce
its rights to Recoveries, the Reinsurer is authorized and empowered to bring any
appropriate action in the name of the Company or its policy holder or otherwise
to enforce those rights and the Company shall cooperate fully with the Reinsurer
in enforcing those rights. The Company and the Reinsurer shall share in the cost
and expense of any unsuccessful Recoveries effort in the same proportion that
the Company and the Reinsurer shared the loss giving rise to those Recoveries
efforts, regardless of which party incurs them.

                                   ARTICLE 13

NOTICE OF LOSS AND LOSS SETTLEMENTS

Reinsurer is a party along with its Affiliate to the Quota Share Treaties and
shall accordingly be deemed to be on notice of any Loss Occurrence that may
expose Reinsurer to an obligation under this Contract.

The Reinsurer agrees to abide by the loss settlements of the Company, such
settlements to be considered as satisfactory proofs of loss, and amounts falling
to the share of the Reinsurer shall be immediately payable to the Company by
them upon reasonable evidence of the amount paid or to be paid by the Company
being presented to the Reinsurer by the Company.


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                                   ARTICLE 14

CURRENCY

Whenever the word "Dollars" or the sign "$" appear in this Contract, they shall
be construed to mean United States Dollars.

For purposes of this Contract, where the Company pays or receives amounts under
the Quota Share Treaties in currencies other than United States Currency, such
amounts shall be converted into United States Dollars at the actual rates of
exchange at which they are entered into the Company's books


                                   ARTICLE 15

FEDERAL EXCISE TAX

(This Article applies only to the extent Federal Excise Tax ("FET") is due with
respect to any portion of the premium payable by Company to Reinsurer.)

The Reinsurer has agreed to allow a deduction by Company for the purpose of
paying the FET Percentage specified by United States law of the premium payable
by Company to Reinsurer hereunder to the extent such premiums is subject to FET.

In the event of any return of premium becoming due hereunder on which FET has
been paid, the Reinsurer will deduct the percentage specified by United States
law from the amount of the return and the Company or its agent should take steps
to recover the Tax from the United States Government.




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                                   ARTICLE 16

ERRORS AND OMMISSIONS

Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.


                                   ARTICLE 17

ACCESS TO RECORDS

The Reinsurer or their duly authorized representative shall, on prior written
notice, have access to the books and records of the Company at all reasonable
times for the purpose of obtaining information concerning this Contract or the
subject matter thereof.

                                   ARTICLE 18

ARBITRATION

As a condition precedent to any right of action hereunder, if any dispute, claim
or controversy shall arise between the Company and the Reinsurer with respect to
this Contract, the interpretation or breach thereof or the rights of the parties
with respect to any transaction contemplated hereunder (a "Dispute"), whether
such Dispute arises before or after termination of this Contract, such dispute,
upon the written demand of either party, shall be arbitrated in accordance with
this ARTICLE 19. Any such demand for arbitration shall be made within a
reasonable time after the Dispute has arisen, and in any event shall not be made
after the date when institution of legal or equitable proceedings based on such
Dispute would be barred by the applicable statute of limitations.

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Any Dispute to be arbitrated hereunder shall be submitted to three arbitrators,
one to be appointed by each party, and an umpire to be chosen by the two so
appointed. If either party refuses or neglects to appoint an arbitrator within
thirty (30) days after the receipt of written notice from the other party
requesting it to do so, the requesting party may appoint two arbitrators. If the
two arbitrators fail to agree in the selection of the umpire within thirty (30)
days. of their appointment, each arbitrator shall nominate three candidates
within ten (10) days thereafter,' two of whom the other shall decline, and the
choice between the remaining two shall be made by drawing lots. All arbitrators
shall be active or retired executive officers of insurance or reinsurance
companies or underwriters at Lloyd's, London not under the control of, or having
had in the previous 3 years direct and material business relations with, or
related by birth or marriage to any employee of, either party to this Contract,
and having no other personal or financial interest in the outcome of the
arbitration. Any determination by a majority of the arbitrators shall be binding
and conclusive upon the parties hereto.

Each party shall submit its case to the arbitrators within thirty (30) days of
the appointment of the umpire. All proceedings before the arbitration panel
shall be informal and the arbitrators shall have the power to fix all procedural
rules relating to the arbitration proceeding.

The arbitration panel shall render its decision within thirty (30) days after
termination of the proceeding, which decision shall be in writing, stating the
reasons therefor. Judgment upon the final decision of the arbitrators may be
entered in any court having jurisdiction or application may be made to such
court for a judicial confirmation of the award and an order of enforcement, as
the case may be. Unless otherwise allocated by the arbitrators, each party shall
bear the expense of its own arbitrator and shall jointly and equally bear with
the other party the expense of the umpire and of any other expenses of the
arbitration. The arbitration shall take place in the city in which the Company's
head office is located unless some other place is mutually agreed upon by the
Company and the Reinsurer.

Notwithstanding the foregoing provisions of this ARTICLE 19, it is hereby agreed
that no arbitration panel shall have any power to add to, alter or modify the
terms and conditions of this Contract or to decide any issue which does not
arise from the interpretation or application of the provisions of this Contract.


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                                   ARTICLE 19

SERVICE OF SUIT

In the event of the failure of the Reinsurer to pay any amount claimed to be due
hereunder following an arbitration decision, or if court action is necessary to
aid arbitration, the Reinsurer, at the request of the Company, will submit to
the jurisdiction of any court of competent jurisdiction in the State and City of
New York and will comply with all requirements necessary to give such court
jurisdiction. All matters arising hereunder shall be determined in accordance
with the law and practice of such court. Nothing in this ARTICLE 20 constitutes
or should be understood to constitute a waiver of the Reinsurer's rights to
commence an action in any court of competent jurisdiction in the United States,
to remove an action to a United States District Court, or to seek a transfer of
a case to another court as permitted by the laws of the United States or of any
state in the United States.

Service of process in such suit may be made upon Nancy Corbett esq., Sidley
Austin Brown & Wood, 787 Seventh Avenue, New York, NY 10019 (the "agent for
service of process") and in any suit instituted upon this Contract, the
Reinsurer will abide by the final decision of such court or of any appellate
court in the event of an appeal whose decision is no longer subject to appeal.
The above-named agent for service of process is authorized and directed to
accept service of process on behalf of the Reinsurer in any such suit and the
Reinsurer hereby agrees that any such service shall be deemed good and
sufficient service under the New York Civil Practice Laws and Rules.

Further, pursuant to any statute of any state, territory or district of the
United States of America which requires that the Reinsurer appoint a person
designated by such statute as its agent for service of process, Reinsurer hereby
designates the Superintendent, Commissioner, Director of Insurance, or other
officer specified for that purpose in such statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract, and
hereby designates the agent for service of process as the firm to whom the said
officer is authorized to mail such process or a true copy thereof if such agent
must be in the United States, otherwise such process shall be mailed to the
Reinsurer at its address for notice under Article 23 hereof.


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                                   ARTICLE 20

INSOLVENCY

In the event of the insolvency of the Company, the reinsurance provided by
Reinsurer hereunder shall be payable by Reinsurer directly to the Company, or to
its liquidator, receiver, conservator or statutory successor on the basis of the
liability to the Company, without diminution because of the insolvency of the
Company or because the liquidator, receiver conservator or statutory successor
of the Company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of
the Company shall give written notice to the Reinsurer of the pendency of a
claim against the Company under the Quota Share Treaties , which claim would
involve a possible liability on the part of the Reinsurer within a reasonable
time after such claim is filed in the conservation or liquidation proceeding or
in the receivership, and that during the pendency of such claim, the Reinsurer
may investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated any defense or defenses that it may deem
available to the Company or its liquidator, receiver, conservator or statutory
successor. The expense thus incurred by the Reinsurer shall be chargeable,
subject to the approval of the court, against the Company as part of the expense
of conservation or liquidation to the extent of a pro rata share of the benefit
which may accrue to the Company solely as a result of the defense undertaken by
the Reinsurer.

 All obligations of the Reinsurer made, ceded, renewed or otherwise becoming
effective under this Contract, shall be due as set forth in this Contract by the
Reinsurer to the Company or to its liquidator, receiver, conservator or
statutory successor, except (1) where this Contract specifically provides
another payee in the event of the insolvency of the Company, or (2) where the
Reinsurer, with the consent of the direct insured or insureds, has assumed such
policy obligations of the Company as direct obligations of the Reinsurer to the
payees under such policies, in substitution for the obligations of the Company
to such payees.


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                                   ARTICLE 21

OFFSET

Both the Reinsurer and the Company shall have, and may exercise at any time, the
right to offset any amounts due from one party to the other or, to the extent
permitted by applicable law, such other's successor, including a successor by
operation of law. Such offset may only include amounts due under this Agreement
and any other reinsurance agreements heretofore or hereafter entered into
between the Reinsurer and the Company, regardless of whether such amounts are in
respect of premiums, or losses or otherwise, and regardless of the capacity of
any party, whether as reinsurer or reinsured, under the various agreements
involved


                                   ARTICLE 22

GENERAL PROVISIONS


A.  COUNTERPARTS

This Contract 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.

B.  GOVERNING LAW

This Contract shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York other than any mandatory conflict of law
rules that might result in the application of the laws of any other
jurisdiction; provided that in any insolvency proceeding of a Party, the law of
the jurisdiction in which the insolvency proceeding is pending shall govern
matters adjudicated in such proceeding.

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C.  AMENDMENTS AND WAIVERS

This Contract may not be changed, altered or modified unless the same shall be
in writing that expressly refers to this Contract and is executed by the
Reinsurer and the Company with the same formalities required for the execution
of this Contract.

No waiver of any right granted by this Contract, including an alleged waiver by
course of dealing, shall be found to exist unless such waiver shall be in
writing executed by the party sought to be charged with such waiver stating that
such party intentionally relinquished a known right.

No consent or waiver, express or implied, by any party to or of any breach or
default by any other party in the performance by such other party of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance of obligations hereunder by
such other party hereunder.

Failure on the part of any party to complain of any act or failure to act of any
other party or to declare any other party in default, irrespective of how long
such failure continues, shall not constitute a waiver by such first party of any
of its rights hereunder.

D.  NOTICES

All notices, requests, demands and other communications hereunder must be in
writing (including facsimile transmission) and shall be deemed to have been duly
given (i) when received if delivered by hand, (ii) when sent if sent by
facsimile transmission between 9:00 a.m. and 5:00 p.m. Bermuda time on a day
when the Federal Reserve Bank of New York and the Bank of Bermuda are open for
business, provided such transmission is confirmed by the transmitting machine,
(iii) 5 days after being mailed if mailed by prepaid, first class certified mail
or similarly controlled mail, return receipt requested, or (iv) if sent by
overnight courier, 2 days after delivery to a recognized major overnight courier
service, fees prepaid. In each case, notices shall be addressed as follows:

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                  If to the Company:

                  STREET ADDRESS
                  Select Reinsurance Ltd.
                  Victoria Hall
                  11 Victoria Street, 3rd Floor
                  Hamilton HM11
                  Bermuda
                  Attention:  Brant L. Kizer
                  Facsimile:  441-296-8459

                  MAILING ADDRESS
                  Select Reinsurance Ltd.
                  Suite #794
                  48 Par-la-ville Road
                  Hamilton  HM11
                  Bermuda


                  If to the Reinsurer:

                  STREET ADDRESS
                  PXRE Reinsurance
                  Swan Building
                  26 Victoria Street
                  Hamilton  HM 12
                  Attention:        Chief Financial Officer
                  Facsimile:  441-296-6162



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Any party by notice in writing sent to the other may change the name, address or
facsimile number to which notices, requests, demands or other communications to
it shall be given.

E.  ASSIGNMENT

No party may assign any of its rights or obligations under this Contract without
the written consent of the other party to this Contract, which consent may be
arbitrarily withheld by such party, any such non-consented to assignments being
void. Except as otherwise provided in this Contract, this Contract shall be
binding upon, inure to the benefit of, and be enforceable by and against the
respective successors and assigns of each party to this Contract.


F.  CAPTIONS

The section and subsection headings hereto are for convenience only and shall
not be deemed to affect or alter any provision hereof.




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In Witness Whereof, the parties hereto express their agreement effective January
1, 2003 by their duly authorized signatures below:


For and on behalf of PXRE Reinsurance Ltd.

By:      /s/ Mark W. Christie
         -------------------------------------------------------

Title:   Vice President
         -------------------------------------------------------



For and on behalf of Select Reinsurance Ltd.

By:      /s/ Cindy L. Miller
         -------------------------------------------------------

Title:   Treasurer
         -------------------------------------------------------


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