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                                                                    EXHIBIT 10.5

                                SERVICE AGREEMENT

THIS AGREEMENT is made of the first day of January, 2002

BETWEEN:

Montpelier Reinsurance Ltd., whose registered office is situate at Clarendon
House, 2 Church Street, Hamilton Bermuda (the "Company"); and

Thomas George Story Busher, 39 Tankfield Hill PagetPG06, Bermuda (the
"Executive").

WHEREAS the parties desire to record the terms and conditions upon which the
Executive is employed by the Company.

NOW THEREFORE in consideration of the mutual covenants and promises herein
contained

IT IS HEREBY AGREED as follows:

1.       Interpretation

1.1      In this Agreement unless the context otherwise requires the following
         words and expressions shall have the following meanings:

         this "Agreement" means this service agreement and includes all
         schedules hereto;

         the "Board" means the board of directors of the Company;

         the "Companies Act" means the Companies Act 1981;

         "Pounds" or "(pound)" means British Pounds Sterling;

         "Group Company" means and includes any company which is from time to
         time a holding company (as defined by Section 86 of the Companies Act,
         but irrespective of whether it is a Bermuda company or an overseas
         company) of the Company, a subsidiary company (as so defined) of the
         Company, a subsidiary company (as so defined) of a holding company (as
         so defined) of the Company or in which the Company owns at least 50% of
         the issued share capital;

         the "Parties" means the parties to this Agreement;

1.2      In this Agreement unless the context otherwise requires:

         1.2.1    references to statutory provisions shall be construed as
                  references to those provisions as amended or re-enacted or as
                  their application is modified by other provisions from time to
                  time and shall include references to any provisions of which
                  they are re-enactments (whether with or without modification);
                  and


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         1.2.2    references to clauses and schedules are references to clauses
                  hereof and schedules hereto; references to sub-clauses or
                  paragraphs are, unless otherwise stated, references to
                  sub-clauses of the clause or paragraphs of the schedule in
                  which the reference appears;

         1.2.3    references to the singular shall include the plural and vice
                  versa and references to the masculine shall include the
                  feminine and/or neuter and vice versa; and

         1.2.4    references to persons shall include companies, partnerships,
                  associations and bodies of persons, whether incorporated or
                  unincorporated.

2.       Appointment

         The Company hereby appoints the Executive and the Executive hereby
         agrees to serve the Company as Chief Operating Officer subject to the
         terms and conditions hereinafter contained.

3.       Term

         The appointment of the Executive hereunder began on 1 January, 2002 and
         shall continue unless and until terminated in accordance with the
         provisions hereinafter contained.

4.       Duties and Responsibilities

         During the continuance of his employment hereunder:

4.1      The Executive shall perform such duties and exercise such powers in
         relation to the business of the Company or of any Group Company as may
         from time to time reasonably be assigned to or vested in him by the
         Board and shall give to the Board such information regarding the
         affairs of the Company and any Group Company as it shall require and at
         all times and in all respects conform to and comply with the reasonable
         directions and regulations made by the Board. The Executive agrees that
         he shall not conduct any business activity on behalf of the Company in
         the United Kingdom other than marketing the Company's products and save
         to the extent provided under any contract with any other Group Company.
         The Executive shall perform such services for any Group Company
         (without further remuneration except as otherwise agreed) and shall
         accept such offices in any such Group Companies as the Board may
         reasonably require.

4.2      The Executive shall well and faithfully serve the Company and the Group
         Companies and use his best endeavours to promote, develop and extend
         their businesses and interests giving at all times the full benefit of
         his knowledge, expertise, technical skill and ingenuity.

4.3      Save that

         (i)      the Executive has an interest in a sole tradership trading as
                  Capitor.com;


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         (ii)     that that business is not of a similar nature to that of the
                  Company, nor does it compete with the Company's business; and

         (iii)    the Company consents to the Executive's engagement with
                  Capitor.com;

         the Executive shall not without the consent of the Board directly or
         indirectly engage in any other business or be concerned or interested
         in any other business of a similar nature to or which would or might
         compete with the business for the time being carried on by the Company
         or any Group Company save that he may (but without prejudice to clause
         4.2) be interested as a holder or beneficial owner of not more than 5%
         of any class of stock, shares or debentures in any company (other than
         the Company, in which case, such limit shall not apply) whose stock,
         shares or debentures are listed or dealt in on an appointed stock
         exchange (as defined in the Companies Act).

4.4      The Company reserves the right to require the Executive not to attend
         work/and or not to undertake all or any of his duties hereunder during
         a period of up to 12 months immediately preceding the termination of
         his employment, provided always that the Company shall continue to pay
         the Executive's salary and contractual benefits for such period. This
         Clause 4.4 shall not affect the general right of the Company to suspend
         the Executive for good cause.

5.       Remuneration and Reimbursement

5.1      The Company shall pay to the Executive by way of remuneration for his
         services hereunder a salary at the rate (subject as hereinafter
         provided) of US$300,000 per annum. Such salary shall be inclusive of
         any director's fees payable to the Executive by the Company or any
         Group Company and accordingly either the Executive shall pay over or
         procure to be paid over to the Company all such fees received or
         receivable by him or his remuneration hereunder shall be reduced pro
         tanto. The said salary shall be payable by equal monthly instalments in
         arrears on the day appointed by the Board for the payment of employees'
         salaries or pro rata where the Executive is only employed hereunder
         during part of the month. The Compensation Committee of the Company's
         Board, subject to ratification by the Board, may increase or reduce the
         Executive's salary on each anniversary of the date of this Agreement,
         but not below the amount of the Executive's starting salary.

5.2      The Company shall also pay to the Executive all reasonable travelling
         hotel and other out-of-pocket expenses which are properly incurred by
         him in or about the performance of his duties hereunder and for which
         vouchers (if so required) are provided to the reasonable satisfaction
         of the Board.

5.3      The Company will reimburse the Executive for up to US $50,000 in
         expenses incurred by the Executive in establishing a residence in
         Bermuda, including, as applicable, cost of furnishings, transportation
         expenses for a 20ft/40ft container (or equivalent capacity) from the
         United Kingdom to Bermuda provided that the said expenses have been
         approved in advance. The Company will pay for 8 business-class
         round-trip flights to the United Kingdom per annum.


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5.4      The Executive shall be entitled to participate in:

         (i)      the Company's medical and Dental Plan;

         (ii)     a suitable pension arrangement in accordance with Bermuda law;
                  and

         (iii)    any other employment benefit plans generally available to
                  executives in the Company of the Executive's stature, to the
                  extent not duplicative of benefits otherwise provided by the
                  Company.

5.5      During the Executive's appointment under this Agreement, he shall
         receive a housing allowance of $7,500 per month, plus a tax gross-up
         payment to reimburse the Executive for any income taxes paid by the
         Executive on the allowance.

6.       Normal Hours and Holidays

         The Executive shall conform to such hours of work as may from time to
         time reasonably be required of him and shall not be entitled to receive
         any additional remuneration for work outside his normal hours. In
         addition to the usual public holidays the Executive shall, subject as
         mentioned in the Schedule, be entitled without loss of remuneration to
         25 days holiday in each year to be taken at such time or times as may
         be approved by the Chief Executive Officer of the Company. Any
         entitlement to holiday remaining at the end of any year may be carried
         forward to the next succeeding year but no further. The entitlement to
         holiday (and on termination of employment holiday pay in lieu of
         holiday) accrues pro rata throughout each year, provided that fractions
         of days shall be disregarded in calculating entitlement to holiday or
         payment in lieu of holiday.

7.       Confidentiality

7.1      The Executive shall not either during the continuance of his employment
         hereunder (otherwise than in the proper performance of his duties
         hereunder) or at any time after the determination thereof divulge to
         any person whomsoever and shall use his reasonable endeavours to
         prevent the publication or disclosure of any trade secret or other
         confidential information concerning the business, finances, accounts,
         dealings, transactions or affairs of the Company or any Group Company
         or of any of their respective clients entrusted to him or arising or
         coming to his knowledge during the course of his employment hereunder
         or otherwise.

7.2      The Executive shall upon the termination of his employment hereunder
         immediately deliver up to the Company all fee schedules, lists of
         clients, correspondence and other documents, papers and property
         belonging to the Company or any Group Company or related to any of the
         matters referred to in clause 7.1 which may have been prepared by him
         or have come into his possession in the course of his employment
         hereunder and shall not retain any copies thereof.


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8.       Change of Status

8.1      If, before the expiration or determination of this Agreement, the
         employment of the Executive hereunder shall be terminated by reason of
         the liquidation of the Company or for the purpose of reconstruction or
         amalgamation, and he shall be offered employment with any concern or
         undertaking resulting from such reconstruction or amalgamation on terms
         and conditions not less favourable (financially and in personal status)
         than the terms of this Agreement, then he shall have no claim against
         the Company in respect of the termination of his employment hereunder
         save in respect of accrued benefits.

8.2      Unless this agreement has been terminated under clause 9, if for any
         reason the Executive shall either:

         8.2.1    at the Company's request resign as a director of the Company
                  or any Group Company; or

         8.2.2    be removed from office as a director of the Company or any
                  Group Company;

         then, notwithstanding his so ceasing to be a director, this Agreement
         shall not automatically terminate and thereupon (and without any claim
         against the Company in respect of such loss of office) the Executive's
         employment hereunder shall continue for the remaining period of this
         Agreement and all the terms and conditions of this Agreement shall with
         the necessary variations apply to the Executive's employment but in any
         event, the Executive's basic annual salary will not at any time be less
         than the Executive's starting salary under this agreement.

9.       Termination

9.1      This Agreement shall be subject to termination by the Company by
         summary notice in writing:

         9.1.1    if the Executive shall become of unsound mind or be or become
                  a patient for the purpose of any statute relating to mental
                  health;

         9.1.2    if the Executive shall at any time be prevented by illness or
                  accident from performing his duties for a period of 6
                  consecutive months or if he shall be absent from his duties by
                  reason of illness or accident for more than 180 working days
                  in any consecutive twelve months (provided that any such
                  periods may be extended at the sole discretion of the Board);

         9.1.3    other than by written notice, if the Executive terminates his
                  employment for any reason prior to the expiration of this
                  Agreement other than in accordance with the term 9.2(b) herein
                  or if the Executive shall have failed or neglected efficiently
                  and diligently to discharge his duties hereunder having
                  received a written warning for the misconduct within the
                  previous 6 months or shall have committed any serious breach
                  of his obligations hereunder or shall have been guilty of
                  conduct tending to bring himself or the Company or any Group
                  Company into disrepute or calculated or likely to affect
                  prejudicially the interests of the Company or any Group


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                  Company or shall have committed an act of bankruptcy or
                  compounded with his creditors generally.

9.2      Subject to 9.1 above, this Agreement shall be subject to termination at
         any time by notice:

         (a)      if by the Company, then upon 12 months' written notice; or

         (b)      if by the Executive upon 6 months' written notice.

         The Company reserves the right to terminate the Executive's appointment
         by payment in lieu of notice.

9.3      The termination by the Company of this Agreement shall be without
         prejudice to any claim which the Company may have for damages arising
         from any breach thereof by the Executive giving rise to such
         termination.

9.4      Until this Agreement is terminated pursuant to clause 9.1 or clause
         9.2, the Executive shall remain entitled to receive his salary payable
         hereunder in full notwithstanding illness or other incapacity.

10.      Consequence of Termination

         Upon the termination of this Agreement howsoever arising, the Executive
         shall at any time or from time to time thereafter upon the request of
         the Company resign, without claim for compensation for loss of office,
         as a director of the Company and such offices held by him in any of the
         Group Companies as may be so requested and should he fail to do so, the
         Company is hereby irrevocably authorised to appoint some person in his
         name and on his behalf to sign and do any documents or things necessary
         or requisite to give effect thereto. Notwithstanding anything else to
         the contrary herein, should the Board determine that this Agreement be
         terminated pursuant to section 9.1.1 or section 9.1.2, the Executive
         shall continue to receive his salary for a period of 12 months
         following the termination of this Agreement. If this Agreement is
         terminated by the Company as referenced in 9.1.3, all payments under
         this Agreement shall immediately cease and the Company shall have no
         further obligations to the Executive arising hereunder.

11.      Non-Competition

11.1     Since the Executive has obtained in the course of his employment prior
         to the date hereof and is likely to obtain in the course of his
         employment hereunder knowledge of the trade secrets and also other
         confidential information in regard to the business of the Company and
         of any Group Company with which he becomes associated, the Executive
         hereby agrees with the Company that in addition to the restrictions
         contained in clause 4.3 he will not in Bermuda, the United Kingdom or
         the European Economic Community:

         11.1.1   during the period of 12 months following the termination of
                  his employment hereunder (howsoever caused) either on his own
                  account or for any other person, firm or company directly or
                  indirectly be engaged in or concerned with any


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                  business or undertaking which is engaged in or carries on in
                  Bermuda, the United Kingdom, the European Economic Community
                  any insurance business which competes or seeks to compete with
                  the business carried on by the Company or any other Group
                  Company at the date of termination.

         11.1.2   during the period of 12 months following the termination
                  aforesaid either on his own account or for any other person,
                  firm or company directly or indirectly solicit, interfere with
                  or endeavour to entice away from the Company or any Group
                  Company the custom of any person, firm or company who at the
                  date of termination aforesaid or who in the period of 12
                  months immediately prior to such date was a customer or client
                  of or in the habit of dealing with the Company or any Group
                  Company or who at such date was to his knowledge negotiating
                  with the Company or any Group Company in relation to all or
                  part of its business.

         11.1.3   during the period of 12 months following the termination
                  aforesaid either on his own account or for any other person,
                  firm or company solicit the services of or endeavour to entice
                  away from the Company or any Group Company (whether or not
                  such person would commit any breach of his contract of
                  employment or engagement by reason of leaving the service of
                  such company) nor shall the Executive knowingly employ or aid
                  or assist in or procure the employment by any other person,
                  firm or company of any such person.

11.2     While the restrictions aforesaid are considered by the Parties to be
         reasonable in all the circumstances it is agreed that if any of such
         restrictions shall, taken together, be adjudged to go beyond what is
         reasonable in all the circumstances for the protection of the
         legitimate interests of the Company or any Group Company but would be
         adjudged reasonable if part of the wording thereof were deleted or
         modified the said restrictions shall apply with such words deleted or
         modified.

11.3     The Executive hereby agrees that he will at the request and cost of the
         Company enter into a direct agreement or undertaking with any Group
         Company whereby he will accept restrictions and provisions
         corresponding to the restrictions and provisions herein contained (or
         such of them as may be appropriate in the circumstances) in relation to
         such services and such area and for such period as such company or
         companies may reasonably require for the protection of its or their
         legitimate interests provided that the terms of such restrictions and
         provisions will not be more onerous than the restrictions and
         provisions of this agreement.

12.      Untrue Statements

         The Executive shall not knowingly at any time make any untrue statement
         in relation to the Company or any Group Company and in particular shall
         not after the determination of his employment hereunder wrongfully
         represent himself as being employed by or connected with the Company or
         any Group Company.


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13.      Schedule

         The provisions set out in the schedule hereto shall apply as if
         incorporated in this Agreement.

14.      Delegation

         The Company may at any time and from time to time delegate its power
         and authority under this Agreement to any Group Company and such
         delegation (or the revocation thereof) shall be effective upon the
         Company's giving written notice of the same to the Executive.

15.      Notices

         Notices may be given by either Party by pre-paid first class post or by
         hand delivery addressed to the other Party at (in the case of the
         Company) its registered office for the time being and (in the case of
         the Executive) his last known address. Any such notice given by post
         shall be deemed to have been served on the second week day after
         despatch (public holidays excepted) and any notice so given by hand
         shall be deemed to have been served when delivered if delivered during
         normal business hours or, if delivered outside such hours, at the next
         time after delivery when normal business hours commence.

16.      Miscellaneous

         The expiration or termination of this Agreement howsoever arising shall
         not operate to affect such of the provisions hereof as are expressed or
         intended to remain in full force and effect notwithstanding such
         termination.

16.1     If any of the clauses, conditions, covenants or restrictions of this
         Agreement or any deed or document emanating from it shall be found to
         be void but would be valid if some part thereof were deleted or
         modified, then such clause, condition, covenant or restriction shall
         apply with such deletion or modification as may be necessary to make it
         valid and effective.

16.2     This Agreement shall be binding and enure for the benefit of the
         successors of the Parties but shall not be assignable.

16.3     This Agreement (together with any documents referred to herein)
         constitutes the whole agreement between the Parties relating to its
         subject matter.

16.4     The headings in this Agreement are inserted for convenience only and
         shall not affect the construction of this Agreement.

16.5     This Agreement may be executed in counterparts each of which when
         executed and delivered shall constitute an original but all such
         counterparts together shall constitute one and the same instrument.


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16.6     No provision in this Agreement may be amended unless such amendment is
         agreed to in writing, signed by the Executive and by a duly authorised
         officer of the Company. No waiver by either Party of any breach by the
         other Party of any condition or provision of this Agreement to be
         performed by such other Party shall be deemed a waiver of a similar or
         dissimilar condition or provision at the same or any prior or
         subsequent time. Any waiver must be in writing and signed by the
         Executive or a duly authorised officer of the Company, as the case may
         be.

16.7     This Agreement shall be governed by and construed in accordance with
         the laws of Bermuda and the Parties hereby irrevocably submit to the
         non-exclusive jurisdiction of the courts of Bermuda.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.

SIGNED by                                         )
on behalf of the Montpelier Re Holdings Ltd.      )
in the presence of:                               )



              /s/
-------------------------------------
Witness


SIGNED by Thomas George Story Busher              )
in the presence of:



  /s/ Thomas George Story Busher
-------------------------------------



               /s/
-------------------------------------
Witness




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                                  THE SCHEDULE

1.       Hours of Work: The Executive shall conform to such hours of work as may
         reasonably be required of him for the proper performance of his duties
         hereunder and shall not be entitled to receive any additional
         remuneration for work outside his normal hours.

2.       Medical and Other Insurance: The Executive will be entitled to
         participate in the Company medical insurance plan and other insurance
         plans from time to time subject to the provisions of the company's
         insurance plans in effect at the time.

3.       Pension Provisions: The Executive will be entitled to participate in
         the Company's pension plan from time to time subject to the provisions
         of such pension plan in effect at the time.

4.       Incentive Plans: The Executive will be entitled to participate in the
         Montpelier Annual Incentive Plan, the Montpelier Long-Term Incentive
         Plan and any other incentive plan for which the Executive is eligible,
         from time to time subject to the provisions of such plans in effect at
         the time.

5.       Policies: The Executive shall adhere to the Company's policies and
         procedures, a copy of which has been given to the Executive. It
         contains details of Company policies along with descriptions of
         disciplinary and grievance procedures, dress code and other policies
         relevant to the Executive's employment. The Company reserves the right
         to vary the policies from time to time.


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