<PAGE>   1
                                                                   EXHIBIT 10.27
                           ODYSSEY RE HOLDINGS CORP.
                               STOCK OPTION PLAN
PLAN, as amended from time to time (the "Plan"), are to advance the interests of
Odyssey Re Holdings Corp., a Delaware corporation, and any successor thereto
(the "Company"), by linking the personal interests of participants to those of
the Company's stockholders by providing participants with an incentive for
outstanding performance. The Plan is further intended to assist the Company in
its ability to motivate, and retain the services of, participants upon whose
judgment, interest and special effort the successful conduct of the Company's
and its Subsidiaries' (as such term is defined below) operations is largely
     (a)   Definitions.  For purposes of the Plan, the following capitalized
        words shall have the meanings set forth below:
     "Award" means a grant of an Option pursuant to Section 7 of the Plan.
     "Award Document" means an agreement, certificate or other type or form of
document or documentation approved by the Committee which sets forth the terms
and conditions of an Award. An Award Document may be in written, electronic or
other media, may be limited to a notation on the books and records of the
Company and, unless the Committee requires otherwise, need not be signed by a
representative of the Company or a Participant.
     "Board" means the Board of Directors of the Company.
     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations (including any proposed regulations)
promulgated thereunder.
     "Committee" means the Compensation Committee of the Board, or such other
committee of the Board as may be designated from time to time by the Board to
administer the Plan.
     "Common Stock" means the common stock, par value $.01 per share, of the
     "Date of Grant" means the date of grant of an Award as set forth in the
applicable Award Document.
     "Disability" means an Employee's inability to fulfill his or her employment
or directorial obligations to the Company or any Subsidiary by reason of any
medically determinable physical or mental impairment which has lasted or in the
determination of the Committee or of such other person(s), if any, as the
Committee may appoint with the consent of the Board, is likely to last for a
continuous period of at least twenty-six (26) weeks or for any period of
twenty-six (26) weeks (whether or not consecutive) in any consecutive twelve
(12) month period.
     "Effective Date" means May 23, 2001.
     "Eligible Individual" means an individual described in Section 5(a) who is
eligible for an Award under the Plan.
     "Employee" means a director or an employee of the Company or of any
Subsidiary (including, without limitation, a common law employee and an
individual who provides substantial service for the Company or any Subsidiary
pursuant to a contractual arrangement entered into by and between the Company or
any Subsidiary and an independent entity).
     "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
<PAGE>   2
     "Option" means a nonqualified stock option granted under Section 7, which
is not an "incentive stock option" within the meaning of Section 422 of the
     "Participant" means an Eligible Individual described in Section 5(a) who
has been granted an Award under the Plan.
     "Pro Rata Portion" means, in respect of a particular Option on a particular
date, the portion represented by the fraction A divided by B, where A is the
number of days from (but excluding) the date the particular Option was granted
until (and including) the particular date and B is the number of days from (but
excluding) the date the particular Option was granted until (and including) the
date when that Option would have been fully vested.
     "Retirement Age" means the age regarded by the Company or a Subsidiary as
the normal retirement age for its employees in general, based upon the Company's
or the Subsidiary's normal employment and related policies and practices.
     "Shares" means the shares of Common Stock and any shares or other
securities into which such Shares have been for whatever reason changed or which
have for whatever reason been substituted for, or distributed (as a dividend or
otherwise) upon, such Shares.
     "Subsidiary" means any (i) corporation if fifty percent (50%) or more of
the total combined voting power of all classes of stock is owned, either
directly or indirectly, by the Company or another Subsidiary or (ii) limited
liability company if fifty percent (50%) or more of the membership interests is
owned, either directly or indirectly, by the Company or another Subsidiary.
     "Termination of Employment" means a Participant's termination of employment
or directorship with the Company or a Subsidiary for any reason whatsoever
(including, without limitation, as a result of termination by the Company or a
Subsidiary without cause) at a time when the Participant is not (and is not
imminently about to be) an employee or a director of either the Company or any
     (b)   Rules of Construction. The masculine pronoun shall be deemed to
           include the feminine pronoun and the singular form of a word shall be
           deemed to include the plural form, unless the context requires
           otherwise. Unless the text indicates otherwise, references to
           sections are to sections of the Plan.
     (a)   Power and Authority of the Committee.  The Plan shall be administered
           by the Committee, which shall have full power and authority, subject
           to the express provisions hereof:
        (i)   to select Participants from the Eligible Individuals;
        (ii)   to make Awards in accordance with the Plan;
        (iii)  to determine the number of shares of Common Stock subject to each
        (iv)  to determine the terms and conditions of each Award, including,
              without limitation, those related to transferability, vesting,
              forfeiture and exercisability and the effect, if any, of a
              Participant's Termination of Employment, and including the
              authority to adjust the terms of an Award to comply with the laws
              of any applicable jurisdiction;
        (v)   to amend the terms and conditions of an Award after the granting
              thereof to a Participant in a manner that either is not
              prejudicial to the rights of such Participant in such Award or has
              been consented to in writing by the Participant;
        (vi)  to specify and approve the provisions of the Award Documents
              delivered to Participants in connection with their Awards;
        (vii) to construe and interpret any Award Document delivered under the
        (viii) to prescribe, amend and rescind rules and procedures relating to
               the Plan;
<PAGE>   3
        (ix)  subject to the provisions of the Plan and subject to such
              additional limitations and restrictions as the Committee may
              impose, to delegate to one or more officers of the Company some or
              all of its authority under the Plan;
        (x)   to adopt, on behalf of the Company, one or more sub-plans
              applicable to separate classes of Participants who are subject to
              the laws of jurisdictions outside of the United States;
        (xi)  to employ such legal counsel, independent auditors and consultants
              as it deems desirable for the administration of the Plan and to
              rely upon any opinion or computation received therefrom; and
        (xii) to make all other determinations (including, without limitation,
              factual determinations) and to formulate such procedures as may be
              necessary or advisable for the administration of the Plan.
     (b)   Plan Construction and Interpretation.  The Committee shall have full
           power and authority, subject to the express provisions hereof, to
           construe and interpret the Plan.
     (c)   Determinations of Committee Final and Binding.  All determinations by
           the Committee in carrying out and administering the Plan and in
           construing and interpreting the Plan shall be final, binding and
           conclusive for all purposes and upon all interested persons. Every
           action, including an exercise of discretion by the Committee, is
           wholly without precedent value for any purpose.
     (a)   Plan Limit.  Subject to Section 9, the Company is authorized to issue
           Awards on underlying Common Stock which together with the awards of
           Common Stock granted under the Company's Restricted Share Plan do not
           in the aggregate exceed 10% of the Company's issued and outstanding
           Common Stock as of the last business day of each calendar year (the
           "Plan Limit"). Shares utilized in connection with the Plan must be
           already outstanding shares purchased on the open market or otherwise
           acquired, except that a maximum aggregate of 80,000 Options may be
           issued on underlying newly issued shares in connection with the
           initial public offering of the Company's Common Stock.
     (b)   Rules Applicable to Determining Shares Available for Issuance.  For
           purposes of determining the number of shares of Common Stock that
           remain available for issuance under the Plan, the following shares
           shall be added back to the Plan Limit and again be available for
        (i)   The number of shares tendered to pay the exercise price of an
              Option or to satisfy a Participant's tax withholding obligations;
        (ii)   The number of shares withheld from any Award to satisfy a
               Participant's tax withholding obligations or, if applicable, to
               pay the exercise price of an Option; and
        (iii)  The number of shares of Common Stock underlying any Option that
               are surrendered and cancelled without being exercised.
     (a)   Eligible Individuals.  Awards may be granted by the Committee, in its
           sole discretion, to those individuals who are Employees of the
           Company and any Subsidiary that is selected by the Company and are,
           in the Committee's good faith belief, subject to the tax laws of a
           jurisdiction outside of the United States which would render
           participation in the Company's Restricted Share Plan disadvantageous
           for such individuals or for the Company (any Award being valid even
           if the Committee was for any reason wrong in such belief).
     (b)   Awards to Participants.  The Committee shall have no obligation to
           grant any Eligible Individual an Award or to designate an Eligible
           Individual as a Participant.
<PAGE>   4
     6.   AWARD DOCUMENT.  The terms and provisions of each Award may be set
forth in an Award Document in a form approved by the Committee, which shall
incorporate the Plan by reference. The exercise price, vesting, forfeiture,
exercisability conditions and other restrictions applicable to an Award (which
may include, without limitation, restrictions on transferability) shall be
determined by the Committee and may be set forth in the applicable Award
     7.   STOCK OPTIONS.
     (a)   Form of Award.  The Committee is authorized to grant Options to
           Eligible Individuals. An Option shall entitle a Participant to
           purchase a specified number of Shares during a specified time at an
           exercise price determined in accordance with Section 7(b) below. An
           Option shall become exercisable after or at the time such Option
           becomes vested as determined by the Committee. An Option shall be
           exercisable during such period(s) as shall be determined by the
           Committee and set forth in the Award Document relating to such Option
           and the Committee may extend the term of an Option after the Date of
           Grant. An Option which is not exercised during its period of
           exercisability shall expire.
     (b)   Exercise Price.  The exercise price per share of Common Stock
           purchasable under an Option shall be fixed by the Committee on the
           Date of Grant or, alternatively, shall be determined by a method
           specified by the Committee on the Date of Grant.
     (c)   Method of Exercise.  Subject to the provisions of the applicable
           Award Document, the exercise price of an Option may be paid in cash
           or previously owned shares, or a combination thereof, and, if the
           applicable Award Document so provides, in whole or in part through
           the withholding of shares subject to the Option with a value equal to
           the exercise price. The Committee may also establish procedures
           pursuant to which an Option may be exercised through a "cashless
           exercise" procedure involving a broker or dealer approved by the
           Committee, that affords Participants the opportunity to sell
           immediately some or all of the shares underlying the exercised
           portion of the Option in order to generate sufficient cash to pay the
           Option exercise price and/or to satisfy withholding tax obligations
           related to the Option.
     (d)   Death; Disability; Reaching Retirement Age and Termination of
           Employment.  A Participant ceases to be an Eligible Individual for
           purposes of the Plan on the earliest to occur of:
        (i)   the Participant's ceasing for any reason whatsoever to be employed
              or engaged by, or to be a director of, the Company or a Subsidiary
              if the Participant will not imminently after such cessation be
              employed or engaged by, or be a director of, the Company or a
        (ii)   upon the Disability of a Participant (the Board's determination
               as to whether or not a Participant has incurred a Disability
               being final and conclusive and binding on all parties);
        (iii)   the Participant's death; and
        (iv)   the Participant otherwise not being an "Eligible Individual" as
     (e)   The following provisions apply to the unvested portion of an Option
           held by a Participant except to the extent, if any, otherwise
           provided in the applicable Award Document:
        (i)   upon the Participant ceasing to be an Eligible Individual, the
              unvested portion of the Option shall be forfeited and cancelled
              without any payment to such Participant and shall not be
              exercisable in whole or in part unless otherwise provided by the
              Committee, the Plan or the Award Document;
        (ii)   upon the Participant ceasing to be an Eligible Individual because
               of death or Disability, the Pro Rata Portion of the unvested
               portion of an Option shall immediately vest (the number of Shares
               under such option vesting being rounded to the next highest whole
               number of Shares if such number would otherwise include a
               fraction) and the remainder of such unvested portion shall
               immediately expire and shall not be exercisable in whole or in
               part; and
<PAGE>   5
        (iii)  upon the Participant reaching Retirement Age, the unvested
               portion of an Option shall immediately vest in full.
Notwithstanding the foregoing, the Board may in any particular case, in its sole
discretion and without precedent value, suspend or vary the operation of the
foregoing provisions, upon such terms and to such extent as it may determine,
but only in a manner that is not adverse to the Participant and complies with
applicable laws and stock exchange rules.
     (f)   Upon a Participant's death, Disability, reaching Retirement Age or
           Termination of Employment, the Participant shall, except to the
           extent, if any, otherwise provided in the applicable Award Document,
           retain the right to exercise the vested portion of any Option held by
           such Participant for the applicable term of the Option.
     (g)   Fractional Shares. No fractional Shares may be issued upon any
           exercise of an Option, and the Committee may determine the manner, if
           any, in which fractional share value shall be treated.
     (a)   Non-Transferability of Award.  Unless the Committee determines
           otherwise in its sole discretion, no Award or amount payable under,
           or interest in, the Plan shall be transferable by a Participant
           except by will or the laws of descent and distribution or otherwise
           be subject in any manner to anticipation, alienation, sale, transfer,
           assignment, pledge, encumbrance or charge; provided, however, that
           the Committee may, in its sole discretion and subject to such terms
           and conditions as it shall specify, permit the transfer of an Award
           for no consideration to a Participant's family members or to one or
           more trusts or partnerships established in whole or in part for the
           benefit of one or more of such family members (collectively,
           "Permitted Transferees"). Any Award transferred to a Permitted
           Transferee shall be further transferable only by will or the laws of
           descent and distribution or, for no consideration, to another
           Permitted Transferee of the Participant. The Committee may, in its
           sole discretion, permit transfers of Awards other than those
           contemplated by this Section 8(a). During the lifetime of the
           Participant, an Option shall be exercisable only by the Participant
           or by a Permitted Transferee to whom such Option has been transferred
           in accordance with this Section 8(a).
     (b)   Rights with Respect to Shares.  A Participant shall have no rights as
           a stockholder with respect to shares of Common Stock covered by an
           Award until the date the Participant or his nominee becomes the
           holder of record of such shares, and except as herein otherwise
           provided no adjustments shall be made for cash dividends or other
           distributions or other rights as to which there is a record date
           preceding the date such person becomes the holder of record of such
           shares. The Company shall not be entitled to exercise any voting
           rights in respect of the Shares held by it unless the Company has
           both sought and obtained instructions from a Participant, in which
           case the Company shall exercise the voting rights in respect of the
           Shares which are or may be transferable to such Participant upon the
           exercise of such Participant's Options in accordance with the
           instructions of such Participant (provided that, for greater
           certainty, nothing herein shall obligate the Company to seek
           instructions from any or all of the Participants). Except as the
           following may be varied by action taken under Section 9, the Company
           shall be entitled (to the exclusion of any Participant) to all
           dividends and other distributions in respect of the Shares held by it
           at all times prior to the transfer of such Shares to a Participant
           upon the exercise of an Option.
     (c)   No Right to Continued Employment.  No Eligible Individual or
           Participant shall have any claim or right to receive grants of Awards
           under the Plan. Nothing in the Plan or in any Award or Award Document
           shall confer upon any Employee any right to continued employment or
           directorship with the Company or any Subsidiary or interfere in any
           way with the right of the Company or any Subsidiary to terminate the
           employment or directorship of any of its Employees at any time, with
           or without cause. Each Participant, by accepting an Award, agrees
           with the Company and its Subsidiaries that he or she will not be
           entitled to any damages, payment or claim with respect to
<PAGE>   6
        or as a result of any forfeiture of the Award that occurs as a result of
        the termination of the Participant's employment or directorship with the
        Company or any Subsidiary, regardless of the reason for or circumstances
        of such employment or directorship termination, or whether such
        employment or directorship termination was or was not wrongful and of
        whether or not the period of notice of termination given to the
        Participant was sufficient.
     (d)   Consent to Plan.  By accepting any Award or other benefit under the
           Plan, each Participant and each person claiming under or through such
           Participant shall be conclusively deemed to have indicated his
           acceptance and ratification of, and consent to, any action taken
           under the Plan by the Company, the Board or the Committee.
     (e)   Wage and Tax Withholding.  The Company or any Subsidiary is
           authorized to withhold from any Award or any compensation or other
           payment to a Participant amounts of withholding and other taxes due
           in connection with any Award, and to take such other action as the
           Committee may deem necessary or advisable to enable the Company and
           the Participants to satisfy obligations for the payment of
           withholding taxes and other tax obligations relating to any Award.
           This authority shall include authority for the Company to withhold or
           receive Common Stock or other property and to make cash payments in
           respect thereof in satisfaction of a Participant's tax obligations,
           either on a mandatory or elective basis in the sole discretion of the
     (f)   Compliance with Securities Laws.  An Award may not be exercised, and
           no shares of Common Stock may be issued in connection with an Award,
           unless (i) the issuance of such shares has been registered under the
           Securities Act of 1933, as amended, and qualified under applicable
           state "blue sky" laws, or the Company has determined that an
           exemption from registration and from qualification under such state
           "blue sky" laws is available and (ii) the issuance of such shares
           complies with any other applicable securities laws.
     (g)   Unfunded Plan.  The Plan is intended to constitute an "unfunded" plan
           for incentive compensation. Nothing contained in the Plan (or in any
           Award Documents or other documentation related thereto) shall give
           any Participant any rights that are greater than those of a general
           creditor of the Company; provided, however, that the Committee may
           authorize the creation of trusts and deposit therein cash, shares of
           Common Stock or other property or make other arrangements to meet the
           Company's obligations under the Plan. Such trusts or other
           arrangements shall be consistent with the "unfunded" status of the
           Plan unless the Committee determines otherwise. The trustee of such
           trusts may be authorized to dispose of trust assets and reinvest the
           proceeds in alternative investments, subject to such terms and
           conditions as the Committee may specify.
     (h)   Other Employee Benefit Plans.  Payments received by a Participant
           under any Award made pursuant to the Plan shall not be included in,
           nor have any effect on, the determination of benefits under any other
           employee benefit plan or similar arrangement provided by the Company,
           unless otherwise specifically provided for under the terms of such
           plan or arrangement or by the Committee.
     (i)   Compliance with Rule 16b-3.  Notwithstanding anything contained in
           the Plan or in any Award Document to the contrary, if the
           consummation of any transaction under the Plan would result in the
           possible imposition of liability on a Participant pursuant to Section
           16(b) of the Exchange Act, the Committee shall have the right, in its
           sole discretion, but shall not be obligated, to defer such
           transaction or the effectiveness of such action to the extent
           necessary to avoid such liability, but in no event for a period
           longer than six months.
     (j)   Expenses.  The costs and expenses of administering and implementing
           the Plan shall be borne by the Company.
     (k)   Liability and Indemnification.
        (i)   Neither the Company nor any Subsidiary shall be responsible in any
              way for any action or omission of the Committee or any other
              fiduciaries in the performance of their duties and
<PAGE>   7
             obligations as set forth in the Plan. Furthermore, neither the
             Company, any Subsidiary nor the Committee shall be responsible for
             any act or omission of any of their agents, or with respect to
             reliance upon the advice of their counsel, provided that the
             Company, the appropriate Subsidiary or the Committee, as the case
             may be, relied in good faith upon the action of such agent or the
             advice of such counsel.
        (ii)   Neither the Company, any Subsidiary, the Committee, nor any
               agent, employee, officer, director, stockholder or member of any
               of them, nor any other person shall have any liability or
               responsibility to any Participant or otherwise with respect to
               the Plan, except with respect to fraud, bad faith or willful
               misconduct on their part or as otherwise expressly provided
     (l)   Cooperation of Parties.  All parties to the Plan and any person
           claiming any interest hereunder agree to perform any and all acts and
           execute any and all documents and papers which are necessary or
           desirable for carrying out the Plan or any of its provisions.
     (m)  Notices.  Each notice relating to the Plan shall be in writing and
          delivered by recognized overnight courier or certified mail to the
          proper address or, optionally, to any individual personally. Except as
          otherwise provided in any Award Document, all notices to the Company
          or the Committee shall be addressed to it c/o the Company at its
          registered office, Attn: Corporate Secretary. All notices to
          Participants, former Participants, beneficiaries or other persons
          acting for or on behalf of such persons which are not delivered
          personally to an individual shall be addressed to such person at the
          last address for such person maintained in the records of the
          Committee or the Company.
     (a)   Authority of the Company and Stockholders.  The existence of the
           Plan, the Award Documents and the Awards granted hereunder shall not
           affect or restrict in any way the right or power of the Company or
           the stockholders of the Company to make or authorize any adjustment,
           recapitalization, reorganization or other change in the Company's
           capital structure or its business, any merger or consolidation of the
           Company, any dividend or other distribution, any issue of stock or of
           options, warrants or rights to purchase stock or of bonds,
           debentures, preferred or prior preference stocks whose rights are
           superior to or affect the Common Stock or the rights thereof or which
           are convertible into or exchangeable for Common Stock, or the
           dissolution or liquidation of the Company, or any sale or transfer of
           all or any part of its assets or business, or any other corporate act
           or proceeding, whether of a similar character or otherwise.
     (b)   Change in Capitalization.  Notwithstanding any provision of the Plan
           or any Award Document, if there is any change in the outstanding
           Shares by reason of a stock dividend or split, a recapitalization, or
           a consolidation, combination or exchange of shares, or if there is
           any other change (including, possibly, an extraordinary dividend)
           which the Committee in its sole discretion determines is a
           sufficiently fundamental change to warrant the action hereinafter
           described, the Committee shall make, subject to any prior approval
           required of relevant stock exchanges or other applicable regulatory
           authorities, if any, an appropriate substitution or adjustment in (i)
           the exercise price of any unexercised Options under the Plan; and/or
           (ii) the number and kind of shares or other securities subject to
           unexercised Options under the Plan; provided, however, that no
           substitution or adjustment will obligate the Company to transfer
           fractional Shares. In the event of the reorganization or the
           amalgamation, merger or consolidation of the Company with another
           corporation, the Committee may make such provision for the protection
           of the rights of Eligible Individuals and Participants as the
           Committee in its discretion deems appropriate. The determination of
           the Committee, as to any such substitution or adjustment or as to
           there being no need for the same, will be final and binding on all
     10. EFFECTIVE DATE.  The Plan shall become effective on the Effective Date,
subject to subsequent approval thereof by the Company's stockholders, and shall
remain in effect until it has been terminated
<PAGE>   8
pursuant to Section 11. If the Plan is not approved by the stockholders, the
Plan and all interests in the Plan awarded to Participants shall be void ab
initio and of no further force and effect.
     (a)   Notwithstanding anything herein to the contrary, the Board or the
           Committee may, at any time, terminate or, from time to time, amend,
           modify or suspend the Plan; provided, however, that no amendment or
           modification which (i) increases the Plan Limit or (ii) otherwise
           must be approved by stockholders pursuant to applicable rules of an
           exchange or any requirements or any requirements of the Code and the
           regulations promulgated thereunder, shall be effective without
           stockholder approval. However, except as otherwise expressly provided
           herein, no amendment, modification, suspension or termination of the
           Plan shall alter the rights of any Participant existing at such time
           with respect to an Option, except with the express written consent of
           such Participant. The Plan shall continue until earlier terminated by
           the Company pursuant to this Section 11. If the Plan is terminated,
           the provisions of the Plan, and any administrative guidelines,
           regulations and other rules adopted by the Committee with respect to
           the Plan which are in force at the time of such termination, will
           continue in effect in respect of any Options which are outstanding at
           such time and any rights pursuant to any such Options. However,
           notwithstanding the termination of the Plan, the Committee may make
           any amendments to the Plan or the Options which it would have been
           entitled to make if the Plan were still in effect.
     (b)   With the consent of any applicable regulatory authorities, as may be
           required, the Committee may, in its sole discretion and without
           precedent value, amend or modify any particular outstanding Option(s)
           or, in circumstances which the Committee deems appropriate (such a
           circumstance may, for instance, be a change of control of the
           Company), all outstanding Options, so as to:
        (i)   accelerate the Option's vesting or exercisability;
        (ii)   reduce any restrictions on the transferability, vesting or
               exercisability of the Option; or
        (iii)  if the Company ceases to be subject to the terms of the Exchange
               Act or there is a contemplated transaction which would result in
               the Company ceasing to be subject to the terms of the Exchange
               Act, abbreviate the exercise period of all outstanding Options;
upon not less than 30 days' notice to all affected Participants and upon such
terms (including the possible reinstatement of Options) as the Committee
     12. GOVERNING LAW.  The validity, construction and effect of the Plan, any
rules and regulations relating to the Plan, and any Award shall be determined in
accordance with the laws of the State of Delaware applicable to contracts to be
performed entirely within such state and without giving effect to principles of
conflicts of laws.