EXECUTION COPY

                   FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT


     THIS FIRST  AMENDMENT TO STOCK PURCHASE  AGREEMENT  ("First  Amendment") is
entered  into as of March 16,  1999  between  ACE Bermuda  Insurance,  Ltd.,  an
insurance  company  licensed  and  registered  under the laws of the  Islands of
Bermuda (the "Purchaser"),  and Capital Re Corporation,  a Delaware  corporation
(the "Company").

                             Background and Purpose

     The Purchaser  and the Company are parties to that certain  Stock  Purchase
Agreement dated as of February 19, 1999 (the "Agreement")  pursuant to which the
Purchaser  agreed to  purchase  and the  Company  agreed to issue  shares of the
Company's  common  stock,  $.01 par value per share (the  "Common  Stock").  The
parties  hereto  have  agreed  to  amend  certain  provisions  contained  in the
Agreement  and have  therefore  agreed  to enter  into and  perform  this  First
Amendment.

     NOW,  THEREFORE,  in  consideration of the continuance of the Agreement and
for other good and valuable consideration,  the receipt and sufficiency of which
is hereby  acknowledged,  the  parties  hereto,  intending  to be legally  bound
thereby, hereby agree as follows:

                                    Agreement

     1.  Definitions.  All capitalized  terms used in this First Amendment shall
have the meanings given them in the Agreement.

     2. Amendment to Purchase Price Determination. Section 2 of the Agreement is
hereby deleted in its entirety and the following inserted in place thereof:

     "2. SALE AND PURCHASE OF SHARES

          On  the  basis  of  the  representations,  warranties  and  agreements
     contained  herein,  and  subject to the terms and  conditions  hereof,  the
     Company hereby agrees to issue and sell to the Purchaser, and the Purchaser
     agrees to purchase from the Company,  that number of shares of Common Stock
     (the "Shares") equal to $75,000,000  (the "Purchase  Price") divided by the
     lesser per share  price of: (a) the fully  diluted  book value per share of
     the Common Stock at December 31, 1998,  determined  from the Company's 1998
     audited  financial  statements as described in Section 2 of the  Disclosure
     Schedule  ($18.87)  and (b) the  average  of the five  highest  consecutive



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     closing  prices of the Common  Stock  between  March 12, 1999 and April 15,
     1999 inclusive,  as reported on the New York Stock Exchange composite tape.
     At the Closing,  the  Purchaser  shall deliver to the Company the amount of
     $75,000,000  by wire  transfer  of  immediately  available  funds,  and the
     Company will deliver to the  Purchaser one or more stock  certificates,  as
     the  Purchaser  may  request,  registered  in the name of the  Purchaser or
     otherwise   as  the   Purchaser   may   direct,   evidencing   the  Shares.
     Notwithstanding the foregoing, in no event will the number of Shares exceed
     19.9% of the total number of shares of Common Stock outstanding immediately
     prior to the Closing  (the  "Maximum  Amount").  In the event the number of
     Shares to be issued on the date  selected  for  Closing  would  exceed  the
     Maximum Amount,  the Company shall, at the Purchaser's  option and upon the
     written request of the Purchaser,  issue and sell to the Purchaser, and the
     Purchaser  shall  purchase from the Company,  the Maximum Amount of Shares,
     and the Purchase Price shall be adjusted in accordance  with the applicable
     per share  price as  determined  under the  formula  set forth in the first
     sentence  of this  Section  2. In the  event  that the  Purchaser  does not
     exercise the option set forth in the prior  sentence,  the Closing will not
     occur, this Agreement shall be immediately terminated and no party shall be
     under any further obligation to the other."

     3.  Amendment to Board  Nominee  Covenant.  Section 4.6 of the Agreement is
hereby retitled "Board  Nominees" and paragraph (a) thereof is hereby deleted in
its entirety and the following inserted in place thereof:

          "(a)  The  Company  covenants  that  the  Company  will  nominate  and
     recommend as a candidate for election to the Board of Directors, so long as
     the Purchaser (and/or its Affiliates) holds at least 8% of the Total Voting
     Power,  two  individuals,  in each case such  individuals  to be reasonably
     acceptable  to the then current Board of Directors of the Company and to be
     designated in writing by an executive  officer of the  Purchaser,  provided
     that any executive officer of Purchaser shall be presumed to be acceptable.
     In the event  Purchaser  is entitled to  designate  such  nominees  between
     regular annual stockholder  meetings,  the Company will take such action as
     is required (including,  if necessary,  increasing the size of its Board of
     Directors)  to appoint  such  nominees to the Board of  Directors  to serve
     until the next annual stockholders meeting."

     4. Deletion of Standstill Provision. The phrase "Standstill Provisions;" is
hereby deleted from the title of Section 7 and the third line of Section 10.1 of
the  Agreement  and  Section  7.1 of the  Agreement  is  hereby  deleted  in its


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entirety.  All  definitions  of terms in Exhibit A that relate solely to Section
7.1 of the Agreement are also hereby deleted in their entirety.

     5. Waiver of Condition  Precedent.  Purchaser hereby waives  fulfillment of
the condition  precedent set forth in the first clause of Section  3.2(e) of the
Agreement  relating to the  financial  strength  rating  affirmation  by Moody's
Investor Services, Inc.

     6.  Continuance of Agreement.  Except as specifically  amended hereby,  the
terms, conditions, provisions and agreements contained in the Agreement shall be
and remain in full force and effect,  unchanged,  unamended and unaltered in any
way or manner whatsoever.

     7. Counterparts. This First Amendment may be executed by the parties hereto
in one or more counterparts  each of which shall be deemed an original,  but all
of which taken together shall  constitute one and the same  agreement,  it being
understood that all of the parties need not sign the same counterpart.

     IN WITNESS  WHEREOF,  the  parties  hereto  have duly  executed  this First
Amendment,  or have caused  this First  Amendment  to be duly  executed on their
behalf, as of the day and year first above written.


                                          PURCHASER:

                                          ACE BERMUDA INSURANCE, LTD.



                                          By: /s/ Christopher Z. Marshall
                                             ---------------------------------
                                          Christopher Z. Marshall, Director


                                          COMPANY:

                                          CAPITAL RE CORPORATION



                                          By: /s/ Jerome F. Jurschak
                                             ---------------------------------
                                          Jerome F. Jurschak
                                          Chairman and Chief Executive Officer




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