Exhibit 10.35

                  Letter Agreement to the Management Agreement


         WHEREAS,  XL  Capital  Assurance  Inc.,  a  New  York  domiciled  stock
insurance  corporation  ("XLCA"),  and XL Investment  Management  Ltd, a Bermuda
domiciled  company  ("XLIML"),  are  parties  to  a  Management  Agreement  (the
"Agreement") effective July 26, 2005; and

         WHEREAS,  pursuant  to  Section 15 of the  Agreement,  any party to the
Agreement has a right to terminate  the Agreement by providing  ninety (90) days
prior written notice to the other party; and

         WHEREAS,  XLCA desires to terminate  the Agreement  effective  upon the
date of the initial public offering of the shares of Security Capital  Assurance
Ltd. ("SCA"), the ultimate parent company of XLCA.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

         1.       Due to the  uncertainty  of the  date  of the  initial  public
                  offering of the shares of SCA,  each of the parties agree that
                  the notice  requirements under Section 15 of the Agreement are
                  hereby waived.

         2.       Each of the parties acknowledge and confirm that the Agreement
                  will  terminate  effective upon the date of the initial public
                  offering of the shares of SCA.

         3.       Each of the parties  further  acknowledge and confirm that the
                  obligations  of XLCA  under  the  terms of the  Agreement  are
                  released  and  discharged  and that  XLCA  shall  not have any
                  further   obligations   thereunder,   subject  to  XLCA  being
                  obligated to furnish to XLIML all  necessary  and  appropriate
                  payments  and/or  documentation  consistent with the terms and
                  conditions of the Agreement.

         4.       This  Agreement  may be executed  in two or more  counterparts
                  each of which shall  constitute an original,  but all of which
                  when taken together shall constitute one agreement.  Any Party
                  may  deliver  a  signed  counterpart  signature  page  of this
                  Agreement  by fax and  such  faxed  signature  pages  shall be
                  deemed to be an original for all purposes.

         5.       The terms and  conditions of this  Agreement and the rights of
                  the parties  hereunder  shall be governed by and  construed in
                  all respects in  accordance  with the laws of the State of New
                  York,  without  regard to conflicts of law that would  require
                  the application of the laws of any other jurisdiction.

                                       1
<PAGE>

         IN  WITNESS  WHEREOF,   this  Agreement  is  hereby  executed  by  duly
authorized officers of the parties hereto as of the date first above written.




                                            XL CAPITAL ASSURANCE INC.


                                            By:___________________________
                                            Title:___________________________


                                            XL INVESTMENT MANAGEMENT LTD


                                            By:__________________________
                                            Title:___________________________


                                       2