JANUARY 1999 AMENDMENT TO THE CREDIT AGREEMENT

     JANUARY 1999 AMENDMENT TO THE CREDIT AGREEMENT (this "Amendment"), dated as
of January 22, 1999,  among Capital Re  Corporation  (the  "Borrower"),  various
banks  (the  "Banks")  and  Deutsche  Bank AG,  New York  Branch,  as agent (the
"Agent").  All  capitalized  terms  defined in the  hereinafter  defined  Credit
Agreement shall have the same meaning when used herein unless otherwise  defined
herein.

                                   WITNESSETH:

     WHEREAS,  the  Borrower,  the  Banks and the  Agent  entered  into a Credit
Agreement,  dated as of  January  27,  1994 (as  amended  to date,  the  "Credit
Agreement");

     WHEREAS,   pursuant  to  Section  3.03(b)  of  the  Credit   Agreement  the
Commitments  of  KBC  Bank  N.Y.   (formerly  known  as  Kredietbank  N.V.)  and
Westdeutsche  Landesbank  Girozentrale,  New  York  Branch,  expire  on the date
hereof;

     WHEREAS, no Loans are presently outstanding under the Credit Agreement;

     WHEREAS,  after the date hereof Deutsche Bank AG, New York Branch, shall be
the sole Bank;

     WHEREAS,  the parties  hereto wish to amend the Credit  Agreement as herein
provided;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:

     1.  Amendments to the Credit  Agreement.  (a) The first sentence of Section
3.04(a) of the Credit  Agreement  is hereby  amended in its  entirety to read as
follows:

     The expiration date of the Commitments of the Banks to make Revolving Loans
     shall be January 21, 2000 (the  "Revolving  Loan Expiry  Date");  provided,
     however,  that before (but not earlier than 120 days nor later than 45 days
     before) the  Revolving  Loan Expiry Date then in effect,  the  Borrower may
     make a written request (an "Extension  Request") to the Agent at its Notice
     Office  and  each of the  Banks  that the  Revolving  Loan  Expiry  Date be
     extended by 364 days.

     (b) Schedule I of the Credit Agreement is hereby amended in its entirety to
the form attached hereto as Annex A.

     2.  Representations  and  Warranties.  In order to induce the Banks and the
Agent to enter into this Amendment,  the Borrower hereby represents and warrants
that:

     (a) no  Default  or Event of  Default  exists or will  exist as of the date
hereof and after giving effect to this Amendment; and


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     (b) as of the date  hereof  after  giving  effect  to this  Amendment,  all
representations,  warranties  and  agreements  of the Borrower  contained in the
Credit Agreement will be true and correct in all material respects.

     3.  GOVERNING  LAW. THIS  AMENDMENT AND THE RIGHTS AND  OBLIGATIONS  OF THE
PARTIES  HEREUNDER  SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE  STATE OF NEW  YORK,  WITHOUT  GIVING  EFFECT  TO THE  CHOICE  OF LAW
PROVISIONS THEREOF.

     4. Agreement Not Otherwise Amended.  This Amendment is limited precisely as
written  and  shall  not  be  deemed  to be an  amendment,  consent,  waiver  or
modification  of any other term or condition  of the Credit  Agreement or any of
the  instruments  or agreements  referred to therein,  or prejudice any right or
rights which the Banks, the Agent or any of them may now have or may have in the
future  under  or in  connection  with  the  Credit  Agreement  or  any  of  the
instruments  or  agreements  referred to therein.  Except as expressly  modified
hereby,  the terms and provisions of the Credit Agreement shall continue in full
force and effect.  Whenever  the Credit  Agreement  is referred to in the Credit
Agreement or any of the  instruments,  agreements  or other  documents or papers
executed  and  delivered  in  connection  therewith,  it shall be deemed to be a
reference to the Credit Agreement as modified hereby.

     5.   Counterparts.   This   Amendment  may  be  executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly executed and delivered by their  respective duly authorized  officers as of
the date first above written.

                                  CAPITAL RE CORPORATION


                                  By /s/ David A. Buzen
                                  -------------------------------------
                                     Title: EVP & CFO


                                  DEUTSCHE BANK AG, NEW YORK
                                    BRANCH, Individually and as Agent


                                  By /s/ John S. McGill
                                     ----------------------------------
                                     Title: John S. McGill
                                            Vice President


                                  By /s/ Alan Xrouk
                                     ----------------------------------
                                     Title: Alan Xrouk
                                            Associate


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                                                                         ANNEX A
                                                                      SCHEDULE I

                             SCHEDULE OF COMMITMENTS

                 Bank                               Commitment
                 ----                               ----------
            Deutsche Bank AG,                       $29,000,000
             New York Branch

                 Total Commitment                   $29,000,000
                                                    ===========


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