EXHIBIT 10.2

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

                  This  Agreement  is made  this 4th day of  August  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"),  Security  Capital  Assurance  Ltd, a Bermuda  company  ("SCA"),  SCA
Holdings  US  Inc.,  a  Delaware  corporation  ("Holdings"),  and  XL  Financial
Assurance  Ltd.,  a Bermuda  company  ("XLFA").  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 XLFA;

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

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

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                  WHEREAS,  in certain  taxable  periods ending on or before the
Closing Date,  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 Date, 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 or any of the SCA Post-Closing Sub-


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sidiaries 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 would be so accrued or  reserved  if the
Financial  Statement  were prepared as of the Closing,  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 on 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 the  indemnitee  or, in the case of any payments
made pursuant to clause (2) above, as a tax-free reimbursement.

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                  (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 Transition Agreement.

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

                  (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 in-

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demnification  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
end of the most recent fiscal quarter ended prior to the Closing.

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

                  (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,
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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.

3.       INDEMNIFICATION BY SCA, HOLDINGS AND XLFA.

                  (a)  SCA,   Holdings  and  XLFA  will  jointly  and  severally
indemnify and hold harmless on an After-Tax  Basis XL Capital and each of the XL
Capital  Post-Closing

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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,  Holdings  and XLFA will make  payments  from time to
time to XLI or XL  Capital  (as  applicable)  equal to the amount of any net Tax
benefit  obtained by SCA or any of the SCA 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 SCA  Subsidiaries at the time such option
is  exercised  or (2) any other  compensation  paid after the Closing by XLI, XL
Capital or any other Post-Closing  Subsidiary of XL Capital to any Person who is
an employee (or former  employee) or director (or former director) of SCA or any
of the SCA 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,  Holdings or
XLFA  pursuant to Section  3(b) will be treated as a reduction  in the amount of
the  contribution  to the capital of SCA that would  otherwise be deemed to have
been 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
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(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 involving 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 or any refund that would be so
shown or taken into account if the Financial  Statement  were prepared as of the
Closing,  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) 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;

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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 on 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 a
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
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.

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                  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 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 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.

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                  (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 Transition Agreement, or any Ancillary Agreement to the contrary,
this  Agreement may be terminated at any time prior to the Closing 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.

                  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.

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                  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
herefrom 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.

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                  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.

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

                        XL CAPITAL LTD


                        By:               /s/ Michael P. Esposito, Jr.
                              -------------------------------------------------
                              Name:       Michael P. Esposito, Jr.
                              Title:      Chairman of the Board

                        X.L. AMERICA, INC.


                        By:               /s/ Richard G. McCarty
                              -------------------------------------------------
                              Name:       Richard G. McCarty
                              Title:      SVP, General Counsel
                                          and Secretary

                        SECURITY CAPITAL ASSURANCE LTD


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

                        SCA HOLDINGS US INC.


                        By:               /s/ Susan Comparato
                              -------------------------------------------------
                              Name:       Susan Comparato
                              Title:      Authorized Officer

                        XL FINANCIAL ASSURANCE LTD.


                        By:               /s/ Michael Rego
                              -------------------------------------------------
                              Name:       Michael Rego
                              Title:      Chief Operating Officer