Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

ITEM5.02

Resignation

By letter received on April21, 2017, Mr.Adam Szakmary, advised
Blue Capital Reinsurance Holdings Ltd. (the Company or BCRH) of
his resignation as Chief Executive Officer (CEO) and director
with immediate effect. Mr.Szakmary served as CEO and a member of
the board of directors (the Board) since August 2015.

Appointment of CEO

Following Mr.Szakmarys resignation, the Company appointed Michael
J. McGuire as CEO, effective as of April24, 2017. Mr.McGuire has
had executive responsibility for Blue Capital Management Ltd.
(the Manager), and has been a Director of the Manager and
Chairman of the Board for Blue Capital Reinsurance Holdings Ltd.
since August 2015. He has served as Chief Financial Officer since
January 2006 of Endurance Specialty Holdings Ltd. (Endurance),
the owner of the Manager and a wholly owned subsidiary of Sompo
Holdings, Inc.Prior to this role, he led Endurances external
reporting, treasury and Sarbanes-Oxley compliance initiatives
from 2003 through 2005. Prior to joining Endurance, Mr.McGuire
gained a broad range of public accounting experience in audit and
advisory roles in the United States, Bermuda and Europe, which
included providing transaction accounting, structuring and due
diligence services to private equity and strategic investors on
mergers and acquisitions. Mr.McGuire is a Certified Public
Accountant and a member of the American Institute of Certified
Public Accountants

Mr.McGuire will continue to serve as the Chief Financial Officer
of Endurance. Mr.McGuire will not receive any compensation
directly from the Company for his services as CEO.

Appointment of Director

In light of the Board vacancy caused by Mr.Szakmarys resignation,
on April24, 2017, the Board appointed Mr.JohnV. Del Col as a
ClassB director to serve until the 2018 Annual General Meeting of
the Companys shareholders or until his earlier resignation or
removal. Mr.Del Col will not serve on either of the Boards
committees.

John V. Del Col serves as a Director of the Manager and has been
the General Counsel and Secretary of Endurance since 2003. Prior
to joining Endurance inthis role in January 2003,Mr.Del Col was
General Counsel and Deputy General Counsel for several property
and casualty reinsurers and a merchant bank, having begun his
career in associate roles at several New York law firms. He holds
a JD from Harvard University and an AB from Dartmouth College. He
is admitted to practice law in New York State. We believe Mr.Del
Cols qualifications to serve on the Board include his
professional legal experience of over 20 years in the insurance
and reinsurance industries. Mr.Del Col is 55 years old.

Each director receives, or is entitled to receive, the following
compensation for services as a director: an annual cash retainer
of $50,000 and an annual grant of restricted share units with a
grant-date fair value of approximately $25,000, which vests over
a three-year period (Director Compensation).

In connection with his appointment as a director, Mr.Del Col is
entitled to the Director Compensation.On April25, 2017, Mr.Del
Col entered into a written letter agreement instructing the
Company to assign to Endurance his rights to any remuneration,
including but not limited to cash, equity and equity-based
awards, paid, payable or granted to him in his capacity as a
director of BCRH for so long as he remains an Endurance
employee.The letter agreement is attached to this report as
Exhibit 10.1.

Certain Relationships and Related Transactions and
Director Independence

Messrs.McGuire and Del Col are employees, directors and /or
officers of the Endurance companies that perform services for the
Company. Messrs. McGuire and Del Col are also directors of Blue
Capital Re Ltd. (Blue Capital Re) and Blue Capital Re ILS Ltd.,
the Companys wholly-owned subsidiaries.

Endurance currently provides services to the Company through the
following arrangements:

BW
Retrocessional
Agreement. Through a retrocessional
contract dated December31, 2013 (the BW Retrocessional
Agreement), between Blue Capital Re and Blue Water Re Ltd. a
wholly-owned subsidiary of Endurance (Blue Water Re). Blue Water
Re has the option to cede to Blue Capital Re up to 50% of its
participation in the ceded reinsurance business it writes,
provided that such business is in accordance with the Companys
underwriting guidelines. to the BW Retrocessional Agreement, Blue
Capital Re may participate in: (i)retrocessional, quota share or
other agreements between Blue Water Re and Endurance or other
third-party reinsurers, which provides it with the opportunity to
participate in a diversified portfolio of risks on a proportional
basis; and (ii)fronting agreements between Blue Water Re and
Endurance or other well capitalized third-party rated reinsurers,
which allows Blue Capital Re to transact business with
counterparties who prefer to enter into contracts with rated
reinsurers.

Investment
Management
Agreement. The Company has entered into
an Investment Management Agreement with the Manager. to the terms
of the Investment Management Agreement, the Manager has full
discretionary authority, including the delegation of the
provision of its services, to manage the Companys assets, subject
to the Companys underwriting guidelines, the terms of the
Investment Management Agreement and the oversight of the Board.

to the Investment Management Agreement, the Company is obligated
to pay the Manager a management fee (the Management Fee) equal to
1.5% of our average total shareholders equity (as defined in the
Investment Management Agreement) per annum, calculated and
payable in arrears in cash each quarter (or part thereof) that
the Investment Management Agreement is in effect.

As of December31, 2016, the Companys total shareholders equity
was $183.3million.Assuming that the Companys average total
shareholders equity remains at this level in future periods, the
Company would expect to pay the Manager a Management Fee of
approximately $2.7million per year to this agreement.

Underwriting
and Insurance
Management
Agreement. The Company, Blue Capital Re
and the Manager have entered into an Underwriting and Insurance
Management Agreement (the Underwriting and Insurance Management
Agreement). to the Underwriting and Insurance Management
Agreement, the Manager provides underwriting, risk management,
claims management, ceded retrocession agreements management and
actuarial and reinsurance accounting services to Blue Capital Re.
The Manager has full discretionary authority to manage the
underwriting decisions of Blue Capital Re, subject to the
Companys underwriting guidelines, the terms of the Underwriting
and Insurance Management Agreement and the oversight of the
Companys and Blue Capital Res boards of directors.

to the Underwriting and Insurance Management Agreement, the
Company is obligated to pay the Manager a performance fee (the
Performance Fee) which is equal to 20% of our pre-tax,
pre-Performance Fee income over a hurdle amount (as defined in
the Underwriting and Insurance Management Agreement) and payable
in arrears in cash each quarter (or part thereof) that such
agreement is in effect.

Since the Underwriting and Insurance Management Agreement is
dependent on the Companys future performance, the Company is
unable to determine the amount of Performance Fees the Company
would expect to pay the Manager in future periods to this
agreement. To date, the Company has incurred $1.8million in
Performance Fees to this agreement.

Administrative
Services
Agreement. The Company has entered into
an Administrative Services Agreement with the Manager, as amended
on November13, 2014 (the Administrative Services Agreement). to
the terms of the Administrative Services Agreement, the Manager
provides the Company with support services, including the
services of the Companys Chief Financial Officer, as well as
finance and accounting, internal audit, claims management and
policy wording, modeling software licenses, office space,
information technology, human resources and administrative
support.

to the Administrative Services Agreement, the Company is
obligated to reimburse the Manager for various fees, expenses and
other costs in connection with the services provided under the
terms of this agreement, including the services of the Companys
Chief Financial Officer, modeling software licenses and finance,
legal and administrative support.

The Company currently expects to pay the Manager approximately
$0.6million per year in future periods to this agreement.

CreditAgreement.On
May6, 2016, the Company entered into the 2016 Credit Facility
with Endurance Investment Holdings Ltd. (the Lender), a
wholly-owned subsidiary of Endurance. The 2016 Credit Facility
provides the Company with an unsecured $20.0million revolving
credit facility for working capital and general corporate
purposes and expires on September30, 2018. The 2016 Credit
Facility replaces the 2014 Credit Agreement and related Guarantee
Agreement which expired on April29, 2016. Borrowings under the
2016 Credit Facility bear interest, set at the time of the
borrowing, at a rate equal to the applicable LIBOR rate plus 150
basis points. A one-time fee of $20,000 was due to the Lender in
connection with establishing the 2016 Credit Facility. The 2016
Credit Facility contains covenants that limit the Companys
ability, among other things, to grant liens on its assets, sell
assets, merge or consolidate, or incur debt. If the Company fails
to comply with any of these covenants, the Lender could revoke
the facility and exercise remedies against the Company. In
addition, in the event of a default in the performance of any of
the agreements or covenants under certain management agreements
with the Manager by the Company, the Lender has the right to
terminate the 2016 Credit Facility.

As of April25, 2017, the Company had no outstanding borrowings
under the 2016 Credit Facility.

Certain
Termination
Provisions
Associated
with the
Foregoing
Agreements. The Company may not
terminate the Investment Management Agreement, the Underwriting
and Insurance Management Agreement or the Administrative Services
Agreement prior to November12, 2018, whether or not the Managers
performance results are satisfactory. Upon any termination or
non-renewal of either of the Investment Management Agreement or
the Underwriting and Insurance Management Agreement (other than
for a material breach by, or the insolvency of, the Manager), the
Company must pay a one-time termination fee to the Manager equal
to 5% of the Companys GAAP shareholders equity, calculated as of
the most recently completed quarter prior to the date of
termination.

As of December31, 2016, if the Company were to terminate either
the Investment Management Agreement or the Underwriting and
Insurance Management Agreement, the Company would be required to
pay the Manager a one-time termination fee of approximately
$9.2million.

Shareholder and Registration Rights Agreement

Private
Placement. Upon the completion of the
initial public offering and through a private placement,
Montpelier Reinsurance Ltd. purchased 2,500,000 Common Shares at
a price of $20.00 per share. In connection with the Private
Placement, we entered into a shareholder and registration rights
agreement, dated November12, 2013 (the Shareholder and
Registration Rights Agreement), with Montpelier Re Holdings Ltd.,
now by operation of law, Endurance.

Governance. to the Shareholder and
Registration Rights Agreement, Endurance has the right to
nominate two of our five directors (or, if the Board consists of
more than five directors, not less than 40% of the total Board
seats at any given time) until the later of the date on which:
(i)Endurance sells any common shares; and (ii)Endurance owns less
than 5% of the outstanding common shares. Endurance also has the
right to designate one of its nominees as Chairman.

to the Shareholder and Registration Rights Agreement, for so long
as Endurance has the right to nominate two directors to the
Board; (i)if the size of the Board is five, a quorum of the Board
cannot exist unless at least one director nominated by Endurance
is present at a meeting of the Board; and (ii)if the size of the
Board is greater than five, a quorum of the Board cannot exist
unless at least two directors nominated by Endurance are present
at a meeting of the Board.

Registration
Rights. to the Shareholder and
Registration Rights Agreement, the Company has granted Endurance
registration rights with respect to the common shares purchased
in the Private Placement and any other common shares Endurance
may own. These rights include demand registration rights, shelf
registration rights and piggyback registration rights, as well as
customary indemnification. All fees, costs and expenses related
to any registrations will be borne by the Company, other than
underwriting discounts and commissions.

Demand
Registration
Rights. The Shareholder and
Registration Rights Agreement grants Endurance demand
registration rights. The Company is required, upon the written
request of Endurance, to use the Companys reasonable best efforts
to effect registration of those common shares requested to be
registered by Endurance promptly after receipt of the request.
The Company is not required to effect any such demand
registration within 180 days after the effective date of a
previous demand registration.

Shelf
Registration
Rights. The Shareholder and
Registration Rights Agreement grants Endurance shelf registration
rights. Endurance may demand that we file a shelf registration
statement with respect to some or all of the common shares it
holds, and, upon such demand, the Company is required to use its
reasonable best efforts to effect such registration.

Piggyback
Registration
Rights. The Shareholder and
Registration Rights Agreement grants Endurance piggyback
registration rights. If the Company registers any common shares,
either for the Companys own account or for the account of other
security holders, Endurance is entitled, subject to certain
limitations, to include some or all of the common shares it holds
in the registration.

Corporate
Opportunities. to the Shareholder and
Registration Rights Agreement, Endurance or any of its affiliates
or any of its or their respective directors, officers, employees,
partners or agents are permitted to engage in activities or
businesses that are competitive with the Company and will have no
duty to refrain from engaging in such activities or businesses.
The Shareholder and Registration Rights Agreement also generally
releases Endurance or any of its affiliates or any of its or
their respective directors, officers, employees, partners or
agents from referring any business opportunity to the Company.

Preemptive
Rights. to the Shareholder and
Registration Rights Agreement, the Company has granted Endurance
preemptive rights to participate, at Endurances option, in any
offerings of our equity securities. Endurances preemptive rights
entitle it to participate in any issuance of equity securities by
the Company based on Endurances pro rata portion of common shares
that it holds at the time of such issuance.

General. The Shareholder and
Registration Rights Agreement provides that, except as required
by applicable law, neither the Company nor the Board shall take
any action to cause the amendment of the Companys organizational
documents in a manner that is inconsistent with, or adverse to,
Endurances governance and related rights under the Shareholder
and Registration Rights Agreement. In addition, our Bye-Laws will
be read and construed as one with the Shareholder and
Registration Rights Agreement, and the provisions of the
Shareholder and Registration Rights Agreement are incorporated
into such Bye-Laws.

(d)Exhibits

About Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH)

Blue Capital Reinsurance Holdings Ltd. provides collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company conducts its operations through its subsidiaries, including Blue Capital Re Ltd. (Blue Capital Re), which provides collateralized reinsurance, and Blue Capital Re ILS Ltd. (Blue Capital Re ILS), which conducts hedging and other investment activities. Blue Capital Re provides reinsurance to third-party insurance and reinsurance companies through reinsurance contracts, either directly with the cedant or on a fronted basis. Blue Capital Re ILS may purchase catastrophe bonds to access certain risks. Blue Capital Re or Blue Capital Re ILS may buy and sell industry loss warranties as a way to access certain risks. Blue Capital Re ILS’ portfolio may include over-the-counter or exchange-traded futures or options listed on catastrophe indexes, such as catastrophe or weather derivatives.

Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) Recent Trading Information

Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) closed its last trading session down -0.05 at 19.50 with 25,534 shares trading hands.