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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(D) of the

Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003

Commission File Number 000-33047

MAX RE CAPITAL LTD.

(Exact name of registrant as specified in its charter)

Max Re House

2 Front Street

Hamilton, HM 11

Bermuda

(Address of principal executive offices)

Registrant’s telephone number, including area code: (441) 296-8800

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, Par Value $1.00 per share (the “Common Shares”)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to the filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2003 was $349,421,480, based on the closing price of the registrant’s common shares on June 30, 2003, the last business day of the registrant’s most recently completed second fiscal quarter. Solely for the purpose of this calculation and for no other purpose, the non-affiliates of the registrant are assumed to be all shareholders of the registrant other than (i) directors of the registrant, (ii) executive officers of the registrant who are identified as “named executive officers” pursuant to Item 11 of this Form 10-K, (iii) any shareholder that beneficially owns 10% or more of the registrant’s common shares and (iv) any shareholder that has one or more of its affiliates on the registrant’s board of directors. Such exclusion is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the registrant.

The number of shares of the registrant’s common shares outstanding as of February 27, 2004 was $45,780,111.

Documents incorporated by reference:

Portions of the proxy statement for the registrant’s annual meeting of shareholders to be held on April 29, 2004, to be filed subsequently with the Securities and Exchange Commission pursuant to Regulation 14A, are incorporated by reference in Part III of this Annual Report on Form 10-K.

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PART I

References in this Annual Report on Form 10-K to Max Re Capital or the Company refer to Max Re Capital Ltd., a Bermuda company, and, unless the context otherwise requires or is otherwise as expressly stated, its direct and indirect subsidiaries, Max Re Ltd., a Bermuda company licensed under the laws of Bermuda as a Class 4 insurer and long-term insurer (“Max Re”), Max Europe Holdings Limited (“Max Europe Holdings”) and its wholly owned operating subsidiaries Max Re Europe Limited (“Max Re Europe”) and Max Insurance Europe Limited (“Max Insurance Europe”), each incorporated and operated in Dublin, Ireland (collectively referred to as “Max Europe”), Max Re Diversified Strategies Ltd., a Bermuda company that invests in entities that pursue alternative investment strategies (“Max Re Diversified”), and Max Re Managers Ltd., a Bermuda company licensed under the laws of Bermuda as an insurance manager (“Max Re Managers”).

Safe Harbor Disclosure

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends that the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 apply to these forward-looking statements. Forward-looking statements are not statements of historical fact but rather reflect the Company’s current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to the Company or the Company’s management. When the Company makes forward-looking statements, it is basing them on management’s beliefs and assumptions, using information currently available to it. These forward-looking statements are subject to risks, uncertainties and assumptions. Factors that could cause such forward-looking statements not to be realized (which are described in more detail elsewhere herein and in documents filed by the Company with the Securities and Exchange Commission) include, without limitation, acceptance in the market of the Company’s products, general economic conditions and conditions specific to the reinsurance and insurance markets in which the Company operates, pricing competition, the amount of underwriting capacity from time to time in the market, material fluctuations in interest rate levels, tax and regulatory changes and conditions, rating agency policies and practices, claims development and loss of key executives. Other factors such as changes in U.S. and global financial and equity markets resulting from general economic conditions, market disruptions and significant interest rate fluctuations may adversely impact the Company’s investments or impede the Company’s access to, or increase the cost of, financing its operations. The Company cautions that the foregoing list of important factors is not intended to be, and is not, exhaustive. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may vary materially from what the Company projected. Any forward-looking statements in this Form 10-K reflect the Company’s current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to the Company or individuals acting on the Company’s behalf are expressly qualified in their entirety by this paragraph.

General Description

Max Re Capital is a holding company formed in July 1999 under the laws of Bermuda. The Company commenced operations in January 2000. Through its subsidiaries Max Re, Max Re Europe and Max Insurance Europe, the Company provides multi-line reinsurance and insurance products. Max Re Managers provides reinsurance underwriting and administrative services on a fee basis. Max Re Diversified holds all of the Company’s alternative investments, other than reinsurance private equity investments that are held by Max Re. Max Europe Holdings is the holding company for the Company’s European operating subsidiaries and was formed in June 2003 under the laws of Ireland.

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In December 1999, the Company raised gross proceeds of $331 million from an initial private placement of its Common Shares and non-voting common shares of Max Re, par value $1.00 per share. In March 2000, the Company completed a second private placement of the Common Shares which raised an additional $180 million of gross proceeds. The Company used substantially all of the net proceeds of these offerings to capitalize its reinsurance operations.

On August 14, 2001, the Company raised gross proceeds of $192 million in its initial public offering of Common Shares. Total proceeds received, net of underwriting discounts and commissions, were $179.5 million. Substantially all of the net proceeds were contributed to Max Re in support of its reinsurance operations. The Company’s Common Shares are listed on the Nasdaq National Market under the symbol MXRE and the Bermuda Stock Exchange under the symbol MXRE BH.

On July 30, 2003, the holders of non-voting common shares of Max Re and warrants to acquire non-voting common shares of Max Re exchanged such shares and warrants for Common Shares and warrants to acquire Common Shares. The effect of this exchange resulted in the elimination of minority interest and increase in shareholders’ equity of equal amounts as of the date of the exchange.

Business Segments

The Company operates in the reinsurance and insurance business serving two segments: the property and casualty segment and the life and annuity segment, which includes disability products. The table below sets forth the Company’s gross premiums written by type of risk for the years ended December 31, 2003, 2002 and 2001. Additional information about the Company’s business segments is set forth in Note 16 to the audited consolidated financial statements of the Company included herein.

Segment Analysis of Gross Premiums Written

Gross premiums written, by type of risk assumed, for the years ended December 31, 2003, 2002 and 2001 was as follows:

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The majority of the Company’s clients are insurers, reinsurers and companies located in the United States. Calculated based on the location of the cedent, the Company derived approximately 62.9%, 63.7% and 72.4%, of gross premiums written for the years ended December 31, 2003, 2002 and 2001, respectively, from cedents located in the United States. The Company sources business throughout Europe, which represented approximately 37.1%, 36.3% and 27.6%, of gross premiums written for the years ended December 31, 2003, 2002 and 2001, respectively.

For the years ended December 31, 2003, 2002, and 2001, the Company derived approximately 89.3%, 97.7% and 69.9%, respectively, of its gross premiums written from property and casualty products and 10.7%, 2.3% and 30.1%, respectively, from life and annuity products. Due to continual changes in industry and global economic cycles, the Company anticipates that the percentages of premiums written will fluctuate regularly between its property and casualty products and life and annuity products.

Description of Business

The Company is a Bermuda-based provider of reinsurance and insurance products for both the property and casualty and life and annuity, including disability, markets. To manage its reinsurance and insurance liability exposure, structure its investment portfolio and assess overall risk, the Company models its underwriting and investments on an integrated basis.

The Company’s integrated risk management and the cash flow characteristics of the Company’s products allow the Company to invest a portion of its assets in alternative investments, in addition to high grade fixed maturities investments.

Property and Casualty

Reinsurance Products

The Company offers structured risk transfer, alternative risk transfer and traditional reinsurance products, as well as insurance products, in the property and casualty market. The Company often customizes its reinsurance products in an effort to satisfy particular client needs. The structured risk transfer and alternative risk transfer reinsurance products that the Company offers have several features that differ from traditional reinsurance products. These features require the client to share in its own loss results. Features that the Company includes in its structured risk transfer and alternative risk transfer reinsurance products include: (i) premium refunds if the losses the Company incurs under a reinsurance contract are more favorable than those projected at the time of execution of the reinsurance contract; (ii) loss sharing provisions that may require a client to share in a portion of its losses resulting from ceded risks; (iii) additional premium amounts if the Company incurs losses under the reinsurance contracts that are less favorable than those projected at the time of execution of the reinsurance contract; and (iv) underwriting terms that limit the Company’s maximum aggregate exposure. Structured risk transfer and alternative risk transfer products are distinguished from each other based on the amount of risk transferred to the Company, with alternative risk transfer products transferring more risk to the Company.

The Company’s traditional reinsurance products do not typically include certain features described above and, accordingly, they expose the Company to greater reinsurance loss than the structured or alternative risk transfer products. Generally, the Company’s traditional reinsurance products are written on market terms with participation by other reinsurers.

The Company’s primary focus is on the casualty classes, such as whole account, workers’ compensation, general liability, professional liability, accident and health and medical malpractice with a lesser focus on aviation and marine, property and homeowners. Whole account coverage provides integrated liability coverage across a client’s multi-line portfolio of risk and may include some or all of the classes above.

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The Company typically writes its property and casualty reinsurance products in the form of treaty reinsurance contracts, which are contractual arrangements that provide for automatic reinsuring of a type or category of risk underwritten by the Company’s clients. With treaty reinsurance contracts, the Company does not evaluate separately each of the individual risks assumed under the contracts and is largely dependent on the individual underwriting decisions made by the ceding client. Accordingly, the Company carefully reviews and analyzes the ceding client’s risk management and underwriting practices in deciding whether to provide treaty reinsurance and in appropriately pricing the treaty.

The Company’s property and casualty reinsurance contracts are written on either a quota share, also known as proportional or pro rata, basis or on an excess of loss basis. With respect to quota share reinsurance, the Company shares the premiums as well as the losses and expenses in an agreed proportion with the ceding client. With respect to excess of loss reinsurance, the Company indemnifies the ceding client against all or a specified portion of losses and expenses in excess of a specified dollar or percentage amount. In both types of contracts, the Company may provide a ceding commission to the client.

Insurance Products

In the first quarter of 2003, the Company began offering excess liability and professional lines insurance products, primarily to Fortune 1000 clients. The excess liability products are excess umbrella liability, excess product liability, excess medical malpractice and excess product recall. The professional lines products offered are directors and officers, errors and ommissions and employment practices liability. The products offered by the Company are underwritten in Bermuda and Ireland.

The products noted above are underwritten by the Company on an individual risk basis, which in many cases includes a face to face meeting with the client in Bermuda or Ireland. Excess Liability and Professional Liability premiums accounted for approximately equal shares of the gross premium written for traditional insurance products for the year ending December 31, 2003. The Company also offers alternative risk transfer insurance products with alternative risk transfer features to its clients.

Reinsurance and Insurance Premium Activity

For the years ended December 31, 2003, 2002 and 2001, $302.3 million, $275.5 million and $94.1 million, or 33.5%, 43.5% and 19.0%, respectively, of gross premiums written were written on a quota share basis and $599.2 million, $357.2 million and $402.4 million, or 66.5%, 56.5% and 81.0%, respectively, were written on an excess of loss basis.

Life and Annuity

The Company’s life and annuity reinsurance products focus on existing blocks of business. They typically take the form of co-insurance structures, where generally the risk is reinsured on the same basis as that of the original policy. In a co-insurance transaction, the Company receives a percentage of the gross premium charged to the policyholder by the client less an expense allowance that the Company grants to the client, as the primary insurer. By transferring liabilities and the related assets to the Company in these co-insurance transactions, the Company seeks to allow its life and annuity clients to achieve capital relief and improved returns on equity.

The life and annuity risks the Company underwrites include mortality and investment risks and, to a lesser extent, early surrender and lapse risks. The disability products the Company underwrites include morbidity risk and, to a lesser extent, early surrender and lapse risks. Mortality risk measures the sensitivity of the insurance company’s liability to higher mortality rates than were assumed in setting the premium. Morbidity risk measures the sensitivity of the insurance company’s liability for higher illness, sickness and disease rates than were assumed in setting the premium. Early surrender and lapse risks measure the sensitivity of the insurance company’s liability to early or changing policy surrender distributions. Life reinsurance is often written on a

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yearly renewable term basis, where the predominant risk is the mortality of the insured population. However, the Company’s co-insurance structures typically involve a certain level of investment risk, with the Company reinsuring a percentage of the ceding clients’ investment risk.

The Company seeks to write life and annuity reinsurance agreements with respect to individual and group disability, whole life, universal life, variable life, corporate owned life, term life, fixed annuities, variable annuities and structured settlements.

Pricing of the Company’s life and annuity reinsurance products is based on actuarial models that incorporate a number of factors, including assumptions for mortality, morbidity, expenses, demographics, persistency, investment returns, certain macroeconomic factors, such as inflation, and certain regulatory factors, such as taxation and minimum surplus requirements for all products.

Underwriting and Risk Management

The Company attempts to manage its underwriting exposures by diversifying across many underlying insureds with small policy limits per insured. The Company’s largest underlying exposure in the property and casualty reinsurance business is workers’ compensation, (including reinsurance written as such and workers’ compensation exposure embedded in other types of contracts such as whole account), which has attractive features of payments over many years and low statutorily defined cash payout amounts. The exposure in the Company’s property and casualty traditional insurance business is allocated approximately evenly between general liability and professional liability business. With its life reinsurance products, the Company’s focus is on reinsuring blocks of business having small underlying policy limits spread across a large population of insureds and avoids high policy limit exposures.

The Company seeks to reduce the volatility transmitted from underlying risks assumed through its written business by setting and maintaining overall aggregate limits on liabilities, sub-limits on liabilities, attachment points for liabilities and contract terms providing for additional premium where losses are worse than expected.

The Company manages its overall risk by attempting to manage the volatility of its asset mix in the context of its liabilities. The Company believes that its portfolio of underwriting risks benefits from diversification and complements its investment strategy. The Company accesses the retrocession and capital markets to transfer risk to other parties when competitive advantages permit them to assume a risk for a lower price. The Company also manages the amount of leverage that it employs on the liability side of its business based upon continual assessment of the risks and opportunities in the capital and underwriting markets.

The Company uses a series of proprietary and non-proprietary actuarial and financial models in an effort to analyze the underlying risk characteristics of its liabilities and assets. The Company conducts both transaction-by-transaction modeling as well as portfolio aggregation modeling. The Company then analyzes these modeling efforts on an integrated basis in an effort to determine the aggregation of its underwriting risks and investment risks and the ultimate impact adverse events might have on the Company’s surplus.

The Company utilizes dynamic financial analysis to examine the possible effects of future variables, such as the effect of inflation on the cost of losses, using multiple scenarios to predict the range of outcomes and prices of its products. In addition, the Company attempts to manage capital adequacy by incorporating value at risk and risk based capital analyses into its modeling. Through the use of dynamic financial analysis, the Company seeks to measure adequately the financial risk inherent in each transaction and the portfolio overall, and the potential for adverse scenarios producing projected losses and potential negative cash flow. Additionally, by employing a risk based capital analysis, rather than using premium income as a measure of risk, the Company is able to obtain an estimate of the amount of capital to be allocated to each transaction and its portfolio of liabilities. The Company believes that its analysis of loss payment patterns enables it to generate meaningful projections of the total and interim cash flows of its liability portfolios. The Company then uses the projections to determine the

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profile of liquidity and investment returns required of its investment portfolio. The Company believes that this integrated approach allows it to optimize the use of its capital by providing a dynamic measurement of risk and return to evaluate competing reinsurance, insurance and investment opportunities.

Due Diligence

The Company performs a significant amount of due diligence on every material transaction that it considers underwriting, and performs regular monitoring and periodic due diligence on the transactions that it completes. Generally, the Company complements its internal skills with reputable third party resources. Third party actuaries, attorneys, claim adjusters and other professionals perform on-site client due diligence on the Company’s behalf and assist the Company in modeling transactions and contract documentation.

Retrocessional and Balance Sheet Protections

As part of the underwriting process, the Company reinsures, or retrocedes, portions of certain risks for which it has accepted liability. In these transactions, the Company cedes to another reinsurer, called the retrocessionaire, all or part of the reinsurance risk that the Company has assumed. However, these arrangements do not legally discharge the Company from its liability with respect to the obligations it has reinsured.

The Company utilizes retrocessional arrangements, such as quota share reinsurance, excess of loss reinsurance and stop-loss contracts that are available in the retrocessional market as a means to manage risk on the products it writes. In quota share reinsurance arrangements, the retrocessionaire shares a proportional part of the Company’s premiums and losses associated with the risks being reinsured, while in excess of loss reinsurance and stop-loss contracts, the retrocessionaire agrees to cover all losses in excess of the amount of risk the Company has retained, subject to negotiated limits. The Company’s strategy includes purchasing reinsurance to limit losses on a single risk or transaction, or on a whole portfolio basis, as the need arises.

The amount of risk the Company retains differs in each retrocession transaction it underwrites. The Company may retain higher amounts of net risk on transactions where it believes it can monitor outcomes with a high degree of accuracy or where larger blocks of business offer the Company the possibility of higher returns without retaining excessive risk. The Company’s underwriting policy is to retain a maximum net exposure of not more than 5% of its shareholders’ equity for any individual contract it writes.

The Company prefers to cede risk to a retrocessionaire on a funds withheld basis. Retroceding risk on this basis allows the Company to cede risk while retaining collateral for its retrocessionaire’s obligation. Since the Company is liable with respect to the reinsurance that it cedes in the event that a retrocessionaire is unable to meet its obligations assumed under a retrocession agreement, the financial strength of each retrocessionaire is evaluated and monitored. Two retrocessionaires accounted for 61.8% and 28.7% of the Company’s losses recoverable from reinsurers as of December 31, 2003. These retrocessionaires have a financial strength rating of “A-” and “A”, respectively by A.M. Best Company as of February 27, 2004. The Company retains funds from these two retrocessionaires to secure the obligations.

Reserves

To recognize liabilities for unpaid losses and loss adjustment expenses and life and annuity benefits, the Company establishes reserves, which are balance sheet liabilities representing estimates of future amounts needed to pay losses and related expenses with respect to insured events that have occurred on or before the balance sheet date, including events that have occurred but have not been reported by the ceding client. The adequacy of the Company’s reserves is reviewed annually by outside actuaries to support management’s estimates. Future losses and policy benefits constitute the majority of the Company’s financial obligations.

Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what the Company expects the ultimate settlement and claim administration will cost. While the methods for establishing

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the reserves are well tested over time, some of the major assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. These estimates, which generally involve actuarial projections, are based upon the Company’s assessment of facts and circumstances then known, as well as estimates of future trends in claims severity and frequency, mortality, judicial theories of liability and other factors, including the actions of third parties, that are beyond the Company’s control.

Loss and loss adjustment expenses and life and annuity benefits, net of related reinsurance recoverables, are charged to income as incurred. Unpaid losses and loss adjustment expenses represent the accumulation of case reserves, reserves for incurred but not reported losses and loss adjustment expenses.

Property and Casualty Reserve Process

The Company’s property and casualty reserves are compiled on a transaction-by-transaction basis and are computed on an undiscounted basis. The reserves include amounts for:

The Company establishes and reviews these reserves on a regular basis. The process for establishing reserves is based upon both internally generated actuarial analysis and models, and data provided by clients. The Company uses a variety of actuarial techniques and methods in estimating its ultimate liability for losses and loss expenses. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. This actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate. Industry loss experience is also used to supplement the Company’s own data in selecting “tail factors” and in areas where the Company’s own data is limited.

In the course of its ongoing reserve analysis, the Company reviews loss reports received from its clients to confirm that submitted claims are covered under the contract terms, establishes reserves on an individual client basis and takes into account industry loss activity and industry loss trends. Other factors considered by the Company in this process include historical data, legal developments, changes in social attitudes and economic conditions, including the effects of inflation. As additional experience and other data become available and are reviewed, these reserve estimates are revised. This process may result in increases or decreases to reserves for insured events of prior years. These adjustments are recorded in the period they are determined.

Life and Annuity Reserve Process

The Company’s life and annuity reserves are compiled on a transaction-by-transaction basis and are computed on a discounted basis. The Company establishes and reviews its life and annuity reserves on a regular basis. The process for establishing reserves is based upon cash flow projection models that utilize both internally generated actuarial analysis, and data provided by clients. The Company establishes and maintains reserves at a level that, when taken together with future interest earned on these reserves, will in the Company’s estimation be sufficient to support all the future cash flow benefit and third party servicing obligations as they become payable.

Since the development of the Company’s life and annuity reserves is based upon cash flow projection models, the Company must make estimates and assumptions regarding mortality, morbidity, lapse, expense and investment experience. The Company establishes such estimates based upon transaction specific historical experience, information provided by ceding companies and industry experience studies. Actual results could differ materially from these estimates. The Company monitors actual experience and, where circumstances warrant, will revise its assumptions and the related reserve estimates. These revisions are recorded in the period they are determined.

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Evaluation of Loss Reserves

The Company regularly reviews and updates its methods of determining estimates for reported and unreported losses and establishing resulting reserves and related reinsurance recoverables, and adjustments resulting from this review are reflected in income in the period such adjustments are determined. In connection with the process, the Company relies upon the basic assumption that past experience, adjusted for the effect of current developments and likely trends, is an appropriate basis for predicting future events. However, estimation of loss reserves is a difficult process, especially in view of changes in the legal environment that affect the development of loss reserves. Therefore, quantitative techniques frequently have to be supplemented by subjective considerations and managerial judgment.

During the loss settlement period, which can be many years in duration, additional facts regarding individual claims and trends usually become known. As these become apparent, it usually becomes necessary to refine and adjust the reserves upward or downward. Even then, the ultimate net liability may be less than or greater than the Company’s revised estimates.

The following table represents the development of balance sheet property and casualty reserves in accordance with accounting principles generally accepted in the United States of America (“GAAP”) since the Company’s commencement of operations on January 1, 2000 through December 31, 2003. This table does not present accident or policy year development data. The top line of the table shows the reserves, net of reinsurance recoverables, at the balance sheet date for each of the indicated years. This represents the estimated amount of net claims and claim expenses arising in the current year and all prior years that are unpaid at the balance sheet date, including IBNR reserves. The table also shows the reestimated amount of the previously recorded reserves as adjusted for new information received as of the end of each succeeding year. The estimate changes as more information becomes known about the frequency and severity of claims for individual years. The “net cumulative redundancy (deficiency)” represents the aggregate change to date from the original estimate on the top line of the table. The table also shows the cumulative net paid amounts as of successive years with respect to the net reserve liability.

Adverse development on two whole account stop loss covers written in 2000 principally account for the deterioration of the reserve balances at December 31, 2000 and December 31, 2001, respectively. The contracts have workers compensation as the principal underlying risk, where losses incurred and settled by the underlying reinsured exceeded the Company’s estimates and consequently resulted in additional losses being recorded by the Company. The reserve for the first of these two contracts was increased by $11.2 million in the year ended December 31, 2001 but was subsequently reduced by $10.2 million at final commutation of the liability in 2002.

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The reserve for the second of these contracts was increased by $36.8 million in the year ended December 31, 2002 based on loss information received. Consequently, the reserve increase with respect to this contract affected both the 2000 and 2001 balance sheet reserve re-estimation in the table above. For this contract, the adverse loss development triggered additional premiums, net of acquisition costs and inclusive of interest on premiums, of $29.2 million to the Company. The contract was commuted in 2003 with no further loss development.

The Company structures a number of its contracts with features to reduce its overall loss exposure by requiring clients to pay additional premiums in the event of adverse loss activity. A summary of additional premiums relating to contracts where the loss development has triggered this type of premium together with the effect of those premiums on the net cumulative reserve redundancy (deficiency) is as follows: