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                                                                     EXHIBIT 4.2

                          FIRST SUPPLEMENTAL INDENTURE

                  FIRST SUPPLEMENTAL INDENTURE, dated as of June 30, 2003, among
Crum & Forster Holdings Corp., a Delaware corporation ("Holdings"), Crum &
Forster Funding Corp., a Delaware corporation ("Funding"), and The Bank of New
York, as trustee under the Indenture referred to below (the "Trustee").

                              W I T N E S S E T H :

                  WHEREAS, Funding and the Trustee heretofore executed and
delivered an Indenture, dated as of June 5, 2003 (as heretofore amended and
supplemented, the "Indenture"), providing for the issuance of the 10 3/8% Senior
Notes due 2013 (the "Notes") (capitalized terms used herein but not otherwise
defined have the meanings ascribed thereto in the Indenture);

                  WHEREAS, Section 9.1 of the Indenture provides that upon the
execution and delivery by Holdings to the Trustee of this First Supplemental
Indenture, Holdings shall be the successor Company under the Indenture and the
Notes and shall succeed to, and be substituted for, and may exercise every right
and power of, Funding under the Indenture and the Notes and Funding shall be
discharged from all obligations and covenants under the Indenture and the Notes;

                  WHEREAS, Section 9.1 of the Indenture provides that Funding
and the Trustee may enter into this supplemental indenture without notice to or
consent of any Holders of the Notes; and

                  WHEREAS, this First Supplemental Indenture has been duly
authorized by all necessary corporate action on the part of each of Holdings,
Funding and the Trustee.

                  WHEREAS, upon the satisfaction of the conditions set forth in
Section 2(a) of the Initial Escrow Agreement, Holdings will be entitled to
receive the Released Amount (as defined in the Initial Escrow Agreement) in
accordance with the terms of the Initial Escrow Agreement;

                  NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
Holdings, Funding and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders as follows:

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                                   ARTICLE I

                             Assumption by Holdings

                  Section 1.1 Assumption of the Notes. Effective at the
effective time of this First Supplemental Indenture:

                  (a)      Holdings hereby assumes and agrees to promptly pay,
         perform and discharge when due each and every debt, obligation,
         covenant and agreement of any nature whatsoever of "the Company" under
         the Indenture and the Notes; and

                  (b)      Holdings hereby agrees to be bound by all the terms,
         provisions and conditions of the Indenture and the Notes and hereby
         acknowledges that references to "the Company" in the Indenture, shall
         refer to Holdings from and after such effective time, as the successor
         to Funding, and Holdings shall succeed to, and be substituted for, and
         may exercise every right and power of "the Company" under the Indenture
         and the Notes.

                  Section 1.2 Discharge of Funding. Effective at the effective
time of this First Supplemental Indenture:

                  (a)      Funding is hereby discharged from all debts,
         obligations, covenants and agreements of any nature whatsoever under
         the Indenture and the Notes;

                  (b)      Funding shall no longer be bound by any of the terms,
         provisions and conditions of the Indenture and the Notes and hereby
         acknowledges that references to "the Company" in the Indenture, shall
         refer to Holdings from and after such effective time, as the successor
         to Funding, and not to Funding, and Holdings shall succeed to, and be
         substituted for, and Funding may no longer exercise any right or power
         of, "the Company" under the Indenture or the Notes.

                  Section 1.3 Trustee's Acceptance. The Trustee hereby agrees to
accept this First Supplemental Indenture and agrees, from and after the
effective time of this First Supplemental Indenture, to perform the same under
the terms and conditions set forth in the Indenture.

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                                   ARTICLE II

                                  Miscellaneous

                  Section 2.1 Effectiveness of First Supplemental Indenture.
This First Supplemental Indenture shall not be effective until the conditions
set forth in this Section 2.1 have been satisfied. This First Supplemental
Indenture shall become effective only upon:

                  (a)      the execution and delivery of this First Supplemental
         Indenture by Holdings, Funding and the Trustee; and

                  (b)      the release by the Initial Escrow Agent (as defined
         in the Initial Escrow Agreement) of the Released Amount to Holdings (or
         its designee) in accordance with the terms of the Initial Escrow
         Agreement.

From and after the effective time of this First Supplemental Indenture, the
Indenture shall be amended and supplemented in accordance herewith, and this
First Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Notes heretofore or hereafter authenticated and
delivered under the Indenture shall be bound hereby and thereby. In the event
that the condition set forth in clause (b) above is not fulfilled within ten
(10) Business Days of the fulfillment of the condition set forth in clause (a)
above, this First Supplemental Indenture shall automatically terminate and be of
no force or effect.

                  Section 2.2 Indenture Remains in Full Force and Effect. Except
as supplemented or amended hereby, all provisions in the Indenture shall remain
in full force and effect.

                  Section 2.3 Indenture and First Supplemental Indenture
Construed Together. This First Supplemental Indenture is an indenture
supplemental to the Indenture, and the Indenture and this First Supplemental
Indenture shall henceforth be read and construed together.

                  Section 2.4 Confirmation and Preservation of Indenture. The
Indenture as supplemented or amended by this First Supplemental Indenture is in
all respects confirmed and preserved.

                  Section 2.5 Conflict with Trust Indenture Act. If any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with any provision of the TIA that is required under the TIA to be part of and
govern any provision of this First Supplemental Indenture, the provision of the
TIA shall control. If any provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the

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provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture, as the case
may be.

                  Section 2.6 Severability. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

                  Section 2.7 Benefits of First Supplemental Indenture. Nothing
in this First Supplemental Indenture or the Notes, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Notes, any benefit of
any legal or equitable right, remedy or claim under the Indenture, this First
Supplemental Indenture or the Notes.

                  Section 2.8 Successors. All agreements of Holdings in this
First Supplemental Indenture shall bind its successors. All agreements of the
Trustee in this First Supplemental Indenture shall bind its successors.

                  Section 2.9 Certain Duties and Responsibilities of the
Trustee. In entering into this First Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture and the Notes
relating to the conduct or affecting the liability or affording protection to
the Trustee, whether or not elsewhere herein so provided.

                  Section 2.10 Governing Law. This First Supplemental Indenture
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.

                  Section 2.11 Multiple Originals. The parties may sign any
number of copies of this First Supplemental Indenture, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

                  Section 2.12 Headings. The Article and Section headings herein
are inserted for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.

                  Section 2.13 The Trustee. The Trustee shall not be responsible
in any manner for or in respect of the validity or sufficiency of this First
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which are made by Holdings and Funding.

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                  IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first written above.

                                        CRUM & FORSTER HOLDINGS CORP.

                                        By: /s/ V. PREM WATSA
                                            -------------------------------
                                            Name:  V. Prem Watsa
                                            Title: Chief Executive Officer

                                        CRUM & FORSTER FUNDING CORP.

                                        By: /s/ THOMAS M. STRAUSS
                                            -------------------------------
                                            Name:  Thomas M. Strauss
                                            Title: President

                                        THE BANK OF NEW YORK,
                                             as Trustee

                                        By: /s/ MARIE TRIMBOLI
                                            -------------------------------
                                            Name:  Marie Trimboli
                                            Title: Assistant Vice President