EXHIBIT 10.4


                                                                     May 3, 2007


Security Capital Assurance Ltd
One Bermudiana Road
Hamilton HM11, Bermuda
Attention:        Paul S. Giordano, President and Chief Executive Officer


                  Re:  TRANSITION AGREEMENT, DATED AUGUST 4, 2006

Ladies and Gentlemen:

     Reference is made to the Transition Agreement dated August 4, 2006 among XL
Capital Ltd, a Cayman Islands  company ("XL  CAPITAL"),  XL Insurance  (Bermuda)
Ltd, a Bermuda  company  ("XLI"),  X.L.  America,  Inc., a Delaware  corporation
("XLA" and,  together with XL Capital and XLI, the "XL  PARTIES"),  and Security
Capital  Assurance Ltd, a Bermuda company ("SCA") (the "TRANSITION  AGREEMENT").
Capitalized  terms used herein and not otherwise  defined shall have the meaning
provided therefor in the Transition Agreement.

     Pursuant to Section 9.5 of the  Transition  Agreement,  the parties  hereto
agree,  in  consideration  of the premises and of the mutual  agreements  herein
contained, to amend the Transition Agreement as follows:

     1. Section 8.6 of the Transition  Agreement is hereby amended by adding the
following at the end thereof:

     "(d) In addition to the other  indemnification  provisions  available under
this  Agreement,  XL Capital shall  indemnify,  defend and hold harmless any SCA
officer from and against any and all Losses of such SCA officer  arising out of,
relating  to,  by reason  of or  otherwise  in  connection  with the  submission
following  the Closing Time by such SCA officer of any  certification  regarding
the financials, disclosure controls and procedures, internal controls or related
matters of any member of the SCA Group  ("SCA  Certification")  requested  by XL
Capital and provided by such SCA officer in connection  with the  preparation by
XL  Capital  (each  such  SCA  officer  an "SCA  Certifying  Officer"),  and the
execution  by the Chief  Executive  Officer  and Chief  Financial  Officer of XL
Capital,  of  any  certification   pursuant  to  Sections  302  or  906  of  the
Sarbanes-Oxley  Act of 2002 to the same  extent and  subject to the same  terms,
conditions  and  exceptions  set  forth  in  Article  109  of  the  Articles  of
Association of XL Capital as if such SCA  Certifying  Officer were an officer of
XL Capital; PROVIDED, HOWEVER, that no such indemnification shall be provided in
respect of any Losses  arising out of or relating to any  proceeding in which XL
Capital (including, solely for purposes of this proviso, any XL Capital officer,
director  or  employee,  acting as such) is not a subject  or party;  solely for
purposes  of this  Section  8.1(d),  XL  Capital  shall be  deemed  to  remain a
subject/party with respect to a proceeding even if it subsequently  ceases to be
a subject/party  with respect to such proceeding.  Subject to the proviso in the
preceding  sentence,  if both XL Capital and SCA are  subjects  or parties  with
respect to a  proceeding  contemplated  by the second  preceding  sentence,  the
amount of any  indemnification  provided  to such SCA  Certifying  Officer by XL
Capital under this Section 8.1(d) will be determined on a basis reasonable under
the circumstances in light of the relative  responsibility of XL Capital and its
officers and directors acting as such, on the one hand, and SCA and its officers
and directors acting as such, on the other hand, for the Losses."


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     Except as set forth herein,  the Transition  Agreement shall remain in full
force and effect in accordance with the original terms thereof.

     This  letter may be  executed  in one or more  counterparts,  each of which
shall be deemed an original,  but all of which shall  constitute but one and the
same letter.

     This letter shall be governed by, and  construed in  accordance  with,  the
laws  of  the  State  of New  York,  without  regard  to its  conflict  of  laws
principles.  The parties hereto consent to the non-exclusive jurisdiction of the
Courts of New York.


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     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed as of the day and year first above written.

                                    XL CAPITAL LTD


                             By:    /s/ KIRSTIN R. GOULD
                                    --------------------------------------------
                                    Name:  Kirstin Romann Gould
                                    Title: EVP, General Counsel of Corporate
                                           Affairs & Secretary

                                    XL INSURANCE (BERMUDA) LTD


                             By:    /s/ KIRSTIN R. GOULD
                                    --------------------------------------------
                                    Name:  Kirstin Romann Gould
                                    Title: Secretary

                                    X.L. AMERICA, INC.


                             By:    /s/ RICHARD G. MCCARTY
                                    --------------------------------------------
                                    Name:  Richard G. McCarty
                                    Title: Senior Vice President, General
                                           Counsel & Secretary

Accepted and Agreed to as of the date first above written:

SECURITY CAPITAL ASSURANCE LTD


By: /s/ MICHAEL REGO
    ---------------------------------------------------
    Name:  Michael Rego
    Title: Executive Vice President



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