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                                                                   EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

            THIS AGREEMENT, dated as of June 10, 2003, replaces as of June 1,
2003 the employment agreement , dated as of January 8, 1998 by and between
Annuity and Life Re (Holdings), Ltd., a Bermudian corporation (the "Company"),
Annuity and Life Reassurance, Ltd., a subsidiary of the Company organized under
the laws of Bermuda to engage in worldwide life and annuity reinsurance (the
"Operating Company"), and Robert Reale (hereinafter called the "Employee").

                                   WITNESSETH:

            WHEREAS, the Company and the Operating Company desire that the
Employee serve as Senior Vice President and Chief Underwriter and Chief
Operating Officer of the Company and as Senior Vice President and Chief
Underwriter of the Operating Company and the Employee is willing to serve in
such capacities.

            NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the parties hereto agree as
follows;

Section: 1. Employment.

            Effective as of June 1, 2003, the Company and the Operating Company
will employ the Employee and the Employee will perform services for the Company
and the operating Company on the terms and conditions set forth in this
Agreement and for the period ("Term of Employment") specified in Section 3
hereof.

Section: 2. Duties.

            The Employee, during the Term of Employment, shall serve the Company
as its Senior Vice President and Chief Underwriter and Chief Operating Officer.
The Employee shall also serve as Senior Vice President and Chief Underwriter of
the Operating Company. The Employee shall be based at the Operating Company's
headquarters in Bermuda, other than for periodic travel in the ordinary course
of business. The Employee shall have such duties and responsibilities as are
assigned to him by the Boards of Directors of the Company and the Operating
Company and the CEO commensurate with his positions as Senior Vice President and
Chief Underwriter and Chief Operating Officer of the Company and Senior Vice
President and Chief Underwriter the Operating Company.

            The Employee shall perform his duties hereunder faithfully and to
the best of his abilities and in furtherance of the business of the Company, and
shall devote his full business time, energy, attention and skill to the business
of the Company and to the promotion of its interests except as otherwise agreed
by the Company.

            The Employee warrants and represents that he is free to enter into
this Agreement and is not restricted by any prior or existing agreement and the
Company and the Operating Company may rely on such representation in entering
into this Agreement.

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Section: 3. Term of Employment.

            The Term of Employment of this Agreement shall be the period
commencing on June 1, 2003 and ending on the later of (i) February 28, 2004, or
(ii) the date the Company's arbitrations with MetLife which commenced in April
2002 and Hartford Life Insurance Company which commenced in March 2003 have been
withdrawn, resolved or ended with the delivery of the decision from their
arbitration panel on the matters being arbitrated as of the date of this
Agreement. At the end of the Term of Employment, and on each three month
anniversary thereof, the Term of Employment shall automatically be extended for
three additional months, unless the Company or the Employee shall have given
written notice to the other that it does not wish to extend this Agreement at
least three months in advance.

Section: 4. Salary.

            The Employee shall receive, as compensation for his duties and
obligations to the Company and the Operating Company, a salary at the annual
rate of $335,000, payable in substantially equal installments in accordance with
the Operating Company's payroll practice. It is agreed between the parties that
the Company shall review the base annual salary annually and in light of such
review may, in the discretion of the Board of Directors of the Company (but
shall not be obligated to), increase such base annual salary taking into account
any change in the Employee's then responsibilities, increases in the cost of
living, performance by the Employee, and other pertinent factors.

Section: 5. Bonus.

            During the Term of Employment, the Employee shall participate in the
Company's Incentive Compensation Plan, and will be eligible for an annual cash
bonus of up to two times his annual salary based on performance targets as
determined in accordance with the terms of the Plan.

            Additionally, upon the date the Company's arbitrations with MetLife
and Hartford Life Insurance Company have been withdrawn, resolved or ended, the
Employee shall receive a one-time Special Retention Cash Bonus equal to one
times the Employee's annual base salary, except the Special Retention Cash Bonus
shall not be paid in the event of termination of the Employee's employment by
the Company for Serious Cause or termination of the Employee's employment by the
Employee for other than Good Reason.

Section: 6. Options.

            (a) Initial Options. No Initial Option may be exercised after the
earlier of (A) the date that is (i) ninety (90) days following the termination
of the employee's employment for any reason other than death, disability or
Serious Cause (as defined in Section 11), or (ii) six (6) months after the
termination of the Employee's employment by reason of death or disability or
(iii) the date upon which the Employee's employment


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is terminated for Serious Cause; or (B) the tenth anniversary of the IPO date.

            The consideration for the Ordinary Shares purchased upon exercise of
the initial options may be paid in cash or by any other method permitted by the
terms of the Company's Initial Option Plan. The issuance of any Ordinary Shares
pursuant to the Initial Options shall in all events be subject to all applicable
securities laws and the Employee shall enter into any agreement reasonably
requested by the Company in order to ensure that all such issuances are in full
compliance therewith. The Employee shall not have any of the rights and
privileges of a shareholder of the Company with respect to the Ordinary Shares
issuable upon any exercise of Initial options unless and until his name is
entered into the register of members of the Company in respect of such ordinary
Shares. If there is any change in the number or nature of outstanding shares of
the Company's capital stock by reason of share dividend, recapitalization,
merger, consolidation, scheme of arrangement, share split, combination or
exchange, share repurchase or otherwise, which in any such case has a dilutive
or anti-dilutive effect on the Ordinary Shares, the number of Ordinary Shares
subject to each outstanding Initial Option, the exercise price thereof and/or
other terms thereof shall be appropriately adjusted by the Board of Directors of
the Company (or any committee thereof), whose determination shall be conclusive,
so as to restore the option holder to his rights thereunder.

            (b) Other 0ptions. During the Term of Employment, the Employee shall
be eligible to be granted options to purchase Ordinary Shares at such price and
subject to such terms as provided by the Company's Initial Stock Option Plan, in
the sole discretion of the Board of Directors of the Company.

            (c) Restricted Stock. During the Term of Employment, the Employee
shall be eligible to receive restricted stock subject to such terms as provided
by the Company's Restricted Stock Plan, in the sole discretion of the Board of
Directors of the Company.

Section: 7. Employee Benefits.

            During the Term of Employment the Employee shall be entitled to
participate in all employee benefit programs of the Company, as such programs
may be in effect from time to time, including without limitation, pension and
other retirement plans, profit sharing plans, group life insurance, accidental
death and dismemberment insurance, hospitalization, surgical and major medical
coverage, sick leave (including salary continuation arrangements), long term
disability, holidays and vacations.

Section: 8. Business Expenses.

            All reasonable travel and other expenses incidental to the rendering
of services by the Employee hereunder shall be paid by the Company and if
expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor upon presentation of proper invoices; subject in each
case to compliance with the Company's reimbursement policies and procedures.


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Section: 9. Housing and Travel Expenses.

            The Company shall provide to the Employee the sum of $10,000.00
monthly as an allowance to cover the expenses of housing in Bermuda and for his
personal travel.

Section: 10. Vacations and Sick Leave.

            The Employee shall be entitled to reasonable vacation and reasonable
sick leave each year, in accordance with policies of the Company, as determined
by the Board of Directors, provided, however, that the Employee shall be
entitled to a minimum of 4 weeks vacation per year.

Section: 11. Termination.

            (a) In the event of Serious cause, as defined below, the company may
terminate the Employee's employment and the Term of Employment upon written
notice of such termination stating the Serious Cause upon which the Company
relies for its termination. The Employee's employment and the Term of Employment
shall be terminated effective as of the date specified in such notice, which
shall in no event be earlier than the effective date of such notice.

            "Serious Cause" shall mean (i) the willful and continued failure by
the Employee to perform substantially his duties hereunder, other than by
reasons of health, after demand for substantial performance is delivered by the
Company that identifies the manner in which the Company believes the Employee
has not substantially performed his duties, (ii) the Employee shall have been
indicted by any federal, state or local authority in any jurisdiction for, or
shall have pleaded guilty or nolo contendere to, an act constituting a felony,
(iii) the Employee shall have habitually abused any substance (such as narcotics
or alcohol), or (iv) the Employee shall have (A) engaged in acts of fraud,
material dishonesty or gross misconduct in connection with the business of the
Company or (B) committed a material breach of this Agreement.

            (b) The Employee may terminate his employment and the Term of his
Employment in the event of Good Reason, as defined below, upon 30 days' prior
written notice of such termination stating the Good Reason upon which the
Employee relies for his termination. The Employee's employment and the Term of
Employment shall be terminated effective as of the date specified in such
notice, which in no event shall be earlier than the effective date of such
notice.

            "Good Reason" shall mean (i) a substantial reduction in the
Employee's salary, (ii) a change in title of the Employee, or (iii) a material
breach of this Agreement by the Company.

            (c) In the event of termination of the Employee's employment and the
Term of Employment by the Company for Serious Cause or by the Employee without
Good Reason, the Employee shall forfeit all bonus amounts for the then current
fiscal year and the Company shall be liable to the Employee only for (i) any
accrued but unpaid salary, (ii) any accrued but unpaid bonus from a prior fiscal
year, and (iii) reimbursement of business expenses incurred prior to the date of
termination.


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            (d) In the event of the death, retirement or disability of the
Employee, the Employee's employment and Term of Employment shall be terminated
as of the date of such death, retirement or disability and the Company shall pay
the Employee, or the Employee's estate or legal representative, as appropriate,
(i) any accrued but unpaid salary, (ii) any earned but unpaid bonus from a prior
fiscal year, (iii) reimbursement of business expenses incurred prior to the date
of termination, (iv) travel and housing allowances under Section 9 for six
months after the date of termination, and (v) reasonable relocation expenses
from Bermuda to the United States. The date of the Employee's disability shall
be deemed to be the last day of the sixth month during which the Employee has
been unable to carry out his position as provided below.

            "Disability" shall mean the Employee's inability, for reasons of
health, to carry out the functions of his position for a total of 6 months
during any 12 month period of this Agreement. "Retirement" shall mean retirement
from employment upon attaining age 65 or such earlier age agreed to by the
Company.

            In addition, in such event, if the Company's Ordinary Shares are not
then publicly traded, the Company shall have the right to call any or all of the
Ordinary Shares of the Company owned by the Employee within six (6) months of
death, retirement or disability, and the Employee, the Employee's estate or
legal representative, whichever is appropriate, shall have the right to put any
or all of the Employee's Ordinary Shares to the Company within twelve (12)
months after death or within six (6) months after retirement or disability. The
price at which such put or call is exercisable shall be equal to the appraised
value, in each case measured as of the date of termination.

            (e) If the company should (i) terminate the Term of Employment and
the Employee's employment herein without Serious Cause; or (ii) if the Employee
should terminate the Term of Employment and his employment hereunder for Good
Reason, the Company shall continue to pay the Employee his base salary for a
period of one year from such termination. In addition, the Employee shall be
entitled to (A) any accrued but unpaid salary, (B) any earned but unpaid bonus
from a prior fiscal year, (C) reimbursement of business expenses incurred prior
to the date of termination, and (D) travel and housing allowances under Section
9 for six months after the date of termination, and (E) reasonable relocation
expenses from Bermuda to the United States.

            (f) In the event of the liquidation of the Company or in the event
that the Board of Directors elects to discontinue permanently operating the
Company, the Term of Employment and the Employee's employment herein shall be
terminated as of the date of such liquidation or discontinuance and the Company
shall pay the Employee (i) any accrued but unpaid salary, (ii) any earned but
unpaid bonus from a prior fiscal year, (iii) unreimbursed business expenses
incurred prior to the date of termination, (iv) travel and housing allowances
under Section 9 for two months after the date of termination, and (v) reasonable
relocation expenses from Bermuda to the United States. In addition, the Employee
shall be entitled to receive one year's base salary from the date on which the
Employee's employment is terminated.


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Section: 12. Change of Control.

            (a) Notwithstanding any other provision contained herein, the
Employee's Initial Options and other options issued under the Company's share
option plans that are not then exercisable shall become exercisable (and be
deemed to be vested) on the date on which a Change of Control of the Company
occurs. In addition, restricted Ordinary Shares granted under any of the
Company's share option plans shall immediately vest upon a Change of Control of
the Company.

            (b) If (i) the employment of the Employee is terminated by the
Company (or successor thereto) without Serious Cause or (ii) the Employee
terminates employment with the Company (or successor thereto) for Good Reason,
within the period commencing on the date that a Change of Control is formally
proposed to the Company's Board of Directors and ending on the first anniversary
of the date onwhich such Change of Control occurs, then the Employee shall be
entitled to receive (in lieu of the benefits described in Section 11): (1) any
accrued but unpaid salary, (2) a lump sum payment equal to two times such
Employee's annual base salary as of the date of termination, (3) any accrued but
unpaid bonus from a prior fiscal year, (4) reimbursement of business expenses
incurred prior to the date of termination, (5) travel and housing allowances
under Section 9 for one year following the date of termination, (6) reasonable
relocation expenses from Bermuda to the United States, together with (7) a
gross-up of any income taxes payable by the Employee by reason of such payments
occurring in connection with a change of control.

            The Employee shall not be entitled to any benefits or other
entitlements under this section unless a Change of Control actually occurs.

            (c) A "Change of Control" of the Company shall be deemed to have
occurred if (i) any "person" (as such term is defined in Section 3(a)(9) and as
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or
any fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, an underwriter temporarily holding securities
pursuant to an offering of such securities or a corporation owned, directly or
indirectly, by shareholders of the Company in substantially the same proportion
as their ownership of the Company, is or becomes the "beneficial owner" (as
defined in rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities ("Voting Securities"); (ii) during
any period of not more than two years, individuals who constitute the Board of
Directors of the Company (the "Board") as of the beginning of the period and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause (i) or
(iii) of this sentence) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at such
time or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; (iii) the shareholders of
the Company approve a merger, consolidation or reorganization or a court of
competent jurisdiction approves a scheme of arrangement of the Company,


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other than a merger, consolidation, reorganization or scheme of arrangement
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 50% of the combined voting power of the Voting Securities of
the Company or such surviving entity outstanding immediately after such merger,
consolidation, reorganization or scheme of arrangement; or (iv) the shareholders
of the Company approve a plan of complete liquidation of the Company or any
agreement for the sale of substantially all of the Company's assets.

Section: 13. Agreement Not to Compete.

            (a) The Employee hereby covenants and agrees that at no time during
the Term of Employment nor for a period of (i) one year immediately following
the termination of the Employee's employment by the Company without Serious
Cause or by the Employee for Good Reason or (ii) two years following the
termination of the Employee's employment for any other reason, will he for
himself or on behalf of any other person, partnership, company or corporation,
directly or indirectly, acquire any financial or beneficial interest in (except
as provided in the next sentence) any entity engaged in any business similar to
the business engaged in by the Company or the Operating Company at the time of
such termination of employment. Notwithstanding the preceding sentence, the
Employee shall not be prohibited from owning less than one (1%) percent of any
publicly traded corporation, whether or not such corporation is in competition
with the Company or the Operating Company. Additionally, the Employee will not
become employed by any non-United States entity engaged in a similar business.
Furthermore, the employee will not enter into competition with the Company or
Operating Company for a period of two years following termination. For purposes
of this Employment Agreement, "competition" will mean soliciting business from
any clients of the Company and/or operating Company. Clients of the Company
and/or operating Company are those companies for whom the Company and/or
Operating Company has reinsured business during the Employee's period of
employment under this agreement.

            (b) The Employee hereby covenants and agrees that, at all times
during the Term of Employment and for a period of two years immediately
following the termination thereof, the Employee shall not directly or indirectly
employ or seek to employ any person or entity employed at that time by the
Company or any of its subsidiaries, or otherwise encourage or entice such person
or entity to leave such employment.

            (c) This Section 13 shall be null and void if the Board of Directors
elects to discontinue permanently Company operations, or, upon the date the
Company's arbitrations with MetLife and Hartford Life Insurance Company have
been withdrawn, resolved or ended, and the Company or any of its subsidiaries
has not announced intentions to engage in assuming life reinsurance.

Section: 14. Confidential Information.

            (a) The Employee agrees to keep secret and retain in the strictest
confidence all confidential matters which relate to the


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Company or any affiliate of the Company, including, without limitation, customer
lists, client lists, trade secrets, pricing policies and other business affairs
of the Company and any affiliate of the Company learned by him from the Company
or any such affiliate or otherwise before or after the date of this Agreement,
and not to disclose any such confidential matter to anyone outside the company
or any of its affiliates, whether during or after his period of service with the
Company, except as may be required in the course of a legal or governmental
proceeding. Upon request by the Company, the Employee agrees to deliver promptly
to the Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company's or any
affiliate's business and all property of the Company or any affiliate associated
therewith, which he may then possess or have under his control.

Section: 15. Remedy.

            (a) Should the Employee engage in or perform, either directly or
indirectly, any of the acts prohibited by Sections 13 or 14 hereof, it is agreed
that the Company shall be entitled to full injunctive relief, to be issued by
any competent court of equity, enjoining and restraining the Employee and each
and every other person, firm, organization, association, or corporation
concerned therein, from the continuance of such violative acts. The foregoing
remedy available to the Company shall not be deemed to limit or prevent the
exercise by the Company of any or all further rights and remedies which may be
available to the Company hereunder or at law or in equity.

            (b) The Employee acknowledges and agrees that the covenants
contained in this Agreement are fair and reasonable in light of the
consideration paid hereunder, and the invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof. If any provision hereof is
determined to be invalid or unenforceable by a court of competent jurisdiction,
the Employee shall negotiate in good faith to provide Company with protection as
nearly equivalent to that found to be invalid or unenforceable and if any such
provision shall be so determined to be invalid or unenforceable by reason of the
duration or geographical scope of the covenants contained therein, such duration
or geographical scope, or both, shall be considered to be reduced to a duration
or geographical scope to the extent necessary to cure such invalidity.

Section: 16. Successors and Assigns.

            This Agreement shall be binding upon and inure to the benefit of the
Employee, his heirs, executors, administrators and beneficiaries, and the
Company, the operating company and their successors and assigns.


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Section: 17. Governing Law.

            This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to rules
relating to conflicts of law.

Section: 18. Entire Agreement.

            This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements
as to employment of the Employee. This Agreement cannot be amended, changed,
modified or terminated without the written consent of the parties hereto.

Section: 19. Waiver of Breach.

            The waiver by either party of a breach of any term of this Agreement
shall not operate nor be construed as a waiver of any subsequent breach thereof.

Section: 20. Notices.

            Any notice, report, request or other communication given under this
Agreement shall be written and shall be effective upon delivery when delivered
personally, by Federal Express or by fax.

            Unless otherwise notified by any of the parties, notices shall be
sent to the parties as follows:

            To Employee:                Robert Reale
                                        "March Hill"
                                        40 Harrington Hundreds Road
                                        Smiths, FL 06
                                        Bermuda

            To the Company:             Annuity and Life Reassurance, Ltd.
                                        c/o Conyers Dill & Pearman
                                        Clarendon House
                                        2 Chuch Street
                                        Hamilton HM-CX

Section: 21. Severability.

            If any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.

Section: 22. Counterparts.

            This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.


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            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as on the day and year first above written.


                                        /s/ Robert Reale
                                        ----------------------------------------
                                            Robert Reale


                                        By: /s/ John F. Burke
                                        ----------------------------------------
                                            Annuity and Life Re (Holdings), Ltd.


                                        By: /s/ John F. Burke
                                        ----------------------------------------
                                            Annuity and Life Reassurance, Ltd.


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