1141719--2/16/2007--MAX_RE_CAPITAL

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Risks Related to Our Business Our losses and benefits may exceed our loss and benefit reserves, which could significantly increase our liabilities and reduce our profits. Competitors with greater resources may make it difficult for us to market our products effectively and offer our products at a profit. Our ability to write reinsurance and insurance in the property and casualty market may be affected by cyclical trends and in the life and annuity market by global economic conditions and fluctuations in interest rates. The property, property catastrophe and aviation reinsurance that we offer may make us vulnerable to losses from catastrophes and may cause our results of operations to vary significantly from period to period. A downgrade or withdrawal of any of our ratings would significantly and negatively affect our ability to implement our business strategy successfully. A limited number of reinsurance and insurance brokers and broker transactions account for a large portion of our revenues, and a loss of all or a substantial portion of this brokered business could have a material adverse effect on our business and results of operations. The involvement of reinsurance brokers subjects us to their credit risk. The SEC s investigation into non-traditional, or loss mitigation, (re)insurance products, our business practice review and our determination to restate of our audited financial statements for the years ended December 31, 2005, 2004, 2003, 2002 and 2001 and the quarters ended March 31, 2006 and June 30, 2006, may result in penalties and relief or require remediation and could have an adverse effect on us, perhaps materially so. Current investigations and proceedings by government agencies relating to insurance practices could adversely affect the industry in which we operate. Operational risks, including human or systems failures are inherent in our business. We may require additional capital in the future, which may not be available to us on satisfactory terms, if at all. In the event that we are unable to purchase reinsurance or retrocessional reinsurance on acceptable terms, or if we purchase reinsurance or retrocessional reinsurance but are unable to collect, we may have difficulty mitigating the effect of large or multiple losses which, in turn, could have a significant and negative effect on our business. If we lose or are unable to retain our senior management and other key personnel, or if we are unable to renew the Bermudian work permits of any members of our senior management or other key personnel, our ability to implement our business strategy could be delayed or hindered, which, in turn, could significantly and negatively affect our business. Currency fluctuations could result in exchange losses and our failure to manage our multiple currency liabilities effectively could significantly and negatively impact our business. Our failure to maintain sufficient letter of credit facilities or to increase our letter of credit capacity on commercially acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy. Our results of operations may fluctuate significantly from period to period and may not be indicative of our long-term prospects. Our financial condition and results of operations could be negatively affected to the extent that we sustain losses from our reinsurance and insurance of terrorist attacks and similar risks. Max Re Capital has no significant operations other than its ownership of share capital of its subsidiaries and may be restricted from declaring or paying dividends. We may not consummate the acquisition contemplated by Max USA. Risks Related to Our Investment Strategy If our calculations with respect to our liabilities are incorrect, or if we do not appropriately structure our investments in relation to our anticipated liabilities, we could be forced to liquidate investments at a significant loss. The failure of our investment managers to perform their services in a manner consistent with our expectations and investment objectives, or the termination of our agreements with one or more of these investment managers, could significantly and negatively affect our ability to conduct business. Our investment portfolios are managed by outside managers, therefore we cannot control individual trading activity. Alstra s ability to identify alternative investment fund managers and obtain access for our company to the funds managed by these fund managers may have a significant effect on the performance of our alternative investment portfolio. Unexpected volatility or illiquidity associated with our alternative investment portfolio or in the financial markets could significantly and negatively affect our ability to conduct business. Changes in market interest rates could have a material adverse effect on our investment portfolio, investment income and results of operations. Members of our board of directors may have conflicts of interests. Risks Related to Regulation of Our Company The regulatory systems under which we operate, and potential changes thereto, could have a material adverse effect on our business. Risks Related to Our Common Shares Our common shares are subject to limitations on ownership and voting rights. U.S. persons who own our common shares may have more difficulty in protecting their interests than U.S. persons who are shareholders of a U.S. corporation. There are anti-takeover provisions contained in our bye-laws that could impede an attempt to replace or remove our management or delay or prevent the sale of our company, which could diminish the value of our common shares. A shareholder may be required to sell its shares of Max Re Capital. You may have difficulty effecting service of process on us or enforcing judgments against us in the United States. Max Re Capital and its non-U.S. subsidiaries may be subject to U.S. federal income taxation. Changes in U.S. federal income tax law could materially adversely affect an investment in our common shares. Shareholders who are U.S. persons may recognize income for U.S. federal income tax purposes on our undistributed earnings. U.S. tax-exempt organizations who own our common shares may recognize unrelated business taxable income. Changes in U.S. tax laws may be retroactive and could subject us and/or U.S. persons who own our common shares to U.S. income taxation on our undistributed earnings. We may become subject to taxes in Bermuda after March 28, 2016, which would have a material adverse effect on our business and results of operations. The impact of Bermuda s commitment to the Organization for Economic Cooperation and Development to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda.

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1141719--2/16/2007--MAX_RE_CAPITAL_LTD