SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-Q/A

                                   (Mark One)

           |X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) 0F THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

                                       OR

              |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the period from ___________ to

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

                         Commission file number 1-10967

                      ENHANCE FINANCIAL SERVICES GROUP INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           New York                                               13-3333448
--------------------------------------------------------------------------------
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                           Identification No.)

 335 Madison Avenue, New York, New York                             10017
--------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

                                 (212) 983-3100
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

             (Former name, former address and former fiscal year, if
                           changed since last report)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 38,035,954 shares of common
stock, par value $.10 per share, as of August 10, 1999.
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.

                                      INDEX

                                                                            Page
                                                                            ----

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets - June 30, 1999 and December 31, 1998 .......      3

Consolidated Statements of Income - Six months ended June 30, 1999
and 1998 ................................................................      4

Consolidated Statement of Shareholders' Equity - Six months ended
June 30, 1999 ...........................................................      5

Consolidated Statements of Cash Flows - Six months ended June 30,
1999 and 1998 ...........................................................      6

Notes to Consolidated Financial Statements ..............................   7-10

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations .......................................  11-17

PART II OTHER INFORMATION

Item 4. Submission of Matter to a Vote of Security Holders ..............     18

Item 6. Exhibits ........................................................     18

Signature ...............................................................     19

Exhibit 3.1.      Restated certificate of incorporation                        *
Exhibit 4.2.4.    Third Amendment to the Credit Agreement (Amending
                  and Restating Credit Agreement)                              *
Exhibit 10.2.2.   1997 Long-Term Incentive Plan for Key Employees,
                  as amended and restated as of June 3, 1999                   *
Exhibit 27        Financial data schedules                                     *

* Previously filed


                                       2
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)

<TABLE>
<CAPTION>
                                                            June 30, 1999    December 31, 1998
                                                             (unaudited)
<S>                                                          <C>                <C>
Assets
   Investments:
     Fixed maturities, held to maturity, at amortized cost
         (market value $186,824 and $205,792)                $   181,230        $   196,768
     Fixed maturities, available for sale, at market
         (amortized cost $722,015 and $657,644)                  727,918            694,374
     Common stock, at market (cost $498)                             839                839
     Short-term investments                                       38,138             50,794
                                                             -----------        -----------
Total Investments                                                948,125            942,775

   Investment in affiliates                                      110,170             96,867
   Cash and cash equivalents                                       5,929              5,542
   Premiums and other receivables                                 29,426             35,950
   Accrued interest and dividends receivable                      17,791             15,241
   Deferred policy acquisition costs                             113,021            103,794
   Federal income taxes recoverable                                5,933              9,717
   Prepaid reinsurance premiums                                    5,293              7,000
   Reinsurance recoverable on unpaid losses                        2,256              2,500
   Receivable from affiliates                                     20,798             16,710
   Receivable for securities                                          --              9,590
   Other assets                                                  135,313             90,731
                                                             -----------        -----------
TOTAL ASSETS                                                 $ 1,394,055        $ 1,336,417
                                                             ===========        ===========

Liabilities and Shareholders' Equity
LIABILITIES
   Losses and loss adjustment expenses                       $    36,750        $    36,239
   Reinsurance payable on paid losses
      and loss adjustment expenses                                 7,085              5,994
   Deferred premium revenue                                      327,541            315,215
   Accrued profit commissions                                      2,253              2,511
   Deferred income taxes                                          71,692             79,569
   Long-term debt                                                 75,000             75,000
   Short-term debt                                                99,646             54,290
   Payable for securities                                             --             11,557
   Accrued expenses and other liabilities                         69,990             49,843
   Payable to affiliates                                          22,654             43,553
                                                             -----------        -----------
TOTAL LIABILITIES                                                712,611            673,771
                                                             -----------        -----------

SHAREHOLDERS' EQUITY
   Common stock-$.10 par value, Authorized-100,000,000
      shares, issued-39,957,748 and 39,812,937 shares              3,996              3,981
   Additional paid-in capital                                    251,873            249,851
   Retained earnings                                             455,304            418,214
   Accumulated other comprehensive income                          2,857             23,186
   Treasury stock                                                (32,586)           (32,586)
                                                             -----------        -----------
TOTAL SHAREHOLDERS' EQUITY                                       681,444            662,646
                                                             -----------        -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 1,394,055        $ 1,336,417
                                                             ===========        ===========
</TABLE>

           See notes to unaudited consolidated financial statements.


                                       3
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                         Three Months Ended       Six Months Ended
                                                              June 30,                June 30,
                                                              --------                --------
                                                          1999        1998        1999        1998
                                                          ----        ----        ----        ----
<S>                                                     <C>         <C>         <C>         <C>
Revenues
   Net premiums written                                 $ 34,944    $ 27,299    $ 64,430    $ 60,963
   Increase in deferred premium revenue                   (8,838)     (2,912)    (14,033)    (12,921)
                                                        --------    --------    --------    --------
      Premiums earned                                     26,106      24,387      50,397      48,042
   Net investment income                                  13,934      13,311      27,488      26,239

   Net realized gains/(losses) on sale of investments       (450)        301      (4,340)        (23)
   Assignment sales                                        8,004      12,047      16,306      22,471
   Other income                                            4,025       1,377       6,211       3,001
                                                        --------    --------    --------    --------
      Total revenues                                      51,619      51,423      96,062      99,730
                                                        --------    --------    --------    --------

Expenses
   Losses and loss adjustment expenses                     2,629       1,612       5,386       3,867
   Policy acquisition costs                                9,232       8,553      18,107      16,668
   Profit commissions                                        442         365         556         804
   Other operating expenses - insurance                    4,294       3,251       8,202       6,677
                            - non-insurance               15,002      10,961      26,418      18,689
                                                        --------    --------    --------    --------
         Total expenses                                   31,599      24,742      58,669      46,705
                                                        --------    --------    --------    --------

Income from operations                                    20,020      26,681      37,393      53,025
   Equity in net income of affiliates                      7,883       3,797      12,566       6,398
   Foreign currency losses                                   (19)         (9)         (6)         (9)
   Interest expense                                       (2,484)     (2,211)     (4,928)     (4,062)
                                                        --------    --------    --------    --------
   Income before income taxes                             25,400      28,258      45,025      55,352
   Income tax expense                                      1,905       7,724       3,377      15,600
                                                        --------    --------    --------    --------
      Net income                                        $ 23,495    $ 20,534    $ 41,648    $ 39,752
                                                        ========    ========    ========    ========

Basic earnings per share                                $   0.62    $   0.55    $   1.10    $   1.06
                                                        ========    ========    ========    ========

Diluted earnings per share                              $   0.60    $   0.52    $   1.07    $   1.01
                                                        ========    ========    ========    ========

Basic weighted average shares outstanding                 37,992      37,555      37,955      37,516
                                                        ========    ========    ========    ========

Diluted weighted average shares outstanding               38,990      39,396      39,096      39,330
                                                        ========    ========    ========    ========
</TABLE>

           See notes to unaudited consolidated financial statements.


                                       4
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 1999
                (In thousands except share and per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                   Outstanding Common
                                                         Stock                Treasury Stock
                                                -----------------------   -----------------------

                                                                                                     Additional
                                                                                                       Paid-in
                                                  Shares       Amount       Shares       Amount        Capital
                                                  ------       ------       ------       ------        -------
<S>                                             <C>          <C>           <C>         <C>           <C>
Balance,  December 31, 1998                     39,812,937   $    3,981    1,950,794   $  (32,586)   $  249,851
  Comprehensive income:
     Net income for the period                          --           --           --           --            --
     Unrealized foreign currency translation
        adjustment (net of tax of $613)                 --           --           --           --            --
     Unrealized losses during the period
        (net of tax of $11,852)                         --           --           --           --            --
     Reclassification adjustment for realized
        losses included in net income (net of
        tax of $1,519)                                  --           --           --           --            --
  Total comprehensive income                            --           --           --           --            --
  Dividends paid ($0.12 per share)                      --           --           --           --            --
  Exercise of stock options                        144,811           15           --           --         2,022
                                                ----------   ----------   ----------   ----------    ----------
Balance, June 30, 1999                          39,957,748   $    3,996    1,950,794   $  (32,586)   $  251,873
                                                ==========   ==========   ==========   ==========    ==========

<CAPTION>
                                                              Accumulated
                                                       Other Comprehensive Income
                                                -----------------------------------------
                                                                 Foreign
                                                                Currency
                                                  Unearned    Translation    Unrealized     Retained
                                                Compensation   Adjustment  Gains (Losses)   Earnings       Total
                                                ------------   ----------  --------------   --------       -----
<S>                                              <C>           <C>           <C>           <C>           <C>
Balance,  December 31, 1998                      $     (493)   $      714    $   22,965    $  418,214    $  662,646
  Comprehensive income:
     Net income for the period                           --            --            --        41,648            --
     Unrealized foreign currency translation
        adjustment (net of tax of $613)                  --        (1,139)           --            --            --
     Unrealized losses during the period
        (net of tax of $11,852)                          --            --       (22,011)           --            --
     Reclassification adjustment for realized
        losses included in net income (net of
        tax of $1,519)                                   --            --         2,821            --            --
  Total comprehensive income                             --            --            --            --        21,319
  Dividends paid ($0.12 per share)                       --            --            --        (4,558)       (4,558)
  Exercise of stock options                              --            --            --            --         2,037
                                                 ----------    ----------    ----------    ----------    ----------
Balance, June 30, 1999                           $     (493)   $     (425)   $    3,775    $  455,304    $  681,444
                                                 ==========    ==========    ==========    ==========    ==========
</TABLE>

           See notes to unaudited consolidated financial statements.


                                       5
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

                                                       Six Months Ended June 30,
                                                       -------------------------
                                                          1999         1998
                                                          ----         ----
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                             $  41,648    $  39,752
 Adjustments  to  reconcile net income to
   net cash provided by operating activities:
  Depreciation and amortization, net                       (4,109)      (5,235)
  Loss on sale of investments, net                          4,340           23
  Equity in net income of affiliates                      (12,566)      (6,398)
  Change in assets and liabilities:
    Premiums and other receivables                          6,524       (1,656)
    Accrued interest and dividends receivable              (2,550)      (1,731)
    Accrued expenses and other liabilities                 20,147      (21,716)
    Deferred policy acquisition costs                      (9,227)      (2,160)
    Deferred premium revenue, net                          14,033       12,920
    Accrued profit commissions                               (258)      (1,205)
    Losses and loss adjustment expenses, net                1,846        6,149
    Payable to (receivable from) affiliates               (24,987)     (16,518)
    Payable (receivable) for securities                    (1,967)      (3,778)
    Other assets                                          (30,862)      34,295
    Income taxes, net                                       6,377        9,906
                                                        ---------    ---------
Net cash provided by  operating activities                  8,389       42,648
                                                        ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                        (2,977)        (472)
 Proceeds from sales and maturities of investments        235,739      155,318
 Purchase of investments                                 (280,038)    (205,837)
 Purchase of partnership interests                        (13,720)          --
 Sales of short-term investments, net                      12,656       19,867
 (Purchase) of other invested assets, net                      --       (1,128)
 Investment in affiliates                                  (2,497)     (15,092)
                                                        ---------    ---------
Net cash used in investing activities                     (50,837)     (47,344)
                                                        ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Capital stock                                              2,037        7,283
 Short-term debt                                           45,356       20,000
 Dividends paid                                            (4,558)      (4,130)
 Purchase of treasury stock                                    --      (11,472)
                                                        ---------    ---------
Net cash provided by financing activities                  42,835       11,681
                                                        ---------    ---------
Net change in cash and cash equivalents                       387       (6,985)
 Cash and cash equivalents, beginning of period             5,542       21,405
                                                        ---------    ---------
Cash and cash equivalents, end of period                $   5,929    $  28,390
                                                        =========    =========

            See notes to unaudited consolidated financial statements.


                                       6
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      PERIODS ENDED JUNE 30, 1999 AND 1998

1. BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q under Rules and
Regulations of the Securities and Exchange Commission and do not include all of
the information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 1998 of Enhance Financial Services Group
Inc. ("Enhance Financial").

      The accompanying unaudited consolidated financial statements have not been
audited by independent auditors in accordance with generally accepted auditing
standards. However, in the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position and results of operations of
Enhance Financial and Subsidiaries (collectively the "Company"). The results of
operations for the six months ended June 30, 1999 may not be indicative of the
results that may be expected for the year ending December 31, 1999.

2. DIVIDENDS DECLARED

      In the first six months of 1999, Enhance Financial declared and paid cash
dividends of $.12 per share totaling approximately $4,558,000.

3. COMMON STOCK

      On June 26, 1998, Enhance Financial effected a two-for-one split of its
common stock. An amount equal to the par value of common shares issued to effect
the split was transferred from additional paid-in capital to the common stock
account. This transfer has been reflected in the consolidated statement of
shareholders' equity at January 1, 1998. On June 3, 1998, the Company's
shareholders approved an increase in the number of shares of common stock
authorized for issuance to 100 million. All references to number of common
shares and to per-share information in the consolidated financial statements and
related notes have been adjusted to reflect the stock split on a retroactive
basis.

      During the first six months of 1999, no common stock repurchases were made
by Enhance Financial.

4. COMPREHENSIVE INCOME

      Effective in 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This pronouncement established new rules for the
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. The adoption of this statement had no
impact on the Company's financial position or results of operations. SFAS No.
130 requires the Company's unrealized gains and losses and changes in foreign
currency translation adjustment to be included in other comprehensive income.

      Total comprehensive income for the six months ended June 30, 1999 and 1998
was $21.3 million and $41.1 million, respectively. Presently, other
comprehensive income represents net income plus changes in unrealized gains and
losses on available for sale securities and foreign currency translation
adjustments.


                                       7
<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      PERIODS ENDED JUNE 30, 1999 AND 1998

5. NEW ACCOUNTING PRONOUNCEMENTS

      In June 1998, the Financial Accounting Standard Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
becomes effective for the Company January 1, 2001. This pronouncement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Company will be required to recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The accounting for a change in fair value of a
derivative in earnings or other comprehensive income will depend on the intended
use of the derivative and the resulting designation. Derivatives can be
designated as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or a firm commitment, (b) a hedge of the exposure
to variable cash flow of a forecast transaction, or (c) a hedge of foreign
currency exposure of a net investment in foreign operations, an unrecognized
firm commitment, an available-for-sale security, or a foreign currency
denominated forecasted transaction.

      In March 1998, the National Association of Insurance Commissioners adopted
the Codification of Statutory Accounting Principles (the "Codification"). The
Codification is intended to standardize regulatory accounting and reporting for
the insurance industry and is proposed to become effective January 1, 2001.
However, statutory accounting principles will continue to be established by
individual state laws and permitted practices, and it is uncertain when or if,
the State of New York will require adoption of the Codification for the
preparation of statutory financial statements. The Company has not finalized the
quantification of the effects of Codification on its statutory statements.

6. INCOME TAXES

      The Company files a consolidated federal income tax return with its
includable subsidiaries. Subject to the provisions of a tax sharing agreement,
income tax allocation is based upon separate return calculations.

      In April 8, 1999, the Company completed a $13,720,000 purchase of a
portfolio of approximately 500 residential mortgage-backed securities. The
transaction was structured by Credit-Based Asset Servicing and Securitization
LLC ("C-BASS"), a New York City-based joint venture, which will also manage and
service the portfolio for the Company. The purchase price was financed by a
short-term credit arrangement of $10,290,000. As of June 30, 1999, the balance
of outstanding debt related to such arrangement was $8,646,000. The transaction
is expected to produce significant pre-tax economic profits over the life of the
acquired portfolio, which is anticipated to be for a period of eight to ten
years. Additionally, the transaction will provide ancillary benefits that will
result in a lowering of the Company's effective tax rate in 1999 and beyond. The
Company currently expects that it will continue to receive tax benefits from the
portfolio at a level comparable to the current year at least through 2001 and
will receive some additional tax benefits over a period of six to eight years
thereafter. However, the amount of pre-tax economic profits and tax benefits
recognized from year to year may vary significantly depending on factors
relating to the portfolio, some of which are outside the control of the Company.
The Company's effective tax rate for the first six months of 1999 was 7.5%
compared to 28.2% for the comparable period of 1998.

      The investment in the portfolio is carried at amortized cost and is
classified on the balance sheet with other assets.

7. RECLASSIFICATIONS

      Certain of the 1998 amounts have been reclassified to conform to the
current year presentation.


                                       8
<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      PERIODS ENDED JUNE 30, 1999 AND 1998

8 - SEGMENT REPORTING

      The Company has two reportable segments: insurance and asset-based
businesses. The insurance segment provides credit-related insurance coverage to
meet the needs of customers in a wide variety of domestic and international
markets. The Company's largest insurance business is the provision of
reinsurance to the monoline primary financial guaranty insurers for both
municipal bonds and non-municipal obligations. The Company also provides trade
credit reinsurance, financial responsibility bonds, excess-SIPC insurance and
direct financial guaranty insurance. The asset-based businesses segment deals
primarily with credit-based servicing and securitization of assets in
underserved markets, in particular, the origination, purchase, servicing and
securitization of special assets, including lottery awards, structured
settlement payments, sub-performing/non-performing and seller financed
residential mortgages and delinquent consumer assets. The Company's reportable
segments are strategic business units which are managed separately as each
business requires different marketing and sales expertise.

      The Company evaluates performance based on profit or loss from operating
earnings, which it defines as net income excluding the impact of capital and
foreign exchange gains and losses, and certain non-recurring items, net of
taxes. Summarized financial information concerning the Company's operating
segments is presented in the following tables:

In thousands
                                                      June 30, 1999
                                                      -------------

                                          Insurance    Asset-Based      Totals
                                          ---------    -----------      ------
Revenues from external customers          $   53,431    $   19,483    $   72,914
Interest revenue                              27,488            --        27,488
Operating earnings                            36,819         8,355        45,174
Segment assets                             1,188,887       205,168     1,394,055

                                                      June 30, 1998
                                                      -------------
In thousands
                                          Insurance    Asset-Based      Totals
                                          ---------    -----------      ------
Revenues from external customers          $   50,522    $   22,992    $   73,514
Interest revenue                              26,239            --        26,239
Operating earnings                            29,853         9,920        39,773
Segment assets                             1,102,273       134,199     1,236,472


                                       9
<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                      PERIODS ENDED JUNE 30, 1999 AND 1998

      The following are reconciliations of reportable segment revenues and
profit to Enhance Financial's consolidated totals:

<TABLE>
<CAPTION>
In thousands                                                           June 30,
                                                                       --------
                                                                   1999        1998
                                                                   ----        ----
<S>                                                              <C>         <C>
Revenues

Total revenues from external customers for reportable segments   $ 72,914    $ 73,514

Total interest revenue for reportable segments                     27,488      26,239

Realized gains (losses)                                            (4,340)        (23)
                                                                 --------    --------

     Total consolidated revenues                                 $ 96,062    $ 99,730
                                                                 ========    ========

Net income

Operating earnings for reportable segments                       $ 45,174    $ 39,773

Capital and foreign exchange gains (losses) net of tax             (3,526)        (21)
                                                                 --------    --------

     Net income                                                  $ 41,648    $ 39,752
                                                                 ========    ========
</TABLE>


                                       10
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

General

      The Company divides its business operations into two reportable operating
segments: insurance businesses and asset-based businesses.

      The insurance businesses of the Company, which are engaged through its
indirectly held subsidiaries, Enhance Reinsurance Company and Asset Guaranty
Insurance Company (collectively the "Insurance Subsidiaries"), include
principally the reinsurance of financial guaranties of municipal and
asset-backed debt obligations issued by monoline financial guaranty insurers. In
addition, the Company is engaged in other insurance, reinsurance and
non-insurance businesses that utilize the Company's expertise in performing
sophisticated analyses of complex, credit-based risks. The Company's other
insurance businesses involve the issuance of direct financial guaranties of
smaller municipal debt obligations, trade credit reinsurance, financial
institutions credit insurance (which includes excess-SIPC/excess-ICS and related
type bonds) and financial responsibility bonds. Some of these other insurance
businesses are conducted by Van-American Insurance Company ("Van-Am"), a
Kentucky domiciled insurer which writes reclamation bonds for the coal mining
industry, and surety bonds covering the closure and post-closure obligations of
landfill operators. The Company has decided to exit this line of business. The
Company also provides surety and other credit-based insurance products through
its 25% ownership of Seguradora Brasileira de Fiancas S.A.

      The Company operates its asset-based businesses primarily through its
consolidated subsidiary, Singer Asset Finance Company, L.L.C. ("Singer") and a
partially owned affiliate, Credit-Based Asset Servicing and Securitization LLC
("C-BASS"). The Company's asset-based businesses include the origination,
purchase, servicing and/or securitization of special assets, including lottery
awards, structured settlement payments and sub-performing/non- performing and
seller-financed residential mortgages, real estate and subordinated residential
mortgage-backed securities.

      The Company's revenues consist primarily of (a) premiums earned on
insurance and reinsurance contracts, (b) investment income and (c) the sale of
securitized lottery prizes and structured settlement payment streams.

Results of Operations

Three Months Ended June 30, 1999 vs. Three Months Ended June 30, 1998

      Gross premiums written in the second quarter of 1999 were $35.1 million
compared with $27.7 million in the same period in 1998, representing an increase
of 26.9%.

      Net premiums written increased 28.0% to $34.9 million in the second
quarter of 1999 from $27.3 million in the same period in 1998. Of the Company's
net premiums written in the second quarter of 1999, 33.9%, 20.7% and 45.4% were
derived from the reinsurance of municipal bonds, the reinsurance of
non-municipal obligations and the Company's other insurance lines, respectively,
compared to 46.9%, 19.1% and 34.0% during the same period in 1998.

      In the second quarter of 1999, municipal new-issue volume was $52.5
billion, a decline of 33.2% from the same period in 1998. The insured portion of
such new issues was 42.7% and 49.5% during the second quarters of 1999 and 1998,
respectively. Total municipal bond refundings in the second quarter of 1999
represented approximately 16.3% of new-issue volume, down from 25.8% for the
first quarter of 1998.

      Earned premiums grew 7.0% to $26.1 million in the second quarter of 1999
from $24.4 million in the second quarter of 1998. Earned premiums from
refundings contributed 3.0 million (or 11.5%) of earned premiums in the second
quarter of 1999 compared to $3.5 million (or 14.4%) in the same period in 1998.
Deferred premium revenue, net of prepaid reinsurance premiums, grew to $322.2
million at June 30, 1999 from $308.2 million at December 31, 1998.


                                       11
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

      Net investment income increased 4.7% to $13.9 million in the second
quarter of 1999 from $13.3 million in the same period in 1998. This increase
resulted primarily from the growth in the Company's fixed maturities portfolio
and short-term investments from $870.9 million at June 30, 1998 to $909.1
million at June 30, 1999. The average yields on the Company's investment
portfolio were 5.95% and 6.14% for the second quarters of 1999 and 1998,
respectively. In addition, the Company realized $0.5 million of capital losses
in the second quarter of 1999 compared with $0.3 million of capital gains in the
second quarter of 1998.

      The Company recognized revenues from disposition of assignments, through
securitization and other sales, of $8.0 million in the second quarter of 1999
compared to $12.0 million in the second quarter of 1998.

      Incurred losses and LAE were $2.6 million in the second quarter of 1999
compared to $1.6 million for the same period of 1998.

      The Company's insurance expense ratio was 53.5% in the second quarter of
1999 compared to 49.9% in the second quarter of 1998. Non-insurance expenses
increased to $15.0 million in the second quarter of 1999 from $11.0 million
during the same period in 1998 reflecting the cost of reorganizing Singer's
operations including significant start-up expenses in its new viatical
settlements product. Policy acquisition costs ("PAC") were $9.2 million and $8.6
million for the second quarters of 1999 and 1998, respectively, representing
35.4% and 35.1% of earned premiums in those respective periods.

      The Company realized income of $7.9 million from its investments in
affiliates in the second quarter of 1999 compared to $3.8 million in the second
quarter of 1998.

      Interest expense totaled $2.5 million and $2.2 million in the second
quarters of 1999 and 1998, respectively, reflecting the increase in the
Company's short-term debt outstanding.

      The Company's effective tax rate for the second quarter of 1999 was 7.5%
compared to 27.3% for the 1998 second quarter as a result of the April 1999
purchase of a portfolio of residential mortgage-backed securities. As described
more fully in the notes to the unaudited financial statements, the transaction
is expected to provide ancillary benefits that will result in a lowering of the
Company's effective tax rate at least through at least 2001.

      The Company's 1999 second quarter net income increased 14.4% to $23.5
million from $20.5 million in the second quarter of 1998. Second quarter 1999
basic and diluted earnings per share increased 12.7% and 15.4%, respectively, to
$.62 and $.60 from $.55 and $.52 in the same period of 1998.

      The diluted weighted average shares outstanding during the second quarter
of 1999 was 39.0 million compared to 39.4 million during the second quarter of
1998.

      All references to number of common shares and per-share information
reflect the two-for-one stock split, which was effective on June 26, 1998.

      The Company experienced unrealized losses of $24.6 million in its
available-for-sale portfolio during the second quarter of 1999. Such losses are
directly attributable to an increase in interest rates during such period. The
Company does not believe it is possible to predict changes in interest rates or
that the higher interest rates during such period are necessarily indicative of
a trend.

      During the first quarter of 1999, Singer's Chief Executive Officer made
several management changes aimed at strengthening and streamlining Singer's
operations. In connection with these changes, Singer entered into severance
agreements with several employees, the $0.7 million cost of which was expensed
in the first quarter of 1999. In addition, Singer incurred significant start-up
expenses in its new viatical settlements (the lump-sum purchase of life
insurance policies of individuals facing imminent life-


                                       12
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

threatening illness) product, primarily in the marketing thereof. An aggregate
of $1.8 million ($1.0 million and $0.8 million in the first and second quarters
of 1999, respectively) has been expensed through June 30, 1999. Although the
management streamlining was substantially completed by June 30, 1999, Singer may
incur additional expenses related to these streamlining and start-up expenses in
the remainder of 1999. However, these are not expected to be material, and the
aggregate of these expenses is not expected to have a material impact on cash
flow, liquidity or segment profitability.

Six Months Ended June 30, 1999 vs. Six Months Ended June 30, 1998

      Gross premiums written in the first six months of 1999 were $64.7 million
compared with $61.1 million in the same period in 1998, representing an increase
of 5.9%.

      Net premiums written increased 5.7% to $64.4 million in the first six
months of 1999 from $61.0 million in the same period in 1998. Of the Company's
net premiums written in the first six months of 1999, 35.4%, 21.6% and 43.0%
were derived from the reinsurance of municipal bonds, the reinsurance of
non-municipal obligations and the Company's other insurance lines, respectively,
compared to 47.6%, 17.7% and 34.7% during the same period in 1998.

      In the first six months of 1999, municipal new-issue volume was $115.7
billion, a decline of 23.0% from the same period in 1998. The insured portion of
such new issues was 47.0% and 49.2% during the first six months of 1999 and
1998, respectively. Total municipal bond refundings in the first six months of
1999 represented approximately 20.4% of new-issue volume, down from 29.5% for
the first six months of 1998.

      Earned premiums grew 4.9% to $50.4 million in the first six months of 1999
from $48.0 million in the first six months of 1998. Earned premiums from
refundings contributed $5.0 million (or 9.9%) of earned premiums in the first
six months of 1999 compared to $7.9 million (or 16.5%) in the same period in
1998.

      Net investment income increased 4.8% to $27.5 million in the first six
months of 1999 from $26.2 million in the same period in 1998. This increase
resulted primarily from the growth in the Company's fixed maturities portfolio
and short-term investments from $870.9 million at June 30, 1998 to $909.1
million at June 30, 1999. The average yields on the Company's investment
portfolio were 5.87% and 6.15% for the first six months of 1999 and 1998,
respectively. In addition, the Company realized $4.3 million of capital losses
in the first six months of 1999 compared with $.02 million of capital losses in
the first six months of 1998. The 1999 capital loss includes the recognition of
a $4.7 million pre-tax write down of two asset-backed securities serviced by
Commercial Financial Services, Inc. ("CFS"), which were purchased by the Company
in December 1997 for $6.1 million. CFS is currently protected under Chapter 11
of the bankruptcy code as an outgrowth of allegations of improper activities.
Though CFS continues to service the debt on a current basis, the Company does
not expect to recover its entire investment. The ultimate realizable amount
depends on the outcome of the bankruptcy of CFS, and is therefore subject to
further adjustments.

      The Company recognized revenues from disposition of assignments, through
securitization and other sales, of $16.3 million in the first six months of 1999
compared to $22.5 million in the first six months of 1998.

      Incurred losses and LAE were $5.4 million in the first six months of 1999
compared to $3.9 million for the same period of 1998.

      The Company's insurance expense ratio was 53.3% in the first six months of
1999 compared to 50.3% in the first six months of 1998. Non-insurance expenses
increased to $26.4 million in the first six months of 1999 from $18.7 million
during the same period in 1998 reflecting the cost of reorganizing Singer's
operations including large start-up expenses in its new viatical settlements
product. Policy


                                       13
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

acquisition costs ("PAC") were $18.1 million and $16.7 million for the first six
months of 1999 and 1998, respectively, representing 35.9% and 34.7% of earned
premiums in those respective periods.

      The Company realized income of $12.6 million from its investments in
affiliates in the first six months of 1999 compared to $6.4 million in the first
six months of 1998.

      Interest expense totaled $4.9 million and $4.1 million in the first six
months of 1999 and 1998, respectively, reflecting the increase in the Company's
short-term debt outstanding.

      The Company's effective tax rate for the first six months of 1999 was 7.5%
compared to 28.2% for the same period of 1998 as a result of the April 1999
purchase of a portfolio of residential mortgage-backed securities. As described
more fully in the notes to the unaudited financial statements, the transaction
is expected to provide ancillary benefits that will result in a lowering of the
Company's effective tax rate until at least the year 2001.

      The Company's 1999 first six-months net income increased 4.8% to $41.7
million from $39.8 million in the first six months of 1998. Basic and diluted
earnings per share increased 3.8% and 5.9%, respectively, to $1.10 and $1.07 in
the first six months of 1999 from $1.06 and $1.01 for the same period of 1998.

      The diluted weighted average shares outstanding during the first six
months of 1999 was 39.1 million compared to 39.3 million during the same period
of 1998.

      All references to number of common shares and per-share information
reflect the two-for-one stock split, which was effective on June 26, 1998.

      The Company experienced unrealized losses of $30.8 million in its
available-for-sale portfolio during the first six months of 1999. Such losses
are directly attributable to an increase in interest rates during such period.
The Company does not believe it is possible to predict changes in interest
rates, or that the higher interest rates during such period are necessarily
indicative of a trend.

      During the first quarter of 1999, Singer's Chief Executive Officer made
several management changes aimed at strengthening and streamlining Singer's
operations. In connection with these changes, Singer entered into severance
agreements with several employees, the $0.7 million cost of which was expensed
in the first quarter of 1999. In addition, Singer incurred significant start-up
expenses in its new viatical settlements (the lump-sum purchase of life
insurance policies of individuals facing imminent life-threatening illness)
product, primarily in the marketing thereof. An aggregate of $1.8 million ($1.0
million and $0.8 million in the first quarter and second quarters of 1999,
respectively) has been expensed through June 30, 1999. Although the management
streamlining was substantially completed by June 30, 1999, Singer may incur
additional expenses related to these streamlining and start-up expenses in the
remainder of 1999. However, these are not expected to be material, and the
aggregate of these expenses is not expected to have a material impact on cash
flow, liquidity or segment profitability.

Liquidity and Capital Resources

      As a holding company, Enhance Financial funds the payment of its operating
expenses, principal and interest on its debt obligations, dividends to its
shareholders and the repurchase of common stock primarily from dividends from
its wholly-owned subsidiary, Enhance Investment Corporation ("Enhance
Investment"), whose ability to provide such dividends to Enhance Financial
depends upon dividends and other payments from the Insurance Subsidiaries;
manages cash flows associated with the Company's diversification activities and
draws on its line of credit provided under the credit agreement described below.
Payments of dividends to Enhance Investment by the Insurance Subsidiaries are
subject to restrictions relating to statutory capital and surplus and net
investment income. During the first six months of 1999, the Insurance
Subsidiaries paid $13 million of dividends to Enhance Investment, which paid a
dividend of $6.5 million to Enhance Financial in March 1999 and a dividend of
$6.45 million to Enhance


                                       14
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Financial in June 1999. As of June 30, 1999, the maximum amount of dividends
remaining available from the Insurance Subsidiaries without prior approval of
the insurance regulatory authorities was $13.3 million.

      The Company's cash flow provided from operations for the first six months
of 1999 was $8.4 million compared to cash flow provided from operations of $42.6
million for the same period in 1998. The decrease in cash flow provided from
operations in the first six months of 1999 was primarily due to Singer's
increased purchases of lottery receivables and structured settlements and new
products including the lump-sum purchases of life insurance policies of
individuals facing imminent life-threatening illness. Enhance Financial does not
expect this trend to continue and believes that the current level of cash flow
from operations provides the Company with sufficient liquidity to meet its
operating needs. The carrying value of the Company's investment portfolio (total
investments less investment in affiliates) increased to $954 million at June 30,
1999 from $948 million at December 31, 1998 principally as a result of cash
flows from insurance operations.

      The Company maintains a credit facility providing for borrowings to be
used for general corporate purposes. During the second quarter of 1998, the
Company entered into a new unsecured credit agreement with four major commercial
banks for up to $100 million of borrowings, an increase of $25 million over the
previous agreement (which was terminated). As of June 30, 1999, the Company had
$91 million outstanding under the credit agreement.

      In July 1996, the Company formed C-BASS, a joint venture in which each of
Enhance Financial and Mortgage Guaranty Insurance Company ("MGIC") owns
approximately a 48% interest. Enhance Financial has contributed $55.5 million to
C-BASS through June 30, 1999 (including its 100% interest in Litton Loan
Servicing Inc.) and expects that it will provide additional funding. In January
1998 Enhance Financial guarantied repayment of up to $25 million of the amount
outstanding under a $50 million LIBOR-based unsecured revolving credit facility
that C-BASS obtained from a major commercial bank. As of June 30, 1999, the
outstanding principal balance under the facility was $20 million, with Enhance
Financial guaranteeing $10 million of such amount. The outstanding principal and
interest under the facility was repaid in full in July 1999, prior to its due
date of July 31, 1999, thereby effectively terminating the facility and Enhance
Financial's repayment guarantee.

      In December 1998, the Company formed Sherman Financial Group, LLC
("Sherman"), a joint venture in which each of the Company and MGIC own a 45.5%
interest. Enhance Financial has contributed approximately $2.0 million to
Sherman through June 30, 1999 and is obligated to contribute an additional $6.5
million in cash to Sherman as and when needed by Sherman. In addition, Enhance
is obligated to contribute the equity in the subsidiaries of Alegis Group Inc.
to Sherman after certain regulatory requirements have been satisfied. The
Company expects that it will provide additional funding. In May, 1999, Enhance
Financial guarantied repayment of up to 50% of the amount outstanding under a
$50 million revolving credit facility that Sherman obtained from a major
commercial bank. As of June 30, 1999, the outstanding principal balance under
the facility was $23 million, with Enhance Financial guaranteeing $11.5 million
of such amount.

      In the first six months of 1999, Enhance Financial declared and paid cash
dividends of $.12 per share, aggregating $4.6 million.

YEAR 2000

      As the Year 2000 approaches, Enhance Financial, including its insurance
subsidiaries, Enhance Reinsurance Company and Asset Guaranty Insurance Company,
is assessing the Company's potential exposure to the so called "millenium bug"
and the effects the century date change may have on its electronic systems and
those of its significant business partners. Since certain computer programs were
written using two digits rather than four to define the applicable year,
computing devices and systems may recognize a date using the two digits "00" as
1900 rather than the year 2000. Those that do not recognize a date correctly
could generate erroneous data and/or cause systems to fail.


                                       15
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

      As part of its firm-wide Year 2000 Project, the Company has established a
Year 2000 Task Force consisting of senior management of the Company, led by the
Chief Information Officer and the General Counsel. It has also retained an
independent information technology consulting firm and outside legal counsel to
provide assistance with Year 2000 readiness and has adequate staff to administer
the Project. The progress of the Company's Year 2000 Project is being monitored
by the Audit Committee of the board of directors.

      The Year 2000 Project covers both computer systems and infrastructure ("IT
systems") as well as other systems and equipment which utilize embedded
microchips ("non-IT systems"). It also considers the readiness of significant
third parties on which the Company depends, such as clients, vendors and service
providers. The Year 2000 Project has several interrelated phases. The status of
each phase is as follows. Project Development and Resource Mobilization is
substantially complete. Assessment of internal IT systems and non-IT systems and
exposure to third party risks is substantially complete. As part of its
third-party due diligence, the Company has assessed the Year 2000 readiness of
all major products and services purchased from vendors and service providers of
IT and non-IT components and systems. Remediation and Testing of IT systems and
non-IT systems are in progress, and a separate IT test environment has been
established for selected applications deemed critical by management. Based on
the assessment of its major IT systems and non-IT systems, Enhance Financial
expects that all necessary remediation and testing will be completed to insure
Year 2000 readiness in all material respects. Contingency Planning, including
disaster recovery planning is in progress and will continue throughout 1999.
Implementation of contingency plans will be made as and when needed.

      Since 1997, Enhance Financial has invested in a major initiative to
replace and upgrade its technology. This ongoing project addresses, among other
matters, many of the Year 2000 issues of the Company's internal IT systems. The
Company has expended approximately $2 million on this project, which,
accordingly, includes a portion of the cost of Year 2000 readiness. Additional
expenditures for Year 2000 readiness, which will be funded through operating
cash flow, are expected to total approximately $1.5 million. These cost
estimates are based upon currently available information and may change as the
Year 2000 Project proceeds. However, the cost of Year 2000 readiness is not
expected to affect materially the financial condition of the Company.

      The failure of IT systems and non-IT systems associated with cash
management, servicing, communications and building facilities would in varying
degrees have a material adverse effect on the Company. Such failures could
disrupt the Company's ability to conduct normal business operations, including
financial transactions such as payment of claims or debts, collecting or funding
of receivables and selling of commercial paper. The consequences of such
failures could include business interruption, lost revenue and illiquidity. The
magnitude of the financial impact of such potential failures is not known. The
Company is continuing to consider its reasonably likely worst case Year 2000
scenarios and their potential financial impact. The Year 2000 Project includes a
provision for contingency planning for systems and facilities that will
generally involve processing that does not rely upon computer systems and will
utilize additional staff as needed.

      The Company has communicated with third parties with which it has material
dealings to determine the status of their Year 2000 readiness and it is in the
process of assessing its exposure to potential third party Year 2000 failures.
Management has determined that the following consequences to the Company could
result from the failure of such third parties to successfully address their Year
2000 issues: Obligors of Insured Issues (see also next paragraph) - increased
credit risk, claims, loss of premiums and renewals; Primaries and Reinsurers -
increased credit risk, uncollected claims, premium loss, impaired liquidity;
Counterparties and Issuers of Obligations - investment portfolio downgrade, loss
of income and/or principal; Financial Institutions and Lenders - impaired
liquidity, loss of income and/or principal; Vendors and Service Providers -
interrupted power, building access, telecommunications, flow of goods, security
and professional and technical services.

      The policies of insurance and reinsurance issued by the insurance
subsidiaries of Enhance Financial, their primary insurers and their reinsurers
do not contain specific exclusions for Year 2000-


                                       16
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

related defaults. Accordingly, these policies would generally cover a default by
an obligor of this type. Although the insurers would expect eventually to
recover the amounts paid in claims for Year 2000-related defaults by obligors,
the coincidence of several such unanticipated claims could result in short-term
liquidity risk for the insurers. Failure of a trustee or paying agent for a
given insured obligation to make payment on that obligation as a result of a
Year 2000-related event (or otherwise) would generally not be covered by the
insurance or reinsurance policy, and no such claims are expected.

      In addition to other risks in connection with the Year 2000, general
uncertainty among market participants could cause a decline in business activity
and revenue in 1999 and 2000, as companies address their Year 2000 issues.
Enhance Financial cannot predict the magnitude of this possible decline or the
impact that it may have on its financial results for those years. However,
Enhance Financial has undertaken a thorough review of third-party risks inherent
in Year 2000 issues, and it is working with the industry group allied with its
core business to identify and address credit and other business issues related
to Year 2000. Enhance Financial is also assessing potential effects of
unexpected failures in local, national or international systems, including
power, communication and transportation systems, on which the normal conduct of
business depends, and it will establish contingency plans to deal with such
failures, although there can be no assurance that such plans can be effective in
such circumstances, especially in the case of widespread economic disruption.

      Management believes, based upon its investigation to date, that Enhance
Financial will be substantially Year 2000 ready on or before December 31, 1999.
However, there can be no assurance, due to the uncertain nature of potential
Year 2000 problems and Enhance Financial's lack of control over some of them,
especially the readiness of third parties, that all Year 2000 issues will be
foreseen and corrected in a timely fashion. Failure of the efforts by Enhance
Financial or certain third parties to be Year 2000 ready could result in the
disruption of Enhance Financial's normal business activities or in unanticipated
claims upon Enhance Financial, either of which could have a material adverse
effect. Management is assessing the need to increase its liquidity, from various
sources, in order to meet unanticipated demand for the claim payments.


                                       17
<PAGE>

Part II: Other Information

Item 4. Submission of Matters to a Vote of Security Holders

      On June 3, 1999, the registrant held an annual meeting of shareholders, at
which the shareholders voted as indicated on the following proposals:

      (a)   The election of the following persons as directors:

               Name                                 For          Withheld
               ----                                 ---          --------

            Daniel Gross                         32,940,463      458,018
            Brenton W. Harries                   32,977,559      420,922
            David R. Markin                      32,941,363      457,118
            Jay A. Novik                         32,979,899      418,582
            Robert P. Saltzman                   32,978,549      419,932
            Wallace O. Sellers                   32,977,449      421,032
            Richard J. Shima                     32,979,899      418,582
            Spencer R. Stuart                    32,977,559      420,922
            Allan R. Tessler                     32,976,799      421,682
            Frieda K. Wallison                   32,977,999      420,482
            Jerry Wind                           32,977,799      420,682

      (b)   The proposed amendment to the restated certificate of incorporation,
            as amended, of the registrant to delete therefrom certain
            restrictions on the permitted scope of its activities was approved
            by the shareholders by a vote of 30,564,471 in favor, 60,206 against
            and 39,700 abstaining;

      (c)   The proposed amendment to the 1997 Long-Term Incentive Plan for Key
            Employees to increase the number of shares of common stock, par
            value $.10 per share, reserved for grants thereunder to an aggregate
            of 5,000,000 shares was approved by the shareholders by a vote of
            16,624,055 in favor, 13,964,316 against and 76,006 abstaining;

      (d)   The appointment of Deloitte & Touche LLP as the registrant's outside
            auditor for fiscal year 1999 was ratified by a vote of 33,112,237 in
            favor, 260,140 against and 26,104 abstaining.

Item 6. Exhibits and reports on Form 8-K

      (a)   Exhibits

      Exhibit 3.1.*       Restated certificate of incorporation of the
                          registrant filed with the State of New York on July 7,
                          1999.

      Exhibit 4.2.4.*     Third Amendment to the Credit Agreement
                          (Amending and Restating Credit Agreement) among the
                          registrant, Fleet National Bank as lender, swingline
                          bank and as agent for the Banks, and The Bank of New
                          York, The First National Bank of Chicago, and Deutsche
                          Bank AG, New York and/or Cayman Island Branches, as
                          lenders

      Exhibit 10.2.2.*    1997 Long-Term Incentive Plan for Key
                          Employees, as amended and restated as of June 3, 1999.

      Exhibit 27.*        Financial data schedules.

      *     Previously filed

      (b)   Reports on Form 8-K. None.


                                       18
<PAGE>

                                    SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: October 28, 1999                  ENHANCE FINANCIAL SERVICES GROUP INC.

                                        By: /s/ Richard J. Dunn
                                            ------------------------------------

                                            Richard J. Dunn
                                            Executive Vice President (duly
                                            authorized officer and Principal
                                            Financial Officer)


                                       19