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                                                                   Exhibit 10.1



                                                                    Page 1 of 7



                              COMMUTATION AGREEMENT

This Agreement is made effective as of September 30, 2004 (the "Commutation
Date") by and between PXRE Reinsurance Company, PXRE Reinsurance Ltd. and PXRE
Group Ltd. (hereinafter, separately and collectively, referred to as the
"Reinsured") and Select Reinsurance Ltd. (hereinafter referred to as the
"Reinsurer") and such entities collectively hereinafter, (the "parties").

         WHEREAS, the parties hereto desire to effect a full and final
commutation and release of all agreements and other obligations between the
parties, whether written or verbal, including without limitation, the
reinsurance agreements set forth in Schedule A hereto, (all such contracts and
obligations hereunder the "Commuted Contracts"); other than those set forth in
Schedule B hereto (the "Non-Commuted Contracts") upon the terms and conditions
set forth below:

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

1. The Reinsurer shall pay to PXRE Reinsurance Ltd., as agent for the Reinsured,
upon the Effective Date as defined in Schedule C, the amount of $23,054,154
(hereinafter referred to as the "Funds") for commutation of the Commuted
Contracts. The payment of the Funds shall constitute the "Commutation Payment",
which amount represents the mutually agreed upon amount to completely discharge
all liabilities and obligations of the parties in respect of the Commuted
Contracts.

The Commutation Payment shall be affected in accordance with the arrangements
set out in Schedule C to this Agreement.

The Reinsured shall, simultaneously with the giving of instructions for the
payment referred to in Schedule C, authorize the prompt release to the Reinsurer
of all amounts in the United States based Regulation 114 Trust account at JP
Morgan Chase, account number 311699 (the "Chase Trust"), in excess of
$6,110,665, which is the collateral requirement for the Aggregate Excess of Loss
Reinsurance Agreement, dated July 1, 2001, between PXRE Reinsurance Company and
Select Reinsurance Ltd. which is listed in Schedule B to this Agreement as a
Non-Commuted Contract.

The Reinsured shall, simultaneously with the giving of instructions for the
payment referred to in Schedule C, authorize the prompt release to the Reinsurer
of all amounts in the Bermuda based Patriot 2002 Trust Account, account number
102-08097 (Bear Stearns) (the Patriot 2002 Trust"), in excess of $22,373,000,
which is the collateral requirement for the Specific Retrocessional Aggregate
Excess Contract, dated as of June 30, 2001, by and between PXRE Reinsurance
Company and Select Reinsurance Ltd. which is listed in Schedule B to this
Agreement as a Non-Commuted Contract.

The Reinsured shall, simultaneously with the giving of instructions for the
payment referred to in Schedule C, authorize the prompt release to the Reinsurer
of all amounts in the Bermuda based Patriot 2004 Trust Account (Appleby Trust
(Bermuda) Ltd. client trust account number 1510 803 225) (the "Patriot 2004
Trust"), in excess of $10,000,000, which is the collateral requirement for the
Excess of Loss Reinsurance Treaty, dated as of April 1, 2004, by and between
PXRE Reinsurance Ltd. and Select Reinsurance Ltd. which is listed in Schedule B
to this Agreement as a Non-Commuted Contract.


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                                                                    Page 2 of 7


All payments to the Reinsurer hereunder shall be made by wire transfer to the
following account of the Reinsurer.

The Bank of Bermuda Limited
6 Front Street
Hamilton
Bermuda

Account Name: Select Reinsurance Ltd.
Account Number: 1010 730206

2. The Reinsured and Reinsurer do hereby irrevocably and unconditionally release
and forever discharge each other, and their affiliates, parents, subsidiaries
and other related or associated companies (the "Entities"), and the Entities'
officers, directors, agents and shareholders, and their heirs, executors,
administrators, successors, predecessors and assigns from all past, present and
future obligations, losses, offsets, actions, causes of action, suits, debts,
sums of money, accounts, damages, judgments, claims, demands or other liability
whatsoever, known or unknown, at law or in equity, in contract or in tort,
arising under, or in connection with the Commuted Contracts, including, without
limitation, any obligation for loss, loss adjustment expenses, reinsurance
premiums due, reinsurer's margin, commutation amounts, termination amounts,
profit sharing, adjustments, offsets, taxes and any other obligation which might
be claimed or demanded by reason of any matter whatsoever arising out of, or in
connection with, the Commuted Contracts; it being the intention of the parties
that this release operate as a full and final settlement of each party's current
and future obligations and liabilities to the other parties hereto with respect
to the Commuted Contracts and discharge of any claim by one party against any
other party whatsoever arising out of, or in connection with, the Commuted
Contracts. For the avoidance of doubt, this Agreement shall not release, modify
or affect any party's obligations under the Non-Commuted Contracts.

3. REPRESENTATIONS AND WARRANTIES. Each of the parties hereto expressly
severally warrants and represents to each of the other parties hereto that it is
a corporation in good standing in its respective place of domicile; that the
execution, giving effect to and performance of its obligations under this
Agreement is fully authorized by it; that the person executing this Agreement
has the necessary and appropriate authority to do so; that this Agreement
constitutes a valid and binding obligation of it (except as limited by
applicable bankruptcy or other laws for the protection of debtors); that it
derives a benefit and will not assert a lack of benefit by reason of its
execution of this Agreement; that there are no existing or pending agreements,
transactions or negotiations to which it is a party that would render this
Agreement or any part thereof void, avoidable or unenforceable; that there is no
authorization, consent or approval of any government or regulatory entity which
is required to make this Agreement valid and binding upon it; that no claim or
account being paid or settled hereunder has previously been assigned or
transferred to another person or entity; that no order has been made or petition
presented or other step taken for it to be wound up or for the appointment of a
liquidator, provisional liquidator, receiver, administrator or other like office
holder under the laws of any jurisdiction whatsoever; and that the execution,
giving effect to and performance of its obligations under, this Agreement does
not contravene or fail to comply with a direction given by any governmental
authority having regulatory authority over it.

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                                                                    Page 3 of 7


4. GOVERNING LAW. This Agreement shall be interpreted under and be governed by
the laws of New York, without regard to any choice of law principles that would
apply the law of any other jurisdiction.

5. ENTIRE AGREEMENT. This Agreement shall constitute the entire Agreement
between the parties with respect to the commutation of the Commuted Contracts
and may not be amended orally or in writing except by written addendum signed by
each of the parties hereto.

6. NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and shall
inure solely to the benefit of the parties hereto and their respective assigns;
it being the intent of the parties not to create any third party beneficiaries
hereunder.

7. NO RELIANCE. The parties acknowledge that they have entered into this
Agreement in reliance upon their own independent investigation and analysis and
not on the basis of any representation or warranty by the other parties hereto
other than those representations and warranties set forth above.

8. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed to be an original, but all of
which shall constitute one and the same Agreement.

9. NO WAIVER. The failure of the parties to enforce any provision of this
Agreement shall not be construed as a waiver of such provision or any other
provision of this Agreement. No waiver of any provision of this Agreement shall
be deemed a waiver of any of its other terms, nor shall such waiver constitute a
continuing waiver.

10. ILLEGALITY. In the event that any part of this Agreement should for any
reason become or be found to be null, void, illegal or otherwise unenforceable,
it shall be struck out to the extent that it is so null, void, illegal or
unenforceable in the jurisdiction or jurisdictions affected, and the remaining
provisions of this Agreement shall remain in full force and effect; provided
that the part struck does not leave any of the parties without the essence of
their bargain and if so, the parties shall negotiate in good faith to replace
such part with provisions that will restore such essential bargain. In the event
that any court of competent jurisdiction renders a final, non-appealable order
or ruling declaring this Agreement null and void in its entirety, it is mutually
agreed by the Reinsured and the Reinsurer that this Agreement shall be
immediately rescinded and that each of the parties hereto shall be restored to
the position it was in just prior to the making of this Agreement.


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                                                                    Page 4 of 7


IN WITNESS WHEREOF, the Reinsurer and the Reinsured have caused this Agreement
to be executed by their duly authorized representatives.


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PXRE REINSURANCE LTD.                        SELECT REINSURANCE LTD.

By: /s/ Robert P. Myron                      By:  /s/ Brant Kizer
    -------------------------------               -----------------------------
Title: SVP & CFO                             Title: President
Date:  October 20, 2004                      Date:  October 19, 2004

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PXRE REINSURANCE COMPANY

By: /s/Bruce J. Byrnes
    -------------------------------
Title: General Counsel
Date:  October 20, 2004

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PXRE GROUP LTD.

By: /s/  Robert P. Myron
    -------------------------------
Title: SVP and Treasurer
Date:  October 20, 2004

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                                                                    Page 5 of 7


                                   SCHEDULE A

                         SCHEDULE OF COMMUTED CONTRACTS


1.       Amended And Restated Facultative Obligatory Quota Share Retrocessional
         Agreement by and between Select Reinsurance Ltd., PXRE Reinsurance
         Company and PXRE Reinsurance Ltd. dated October 1, 1997 and all
         amendments, addendums and letter agreements related thereto;

2.       Variable Quota Share Retrocessional Agreement by and between Select
         Reinsurance Ltd., PXRE Reinsurance Company and PXRE Reinsurance Ltd.
         dated April 1, 1997 and all amendments, addendums and letter agreements
         related thereto;

3.       Aggregate Excess of Loss Retrocessional Reinsurance Agreement, dated as
         of February 19, 2001, by and between PXRE Reinsurance Ltd, and Select
         Reinsurance Ltd. (aka, the Kemper Contract);

4.       The Specific Retrocessional Quota Share Agreement, dated as of January
         1, 2004, by and between PXRE Reinsurance Ltd. and Select Reinsurance
         Ltd. (aka, the Amlin Contract);

5.       Specific Retrocessional Aggregate Excess Contract, dated as of January
         3, 2002, by and between PXRE Reinsurance Company and Select Reinsurance
         Ltd. (aka, the 2002 Tower Contract)

6.       Section A of the Reinsurance Contract between Select Reinsurance Ltd.
         and PXRE Group Ltd., dated as of June 29, 2000, covering Realm National
         Insurance Company Treaty and Royal Insurance Co. Risk Excess
         Treaty;

7.       Section A of the Reinsurance Contract between Select Reinsurance Ltd.
         and PXRE Group Ltd., dated of June 29, 2000, covering the Royal
         Insurance Treaty and Kemper Aggregate Treaty.

8.       Retrocession contract, by and between PXRE Reinsurance Company and
         Select Reinsurance Ltd., dated July 10, 2001, and all amendments,
         addendums and letter agreements thereto;

9.       Retrocession contract, by and between PXRE Reinsurance Company and
         Select Reinsurance Ltd., dated January 1, 2002, and all amendments,
         addendums, and letter agreements thereto;

10.      Retrocession contract, by and between PXRE Reinsurance Ltd. and Select
         Reinsurance Ltd., dated January 1, 2003 and all amendments, addendums
         and letter agreements thereto.






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                                                                    Page 6 of 7


                                   SCHEDULE B

                       SCHEDULE OF NON-COMMUTED CONTRACTS

1.       Excess of Loss Reinsurance Treaty, dated as of April 1, 2004, by and
         between PXRE Reinsurance Ltd. and Select Reinsurance Ltd.;

2.       Specific Retrocessional Aggregate Excess Contract, dated as of June 30,
         2001, by and between PXRE Reinsurance Company and Select Reinsurance
         Ltd. (aka, the 2001 Tower Contract)

3.       Aggregate Excess of Loss Reinsurance Agreement, dated July 1, 2001,
         between PXRE Reinsurance Company and Select Reinsurance Ltd.




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                                                                    Page 7 of 7

                                   SCHEDULE C

                               COMMUTATION PAYMENT

1.       The effective date of all payments referred to in this Schedule, which
         together constitute the Commutation Payment, shall be October 26, 2004.

2.       The Reinsurer and to the extent required, the Reinsured, shall provide
         instructions to the Trustees of the Chase Trust, Patriot 2002 Trust and
         Patriot 2004 Trust, as required, to facilitate the payments referred to
         below.

3.       PXRE Reinsurance Company, as beneficiary, shall withdraw the sum of
         $19,000,000 from the Chase Trust by wire transfer to the account
         indicated below.

4.       PXRE Reinsurance Ltd., as beneficiary, shall withdraw the sum of
         $449,511 from the Patriot 2002 Trust by wire transfer to the account
         indicated below.

5.       PXRE Reinsurance Ltd., as beneficiary, shall withdraw the sum of
         $3,000,000 from the Patriot 2004 Trust by wire transfer to the account
         indicated below.

6.       The Reinsurer shall pay PXRE Reinsurance Ltd., as agent for the
         Reinsured, the sum of $604,643. Payment shall be made by wire transfer
         to the account indicated below.

         Credit To:                         JP Morgan Chase
                                            270 Park Avenue
                                            New York, NY 10017
                                            ABA #:  021000021
         Further Credit to:                 JPMorgan Chase Bank, New York
                                            PXRE REINSURANCE LTD.
                                            PXRE House
                                            110 Pitts Bay Road
                                            Pembroke HM 08
                                            Bermuda
         DDA Account                        323-957-080