EXHIBIT 10.2


                             TAX INDEMNITY AGREEMENT
                             -----------------------

            This Agreement is made this ___ day of _____ 2006 by and among XL
Capital Ltd, a Cayman Islands company ("XL Capital"), X.L. America, Inc., a
Delaware corporation ("XLA" and, together with XL Capital, the "XL Parties"),
and Security Capital Assurance Ltd, a Bermuda company ("SCA"). Capitalized terms
used herein (unless otherwise defined) have the meanings set forth below in
Section 2.

                                 W I T N E S S E T H :
                                 --------------------

            WHEREAS, SCA was organized on March 17, 2006 for the purpose of
becoming a holding company for the financial guaranty insurance and reinsurance
businesses conducted by Subsidiaries of XL Capital, including XL Capital
Assurance Inc., a New York financial guarantee insurance company ("XLCA") and XL
Financial Assurance Ltd., a Bermuda financial guarantee reinsurance company
("XLFA");

            WHEREAS, SCA, pursuant to the Registration Statement will offer its
common shares to the public in the United States (the "Public Offering");

            WHEREAS, the parties hereto and XL Insurance (Bermuda) Ltd., a
Bermuda insurance company ("XLI"), have entered into a Master Transition
Agreement (the "Master Transition Agreement") in connection with the Public
Offering;

<PAGE>
                                      -2-


            WHEREAS, in certain taxable periods ending on or before the Closing,
XLCA has been a member of the affiliated group of corporations (within the
meaning of Section 1504 of the Code) of which XLA is the common parent (the "XLA
Affiliated Group");

            WHEREAS, in certain taxable periods ending on or before the Closing,
XLCA has been a party to the Fifth Amended Tax Sharing and Payment Agreement
effective April 1, 2004, by and among XLA and certain of its Subsidiaries (the
"Tax Sharing and Payment Agreement");

            WHEREAS, in connection with the Public Offering, XLCA will leave the
XLA Affiliated Group and will become a Former Member within the meaning of
Article VIII of the Tax Sharing and Payment Agreement; and

            WHEREAS, the parties to this Agreement desire to allocate the
liability for the Taxes of SCA and the SCA Post-Closing Subsidiaries that may be
owed to or asserted by any governmental authority after the Public Offering.

            NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:

            1. INDEMNIFICATION BY THE XL PARTIES. (a) The XL Parties will
jointly and severally indemnify and hold harmless on an After-Tax Basis SCA and
each of the SCA Post-Closing Subsidiaries from and against any Losses with
respect to (1) Taxes imposed on SCA


<PAGE>
                                      -3-


or any of the SCA Post-Closing Subsidiaries for all taxable periods (or portions
thereof) ending on or before the Closing Date, (2) Taxes imposed on the XLA
Affiliated Group for which SCA or any of the SCA Post-Closing Subsidiaries is
severally liable under United States Treasury Regulation ss. 1.1502-6 solely by
reason of having been a member of the XLA Affiliated Group and (3) any other
Taxes, other than excise Taxes, imposed on SCA or any of the SCA Post-Closing
Subsidiaries other than XLCA or XL Financial Administrative Services Inc. that
result from business activities conducted by SCA or any of the SCA Post-Closing
Subsidiaries prior to the consummation of the IPO; PROVIDED, HOWEVER, that this
Section 1(a) will not apply to Losses with respect to any liability for Taxes
that (i) is accrued or reserved on the Financial Statement (other than as a
deferred tax liability or a reduction in a deferred tax asset), or (ii) results
from (A) any decrease in the amount of any deduction allowed in a taxable period
(or portion thereof) ending on or prior to the Closing Date if such decrease
corresponds to an increase in any deduction allowed in a taxable period (or
portion thereof) ending after the Closing Date, (B) any increase in the amount
of taxable income included in a taxable period ending or prior to the Closing
Date if such increase corresponds to a decrease in taxable income included in a
taxable period (or portion thereof) ending after the Closing Date, or (C) any
similar timing difference. The parties agree that to the extent allowed by
applicable law, any payments made by the XL Parties to SCA or any of the SCA
Post-Closing Subsidiaries pursuant to this Section 1(a) will be treated as a
contribution to the capital of SCA.


<PAGE>
                                      -4-


            (b) SCA will notify XL Capital (or cause XL Capital to be notified)
in writing within 30 days of the receipt of any communication by SCA or any of
its Subsidiaries from or with any governmental authority concerning Taxes owed
by SCA or any of the SCA Post-Closing Subsidiaries for which indemnification may
be claimed from the XL Parties pursuant to the provisions of this Agreement. In
addition, SCA will notify XL Capital (or cause XL Capital to be notified) in
writing at least 15 days prior to the date SCA or any of its Subsidiaries
intends to make a payment of any Taxes which may be indemnifiable by the XL
Parties pursuant to the provisions of this Agreement and will consult in good
faith with XL Capital prior to making any such payment. XL Capital will notify
SCA (or cause SCA to be notified) in writing within 30 days of receipt of any
communication by XL Capital or any of the XL Post-Closing Subsidiaries from or
with any governmental authority concerning Taxes owed by SCA or any of the SCA
Post-Closing Subsidiaries.

            2. DEFINITIONS.

            (a) Unless otherwise indicated, all capitalized terms used herein
have the same meaning as in the Master Transition Agreement.

            (b) For purposes of this Agreement the following terms are as
defined below:

<PAGE>
                                      -5-


            (1) "After-Tax Basis" means that, in determining the amount of the
payment necessary to indemnify any party against, or reimburse any party for,
Losses, the amount of such Losses will be determined net of any Tax benefit
derived by the indemnified party as the result of sustaining such Losses, and
the amount of such indemnification payment will be increased (i.e., "grossed
up") by the amount necessary to satisfy any Tax liabilities incurred by the
indemnified party as a result of its receipt, or right to receive, such
indemnification payment (as so increased), so that the indemnified party is put
in the same net after-Tax economic position as if it had not incurred such
Losses.

            (2) "Closing Date" means the date of the Closing.

            (3) "Final Determination" means a determination as defined in
Section 1313(a) of the Code or any other event (including the execution of a
Form 870-AD or any other form having substantially the same effect for purposes
of any Tax law) that finally and conclusively establishes the amount of any
liability for Tax.

            (4) "Financial Statement" means the U.S. GAAP consolidated balance
sheet of SCA and the SCA Post-Closing Subsidiaries prepared as of the Closing in
connection with the Public Offering.

            (5) "SCA Post-Closing Subsidiaries" means collectively all of the
Persons that are, immediately after the Closing, Subsidiaries of SCA (including
XLCA and XLFA).

<PAGE>
                                      -6-


            (6) "Tax" or "Taxes" means (i) any and all taxes, charges, fees,
duties, levies or other assessments, including all net income, gross income,
gross receipts, excise, stamp, premium, real or personal property, ad valorem,
sales, withholding, estimated, social security, employment, unemployment,
occupation, use, service, service use, license, net worth, payroll, franchise,
environmental, severance, transfer, recording, escheat, or other taxes, duties,
assessments, or charges, whether computed on a separate, consolidated, unitary,
combined or any other basis, imposed by any governmental authority; (ii) all
interest, penalties, fines, or additions to tax attributable thereto; and (iii)
all transferee, successor, joint and several, contractual, or other liability
(including pursuant to the Tax Sharing and Payment Agreement) in respect of any
items described in clauses (i) or (ii).

            (7) "Tax Return" means any report, document, declaration,
information, return, or filing (including any related or supporting information
and any amendments to any of the foregoing) filed or required to be filed with
respect to Taxes.

            (8) "XL Post-Closing Subsidiaries" means collectively all of the
Persons that are, at any time after the Closing, Subsidiaries of XL Capital.

            (c) References in this Agreement to any Person include the
successors, predecessors, and permitted assigns of such Person.

<PAGE>
                                      -7-


            3. INDEMNIFICATION BY SCA AND THE SCA POST-CLOSING SUBSIDIARIES. (a)
SCA and each of the SCA Post-Closing Subsidiaries will jointly and severally
indemnify and hold harmless on an After-Tax Basis XL Capital and each of the XL
Capital Post-Closing Subsidiaries from and against any Losses with respect to
Taxes imposed on SCA or any of the SCA Post-Closing Subsidiaries other than
those Losses for which the XL Parties are responsible pursuant to Section 1 (a).

            (b) SCA and the SCA Post-Closing Subsidiaries will make payments
from time to time to XLI equal to the amount of any net Tax benefit obtained by
SCA or any of the CA Subsidiaries as the result of (1) the exercise of any
compensatory stock option granted by XL Capital (with respect to its stock) to
any Person who is an employee (or former employee) or director (or former
director) of SCA or any of the CA Subsidiaries at the time such option is
exercised, or (2) any other compensation paid after the Closing Time by XLI, XL
Capital or any of the Post-Closing Subsidiaries of XL Capital to any Person who
is an employee (or former employee) or director (or former director) of SCA or
any of the CA Subsidiaries at the time such payment is made.

            (c) The parties agree that for applicable income tax purposes, to
the extent allowed by applicable law, any payments made by SCA or any SCA
Post-Closing Subsidiary pursuant to Section 3(b) will be treated as a reduction
in the amount of the contribution to the


<PAGE>
                                      -8-


capital of SCA that would otherwise be deemed to be made as the result of the
event described in subparagraph (1) or (2) of such Section 3(b).

            4. CONTROL. (a) XL Capital will have the exclusive right to file any
amended Tax Returns and to control any audit or other administrative or judicial
proceeding with respect to (i) the Tax liability of SCA and/or the SCA
Post-Closing Subsidiaries for any taxable period (or portion thereof) ending on
or before the Closing Date, and (ii) any other matter resulting in any asserted
Tax liability with respect to which any of the XL Parties provides
indemnification under this Agreement. XL Capital will consult in good faith with
SCA with respect to each defense against or compromise or settlement of any
indemnified Tax liability. At its own expense, SCA will be permitted to
participate in, and be represented at, each conference, hearing, or meeting with
representatives of the pertinent governmental authority (and will be notified
reasonably in advance thereof).

            (b) Except as provided in Section 4(a), SCA will have the exclusive
right to control any audit or other administrative or judicial proceeding with
respect to the Tax liability of SCA or any of the SCA Post-Closing Subsidiaries.

            5. REFUNDS. (a) Except for any refund shown as an asset or taken
into account as an offset to the amount of any liability (other than a deferred
tax asset or liability) on the Financial Statement, XL Capital will be entitled
to any refunds (including interest paid therewith), whether received in cash, as
a credit or offset, or in any other form, in respect of (i)


<PAGE>
                                      -9-


any Tax liability of SCA or any of the SCA Post-Closing Subsidiaries in respect
of any taxable period (or portion thereof) ending on or prior to the Closing
Date, and (ii) any other Tax liability for which the XL Parties are responsible
under this Agreement; PROVIDED, HOWEVER, that this Section 5(a) will not apply
to a refund that results from (A) any increase in the amount of any deduction
allowed in a taxable period (or portion thereof) ending on or prior to the
Closing Date if such increase corresponds to a decrease in any deduction allowed
in a taxable period (or portion thereof) ending after the Closing Date, (B) any
decrease in the amount of taxable income included in a taxable period ending or
prior to the Closing Date if such decrease corresponds to an increase in taxable
income included in a taxable period (or portion thereof) ending after the
Closing Date, or (C) any similar timing difference.

            (b) Except as provided in paragraph (a) of this Section 5, SCA will
be entitled to any refunds (including interest paid therewith) in respect of the
Tax liability of SCA or any of the SCA Post-Closing Subsidiaries.

            (c) In the event of any change to the liability of SCA or any of the
SCA Post-Closing Subsidiaries for Taxes or entitlement to a refund, as the
result of an audit, carryover, carryback, or otherwise, the amounts previously
payable under this Agreement will be appropriately adjusted and SCA will pay to
XL Capital, or XL Capital will pay to SCA, without duplication, the amount
required as a result of such adjustment, together with interest at the rate per
annum determined from time to time under Section 6621(a)(2) of the Code


<PAGE>
                                      -10-


compounded daily for the period from the original date of the payment affected
by the adjustment to the date on which the payment is made.

            6. INTEREST. In the event that any payment required to be made under
this Agreement is made after the date on which said payment is due, interest
will accrue on such amount from the due date of the payment through the date
such payment is actually made at the applicable short-term federal rate
determined from time to time under Section 1274(d)(1) of the Code, compounded
semi-annually.

            7. TAX COOPERATION. (a) XL Capital and SCA and their respective
Subsidiaries will cooperate with each other in all Tax matters, including the
conduct of any audit or other proceeding related to any Tax liability with
respect to which the XL Parties provide indemnification under this Agreement,
and each will execute and deliver such powers of attorney and other documents as
are necessary to carry out the intent of this Agreement. Without limiting the
generality of the foregoing, XL Capital and SCA will furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to SCA and its Subsidiaries or their
respective assets or businesses (including, without limitation, access to books
and records) as is reasonably necessary for the filing of all amended Tax
returns, the preparation for any audit by any governmental authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
liability with respect to which the XL Parties provide indemnification under
this Agreement. The

<PAGE>
                                      -11-


party requesting cooperation under this Section 7(a) will reimburse the other
party for any actual out-of-pocket expenses incurred in furnishing such
cooperation.

            (b) Unless there has previously been a Final Determination to the
contrary, none of SCA and its Subsidiaries will take any position with respect
to Taxes (including on any Tax Return or in connection with any Tax controversy)
for any taxable period (or the portion thereof) ending after the Closing Date
that is inconsistent with any position taken by the SCA or any of its
Subsidiaries for any taxable period (or the portion thereof) ending on or before
the Closing Date (including any position relating to the timing or character of
any income, deduction, credit, or other item).

            (c) XL Capital and SCA (and their respective Subsidiaries) agree to
report to the other any communication from or with the Internal Revenue Service
or any other taxing authority that reasonably could affect any Tax liability
with respect to which the XL Parties may be required to provide indemnification
under this Agreement.

            8. TERMINATION. Notwithstanding any provision of this Agreement, the
Master Transition Agreement, or any Ancillary Agreement to the contrary, this
Agreement may be terminated at any time prior to the Closing Time by and in the
sole discretion of XL Capital. In the event of such termination, no party will
have any liability of any kind to any other party on account of such
termination, except as set forth in Section 9.11 of the Separation Agreement.

<PAGE>
                                      -12-


            9. SURVIVAL. The covenants, agreements and other obligations of the
parties contained in this Agreement will survive the Closing Date until 45 days
after the expiration of the applicable statutes of limitations.

            10. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the parties hereto and the respective successors and
permitted assigns.

            11. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and will not be deemed to confer upon third
parties (including stockholders or members of any party hereto) and any remedy,
claim, reimbursement, claim of action, or other right in excess of those
existing without reference to this Agreement.

            12. HEADINGS. The section headings contained in this Agreement are
for reference purposes only and will not in any way affect the meaning or
interpretation of this Agreement.

            13. SEVERABILITY. To the extent any provision of this Agreement is
invalid or unenforceable, such provision will be considered deleted here from
and the remaining provisions of this Agreement will be unaffected and will
continue in full force and effect.

            14. ASSIGNMENT OF THIS AGREEMENT. No party may assign this Agreement
by operation of law or otherwise without the express written consent of the
other parties; provided, however, this Agreement may be assigned by operation of
law or otherwise without the express written consent of the other parties hereto
by XL Capital and/or SCA to their respective Post-Closing Subsidiaries so long
as such assignment does not relieve the assigning party of liability hereunder.

<PAGE>
                                      -13-


            15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.

            16. AMENDMENT; WAIVER. No provision of this Agreement may be
amended, waived, or otherwise modified without the prior written consent of each
of the parties hereto.

            17. GOVERNING LAW. This Agreement will be governed by, and construed
in accordance with, the internal laws of the State of New York, without
reference to the principles of conflicts of law.


                           [Intentionally left blank]

<PAGE>
                                      -14-



            18. IN WITNESS WHEREOF, this Agreement has been duly executed as of
the day and year first above written.

                                       XL CAPITAL LTD


                                       By:   _____________________
                                             Name:
                                             Title:


                                       X.L. AMERICA, INC.


                                       By:   _________________________
                                             Name:
                                             Title:


                                       SECURITY CAPITAL ASSURANCE LTD


                                       By:   _________________________
                                             Name:
                                             Title: