EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT


AGREEMENT made effective as of the 23rd day of March, 1998, among ESG Re
Limited, a Bermuda company (the "Company") and its various subsidiaries and Joan
H. Dillard ("Executive").

WHEREAS, the Company wishes to retain the services of the Executive and
recognizes that the Executive's contribution to the growth and success of the
Company will be substantial; and

WHEREAS, the Executive is willing to commit herself to serve the Company, on the
term and conditions herein provided.

NOW, THEREFORE, in order to effect the foregoing, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

1.       EMPLOYMENT

         The Company hereby agrees to employ the Executive, and the Executive
         hereby agrees to be employed by the Company, on the terms and
         conditions set forth herein.

2.       TERM

         The term of the Executive's employment hereunder shall commence as of
         the date hereof and shall continue until the close of business on the
         third anniversary of the date hereof, subject to earlier termination in
         accordance with the terms of this Agreement (the "Term"). The Term
         shall be automatically extended for successive one year periods
         thereafter unless any of the parties notifies the other in writing of
         its intention not to so extend the Term at least one year prior to the
         commencement of the next scheduled one year extension.

3.       POSITION AND DUTIES

         (a)      Title and Duties
                  ----------------

                  The Executive shall serve a Chief Financial Officer of the 
                  Company and shall have such duties, authority and 
                  responsibilities as are normally associated with and 
                  appropriate for such positions.  The Executive shall

                                       E-1

<PAGE>


                  report directly to the Chief Executive Officer of the Company.
                  The Executive shall devote substantially all of her working
                  time and efforts to the business and affairs of the Company,
                  at such locations, including Germany, Bermuda, Ireland and
                  Toronto and/or as mutually agreed upon by the Executive and
                  the Company. The Executive shall not serve as Director or
                  Officer of any unaffiliated companies, including but not
                  limited to, any charitable organization or chamber of commerce
                  without the written consent of the Company.

         (b)      Office and Facilities
                  ---------------------

                  The Executive shall be provided with appropriate office and
                  secretarial facilities at the Company's offices in Hamburg,
                  Germany and any other location that the Company reasonably
                  deems necessary to have an office and support services in
                  order for the Executive to perform her duties to the Company.
                  The Executive shall serve as a Director or Officer of the
                  Company and shall agree to serve on other committees of the
                  Company or any other affiliated company, without additional
                  compensation, if so requested by the Company.

4.       COMPENSATION

         (a)      Base Salary
                  -----------

                  During the Term, the Company shall pay to the Executive an
                  annual base salary of US $250,000. The Executive's base salary
                  shall be paid in substantially equal instalments on a basis
                  consistent with the Company's payroll practices. The
                  Executive's base salary, as in effect at any time, is
                  hereinafter referred to as the "Base Salary". The Compensation
                  Committee of the Board (the "Compensation Committee") shall
                  review the Executive's performance on an annual basis and may
                  increase the Executive's Base Salary, in its sole discretion,
                  as it deems appropriate.

                  At the request of the Executive, the Company will pay up to
                  70% of the Base Salary in Deutsche Mark.

         (b)      Annual Bonus
                  ------------

                  The Compensation Committee may award the Executive an annual
                  bonus, at such time and in such amount as the Compensation
                  Committee, in its sole discretion, deems appropriate.

                                       E-2

<PAGE>

5.       EMPLOYEE BENEFITS

         (a)      Benefit Plans
                  -------------

                  The Executive shall be entitled to participate in all employee
                  benefit plans, which include worldwide medical, dental and
                  vision coverage, perquisite and fringe benefit arrangements of
                  the Company generally made available by the Company to its
                  executives, subject to, and on a basis consistent with the
                  terms, conditions and administration of such plans and
                  arrangements.

         (b)      Expenses
                  --------

                  The Executive shall be entitled to receive prompt
                  reimbursement for all reasonable and customary expenses
                  incurred by the Executive in performing services hereunder,
                  including all expenses of travel and living expenses while
                  away from home on business at the request of and in the
                  service of the Company or any of its affiliates and promoting
                  the business of the Company, provided that such expenses are
                  incurred and accounted for in accordance with the policies and
                  procedures established by the Company.

         (c)      Vacation
                  --------

                  The Executive shall be entitled to vacations and holidays on a
                  basis consistent with that offered to other senior executive
                  officers of the Company.

         (d)      Tax Equalization
                  ----------------

                  In the event that the Executive will be subject to taxes in
                  excess of those that would otherwise have been due under US
                  tax code as a US citizen working in the US, ESG Re will
                  compensate the Executive for the difference.

6.       TERMINATION OF EMPLOYMENT

         The Company and the Executive may each terminate the Executive's
         employment hereunder and the Term for any reason.

         (a)      Termination by the Company without Cause or by the Executive
                  for Good Reason
                  ------------------------------------------------------------ 

                  If the Company shall terminate the Executive's employment
                  without "Cause" (as defined in Section 6(f)), or if the
                  Executive resigns for Good

                                       E-3

<PAGE>

                  Reason (as defined in Section 6(f) then, the Executive shall
                  be entitled to her Base Salary for the greater of (1) the
                  remainder of the Term, or (2) one year, subject to and
                  conditioned upon the Executive's compliance with Sections 7
                  and 8 hereof. Options held by the Executive will be treated as
                  provided for in the applicable Award Agreement. In addition,
                  the company will reimburse reasonable relocation costs for a
                  move back to the United States.

                  Except as expressly provided above, the Company will have no
                  further obligations to the Executive hereunder following the
                  Executive's termination of employment under the circumstances
                  described in this Section 6(a).

         (b)      Termination due to Non-Renewal of the Term or Death or
                  Disability
                  ------------------------------------------------------ 

                  If the Executive's employment is terminated due to the
                  non-renewal of the Term or due to the Executive's death or
                  disability (as defined in Section 6(f)), the Executive shall
                  be entitled to a lump sum cash payment equal to the
                  Executive's Base Salary through the date of termination.
                  Options held by the Executive will be treated as provided for
                  in the applicable Award Agreement. In addition, the Company
                  will reimburse reasonable relocation costs for a move back to
                  the United States for the spouse or named beneficiary.

                  Except as expressly provided above, the Company will have no
                  further obligations to the Executive hereunder following the
                  Executive's termination of employment under the circumstances
                  described in this Section 6(b).

         (c)      Termination by the Company for Cause of by the Executive other
                  than for Good Reason
                  --------------------------------------------------------------

                  If the Executive's employment is terminated by the Company for
                  Cause or by the Executive other than for Good Reason, the
                  Executive shall be entitled to a lump sum cash payment equal
                  to her Base Salary through the date of termination. Options
                  held by the Executive shall be treated as provided for in the
                  applicable Award Agreement.

                  Except as expressly provided above, the Company will have no
                  further obligations to the Executive hereunder following the
                  Executive's termination of employment under the circumstances
                  described in this Section 6(c).

                                       E-4

<PAGE>

         (d)      Termination within one year of a Change in Control
                  --------------------------------------------------

                  If the Company terminates the Executive's employment without
                  Cause or the Executive terminates her employment for Good
                  Reason within one year following a Change in Control, the
                  Executive shall be entitled, in addition to the compensation
                  otherwise payable upon her termination of employment pursuant
                  to Section 6(a) above, to a lump sum payment which, when added
                  to the present value of all other benefits or payments to
                  which the Executive is entitled which would constitute
                  "Parachute Payments" (as defined in Section 28OG of the U.S.
                  Internal Revenue Code of 1986, as amended (the "Code"));
                  equals 2.99 times the Executive's "Base Amount" (as defined in
                  Section 28OG of the Code). In addition, the Company will
                  reimburse reasonable relocation costs for a move back to the
                  United States.

         (e)      Notice of Termination
                  ---------------------

                  Any termination of the Executive's employment by the Company
                  or by the Executive (other than termination pursuant to the
                  Executive's death) shall be communicated by written Notice of
                  Termination to the other party hereto in accordance with
                  Section 11 hereof. If the Company terminates the Executive's
                  employment for Cause or if the Executive resigns for Good
                  Reason, the "Notice of Termination" shall mean a notice which
                  shall indicate the specific termination provision in this
                  Agreement relied upon and shall set forth in reasonable detail
                  the facts and circumstances claimed to provide a basis for
                  termination of the Executive's employment under the provision
                  so indicated. For purposes of this Agreement, the date of the
                  Executive's termination of employment shall be deemed to be
                  the date of receipt of the Notice of Termination.

         (f)      Definitions - For purpose of this Agreement:
                  -----------

         (i)      "Cause" shall mean

                  (1)      The Executive's breach of any material term of this
                           Agreement, including, but not limited to, the
                           covenants set forth in Sections 7 and 8 hereof;

                  (2)      The Executive's failure or refusal to perform her
                           duties hereunder or to perform specific directives of
                           the Company, provided that such directives do not
                           violate any applicable law or industry standards;

                  (3)      Dishonesty of the Executive affecting the Company or 
                           any affiliates;

                                       E-5

<PAGE>

                  (4)      Any gross or willful conduct of the Executive
                           resulting in substantial loss to or theft from any of
                           the Company or any affiliate; or substantial damage
                           to the Company's reputation or theft from the
                           Company; or

                  (5)      Alcoholism or use of drugs or any controlled
                           substances which interferes with the performance of
                           the Executive's duties and responsibilities under
                           this Agreement;

                  (6)      The Executive is charged with a felony or other
                           serious crime, whether or not related to the business
                           of the Company, including but not limited to, any
                           crime related to tax evasion, bribery, theft,
                           political payoffs, etc.

         (ii)     "Change in Control" shall mean the occurrence of any of the
                  following: (i) the sale, lease, transfer or other disposition,
                  in one or a series of related transactions, of all or
                  substantially all of the assets of the Company other than to
                  any of the Affiliates, or (ii) a merger or sale of the Company
                  pursuant to which the shareholders of the Company immediately
                  prior to such merger or sale do not own a majority of the
                  stock of the Company or the surviving corporation immediately
                  after such merger or sale.

         (iii)    "Disability" shall mean the Executive's adjudication as
                  mentally incompetent, or mental or physical disability
                  preventing the Executive from performing her duties under this
                  Employment Agreement for a period of 180 consecutive days.

         (iv)     "Good Reason" shall mean (1) a material diminution of the
                  Executive's duties (per Exhibit A as attached) or the
                  assignment to the Executive of a title or duties inconsistent
                  with her position as Chief Financial Officer of the Company,
                  (2) a material reduction mounting to at least 10% of the
                  Executive's base salary, or (3) a failure of the Company to
                  comply with any material provision of this Agreement.

7.       NON-COMPETITION

         (a)      The Executive acknowledges and recognizes the highly
                  competitive nature of the businesses of the Company and its
                  affiliates and accordingly agrees as follows:

                  (i)      During the Employment Term and for a period of 18
                           months following the Executive's termination of
                           employment (unless such termination of employment
                           occurs within one year following a Change in Control,
                           in which case this paragraph shall not be

                                       E-6

<PAGE>

                           applicable) (the "Restricted Period"), the Executive
                           will not, unless the Executive is given written
                           permission by the Company, directly or indirectly,
                           (i) engage in any business for the Executive's own
                           account that competes with the business of the
                           Company or any of its affiliates that are engaged in
                           the insurance or reinsurance business (the "Company
                           Affiliates"),(ii) enter the employment of, or render
                           any services to, any person engaged in any business
                           that competes with the business of the Company or the
                           Company Affiliates, (iii) acquire a financial
                           interest in, or otherwise become actively involved
                           with, any person engaged in any business that
                           competes with the business of the Company or the
                           Company Affiliates, directly or indirectly, as an
                           individual, partner, shareholder, officer, director,
                           principal agent, trustee or consultant, or (iv)
                           interfere with business relationships (whether formed
                           before or after the date of this Agreement) of the
                           Company or the Company Affiliates.

                  (ii)     Notwithstanding anything to the contrary in this
                           Agreement, the Executive may, directly or indirectly
                           own, solely as an investment, securities of any
                           person engaged in the business of the Company or the
                           Company Affiliates if the Executive (i) is not a
                           controlling person or a member of a group which
                           controls, such person and (ii) does not, directly or
                           indirectly, own more than one share less than 5% of
                           any class of securities of such person.

                  (iii)    During the Restricted Period, the Executive will not,
                           directly or indirectly, (i) solicit or encourage any 
                           employee of the Company or the Company Affiliates to 
                           leave the employment of the Company or the Company 
                           Affiliates, or (ii) hire any such employee who has 
                           left the employment of the Company or the Company 
                           Affiliates (other than as a result of the termination
                           of such employment by the Company or the Company 
                           Affiliates) within one year after the termination of 
                           such employees employment with the Company or the 
                           Company Affiliates.

                  (iv)     During the Restricted Period, the Executive will not,
                           directly or indirectly, solicit or encourage to cease
                           to work with the Company or the Company Affiliates
                           any consultant then under contract with the Company
                           or the Company Affiliates.

         (b)      It is expressly understood and agreed that although the
                  Executive and the Company consider the restrictions contained
                  in this Section 7 to be reasonable, if a final judicial
                  determination is made by a court of competent jurisdiction
                  that the time or territory or any other restriction contained
                  in this Agreement is an unenforceable restriction against the

                                       E-7

<PAGE>

                  Executive, the provisions of this Agreement shall not be
                  rendered void but shall be deemed amended to apply as to such
                  maximum time and territory and to such maximum extent as such
                  court may judicially determine or indicate to be enforceable.
                  Alternatively, if any court of competent jurisdiction finds
                  that any restriction contained in this Agreement is
                  unenforceable, and such restriction cannot be amended so as to
                  make it enforceable, such finding shall not affect the
                  enforceability of any of the other restrictions contained
                  herein.

8.       CONFIDENTIALITY

         The Executive will not at any time (whether during or after her
         employment with the Company) disclose or use for her own benefit or
         purposes or the benefit or purposes of any other person, firm,
         partnership, joint venture, association, corporation or other business
         organization, entity or enterprise other than the Company and any of
         their subsidiaries or affiliates, any trade secrets, information, data,
         or other confidential information relating to customers, development
         programs, costs, marketing & trading, investment, sales activities,
         promotion, credit and financial data, financing methods, plans, or the
         business and affairs of the Company or of any subsidiary or affiliate
         of the Company, provided that foregoing shall not apply to information
         which is not unique to the Company or any of its subsidiaries or
         affiliates or which is generally known to the industry or the public
         other than as a result of the Executive's breach of this covenant. The
         Executive agrees that upon termination of her employment with the
         Company for any reason, she will return to the Company immediately all
         memoranda, books, papers, plans, information, letters and other data,
         and all copies thereof or therefrom, in any way relating to the
         business of the Company and its affiliates, except that she may retain
         personal notes, notebooks and diaries. The Executive further agrees
         that she will not retain or use for her account at any time any trade
         names, trademarks or other proprietary business designations used or
         owned in connection with the business of the Company or their
         affiliates.

9.       EQUITABLE RELIEF

         The Executive acknowledges and agrees that the Company's remedies at
         law for a breach or threatened breach of any of the provisions of
         Section 7 or Section 8 would be inadequate and, in recognition of this
         fact, the Executive agrees that, in the event of such a breach or
         threatened breach, in addition to any remedies at law, the Company,
         without posting any bond or security, shall be entitled to obtain
         equitable relief in the form of specific performance, temporary
         restraining order, temporary or permanent injunction or any other
         equitable remedy which may then be available.

                                       E-8

<PAGE>

10.      SUCCESSORS; BINDING AGREEMENT

         (a)      The Company will require any successor (whether direct or 
                  indirect, by purchase, merger, consolidation or otherwise) to
                  all or substantially all of the business and/or assets of the
                  Company to expressly assume and agree to perform this 
                  Agreement in the same manner and to the same extent that the 
                  Company would be required to perform it if no such succession 
                  had taken place.  As used in this Agreement, "Company" shall 
                  mean the Company as herein defined and any successor to its 
                  business and/or assets as aforesaid which executes and 
                  delivers the agreement provided for in this Section 10 or 
                  which otherwise becomes bound by all the terms and provisions 
                  of this Agreement by operation of law.

         (b)      This Agreement and all rights of the Executive hereunder shall
                  inure to the benefit of and be enforceable by the Executive's 
                  personal or legal representatives, executors, administrators, 
                  successors, heirs, distributees, devisees and legatees.  If 
                  the Executive should die while any amounts an payable to her 
                  hereunder all such amounts unless otherwise provided herein, 
                  shall be paid in accordance with the terms of this Agreement 
                  to the Executive's devisee, legatee, or other designee or, if 
                  there be no such designee, to the Executive's estate.

11.      NOTICE

         For the purpose of this Agreement, notices, demands and all other
         communications provided for in this Agreement shall be in writing and
         shall be deemed to have been duly given when personally delivered with
         receipt acknowledged or after having been received by certified or
         registered mail, return receipt requested, postage prepaid, addressed
         as follows:

                                       If to the Executive:

                                       Joan R Dillard
                                       Oberstrasse 75
                                       D - 20144 Hamburg

                                       If to the Company:

                                       ESG Re Limited
                                       Skandia International House
                                       16 Church Street
                                       Hamilton, HM 11
                                       Bermuda
                                       Attention: Chairman

                                       E-9

<PAGE>

         or to such other address as any party may have furnished to the other
         in writing in accordance herewith, except that notices of change of
         address shall be effective only upon receipt.

12.      MISCELLANEOUS

         No provisions of this Agreement may be modified, waived or discharged
         unless such waiver, modification or discharge is agreed to in writing
         signed by the Executive and such officer of the Company as may be
         specifically designated by the Company as the case may be. No waiver by
         any party hereto at any time of any breach by the other party hereto
         of, or compliance with, any condition or provision of this Agreement to
         be performed by such other party shall be deemed a waiver of similar or
         dissimilar provisions or conditions at the same or at any prior or
         subsequent time. The validity, interpretation, construction and
         performance of this Agreement shall be governed by the laws of Bermuda
         without regard to its conflicts of law principles.

13.      VALIDITY

         The invalidity or unenforceability of any provision or provisions of
         this Agreement shall not affect the validity or enforceability of any
         other provision of this Agreement, which shall remain in full force and
         effect.

14.      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.

15.      WITHHOLDING

         The Company may withhold from any amounts payable under this Agreement
         such federal state and local and foreign taxes as may be required to be
         withheld pursuant to applicable law or regulation.

16.      ENTIRE AGREEMENT

         This Agreement sets forth the entire agreement of the parties hereto in
         respect of the subject matter contained herein and supersedes all prior
         agreements, promises, covenants, arrangements, communications,
         representations or warranties, whether oral or written, by any officer,
         employee or representative of any party hereto, including any prior
         employment agreements other than those contained in the employment
         offer dated 5th of March, 1998.

                                      E-10

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Executive has hereunto set his hand, effective as of 23rd day of March,
1998.

                                               ESG Re Limited



                                               By:
                                                  ------------------------------
                                                   Name: W.H. Wan
                                                   Title: CEO




                                                  Joan H. Dillard



                                                  -----------------------------

                                      E-11

<PAGE>

                                    EXHIBIT A

                             CHIEF FINANCIAL OFFICER
                                 ESG RE LIMITED
                           DUTIES AND RESPONSIBILITIES

1.       Manage the Company's accounting, SEC and other regulatory reporting
         functions.

2.       Ensure the conformance of an international operation with SEC and
         international accounting and reporting standards.

3.       Establish and maintain a financial/tax analysis, reporting, budgeting
         and planning capability that provides appropriate management
         information and accountability reporting.

4.       Represent the Company in its dealings with shareholders, regulators,
         rating agencies and equity analysts; manage overall investors relations
         activities and communications.

5.       Play a key role in the development and implementation of the Company's
         strategy; serve on the Company's Executive Committee.

6.       Evaluate and maintain optimal capital structure; lead capital raising
         efforts in public or private markets, as necessary.

7.       Evaluate and recommend investment policy and strategy consistent with
         Company parameters of credit rating, liquidity and liability
         characteristics; ensure conformance with stated policy and strategy.
         Evaluation, recommendation, policy and strategy will include both the
         invested asset portfolio and strategic investments, mergers or
         acquisitions.

8.       Supervise the Company's systems (IT) operation and development.

9.       Manage Treasury operations, including risk management, cash management,
         banking relationships and credit facilities, pension and benefit plans.

10.      Evaluate adequacy of loss reserves.

11.      Provide personnel functions and support to the Company, including:
         development of incentive compensation plans, human resource planning
         and development, establishing appropriate hiring policies and
         practices, implementing and administering all policies and procedures.

                                      E-12

<PAGE>

12.      Direct and provide management to the General Counsel of the Company or
         legal staff, as required.

13.      Ensure that an overall integrated framework of internal control is
         maintained and that compliance is achieved.

14.      Provide regular communication and information to the Board of Directors
         regarding the financial results of the Company, significant business
         and financial issues, and other items or requests that may arise.

                                      E-13