<PAGE>   1


                                                                    Exhibit 4.23







--------------------------------------------------------------------------------




                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                     BETWEEN

                              TRENWICK GROUP LTD.,
                                  AS GUARANTOR

                                       AND

                          BANK ONE TRUST COMPANY, N.A.
                              AS GUARANTEE TRUSTEE

                          DATED AS OF           , 200_





--------------------------------------------------------------------------------


<PAGE>   2


                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                           <C>
ARTICLE I.           DEFINITIONS AND INTERPRETATIONS..............................................................2

   Section 1.1       Definitions and Interpretations..............................................................2

ARTICLE II.          TRUST INDENTURE ACT..........................................................................6

   Section 2.1       Trust Indenture Act: Application.............................................................6
   Section 2.2       List of Holders..............................................................................6
   Section 2.3       Reports by the Guarantee Trustee.............................................................6
   Section 2.4       Periodic Reports to the Guarantee Trustee....................................................6
   Section 2.5       Evidence of Compliance with Conditions Precedent.............................................7
   Section 2.6       Events of Default; Waiver....................................................................7
   Section 2.7       Event of Default; Notice.....................................................................7
   Section 2.8       Conflicting Interests........................................................................7

ARTICLE III.         POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE...............................................7

   Section 3.1       Powers and Duties of the Guarantee Trustee...................................................7
   Section 3.2       Certain Rights of the Guarantee Trustee......................................................9
   Section 3.3       Indemnity...................................................................................10

ARTICLE IV.          GUARANTEE TRUSTEE...........................................................................11

   Section 4.1       Guarantee Trustee; Eligibility..............................................................11
   Section 4.2       Appointment, Removal and Resignation of Guarantee Trustees..................................11

ARTICLE V.           GUARANTEE...................................................................................12

   Section 5.1       Guarantee...................................................................................12
   Section 5.2       Waiver of Notice and Demand.................................................................12
   Section 5.3       Obligations Not Affected....................................................................12
   Section 5.4       Rights of Holders...........................................................................13
   Section 5.5       Guarantee of Payment........................................................................13
   Section 5.6       Subrogation.................................................................................14
   Section 5.7       Independent Obligations.....................................................................14
   Section 5.8       Net Payments................................................................................14

ARTICLE VI.          LIMITATION OF TRANSACTIONS; RANKING.........................................................15

   Section 6.1       Limitation of Transactions..................................................................15
   Section 6.2       Ranking.....................................................................................16
   Section 6.3       Pari Passu Guarantees.......................................................................16
</TABLE>


                                       i


<PAGE>   3


<TABLE>
<S>                                                                                                           <C>
ARTICLE VII.         TERMINATION.................................................................................16

   Section 7.1       Termination.................................................................................16

ARTICLE VIII.        MISCELLANEOUS...............................................................................17

   Section 8.1       Successors and Assigns......................................................................17
   Section 8.2       Amendments..................................................................................17
   Section 8.3       Notices.....................................................................................17
   Section 8.4       Benefit.....................................................................................18
   Section 8.5       Governing Law...............................................................................18
   Section 8.6       Submission to Jurisdiction..................................................................18
   Section 8.7       Judgment Currency...........................................................................19
</TABLE>






                                       ii


<PAGE>   4


                    PREFERRED SECURITIES GUARANTEE AGREEMENT

         This PREFERRED SECURITIES GUARANTEE AGREEMENT, dated as of            ,
200_, is executed and delivered by Trenwick Group Ltd., a company duly organized
and existing under the laws of Bermuda (the "Guarantor"), having its principal
executive offices at Continental Building, 25 Church Street, Hamilton HM 12,
Bermuda, and Bank One Trust Company, N.A., a national banking association,
having a corporate trust office at 1 Bank One Plaza, Corporate Trust - Suite
IL1-0126, Chicago, Illinois 60670, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Trenwick America Capital Trust III, a Delaware
statutory business trust (the "Issuer").

         WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of              , 200_, among the Trustees named therein, Trenwick America
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
Guarantor ("Trenwick America"), as depositor (in such capacity, the
"Depositor"), and the Holders from time to time of undivided beneficial
interests in the assets of the Issuer (as amended from time to time, the "Trust
Agreement"), the Issuer is issuing on the date hereof $           ($
if the Underwriters' over-allotment option pursuant to the Underwriting
Agreement is exercised in full), aggregate liquidation preference of its       %
Trust Originated Preferred Securities (liquidation preference $           per
preferred security) (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;

         WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined herein), will be used to purchase the Notes (as
defined herein) of Trenwick America (in its capacity as issuer of the Notes, the
"Note Issuer"), which will be deposited with Bank One Trust Company, N.A., as
Property Trustee under the Trust Agreement, as trust assets;

         WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee Agreement, 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 Agreement") in which it agrees to
guarantee the obligations of the Issuer with respect to the Common Securities
issued by the Issuer to the same extent as it guarantees the Preferred
Securities under this Guarantee Agreement, except that if an Event of Default
under the Trust Agreement has occurred and is continuing, the rights of holders
of the Common Securities to receive guarantee payments under the Common
Securities Guarantee Agreement are subordinated, to the extent and in the manner
set forth in the Common Securities Guarantee Agreement, to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement.


<PAGE>   5


         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 Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATIONS

SECTION 1.1       Definitions and Interpretations

         In this Guarantee Agreement, unless the context otherwise requires:

         (a)      capitalized terms used in this Guarantee Agreement, but not
defined in the preamble hereto have the respective meanings assigned to them in
this Section 1.1 or in the Trust Agreement, as the case may be;

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

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

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

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

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

         (g)      the masculine, feminine, or neuter genders used herein shall
include the masculine, feminine and neuter genders.

         "Additional Amounts" means any additional amounts which are required
hereby or by the terms of the Preferred Securities, under circumstances
specified herein or therein, to be paid by the Guarantor in respect of certain
taxes, assessments or other governmental charges imposed on Holders specified
therein and which are owing to such Holders.

         "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; provided, however, that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. For the purpose 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.


                                        2


<PAGE>   6


         "Capitalized Lease Obligations" means an obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with U.S. generally accepted accounting principles, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with such principles.

         "Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.

         "Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within sixty (60) days after receipt of such notice.

         "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) that are required to be paid
on such Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price") with respect to Preferred Securities called for redemption by the
Issuer, to the extent the Issuer shall have funds on hand available therefor at
such time and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Issuer, unless Notes are distributed to the Holders, the
lesser of (a) the aggregate of the liquidation preference of $ per Preferred
Security plus accumulated and unpaid Distributions on the Preferred Securities
to the date of payment, to the extent the Issuer shall have funds on hand
available to make such payment at such time and (b) the amount of assets of the
Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution").

         "Guarantee Trustee" means Bank One Trust Company, N.A., until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.

         "Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; 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 Depositor, the Guarantee Trustee or any
Affiliate of the Guarantor, the Depositor, or the Guarantee Trustee.

         "Indebtedness" means, with respect to any Person, (i) the principal of
and any premium and interest on (a) indebtedness of such Person for money
borrowed and (b) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing


                                        3


<PAGE>   7


obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) all obligations of the type referred to in clauses (i)
through (iv) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable as obligor,
guarantor or otherwise; (vi) all obligations of the type referred to in clauses
(i) through (v) of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured; and (vii) any
amendments, modifications, refundings, renewals or extensions of any
indebtedness or obligation described as Indebtedness in clauses (i) through (vi)
above.

         "Indenture" means the Subordinated Indenture dated as of
among the Note Issuer, the Note Guarantor and Bank One Trust Company, N.A., as
trustee, and any indenture supplemental thereto pursuant to which the Notes and
the Note Guarantee are to be issued to the Property Trustee of the Issuer.

         "List of Holders" has the meaning specified in Section 2.2(a).

         "Majority in liquidation preference of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s), voting
separately as a class, of more than fifty percent (50%) of the liquidation
preference of all then outstanding Preferred Securities issued by the Issuer.

         "Note Guarantee" means the full and unconditional payment guarantee
and indemnity of the Note Guarantor provided for in the Indenture with respect
to the Notes.

         "Note Guarantor" means Trenwick Group Ltd., in its capacity as
guarantor of the Notes under the Indenture.

         "Notes" means the series of               debt securities of the Note
Issuer designated the       %              Notes due      held by the Property
Trustee.

         "Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board of Directors, a Vice Chairman,
the President, any Vice President, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officer's Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:

                  (a) a statement that the officer signing the Officer's
Certificate has read the covenant or condition and the definitions relating
thereto;

                  (b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officer's Certificate;


                                       4


<PAGE>   8


                  (c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

                  (d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer within the
Corporate Trust Department 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 all Indebtedness of the Guarantor
(including its Indebtedness, as Note Guarantor, under the Indenture) outstanding
at any time, except (a) the Indebtedness under this Guarantee Agreement, (b)
Indebtedness as to which, by the terms of the instrument creating or evidencing
the same, it is provided that such Indebtedness is subordinated to or pari passu
with this Guarantee Agreement or to other Indebtedness of the Guarantor which is
subordinated to or pari passu with this Guarantee Agreement, (c) Indebtedness of
the Guarantor to an Affiliate of the Guarantor, (d) interest accruing after the
filing of a petition initiating any proceeding referred to in Section 5.1(7) and
5.1(8) of the Indenture unless such interest is an allowed claim enforceable
against the Guarantor in a proceeding under federal or state bankruptcy laws,
(e) trade accounts payable and (f) similar guarantee agreements issued by the
Guarantor on behalf of holders of preferred securities of any other Trenwick
Capital Trust or any trust, partnership or other entity affiliated with the
Guarantor which is a financing vehicle of the Guarantor or any Affiliate of the
Guarantor in connection with the issuance by such entity of preferred securities
or other securities which are similar to preferred securities that are
guaranteed by the Guarantor pursuant to an instrument that ranks pari passu with
or junior in right of payment to this Guarantee Agreement.

         "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.


                                        5


<PAGE>   9


                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1       Trust Indenture Act: Application

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

         (b)      If any provision of this Guarantee Agreement limits, qualifies
or conflicts with any duties under any required provision of the Trust Indenture
Act imposed hereon by Section 318(c) thereof, such required provision shall
control.

SECTION 2.2       List of Holders

         (a)      The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (i) semiannually, not later than May 1 and November 1 of each
year, a list, in such form as the Guarantee Trustee may reasonably require, of
the names and addresses of the Holders ("List of Holders") as of the applicable
date, and (ii) at such other times as the Guarantee Trustee may request in
writing, within thirty (30) days after the receipt by the Guarantor of any such
request, a List of Holders as of a date not more than fifteen (15) days prior to
the time such list is furnished, in each case to the extent such information is
in the possession or control of the Guarantor and is not identical to a
previously supplied list of Holders or has not otherwise been received by the
Guarantee Trustee in its capacity as such or in its capacity as Security
Registrar (as defined in the Indenture). The Guarantee Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.

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

SECTION 2.3       Reports by the Guarantee Trustee

         Within sixty (60) days after May 15 of each year commencing with May
15, 2002, the 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 Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.

SECTION 2.4       Periodic Reports to the Guarantee Trustee

         The Guarantor shall provide to the 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, in the manner and at the times required by Section 314 of the Trust
Indenture Act.


                                       6


<PAGE>   10


SECTION 2.5       Evidence of Compliance with Conditions Precedent

         The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officer's Certificate.

SECTION 2.6       Events of Default; Waiver

         The Holders of a Majority in liquidation preference of the Preferred
Securities may, by vote, on behalf of all 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 Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

SECTION 2.7       Event of Default; Notice

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

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

SECTION 2.8       Conflicting Interests

         The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.

                                   ARTICLE III
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 3.1       Powers and Duties of the Guarantee Trustee

         (a)      This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising his
or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act


                                       7
<PAGE>   11


as Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, upon
acceptance by such Successor 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 Guarantee Trustee.

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

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

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

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

                           (A)      the duties and obligations of the Guarantee
                  Trustee shall be determined solely by the express provisions
                  of this Guarantee Agreement, and the Guarantee Trustee shall
                  not be liable except for the performance of such duties and
                  obligations as are specifically set forth in this Guarantee
                  Agreement, and

                           (B)      in the absence of bad faith on the part of
                  the Guarantee Trustee, the 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 Guarantee Trustee and conforming to
                  the requirements of this Guarantee Agreement; but in the case
                  of any such certificates or opinions that by any provision
                  hereof are specifically required to be furnished to the
                  Guarantee Trustee, the Guarantee Trustee shall be under a duty
                  to examine the same to determine whether or not they conform
                  to the requirements of this Guarantee Agreement;

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

                  (iii)    the 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 not less than a
         Majority in liquidation preference of the Preferred Securities relating
         to


                                       8
<PAGE>   12


         the time, method and place of conducting any proceeding for any remedy
         available to the Guarantee Trustee, or exercising any trust or power
         conferred upon the Guarantee Trustee under this Guarantee Agreement;
         and

                  (iv)     no provision of this Guarantee Agreement shall
         require the Guarantee Trustee to expend or risk its own funds or
         otherwise incur personal financial liability in the performance of any
         of its duties or in the exercise of any of its rights or powers, if the
         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 Guarantee Agreement or adequate indemnity
         against such risk or liability is not reasonably assured to it.

SECTION 3.2       Certain Rights of the Guarantee Trustee

         (a)      Subject to the provisions of Section 3.1:

                  (i)      The Guarantee Trustee may rely upon, 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 direction or act of the Guarantor contemplated by
         this Guarantee Agreement shall be sufficiently evidenced by an
         Officer's Certificate unless otherwise prescribed herein;

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

                  (iv)     The Guarantee Trustee may consult with competent
         legal counsel, and the written advice or opinion of such 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 counsel may be counsel to the Guarantor or any of its
         Affiliates and may include any of its employees. The Guarantee Trustee
         shall have the right at any time to seek instructions concerning the
         administration of this Guarantee Agreement from any court of competent
         jurisdiction;

                  (v)      The Guarantee Trustee shall be under no obligation to
         exercise any of the rights or powers vested in it by this Guarantee
         Agreement at the request or direction of any Holder, unless such Holder
         shall have provided to the Guarantee Trustee such security and
         indemnity as would satisfy a reasonable person in the position of the
         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,


                                       9
<PAGE>   13


         including such reasonable advances as may be requested by the Guarantee
         Trustee; provided that, nothing contained in this Section 3.2(a)(v)
         shall be taken to relieve the Guarantee Trustee, upon the occurrence of
         an Event of Default, of its obligation to exercise the rights and
         powers vested in it by this Guarantee Agreement;

                  (vi)     The 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 Guarantee Trustee, in
         its discretion, may make such further inquiry or investigation into
         such facts or matters as it may see fit;

                  (vii)    The Guarantee Trustee may execute any of the trusts
         or powers hereunder or perform any duties hereunder either directly or
         by or through agents or attorneys, and the 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;

                  (viii)   Any action taken by the Guarantee Trustee or its
         agents hereunder shall bind the Holders, and the signature of the
         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 Guarantee Trustee to so act or as to its
         compliance with any of the terms and provisions of this Guarantee
         Agreement, both of which shall be conclusively evidenced by the
         Guarantee Trustee's or its agent's taking such action; and

                  (ix)     Whenever in the administration of this Guarantee
         Agreement the Guarantee Trustee shall deem it desirable to receive
         instructions with respect to enforcing any remedy or right or taking
         any other action hereunder, the Guarantee Trustee (A) may request
         instructions from the Holders of a Majority in liquidation preference
         of the Preferred Securities, (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.

         (b)      No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the 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 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 Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.

SECTION 3.3       Indemnity

         The Guarantor agrees to indemnify the Guarantee Trustee and any
officers, directors, shareholders, employees, representatives, custodians,
nominees or agents of the Guarantee Trustee for, and to hold each such person
harmless against, any loss, liability or expense incurred without negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or


                                       10
<PAGE>   14


performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any guarantee agreement as a result of
any amount due to it under this Guarantee Agreement.

         The provisions of this Section 3.3 shall survive the termination of
this Guarantee Agreement or the resignation or removal of the Guarantee Trustee.

                                   ARTICLE IV
                                GUARANTEE TRUSTEE

SECTION 4.1       Guarantee Trustee; Eligibility

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

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

                  (ii)     be a Person that is eligible pursuant to the Trust
         Indenture Act to act as such and has a combined capital of at least
         fifty million U.S. dollars ($50,000,000). 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 4.1(a)(ii), 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 Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).

         (c)      If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.

SECTION 4.2       Appointment, Removal and Resignation of Guarantee Trustees

         (a)      Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed with or without cause at any time by the Guarantor.

         (b)      The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

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


                                       11
<PAGE>   15


accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

         (d)      If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within sixty (60) days
after delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

                                    ARTICLE V
                                    GUARANTEE

SECTION 5.1       Guarantee

         The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert, other then
the defense of payment. 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, through the Note Issuer, to pay such
amounts to the Holders.

SECTION 5.2       Waiver of Notice and Demand

         The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, 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 5.3       Obligations Not Affected

         The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement 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, 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 (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment period
on the Notes or so provided by the Indenture);


                                       12
<PAGE>   16


         (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 defect or deficiency in, the Preferred
Securities;

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

         (g)      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 5.3 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 5.4       Rights of Holders

         The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and (iv) any Holder may, to the extent permitted by law,
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Issuer, the Note Issuer or any
other Person. The Guarantor waives any right or remedy to require that any such
action on this Guarantee Agreement be brought first against the Issuer or any
other Person or entity before so proceeding directly against the Guarantor.

SECTION 5.5       Guarantee of Payment

         This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.


                                       13
<PAGE>   17


SECTION 5.6       Subrogation

         The Guarantor shall be subrogated to all rights, if any, of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. 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 5.7       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 Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of SECTION 5.3 hereof.

SECTION 5.8       Net Payments

         All Guarantee Payments required to be made hereunder shall be made by
the Guarantor without withholding or deduction at source for, or on account of,
any present or future taxes, fees, duties, assessments or governmental charges
of whatever nature imposed or levied by or on behalf of Bermuda or any political
subdivision or taxing authority thereof or therein (a "taxing jurisdiction"),
unless such taxes, fees, duties, assessments or governmental charges are
required to be withheld or deducted by (i) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or (ii) an official
position regarding the application, administration, interpretation or
enforcement of any such laws, regulations or rulings (including, without
limitation, a holding by a court of competent jurisdiction or by a taxing
authority in a taxing jurisdiction). If a withholding or deduction at source is
required, the Guarantor shall, subject to certain limitations and exceptions set
forth below, pay to the Holder of any Preferred Security such Additional Amounts
as may be necessary so that every Guarantee Payment made to such Holder, after
such withholding or deduction, shall not be less than the amount provided for in
this Guarantee Agreement to be then due and payable; provided, however, that the
Guarantor shall not be required to make payment of such Additional Amounts for
or on account of:

         (1) any tax, fee, duty, assessment or governmental charge of whatever
nature which would not have been imposed but for the fact that such Holder: (A)
was a resident, domiciliary or national of, or engaged in business or maintained
a permanent establishment or was physically present in, the relevant taxing
jurisdiction or otherwise had some connection with the relevant taxing
jurisdiction other than by reason of the mere ownership of, or receipt of
payment under, such Preferred Security; (B) presented such Preferred Security
for payment in the relevant taxing jurisdiction, unless such Preferred Security
could not have been presented for payment elsewhere; or (C) presented such
Preferred Security more than thirty (30) days after the date on which the
payment in respect of such Preferred Security first became due and payable or


                                       14
<PAGE>   18


provided for, whichever is later, except to the extent that the Holder would
have been entitled to such Additional Amounts if it had presented such Preferred
Security for payment on any day within such period of thirty (30) days;

         (2) any estate, inheritance, gift, sale, transfer, personal property or
similar tax;

         (3) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of such
Preferred Security to comply with any reasonable request by the Guarantor or the
Trust addressed to the Holder within ninety (90) days of such request (A) to
provide information concerning the nationality, residence or identity of the
Holder or such beneficial owner or (B) to make any declaration or other similar
claim or satisfy any information or reporting requirement, which, in the case of
(A) or (B), is required or imposed by statute, treaty, regulation or
administrative practice of the relevant taxing jurisdiction as a precondition to
exemption from all or part of such tax, assessment or other governmental charge;
or

         (4) any combination of items (1), (2) and (3);

nor shall Additional Amounts be paid with respect to any Guarantee Payment to
any Holder who is a fiduciary or partnership or other than the sole beneficial
owner of the related Preferred Security to the extent such payment would be
required by the laws of the relevant taxing jurisdiction to be included in the
income for tax purposes of a beneficiary or partner or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner who would
not have been entitled to such Additional Amounts had it been the Holder of such
Preferred Security.

                                   ARTICLE VI
                       LIMITATION OF TRANSACTIONS; RANKING

SECTION 6.1       Limitation of Transactions

         The Guarantor hereby covenants and agrees that, so long as any
Preferred Securities remain outstanding, it will not, and will not permit any of
its Subsidiaries (including the Note Issuer) to, (a) redeem or make a
liquidation payment with respect to, any of the outstanding capital stock of the
Note Issuer or the Guarantor, as the case may be, or (b) make any payment of
principal of, interest or premium, if any, on or repay, repurchase or redeem any
debt security of the Note Issuer or the Guarantor, as the case may be, that
ranks junior in interest to the Notes or the guarantee in respect thereof, as
the case may be, or make any guarantee payments with respect to any guarantee by
the Note Issuer or the Guarantor, as the case may be, of the debt securities of
any Subsidiary of the Note Issuer or the Guarantor, as the case may be, if such
guarantee ranks junior in interest to the Notes or the guarantee in respect
thereof, as the case may be (other than (i) dividends or distributions on the
Capital Stock (as defined in the Indenture) of the Note Issuer paid or made to
the Guarantor and dividends or distributions in Common Stock (as defined in the
Indenture) of the Note Issuer or the Guarantor, as the case may be, (ii)
redemptions or purchases of any rights outstanding under a shareholder rights
plan of the Note Issuer or the Guarantor, as the case may be, or any successor
to such rights plan, or the declaration of a dividend of such rights or the
issuance of stock under such plans in the future,


                                       15
<PAGE>   19


(iii) payments under any preferred securities guarantee issued by the Guarantor,
and (iv) purchases of Common Stock related to the issuance of Common Stock under
any benefit plans of the Note Issuer, the Guarantor or its Subsidiaries, as the
case may be, for their respective directors, officers or employees) if at such
time (1) there shall have occurred any event of which the Note Issuer or the
Guarantor, as the case may be, has actual knowledge that (A) with the giving of
notice or the lapse of time or both would constitute an Event of Default under
the Indenture and (B) in respect of which the Note Issuer or the Guarantor, as
the case may be, shall not have taken reasonable steps to cure, (2) the
Guarantor shall be in default with respect to its payment of any obligations
under this Guarantee Agreement or (3) the Note Issuer shall have given notice of
its election to begin an Extension Period (as defined in the Indenture) with
respect to the Notes as provided in the Indenture and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.

SECTION 6.2       Ranking

         This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Guarantor.

SECTION 6.3       Pari Passu Guarantees

         This Guarantee Agreement shall rank pari passu with any similar
guarantee agreements issued by the Guarantor on behalf of holders of preferred
securities of any other Trenwick America Capital Trust or any trust, partnership
or other entity affiliated with the Guarantor which is a financing vehicle of
the Guarantor or any Affiliate of the Guarantor in connection with the issuance
by such entity of preferred securities or other securities which are similar to
preferred securities that are guaranteed by the Guarantor pursuant to an
instrument that ranks pari passu with or junior in right of payment to this
Guarantee Agreement.

                                   ARTICLE VII
                                   TERMINATION

SECTION 7.1       Termination

         This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of the Notes to all Holders in exchange for
the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to the Preferred Securities
or under this Guarantee Agreement.


                                       16
<PAGE>   20


                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1       Successors and Assigns

         All guarantees and agreements contained in this Guarantee Agreement
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. Except in connection with a consolidation,
amalgamation or merger or conveyance, transfer or lease involving the Guarantor
that is permitted under Article 8 of the Indenture and pursuant to which the
assignee agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.

SECTION 8.2       Amendments

         Except with respect to any changes that do not adversely affect the
rights of Holders in any material respect (in which case no consent of Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of at least a Majority in liquidation preference of the
Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of Holders apply to the giving of such approval.

SECTION 8.3       Notices

         Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by first class mail, as
follows:

         (a)      If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Guarantor and the Holders):

                           Bank One Trust Company, N.A.
                           1 Bank One Plaza
                           Corporate Trust - Suite IL1-0126
                           Chicago, Illinois  60670

                           Attn:

         (b)      If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):

                           Trenwick Group Ltd.
                           Continental Building
                           25 Church Street
                           Hamilton, HM 12, Bermuda

                           Attn: General Counsel and Secretary


                                       17
<PAGE>   21


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

                           Trenwick America Capital Trust III
                           c/o Trenwick America Corporation
                           One Canterbury Green
                           Stamford, Connecticut  06901

                           Attn: General Counsel and Secretary

                           with a copy to:





                           Attn:

         (d)      If given to any Holder, at the address set forth on the books
and records of the Issuer.

         All such notices 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 8.4       Benefit

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

SECTION 8.5       Governing Law

         THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND WHOLLY PERFORMED IN NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.

SECTION 8.6       Submission to Jurisdiction

         The Guarantor agrees that any judicial proceedings instituted in
relation to any matter arising under this Guarantee Agreement may be brought in
any United States Federal or New York State court sitting in the Borough of
Manhattan, The City of New York, New York to the extent that such court has
subject matter jurisdiction over the controversy, and, by execution and delivery
of this Guarantee Agreement, the Guarantor hereby irrevocably accepts, generally
and


                                       18
<PAGE>   22


unconditionally, the jurisdiction of the aforesaid courts, acknowledges their
competence and irrevocably agrees to be bound by any judgment rendered in such
proceeding. The Guarantor also irrevocably and unconditionally waives for the
benefit of the Guarantee Trustee and the Holders any immunity from jurisdiction
and any immunity from legal process (whether through service or notice,
attachment prior to judgment, attachment in the aid of execution, execution or
otherwise) in respect of this Guarantee Agreement. The Guarantor hereby
irrevocably designates and appoints for the benefit of the Guarantee Trustee and
the Holders for the term of this Guarantee Agreement, Trenwick America
Corporation, One Canterbury Green, Stamford, Connecticut 06901, as its agent to
receive on its behalf service of all process (with a copy of all such service of
process to be delivered to                             Trenwick Group Ltd.,
Continental Building, 25 Church Street, Hamilton, HM 12, Bermuda) brought
against it with respect to any such proceeding in any such court in The City of
New York, such service being hereby acknowledged by the Guarantor to be
effective and binding service on it in every respect whether or not the
Guarantor shall then be doing or shall have at any time done business in New
York. Such appointment shall be irrevocable so long as any of the Preferred
Securities or the obligations of the Guarantor hereunder remain outstanding, or
until the appointment of a successor by the Guarantor and such successor's
acceptance of such appointment. Upon such acceptance, the Guarantor shall
notify the Guarantee Trustee of the name and address of such successor. The
Guarantor further agrees for the benefit of the Guarantee Trustee and the
Holders to take any and all action, including the execution and filing of any
and all such documents and instruments, as may be necessary to continue such
designation and appointment of said Trewnick America Corporation in full force
and effect so long as any of the Preferred Securities or the obligations of the
Guarantor hereunder shall be outstanding. The Guarantee Trustee shall not be
obligated and shall have no responsibility with respect to any failure by the
Guarantor to take any such action. Nothing herein shall affect the right to
serve process in any other manner permitted by any law or limit the right of
the Guarantee Trustee or any Holder to institute proceedings against the
Guarantor in the courts of any other jurisdiction or jurisdictions.

SECTION 8.7       Judgment Currency

         The Guarantor agrees, to the fullest extent that it may effectively do
so under applicable law, that (a) if for the purpose of obtaining judgment in
any court it is necessary to convert the sum due in respect of any Guarantee
Payment (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Guarantee Trustee
could purchase in The City of New York the requisite amount of the Required
Currency with the Judgment Currency on the New York Banking Day preceding the
day on which a final unappealable judgment is given and (b) its obligations
under this Guarantee Agreement to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment (whether or not entered in accordance with clause (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Guarantee Agreement. For purposes of
the foregoing, "New York Banking


                                       19
<PAGE>   23


Day" means any day except a Saturday, Sunday or a legal holiday in The City of
New York or a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to be closed.






                                       20
<PAGE>   24


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

                                       TRENWICK GROUP LTD., as Guarantor



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




                                       BANK ONE TRUST COMPANY, N.A., as
                                       Guarantee Trustee



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






                                       21