EXHIBIT 3.2









                          AMENDED AND RESTATED BYE-LAWS
                                       OF
                           CASTLEPOINT HOLDINGS, LTD.





















                      Amended and Restated on April 1, 2006
                      -------------------------------------
                              Amended July 31, 2007
                              ---------------------



<PAGE>



                                TABLE OF CONTENTS

Bye-Law                                                                    Page
-------                                                                    ----

1.    Interpretation.........................................................1
2.    Board of Directors.....................................................5
3.    Management of the Company..............................................5
4.    Power to appoint chief executive officer...............................6
5.    Power to appoint manager...............................................6
6.    Power to authorise specific actions....................................6
7.    Power to appoint attorney..............................................6
8.    Power to appoint and dismiss employees.................................6
9.    Power to borrow and charge property....................................7
10.   Power to purchase shares of the Company................................7
11.   Election of Directors..................................................8
12.   Defects in appointment of Directors....................................9
13.   Removal of Directors..................................................10
14.   Vacancies on the Board................................................10
15.   Notice of meetings of the Board.......................................11
16.   Quorum at meetings of the Board.......................................11
17.   Meetings of the Board.................................................12
18.   Unanimous written resolutions.........................................12
19.   Contracts and disclosure of Directors' interests......................12
20.   Remuneration of Directors.............................................12
21.   Power to delegate to a committee......................................13
22.   Officers of the Company...............................................13
23.   Appointment of Officers...............................................14
24.   Remuneration of Officers..............................................14


                                        i
<PAGE>



25.   Duties of Officers....................................................14
26.   Chairman of meetings..................................................14
27.   Register of Directors and Officers....................................14
28.   Obligations of Board to keep minutes..................................14
29.   Indemnification of Directors and Officers of the Company..............15
30.   Waiver of claim by Member.............................................15
31.   Notice of annual general meeting......................................16
32.   Notice of special general meeting.....................................16
33.   Accidental omission of notice of general meeting......................16
34.   Meeting called on requisition of Members..............................16
35.   Short notice..........................................................16
36.   Postponement of Meetings..............................................16
37.   Quorum For General Meeting............................................17
38.   Adjournment of meetings...............................................17
39.   Attendance at meetings................................................17
40.   Written resolutions...................................................17
41.   Attendance of Directors...............................................18
42.   Voting at meetings....................................................18
43.   Voting on show of hands...............................................18
44.   Decision of chairman..................................................19
45.   Demand for a poll.....................................................19
46.   Seniority of joint holders voting.....................................20
47.   Instrument of proxy...................................................20
48.   Representation of corporations at meetings............................20
49.   Rights of shares......................................................20
50.   Limitation on voting rights of Controlled Shares......................21
51.   Power to issue shares.................................................23
52.   Variation of rights and alteration of share capital...................24
53.   Registered holder of shares...........................................25


                                       ii
<PAGE>



54.   Death of a joint holder...............................................25
55.   Share certificates....................................................25
56.   Calls on shares.......................................................26
57.   Forfeiture of Shares..................................................26
58.   Contents of Register of Members.......................................26
59.   Inspection of Register of Members.....................................26
60.   Determination of record dates.........................................27
61.   Instrument of transfer................................................27
62.   Restrictions on transfer..............................................28
63.   Transfers by joint holders............................................29
64.   Lien on Shares........................................................29
65.   Registration on death or bankruptcy...................................30
66.   Representative of deceased Member.....................................30
67.   Declaration of dividends by the Board.................................31
68.   Other distributions...................................................31
69.   Reserve fund..........................................................31
70.   Deduction of amounts due to the Company...............................31
71.   Unclaimed dividends...................................................31
72.   Interest on dividend..................................................31
73.   Issue of bonus shares.................................................31
74.   Records of account....................................................32
75.   Financial year end....................................................32
76.   Financial statements..................................................32
77.   Appointment of Auditor................................................32
78.   Remuneration of Auditor...............................................33
79.   Vacation of office of Auditor.........................................33
80.   Access to books of the Company........................................33
81.   Report of the Auditor.................................................33
82.   Notices to Members of the Company.....................................33


                                      iii
<PAGE>



83.   Notices to joint Members..............................................34
84.   Service and delivery of notice........................................34
85.   The Seal..............................................................34
86.   Manner in which seal is to be affixed.................................34
87.   Winding-up/distribution by liquidator.................................34
88.   Alteration of Bye-laws................................................35
89.   Voting of Subsidiary Shares...........................................35
90.   Bye-Laws or Articles of Association of Certain Subsidiaries...........35


                                       iv
<PAGE>



                                 B Y E - L A W S

                                       of

                           CASTLEPOINT HOLDINGS, LTD.

                                 INTERPRETATION
1. Interpretation
-- --------------

     (1) In these Bye-laws the following words and expressions  shall, where not
inconsistent with the context, have the following meanings respectively:

          (a)  "Act" means the Companies Act 1981 as amended from time to time;

          (b)  "Affiliate"  has  the  meaning   ascribed  thereto  in  Rule  144
               promulgated under the Securities Act;

          (c)  "Auditor" includes any individual or partnership;

          (d)  "Board"  means  the  Board  of  Directors  appointed  or  elected
               pursuant to these Bye-laws and acting by resolution in accordance
               with the Act and these  Bye-laws  or the  Directors  present at a
               meeting of Directors at which there is a quorum;

          (e)  "Business Day" means any day, other than a Saturday,  a Sunday or
               any day on which  banks in  Hamilton,  Bermuda or The City of New
               York,  United  States  are  authorized  or  obligated  by  law or
               executive order to close;

          (f)  "Cause"  means  wilful   misconduct,   fraud,  gross  negligence,
               embezzlement  or any other  criminal  conduct or any  physical or
               mental disability that would substantially  impair the ability of
               a Director to function in that capacity;

          (g)  "Code" means the United States Internal  Revenue Code of 1986, as
               amended  from time to time,  or any federal  statute from time to
               time in effect that has replaced such statute,  and any reference
               in  these  Bye-laws  to a  provision  of the  Code  or a rule  or
               regulation promulgated  thereunder means such provision,  rule or
               regulation  as amended  from time to time or any  provision  of a
               federal law, or any federal rule or regulation, from time to time
               in effect that has replaced such provision, rule or regulation;

          (h)  "Common Shares" means the common shares, par value U.S.$ 0.01 per
               share, of the Company and includes a fraction of a Common Share;



<PAGE>



          (i)  "Company" means the company for which these Bye-laws are approved
               and confirmed;

          (j)  "Controlled  Shares"  of any Person  means all Common  Shares and
               shares of any other  class or  classes  of shares of the  Company
               conferring voting rights owned by such Person, whether:

               (i)  directly;

               (ii) with respect to Persons who are U.S. Persons, by application
                    of the  attribution  and  constructive  ownership  rules  of
                    Sections 958(a) and 958(b) of the Code; or,

               (iii) beneficially   owned  directly  or  indirectly  within  the
                    meaning of Section 13(d)(3) of the Exchange Act, as amended,
                    and the rules and regulations thereunder;

          (k)  "Director" means a director of the Company;

          (l)  "Dividend" includes a bonus or capitalization issue of shares;

          (m)  "Exchange Act" means the United States Securities Exchange Act of
               1934 as amended  from time to time or any  federal  statute  from
               time to time in effect that has replaced  such  statute,  and any
               reference in these Bye-laws to a provision of the Exchange Act or
               a rule or regulation promulgated thereunder means such provision,
               rule or  regulation as amended from time to time or any provision
               of a federal law, or any federal rule or regulation, from time to
               time  in  effect  that  has  replaced  such  provision,  rule  or
               regulation;

          (n)  "Fair Market  Value"  means,  with respect to a repurchase of any
               shares of the Company in accordance with these  Bye-laws,  (i) if
               such shares are listed on a  securities  exchange (or quoted in a
               securities  quotation system),  the average closing sale price of
               such shares on such exchange (or in such quotation  system),  or,
               if such  shares  are  listed  on (or  quoted  in)  more  than one
               exchange (or quotation system), the average closing sale price of
               the shares on the  principal  securities  exchange (or  quotation
               system) on which such shares are then traded,  or, if such shares
               are not  then  listed  on a  securities  exchange  (or  quotation
               system)  but  are  traded  in the  over-the-counter  market,  the
               average of the latest bid and asked quotations for such shares in
               such  market,  in  each  case  for the  last  five  trading  days
               immediately  preceding the day on which notice of the  repurchase
               of such shares is sent  pursuant to these  Bye-laws or (ii) if no
               such closing  sales prices or quotations  are  available  because
               such shares are not publicly traded or otherwise,  the fair value
               of  such  shares  as  determined  by one  independent  nationally
               recognized  investment  banking  firm  chosen by the  Company and
               reasonably  satisfactory  to the Member whose shares are to be so
               repurchased  by the  Company,  provided  that the  --------  ----
               calculation  of the Fair Market  Value of the shares made by such
               appointed  investment  banking  firm (i)  shall not  include  any
               discount  relating to the absence of a public trading market for,
               or any transfer  restrictions on, such shares,  and (ii) shall be
               final and the fees and expenses  stemming  from such  calculation
               shall be borne by the  Company or its  assignee,  as the case may
               be;


                                       -2-
<PAGE>

          (o)  "Formula" has the meaning ascribed thereto in Bye-law 50;

          (p)  "Member"  means the person  registered in the Register of Members
               as the  holder  of shares in the  Company  and,  when two or more
               persons are so registered  as joint holders of shares,  means the
               person  whose name stands first in the Register of Members as one
               of such joint  holders or all of such  persons as the  context so
               requires;

          (q)  "9.5% Shareholder" means a Person who owns, in the aggregate, (i)
               directly,  (ii) with respect to Persons who are U.S. Persons,  by
               application of the attribution and  constructive  ownership rules
               of Sections 958(a) and 958(b) of the Code or (iii)  beneficially,
               directly or indirectly  within the meaning of Section 13(d)(3) of
               the Exchange Act,  shares of the Company  representing  more than
               nine and one half  percent  (9.5%) of the total  combined  voting
               rights  attaching  to the  issued  Common  Shares  and the issued
               shares of any other class or classes of shares of the Company;

          (r)  "Notice"  means  written  notice  as  further  defined  in  these
               Bye-laws unless otherwise specifically stated;

          (s)  "Officer"  means  any  person  appointed  by the Board to hold an
               office in the Company;

          (t)  "Person"  means  any  individual,   company,  corporation,  firm,
               partnership,  trust or any  other  business,  entity  or  person,
               whether  or not  recognized  as  constituting  a  separate  legal
               entity;

          (u)  "Register  of  Directors  and  Officers"  means the  Register  of
               Directors and Officers referred to in Bye-law 27;

          (v)  "Register of Members"  means the Register of Members  referred to
               in Bye-law 58;

          (w)  "Related  Group" means a group of  shareholders or members of the
               Company that are investment vehicles and are under common control
               or management;


                                       -3-
<PAGE>



          (x)  "Secretary"  means the person appointed to perform any or all the
               duties of  secretary  of the Company and  includes  any deputy or
               assistant secretary;

          (y)  "Securities  Act" means the United States  Securities Act of 1933
               as amended from time to time or any federal  statute from time to
               time in effect which has replaced such statute, and any reference
               in these  Bye-laws to a provision of the Securities Act or a rule
               or regulation promulgated  thereunder means such provision,  rule
               or  regulation as amended from time to time or any provision of a
               federal law, or any federal rule or regulation, from time to time
               in effect that has replaced such provision, rule or regulation;

          (z)  "share"  means a share of any class of shares in the  capital  of
               the  Company  (including,  where the  context so  admits,  Common
               Shares) and includes a fraction of a share;

          (aa) "subsidiary",  with  respect to any Person,  means a company more
               than  fifty  percent  (50%)  (or,  in the case of a wholly  owned
               subsidiary, one hundred percent (100%)) of the outstanding Voting
               Shares of which is owned, directly or indirectly,  by such Person
               or by one or more other subsidiaries,  or any such Person and one
               or more other subsidiaries;

          (bb) "Unadjusted  Basis",  when used  with  respect  to the  aggregate
               voting rights held by any Member,  refers to the determination of
               such rights without  reference to the provisions  relating to the
               adjustment of voting rights contained in Bye-law 50;

          (cc) "United  States" means the United States of America and dependent
               territories or any part thereof;

          (dd) "United  States 25%  Shareholder"  means a U.S.  Person who owns,
               directly or by application of the  attribution  and  constructive
               ownership  rules of  Sections  958(a)  and  958(b)  of the  Code,
               twenty-five  percent  (25%)  or more  of  either  (i)  the  total
               combined voting rights  attaching to the issued Common Shares and
               the issued  shares of any other class or classes of shares of the
               Company or (ii) the total  combined  value of the  issued  Common
               Shares and any other issued  shares of the Company,  in each case
               determined pursuant to Section 957 of the Code;


                                       -4-
<PAGE>



          (ee) "U.S.  Person"  means (i) a citizen  or  resident  of the  United
               States for U.S. tax purposes, (ii) a corporation,  partnership or
               other entity taxable as a corporation  or partnership  created or
               organized  in the  United  States or under the laws of the United
               States or of any of its political  subdivisions,  (iii) an estate
               the income of which is subject to United  States  federal  income
               tax without regard to its source,  (iv) a trust if a court within
               the United States is able to exercise  primary  supervision  over
               the trust's  administration and one or more U.S. persons have the
               authority to control all  substantial  decisions of the trust and
               (v) certain electing corporations and trusts; and

          (ff) "Voting  Share" of any  Person  means  any  share in such  Person
               conferring  voting rights on the holder  thereof (other than such
               voting  rights as would exist solely in relation to a proposal to
               alter or vary the rights attaching to such shares solely upon the
               future  occurrence  of a contingency  or voting rights  attaching
               solely by virtue of the provisions of the Act).

     (2) In these Bye-laws, where not inconsistent with the context:

          (a)  words denoting the plural number include the singular  number and
               vice versa;

          (b)  words denoting the masculine gender include the feminine gender;

          (c)  words importing persons include companies, associations or bodies
               of persons whether corporate or not;

          (d)  the word:

          (i)  "may" shall be construed as permissive;

          (ii) "shall" shall be construed as imperative; and

          (e)  unless otherwise provided herein words or expressions  defined in
               the Act shall bear the same meaning in these Bye-laws.

     (3) Expressions  referring to writing or written shall, unless the contrary
intention appears,  include facsimile,  electronic mail, printing,  lithography,
photography and other modes of representing words in a visible form.

     (4) Headings used in these Bye-laws are for convenience only and are not to
be used or relied upon in the construction hereof.

                               BOARD OF DIRECTORS

2. Board of Directors
-- ------------------

     The business of the Company shall be managed and conducted by the Board.


                                       -5-
<PAGE>



3. Management of the Company
-- -------------------------

     (1) In managing  the  business of the  Company,  the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws, required
to be  exercised by the Company in general  meeting  subject,  nevertheless,  to
these Bye-laws, the provisions of any statute, and to such regulations as may be
prescribed by the Company in general meeting.

     (2) No regulation  or  alteration to these  Bye-laws made by the Company in
general  meeting  shall  invalidate  any prior act of the Board which would have
been valid if that regulation or alteration had not been made.

     (3) The Board may procure that the Company pays to Members or third parties
all expenses incurred in promoting and incorporating the Company.

4. Power to appoint chief executive officer
-- ----------------------------------------

     The Board may from time to time  appoint one or more  Persons to the office
of chief executive  officer of the Company who shall,  subject to the control of
the Board,  supervise and administer all of the general  business and affairs of
the Company.

5. Power to appoint manager
-- ------------------------

     The Board may  appoint a Person to act as manager of the  Company's  day to
day  business  and may entrust to and confer upon such  manager  such powers and
duties as it deems appropriate for the transaction or conduct of such business.

6. Power to authorise specific actions
-- -----------------------------------

     The  Board may from time to time and at any time  authorise  any  Director,
Officer or other  Person or body of Persons to act on behalf of the  Company for
any  specific  purpose and in  connection  therewith  to execute any  agreement,
document or instrument on behalf of the Company.

7. Power to appoint attorney
-- -------------------------

     The  Board  may from  time to time  and at any  time by  power of  attorney
appoint any company, firm, Person or body of Persons, whether nominated directly
or indirectly  by the Board,  to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such  conditions
as they may think fit and any such power of attorney may contain such provisions
for the protection and  convenience of persons dealing with any such attorney as
the Board may think fit and may also authorise any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorised  under the seal of the Company,  execute any
deed or  instrument  under  their  personal  seal  with the same  effect  as the
affixation of the seal of the Company.


                                       -6-
<PAGE>



8. Power to appoint and dismiss employees
-- --------------------------------------

     The Board may  appoint,  suspend or remove any manager,  secretary,  clerk,
agent or employee of the Company and may fix their  remuneration  and  determine
their duties.

9. Power to borrow and charge property
-- -----------------------------------

     The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking,  property and uncalled capital,  or any part
thereof, and may issue debentures,  debenture stock and other securities whether
outright or as security for any debt,  liability or obligation of the Company or
any third party.

10. Power to purchase shares of the Company
--- ----------------------------------------

     (1)  Exercise  of  power  to  repurchase   shares  of  the  Company  or  to
          discontinue the Company

     The Board may exercise all the powers of the Company to purchase all or any
part  of its  own  shares  pursuant  to  Sections  42 and  42A of the  Act or to
discontinue  the  Company to a named  country or  jurisdiction  outside  Bermuda
pursuant to Section 132G of the Act or any successor to such provisions.

     (2)  Unilateral repurchase right

     Subject  to  Section  42A of the  Act,  if the  Board in its  absolute  and
unfettered discretion, on behalf of the Company, determines that share ownership
by any Member may result in adverse tax, regulatory or legal consequences to the
Company,  any of its  subsidiaries or any of the Members,  the Company will have
the option, but not the obligation, to repurchase all or part of the shares held
by such  Member  (to the extent the Board,  in the  reasonable  exercise  of its
discretion,   determines   it  is  necessary  to  avoid  or  cure  such  adverse
consequences)  for  immediately  available  funds in an amount equal to the Fair
Market Value of such shares on the date the Company sends the Repurchase  Notice
referred to below (the "Repurchase  Price");  provided,  that the Board will use
its best  efforts to  exercise  this option  equally  among  similarly  situated
Members (to the extent  possible under the  circumstances).  In that event,  the
Company will also be entitled to assign its repurchase right to a third party or
parties  including the other Members,  with the consent of such  assignee.  Each
Member  shall be bound by the  determination  by the  Company to  repurchase  or
assign its right to repurchase  such Member's  shares and, if so required by the
Company, shall sell the number of shares that the Company requires it to sell.

     In the event that the Company or its  assignee(s)  determines to repurchase
any such shares,  the Company shall provide each Member  concerned  with written
notice of such determination (a "Repurchase Notice") at least seven (7) calendar
days prior to such  repurchase  or such  shorter  period as each such Member may
authorize,  specifying  the date on which any such shares are to be  repurchased
and the Repurchase  Price.  The Company may revoke the Repurchase  Notice at any
time before it (or its assignee(s)) pays for the shares. Neither the Company nor
its  assignee(s)  shall be obliged to give general  notice to the Members of any
intention to purchase or the  conclusion  of any purchase of shares.  Payment of
the Repurchase Price by the Company or its assignee(s) shall be by wire transfer
and made at a closing  to be held no less than  seven (7)  calendar  days  after
receipt of the Repurchase Notice by the Member.


                                       -7-
<PAGE>



     (3)  Restrictions on repurchases

     If the Company redeems or purchases  shares pursuant to this Bye-law 10, it
shall do so only in a manner it believes would not result,  upon consummation of
such  redemption or purchase,  in (i) any Person  becoming or continuing to be a
9.5% Shareholder, other than Tower Group, Inc. or any of its Affiliates; or (ii)
any Person becoming or continuing to be a United States 25% Shareholder.

11. Election of Directors
--- ---------------------

     (1) Unless  otherwise  provided by statute,  regulation,  stock exchange or
self-regulatory  organisation  rule, the election and removal of Directors shall
be governed by the following provisions.

     (2) The Board of Directors shall consist of such number of directors as the
directors shall determine from time-to-time, or such number in excess thereof as
the Members may from time to time  determine  that shall be elected or appointed
in the first  place at the  statutory  meeting of the  Company  and  thereafter,
except in the case of a casual vacancy,  at the annual general meeting or at any
special  general  meeting  called  for that  purpose  in  accordance  with these
Bye-laws.  The Directors shall be divided into three (3) classes as nearly equal
as possible  (Class A, Class B and Class C). The initial Class A Directors shall
serve for a term expiring at the annual general meeting of Members to be held in
2007;  the  initial  Class B Directors  shall  serve for a term  expiring at the
annual  general  meeting of Members to be held in 2008;  and the initial Class C
Directors  shall  serve for a term  expiring  at the annual  general  meeting of
Members to be held in 2009.  At each  annual  general  meeting of  Members,  the
successor or successors  of the class of Directors  shall hold office for a term
expiring  at the  annual  general  meeting  of  Members  held in the third  year
following the year of their election.  The Directors elected to each class shall
hold office until their successors are duly elected and qualified or until their
earlier death, disqualification, resignation, or removal.

     (3) Only  Persons  who are  nominated  in  accordance  with  the  following
procedures  shall be eligible for election as Directors.  Nominations of Persons
for  election  to the Board of the  Company  may be made at a meeting of Members
called for the election of directors,  or at the discretion of the Board, by any
nominating  committee or Person  appointed by the Board, or by any Member of the
Company  entitled  to vote for the  election  of  Director  at the  meeting  who
complies with the Notice procedures set forth in this Bye-Law. Such nominations,
other  than  those  made by or at the  direction  of the  Board,  shall  be made
pursuant to timely  Notice to the  Secretary  of the  Company.  To be timely,  a
Member's  Notice  shall be  delivered to or mailed and received at the Office of
the Company not less than sixty (60) days prior to such  meeting.  Such Member's
Notice to the  Secretary  shall set forth (a) as to each  Person whom the Member
proposes to nominate for election or  re-election  as a Director,  (i) the name,
age,  business address and residence  address of the Person,  (ii) the principal
occupation or employment of the Person,  (iii) the class and number of shares of
Common Shares of the Company which are  beneficially  owned by the Person,  (iv)
any other information relating to the Person that is required to be disclosed in
solicitations for proxies for election of Directors  pursuant to Schedule 14A of
the Exchange Act, and (v) the consent of each nominee to serve as a Director, if
so elected;  and (b) as to the Member  giving the Notice (i) the name and record
address of the  Member and (ii) the class and number of shares of capital  stock
of the  Company  which are  beneficially  owned by the  Member.  The Company may
require any proposed nominee to furnish such other information as may reasonably
be required by the Company to determine the eligibility of such proposed nominee
to serve as a Director of the Company. No Persons shall be eligible for election
as a Director of the Company unless  nominated in accordance with the procedures
set forth herein.


                                       -8-
<PAGE>



     (4) The Chairman of the meeting shall, if the facts warrant,  determine and
declare to the meeting that a  nomination  was not made in  accordance  with the
foregoing procedure,  and if he should so determine,  he shall so declare to the
meeting and the defective nomination shall be disregarded.


     (5) The Directors  shall  (subject to any  resolution of the Members to the
contrary) have the power from time to time and at any time to appoint any Person
as a Director to fill a casual vacancy on the Board, provided, however, that the
number of Directors so appointed shall not exceed any maximum number  determined
from time to time by the Members in a General Meeting. Any Director so appointed
by the Board  shall hold office  until the next  election of the class for which
such director shall have been chosen and shall then be eligible for  re-election
at that meeting.


     (6) A Director  shall not be  required to hold any shares of the Company by
way of  qualification  and a  Director  (as the case may be) who is not a Member
shall be  entitled  to receive  Notice of and to attend and speak at any General
Meeting of the Company and of all classes of shares of the Company.


     (7) A retiring Director shall be eligible for re-election.

12. Defects in appointment of Directors
--- -----------------------------------

     All acts done bona fide by any  meeting of the Board or by a  committee  of
the Board or by any person acting as a Director shall,  notwithstanding  that it
be afterwards  discovered  that there was some defect in the  appointment of any
Director  or  person  acting  as  aforesaid,  or that  they or any of them  were
disqualified,  be as valid as if every  person had been duly  appointed  and was
qualified to be a Director.


                                       -9-
<PAGE>



13. Removal of Directors
--- --------------------

     (1) Subject to any provision to the contrary in these Bye-laws, the Members
may, at any annual general meeting or any special  general meeting  convened and
held in accordance  with these  Bye-laws,  remove any Director,  only for Cause,
provided  that the  notice  of any such  meeting  convened  for the  purpose  of
removing a Director  shall  contain a statement of the intention so to do and be
served on such  Director  not less than 14 days  before the  meeting and at such
meeting  such  Director  shall be  entitled  to be heard on the  motion for such
Director's removal.

     (2) A vacancy on the Board  created by the removal of a Director  under the
provisions of  subparagraph  (1) of this Bye-law may be filled by the Members at
the meeting at which such  Director is removed.  A Director so  appointed  shall
hold office in the same class of  Directors as the removed  Director  held until
the next annual  general  meeting or until such  Director's  office is otherwise
vacated and, in the absence of such election or appointment,  the Board may fill
any such vacancy in accordance with Bye-law 14.

     (3) Subject to any provision to the contrary in these Bye-laws,  a Director
may be removed for any reason prior to the expiration of such Director's  period
of office or in any  agreement  between  the  Company  and such  Director by the
unanimous  vote of the Directors  other than the Director in question at a board
meeting duly convened and held in accordance with these Bye-laws.

     (4) A vacancy  on the Board  created by the  removal  of a  Director  under
paragraph  (3) of this  Bye-law  may be filled by the Board in  accordance  with
Bye-law 14. A Director  so  appointed  shall hold  office  until the next annual
general  meeting or until such  Director's  successor is elected or appointed or
such Director's office is otherwise vacated.

14. Vacancies on the Board
--- ----------------------

     (1) The Board  shall  have the  power  from time to time and at any time to
appoint any person as a Director to fill a vacancy on the Board occurring as the
result of the death, disability, disqualification or resignation of any Director
or if such Director's  office is otherwise  vacated.  A Director so appointed by
the Board shall hold office in the same class of Directors as the Director whose
vacant  position he is filling  until the next annual  general  meeting or until
such Director's office is otherwise vacated.

     (2) The Board may act notwithstanding any vacancy in its number but, if and
so long as its number is reduced  below the number fixed by these  Bye-laws,  or
such greater  number as may have been  determined by the Members,  as the quorum
necessary  for the  transaction  of  business  at  meetings  of the  Board,  the
continuing Directors or Director may act only for the purpose of (i) summoning a
general meeting of the Company or (ii) preserving the assets of the Company.


                                      -10-
<PAGE>



     (3) The office of Director shall be vacated if the Director:

          (a)  is  removed  from  office   pursuant  to  these  Bye-laws  or  is
               prohibited from being a Director by law;

          (b)  is or becomes  bankrupt or makes any  arrangement  or composition
               with his creditors generally;

          (c)  is or becomes of unsound mind or dies; or

          (d)  resigns his or her office by notice in writing to the Company.

15. Notice of meetings of the Board
--- -------------------------------

     (1) The Chairman or Deputy Chairman,  or any two (2) Directors may, and the
Secretary on the requisition of the Chairman or Deputy Chairman,  or any two (2)
Directors shall, at any time summon a meeting of the Board by at least three (3)
Business Days' notice to each Director, unless such Director consents to shorter
notice orally or in writing before the commencement of the meeting.


     (2) Notice of a meeting of the Board shall  specify  the general  nature of
the  business to be  considered  at such  meeting and shall be deemed to be duly
given to a Director  if it is given to such  Director  verbally  in person or by
telephone or otherwise  communicated  or sent to such Director by post,  courier
service, cable, telex, telecopier,  facsimile,  electronic mail or other mode of
representing words in a legible and non-transitory  form at such Director's last
known  address or any other  address  given by such  Director to the Company for
this  purpose.  If such  notice  is  sent by  next-day  courier,  cable,  telex,
telecopier,  facsimile or electronic mail, it shall be deemed to have been given
the  Business  Day  following  the sending  thereof  and,  if by post,  five (5)
Business Days following the sending thereof.

16. Quorum at meetings of the Board
--- -------------------------------

     The quorum  necessary for the  transaction  of business at a meeting of the
Board shall be a majority of the Directors then in office,  present in person or
represented or such greater number as the Members shall determine.


                                      -11-
<PAGE>



17. Meetings of the Board
--- ---------------------

     (1) The  Board  may meet  for the  transaction  of  business,  adjourn  and
otherwise regulate its meetings as it sees fit.

     (2) Directors may  participate in any meeting of the Board by means of such
telephone,  electronic or other  communication  facilities as permit all persons
participating in the meeting to communicate with each other  simultaneously  and
instantaneously,  and participation in such a meeting shall constitute  presence
in person at such meeting.

     (3) A resolution put to the vote at a duly constituted meeting of the Board
at which a quorum is  present  and  acting  throughout  shall be  carried by the
affirmative votes of a majority of the votes cast and in the case of an equality
of votes, the chairman shall have a second or casting vote.

18. Unanimous written resolutions
--- -----------------------------

     A  resolution  in  writing  signed  by all the  Directors  which  may be in
counterparts,  shall be as valid as if it had been  passed at a  meeting  of the
Board duly called and  constituted,  such resolution to be effective on the date
on which the last Director signs the resolution.

19. Contracts and disclosure of Directors' interests
--- ------------------------------------------------

     (1) Any Director,  or any Director's firm, partner or any company with whom
any Director is associated,  may act in a professional  capacity for the Company
and such  Director or such  Director's  firm,  partner or such company  shall be
entitled to remuneration for professional  services as if such Director were not
a Director, provided that nothing herein contained shall authorise a Director or
Director's firm, partner or such company to act as Auditor of the Company.

     (2) A Director who is directly or  indirectly  interested  in a contract or
proposed  contract or  arrangement  with the Company shall declare the nature of
such interest as required by the Act.

     (3) Following a declaration being made pursuant to this Bye-law, and unless
disqualified by the chairman of the relevant Board meeting,  a Director may vote
in respect of any  contract or proposed  contract or  arrangement  in which such
Director is interested and may be counted in the quorum at such meeting.


                                      -12-
<PAGE>



20. Remuneration of Directors
--- -------------------------

     The  remuneration,  if any, of the  Directors  shall be  determined  by the
Board. In addition, each Director shall be paid his reasonable traveling,  hotel
and incidental expenses in attending and returning from meetings of the Board or
committees  appointed  by the Board,  or any Annual  General  Meeting or Special
General  Meeting of the  Members,  and shall be paid all  expenses  properly and
reasonably  incurred by him in the conduct of the  Company's  business or in the
discharge of his duties as a Director.  Any question as to the reasonableness of
expenses as provided herein shall be a matter to be determined by the Board.


                                   COMMITTEES

21. Power to delegate to a committee
--- --------------------------------

     The Board may appoint one or more Board  committees and may delegate any of
its  powers  to any such  committee.  Without  limiting  the  generality  of the
foregoing, such committees may include:

          (a)  an Investment Committee, which shall advise the Board and Company
               on the investment of the Company's assets;

          (b)  an Audit Committee,  which shall, among other things,  advise the
               Board  with  respect  to  the   Company's   financial   reporting
               responsibilities and related matters;

          (c)  a Compensation Committee, which shall, among other things, advise
               the Board with respect to compensation of Officers;

          (d)  a  Nominating  and  Corporate  Governance  Committee  which shall
               advise the Board on all corporate governance matters; and

          (e)  an Executive  Committee which shall have all of the powers of the
               Board between meetings of the Board.



     All Board  committees  shall conform to such  directions as the Board shall
impose on them,  provided  that each  member  shall have one (1) vote,  and each
committee  shall  have the  right  as it deems  appropriate  to  retain  outside
experts.  Each  committee  may  adopt  rules  for the  conduct  of its  affairs,
including  rules  governing  the adoption of  resolutions  by unanimous  written
consent,  and the place,  time, and notice of meetings,  as such committee shall
consider  advisable and as shall not be inconsistent with these Bye-laws or with
any  applicable  resolution  adopted by the Board.  Each  committee  shall cause
minutes  to be made of all  meetings  of such  committee  and of the  attendance
thereat  and shall  cause  such  minutes  and copies of  resolutions  adopted by
unanimous  consent to be promptly  inscribed or incorporated by the Secretary in
the Company's minute book.


                                    OFFICERS

22. Officers of the Company
--- -----------------------


     The  Officers  of the  Company  shall  consist  of a  President  and a Vice
President or a Chairman and a Deputy  Chairman,  a Secretary and such additional
Officers  as the  Board  may from time to time  determine  all of whom  shall be
deemed to be Officers for the purposes of these Bye-laws.


                                      -13-
<PAGE>



23. Appointment of Officers
--- -----------------------


     The Board shall, as soon as possible after the statutory meeting of Members
and after each annual general meeting, appoint a Chairman and a Deputy Chairman,
who  shall be  Directors,  or a  President  and a Vice  President,  who shall be
Directors.  The Secretary and any additional  Officers shall be appointed by the
Board from time to time.

24. Remuneration of Officers
--- ------------------------

     The Officers shall receive such  remuneration as the Board may from time to
time determine.

25. Duties of Officers
--- ------------------

     The  Officers  shall  have  such  powers  and  perform  such  duties in the
management,  business  and affairs of the Company as may be delegated to them by
the Board from time to time.

26. Chairman of meetings
--- --------------------

     Unless  otherwise  agreed by a majority of those  attending and entitled to
attend  and  vote  thereat,  the  Chairman,  if  there  be  one,  and if not the
President, shall act as chairman at all meetings of the Members and of the Board
at which such  person is present.  In his or her absence the Deputy  Chairman or
Vice President,  if present,  shall act as chairman and in the absence of all of
them a chairman  shall be appointed  or elected by those  present at the meeting
and entitled to vote

27. Register of Directors and Officers
--- ----------------------------------


     The Board  shall  cause to be kept in one or more  books at the  registered
office of the  Company a Register  of  Directors  and  Officers  and shall enter
therein the particulars required by the Act.


                                      -14-
<PAGE>

                                     MINUTES

28. Obligations of Board to keep minutes
--- ------------------------------------

     (1) The Board shall cause minutes to be duly entered in books  provided for
the purpose:

          (a)  of all elections and appointments of Officers;


          (b)  of the names of the  Directors  present  at each  meeting  of the
               Board and of any committee appointed by the Board; and

          (c)  of all  resolutions  and  proceedings of general  meetings of the
               Members, meetings of the Board, meetings of managers and meetings
               of committees appointed by the Board.


     (2) Minutes prepared in accordance with the Act and these Bye-laws shall be
kept by the Secretary at the registered office of the Company.


                                    INDEMNITY

29. Indemnification of Directors and Officers of the Company
--- --------------------------------------------------------


     (1) The Directors,  Secretary and other Officers (such term to include, for
the  purposes  of this  Bye-law  and  Bye-law  30, any person  appointed  to any
committee  by the  Board) for the time being  acting in  relation  to any of the
affairs of the Company  and the  liquidator  or  trustees  (if any) for the time
being  acting in  relation to any of the affairs of the Company and every one of
them, and their heirs,  executors and  administrators,  shall be indemnified and
secured  harmless out of the assets of the Company from and against all actions,
costs,  charges,  losses,  damages and expenses which they or any of them, their
heirs,  executors  or  administrators,  shall or may incur or  sustain  by or by
reason of any act done,  concurred  in or omitted in or about the  execution  of
their duty, or supposed duty, or in their respective offices or trusts, and none
of them shall be answerable for the acts, receipts,  neglects or defaults of the
others of them or for joining in any receipts for the sake of conformity, or for
any bankers or other  persons  with whom any moneys or effects  belonging to the
Company  shall  or  may  be  lodged  or  deposited  for  safe  custody,  or  for
insufficiency  or  deficiency  of any  security  upon  which  any  moneys  of or
belonging  to the Company  shall be placed out on loan or  invested,  or for any
other loss,  misfortune  or damage  which may happen in the  execution  of their
respective  offices  or  trusts,  or in  relation  thereto,  provided  that this
indemnity  shall not extend to any matter in respect of any fraud or  dishonesty
which may attach to any of said persons. 30. Waiver of claim by Member


     Each Member  agrees to waive any claim or right of action such Member might
have,  whether  individually  or by or in the right of the Company,  against any
Director or Officer on account of any action taken by such  Director or Officer,
or the failure of such Director or Officer to take any action in the performance
of his duties  with or for the  Company,  provided  that such  waiver  shall not
extend to any matter in respect of any fraud or  dishonesty  which may attach to
such Director or Officer.


                                      -15-
<PAGE>

                                    MEETINGS

31. Notice of annual general meeting
--- --------------------------------

     The annual general  meeting of the Company shall be held in each year other
than the year of  incorporation  at such time and place as the  President or the
Chairman or any two  Directors or any  Director  and the  Secretary or the Board
shall appoint.  At least ten days' notice of such meeting shall be given to each
Member stating the date, place and time at which the meeting is to be held, that
the election of Directors  will take place thereat,  and as far as  practicable,
the other business to be conducted at the meeting.

32. Notice of special general meeting
--- ---------------------------------


     The  President or the Chairman or any two Directors or any Director and the
Secretary  or the Board may  convene a special  general  meeting of the  Company
whenever in their judgment such a meeting is necessary,  upon not less than five
days'  notice  which shall state the time,  place and the general  nature of the
business to be considered at the meeting.

33. Accidental omission of notice of general meeting
--- ------------------------------------------------

     The  accidental  omission  to give  notice of a general  meeting to, or the
non-receipt  of notice of a general  meeting by, any person  entitled to receive
notice shall not invalidate the proceedings at that meeting.

34. Meeting called on requisition of Members
--- ----------------------------------------

     Notwithstanding  anything  herein,  the Board shall,  on the requisition of
Members  holding  at the date of the  deposit of the  requisition  not less than
one-tenth of such of the paid-up  share capital of the Company as at the date of
the  deposit  carries  the right to vote at  general  meetings  of the  Company,
forthwith  proceed to convene a special  general  meeting of the Company and the
provisions of Section 74 of the Act shall apply.

35. Short notice
--- ------------

     A general meeting of the Company shall,  notwithstanding  that it is called
by shorter notice than that specified in these Bye-laws,  be deemed to have been
properly called if it is so agreed by (i) all the Members entitled to attend and
vote thereat in the case of an annual general meeting; and (ii) by a majority in
number of the Members having the right to attend and vote at the meeting,  being
a majority  together  holding  not less than 95% in nominal  value of the shares
giving a right to  attend  and vote  thereat  in the case of a  special  general
meeting.

36. Postponement of Meetings
--- ------------------------

     The Secretary may postpone any general  meeting  called in accordance  with
the  provisions  of these  Bye-laws  (other than a meeting  requisitioned  under
Bye-law 35) provided that notice of  postponement is given to each Member before
the time for such  meeting.  Fresh  notice of the  date,  time and place for the
postponed  meeting  shall  be  given  to each  Member  in  accordance  with  the
provisions of these Bye-laws.


                                      -16-
<PAGE>



37. Quorum For General Meeting
--- --------------------------

     At any general meeting of the Company two or more persons present in person
and representing in person or by proxy in excess of 50% (on an Unadjusted Basis)
of the total issued and outstanding  Common Shares  throughout the meeting shall
form a quorum for the  transaction  of business;  provided,  that if the Company
shall at any time have only one Member, one Member present in person or by proxy
shall  constitute a quorum.  If within half an hour from the time  appointed for
the meeting a quorum is not present,  the meeting  shall stand  adjourned to the
same day one week later,  at the same time and place or to such other day,  time
or place as the  Secretary may  determine.  Unless the meeting is adjourned to a
specific  date and  time,  fresh  notice  of the  date,  time and  place for the
adjourned  meeting  shall  be  given  to each  Member  in  accordance  with  the
provisions of these Bye-laws.

38. Adjournment of meetings
--- -----------------------

     The chairman of a general  meeting may,  with the consent of the Members at
any  general  meeting at which a quorum is present  (and shall if so  directed),
adjourn the  meeting.  Unless the meeting is  adjourned  to a specific  date and
time,  fresh  notice of the  date,  time and  place  for the  resumption  of the
adjourned  meeting  shall  be  given  to each  Member  in  accordance  with  the
provisions of these Bye-laws.

39. Attendance at meetings
--- ----------------------

     Members may  participate in any general meeting by means of such telephone,
electronic or other communication facilities as permit all persons participating
in  the   meeting   to   communicate   with  each   other   simultaneously   and
instantaneously,  and participation in such a meeting shall constitute  presence
in person at such meeting.

40. Written resolutions
--- -------------------

     (1) Subject to subparagraph  (6),  anything which may be done by resolution
of the Company in general  meeting or by resolution of a meeting of any class of
the Members of the  Company,  may,  without a meeting  and without any  previous
notice being  required,  be done by resolution in writing  signed by, or, in the
case of a Member  that is a  corporation  whether  or not a company  within  the
meaning  of the  Act,  on  behalf  of,  all the  Members  who at the date of the
resolution would be entitled to attend the meeting and vote on the resolution.


                                      -17-
<PAGE>



     (2) A  resolution  in writing may be signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of the Act, on
behalf of, all the Members, or any class thereof, in as many counterparts as may
be necessary.

     (3) For the purposes of this  Bye-law,  the date of the  resolution  is the
date when the  resolution  is signed by,  or, in the case of a Member  that is a
corporation  whether or not a company  within the  meaning of the Act, on behalf
of,  the last  Member to sign and any  reference  in any  Bye-law to the date of
passing of a resolution is, in relation to a resolution  made in accordance with
this Bye-law, a reference to such date.

     (4) A  resolution  in writing  made in  accordance  with this Bye-law is as
valid as if it had been passed by the Company in general meeting or by a meeting
of the relevant  class of Members,  as the case may be, and any reference in any
Bye-law to a meeting  at which a  resolution  is passed or to Members  voting in
favour of a resolution shall be construed accordingly.

     (5) A resolution  in writing  made in  accordance  with this Bye-law  shall
constitute minutes for the purposes of Sections 81 and 82 of the Act.

     (6) This Bye-law shall not apply to:

          (a)  a resolution passed pursuant to Section 89(5) of the Act; or

          (b)  a resolution passed for the purpose of removing a Director before
               the expiration of his term of office under these Bye-laws.

41. Attendance of Directors
--- -----------------------

     The Directors of the Company shall be entitled to receive  notice of and to
attend and be heard at any general meeting.

42. Voting at meetings
--- ------------------

     (1) Subject to the provisions of the Act and these  Bye-laws,  any question
proposed for the  consideration  of the Members at any general  meeting shall be
decided by the  affirmative  votes of a majority of the votes cast in accordance
with the  provisions  of these  Bye-laws and in the case of an equality of votes
the resolution shall fail.

     (2) No Member shall be entitled to vote at any general  meeting unless such
Member has paid all the calls on all shares held by such Member.

43. Voting on show of hands
--- -----------------------

     At any general  meeting a resolution  put to the vote of the meeting shall,
in the first  instance,  be voted  upon by a show of hands  and,  subject to any
rights or  restrictions  for the time being  lawfully  attached  to any class of
shares and subject to the provisions of these Bye-laws,  every Member present in
person and every person  holding a valid proxy at such meeting shall be entitled
to one vote and shall cast such vote by raising his or her hand.


                                      -18-
<PAGE>



44. Decision of chairman
--- --------------------

     At any general  meeting a declaration by the chairman of the meeting that a
question  proposed for consideration  has, on a show of hands, been carried,  or
carried unanimously,  or by a particular majority, or lost, and an entry to that
effect in a book containing the minutes of the proceedings of the Company shall,
subject to the  provisions of these  Bye-laws,  be  conclusive  evidence of that
fact.

45. Demand for a poll
--- -----------------

     (1)  Notwithstanding  the  provisions  of  the  immediately  preceding  two
Bye-laws,  at any general  meeting of the  Company,  in respect of any  question
proposed  for  the  consideration  of  the  Members  (whether  before  or on the
declaration of the result of a show of hands as provided for in these Bye-laws),
a poll may be demanded by any of the following persons:

          (a)  the chairman of such meeting; or

          (b)  at least two Members  present in person or  represented by proxy;
               or

          (c)  any Member or Members  present in person or  represented by proxy
               and holding  between  them not less than  one-tenth  of the total
               voting rights of all the Members having the right to vote at such
               meeting; or

          (d)  any Member or Members  present in person or  represented by proxy
               holding  shares in the  Company  conferring  the right to vote at
               such  meeting,  being shares on which an  aggregate  sum has been
               paid up equal to not less than one-tenth of the total sum paid up
               on all such shares conferring such right.

     (2) Where,  in  accordance  with the  provisions  of paragraph  (1) of this
Bye-law, a poll is demanded,  subject to any rights or restrictions for the time
being lawfully attached to any class of shares,  including any limitation on the
voting  power of any  Controlled  Shares  pursuant to Bye-law 50,  every  Person
present at such meeting  shall have one vote for each share of which such Person
is the  holder or for which  such  person  holds a proxy and such vote  shall be
counted in the manner set out in paragraph (4) of this Bye-law or in the case of
a general  meeting at which one or more Members are present by telephone in such
manner as the  chairman  of the  meeting  may direct and the result of such poll
shall be  deemed  to be the  resolution  of the  meeting  at which  the poll was
demanded and shall  replace any previous  resolution  upon the same matter which
has been the subject of a show of hands.

     (3) A poll demanded in accordance  with the  provisions of paragraph (1) of
this  Bye-law,  for the  purpose  of  electing a  chairman  or on a question  of
adjournment,  shall be taken forthwith and a poll demanded on any other question
shall be taken in such  manner  and at such time and place as the  chairman  may
direct and any business  other than that upon which a poll has been demanded may
be proceeded with pending the taking of the poll.


                                      -19-
<PAGE>



     (4) Where a vote is taken by poll each person  present and entitled to vote
shall be furnished  with a ballot paper on which such person shall record his or
her vote in such manner as shall be determined  at the meeting  having regard to
the nature of the  question on which the vote is taken,  and each  ballot  paper
shall be signed or  initialled  or otherwise  marked so as to identify the voter
and the registered  holder in the case of a proxy. At the conclusion of the poll
the ballot  papers shall be examined and counted by a committee of not less than
two Members or proxy  holders  appointed by the chairman for the purpose and the
result of the poll shall be declared by the chairman.

46. Seniority of joint holders voting
--- ---------------------------------

     In the case of joint  holders  the vote of the senior  who  tenders a vote,
whether in person or by proxy,  shall be accepted to the  exclusion of the votes
of the other joint holders,  and for this purpose  seniority shall be determined
by the order in which the names stand in the Register of Members.

47. Instrument of proxy
--- -------------------

     The  instrument  appointing a proxy shall be in writing in the form,  or as
near thereto as circumstances  admit, of Form "A" in the Schedule hereto,  under
the hand of the appointor or of his attorney duly  authorised in writing,  or if
the  appointor is a  corporation,  either under its seal, or under the hand of a
duly authorised officer or attorney. The decision of the chairman of any general
meeting as to the validity of any instrument of proxy shall be final.

48. Representation of corporations at meetings
--- ------------------------------------------

     A corporation  which is a Member may by written  instrument  authorise such
person as it  thinks  fit to act as its  representative  at any  meeting  of the
Members and the person so  authorised  shall be  entitled  to exercise  the same
powers  on  behalf of the  corporation  which  such  person  represents  as that
corporation could exercise if it were an individual Member.  Notwithstanding the
foregoing,  the chairman of the meeting may accept such  assurances as he or she
thinks fit as to the right of any person to attend and vote at general  meetings
on behalf of a corporation which is a Member.


                            SHARE CAPITAL AND SHARES

49. Rights of shares
--- ----------------

     (1) Subject to any  resolution  of the Members to the contrary (and without
prejudice to any special  rights  conferred  thereby on the holders of any other
shares or class of shares),  the share  capital of the Company  shall be divided
into Common  Shares,  the holders of which shall,  subject to the  provisions of
these Bye-laws:


                                      -20-
<PAGE>



          (a)  be  entitled  to one vote per  Common  Share  or,  in the case of
               Controlled  Shares,  if  applicable,  a  fraction  of a vote  per
               Controlled Share as determined pursuant to Bye-law 50;

          (b)  be entitled to such  dividends as the Board may from time to time
               declare;


          (c)  in the event of a  liquidation,  winding-up or dissolution of the
               Company, whether voluntary or involuntary or for the purpose of a
               reorganisation  or otherwise or upon any distribution of capital,
               be  entitled  to share  equally  and ratably in the assets of the
               Company,  if any,  remaining  after the  payment of all debts and
               liabilities of the Company; and

          (d)  generally  be  entitled to enjoy all of the rights  attaching  to
               shares.

50. Limitation on voting rights of Controlled Shares
--- ------------------------------------------------

     (1) Subject to any rights or  restrictions  for the time being  attached to
any class or classes of shares,  on a poll at a general  meeting every Member of
record  present in person or by proxy shall have one vote for each Common  Share
registered in his name in the register;  provided, however, that, subject to the
following  provisions  of this  Bye-law  50, if and for so long as the number of
issued  Controlled  Shares of any Person would constitute more than nine and one
half percent (9.5%) of the total combined voting rights  attaching to the issued
Common  Shares  of the  Company  (calculated  after  giving  effect to any prior
reduction  in voting  rights  attaching  to Common  Shares of other  Persons  as
provided in this Bye-law 50), each such issued Controlled  Share,  regardless of
the identity of the registered holder thereof, shall confer only a fraction of a
vote as determined by the following formula (the "Formula"):

     (T - C) / (9.525 x C)


      Where:      "T" is the  aggregate  number of votes  conferred by all the
                  issued Common Shares  immediately  prior to that application
                  of the  Formula  with  respect  to  such  issued  Controlled
                  Shares,  adjusted to take into  account  each  reduction  in
                  such  aggregate  number of votes that  results  from a prior
                  reduction in the  exercisable  votes conferred by any issued
                  Controlled  Shares  pursuant to Bye-law 50(4) as at the same
                  date; and

                  "C" is the number of issued Controlled Shares  attributable to
                  such Person.

     (2) The Directors may, by notice in writing, require any Member to provide,
within not less than ten (10) Business Days,  complete and accurate  information
to the  registered  office or such other place as the Directors may designate in
respect of any or all of the following matters:


                                      -21-
<PAGE>



     (a)  the  number  of Common  Shares in which  such  Member  is  legally  or
          beneficially interested;

     (b)  the  Persons  who are  beneficially  interested  in  Common  Shares in
          respect of which such Member is the registered holder;

     (c)  the  relationship,  association or affiliation of such Member with any
          other Member or Person whether by means of common control or ownership
          or otherwise; or

     (d)  any other facts or matters which the  Directors may consider  relevant
          to the determination of the number of Controlled  Shares  attributable
          to any Person.

     (3) If any Member does not respond to any notice given  pursuant to Bye-law
50(2) above within the time specified therein or the Directors shall have reason
to believe that any  information  provided in relation  thereto is incomplete or
inaccurate,  the Directors may determine that the votes  attaching to any Common
Shares  registered  in the  name of such  Member  shall be  disregarded  for all
purposes until such time as a response (or  additional  response) to such notice
reasonably satisfactory to the Directors has been received as specified therein.

     (4) The  Formula  shall be  applied  successively  as many  times as may be
necessary to ensure that no Person shall be a 9.5%  Shareholder at any time. For
the purposes of determining the votes exercisable by Members as at any date, the
Formula  shall be applied to the shares of each Member in declining  order based
on the  respective  numbers  of total  Controlled  Shares  attributable  to each
Member.  Thus,  the Formula will be applied first to the votes of shares held by
the Member to whom the largest number of total Controlled Shares is attributable
and  thereafter  sequentially  with  respect to the Member with the next largest
number of total Controlled  Shares.  In each case,  calculations are made on the
basis of the aggregate  number of votes conferred by the issued Common Shares as
of such date, as reduced by the  application of the Formula to any issued Common
Shares of any Member with a larger number of total Controlled  Shares as of such
date.

     (5) If, after giving effect to the provisions of Bye-law  50(1),  the votes
conferred  by the  Common  Shares  directly  held  by any  Related  Group  would
otherwise  represent more than 9.5% of the votes  conferred by all of the issued
and  outstanding  Common Shares,  the votes  conferred by such Common Shares are
hereby   reduced   (and  shall  be   automatically   reduced   in  the   future)
proportionately  among all the Common Shares directly held by such Related Group
in accordance with the relative voting power of such Common Shares,  by whatever
amount is necessary so that after any such reduction the votes  conferred by the
Common  Shares  directly held by such Related Group shall not exceed 9.5% of the
votes conferred by all of the issued and outstanding  Common Shares.  The amount
of any reduction in votes pursuant to this Bye-law 50(5) shall then be allocated
and  conferred  proportionately  among the Common  Shares  held  directly by all
shareholders  or members of the  Company  who are not in such  Related  Group in
accordance  with the  relative  voting  power of such Common  Shares,  provided,
however,  that no Common  Shares shall be conferred  votes to the extent that so
doing shall cause any person to be treated as a 9.5% Shareholder.


                                      -22-
<PAGE>



     (6)  Notwithstanding  the  provisions  of  paragraphs  (1)  and (2) of this
Bye-law 50 above, having applied the provisions thereof as best as they consider
reasonably  practicable,  the Directors may make such final  adjustments  to the
aggregate number of votes attaching to the Common Shares of any Member that they
consider fair and reasonable in all the  circumstances  to ensure that no Person
shall be a 9.5% Shareholder at any time.

     (7) This Bye-law 50 shall only be effective  for and at such times when the
Company shall have eleven (11) or more Members holding Common Shares.

51. Power to issue shares
--- ---------------------

     (1)  Subject to the  restrictions,  if any that are  provided  for in these
Bye-laws  from  time  to  time  and  without  prejudice  to any  special  rights
previously  conferred on the holders of any existing  shares or class of shares,
the Board shall have power to issue any  unissued  shares of the Company on such
terms and  conditions  as it may determine and any shares or class of shares may
be  issued  with  such  preferred,  deferred  or other  special  rights  or such
restrictions,  whether  in regard to  dividend,  voting,  return of  capital  or
otherwise as the Board may  determine.  Further,  the Board may create and issue
shares  of a new  class or of any  existing  class of  shares  and the Board may
generally exercise the powers of the Company set out in sections 45(1)(b),  (c),
(d) and (e) of the Act, without the need of any approval of the Members as might
otherwise  be  required by such  sections  of the Act.  The Board may also issue
options,  warrants or other rights to purchase or acquire  shares or, subject to
Section 43 of the Act,  securities  convertible  into or exchangeable for shares
(including  any  employee  benefit  plan  providing  for the  issue of shares or
options or rights in respect thereof), at such times, for such consideration and
on such terms and conditions as it may determine. The Board may create and issue
shares  including,  but not limited to, series of preferred shares (which may or
may not be  separate  classes of  preferred  shares),  at such  times,  for such
consideration and on such terms and conditions, with similar or different rights
or restriction as any other series (or class) and to establish from time to time
the number of  preferred  shares to be  included in each such series (or class),
and to fix the designation, powers, preferences, voting rights, dividend rights,
repurchase  provisions,  and  other  rights,   qualifications,   limitations  or
restrictions  thereof,  as it may  determine,  provided  that if any  shares  so
created by the Board confer any voting  rights that entitle the holders  thereof
to vote generally with the Common Shares,  such new shares shall also be subject
to Bye-law 50 in the same manner as are the Common  Shares and shall be included
with the Common Shares in determining  the limitation on voting rights  pursuant
to Bye-law 50.

     (2) Notwithstanding the foregoing  provisions of this Bye-law,  the Company
shall not issue any shares in a manner that the Board believes  would cause,  by
reason  of  such  issuance,  any  Person  to  become  or  continue  to be a 9.5%
Shareholder,   other  than  Tower  Group,   Inc.  or  any  of  its   Affiliates.
Notwithstanding  the foregoing  provisions of this Bye-law,  the restrictions of
this Bye-law  51(2) shall not apply to any issuance of shares to a person acting
as an underwriter in the ordinary course of its business, purchasing such shares
pursuant to a purchase agreement to which the Company is a party, for resale.


                                      -23-
<PAGE>



     (3) The Board shall,  in connection  with the issue of any share,  have the
power to pay such commission and brokerage as may be permitted by law.

     (4) The Company shall not give, whether directly or indirectly,  whether by
means of loan,  guarantee,  provision of security or  otherwise,  any  financial
assistance for the purpose of or in connection  with a purchase or  subscription
made or to be made  by any  person  of or for any  shares  in the  Company,  but
nothing in this Bye-law shall prohibit  transactions  mentioned in Sections 39A,
39B, and 39C of the Act.

     (5) The  Company may (and the Board may  exercise  such power) from time to
time do any one or more of the following things:

          (a)  make arrangements on the issue of shares for a difference between
               the  Members in the  amounts  and times of  payments  of calls on
               their shares;

          (b)  accept  from  any  Member  the  whole  or a part  of  the  amount
               remaining  unpaid on any shares held by him,  although no part of
               that amount has been called up;

          (c)  pay  dividends in  proportion to the amount paid up on each share
               where a larger  amount is paid up on some  shares than on others;
               and

          (d)  issue its shares in fractional  denominations  and deal with such
               fractions  to the same  extent as its whole  shares and shares in
               fractional   denominations   shall  have  in  proportion  to  the
               respective  fractions  represented  thereby  all of the rights of
               whole shares  including  (but without  limiting the generality of
               the  foregoing)  the  right to vote,  to  receive  dividends  and
               distributions and to participate in a winding up.

52. Variation of rights and alteration of share capital
--- ---------------------------------------------------

     (1) If at any time the share capital is divided into  different  classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class)  may,  whether or not the Company is being
wound-up,  be varied with the consent in writing of the holders of three-fourths
of the issued  shares of that class or with the sanction of a resolution  passed
by a majority of the votes cast at a separate  general meeting of the holders of
the shares of that class in accordance with Section 47(7) of the Act. The rights
conferred  upon the holders of the shares of any class issued with  preferred or
other  rights shall not,  unless  otherwise  expressly  provided by the terms of
issue of the shares of that  class,  be deemed to be varied by the  creation  or
issue of further shares ranking pari passu therewith.

     (2) The Company may from time to time by resolution  of the Members  change
the currency  denomination  of,  increase,  alter or reduce its share capital in
accordance  with the provisions of Sections 45 and 46 of the Act.  Where, on any
alteration of share capital,  fractions of shares or some other difficulty would
arise,  the Board may deal with or resolve  the same in such manner as it thinks
fit including,  without  limiting the generality of the foregoing,  the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.


                                      -24-
<PAGE>



     (3) Subject to the  restrictions,  if any,  that are  provided for in these
Bye-laws  from time to time,  the Company may from time to time purchase its own
shares in accordance with the provisions of Section 42A of the Act.

53. Registered holder of shares
--- ---------------------------

     (1) The Company  shall be entitled  to treat the  registered  holder of any
share as the  absolute  owner  thereof  and  accordingly  shall  not be bound to
recognise  any  equitable  or other claim to, or interest  in, such share on the
part of any other person.

     (2) Any  dividend,  interest or other moneys  payable in cash in respect of
shares  may be paid by cheque or draft sent  through  the post  directed  to the
Member at such  Member's  address in the  Register of Members or, in the case of
joint  holders,  to such  address of the holder  first named in the  Register of
Members,  or to such person and to such  address as the holder or joint  holders
may in writing direct. If two or more persons are registered as joint holders of
any  shares  any one can give an  effectual  receipt  for any  dividend  paid in
respect of such shares.

54. Death of a joint holder
--- -----------------------

     Where two or more  persons are  registered  as joint  holders of a share or
shares  then in the  event of the  death of any  joint  holder  or  holders  the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company  shall  recognise no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.

55. Share certificates
--- ------------------

     (1) Every Member shall be entitled to a  certificate  under the seal of the
Company (or a facsimile  thereof)  specifying the number and, where appropriate,
the class of shares  held by such  Member and whether the same are fully paid up
and,  if not,  how much has been  paid  thereon.  The  Board  may by  resolution
determine,  either generally or in a particular case, that any or all signatures
on certificates may be printed thereon or affixed by mechanical means.

     (2) The Company  shall be under no  obligation  to  complete  and deliver a
share certificate unless specifically called upon to do so by the person to whom
such shares have been allotted.


                                      -25-
<PAGE>



     (3) If any such  certificate  shall be  proved to the  satisfaction  of the
Board to have been worn out,  lost,  mislaid or destroyed  the Board may cause a
new  certificate to be issued and request an indemnity for the lost  certificate
if they see fit.

56. Calls on shares
--- ---------------


     (1) The Board may from time to time make such  calls as it thinks  fit upon
the Members in respect of any monies unpaid on the shares allotted to or held by
such  Members  and,  if a call is not paid on or before  the day  appointed  for
payment thereof,  the Member may at the discretion of the Board be liable to pay
the  Company  interest  on the amount of such call at such rate as the Board may
determine,  from the date when such call was  payable up to the  actual  date of
payment.  The joint holders of a share shall be jointly and severally  liable to
pay all calls in respect thereof.


     (2) The  Board  may,  on the issue of  shares,  differentiate  between  the
holders  as to the  amount of calls to be paid and the times of  payment of such
calls.

57. Forfeiture of Shares
--- --------------------

     (1) If any Member fails to pay, on the day appointed  for payment  thereof,
any call in respect of any share  allotted to or held by such Member,  the Board
may, at any time  thereafter  during such time as the call remains unpaid direct
the Secretary to forward such Member a notice in writing in the form, or as near
thereto as circumstances admit, of Form "B" in the Schedule hereto.


     (2) If the  requirements  of such notice are not  complied  with,  any such
share  may at any  time  thereafter  before  the  payment  of such  call and the
interest due in respect  thereof be  forfeited  by a resolution  of the Board to
that effect,  and such share shall thereupon  become the property of the Company
and may be disposed of as the Board shall determine.


     (3) A Member whose share or shares have been forfeited as aforesaid  shall,
notwithstanding such forfeiture, be liable to pay to the Company all calls owing
on such  share or  shares at the time of the  forfeiture  and all  interest  due
thereon.


                               REGISTER OF MEMBERS

58. Contents of Register of Members
--- -------------------------------

     The Board shall cause to be kept in one or more books a Register of Members
and shall enter therein the particulars required by the Act.


                                      -26-
<PAGE>



59. Inspection of Register of Members
--- ---------------------------------

     The  Register  of Members  shall be open to  inspection  at the  registered
office  of the  Company  on  every  Business  Day,  subject  to such  reasonable
restrictions  as the Board may  impose,  so that not less than two hours in each
business  day be allowed for  inspection.  The  Register of Members  may,  after
notice has been given by advertisement in an appointed newspaper to that effect,
be closed for any time or times not  exceeding  in the whole thirty days in each
year.

60. Determination of record dates
--- -----------------------------

     Notwithstanding  any other provision of these  Bye-laws,  the Board may fix
any date as the record date for:

          (a)  determining the Members entitled to receive any dividend; and

          (b)  determining the Members entitled to receive notice of and to vote
               at any general meeting of the Company.



                               TRANSFER OF SHARES

61. Instrument of transfer
--- ----------------------

     (1) An  instrument  of transfer  shall be in the form or as near thereto as
circumstances  admit of Form "C" in the Schedule  hereto or in such other common
form as the Board may accept.  Such instrument of transfer shall be signed by or
on behalf of the transferor and transferee provided that, in the case of a fully
paid share,  the Board may accept the  instrument  signed by or on behalf of the
transferor  alone.  The transferor  shall be deemed to remain the holder of such
share until the same has been  transferred  to the transferee in the Register of
Members.

     (2) The Board may refuse to recognise any instrument of transfer  unless it
is accompanied  by the  certificate in respect of the shares to which it relates
and by such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer.


                                      -27-
<PAGE>



62. Restrictions on transfer
--- ------------------------

     (1) Subject to the Act, this Bye-law 62 and such other of the  restrictions
contained in these Bye-laws and elsewhere as may be applicable,  and except,  in
the case of any  shares  other  than the  Common  Shares,  as may  otherwise  be
provided by the terms of issuance thereof, any Member may sell, assign, transfer
or otherwise  dispose of shares of the Company at the time owned by it and, upon
receipt of a duly  executed  form of transfer in writing,  the  Directors  shall
procure the timely registration of the same. If the Directors refuse to register
a  transfer  for any reason  they  shall  notify  the  proposed  transferor  and
transferee within thirty days of such refusal.

     (2) Except for shares held by Tower Group,  Inc. or any of its  Affiliates,
the  Directors  shall  decline to register a transfer of shares if the Directors
have reason to believe that the effect of such transfer would be that any Person
would  become  or  continue  to be a 9.5%  Shareholder  or a United  States  25%
Shareholder.

     (3) The Directors may, in their absolute and unfettered discretion, decline
to register the transfer of any shares if the  Directors  have reason to believe
(i) that such  transfer  may expose the Company,  any  subsidiary  thereof,  any
Member or any Person ceding  insurance to the Company or any such  subsidiary to
adverse  tax  or  regulatory   treatment  in  any   jurisdiction  or  (ii)  that
registration  of such transfer under the Securities Act or under any blue sky or
other U.S. state securities laws or under the laws of any other  jurisdiction is
required and such  registration has not been duly effected  (provided,  however,
that in this case (ii) the Directors shall be entitled to request and rely on an
opinion of counsel to the  transferor or the  transferee,  in form and substance
satisfactory to the Directors,  that no such approval or consent is required and
no such  violation  would  occur,  and the  Directors  shall not be obligated to
register any transfer absent the receipt of such an opinion).

     (4) Without  limiting the foregoing,  the Board shall decline to approve or
register a transfer of shares unless all  applicable  consents,  authorisations,
permissions  or approvals  of any  governmental  body or agency in Bermuda,  the
United States or any other applicable jurisdiction required to be obtained prior
to such transfer shall have been obtained.

     (5) The  registration  of  transfers  may be suspended at such time and for
such periods as the  Directors  may from time to time  determine;  provided that
such  registration  shall not be suspended for more than  forty-five days in any
period of three hundred and sixty five (365) consecutive days.

     (6) The  Directors  may  require  any Member,  or any Person  proposing  to
acquire shares of the Company,  to certify or otherwise  provide  information in
writing as to such  matters as the  Directors  may  request  for the  purpose of
giving effect to Bye-laws 10(2),  51(2),  62(2) and 62(3),  including as to such
Person's status as a U.S. Person, its Controlled Shares and other matters of the
kind contemplated by Bye-law 50(2). Such request shall be made by written notice
and the certification or other  information  requested shall be provided to such
place and within such period  (not less than ten (10)  Business  Days after such
notice is given  unless  the  Directors  and such  Member or  proposed  acquiror
otherwise  agree) as the Directors may designate in such request.  If any Member
or proposed  acquiror  does not respond to any such request by the  Directors as
requested,  or if the Directors have reason to believe that any certification or
other  information  provided  pursuant  to any such  request  is  inaccurate  or
incomplete,  the Directors may decline to register any transfer or to effect any
issuance or purchase of shares to which such request relates.


                                      -28-
<PAGE>



     (7) The restrictions on transfer authorized by this Bye-law 62 shall not be
imposed in any circumstance in a way that would interfere with the settlement of
trades or  transactions in the Common Shares entered into through the facilities
of the  PORTAL  market;  provided,  however,  that the  Company  may  decline to
register transfers in accordance with these Bye-laws or resolutions of the Board
after a settlement has taken place.

63. Transfers by joint holders
--- --------------------------

     The joint  holders of any share or shares may transfer such share or shares
to one or more of such joint holders, and the surviving holder or holders of any
share or shares  previously  held by them  jointly  with a  deceased  Member may
transfer  any such share or shares to the  executors or  administrators  of such
deceased Member.

64. Lien on Shares
--- --------------

     (1) The  Company  shall have a first and  paramount  lien and charge on all
shares  (whether  fully  paid-up  or not)  registered  in the  name of a  Member
(whether  solely  or  jointly  with  others)  for  all  debts,   liabilities  or
engagements to or with the Company  (whether  presently  payable or not) by such
Member or his estate,  either alone or jointly with any other Person,  whether a
Member or not, but the  Directors may at any time declare any share to be wholly
or in part exempt from the  provisions of this Bye-law.  The  registration  of a
transfer of any such share shall operate as a waiver of the  Company's  lien (if
any)  thereon.  The  Company's  lien (if  any) on a share  shall  extend  to all
dividends or other monies payable in respect thereof.

     (2) The Company may sell,  in such manner as the  Directors  think fit, any
shares on which the Company  has a lien,  but no sale shall be made unless a sum
in respect of which the lien  exists is then  presently  payable,  nor until the
expiration  of fourteen  days after a notice in writing  stating  and  demanding
payment of such part of the  amount in  respect  of which the lien  exists as is
presently  payable,  has been given to the relevant  Member,  or the Person,  of
which the Company has notice,  entitled thereto by reason of such Member's death
or  bankruptcy.  Effective  upon such sale, any  certificate  representing  such
shares  prior to such sale  shall  become  null and void,  whether or not it was
actually delivered to the Company.


                                      -29-
<PAGE>



     (3) To give effect to any such sale the Directors may authorise some Person
to transfer the shares sold to the purchaser  thereof.  The  purchaser  shall be
registered as the holder of the shares  comprised in any such  transfer,  and he
shall not be bound to see to the  application of the purchase  money,  nor shall
his title to the shares be affected by any  irregularity  or  invalidity  in the
proceedings in reference to the sale.

     (4) The  proceeds of such sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien  exists as is
presently  payable and the residue,  if any,  shall  (subject to a like lien for
sums not  presently  payable as existed upon the shares before the sale) be paid
to the Person entitled to the shares immediately prior to such sale.


                             TRANSMISSION OF SHARES

65. Registration on death or bankruptcy
--- -----------------------------------

     Any Person  becoming  entitled  to a share in  consequence  of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem  sufficient or may elect to nominate some Person to be registered
as a transferee  of such share,  and in such case the Person  becoming  entitled
shall  execute in favour of such nominee an  instrument of transfer in the form,
or as near thereto as  circumstances  admit, of Form "D" in the Schedule hereto.
On the  presentation  thereof to the Board,  accompanied by such evidence as the
Board may require to prove the title of the transferor,  the transferee shall be
registered as a Member but the Board shall,  in either case, have the same right
to  decline  or  suspend  registration  as it  would  have  had in the case of a
transfer of the share by that Member before such Member's death or bankruptcy.

66. Representative of deceased Member
--- ---------------------------------

     In the case of the death of a Member,  the survivor or survivors  where the
deceased Member was a joint holder,  and the legal personal  representatives  of
the deceased  Member where the deceased  Member was a sole holder,  shall be the
only  Persons  recognised  by the  Company as having  any title to the  deceased
Member's  interest in the shares.  Nothing  herein  contained  shall release the
estate of a deceased  joint  holder from any  liability  in respect of any share
which had been jointly held by such deceased Member with other Persons.  Subject
to the  provisions  of Section 52 of the Act,  for the purpose of this  Bye-law,
legal personal  representative means the executor or administrator of a deceased
Member or such other Person as the Board may in its absolute  discretion  decide
as being properly authorised to deal with the shares of a deceased Member.


                                      -30-
<PAGE>



                        DIVIDENDS AND OTHER DISTRIBUTIONS

67. Declaration of dividends by the Board
--- -------------------------------------

     Subject to any rights or restrictions at the time lawfully  attached to any
class of shares and subject to these Bye-laws, the Board may, in accordance with
Section  54 of the  Act,  declare  a  dividend  to be  paid to the  Members,  in
proportion  to the number of shares held by them,  and such dividend may be paid
in cash or wholly or partly in specie in which  case the Board may fix the value
for distribution in specie of any assets.

68. Other distributions
--- -------------------

     The Board may  declare  and make such  other  distributions  (in cash or in
specie) to the Members as may be lawfully made out of the assets of the Company.

69. Reserve fund
--- ------------

     The Board may from time to time before  declaring a dividend set aside, out
of the  surplus  or profits of the  Company,  such sum as it thinks  proper as a
reserve fund to be used to meet contingencies or for equalising dividends or for
any other special purpose.

70. Deduction of amounts due to the Company
--- ---------------------------------------

     The Board may deduct from the  dividends  or  distributions  payable to any
Member  all monies  due from such  Member to the  Company on account of calls or
otherwise.

71. Unclaimed dividends
--- -------------------

     Any  dividend  unclaimed  for a period  of six (6)  years  from the date of
declaration  of such dividend shall be forfeited and shall revert to the Company
and the payment by the Board of any  unclaimed  dividend,  interest or other sum
payable  on or in  respect  of the  shares  into a  separate  account  shall not
constitute the Company a trustee in respect thereof.

72. Interest on dividend
--- --------------------

     No dividend or distribution shall bear interest against the Company.


                                      -31-
<PAGE>



73. Issue of bonus shares
--- ---------------------

     (1) Subject to Bye-law 51(2),  the Board may resolve to capitalise any part
of the amount for the time being  standing to the credit of any of the Company's
share premium or other reserve  accounts or to the credit of the profit and loss
account or otherwise  available for  distribution by applying such sum in paying
up unissued  shares to be  allotted  as fully paid bonus  shares pro rata to the
Members.

     (2) The Company may  capitalise any sum standing to the credit of a reserve
account or sums  otherwise  available for dividend or  distribution  by applying
such amounts in paying up in full partly paid shares of those  Members who would
have been entitled to such sums if they were  distributed  by way of dividend or
distribution.


                        ACCOUNTS AND FINANCIAL STATEMENTS

74. Records of account
--- ------------------

     The Board shall cause to be kept proper  records of account with respect to
all transactions of the Company and in particular with respect to:

          (a)  all sums of money  received  and  expended by the Company and the
               matters in respect of which the receipt and expenditure relate;

          (b)  all sales and purchases of goods by the Company; and

          (c)  the assets and liabilities of the Company.

     Such  records  of  account  shall be kept at the  registered  office of the
Company  or,  subject to Section  83(2) of the Act,  at such other  place as the
Board thinks fit and shall be available for  inspection by the Directors  during
normal business hours.

75. Financial year end
--- ------------------

     The  financial  year end of the Company may be  determined by resolution of
the Board and failing such resolution shall be December 31st in each year.

76. Financial statements
--- --------------------

     Subject to any rights to waive laying of accounts pursuant to Section 88 of
the Act,  financial  statements  as required by the Act shall be laid before the
Members in general meeting.


                                      AUDIT

77. Appointment of Auditor
--- ----------------------

     Subject  to Section 88 of the Act,  at the annual  general  meeting or at a
subsequent  special general meeting in each year, an independent  representative
of the  Members  shall be  appointed  by them as Auditor of the  accounts of the
Company.  Such Auditor may be a Member but no  Director,  Officer or employee of
the Company shall,  during his or her continuance in office,  be eligible to act
as an Auditor of the Company.


                                      -32-
<PAGE>



78. Remuneration of Auditor
--- -----------------------

     The  remuneration  of the Auditor  shall be fixed by the Company in general
meeting or in such  manner as the  Members  may  determine,  or, by the Board as
permitted under the Act.

79. Vacation of office of Auditor
--- -----------------------------

     If the office of Auditor  becomes vacant by the resignation or death of the
Auditor,  or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's  services are required,  the Board
shall,  as soon as  practicable,  convene a special  general meeting to fill the
vacancy thereby created.

80. Access to books of the Company
--- ------------------------------

     The Auditor shall at all reasonable  times have access to all books kept by
the Company and to all accounts and vouchers relating  thereto,  and the Auditor
may call on the  Directors  or Officers of the  Company for any  information  in
their possession relating to the books or affairs of the Company.

81. Report of the Auditor
--- ---------------------

     (1) Subject to any rights to waive laying of accounts or  appointment of an
Auditor  pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.

     (2) The  financial  statements  provided  for by  these  Bye-laws  shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written  report  thereon in accordance  with  generally
accepted auditing  standards and the report of the Auditor shall be submitted to
the Members in general meeting.

     (3) The generally  accepted auditing standards referred to in paragraph (2)
of this Bye-law shall be those of the United States of America and the financial
statements and the report of the Auditor shall disclose this fact.


                                     NOTICES

82. Notices to Members of the Company
--- ---------------------------------

     A notice may be given by the Company to any Member  either by delivering it
to such  Member in person  or by  sending  it to such  Member's  address  in the
Register of Members or to such other  address  given in writing for the purpose.
For the purposes of this Bye-law, a notice may be sent by mail, courier service,
cable,  telex,  telecopier,  facsimile or other mode of representing  words in a
legible and non-transitory form.


                                      -33-
<PAGE>



83. Notices to joint Members
--- ------------------------

     Any notice  required  to be given to a Member  shall,  with  respect to any
shares  held  jointly  by two or more  persons,  be given to  whichever  of such
persons is named  first in the  Register of Members and notice so given shall be
sufficient notice to all the holders of such shares.

84. Service and delivery of notice
--- ------------------------------

     Any  notice  shall be deemed to have been  served at the time when the same
would be delivered in the ordinary course of  transmission  and, in proving such
service,  it shall be sufficient to prove that the notice was properly addressed
and  prepaid,  if  posted,  and the time when it was  posted,  delivered  to the
courier or to the cable  company or  transmitted  by telex,  facsimile  or other
method as the case may be.


                               SEAL OF THE COMPANY

85. The Seal
--- --------

     The seal of the Company shall be in such form as the Board may from time to
time determine.  The Board may adopt one or more duplicate seals for use outside
Bermuda.

86. Manner in which seal is to be affixed
--- -------------------------------------

     The seal of the  Company  shall not be  affixed  to any  instrument  except
attested by the signature of a Director and the Secretary or any two  Directors,
or any  person  appointed  by the  Board  for the  purpose,  provided  that  any
Director,  or  Officer,  may  affix  the seal of the  Company  attested  by such
Director or Officer's  signature to any authenticated  copies of these Bye-laws,
the incorporating  documents of the Company,  the minutes of any meetings or any
other documents  required to be authenticated  by such Director or Officer.  Any
such  signature  may be  printed or  affixed  by  mechanical  means on any share
certificate, debenture, share or other security certificate.


                                   WINDING-UP

87. Winding-up/distribution by liquidator
--- -------------------------------------

     Subject to the Act, the Company may be wound up  voluntarily  by resolution
of the Members.  If the Company shall be wound up the  liquidator  may, with the
sanction of a resolution of the Members, divide amongst the Members in specie or
in kind the whole or any part of the assets of the Company  (whether  they shall
consist of property of the same kind or not) and may, for such purpose, set such
value as he or she deems fair upon any property to be divided as  aforesaid  and
may determine  how such division  shall be carried out as between the Members or
different classes of Members.  The liquidator may, with the like sanction,  vest
the  whole or any part of such  assets in  trustees  upon  such  trusts  for the
benefit of the Members as the liquidator  shall think fit, but so that no Member
shall be compelled to accept any shares or other  securities  or assets  whereon
there is any liability.


                                      -34-
<PAGE>



                             ALTERATION OF BYE-LAWS

88. Alteration of Bye-laws
--- ----------------------

     No Bye-law shall be rescinded,  altered or amended and no new Bye-law shall
be made until the same has been  approved by a resolution  of the Board and by a
resolution of the Members, in accordance with Bye-law 42.


                              CERTAIN SUBSIDIARIES

89. Voting of Subsidiary Shares
--- ---------------------------

     Notwithstanding  any other provision of these Bye-laws to the contrary,  if
the Company is  required or entitled to vote at a general  meeting of any direct
or indirect  non-U.S.  subsidiary of the Company,  the Directors shall refer the
subject  matter of the vote to the Members of the Company on a poll  (subject to
Bye-law 50) and seek  authority  from the Members  for the  Company's  corporate
representative  or  proxy to vote in favor  of the  resolution  proposed  by the
subsidiary.  The Directors shall cause the Company's corporate representative or
proxy to vote the  Company's  shares  in the  subsidiary  pro rata to the  votes
received at the general  meeting of the  Company,  with votes for or against the
directing  resolution  being  taken,  respectively,  as an  instruction  for the
Company's corporate  representative or proxy to vote the appropriate  proportion
of its shares for and the  appropriate  proportion  of its  shares  against  the
resolution proposed by the subsidiary.

90. Bye-Laws or Articles of Association of Certain Subsidiaries
--- -----------------------------------------------------------


     The Board in its discretion  shall require that the Bye-laws or Articles of
Association  of each  subsidiary of the Company,  organized  under the laws of a
jurisdiction outside the U.S., shall contain provisions substantially similar to
Bye-law 89 herein.  The  Company  shall  enter  into  agreements  with each such
subsidiary, as reasonably necessary, to effectuate or implement this Bye-law.


                                  *********


                                      -35-
<PAGE>



                         SCHEDULE - FORM A (Bye-law 47)
                         ------------------------------

                ..............................................

                                    P R O X Y
                                    ---------


I/We
of
the     holder(s)     of     share(s)    in    the     above-named     company
hereby   appoint    ....................................................    or
failing him/her  .................................................  or failing
him/her  .................................................  as my/our proxy to
vote on my/our  behalf at the  general  meeting  of the  Company to be held on
the             day of               , 20    , and at any adjournment thereof.

Dated this            day of                  , 20

*GIVEN under the seal of the Company
*Signed by the above-named

..............................................................


..............................................................
Witness


*Delete as applicable.



                                      -36-
<PAGE>



                         SCHEDULE - FORM B (Bye-law 57)
                         ------------------------------

       NOTICE OF LIABILITY TO FORFEITURE FOR NON-PAYMENT OF CALL
       ---------------------------------------------------------

       You have  failed to pay the call of [amount of call] made on the ......
       day of  ........,  20..  last,  in  respect  of the  [number]  share(s)
       [numbers in figures]  standing in your name in the  Register of Members
       of the Company,  on the ......  day of .........,  20..  last,  the day
       appointed  for  payment of such  call.  You are  hereby  notified  that
       unless you pay such call together with interest  thereon at the rate of
       ..........  per annum computed from the said .......  day of .........,
       20...  last, on or before the .......  day of .........,  20... next at
       the place of business of the Company the share(s)  will be liable to be
       forfeited.

       Dated this ....... day of .............., 20...

       [Signature of Secretary]
       By order of the  Board


                                      -37-
<PAGE>



                         SCHEDULE - FORM C (Bye-law 61)
                         ------------------------------

                          TRANSFER OF A SHARE OR SHARES
                          -----------------------------

FOR VALUE RECEIVED......................................................[amount]
................................................................... .[transferor]
hereby sell assign and transfer unto................................[transferee]
of.....................................................................[address]
...............................................................[number of shares]
shares of......................................................[name of Company]

Dated ................................................


.......................................................
                                                     (Transferor)

In the presence of:

.......................................................
                 (Witness)


.......................................................
                                                     (Transferee)

In the presence of:

.......................................................
                 (Witness)


                                      -38-
<PAGE>



                         SCHEDULE - FORM D (Bye-law 65)
                         ------------------------------

     TRANSFER BY A PERSON BECOMING ENTITLED ON DEATH/BANKRUPTCY OF A MEMBER
     ----------------------------------------------------------------------


     I/We having become  entitled in  consequence of the  [death/bankruptcy]  of
[name of the  deceased/bankrupt  Member] to  [number]  share(s)  standing in the
register   of  members  of   [Company]   in  the  name  of  the  said  [name  of
deceased/bankrupt Member] instead of being registered  myself/ourselves elect to
have [name of transferee] (the "Transferee")  registered as a transferee of such
share(s)  and I/we do  hereby  accordingly  transfer  the said  share(s)  to the
Transferee  to  hold  the  same  unto  the   Transferee  his  or  her  executors
administrators and assigns subject to the conditions on which the same were held
at the time of the execution  thereof;  and the Transferee  does hereby agree to
take the said share(s) subject to the same conditions.

       WITNESS our hands this ........ day of ..........., 20...

       Signed by the above-named                            )
       [person or persons entitled]                         )
       in the presence of:                                  )


       Signed by the above-named                            )
       [transferee]                                         )
       in the presence of:                                  )