Exhibit 4.13

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                                     FORM OF

                               GUARANTEE AGREEMENT



                                     BETWEEN



                     SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                                  as Guarantor



                                       AND



                         THE BANK OF NEW YORK (DELAWARE)

                         as Preferred Guarantee Trustee



                                       OF



                      SCOTTISH HOLDINGS STATUTORY TRUST III







                              Dated as of _________


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                                TABLE OF CONTENTS

                                                                            Page


ARTICLE I.    DEFINITIONS......................................................1

         SECTION 1.01.  Definitions and Interpretation.........................1

ARTICLE II.   TRUST INDENTURE ACT..............................................4

         SECTION 2.01.  Trust Indenture Act; Application.......................4
         SECTION 2.02.  List of Holders........................................4
         SECTION 2.03.  Reports by the Preferred Guarantee Trustee.............4
         SECTION 2.04.  Periodic Reports to Preferred Guarantee Trustee........4
         SECTION 2.05.  Evidence of Compliance with Conditions Precedent.......5
         SECTION 2.06.  Events of Default; Waiver..............................5
         SECTION 2.07.  Event of Default; Notice...............................5
         SECTION 2.08.  Conflicting Interests..................................5

ARTICLE III.  POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.....6

         SECTION 3.01.  Powers and Duties of the Preferred Guarantee Trustee...6
         SECTION 3.02.  Certain Rights of Preferred Guarantee Trustee..........7
         SECTION 3.03.  Not Responsible for Recitals or Issuance of Guarantee..9

ARTICLE IV.   PREFERRED GUARANTEE TRUSTEE......................................9

         SECTION 4.01.  Preferred Guarantee Trustee; Eligibility...............9
         SECTION 4.02.  Appointment, Removal and Resignation of the Preferred
                        Guarantee Trustee.....................................10

ARTICLE V.    GUARANTEE.......................................................11

         SECTION 5.01.  Guarantee.............................................11
         SECTION 5.02.  Waiver of Notice and Demand...........................11
         SECTION 5.03.  Obligations Not Affected..............................11
         SECTION 5.04.  Rights of Holders.....................................12
         SECTION 5.05.  Guarantee of Payment..................................12
         SECTION 5.06.  Subrogation...........................................12
         SECTION 5.07.  Independent Obligations...............................12

ARTICLE VI.   LIMITATION OF TRANSACTIONS; SUBORDINATION.......................13

         SECTION 6.01.  Limitations of Transactions...........................13
         SECTION 6.02.  Ranking...............................................13

ARTICLE VII.  TERMINATION.....................................................13

         SECTION 7.01.  Termination...........................................13

ARTICLE VIII. INDEMNIFICATION.................................................13

         SECTION 8.01.  Exculpation...........................................13
         SECTION 8.02.  Indemnification.......................................14

ARTICLE IX.   MISCELLANEOUS...................................................14

         SECTION 9.01.  Successors and Assigns................................14
         SECTION 9.02.  Amendments............................................15
         SECTION 9.03.  Notices...............................................15
         SECTION 9.04.  Benefit...............................................15
         SECTION 9.05.  Governing Law.........................................16


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                                REFERENCE TABLE*

                     Section _________ of ______ Section of
                        Trust Indenture Act Guarantee of
                           1939, as amended Agreement

310(a).......................................................  4.01(a)
310(b).......................................................  4.01(c), 2.08
310(c).......................................................  Inapplicable
311(a).......................................................  2.02(b)
311(b).......................................................  2.02(b)
311(c).......................................................  Inapplicable
312(a).......................................................  2.02(a)
312(b).......................................................  2.02(b)
313..........................................................  2.03
314(a).......................................................  2.04
314(b).......................................................  Inapplicable
314(c).......................................................  2.05
314(d).......................................................  Inapplicable
314(e).......................................................  1.01, 2.05, 3.02
314(f).......................................................  .01, 3.02
315(a).......................................................  3.01(d)
315(b).......................................................  2.07
315(c).......................................................  3.01
315(d).......................................................  3.01(d)
316(a).......................................................  1.01, 2.06, 5.04
316(b).......................................................  5.03
316(c).......................................................  8.02
317(a).......................................................  Inapplicable
317(b).......................................................  Inapplicable
318(a).......................................................  2.01(b)
318(b).......................................................  2.01
318(c).......................................................  2.01(a)

* This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not affect the interpretation of any of its terms or provisions.


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                               GUARANTEE AGREEMENT

          This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of ______, is executed and delivered by Scottish Annuity & Life Holdings,
Ltd., a Cayman Islands exempted company (the "Guarantor"), to The Bank of New
York (Delaware), as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Scottish Holdings Statutory Trust III, a Delaware
statutory trust (the "Issuer").

          WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ______ among the Trustees named therein, the
Guarantor, as Sponsor, and the Holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing $______ aggregate
liquidation amount of its ______ % ______ Securities (liquidation amount of
$______ per preferred security) (the "Preferred Securities") representing
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Declaration;

          WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the sale by the Issuer of its
Common Securities, will be used to purchase the Debentures (as defined in the
Declaration) of the Guarantor which will be deposited with The Bank of New York
(Delaware), as Property Trustee under the Declaration, as Trust Property (as
defined in the Declaration);

          WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and

          WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an event of default (as
defined in the Indenture) has occurred and is continuing, the Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.

          NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders from time to time of the Preferred
Securities.

                                   ARTICLE I.
                                   DEFINITIONS

     SECTION 1.01. Definitions and Interpretation. In this Preferred Securities
Guarantee, unless the context otherwise requires:


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          (a) capitalized terms used in this Preferred Securities Guarantee but
     not defined in the preamble above have the respective meanings assigned to
     them in this Section 1.01;

          (b) a term defined anywhere in this Preferred Securities Guarantee has
     the same meaning throughout;

          (c) all references to "the Preferred Securities Guarantee" or "this
     Guarantee" are to this Preferred Securities Guarantee as modified,
     supplemented or amended from time to time;

          (d) all references in this Preferred Securities Guarantee to Articles
     and Sections are to Articles and Sections of this Preferred Securities
     Guarantee unless otherwise specified;

          (e) a term defined in the Trust Indenture Act has the same meaning
     when used in this Preferred Securities Guarantee unless otherwise defined
     in this Preferred Securities Guarantee or unless the context otherwise
     requires; and

          (f) a reference to the singular includes the plural and vice versa.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

          "Common Securities" means the common securities representing undivided
beneficial interests in the assets of the Issuer and having the rights provided
therefor in the Declaration.

          "Covered Person" means any Holder or beneficial owner of Preferred
Securities.

          "Event of Default" shall have the meaning specified in Section 2.06
(a).

          "Guarantee Payments" means the following payments, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer pursuant to the Declaration or by the
Guarantor pursuant to the Indenture: (i) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, to the extent the
Issuer shall have funds available therefor, (ii) the redemption price (the
"Redemption Price") and all accrued and unpaid Distributions to the date of
redemption to the extent the Issuer shall have funds available therefor, and
(iii) upon a voluntary or involuntary dissolution and liquidation of the Issuer
(other than in connection with a Distribution of Debentures to Holders of such
Preferred Securities or the redemption of all such Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount of $[ ] per Preferred
Security plus all accrued and unpaid Distributions on the Preferred Securities
to the date of payment, to the extent the Issuer shall have funds available
therefor and (b) the amount of assets of the Issuer remaining available for


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Distribution to Holders of Preferred Securities upon a dissolution and
liquidation of the Issuer (in either case, the "Liquidation Distribution"). If
an event of default under the Indenture has occurred and is continuing, the
rights of holders of the Common Securities to receive payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.

          "Holder" means a Person in whose name a Preferred Security is
registered in the Securities Register; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Preferred Guarantee Trustee or any Affiliate of the
Guarantor or the Preferred Guarantee Trustee.

          "Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.

          "Indenture" means the Junior Subordinated Indenture dated as of
_______, 2003, as amended or supplemented from time to time, between Scottish
Annuity & Life Holdings, Ltd. and The Bank of New York, as trustee thereunder.

          "List of Holders" has the meaning specified in Section 2.02(a).

          "Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by the Holders of more
than 50% of the aggregate liquidation amount of all then outstanding Preferred
Securities issued by the Issuer.

          "Officers' Certificate" means a certificate signed by the Chairman,
the President, or any Senior or Executive Vice President and the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Guarantor.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

          "Preferred Guarantee Trustee" means ______ , as trustee hereunder,
until a Successor Preferred Guarantee Trustee (as defined below) has been
appointed and has accepted such appointment pursuant to the terms of this
Preferred Securities Guarantee and thereafter means each such Successor
Preferred Guarantee Trustee.

          "Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any Vice President, any Assistant Vice President, any Trust Officer or
Assistant Trust Officer or any other officer of Corporate Trust Administration
of the Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

          "Senior Indebtedness" means Senior Indebtedness as defined in the
Indenture.


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          "Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.01.

          "Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939, as so amended.

                                  ARTICLE II.
                               TRUST INDENTURE ACT

     SECTION 2.01. Trust Indenture Act; Application.

     (a) This Preferred Securities Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Preferred Securities
Guarantee and shall, to the extent applicable, be governed by such provisions.

     (b) If, and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

     SECTION 2.02. List of Holders.

     (a) The Guarantor shall provide the Preferred Guarantee Trustee (i) within
14 days after each record date for the payment of Distributions (as defined in
the Declaration), a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of a date; provided that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Preferred
Guarantee Trustee by the Guarantor, and (ii) at any other time, within 30 days
of receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Preferred
Guarantee Trustee. The Preferred Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.

     (b) The Preferred Guarantee Trustee shall comply with its obligations under
Sections 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

     SECTION 2.03. Reports by the Preferred Guarantee Trustee. Within 60 days
after May 15 of each year, the Preferred Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.

     SECTION 2.04. Periodic Reports to Preferred Guarantee Trustee. The
Guarantor shall provide to the Preferred Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form and
manner and at the times required by Section 314 of the Trust Indenture Act.


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     SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Preferred Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.

     SECTION 2.06. Events of Default; Waiver.

     (a) An Event of Default means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee;
provided, that except with respect to a default resulting from a failure to pay
any Guarantee Payment, the Guarantor shall have received notice of such default
and shall not have cured such default within 60 days after receipt of such
notice.

     (b) The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Preferred Securities Guarantee, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.

     SECTION 2.07. Event of Default; Notice.

     (a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided that, except in the case of a default in the
payment of a Guarantee Payment, the Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.

     (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.

     SECTION 2.08. Conflicting Interests. The Declaration shall be deemed to be
specifically described in this Preferred Securities Guarantee for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.


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                                  ARTICLE III.
          POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE

     SECTION 3.01. Powers and Duties of the Preferred Guarantee Trustee.

     (a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders, and the Preferred Guarantee
Trustee shall not transfer this Preferred Securities Guarantee to any Person
except a Holder exercising his or her rights pursuant to Section 5.04(iv) or to
a Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Preferred Guarantee
Trustee shall automatically vest in any Successor Preferred Guarantee Trustee
upon acceptance by such Successor Preferred Guarantee Trustee of its appointment
hereunder and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.

     (b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders.

     (c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred and is continuing (and has not been cured
or waived pursuant to Section 2.06), the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use in the conduct of his or her own affairs.

     (d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:

          (i) prior to the occurrence of any Event of Default and after the
     curing or waiving of all such Events of Default that may have occurred:

               (A) the duties and obligations of the Preferred Guarantee Trustee
          shall be determined solely by the express provisions of this Preferred
          Securities Guarantee, and the Preferred Guarantee Trustee shall not be
          liable except for the performance of such duties and obligations as
          are specifically set forth in this Preferred Securities Guarantee, and
          no implied covenants or obligations shall be read into this Preferred
          Securities Guarantee against the Preferred Guarantee Trustee; and

               (B) in the absence of bad faith on the part of the Preferred
          Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
          rely, as to the truth of the statements and the correctness of the
          opinions expressed therein, upon any certificates or opinions
          furnished to the Preferred Guarantee Trustee and


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          conforming to the requirements of this Preferred Securities Guarantee;
          but in the case of any such certificates or opinions that by any
          provision hereof or of the Trust Indenture Act are specifically
          required to be furnished to the Preferred Guarantee Trustee, the
          Preferred Guarantee Trustee shall be under a duty to examine the same
          to determine whether or not they conform to the requirements of this
          Preferred Securities Guarantee;

          (ii) the Preferred Guarantee Trustee shall not be liable for any error
     of judgment made in good faith by a Responsible Officer of the Preferred
     Guarantee Trustee, unless it shall be proved that the Preferred Guarantee
     Trustee was negligent in ascertaining the pertinent facts upon which such
     judgment was made;

          (iii) the Preferred Guarantee Trustee shall not be liable with respect
     to any action taken or omitted to be taken by it in good faith in
     accordance with the direction of the Holders of a Majority in liquidation
     amount of the Preferred Securities relating to the time, method and place
     of conducting any proceeding for any remedy available to the Preferred
     Guarantee Trustee, or exercising any trust or power conferred upon the
     Preferred Guarantee Trustee under this Preferred Securities Guarantee; and

          (iv) no provision of this Preferred Securities Guarantee shall require
     the Preferred Guarantee Trustee to expend or risk its own funds or
     otherwise incur financial liability in the performance of any of its duties
     or in the exercise of any of its rights or powers, if the Preferred
     Guarantee Trustee shall have reasonable grounds for believing that the
     repayment of such funds or liability is not reasonably assured to it under
     the terms of this Preferred Securities Guarantee or reasonable indemnity
     against such risk or liability is not reasonably assured to it.

     SECTION 3.02. Certain Rights of Preferred Guarantee Trustee.

     (a) Subject to the provisions of Section 3.01:

          (i) The Preferred Guarantee Trustee may conclusively rely and shall be
     fully protected in acting or refraining from acting upon any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties.

          (ii) Any request, direction, order, demand or act of the Guarantor
     contemplated by this Preferred Securities Guarantee shall be sufficiently
     evidenced by an Officers' Certificate unless otherwise prescribed herein.

          (iii) Whenever, in the administration of this Preferred Securities
     Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
     matter be proved or established before taking, suffering or omitting to
     take any action hereunder, the Preferred Guarantee Trustee (unless other
     evidence is herein specifically prescribed) may, in the absence of bad
     faith on its part, request and conclusively rely upon an Officers'
     Certificate which, upon receipt of such request from the Preferred
     Guarantee Trustee, shall be promptly delivered by the Guarantor.


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          (iv) the Preferred Guarantee Trustee shall have no duty to see to any
     recording, filing or registration of any instrument (or any rerecording,
     refiling or registration thereof);

          (v) The Preferred Guarantee Trustee may consult with legal counsel of
     its choice or other experts, and the advice of such experts within the
     scope of such expert's area of expertise or Opinion of Counsel with respect
     to legal matters shall be full and complete authorization and protection in
     respect of any action taken, suffered or omitted to be taken by it
     hereunder in good faith and in accordance with such advice or opinion. Such
     legal counsel may be legal counsel to the Guarantor or any of its
     Affiliates and may include any of its employees. The Preferred Guarantee
     Trustee shall have the right at any time to seek instructions concerning
     the administration of this Preferred Securities Guarantee from any court of
     competent jurisdiction.

          (vi) The Preferred Guarantee Trustee shall be under no obligation to
     exercise any of the rights or powers vested in it by this Preferred
     Securities Guarantee at the request or direction of any Holder, unless such
     Holder shall have provided to the Preferred Guarantee Trustee such
     reasonable indemnity as would satisfy a reasonable person in the position
     of the Preferred Guarantee Trustee, against the costs, expenses (including
     attorneys' fees and expenses) and liabilities that might be incurred by it
     in complying with such request or direction; provided that, nothing
     contained in this Section 3.02(a)(v) shall be taken to relieve the
     Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of
     its obligation to exercise the rights and powers vested in it by this
     Preferred Securities Guarantee.

          (vii) The Preferred Guarantee Trustee shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document, but the Preferred Guarantee
     Trustee, in its discretion, may make such further inquiry or investigation
     into such facts or matters as it may see fit.

          (viii) The Preferred Guarantee Trustee may execute any of the trusts
     or powers hereunder or perform any duties hereunder either directly or by
     or through its agents or attorneys, and the Preferred Guarantee Trustee
     shall not be responsible for any misconduct or negligence on the part of
     any such agent or attorney appointed with due care by it hereunder.

          (ix) Any action taken by the Preferred Guarantee Trustee or its agents
     hereunder shall bind the Holders of the Preferred Securities, and the
     signature of the Preferred Guarantee Trustee or its agents alone shall be
     sufficient and effective to perform any such action. No third party shall
     be required to inquire as to the authority of the Preferred Guarantee
     Trustee to so act or as to its compliance with any of the terms and
     provisions of this Preferred Securities Guarantee, both of which shall be
     conclusively evidenced by the Preferred Guarantee Trustee's or its agent's
     taking such action.


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<PAGE>


          (x) Whenever in the administration of this Preferred Securities
     Guarantee the Preferred Guarantee Trustee shall deem it desirable to
     receive instructions with respect to enforcing any remedy or right or
     taking any other action hereunder, the Preferred Guarantee Trustee (A) may
     request instructions from the Holders, (B) may refrain from enforcing such
     remedy or right or taking such other action until such instructions are
     received, and (C) shall be protected in acting in accordance with such
     instructions.

          (xi) The Preferred Guarantee Trustee shall not be liable for any
     action taken or omitted by it in good faith and believed by it to be
     authorized or within the discretion, rights or powers conferred upon it by
     the Subordinated Indenture.

     (b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty to act in
accordance with such power and authority.

     SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The
Recitals contained in this Preferred Securities Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representations as to the validity or sufficiency of this Preferred
Securities Guarantee.

                                  ARTICLE IV.
                           PREFERRED GUARANTEE TRUSTEE

     SECTION 4.01. Preferred Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Preferred Guarantee Trustee which shall:

          (i) not be an Affiliate of the Guarantor; and

          (ii) be a Person that is eligible pursuant to the Trust Indenture Act
     to act as such and has a combined capital and surplus of at least fifty
     million U.S. dollars ($50,000,000), and shall be a corporation meeting the
     requirements of Section 310(a) of the Trust Indenture Act. If such
     corporation publishes reports of condition at least annually, pursuant to
     law or to the requirements of the supervising or examining authority, then,
     for the purposes of this Section and to the extent permitted by the Trust
     Indenture Act, the combined capital and surplus of such corporation shall
     be deemed to be its combined capital and surplus as set forth in its most
     recent report of condition so published.

     (b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02(c).


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<PAGE>


     (c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act. In determining whether the Preferred Guarantee Trustee has a "conflicting
interest" within the meaning of Section 310(b)(1) of the Trust Indenture Act,
the provisions contained in the proviso to Section 310(b)(1) of the Trust
Indenture Act and the Preferred Guarantee Trustee's Statement of Eligibility on
Form T-1 shall be deemed incorporated herein.

     SECTION 4.02. Appointment, Removal and Resignation of the Preferred
Guarantee Trustee.

     (a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

     (b) The Preferred Guarantee Trustee shall not be removed until a new,
eligible Preferred Guarantee Trustee has been appointed (a "Successor Preferred
Guarantee Trustee") and has accepted such appointment and assumed the applicable
obligations hereunder by written instrument executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor.

     (c) The Preferred Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument in writing executed by the
Preferred Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor and
the resigning Preferred Guarantee Trustee.

     (d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition, at the expense of the Guarantor, any
court of competent jurisdiction for appointment of a Successor Preferred
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee.

     (e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.

     (f) Upon termination of this Preferred Securities Guarantee or registration
of the Preferred Guarantee Trustee pursuant to this Section 4.02, the Guarantor
shall pay to the Preferred Guarantee Trustee all amounts accrued and owing to
the Preferred Guarantee Trustee on the date of such termination, removal or
registration.

     (g) The Preferred Guarantee Trustee may engage in any merger, conversation,
consolidation or sale of all or substantially all of its corporate trust
business, provided that the Successor Preferred Guarantee Trustee shall be
otherwise qualified and eligible under this Capital Securities Guarantee
Agreement.


                                       10

<PAGE>


                                   ARTICLE V.
                                    GUARANTEE

     SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders of the Outstanding Preferred Securities the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer pursuant to the Declaration or by the Guarantor pursuant to
the Indenture), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

     SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Preferred Securities Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Preferred Guarantee Trustee, the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

     SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from an Extension Period on the Debentures as so
provided in the Indenture), Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities;

     (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

     (e) any invalidity of, or detect or deficiency in, the Preferred
Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or


                                       11

<PAGE>


     (g) to the extent permitted by law, any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.

     SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges that:
(i) this Preferred Securities Guarantee will be deposited with the Preferred
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Preferred
Guarantee Trustee has the right to enforce this Preferred Securities Guarantee
on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercise or direct
the exercise of any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and (iv) any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Preferred Guarantee Trustee, the Issuer or any
other Person.

     SECTION 5.05. Guarantee of Payment. This Preferred Securities Guarantee
creates a guarantee of payment and not of collection (i.e., the guaranteed party
may institute a legal proceeding directly against the Guarantor to enforce its
rights under the Preferred Securities Guarantee without first instituting a
legal proceeding against any other person or entity). This Preferred Securities
Guarantee will not be discharged except by payment of the Guarantee Payments in
full to the extent not previously paid or upon Distribution to the Holders of
the Preferred Securities of the corresponding series of Debentures as provided
in the Declaration.

     SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Preferred Securities Guarantee and shall
have the right to waive payment by the Issuer pursuant to Section 5.01;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

     SECTION 5.07. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section 5.03
hereof.


                                       12

<PAGE>


                                   ARTICLE VI.
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 6.01. Limitations of Transactions. So long as any Preferred
Securities remain outstanding, if there shall have occurred an Event of Default,
an event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture or an exercise by the
Guarantor of its right to defer payment of interest as provided in the Indenture
and such deferral period, or any extension thereof, shall be continuing, then
(a) the Guarantor shall not declare or pay any dividend on, or make any
distribution with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its share capital (other than share dividends
paid by the Guarantor which share dividends consist of shares of the same class
as that on which the dividend is being paid), (b) the Guarantor shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Guarantor which rank pari passu with
or junior to the Debentures and (c) shall not make any guarantee payments with
respect to the foregoing (other than pursuant to this Preferred Securities
Guarantee).

     SECTION 6.02. Ranking. This Preferred Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, except any
liabilities that may be made pari passu or junior expressly by their terms, (ii)
pari passu with the most senior preferred or preference shares now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference shares or preferred
security of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's
ordinary shares.

                                  ARTICLE VII.
                                   TERMINATION

     SECTION 7.01. Termination. This Preferred Securities Guarantee shall
terminate and be of no further force and effect upon full payment of the
Redemption Price or Liquidation Distribution for the Preferred Securities or
upon Distribution of the Debentures to the Holders of the Preferred Securities.
This Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of the Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or this Preferred Securities Guarantee.

                                 ARTICLE VIII.
                                 INDEMNIFICATION

     SECTION 8.01. Exculpation.

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified


                                       13

<PAGE>


Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.

     SECTION 8.02. Indemnification.

     (a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Preferred Securities Guarantee,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.

     (b) To the fullest extent permitted by applicable law, reasonable expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.02(a).

     (c) The obligation to indemnify as set forth in this Section 8.02 shall
survive the termination of the Preferred Securities Guarantee.

                                  ARTICLE IX.
                                  MISCELLANEOUS

     SECTION 9.01. Successors and Assigns. All guarantees and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. The Guarantor may not consolidate with or merge with or into, or
sell, convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety (either in one transaction or a series of
transactions) to, any Person unless permitted under Article Eight of the
Indenture. In connection with a consolidation, merger or sale involving the
Guarantor that is permitted under Article Eight of the Indenture the Person
formed by or


                                       14

<PAGE>


surviving such consolidation or merger or to which such sale, conveyance,
transfer or lease shall have been made, if other than the Guarantor, shall
expressly assume all of the obligations of the Guarantor hereunder and under the
Declaration.

     SECTION 9.02. Amendments. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Preferred Securities
Guarantee may only be amended with the prior approval of the Holders of a
Majority in liquidation amount of the Preferred Securities (excluding any
Preferred Securities held by the Guarantor or an Affiliate thereof). The
provisions of Article VI of the Declaration concerning meetings of the Holders
shall apply to the giving of such approval.

     SECTION 9.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing and delivered, telecopied
or mailed by first class mail, postage prepaid, as follows:

     (a) if given to the Guarantor, to the address set forth below or such other
address as the Guarantor may give notice of to the Holders:

                  Scottish Annuity & Life Holdings, Ltd.
                  P. O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton HM MX, Bermuda

     (b) if given to the Issuer, in care of the Preferred Guarantee Trustee, at
the Issuer's (and the Preferred Guarantee Trustee's) address set forth below or
such other address as the Preferred Guarantee Trustee on behalf of the Issuer
may give notice to the Holders:

                  Scottish Holdings Statutory Trust III
                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P. O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton HM MX, Bermuda

     (c) if given to any Holder, at the address set forth in the Securities
Register.

All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

     SECTION 9.04. Benefit. This Preferred Securities Guarantee is solely for
the benefit of the Holders and is not separately transferable from the Preferred
Securities.


                                       15

<PAGE>


     SECTION 9.05. Governing Law. THIS PREFERRED SECURITIES GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

     This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

     THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.

                                   SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
                                        as Guarantor


                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                   The Bank of New York
                                        as Preferred Guarantee Trustee


                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:



                                       16