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                                 XL CAPITAL LTD


                                       AND


                       STATE STREET BANK AND TRUST COMPANY

                                     Trustee






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




                               FIRST SUPPLEMENTAL
                                    INDENTURE
                                       TO
                                    INDENTURE



                                  Dated as of ,




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


                [ ]% Subordinated Deferrable Interest Debentures
                                    due , 20




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<PAGE>


                                TABLE OF CONTENTS


                                                                            Page



ARTICLE I        DEFINITIONS..................................................2

Section 1.1.     Definition of Terms..........................................2
Section 1.2.     Interpretation...............................................4

ARTICLE II       GENERAL TERMS AND CONDITIONS OF THE NOTES....................4

Section 2.1.     Designation and Principal Amount.............................4
Section 2.2.     Maturity.....................................................4
Section 2.3.     Form and Payment.............................................4
Section 2.4.     Global Note..................................................5
Section 2.5.     Interest.....................................................6
Section 2.6.     Denominations................................................7

ARTICLE III      REDEMPTION OF THE NOTES......................................7

Section 3.1.     Tax Event Redemption.........................................7
Section 3.2.     Optional Redemption by Company...............................8
Section 3.3.     No Sinking Fund..............................................8

ARTICLE IV       EXTENSION OF INTEREST PAYMENT PERIOD.........................9

Section 4.1.     Extension of Interest Payment Period.........................9
Section 4.2.     Notice of Extension..........................................9

ARTICLE V        EXPENSES....................................................10

Section 5.1.     Payment of Expenses.........................................10

ARTICLE VI       SUBORDINATION...............................................11

Section 6.1.     Agreement to Subordinate....................................11
Section 6.2.     Default on Senior Indebtedness..............................12
Section 6.3.     Liquidation; Dissolution; Bankruptcy........................12
Section 6.4.     Subrogation.................................................14
Section 6.5.     Trustee to Effectuate Subordination.........................15
Section 6.6.     Notice by the Company.......................................16
Section 6.7.     Rights of the Trustee; Holders of Senior Indebtedness.......17

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<PAGE>

Section 6.8.     Subordination May Not Be Impaired...........................17

ARTICLE VII      COVENANT TO LIST ON EXCHANGE................................18

Section 7.1.     Listing on Exchange.........................................18

ARTICLE VIII     FORM OF NOTE................................................18

Section 8.1.     Form of Note................................................18

ARTICLE IX       ORIGINAL ISSUE OF NOTES.....................................28

Section 9.1.     Original Issue of Notes.....................................28

ARTICLE X        CERTAIN COVENANTS...........................................28

Section 10.1.    Limitation on Dividends and Other Payments..................28
Section 10.2.    Covenants as to the Trust...................................29

ARTICLE XI       CERTAIN EVENTS OF DEFAULT...................................30

Section 11.1.    Additional Events of Default................................30
Section 11.2.    Waiver of Existing Defaults.................................30

ARTICLE XII      MISCELLANEOUS...............................................30

Section 12.1.    Supplemental Indenture Incorporated Into Indenture..........30
Section 12.2.    Trustee Not Responsible for Recitals; Disclaimer............31
Section 12.3.    Governing Law...............................................31
Section 12.4.    Separability................................................31
Section 12.5.    Counterparts................................................31
Section 12.6.    Acknowledgment of Rights of Holders of Preferred Securities.31


                                      -ii-


<PAGE>

     THIS FIRST SUPPLEMENTAL INDENTURE, dated as of , 2001 (this "First
Supplemental Indenture"), between XL Capital Ltd, a Cayman Islands exempted
limited company (the "Company"), and State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as
trustee (the "Trustee"), under the Indenture dated as of , 2001 between the
Company and the Trustee (the "Indenture").


                              W I T N E S S E T H:


     WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's unsecured subordinated
Securities, to be issued from time to time in one or more series as might be
determined by the Company in accordance with the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered as provided
in the Indenture; and

     WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its [ ]% Subordinated Deferrable Interest Notes due , 20 (the "Notes"), the form
and substance of such Notes and the terms, provisions and conditions thereof to
be as set forth in the Indenture and this First Supplemental Indenture; and

     WHEREAS, XL Capital Trust [ ], a Delaware statutory business trust (the
"Trust"), has offered to the public $[ ] aggregate liquidation amount of its [
]% Trust Preferred Securities (the"Preferred Securities") and has offered to the
Company $[ ] aggregate liquidation amount of its common securities (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities"), such Trust Securities representing undivided beneficial interests
in the assets of the Trust, and proposes to invest the proceeds from such
offering in $[ ] aggregate principal amount of the Notes; and

     WHEREAS, the Company has requested the Trustee to execute and deliver this
First Supplemental Indenture, and all requirements necessary to make this First
Supplemental Inden-


<PAGE>
                                      -2-


ture a valid instrument, in accordance with its terms, and to make the Notes,
when executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this First Supplemental Indenture has been duly authorized in all
respects.

     NOW, THEREFORE, in consideration of the purchase and acceptance of the
Notes by the holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the terms, provisions
and conditions thereof, the Company covenants and agrees with the Trustee as
follows:


                                    ARTICLE I

                                   DEFINITIONS


     Section 1.1. Definition of Terms. Unless the context otherwise requires,
(a) a term defined in the Indenture has the same meaning when used in this First
Supplemental Indenture, (b) a term defined anywhere in this First Supplemental
Indenture has the same meaning throughout and (c) the following terms have the
meanings given to them in the Declaration (including, without limitation, Annex
I thereto):

                           Clearing Agency
                           Delaware Trustee
                           Distribution
                           No Recognition Opinion
                           Preferred Securities Guarantee
                           Preferred Security Certificate
                           Pro Rata
                           Property Trustee
                           Purchase Agreement
                           Regular Trustee
                           Special Event
                           Tax Event
                           Tax Event Opinion

     In addition, the following terms have the following respective meanings:


<PAGE>
                                      -3-


     "Declaration" means the Amended and Restated Declaration of Trust of XL
Capital Trust [ ], a Delaware statutory business trust, dated as of , .

     "Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the Property Trustee are to be distributed
to the holders of the Trust Securities pro rata in accordance with the
Declaration.

     "Maturity Date" means the date on which the Notes mature and on which the
principal shall be due and payable together with all accrued and unpaid interest
thereon including Additional Interest, if any.

     "Senior Indebtedness" means: (i) any payment in respect of (A) indebtedness
of the Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds, notes or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations of such obligor
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations of the Company
for reimbursement on any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
and (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 the Company
(whether or not such obligation is assumed by the Company), except for any such
indebtedness that is by its terms subordinated to or pari passu with the Notes,
as the case may be. For greater certainty, "Senior Indebtedness" includes all
indebtedness for money borrowed between or among the Company and its Affiliates,
except for such indebtedness that is by its terms subordinated to or pari passu
with the Notes, as the case may be. Such Senior Indebtedness shall continue to
be Senior Indebtedness and be entitled to the benefits of Article VI hereof
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.


<PAGE>
                                      -4-


     Section 1.2. Interpretation. Each definition in this First Supplemental
Indenture includes the singular and the plural, and references to the neuter
gender include the masculine and feminine where appropriate. Terms which relate
to accounting matters shall be interpreted in accordance with generally accepted
accounting principles in effect from time to time. References to any statute
mean such statute as amended at the time and include any successor legislation.
The word "or" is not exclusive, and the words "herein," "hereof" and "hereunder"
refer to this First Supplemental Indenture as a whole. References to Articles
and Sections are to the Articles and Sections of this First Supplemental
Indenture. The headings to the Articles and Sections are for convenience of
reference and shall not affect the meaning or interpretation of this First
Supplemental Indenture.


                                   ARTICLE II

                    GENERAL TERMS AND CONDITIONS OF THE NOTES


     Section 2.1. Designation and Principal Amount. There is hereby authorized a
series of Securities designated the "[ ]% Subordinated Deferrable Interest Notes
due , 20 ." The aggregate principal amount of Notes which may be authenticated
and delivered under the Indenture is limited to $[ ] (except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.08, 2.09, 2.11, 3.07 or
9.05 of the Indenture and except for any Notes which pursuant to Section 2.04 of
the Indenture are deemed not to have been authenticated and delivered pursuant
to the Indenture).

     Section 2.2. Maturity. The Maturity Date will be , 20 .

     Section 2.3. Form and Payment. Except as provided in Section 2.4, the Notes
shall be issued in fully registered certificated form without interest coupons.
Principal of and interest (including Additional Interest, if any) on the Notes
issued in certificated form will be payable, the transfer of such Notes will be
registrable and such Notes will be exchangeable for Notes bearing identical
terms and provisions at the office or agency of the Trustee in New York, New
York, pro-


<PAGE>
                                      -5-


vided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered Holder at such address as shall appear
in the security register maintained by the Registrar. Notwithstanding the
foregoing, so long as the registered Holder of any Notes is the Property
Trustee, the payment of the principal of and interest (including Additional
Interest, if any) on such Notes held by the Property Trustee will be made at
such place and to such account as may be designated by the Property Trustee.

     Section 2.4. Global Note. In connection with a Dissolution Event:

          (a) Notes in certificated form may be presented to the Trustee by the
     Property Trustee in exchange for a global Note in an aggregate principal
     amount equal to the aggregate principal amount of the Notes so presented,
     to be registered in the name of The Depository Trust Company ("DTC"), as
     the initial Clearing Agency for the Notes, or the nominee of DTC, and
     delivered by the Trustee to DTC for crediting to the accounts of its
     participants pursuant to the instructions of the Regular Trustees. The
     Company, upon any such presentation, shall execute a global Note in such
     aggregate principal amount and deliver the same to the Trustee for
     authentication and delivery in accordance with the Indenture and this First
     Supplemental Indenture. Payments on the Notes issued as a global Note will
     be made in immediately available funds to DTC (or a successor Clearing
     Agency); and

          (b) If any Preferred Securities are held in certificated form (i.e.,
     not in book entry form), Notes in certificated form may be presented to the
     Trustee by the Property Trustee and any Preferred Security Certificate
     which represents Preferred Securities (other than Preferred Securities held
     by DTC (or a successor Clearing Agency) or its nominee) ("Non Book-Entry
     Preferred Securities") will be deemed to represent beneficial interests in
     Notes in certificated form presented to the Trustee by the Property Trustee
     having an aggregate principal amount equal to the aggregate stated
     liquidation amount of the Non Book-Entry Preferred Securities until such
     Preferred Security Certificates are presented to the Registrar for transfer
     or reissuance, at which time such Preferred Security Certificates will be
     canceled and a Note in certificated form, registered in the name of the
     holder of such Preferred Se-


<PAGE>
                                      -6-


     curity Certificate or the transferee of the holder of such Preferred
     Security Certificate, as the case may be, with an aggregate principal
     amount equal to the aggregate stated liquidation amount of the Preferred
     Security Certificate canceled, will be executed by the Company and
     delivered to the Trustee for authentication and delivery in accordance with
     the Indenture and this First Supplemental Indenture. Upon issuance of such
     Notes, Notes in certificated form with an equivalent aggregate principal
     amount that were presented by the Property Trustee to the Trustee will be
     deemed to have been canceled.

     Section 2.5. Interest. (a) Each Note will bear interest at the rate of [ ]%
per annum (the "Coupon Rate") from the original date of issuance until the
principal thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on , ,
and of each year (each, an "Interest Payment Date"), commencing on , 2001, to
the Person in whose name such Note or any predecessor Note is registered, at the
close of business on the Regular Record Date for such interest installment,
which shall be the close of business on the Business Day next preceding that
Interest Payment Date. If pursuant to the provisions of Section 2.08 of the
Indenture the Notes are no longer represented by a global Security, the Company
may select a regular record date for such interest installment which shall be
any date at least fifteen days before an Interest Payment Date.

     (b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the actual number of days
elapsed in such a 90-day quarter.


<PAGE>
                                      -7-


     (c) If at any time while the Property Trustee is the Holder of any Notes,
the Trust or the Property Trustee is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
case, the Company will pay as additional interest ("Additional Interest") on the
Notes held by the Property Trustee, such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.

     Section 2.6. Denominations. In the event Notes are issued in certificated
form, such Notes will be in denominations of $1,000 and integral multiples
thereof.


                                   ARTICLE III

                             REDEMPTION OF THE NOTES


     Section 3.1. Tax Event Redemption. If a Tax Event has occurred and is
continuing and after receiving a Tax Event Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Tax Event Opinion that a No
Recognition Opinion cannot be delivered to the Trust, then, notwithstanding
Section 3.2(a) but subject to Section 3.2(b), the Company shall have the right,
upon not less than 30 nor more than 60 days' notice to the registered Holders of
the Notes, to redeem the Notes, in whole or in part, for cash within 90 days
following the occurrence of such Tax Event (the "90 Day Period") at a redemption
price equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest thereon to the date of such redemption (the "Special Redemption
Price"), provided, however, that if at the time there is available to the
Company the opportunity to eliminate, within the 90 Day Period, the Tax Event by
taking some ministerial action ("Ministerial Action"), such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Company, the Trust or the holders of the Trust
Securities, the Company shall pursue such Ministerial Action in lieu of
redemption; and provided further, that the Company shall have no right to redeem
the Notes while the Trust is pursuing any Min-


<PAGE>
                                      -8-


isterial Action pursuant to its obligations under the Declaration. The Special
Redemption Price shall be paid prior to 12:00 noon, New York City time, on the
date of such redemption or at such earlier time as the Company determines and
specifies in the notice of redemption; provided, however, the Company shall
deposit with the Trustee an amount sufficient to pay the Special Redemption
Price by 10:00 a.m., New York City time, on the date such Special Redemption
Price is to be paid.

     Section 3.2. Optional Redemption by Company. (a) Subject to the provisions
of Article Three of the Indenture and to Section 3.2(b), the Company shall have
the right to redeem the Notes, in whole or in part, from time to time, on or
after , 20 , at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption (the "Optional Redemption Price"). Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days' notice to
the registered Holder of the Notes, at the Optional Redemption Price. If the
Notes are only partially redeemed pursuant to this Section 3.2, the Notes will
be redeemed by lot or by any other method utilized by the Trustee; provided,
however, that if at the time of redemption the Notes are registered as a global
security, the Depositary shall determine by lot the interest of each of its
participants in such global Note to be redeemed. The Optional Redemption Price
shall be paid prior to 12:00 noon, New York City time, on the date of such
redemption or at such earlier time as the Company determines and specifies in
the notice of redemption, provided the Company shall deposit with the Trustee an
amount sufficient to pay the Optional Redemption Price by 10:00 a.m., New York
City time, on the date such Optional Redemption Price is to be paid.

     (b) If a partial redemption of the Notes would result in the delisting of
the Preferred Securities issued by the Trust from any national securities
exchange or other organization on or with which the Preferred Securities are
then listed, the Company shall not be permitted to effect such partial
redemption and may only redeem the Notes in whole.

     Section 3.3. No Sinking Fund. The Notes are not entitled to the benefit of
any sinking fund.



<PAGE>
                                      -9-


                                   ARTICLE IV

                      EXTENSION OF INTEREST PAYMENT PERIOD


     Section 4.1. Extension of Interest Payment Period. The Company shall have
the right, at any time and from time to time prior to the Maturity Date, to
extend the interest payment period of such Notes for up to twenty (20)
consecutive quarters (the "Extended Interest Payment Period"). To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
4.1, will bear interest compounded quarterly at the Coupon Rate for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Notes, including any Additional Interest ("Deferred
Interest"), which shall be payable to the Holders of the Notes in whose names
the Notes are registered in the security register maintained by the Registrar on
the first Regular Record Date after the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided, however, that such period
together with all previous and such further extensions thereof shall not exceed
twenty (20) consecutive quarters or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof.

     Section 4.2. Notice of Extension. (a) If the Property Trustee is the only
registered Holder of the Notes at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to both the
Regular Trustees and the Property Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities are payable, or
(ii) the date the Trust is required to give notice of the record or payment date
for such Distributions to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities, but in
any event at least one Business Day before such record date. The Regular
Trustees shall give notice of


<PAGE>
                                      -10-


the Company's selection of such Extended Interest Payment Period to the holders
of the Preferred Securities.

     (b) If the Property Trustee is not the only Holder of the Notes at the time
the Company selects an Extended Interest Payment Period, the Company shall give
the Holders of the Notes and the Trustee written notice of its selection of such
Extended Interest Payment Period ten (10) Business Days before the earlier of
(i) the next succeeding Interest Payment Date, or (ii) the date the Company is
required to give notice of the record or payment date of such interest payment
to the New York Stock Exchange or other applicable self-regulatory organization
or to Holders of the Notes.

     (c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the twenty quarters permitted
in the maximum Extended Interest Payment Period permitted under Section 4.1.


                                    ARTICLE V

                                    EXPENSES


     Section 5.1. Payment of Expenses. In connection with the offering, sale and
issuance of the Notes to the Property Trustee in connection with the sale of the
Trust Securities by the Trust, and in connection with the maintenance of the
Trust for so long as the Trust Securities are outstanding, the Company shall:

          (a) pay all costs and expenses relating to the offering, sale and
     issuance of the Notes, including compensation of the Trustee under the
     Indenture in accordance with the provisions of Section 7.07 of the
     Indenture;

          (b) pay all costs and expenses of the Trust (including, but not
     limited to, costs and expenses relating to the organization of the Trust,
     the offering, sale and issuance of the Trust Securities, the fees and
     expenses of the Property Trustee and the Delaware Trustee, the costs and
     expenses relating to the operation of the Trust, including without
     limitation, costs and expenses of accountants, attorneys, statistical or
     bookkeeping services, expenses for printing and engraving and computing or

<PAGE>
                                      -11-


     accounting equipment, paying agent(s), registrar(s), transfer agent(s), any
     Clearing Agency for the Notes, duplicating, travel and telephone and other
     telecommunications expenses and costs and expenses incurred in connection
     with the acquisition, financing, and disposition of Trust assets), other
     than obligations of the Trust in respect of the Common Securities and the
     Preferred Securities;

          (c) be primarily liable for any indemnification obligations arising
     with respect to the Declaration;

          (d) pay any and all taxes, duties, assessments or governmental charges
     of whatever nature (other than United States withholding taxes attributable
     to the Trust or its assets) imposed on the Trust or its assets and all
     liabilities, costs and expenses of the Trust with respect to such taxes,
     duties, assessments or governmental charges; and

          (e) pay any and all fees and expenses related to the enforcement by
     the Property Trustee of the rights of the holders of the Preferred
     Securities.


                                   ARTICLE VI

                                  SUBORDINATION


     Section 6.1. Agreement to Subordinate. The Company covenants and agrees,
and each holder of Notes issued hereunder by such holder's acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article VI; and each holder of a Note, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees to be bound by
such provisions.

     The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this First Supplemental Indenture or thereafter incurred.


<PAGE>
                                      -12-


     This Article shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness and such holders are made obligees hereunder and they and/or
each of them may enforce such provisions.

     No provision of this Article VI shall prevent the occurrence of any default
or Event of Default with respect to the Notes.

     Section 6.2. Default on Senior Indebtedness. In the event and during the
continuation of any default by the Company in the payment of principal, premium,
interest or any other amount due on any Senior Indebtedness, or in the event
that the maturity of any Senior Indebtedness has been accelerated because of a
default, then, in either case, no payment shall be made by the Company to the
Holders of the Notes with respect to the principal (including redemption and
sinking fund payments) of, premium, if any, interest on, or any other amount
owing in respect of, the Notes.

     In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder of the Notes when such payment is
prohibited by the preceding paragraph of this Section 6.2, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.

     Section 6.3. Liquidation; Dissolution; Bankruptcy. Upon any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due upon all Senior Indebtedness shall first be paid in full, or payment
thereof provided


<PAGE>
                                      -13-


for in money in accordance with its terms, before any payment or distribution is
made by the Company to the Holders of the Notes on account of the principal of,
premium, if any, interest on, or any other amount owing in respect of, the
Notes; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Notes or the Trustee would be entitled to receive from
the Company, except for the provisions of this Article VI, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders of the Notes
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders of Notes or to the Trustee.

     In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Notes before all Senior Indebtedness is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.


<PAGE>
                                      -14-


     For purposes of this Article VI, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article VI with respect to
the Notes to the payment of all Senior Indebtedness that may at the time be
outstanding, provided, however, that (i) such Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Five of the Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 6.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
Five of the Indenture. Nothing in Section 6.2 or in this Section 6.3 shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 7.07 of
the Indenture.

     Section 6.4. Subrogation. Subject to the payment in full of all Senior
Indebtedness, the rights of the Holders of the Notes shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until the principal of, premium, if any, and interest on,
and all other amounts owing in respect of, the Notes shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or securities to which
the Holders of the Notes or the Trustee would be entitled except for the
provisions of this Article VI, and no payment over pursuant to the provisions of
this Article VI, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Notes be deemed to be a payment by the Company to or on account
of such Senior Indebtedness. It is understood that the provisions of this
Article VI are and are


<PAGE>
                                      -15-


intended solely for the purposes of defining the relative rights of the Holders
of the Notes, on the one hand, and the holders of Senior Indebtedness on the
other hand.

     Nothing contained in this Article VI or elsewhere in this First
Supplemental Indenture or the Indenture or in the Notes is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Notes the principal
of (and premium, if any) and interest on and all other amounts owing in respect
of the Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Notes and creditors of the Company, other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under the Indenture, as amended and supplemented by
this First Supplemental Indenture, subject to the rights, if any, under this
Article VI of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.

     Upon any payment or distribution of assets of the Company referred to in
this Article VI, the Trustee, subject to the provisions of Section 7.01 of the
Indenture, and the Holders of the Notes, shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article VI.

     Section 6.5. Trustee to Effectuate Subordination. Each Holder of a Note by
such holder's acceptance thereof authorizes and directs the Trustee on such
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article VI and appoints


<PAGE>
                                      -16-


the Trustee as such holder's attorney-in-fact for any and all such purposes.

     Section 6.6. Notice by the Company. The Company shall give prompt written
notice to a Trust Officer of any fact known to the Company that would prohibit
the making of any payment of monies to or by the Trustee in respect of the Notes
pursuant to the provisions of this Article VI. Notwithstanding the provisions of
this Article VI or any other provision of the Indenture and this First
Supplemental Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Notes pursuant to the provisions of this
Article VI unless and until a Trust Officer shall have received written notice
thereof from the Company or a holder or holders of Senior Indebtedness or from
any representative or trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 6.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Note) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.

     The Trustee, subject to the provisions of Section 7.01 of the Indenture,
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a representative
or trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a representative or trustee on
behalf of any such holder or holders. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article VI, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Senior Indebtedness held by such Person, the extent to


<PAGE>
                                      -17-


which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article VI,
and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.

     Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness. The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article VI in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.

     With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture or this First Supplemental Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 7.01 of
the Indenture, the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall pay over or deliver to Holders of Notes, the Company or
any other Person money or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article VI or otherwise.

     Section 6.8. Subordination May Not Be Impaired. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of the Indenture or this First Supplemental
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.

     Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Notes, without
incurring responsibility to the Holders of the Notes and without im-


<PAGE>
                                      -18-


pairing or releasing the subordination provided in this Article VI or the
obligations hereunder of the Holders of the Notes to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.


                                   ARTICLE VII

                          COVENANT TO LIST ON EXCHANGE


     Section 7.1. Listing on Exchange. If the Notes are distributed to the
holders of the Preferred Securities upon a Dissolution Event, the Company will
use its best efforts to list such Notes on the New York Stock Exchange, Inc. or
on such other national securities exchange or with the Nasdaq Stock Market or
such other organization as the Preferred Securities are then listed.


                                  ARTICLE VIII

                                  FORM OF NOTE


     Section 8.1. Form of Note. The Notes and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:

                             (FORM OF FACE OF NOTE)

     [IF THE NOTE IS TO BE A GLOBAL SECURITY, INSERT: This Note is a global Note
within the meaning of the Indenture hereinafter referred to and is registered in
the name of The Depository Trust Company ("DTC") or a nominee of DTC. Unless and
until it is exchanged in whole or in part for


<PAGE>
                                      -19-


Notes in certificated form, this Note may not be transferred except as a whole
by DTC to a nominee of DTC or by DTC or any such nominee to a successor
depositary or a nominee of such successor depositary.

     Unless this Note is presented by an authorized representative of DTC (55
Water Street, New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any Note issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.]



<PAGE>
                                      -20-



No.                                                     $

CUSIP No.

                                 XL CAPITAL LTD

                   [ ]% SUBORDINATED DEFERRABLE INTEREST NOTE
                                    DUE , 20


     XL CAPITAL LTD, a Cayman Islands exempted limited company (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ________________ or
registered assigns, the principal sum of ________________ Dollars on and to pay
interest on said principal sum from , or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on , , and of each year, commencing , 20 , at the rate of [ ]% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, compounded quarterly, at the same rate per
annum. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the actual number of days
elapsed in such 90-day quarter. In the event that any date on which interest is
payable on this Note is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Note (or one or more Predecessor Securities, as defined in said Indenture) is
registered at the close of business on the Regular Record Date for such interest
installment [which


<PAGE>
                                      -21-


shall be the close of business on the Business Day next preceding such Interest
Payment Date.] [IF PURSUANT TO THE PROVISIONS OF SECTION 2.08 OF THE INDENTURE
THE NOTES ARE NO LONGER REPRESENTED BY A GLOBAL SECURITY -- which shall be
[insert date (to be selected by the Company) which is not less than 15 days
prior to each Interest Payment Date.]] Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered Holders on such Regular Record Date, and may be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a special record date to be fixed by the Company for
the payment of such defaulted interest, notice whereof shall be given to the
registered Holders of the Notes not less than fifteen (15) days prior to such
special record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. The principal of (and premium, if any) and
the interest on this Note shall be payable at the office or agency of the
Trustee maintained for that purpose in New York, New York, in any coin or
currency of the United States of America which at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the security register
maintained by the Registrar. Notwithstanding the foregoing, so long as the
Holder of this Note is the Property Trustee of XL Capital Trust [ ], the payment
of the principal of (and premium, if any) and interest on this Note will be made
in immediately available funds at such place and to such account as may by
designated by the Property Trustee of XL Capital Trust [ ].

     The indebtedness evidenced by this Note is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, hereby waives all notice
of the acceptance of the sub-


<PAGE>
                                      -22-


ordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

     This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed.

Dated:             ,

                           XL CAPITAL LTD


                           By:__________________________________________________
                                  Name:
                                  Title:


Attest:


By:__________________________
      Name:
      Title:


<PAGE>
                                      -23-



                     (FORM OF CERTIFICATE OF AUTHENTICATION)


                          CERTIFICATE OF AUTHENTICATION


     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

                         STATE STREET BANK AND TRUST COMPANY,
                              as Trustee


                         By:____________________________________________________
                                Authorized Signatory




<PAGE>
                                      -24-



                            (FORM OF REVERSE OF NOTE)


     This Note is one of a duly authorized series of Securities of the Company
designated its "[ ]% Subordinated Deferrable Interest Notes due [ , 20 ]"
(herein sometimes referred to as the "Notes"), issued under and pursuant to an
Indenture dated as of , 2001, duly executed and delivered between the Company
and State Street Bank and Trust Company, not in its individual capacity but
solely as trustee (the "Trustee"), as supplemented by a First Supplemental
Indenture dated as of , 2001, between the Company and the Trustee (such
Indenture as so supplemented, the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the Holders of the Notes. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as in effect on the date of the
Indenture (the "TIA"). This Note is subject to all such terms and the Holder of
this Note is referred to the Indenture and the TIA for a statement of those
terms.

     The Notes are general unsecured obligations of the Company and are limited
(except as otherwise provided in the Indenture) to $[ ] in aggregate principal
amount.

     Upon the occurrence and continuation of a Tax Event, in certain
circumstances this Note may be redeemed by the Company at a redemption price
equal to 100% of the principal amount hereof, plus any accrued but unpaid
interest thereon to the date of such redemption (the "Special Redemption
Price"). The Special Redemption Price shall be paid prior to 12:00 noon, New
York City time, on the date of such redemption or at such earlier time as the
Company determines. The Company shall also have the right to redeem this Note at
the option of the Company, without premium or penalty, in whole or in part at
any time on or after , 20 (an "Optional Redemption"), at a redemption price
equal to 100% of the principal amount hereof, plus any accrued but unpaid
interest thereon to the date of such redemption (the "Optional Redemption
Price"). Any optional redemption pursuant to this paragraph will be made upon
not less than 30 nor more than 60 days notice, at the Optional Redemption Price.
If the Notes are only partially redeemed by the Company pursuant to an Optional
Redemption, the


<PAGE>
                                      -25-


Notes will be redeemed by lot or by any other method utilized by the Trustee;
provided, however, that if at the time of redemption the Notes are registered as
a global Note, the depositary shall determine by lot the interest of each of its
participants in such global Note to be redeemed.

     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

     In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of a majority in aggregate principal amount of
the Securities of each series affected at the time outstanding, as defined in
the Indenture, to amend or supplement the Indenture or the Securities of any
series (including the Notes) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of modifying in any manner the rights of the Holders of the Securities
(including the Notes); provided, however, that no such amendment or supplement
shall (i) extend the fixed maturity of any Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, without the consent of the Holder of each Security of such
series so affected or (ii) reduce the aforesaid percentage in aggregate
principal amount of Securities, the Holders of which are required to consent to
any such amendment or supplement, without the consent of the Holders of each
Security then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Securities of such series, to waive any past
default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or interest,
if any, on any of the Securities of such series. Any such consent or waiver by
the registered Holder of this Note (unless revoked as provided in the


<PAGE>
                                      -26-


Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Note and of any Note issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.

     The Company shall have the right at any time during the term of the Notes,
and from time to time, to extend the interest payment period of the Notes for up
to twenty (20) consecutive quarters (an "Extended Interest Payment Period"), at
the end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the Notes to
the extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Company
may further extend such Extended Interest Payment Period, provided, however,
that such Extended Interest Payment Period together with all previous and such
further extensions thereof shall not exceed twenty (20) consecutive quarters or
extend beyond the maturity of the Notes. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid interest
and any additional amounts then due, the Company may select a new Extended
Interest Payment Period, subject to the foregoing requirements.

     As provided in the Indenture and subject to certain limitations therein set
forth, this Note is transferable by the registered Holder hereof on the security
register of the Company maintained by the Registrar, upon surrender of this Note
for registration of transfer at the office or agency of the Trustee in New York,
New York accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment

<PAGE>
                                      -27-


of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any Paying Agent and the Registrar may deem and treat the
registered Holder hereof as the absolute owner hereof (whether or not this Note
shall be overdue and notwithstanding any notice of ownership or writing hereon
made by anyone other than the Registrar) for the purpose of receiving payment of
principal of and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any Paying Agent nor the Registrar shall be affected
by any notice to the contrary.

     No past, present or future director, officer, employee or stockholder, as
such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Notes or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.

     [The Notes of this series are issuable only in registered form without
coupons in denominations of $[ ] and any integral multiple thereof.] [This
global Note is exchangeable for Notes in definitive certificated form only under
certain limited circumstances set forth in the Indenture. Notes so issued are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations therein set forth, Notes so issued are exchangeable for a
like aggregate principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.

     This Note shall be governed by the internal laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
State.

     All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.



<PAGE>
                                      -28-


                                   ARTICLE IX

                             ORIGINAL ISSUE OF NOTES


     Section 9.1. Original Issue of Notes. Notes in the aggregate principal
amount of $[ ] may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company, signed by its Chairman, its President, or any Vice
President and its Treasurer, an Assistant Treasurer, or Secretary without any
further action by the Company.


                                    ARTICLE X

                                CERTAIN COVENANTS


     The following covenants shall apply to the Notes (but not with respect to
any other series of Securities), and are in addition to the covenants set forth
in Article Four of the Indenture.

     Section 10.1. Limitation on Dividends and Other Payments. If (i) there
shall have occurred any event that constitutes an Event of Default or (ii) the
Company shall be in default with respect to its payment of any obligations under
the Preferred Securities Guarantee, then (a) the Company shall not declare or
pay any dividend on, make any distributions with respect to, or redeem, purchase
or make a liquidation payment with respect to, any of its capital stock, (b) the
Company shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to the Notes, and (c) the Company shall not make
any guarantee payments (other than pursuant to the Preferred Securities
Guarantee) with respect to the foregoing.

     If the Company shall have given notice of its election to defer payments of
interest on the Notes by extending the interest payment period as provided in
Article IV and such period, or any extension thereof, shall be continuing, then
(i) the Company shall not declare or pay any dividend, or make any


<PAGE>
                                      -29-


distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, (ii) the Company shall not make any
payment of interest, principal, premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to the Notes, and (iii) the Company shall not make any guarantee payments
(other than pursuant to the Preferred Securities Guarantee) with respect to the
foregoing.

     Notwithstanding the foregoing restrictions, nothing in this Section 10.1
shall prevent the Company, in any event, from making dividend, redemption,
liquidation or guarantee payments on capital stock, or interest, principal,
redemption or guarantee payments on debt securities issued by the Company
ranking pari passu with or junior to the Notes, where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such payment is being made.

     Section 10.2. Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company will (i) maintain 100% direct or
indirect ownership of the Common Securities; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) not cause, as sponsor of the
Trust, or permit, as the holder of the Common Securities of the Trust, the
termination, dissolution or winding-up of the Trust, except in connection with a
distribution of the Notes as provided in the Declaration and in connection with
certain mergers, consolidations or amalgamations as permitted by the
Declaration, (iii) use its reasonable efforts to cause the Trust (a) to remain a
statutory business trust, except in connection with a distribution of Notes to
the holders of the Preferred Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (b)
to otherwise continue to be treated as a grantor trust for United States federal
income tax purposes and (iv) use its reasonable efforts to cause each holder of
Trust Securities to be treated as owning an individual beneficial interest in
the Notes.



<PAGE>
                                      -30-


                                   ARTICLE XI

                            CERTAIN EVENTS OF DEFAULT


     Section 11.1. Additional Events of Default. An Event of Default with
respect to the Notes shall include those events described in Section 6.01 of the
Indenture and, with respect to the Notes only, the occurrence of any of the
following events: the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Notes to holders of Preferred Securities in liquidation of their interests in
the Trust, (ii) the redemption of all of the outstanding Preferred Securities,
or (iii) certain mergers, consolidations or amalgamations, each as permitted by
the provisions of the Declaration.

     Section 11.2. Waiver of Existing Defaults. Notwithstanding Section 6.04 of
the Indenture, the Holders of a majority in aggregate principal amount of the
Notes may not waive a Default or an existing Event of Default (i) in the payment
of the principal of or accrued interest on the Notes, unless the Company has
paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest (with interest on overdue interest at the rate
specified in Section 2.5(a)) upon all of the Notes and the principal of the
Notes that shall have become due otherwise than by acceleration or (ii) that
arise out of a breach by the Company of Section 10.1. Section 6.04 of the
Indenture shall, in all other respects and as modified by this Section 11.2,
apply to the Notes.


                                   ARTICLE XII

                                  MISCELLANEOUS


     Section 12.1. Supplemental Indenture Incorporated Into Indenture. This
First Supplemental Indenture is executed by the Company and the Trustee pursuant
to the provisions of Sections 2.01 and 2.02 of the Indenture, and the terms and
conditions hereof shall be deemed to be part of the Indenture for all purposes
relating to the Notes. The provisions of the Indenture, as modified by this
First Supplemental Indenture, are effective with respect to the Notes, and are
not effective with respect to any series of Securities to be issued pursuant to

<PAGE>
                                      -31-


any previous or subsequent supplemental indenture or resolution of the Board of
Directors. The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects adopted, ratified and confirmed.

     Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. The
recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representation as to the validity or sufficiency of this First
Supplemental Indenture.

     Section 12.3. Governing Law. This First Supplemental Indenture and each
Note shall be deemed to be a contract made under the internal laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of said State.

     Section 12.4. Separability. In case any one or more of the provisions
contained in this First Supplemental Indenture or in the Notes shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this First Supplemental Indenture or of the Notes, but this First
Supplemental Indenture and the Notes shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.

     Section 12.5. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.

     Section 12.6. Acknowledgment of Rights of Holders of Preferred Securities.
The Company hereby acknowledges the right of each holder of Preferred
Securities, upon and during the continuance of an Event of Default under the
Declaration that results from the failure of the Company to pay principal of or
interest on the Notes when due, to directly institute proceedings against the
Company to obtain payment to such holder of an amount equal to the principal or
interest so defaulted on with respect to Notes in a principal amount equal to
the aggregate liquidation amount of the Preferred Securities owned by such
holder.



<PAGE>
                                      -32-



     IN WITNESS WHEREOF, XL CAPITAL LTD has caused this First Supplemental
Indenture to be duly executed as a deed the day and year first before written.

The common seal of )
XL CAPITAL LTD     )
was hereunto       )
affixed in the     )
presence of        )


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




                                    Witness:


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


<PAGE>
                                      -33-



     IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this First Supplemental Indenture as of the date first above written.

                              STATE STREET BANK AND TRUST COMPANY


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