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                     CAPITAL SECURITIES GUARANTEE AGREEMENT

                              PXRE Capital Trust I

                          Dated as of January 29, 1997

================================================================================












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CROSS-REFERENCE TABLE*

Section of Trust Indenture               Section of Capital Securities Guarantee
Act of 1939, as amended                  Agreement

310(a) .................................................................  4.1(a)
310(b) .................................................................  4.1(c)
310(c) ...........................................................  Inapplicable
311(a) .................................................................  2.2(a)
311(b) .................................................................  2.2(b)
311(c) ...........................................................  Inapplicable
312(a) .................................................................  2.2(a)
312(b) .................................................................  2.2(b)
313 ....................................................................  2.3
314(a) .................................................................  2.4
314(b) ...........................................................  Inapplicable
314(c) .................................................................  2.5
314(d) ...........................................................  Inapplicable
314(f) ...........................................................  Inapplicable
315(a) .................................................................  3.1(b)
315(b) .................................................................  2.7
315(c) .................................................................  3.1(a)
315(d) .................................................................  3.1(a)
316(a) .........................................................  5.4(a), 2.6

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

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

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                               TABLE OF CONTENTS

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                                                                                          Page
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CROSS-REFERENCE TABLE* ......................................................................i

                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1  Definitions and Interpretation..................................................2

                                   ARTICLE II
                              TRUST INDENTURE ACT

SECTION 2.1  Trust Indenture Act; Application................................................4
SECTION 2.2  Lists of Holders of Securities..................................................5
SECTION 2.3  Reports by the Guarantee Trustee................................................5
SECTION 2.4  Periodic Reports to Guarantee Trustee...........................................5
SECTION 2.5  Evidence of Compliance with Conditions Precedent................................5
SECTION 2.6  Events of Default; Waiver.......................................................6
SECTION 2.7  Events of Default; Notice.......................................................6
SECTION 2.8  Conflicting Interests...........................................................6

                                  ARTICLE III
                          POWERS, DUTIES AND RIGHTS OF
                               GUARANTEE TRUSTEE

SECTION 3.1  Powers and Duties of the Guarantee Trustee......................................6
SECTION 3.2  Certain Rights of Guarantee Trustee.............................................8
SECTION 3.3  Not Responsible for Recitals or Issuance of Capital Securities Guarantee.......10

                                   ARTICLE IV
                               GUARANTEE TRUSTEE

SECTION 4.1  Guarantee Trustee; Eligibility.................................................10
SECTION 4.2  Appointment, Removal and Resignation of Guarantee Trustee......................11

                                   ARTICLE V
                                   GUARANTEE

SECTION 5.1  Capital Securities Guarantee...................................................12
SECTION 5.2  Waiver of Notice and Demand....................................................12
SECTION 5.3  Obligations Not Affected.......................................................12

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<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                        <C>
SECTION 5.4  Rights of Holders..............................................................13
SECTION 5.5  Guarantee of Payment...........................................................13
SECTION 5.6  Subrogation....................................................................14
SECTION 5.7  Independent Obligations........................................................14

                                   ARTICLE VI
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1  Limitation of Transactions.....................................................14
SECTION 6.2  Ranking........................................................................15

                                  ARTICLE VII
                                  TERMINATION

SECTION 7.1  Termination....................................................................15

                                  ARTICLE VIII
                                INDEMNIFICATION

SECTION 8.1  Exculpation....................................................................16
SECTION 8.2  Indemnification................................................................16
SECTION 8.3  Compensation; Reimbursement of Expenses........................................16

                                   ARTICLE IX
                                 MISCELLANEOUS

SECTION 9.1  Successors and Assigns.........................................................17
SECTION 9.2  Amendments.....................................................................17
SECTION 9.3  Notices........................................................................17
SECTION 9.4  Benefit........................................................................18
SECTION 9.5  Governing Law..................................................................18
</TABLE>

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                              GUARANTEE AGREEMENT

               This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"),
dated as of January 29, 1997, is executed and delivered by PXRE Corporation, a
Delaware corporation (the "Guarantor"), and First Union National Bank, a
national banking association, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of PXRE Capital Trust I, a Delaware statutory
business trust (the "Issuer").

               WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of January 29, 1997, among the Administrators and
trustees named therein, PXRE Corporation, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof securities, having an aggregate liquidation
amount of up to $100,000,000, designated the 8.85% Capital Trust Pass-through
Securities'sm' (the "Initial Capital Securities") and may issue in the future,
pursuant to the Registration Rights Agreement (as defined in the Declaration)
securities solely to be exchanged for Initial Capital Securities, with terms
that are substantially identical (except that such securities will not have
provisions relating to transfer restrictions and will not contain provisions for
a Special Payment (as defined in the Indenture) under certain circumstances) to
those of the Initial Capital Securities (the "Exchange Capital Securities" and
together with the Initial Capital Securities, the "Capital Securities");

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

               WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Capital Securities Guarantee for the benefit of the
holders of the Common Securities (as defined in the Declaration) of the Issuer,
except that if an Event of Default (as defined in the Declaration), has occurred
and is continuing, the rights of holders of the Common Securities to receive
Guarantee Payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Capital Securities to receive Guarantee Payments under this
Capital Securities Guarantee;

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







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                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1  Definitions and Interpretation

               In this Capital Securities Guarantee, unless the context
        otherwise requires:

               (a) capitalized terms used in this Capital Securities Guarantee
        but not defined in the preamble above have the respective meanings
        assigned to them in this Section 1.1;

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

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

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

               (e) capitalized terms used in this Capital Securities Guarantee
        have the same meanings ascribed to such terms in the Declaration unless
        otherwise defined in this Capital Securities Guarantee or unless the
        context otherwise requires; and

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

               "Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at 765 Broad Street, Newark,
New Jersey 07102.

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

               "Debentures" means the junior subordinated debentures of the PXRE
Corporation designated the 8.85% Junior Subordinated Deferrable Interest
Debentures due 2027, held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.

               "Declaration Event of Default" means an "Event of Default" as
defined in the Declaration.

               "Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Capital Securities Guarantee.

               "Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available
therefor in


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accordance with the terms of the Declaration, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds available therefor in
accordance with the Declaration, with respect to any Capital Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Capital
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").

               "Guarantees" means the Common Securities Guarantee and this
Capital Securities Guarantee, collectively.

               "Guarantee Trustee" means First Union National Bank, a national
banking association, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Capital Securities
Guarantee and thereafter means each such Successor Guarantee Trustee.

               "Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

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

               "Indenture" means the Indenture dated as of January 29, 1997,
among the Guarantor and First Union National Bank, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

               "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

               "Majority in liquidation amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Capital Securities then outstanding.

               "Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Capital Securities Guarantee shall



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include:

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

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

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

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

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

               "Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee,
including any vice president, any assistant vice president, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.

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

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

               "Trust Securities" means the Common Securities and the Capital
         Securities.

                                   ARTICLE II
                              TRUST INDENTURE ACT

SECTION 2.1  Trust Indenture Act; Application

               (a) This Capital Securities Guarantee is subject to the
        provisions of the Trust Indenture Act that would be required to be part
        of this Capital Securities Guarantee if this Capital Securities
        Guarantee were qualified under the Trust Indenture Act and shall, to the
        extent applicable, be governed by such provisions; and



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

SECTION 2.2  Lists of Holders of Securities

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

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

SECTION 2.3  Reports by the Guarantee Trustee

               Within 60 days after May 15 of each year, the Guarantee Trustee
shall provide to the Holders of the Capital Securities such reports as are
required by Section 313(a) of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313 (d) of the Trust
Indenture Act. The Guarantor will notify the Guarantee Trustee if and when any
Capital Securities are listed on any stock exchange.

SECTION 2.4 Periodic Reports to Guarantee Trustee

               The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information (if any) as required by Section 314 and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

SECTION 2.5 Evidence of Compliance with Conditions Precedent

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



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SECTION 2.6 Events of Default; Waiver

               The Holders of a Majority in liquidation amount of Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.

SECTION 2.7 Events of Default; Notice

               (a) The Guarantee Trustee shall, within 90 days after the
        occurrence of an Event of Default, transmit by mail, first class postage
        prepaid, to the Holders of the Capital Securities, notices of all Events
        of Default actually known to a Responsible Officer of the Guarantee
        Trustee, unless such defaults have been cured before the giving of such
        notice, provided, however, that the Guarantee Trustee shall be protected
        in withholding such notice if and so long as a Responsible Officer of
        the Guarantee Trustee in good faith determines that the withholding of
        such notice is in the interests of the Holders of the Capital
        Securities.

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

SECTION 2.8  Conflicting Interests

               The Indenture, the Debt Securities (as defined therein) issued or
to be issued thereunder, the Declaration, the Trust Securities issued or to be
issued thereunder and the Capital Securities Guarantee and Common Securities
Guarantee in connection therewith shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the
proviso contained in Section 310(b)(1) of the Trust Indenture Act.

                                  ARTICLE III
                          POWERS, DUTIES AND RIGHTS OF
                               GUARANTEE TRUSTEE

SECTION 3.1  Powers and Duties of the Guarantee Trustee

               (a) This Capital Securities Guarantee shall be held by the
        Guarantee Trustee for the benefit of the Holders of the Capital
        Securities, and the Guarantee Trustee shall not transfer this Capital
        Securities Guarantee to any Person except a Holder of Capital Securities
        exercising his or her rights pursuant to Section 5.4 (b) or to a
        Successor Guarantee Trustee on acceptance by such Successor Guarantee
        Trustee of its appointment to act as Successor Guarantee Trustee. The
        right, title and interest of the Guarantee Trustee shall automatically
        vest in any Successor Guarantee Trustee, and such vesting



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        and cessation of title shall be effective whether or not conveyancing
        documents have been executed and delivered pursuant to the appointment
        of such Successor Guarantee Trustee.

               (b) If an Event of Default actually known to a Responsible
        Officer of the Guarantee Trustee has occurred and is continuing, the
        Guarantee Trustee shall enforce this Capital Securities Guarantee for
        the benefit of the Holders of the Capital Securities.

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

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

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

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

                             (B) in the absence of bad faith on the part of the
                      Guarantee Trustee, the Guarantee Trustee may conclusively
                      rely, as to the truth of the statements and the
                      correctness of the opinions expressed therein, upon any
                      certificates or opinions furnished to the Guarantee
                      Trustee and conforming to the requirements of this Capital
                      Securities Guarantee; but in the case of any such
                      certificates or opinions that by any provision hereof are
                      specifically required to be furnished to the Guarantee
                      Trustee, the Guarantee Trustee shall be under a duty to
                      examine the same to determine whether or not they conform
                      to the requirements of this Capital Securities Guarantee;

                      (ii) the Guarantee Trustee shall not be liable for any
               error of judgment made in good faith by a Responsible Officer of
               the Guarantee Trustee, unless it



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               shall be proved that such Responsible Officer of the Guarantee
               Trustee or the Guarantee Trustee was negligent in ascertaining
               the pertinent facts upon which such judgment was made;

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

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

SECTION 3.2  Certain Rights of Guarantee Trustee

               (a) Subject to the provisions of Section 3.1:

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

                      (ii) Any direction or act of the Guarantor contemplated by
               this Capital Securities Guarantee shall be sufficiently evidenced
               by an Officers' Certificate.

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

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



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

                      (vi) The Guarantee Trustee shall be under no obligation to
               exercise any of the rights or powers vested in it by this Capital
               Securities Guarantee at the request or direction of any Holder,
               unless such Holder shall have provided to the Guarantee Trustee
               such security and indemnity, reasonably satisfactory to the
               Guarantee Trustee, against the costs, expenses (including
               attorneys' fees and expenses and the expenses of the Guarantee
               Trustee's agents, nominees or custodians) and liabilities that
               might be incurred by it in complying with such request or
               direction, including such reasonable advances as may be requested
               by the Guarantee Trustee; provided, however, that nothing
               contained in this Section 3.2(a) (vi) shall be taken to relieve
               the Guarantee Trustee, upon the occurrence of an Event of
               Default, of its obligation to exercise the rights and powers
               vested in it by this Capital Securities Guarantee.

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

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

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



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                      (x) Whenever in the administration of this Capital
               Securities Guarantee the Guarantee Trustee shall deem it
               desirable to receive instructions with respect to enforcing any
               remedy or right or taking any other action hereunder, the
               Guarantee Trustee (i) may request instructions from the Holders
               of a Majority in liquidation amount of the Capital Securities,
               (ii) may refrain from enforcing such remedy or right or taking
               such other action until such instructions are received, and (iii)
               shall be protected in conclusively relying on or acting in
               accordance with such instructions.

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

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

SECTION 3.3 Not Responsible for Recitals or Issuance of Capital Securities
            Guarantee

               The recitals contained in this Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Guarantee Trustee does not
assume any responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Capital Securities
Guarantee.

                                   ARTICLE IV
                               GUARANTEE TRUSTEE

SECTION 4.1  Guarantee Trustee; Eligibility

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

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

                      (ii) be a corporation organized and doing business under
               the laws of the United States of America or any State or
               Territory thereof or of the District of Columbia, or a
               corporation or Person permitted by the Securities and Exchange
               Commission to act as an institutional trustee under the Trust
               Indenture Act, authorized under such laws to exercise corporate
               trust powers, having a combined capital and surplus of at least
               50 million U.S. dollars ($50,000,000), and subject to supervision
               or examination by Federal, State, Territorial or District of
               Columbia authority. If such corporation publishes reports of
               condition at least annually,



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               pursuant to law or to the requirements of the supervising or
               examining authority referred to above, then, for the purposes of
               this Section 4.1(a) (ii), the combined capital and surplus of
               such corporation shall be deemed to be its combined capital and
               surplus as set forth in its most recent report of condition so
               published.

               (b) If at any time the Guarantee Trustee shall cease to be
        eligible to so act under Section 4.1(a), the Guarantee Trustee shall
        immediately resign in the manner and with the effect set out in Section
        4.2(c).

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

SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee

               (a) Subject to Section 4.2(b), the Guarantee Trustee may be
        appointed or removed without cause at any time by the Guarantor except
        during an Event of Default.

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

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

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

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

               (f) Upon termination of this Capital Securities Guarantee or
        removal or resignation of the Guarantee Trustee pursuant to this Section
        4.2, the Guarantor shall pay



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        to the Guarantee Trustee all amounts owing to the Guarantee Trustee
        under Sections 8.2 and 8.3 accrued to the date of such termination,
        removal or resignation.

                                   ARTICLE V
                                   GUARANTEE

SECTION 5.1  Capital Securities Guarantee

               The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. Such
obligations will not be discharged except by payment of the Guarantee Payments
in full. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.

SECTION 5.2 Waiver of Notice and Demand

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

SECTION 5.3 Obligations Not Affected

               The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

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

               (b) the extension of time for the payment by the Issuer of all or
        any portion of the Distributions, Redemption Price, Liquidation
        Distribution or any other sums payable under the terms of the Capital
        Securities or the extension of time for the performance of any other
        obligation under, arising out of, or in connection with, the Capital
        Securities (other than an extension of time for payment of
        Distributions, Redemption Price, Liquidation Distribution or other sum
        payable that results from the extension of any interest payment period
        on the Debentures or any extension of the maturity date of the
        Debentures permitted by the Indenture);

               (c) any failure, omission, delay or lack of diligence on the part
        of the Holders to enforce, assert or exercise any right, privilege,
        power or remedy conferred on the Holders



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        pursuant to the terms of the Capital Securities, or any action on the
        part of the Issuer granting indulgence or extension of any kind;

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

               (e) any invalidity of, or defect or deficiency in, the Capital
        Securities;

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

               (g) any other circumstance whatsoever that might otherwise
        constitute a legal or equitable discharge or defense of a guarantor, it
        being the intent of this Section 5.3 that the obligations of the
        Guarantor hereunder shall be absolute and unconditional under any and
        all circumstances.

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

SECTION 5.4 Rights of Holders

               (a) The Holders of a Majority in liquidation amount of the
        Capital Securities have the right to direct the time, method and place
        of conducting of any proceeding for any remedy available to the
        Guarantee Trustee in respect of this Capital Securities Guarantee or
        exercising any trust or power conferred upon the Guarantee Trustee under
        this Capital Securities Guarantee; provided however, that (subject to
        Section 3.1) the Guarantee Trustee shall have the right to decline to
        follow any such direction if the Guarantee Trustee shall determine that
        the actions so directed would be unjustly prejudicial to the Holders not
        taking part in such direction or if the Guarantee Trustee being advised
        by counsel determines that the action or proceeding so directed may not
        lawfully be taken or if the Guarantee Trustee in good faith by its board
        of directors or trustees, executive committee or a trust committee of
        directors or trustees and/or Responsible Officers shall determine that
        the action or proceedings so directed would involve the Guarantee
        Trustee in personal liability.

               (b) Any Holder of Capital Securities may institute a legal
        proceeding directly against the Guarantor to enforce the Guarantee
        Trustee's rights under this Capital Securities Guarantee, without first
        instituting a legal proceeding against the Issuer, the Guarantee Trustee
        or any other Person. The Guarantor waives any right or remedy to require
        that any such action be brought first against the Issuer or any other
        Person before so proceeding directly against the Guarantor.

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SECTION 5.5  Guarantee of Payment

               This Capital Securities Guarantee creates a guarantee of payment
and not of collection.

SECTION 5.6  Subrogation

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

SECTION 5.7 Independent Obligations

               The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.

                                   ARTICLE VI
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1  Limitation of Transactions

               So long as any Capital Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, (ii) there shall have occurred and be continuing an Event
of Default or an event of default under the Declaration, or (iii) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall be continuing, then (a) the Guarantor
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Guarantor's capital stock or rights to acquire such capital stock
(other than (i) purchases or acquisitions of shares of the Guarantor's capital
stock or rights to acquire such capital stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Guarantor's capital stock
or rights to acquire such capital stock or the exchange or conversion of one
class or series of the Guarantor's capital stock or rights to acquire such
capital stock for another class or series of the Guarantor's capital stock, or
rights to acquire any such stock, (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged;
(iv) dividends or distributions made on the Guarantor's capital stock or



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rights to acquire such capital stock, in each case with the Guarantor's capital
stock or rights to acquire such capital stock; or (v) make any guarantee
payments (other than payments under the Guarantees) with respect to the
foregoing and (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Debentures.

SECTION 6.2 Ranking

               This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities agrees to the foregoing provisions of this Capital Securities
Guarantee and the other terms set forth herein. The obligations of the Guarantor
pursuant to this Capital Securities Guarantee shall be junior and subordinate to
the obligations (the "Senior Obligations") of the Guarantor under any Senior
Indebtedness to the full extent that the Debt Securities (as defined in the
Indenture) are subordinated to Senior Indebtedness as described in, and in the
manner provided by, Article 15 of the Indenture. Without limiting the foregoing
and notwithstanding any other provision to the contrary contained herein, the
Guarantee Trustee and each Holder of Capital Securities by their acceptance
thereof agree for the benefit of the holders of the Senior Obligations as
follows: (i) not to initiate any judicial action or seek or enforce collection
(including without limitation initiating a filing of a petition for relief under
the Bankruptcy Law (as defined in the Indenture)) of any amounts owing by the
Guarantor against the Guarantor during any time that the Trustee under the
Indenture (the "Indenture Trustee") and/or the holders of Debentures are
prohibited from taking such actions pursuant to Section 15.02 of the Indenture
and (ii) to turn over any amounts received from the Guarantor to the extent the
Indenture Trustee and/or the holders of Debentures would be required to turn
over amounts under the terms of Article 15 of the Indenture.

               Because the Guarantor is a holding company, the right of the
Guarantor to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent the Guarantor
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Guarantor's obligations under the Guarantee will be effectively subordinated to
all existing and future liabilities of the Guarantor's subsidiaries, and
claimants should look only to the assets of the Guarantor for payments
thereunder. The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture that the Guarantor may enter into in the future
or otherwise.

               If a Declaration Event of Default has occurred and is continuing,
the rights of holders of the Common Securities of the Issuer to receive payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Capital Securities to receive Guarantee Payments.



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                                  ARTICLE VII
                                  TERMINATION

SECTION 7.1 Termination

               This Capital Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price of all Capital Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Capital Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. Notwithstanding the foregoing, this
Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Capital Securities
must restore payment of any sums paid under the Capital Securities or under this
Capital Securities Guarantee.

                                  ARTICLE VIII
                                INDEMNIFICATION

SECTION 8.1 Exculpation

               (a) No Indemnified Person shall be liable, responsible or
        accountable in damages or otherwise to the Guarantor or any Covered
        Person for any loss, damage or claim incurred by reason of any act or
        omission performed or omitted by such Indemnified Person in good faith
        in accordance with this Capital Securities Guarantee and in a manner
        that such Indemnified Person reasonably believed to be within the scope
        of the authority conferred on such Indemnified Person by this Capital
        Securities Guarantee or by law, except that an Indemnified Person shall
        be liable for any such loss, damage or claim incurred by reason of such
        Indemnified Person's negligence or willful misconduct with respect to
        such acts or omissions.

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

SECTION 8.2  Indemnification

               The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties



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hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Capital Securities Guarantee and the resignation
or removal of the Guarantee Trustee.

SECTION 8.3 Compensation; Reimbursement of Expenses

               The Guarantor agrees:

               (a) to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and

               (b) except as otherwise expressly provided herein, to reimburse
the Guarantee Trustee upon request for all reasonable documented expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Capital Securities Guarantee (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith.

               The provisions of this Section 8.3 shall survive the termination
of this Capital Securities Guarantee and the resignation or removal of the
Guarantee Trustee.

                                   ARTICLE IX
                                 MISCELLANEOUS

SECTION 9.1  Successors and Assigns

               All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding. Except in connection with any merger
or consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor's assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Capital Securities Guarantee
without the prior approval of the Holders of at least a Majority in liquidation
amount of the Capital Securities.

SECTION 9.2 Amendments

               Except with respect to any changes that do not adversely affect
the rights of Holders of Capital Securities in any material respect (in which
case no consent of Holders will be required), this Capital Securities Guarantee
may only be amended with the prior approval of the Holders of at least a
Majority in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.



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SECTION 9.3 Notices

               All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, or delivered by a
nationally recognized overnight courier service, as follows:

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

                      First Union National Bank
                      765 Broad Street
                      Newark, NJ  07102
                      Attention:  Corporate Trust Department
                      Telecopy:  (201) 430-2117

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

                      PXRE Corporation
                      399 Thornall Street
                      Fourteenth Floor
                      Edison, NJ  08837
                      Attention:  Treasurer
                      Telecopy:  (908) 906-9157

               with a copy to:

                      Morgan, Lewis & Bockius LLP
                      101 Park Avenue
                      New York, NY  10178-0060
                      Attention:  F. Sedgwick Browne
                      Telecopy: (212) 309-6273

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

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



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SECTION 9.4 Benefit

               This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.

SECTION 9.5 Governing Law

               THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.


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


                                             PXRE CORPORATION,
                                                 as Guarantor


                                             By: /s/ Gerald L. Radke
                                                 -------------------------------
                                                 Name: Gerald L. Radke
                                                 Title: President


                                             FIRST UNION NATIONAL BANK,
                                                 as Guarantee Trustee


                                             By: /s/ Rick Barnes
                                                 -------------------------------
                                                 Name: Rick Barnes
                                                 Title: Assistant Vice President




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