EXHIBIT 10.2

                                 PREMIUM LETTER



                                                     October 13, 2006



XL Asset Funding Company I LLC
20 N. Martingale Road, Suite 200
Schaumburg, IL 60173

                  Re:   INSURANCE  AND  INDEMNITY   AGREEMENT  (the   "Insurance
Agreement"),  dated as of October 13, 2006,  among XL CAPITAL  ASSURANCE INC., a
New York stock  insurance  company  (together  with its  successors and assigns,
"XLCA"),  XL ASSET FUNDING COMPANY I LLC, a Delaware limited  liability  company
(the "Investment Agreement Provider") and XL LIFE AND ANNUITY HOLDING COMPANY, a
Delaware  corporation  (together  with  its  successors  and  assigns,  "Holding
Company"  and,  together  with  Investment  Agreement  Provider,  the  "Provider
Entities").

Ladies and Gentlemen:

This  letter  will  confirm  the  agreement  of XL Asset  Funding  Company I LLC
("XLAF") and XL Capital Assurance Inc. ("XLCA") that XLAF will make the payments
set forth below in connection with and in  consideration of the issue by XLCA of
Financial   Guaranty   Insurance   Policies   (collectively,   the  "Policies").
Capitalized  terms used herein but not defined  herein  shall have the  meanings
given those terms in the Insurance Agreement.

The payments  payable below shall  constitute  the "Premium"  referred to in the
Insurance  Agreement.  This letter is the  "Premium  Letter"  referred to in the
Insurance Agreement. The obligations of XLAF hereunder constitute obligations of
XLAF under the Insurance  Agreement and this letter shall be deemed to be a part
of the Insurance Agreement as if fully set forth therein.

The Premium (the  "Premium")  shall be paid on the tenth (10th)  Business Day of
each month  (or,  if such day is not a Business  Day,  then the next  succeeding
Business Day) in arrears,  based on the actual number of days in the immediately
preceding  calendar  month and a year of 365/366 days, in an amount equal to ten
(10) basis points per annum  multiplied  by sum of the  weighted  average of the
outstanding  principal balance of each Qualified  Investment Contract during the
immediately  preceding  calendar month. The Premium shall be summarized as shown
in the attached  Monthly  Premium Report  attached hereto as Exhibit A and which
shall be delivered to XLCA each month when the Premium is paid. Any changes must
be agreed to by both parties.

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Any payments of Premium payable  hereunder,  once paid,  shall not be refundable
for any  reason  whatsoever,  including,  without  limitation,  the  lack of any
payment under the Insurance Policies.

No recourse  under this letter shall be had against,  and no personal  liability
shall attach to, any officer,  employee,  director,  affiliate or shareholder of
any party hereto,  as such, by the enforcement of any assessment or by any legal
or equitable proceeding,  or by virtue of any statute or otherwise in respect of
this letter, it being expressly agreed and understood that this letter is solely
a  corporate  obligation  of each party  hereto,  and that any and all  personal
liability, either at common law or in equity, or by statute or constitution,  of
every such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under this letter is hereby expressly waived
as a condition of and in  consideration  for the  execution and delivery of this
letter.

Payment  to XLCA shall be made by Federal  funds wire  transfers  to XLCA to the
account set forth below,  unless another account is designated to you in writing
by a Managing Director of XLCA, with the following details  specifically  stated
on the wire instructions:

Receiving Bank:   Bank of America
                  777 Main Street
                  Hartford, CT  06115-2001
                  ABA - 026009593

Beneficiary:      XL Capital Assurance Inc.
                  1221 Avenue of the Americas
                  New York, NY  10020-1001
                  Account Number 942-783-5841

Reference:        XLAF GIC Program



The  Investment  Agreement  Provider  agrees that this  letter and the  contents
thereof  are for its  confidential  use only and will  not,  without  the  prior
written  consent of XLCA (except as otherwise  required by law),  disclose  this
letter  and  the  contents  thereof  to any  Person  other  than  its  officers,
directors, accountants, attorneys and other advisors.

This agreement  shall be governed by the laws of the State of New York,  without
regard to its conflicts of law principles.


<PAGE>




                                           Sincerely,

                                           XL CAPITAL ASSURANCE INC.


                                           By: /s/ Thomas Randazzo
                                               ---------------------------------
                                               Name:  Thomas Randazzo
                                               Title:   Senior Managing Director
Acknowledged and Agreed to by
XL ASSET FUNDING COMPANY I LLC

By:  /s/ Frank Beardsley
     --------------------------
     Name:  Frank Beardsley
     Title: President