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                                                                    Exhibit 10.2


                                SERVICE AGREEMENT

THIS AGREEMENT is made the 12th day of December, 2001

BETWEEN:

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

Anthony Taylor of Strathisla, 3 Cap's Lane, Pitts Bay Road, Pembroke HM 08,
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:

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      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

      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 Executive Officer and Chief Underwriting
      Officer subject to the terms and conditions hereinafter contained.

3.    Term

      The appointment of the Executive hereunder shall (subject as hereinafter
      provided) be for the period from the 1st day of January, 2002, through the
      31st day of December, 2004, unless and until terminated in accordance with
      the provisions hereinafter contained unless both parties agree in writing
      to extend the contract for a period to be determined.

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 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 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 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


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      giving at all times the full benefit of his knowledge, expertise,
      technical skill and ingenuity.

4.3   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 (pound)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 semi-monthly installments 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 an amount of
      (pound)300,000 per annum.

5.2   The Company shall also pay to the Executive all reasonable traveling,
      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 and business class flight tickets from the United Kingdom to
      Bermuda for the Executive and his Dependants, provided that all such
      expenses have been approved by the Company in advance.


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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 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 US $11,000 per month, plus a tax gross-up payment to
reimburse the Executive for any income taxes paid by the Executive on the
allowance.

5.6   As soon as practicable following the execution of this Agreement, the
Executive shall receive a signing bonus of US $400,000.

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
      Board. 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


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      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.

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 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   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 (pound)300,000 per annum.

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);


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      9.1.3   if the Executive terminates his employment for any reason prior to
              the expiration of this Agreement 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 Company or
              shall have committed an act of bankruptcy or compounded with his
              creditors generally.

9.2   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.

9.3   This Agreement shall not, save as hereinbefore set out in this Clause, be
      subject to termination by notice or otherwise by the Company or by the
      Executive.

9.4   Until this Agreement is terminated pursuant to clause 9.1, 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.


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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 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 any director, employee or consultant
              of 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


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      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.

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

16.1  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.

16.2  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


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      shall apply with such deletion or modification as may be necessary to make
      it valid and effective.

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

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

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

16.6  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.

16.7  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.

16.8  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.


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




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


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




SIGNED by Anthony Taylor                           )
in the presence of:                                )


/s/ Anthony Taylor
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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.