Document:

<PAGE>
                                                                   Exhibit 10.13

                               PAYMENT AGREEMENT
                               -----------------

     This PAYMENT AGREEMENT (the "Agreement"), dated as of June 28, 2005 (the
"Effective Date"), is entered into by and between RAM Reinsurance Company Ltd.
(the "Company"), RAM Holdings Ltd. and RAM Holdings II Ltd. (collectively
referred to as "Holding") and Mary Ellen Pavlovsky (the "Participant" and,
together with the Company and Holding, the "Parties").

                              W I T N E S S E T H:
                              -------------------

     WHEREAS, the Participant was granted a stock option pursuant to a stock
option agreement entered into by the Parties, effective March 13, 2001 (the
"Option"), which is attached hereto as Annex A; and

     WHEREAS, the Parties previously entered into the Contingent Share Agreement
and the First Amendment to the Contingent Share Agreement (collectively referred
to as the "Contingent Share Agreement"), each of which are attached hereto as
Annex B; and

     WHEREAS, the Parties wish to terminate the Option and the Contingent Share
Agreement and to enter into this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the Parties hereby agree as follows:

     1. Definitions.
        -----------

          (a)   "Assumed Share Price" means the product of (i) the GAAP book
value of one Share (excluding the mark to market effect of FAS 133 and SFAS 115)
as of the last day of the most recent fiscal quarter that ended prior to the
Payment Date or, if the Payment Date is the last day of a fiscal quarter, as of
the last day of the fiscal quarter that ends on the Payment Date (in either
case, as reported in the financial statements for such quarter), and (ii) 1.15.

          (b)   "Business Days" means any day except a Saturday, Sunday or other
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.

          (c)   "Cash Payment" means a lump sum cash payment equal to the
product of (i) 9,911 and (ii) the excess, if any, of (A) the Assumed Share Price
over (B) $128.62.

          (d)   "Change in Control" means the first to occur of any of the
following events; provided that such event also constitutes a "change in the
ownership or effective control of the corporation, or in the ownership of a
substantial portion of the
<PAGE>
assets of the corporation" as those terms are used in Section 409A of the
Internal Revenue Code of 1986, as amended:

               (i)  the acquisition by any person, entity or "group" (as defined
          in Section 13(d) of the Securities Exchange Act of 1934, as amended)
          of 50% or more of the combined voting power of the Company's or
          Holding's then outstanding voting securities;

               (ii)    the merger, reorganization, or consolidation of, or share
          exchange involving, the Company or Holding, as a result of which the
          shareholders of the Company or Holding immediately before such
          transaction do not, immediately thereafter, own, directly or
          indirectly, more than 50% of the combined voting power entitled to
          vote generally in the election of directors of the merged or
          consolidated company;

               (iii)   a sale of all or substantially all of the Company's
          assets; and

               (iv)    approval by the Company or Holding of the liquidation or
          dissolution of the Company or Holding other than a liquidation of the
          Company into Holding.

          (e)   "Hypothetical Payment" means an amount equal to what the Cash
Payment would be if, in calculating the Cash Payment in accordance with Section
1(c), the Assumed Share Price is an amount equal to the product of (i) the GAAP
book value of one Share (excluding the mark to market effect of FAS 133 and SFAS
115) as reported in the financial statements issued for the most recent fiscal
quarter that ended prior to the Payment Date and (ii) 1.15.

          (f)   "Payment Date" means the earlier to occur of (i) June 30, 2006
or (ii) the date of a Change in Control.

          (g)   "Preliminary Payment" means a lump sum cash payment equal to
seventy-five percent (75%) of the Hypothetical Payment.

          (h)   "Share" means a share of Class A Common Stock, par value $1.00
per share, of RAM Holdings II Ltd.

          (i)   "True-Up Payment" means a lump sum cash payment equal to the
difference between the Cash Payment and the Preliminary Payment, which is paid
(i) by the Company to the Participant if the Cash Payment is greater than the
Preliminary Payment and (ii) by the Participant to the Company if the
Preliminary Payment is greater than the Cash Payment.

     2.         Termination of Option and Contingent Share Agreement.  In
consideration of the execution and delivery of this Agreement, effective as of
the

                                       2

<PAGE>
Effective Date, the Option and the Contingent Share Agreement (and the
Participant's rights with respect to each) shall terminate and be of no further
force or effect.

     3.   Payment of Cash Payment.  Subject to the terms hereof and provided the
Participant's employment is not terminated on or before the Payment Date either
by the Company or Holding for "Cause" (as that term is defined in the
Participant's Employment Agreement) or by the Participant without "Good Reason"
(as that term is defined in the Participant's Employment Agreement), the
Participant (and, if applicable, the Company) shall receive the following:

          (a)   if the financial statements for the fiscal quarter used to
                determine the Assumed Share Price have been issued as of the
                Payment Date, the Cash Payment, which shall be paid to the
                Participant in full, in cash, on (or within three (3) Business
                Days after) the Payment Date; or

          (b)   if the financial statements for the fiscal quarter used to
                determine the Assumed Share Price have not been issued as of the
                Payment Date, (i) the Preliminary Payment, which shall be paid
                to the Participant on (or within three (3) Business Days after)
                the Payment Date and (ii) the True-Up Payment, which shall be
                paid to the Participant or to the Company, as the case may be,
                on (or within five (5) Business Days after) the date the
                financial statements for the fiscal quarter used to determine
                the Assumed Share Price are issued; provided, however, that,
                notwithstanding anything herein to the contrary, the Participant
                shall not be required to make a True-Up Payment to the Company
                if the financial statements for the fiscal quarter used to
                determine the Assumed Share Price are not issued at least ten
                (10) Business Days before the end of the fiscal year in which
                the Preliminary Payment is made.

     4.   Termination for Cause and Termination Without Good Reason.  If the
Participant's employment is terminated on or before the Payment Date either by
the Company or Holding for "Cause" (as that term is defined in the Participant's
Employment Agreement) or by the Participant without "Good Reason" (as that term
is defined in the Participant's Employment Agreement), this Agreement shall
terminate immediately and the Participant shall forfeit all rights to receive
any payments pursuant to this Agreement.  For avoidance of doubt, (a) a
termination of the Participant's employment resulting from the expiration of the
term of her Employment Agreement shall not constitute a termination of
employment by the Company or Holding for "Cause" or a termination by the
Participant without "Good Reason" for purposes of this Agreement and (b)
notwithstanding any forfeiture of rights by the Participant to receive any
payments pursuant to this Agreement, the Participant's Option and Contingent
Share Agreement shall remain terminated.

                                       3

<PAGE>
     5.   Withholding.  The Participant hereby acknowledges that payments made
pursuant to this Agreement may be subject to income, employment and/or other tax
withholding and that the Company and/or an affiliate of the Company shall have
the power to withhold, or to require the Participant to remit to the Company or
one of its affiliates, an amount sufficient to satisfy all federal, state, local
and foreign withholding tax requirements in respect of any payment made pursuant
to this Agreement.

     6.   Financial Statements.  Until such time as the True-Up Payment shall be
due and payable, the Company shall furnish to Participant its quarterly
financial statements not later than five (5) Business Days following the date
upon which they are issued.

     7.   Governing Law.  This Agreement shall be governed by the laws of the
State of New York, without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction might otherwise apply.

     8.  Rights Unsecured and Nontransferable.  Any obligation of the Company to
make a payment hereunder shall constitute a general unsecured obligation of the
Company to the Participant.  The Company shall not be required to establish or
maintain any special or separate fund, or otherwise to segregate assets to
assure that such payment shall be made, and the Participant shall have no
interest in any particular asset of the Company by reason of the Company's
obligation hereunder.  To the extent the Participant acquires a right to receive
a payment from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.  The rights of the Participant
under this Agreement shall be nontransferable other than by will or the laws of
descent and distribution.

     9.  Successors.  The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

     10.        Miscellaneous.

          (a)   This Agreement may be executed in counterparts, which may be
delivered by facsimile transmission.  Each counterpart when so executed and
delivered shall be deemed an original, and all such counterparts taken together
shall constitute one and the same instrument.

          (b)   Nothing in this Agreement shall interfere with or limit in any
way the right of the Company or Holding to terminate the Participant's
employment at any time, or confer upon any Participant the right to continue in
the employ of the Company or Holding.

                                       4

<PAGE>
     IN WITNESS WHEREOF, the Company and Holding have caused this Agreement to
be executed by their duly authorized officers and Participant has hereunto set
his hand as of June 28, 2005.

RAM REINSURANCE COMPANY LTD.

By:
   -----------------------------
   Vernon M. Endo
   President and Chief Executive Officer

RAM HOLDINGS LTD.

By:
   -----------------------------
   Vernon M. Endo
   President and Chief Executive Officer

RAM HOLDINGS II LTD.

By:
   -----------------------------
   Vernon M. Endo
   President and Chief Executive Officer

PARTICIPANT

By:
   -----------------------------
   Mary Ellen Pavlovsky

                                       5

<PAGE>

                                    ANNEX A

<PAGE>

                                    ANNEX B<PAGE>
                                                                   Exhibit 10.16

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                      among

                          RAM REINSURANCE COMPANY LTD.,

                                 VARIOUS BANKS,

                                       and

                      NORDDEUTSCHE LANDESBANK GIROZENTRALE,
                                NEW YORK BRANCH,

                                    as Agent

                                   ----------

                            Dated as of June 22, 2005

                                   ----------

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION....................     1

   Section 1.01  Defined Terms...........................................     1
   Section 1.02  Section 1.02  Principles of Construction................    10

SECTION 2. AMOUNT AND TERMS OF CREDIT....................................    10

   Section 2.01  The Loans...............................................    10
   Section 2.02  Amount of Each Borrowing................................    11
   Section 2.03  Notice of Borrowing.....................................    11
   Section 2.04  Disbursement of Funds...................................    11
   Section 2.05  Notes...................................................    12
   Section 2.06  Interest................................................    12
   Section 2.07  Capital Adequacy........................................    12
   Section 2.08  Obligations of Defaulting Banks.........................    13

SECTION 3. COMMITMENT FEES, FEES; AND TERMINATIONS, EXTENSIONS AND
           INCREASES OF COMMITMENTS AND CONTINGENT COMMITMENTS...........    13

   Section 3.01  Fees....................................................    13
   Section 3.02  Voluntary Termination of Unutilized Commitments and
                 Unutilized Contingent Commitments.......................    14
   Section 3.03  Termination of Commitments and Contingent Commitments...    14
   Section 3.04  Expiry Date.............................................    14

SECTION 4. PREPAYMENTS: PAYMENTS.........................................    15

   Section 4.01  Voluntary Prepayments...................................    15
   Section 4.02  Mandatory Prepayments...................................    15
   Section 4.03  Method and Place of Payment.............................    15
   Section 4.04  Net Payments............................................    16
   Section 4.05  Limitations on Sources of Payment.......................    16

SECTION 5. RESERVED......................................................    17

SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS.....................    17

   Section 6.01  Loss Threshold Incurrence Date..........................    17
   Section 6.02  Notice of Borrowing.....................................    17

SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS....................    17

   Section 7.01  Corporate Status........................................    17
   Section 7.02  Corporate Power and Authority...........................    17
   Section 7.03  No Violation............................................    17
</TABLE>

                                       (i)

<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
   Section 7.04  Governmental Approvals..................................    18
   Section 7.05  Financial Statements; Financial Condition; Undisclosed
                 Liabilities; etc........................................    18
   Section 7.06  Litigation..............................................    18
   Section 7.07  True and Complete Disclosure............................    18
   Section 7.08  Use of Proceeds; Margin Regulations.....................    19
   Section 7.09  Tax Returns and Payments................................    19
   Section 7.10  No ERISA Plans..........................................    19
   Section 7.11  Capitalization..........................................    19
   Section 7.12  Subsidiaries............................................    19
   Section 7.13  Compliance with Statutes, etc...........................    19
   Section 7.14  Investment Company Act..................................    19
   Section 7.15  Public Utility Holding Company Act......................    20
   Section 7.16  Compliance with Insurance Law...........................    20
   Section 7.17  Covered Portfolio.......................................    20
   Section 7.18  Ratings.................................................    21

SECTION 8. AFFIRMATIVE COVENANTS.........................................    21

   Section 8.01  Information Covenants...................................    21
   Section 8.02  Books, Records and Inspections..........................    23
   Section 8.03  Corporate Franchises....................................    23
   Section 8.04  Compliance with Statutes, etc...........................    23
   Section 8.05  ERISA...................................................    23
   Section 8.06  Performance of Obligations..............................    23
   Section 8.07  Use of Proceeds.........................................    23
   Section 8.08  Conduct of Business.....................................    24
   Section 8.09  Underwriting Criteria...................................    24
   Section 8.10  Collection of Pledged Recoveries and Pledged Premiums...    24
   Section 8.11  Pledged Reserve Release Notice..........................    24
   Section 8.12  Registry................................................    24

SECTION 9. NEGATIVE COVENANTS............................................    24

   Section 9.01  Liens...................................................    24
   Section 9.02  Consolidation, Merger, Sale of Assets, etc..............    25

SECTION 10. EVENTS OF DEFAULT............................................    26

   Section 10.01 Payments................................................    26
   Section 10.02 Representations, etc....................................    26
   Section 10.03 Covenants...............................................    26
   Section 10.04 Default Under Other Agreements..........................    26
   Section 10.05 Bankruptcy, etc.........................................    26
   Section 10.06 Security Agreement......................................    27
   Section 10.07 Judgments...............................................    27
   Section 10.08 Change of Control.......................................    27
</TABLE>

                                      (ii)

<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 11. THE AGENT....................................................    27

   Section 11.01 Appointment.............................................    27
   Section 11.02 Nature of Duties........................................    28
   Section 11.03 Lack of Reliance on the Agent...........................    28
   Section 11.04 Certain Rights of the Agent.............................    28
   Section 11.05 Reliance................................................    29
   Section 11.06 Indemnification.........................................    29
   Section 11.07 The Agent in Its Individual Capacity....................    29
   Section 11.08 Resignation by the Agent................................    29

SECTION 12. MISCELLANEOUS................................................    30

   Section 12.01 Payment of Expenses, etc................................    30
   Section 12.02 Right of Setoff.........................................    30
   Section 12.03 Notices.................................................    31
   Section 12.04 Benefit of Agreement....................................    31
   Section 12.05 No Waiver; Remedies Cumulative..........................    33
   Section 12.06 Calculations; Computations..............................    34
   Section 12.07 Governing Law; Submission to Jurisdiction; Venue........    34
   Section 12.08 Obligation to Make Payments in Dollars..................    34
   Section 12.09 Counterparts............................................    35
   Section 12.10 Headings Descriptive....................................    35
   Section 12.11 Amendment or Waiver.....................................    35
   Section 12.12 Survival................................................    35
   Section 12.13 Exclusions from Covered Portfolio.......................    35
   Section 12.14 Confidentiality.........................................    36
   Section 12.15 No Default..............................................    36
</TABLE>

SCHEDULES

Schedule I  Commitments and Contingent Commitments
Schedule II Reinsurance Agreements

EXHIBITS

Exhibit A   Notice of Borrowing
Exhibit B   Form of Note
Exhibit C   Form of Assignment and Assumption Agreement

                                      (iii)

<PAGE>

          AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 22, 2005,
among RAM REINSURANCE COMPANY LTD., a limited liability company organized under
the laws of Bermuda (the "Borrower"), the Banks party hereto from time to time,
and NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, acting in its
capacity as Agent pursuant to Section 11 (in such capacity, the "Agent").

                                   WITNESSETH:

          WHEREAS, the Borrower, the Banks and the Agents are parties to a
Credit Agreement, dated as of May 11, 1999 (as amended to date, the "Original
Credit Agreement"); and

          WHEREAS, the parties hereto desire to amend and restate in its
entirety the Original Credit Agreement; and

          WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the credit
facility provided for herein;

          NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby amend and restate the Original Credit Agreement in its entirety as
follows:

SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

          Section 1.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

          "Affiliate" shall mean, with respect to any Person, any other Person
(other than an individual) directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person; provided, however,
that an Affiliate of the Borrower shall include any Person that directly or
indirectly owns more than 10% of the Borrower and any officer or director of the
Borrower or any such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.

          "Agent" shall mean Norddeutsche Landesbank Girozentrale, New York
Branch, in its capacity as Agent for the Banks hereunder, and shall include any
successor to the Agent appointed pursuant to Section 11.08.

          "Agreement" shall mean this Amended and Restated Credit Agreement, as
modified, supplemented or amended from time to time.

          "Applicable Margin" shall mean a percentage per annum equal to 2.0%.

          "Assignment and Assumption Agreement" shall mean any Assignment and
Assumption Agreement substantially in the form of Exhibit C entered into
pursuant to the terms of this Agreement.

<PAGE>

          "Authorized Officer" shall mean the president, any vice president, the
chief financial officer or the treasurer of the Borrower.

          "Average Annual Debt Service" as of a specified date with respect to
an Insured Obligation shall mean the applicable Retained Percentage times the
sum of (i) the aggregate outstanding principal amount of such Insured Obligation
and (ii) the aggregate amount of interest thereafter required to be paid on such
Insured Obligation (giving effect to all mandatory sinking fund payments or
other regularly scheduled required redemptions, prepayments or other retirement
of principal), divided by the number of whole and fractional years from the date
of determination to the latest maturity date of such Insured Obligation, and as
of a specified date with respect to the Covered Portfolio shall mean the sum of
the Annual Average Debt Service as of such date of all Insured Obligations of
the type defined in clause (i) of the definition thereof contained in the
Covered Portfolio. In the event that an Insured Obligation bears interest at a
variable rate, the interest thereon for purposes of the determination of Average
Annual Debt Service shall be calculated at the rate employed by the Borrower to
compute average annual debt service with respect to such Insured Obligation in
accordance with its customary business practices.

          "Bank" shall mean each of the banks listed on the signature pages
hereof and any institution which becomes a Bank hereunder pursuant to Section
12.04(b).

          "Base Rate" shall mean the higher of (i) 1/4 of 1% in excess of the
Federal Funds Rate and (ii) the Prime Lending Rate.

          "Bankruptcy Code" shall have the meaning provided in Section 10.05.

          "Borrower" shall have the meaning provided in the first paragraph of
this Agreement.

          "Borrower's Rating" shall mean the Borrower's claims-paying rating.

          "Borrowing" shall mean the borrowing of Loans on a given date.

          "Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York, New York or Hamilton, Bermuda a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close.

          "Change of Control" shall mean and include the occurrence of any of
the following events: any Person, entity or "group" (within the meaning of
Sections 13(d) or 14(d) of the Securities Exchange Act of 1934) (i) shall have
acquired beneficial ownership of 20% or more of any outstanding class of capital
stock of the Borrower having ordinary voting power in the election of directors,
provided that any Person, entity or group shall be permitted to acquire up to
25% of the outstanding capital stock of any such class in a transaction approved
before the consummation of same by a majority of the directors of the Borrower
or (ii) shall have obtained the power (whether or not exercised) to elect the
majority of the Board of Directors of the Borrower.

                                       -2-

<PAGE>

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.

          "Collateral" shall mean all "Collateral" as defined in the Security
Agreement.

          "Collateral Account" shall have the meaning set forth in the Security
Agreement.

          "Collateral Agent" shall have the meaning set forth in the Security
Agreement.

          "Commitment" shall mean for each Bank the amount set forth opposite
such Bank's name in Part A of Schedule I hereto directly below the column
entitled "Commitment", as the same may be (i) reduced from time to time pursuant
to Section 3.02 and/or 3.03 and (ii) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 3.04 or 12.04.

          "Commitment Fees" shall have the meaning provided in Section 3.01(a).

          "Contingent Commitment" shall mean for each Part C Bank the amount set
forth opposite such Part C Bank's name in Part C of Schedule I hereto directly
below (i) the column entitled "Contingent Commitment", as the same may be (i)
reduced from time to time pursuant to Section 3.02 and/or 3.03 and (ii) adjusted
from time to time as a result of assignments to or from such Part C Bank
pursuant to Section 3.04 or 12.04.

          "Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the holder of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business or
obligations under insurance or reinsurance contracts entered into in the
ordinary course of business to secure reinsurance obligations. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

          "Covered Portfolio" shall mean and include each Insured Obligation as
of May 11, 2005 and each Insured Obligation issued thereafter and prior to the
Loss Threshold

                                       -3-

<PAGE>

Incurrence Date other than any Insured Obligation which is excluded from the
Covered Portfolio pursuant to Section 12.13.

          "Credit Documents" shall mean this Agreement, each Note and the
Security Agreement.

          "Credit Event" shall mean the making of any Loan.

          "Cumulative Losses" for a specified period shall mean the aggregate
Losses of the Borrower determined cumulatively during such period without regard
to Pledged Recoveries; provided, however, that the aggregate amount of
Cumulative Losses related to (i) Insured Obligations of the type described in
clause (i) of the definition thereof issued on behalf of health care providers
of any type cannot exceed 10% of the Total Coverage Amount, (ii) Insured
Obligations of the type described in clause (i) of the definition thereof issued
on behalf of health care providers of any type which at the time of reinsurance
by the Borrower (and without giving effect to any insurance or other guaranty of
an Eligible Insurer) were unrated or rated lower than A- by S&P cannot exceed
3.33% of the Total Coverage Amount, (iii) Eligible Asset Backed Securities
cannot exceed 20% of the Total Coverage Amount, (iv) Eligible Asset Backed
Securities which at the time of reinsurance by the Borrower (and without giving
effect to any insurance or other guaranty of an Eligible Insurer) were unrated
or rated lower than A- by S&P, cannot exceed 15% of the Total Coverage Amount,
(v) Eligible Asset Backed Securities of any one issuer cannot exceed 1.5% of the
Total Coverage Amount and (vi) Eligible Asset Backed Securities having a common
servicer and/or sub-servicer cannot exceed 4.5% of the Total Coverage Amount.

          "Declining Bank" shall have the meaning provided in Section 3.04(b).

          "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

          "Defaulted Loan" shall mean, with respect to any Bank at any time, the
Loan or portion of any Loan required to be made by such Bank to the Borrower
pursuant to Section 2.01 at or prior to such time that has not been made by such
Bank as of such time.

          "Defaulting Bank" shall mean, at any time, any Bank that, at such
time, owes a Defaulted Loan.

          "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.

          "Eligible Asset Backed Security" shall mean "asset backed securities"
which an Eligible Insurer is permitted to insure under the provisions of Section
6904(b)(1)(F) of the New York Insurance Law (without regard to clause (J)
thereof) which at the time of reinsurance by the Borrower (and without giving
effect to any insurance or other guaranty of an Eligible Insurer) were rated no
lower than BBB- by S&P, but expressly excluding any receivables or other
payments related to commercial real estate.

                                       -4-

<PAGE>

          "Eligible Insurer" shall mean any of AMBAC, MBIA, FSA, FGIC or any
other financial guaranty insurer rated Aaa by Moody's and AAA by S&P at the time
of any determination thereof.

          "Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder) assigned, or the parent of which is assigned, an
unsecured senior debt rating (or shadow rating as reflected in a letter) by each
of Moody's and S&P.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement, and to any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.

          "ERISA Affiliate" shall mean any person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any of its Subsidiaries would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.

          "Event of Default" shall have the meaning provided in Section 10.

          "Expiry Date" shall have the meaning set forth in Section 3.04(a).

          "Extending Bank" shall have the meaning provided in Section 3.04(b).

          "Extension Request" shall have the meaning set forth in Section
3.04(a).

          "Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.

          "Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.

          "Group" shall mean, collectively, the Borrower, the Owners and each
other Person that is combined with the Borrower and the Owners for financial
reporting purposes.

          "holder of any Note" shall mean any Federal Reserve Bank to which a
Bank has pledged its Note to the extent such Federal Reserve Bank has foreclosed
upon such Note.

          "Increasing Extending Bank" shall have the meaning provided in Section
3.04(b).

                                       -5-

<PAGE>

          "Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the face amount of all letters of credit issued for the account
of such Person and all drafts drawn thereunder, (iii) all liabilities secured by
any Lien on any property owned by such Person, whether or not such liabilities
have been assumed by such Person, (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee and (v) all
Contingent Obligations of such Person.

          "Installment Premiums" shall mean any and all premiums which are
required to be paid or claimed to be required to be paid to or for the account
of the Borrower in respect of Insured Obligations in the Covered Portfolio on a
periodic basis rather than by payment in full on the date of the effectiveness
of the relevant Insurance Contract.

          "Insurance Contracts" shall have the meaning set forth in Section
7.17.

          "Insured Obligation" shall mean (i) "municipal obligation bonds",
"special revenue bonds", "industrial development bonds" and "utility first
mortgage obligations", in any event issued by a U.S. municipal or governmental
unit or political subdivision, which an Eligible Insurer is permitted to insure
under the provisions of Section 6904 (b) (1) (A), (B) or (C) of the New York
Insurance Law (without regard to clause (J) thereof) and (ii) Eligible Asset
Backed Securities, in any event to the extent that the payment of principal
thereof, together with interest thereon, is insured, reinsured or otherwise
guaranteed by an Eligible Insurer under an insurance contract and is in turn
reinsured by the Borrower.

          "Lending Office" shall mean the office of the Agent located at 1114
Avenue of the Americas, New York, New York 10036 or such other office,
Subsidiary or Affiliate of the Agent as the Agent may from time to time specify
as such to the Borrower.

          "Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).

          "Loan" shall have the meaning provided in Section 2.01.

          "Loss" shall mean at any time the aggregate sum of (i) the amount paid
by the Borrower at such time or required at such time to be paid by the Borrower
on claims under an Insurance Contract with respect to an Insured Obligation in
the Covered Portfolio by reason of the failure by the issuer thereof or other
obligor with respect thereto to pay insured amounts on such Insured Obligations
when due (including adjustment expenses with respect to such claims), plus (ii)
Permitted Reserves at such time minus (iii) amounts paid at such time or
reasonably expected by the Borrower at such time to be paid to the Borrower
under reinsurance agreements (whether facultative or treaty) and similar
arrangements with respect to the claims referred to in clause (i) provided that,
without limiting the generality of the foregoing, the term "Loss" shall not
include any damages or penalties required to be paid by the Borrower in respect
of an Insur-

                                       -6-

<PAGE>

ance Contract by reason of the breach by the Borrower of its obligations
thereunder or the cancellation or termination thereof other than in accordance
with its terms.

          "Loss Incurrence Period" shall mean (i) at any time prior to May 11,
2006, the period commencing on May 11, 2005 and ending on May 11, 2012, (ii)
between May 11, 2006 and May 10, 2007, the period commencing on May 11, 2006 and
ending on May 11, 2013, (iii) between May 11, 2007 and May 10, 2008, the period
commencing on May 11, 2007 and ending on May 11, 2014, and (iv) at any time
subsequent to May 10, 2008, the period commencing on the date which is seven
years prior to the Expiry Date and ending on the Expiry Date.

          "Loss Threshold Incurrence Date" shall mean the date on which the
Borrower has Cumulative Losses (net of recoveries) during the relevant Loss
Incurrence Period equal to the greater of $80,000,000 and 5% of the Average
Annual Debt Service as of any date of determination thereof.

          "Majority Banks" shall mean at any time Banks owed at least 51% of the
aggregate principal amount of the Loans outstanding at such time or, if no Loans
are outstanding at such time, Banks holding at least 51% of the aggregate
Commitments at such time; provided, however, that if any Bank shall be a
Defaulting Bank at such time, there shall be excluded from the determination of
Majority Banks at such time (i) the aggregate principal amount of the Loans
owing to such Bank and outstanding at such time and (ii) the Commitment of such
Bank at such time.

          "Majority Participants" shall have the meaning set forth in Section
12.04.

          "Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.

          "Moody's" shall mean Moody's Investors Service, Inc.

          "Note" shall have the meaning provided in Section 2.05.

          "Notice of Borrowing" shall have the meaning provided in Section 2.03.

          "Notice Office" shall mean the office of the Agent located at 1114
Avenue of the Americas, New York, New York 10036, or such other office as the
Agent may hereafter designate in writing as such to the Borrower.

          "Obligations" shall mean all amounts owing to the Agent, Collateral
Agent or any Bank pursuant to the terms of this Agreement or any other Credit
Document.

          "Owners" shall mean RAM Holdings Ltd. and RAM Holdings II Ltd.

          "Part B Bank" shall mean each Bank listed on Part B of Schedule I
hereto.

          "Part C Bank" shall mean each Bank listed on Part C of Schedule I
hereto.

          "Part C Loan" shall have the meaning provided in Section 2.08.

                                       -7-

<PAGE>

          "Payment Office" shall mean the office of the Agent located at 1114
Avenue of the Americas, New York, New York 10036, or such other office as the
Agent may hereafter designate in writing as such to the Borrower.

          "Permitted Liens" shall have the meaning set forth in Section 9.01.

          "Permitted Reserves" shall mean, with respect to any Insured
Obligation, an amount equal to the reserves established in accordance with New
York State statutory accounting practices which are deemed necessary or prudent
in the reasonable judgment of the Borrower by reason of the failure or
anticipated failure by the issuer of such Insured Obligation or other obligor
with respect thereto to pay such Insured Obligation when due, all as determined
by the Borrower on a quarterly basis and as reflected on the Borrower's books
and records.

          "Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.

          "Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code, which is maintained or contributed to by (or to which there is an
obligation to contribute of), or at any time during the five calendar years
preceding the date of this Agreement was maintained or contributed to by (or to
which there was an obligation to contribute of), the Borrower or an ERISA
Affiliate.

          "Pledged Premiums" shall mean at any time on and after the Loss
Threshold Incurrence Date (i) any and all Installment Premiums which are paid or
payable to the Borrower at such time with respect to defaulted Insured
Obligations in the Covered Portfolio minus (ii) the aggregate amount of such
Installment Premiums referred to in the next preceding clause (i) paid or
payable to any Person other than the Borrower at such time under reinsurance
agreements (whether facultative or treaty) and similar arrangements.

          "Pledged Recoveries" shall mean at any time on and after the Loss
Threshold Incurrence Date any and all moneys and other payments, property and
other consideration and compensation received or receivable by or for the
account of the Borrower at such time (excluding the aggregate amount of any and
all monies, payments, property, consideration and compensation paid or payable
to any Person other than the Borrower under reinsurance agreements (whether
facultative or treaty) and similar arrangements) as repayment or reimbursement
of, or otherwise in respect of or arising out of, the payment of a claim by the
Borrower under an Insurance Contract covering any Insured Obligation in the
Covered Portfolio (without regard to whether such claim was paid from the
proceeds of a Loan), whether from the issuer thereof or any other Person
including without limitation under or pursuant to (i) such Insurance Contract,
any reimbursement agreement, guaranty, letter of credit, mortgage, security
agreement, pledge agreement or other contract, agreement or arrangement, (ii)
any account or account receivable, (iii) any compromise, settlement or similar
arrangement, (iv) any voluntary payment or gift, (v) any reinsurance of such
Insured Obligation to the extent that payment or expected payment under such
reinsurance was not deducted in determining the Loss attributed to the
Borrower's payment or required payment of such claim, (vi) any contractual,
statutory,

                                       -8-

<PAGE>

common law or other right of subrogation, (vii) any realization upon any
mortgage, security interest or other Lien, (viii) any cause of action, whether
sounding in tort, contract or otherwise, and any judicial, arbitration or other
proceeding by or before any court, agency, tribunal, association or other
governmental or private body, or (ix) any other legal or equitable right or
claim, whether or not similar to the foregoing), less the out-of-pocket costs
and expenses, including without limitation attorneys fees and court costs,
reasonably incurred by the Borrower in connection with the collection or other
realization of such moneys and other payments, property and other consideration
and compensation.

          "Pledged Reserves Account" shall have the meaning set forth in the
Security Agreement.

          "Pledged Reserves Account Funds" shall mean at any time the aggregate
amount of proceeds of Loans borrowed hereunder for the purpose of establishing
or maintaining Permitted Reserves, such proceeds to be deposited in the Pledged
Reserves Account in accordance with Section 2.1(b) of the Security Agreement.

          "Pledged Reserve Release Notice" shall have the meaning set forth in
Section 8.11.

          "Pledged Reserve Repayment Date" shall mean the date on which the
Borrower delivers the Pledged Reserve Release Notice required by Section 8.11.

          "Prime Lending Rate" shall mean the rate as announced by Norddeutsche
Landesbank Girozentrale, New York Branch, from time to time as its prime lending
rate, the Prime Lending Rate to change when and as such prime lending rate
changes. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Norddeutsche
Landesbank Girozentrale, New York Branch, may make commercial loans or other
loans at rates of interest at, above or below the Prime Lending Rate.

          "Rabobank" shall mean Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A. "Rabobank International", New York Branch.

          "Replacement Bank" shall have the meaning provided in Section 3.04(b).

          "Retained Percentage" of an Insured Obligation shall mean the
percentage of risk assumed by the Borrower under Insurance Contracts with
respect thereto minus the percentage of aggregate risk with respect to such
Insurance Contracts that has been ceded by the Borrower to other Persons
pursuant to a reinsurance agreement (whether facultative or treaty) or a similar
arrangement.

          "Security Agreement" shall mean the Amended and Restated Pledge and
Security Agreement, dated as of December 1, 2003, between the Borrower and
Norddeutsche Landesbank Girozentrale, New York Branch, as Collateral Agent, as
modified, supplemented or amended from time to time.

          "S&P" shall mean Standard & Poor's Corporation.

                                       -9-

<PAGE>

          "Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.

          "Taxes" shall have the meaning provided in Section 4.04.

          "Total Coverage Amount" shall mean, at the time of any determination
thereof, the sum of (i) the aggregate Commitment of all Banks (excluding
Contingent Commitments) under the Loan Facility at such time and (ii) the dollar
amount of Cumulative Losses (net of recoveries) at such time that results in the
occurrence of the Loss Threshold Incurrence Date.

          "UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.

          "United States" and "U.S." shall each mean the United States of
America.

          "Unutilized Commitment" shall mean, for any Bank, at any time, the
Commitment of such Bank at such time less the aggregate principal amount of all
Loans made by such Bank pursuant to Section 2.01(a) prior to such time.

          "Unutilized Contingent Commitment" shall mean, for any Part C Bank, at
any time, the Contingent Commitment of such Bank at such time less the aggregate
principal amount of all Loans made by such Bank pursuant to Section 2.01(b)
prior to such time.

          "Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.

          Section 1.02 Section 1.02 Principles of Construction. (a) All
references to sections, schedules and exhibits are to sections, schedules and
exhibits in or to this Agreement unless otherwise specified. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement.

          (b) The term generally accepted accounting principles means generally
accepted accounting principles in the United States, and all accounting terms
not specifically defined herein shall be construed in accordance therewith.

SECTION 2. AMOUNT AND TERMS OF CREDIT

          Section 2.01 The Loans. (a) Subject to and upon the terms and
conditions set

                                      -10-

<PAGE>

forth herein, each Bank severally agrees, at any time and from time to time
prior to the Expiry Date applicable to it, to make loans (such loans, together
with any loans made pursuant to Section 2.01(b), being each a "Loan" and
collectively, the "Loans") to the Borrower, provided, however, that the
principal amount of any Loan made by a Bank at any time pursuant to this Section
2.01(a) shall not exceed the Unutilized Commitment of such Bank at such time.

          (b) In the event that (i) the Borrower requests a Borrowing under
Section 2.01(a) and (ii) any Part B Bank shall fail to make on the date
specified in the Notice of Borrowing for such requested Borrowing any Loan or
any portion of a Loan required to be made by such Bank hereunder representing
such Bank's pro rata portion (in accordance with the Commitment of such Bank and
the aggregate Commitments of all of the Banks as in effect on such date) of the
amount of such requested Borrowing, then each Part C Bank severally agrees to
make a Loan to the Borrower on such date in an amount equal to such Part C
Bank's pro rata portion (in accordance with the Contingent Commitment of such
Part C Bank and the aggregate Contingent Commitments of all of the Part C Banks
as in effect on such date) of such Part B Bank's Defaulted Loan, provided,
however, that the principal amount of any Loan made by a Part C Bank at any time
pursuant to this Section 2.01(b) shall not exceed the Unutilized Contingent
Commitment of such Part C Bank at such time.

          (c) Once repaid, Loans incurred hereunder may not be reborrowed.

          Section 2.02 Amount of Each Borrowing. The aggregate principal amount
of each Borrowing hereunder shall not (i) be less than $2,000,000, and if
greater, shall be in an integral multiple of $1,000,000 and (ii) exceed the
lesser of (a) Cumulative Losses incurred after the occurrence of the Loss
Threshold Incurrence Date less the aggregate principal amount of all Loans
previously made and (b) the aggregate Unutilized Commitments of all Banks as in
effect on the date such Borrowing is made.

          Section 2.03 Notice of Borrowing. Whenever the Borrower desires to
make a Borrowing hereunder, it shall give the Agent at its Notice Office at
least two Business Days' prior notice made hereunder, provided that any such
notice shall be deemed to have been given on a certain day only if given before
12:00 Noon (New York time) on such day. Each such notice (each a "Notice of
Borrowing") shall be in the form of Exhibit A, appropriately completed to
specify the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, and the date of such Borrowing (which shall be a Business Day).

          Section 2.04 Disbursement of Funds. (a) No later than 11:00 A.M. (New
York time) on the date specified in each Notice of Borrowing, (i) each Bank will
make available at the Payment Office of the Agent its pro rata portion (in
accordance with the Commitment of such Bank and the aggregate Commitments of all
of the Banks as in effect on such date) of the amount of the Borrowing requested
to be made on such date, in Dollars and in immediately available funds and (ii)
the Agent will make available to the Borrower the aggregate of the amounts so
made available by the Banks on such day at its Payment Office.

          (b) In the event that any Part B Bank shall fail to make available at
the Payment Office of the Agent its pro rata portion (in accordance with the
Commitment of such Bank and the aggregate Commitments of all of the Banks as in
effect on such date) of the amount

                                      -11-

<PAGE>

of the Borrowing requested to be made in any Notice of Borrowing, at or prior to
11:00 A.M. (New York time) on the date specified in such Notice of Borrowing,
the Agent shall immediately notify each Part C Bank that such Part B Bank has so
defaulted and no later than 1:00 P.M. (New York time) on such date, (i) each
Part C Bank will (subject to the proviso at the end of Section 2.01(b) make
available at the Payment Office of the Agent its pro rata portion (in accordance
with the Contingent Commitment of such Part C Bank and the aggregate Contingent
Commitments of all of the Part C Banks as in effect on such date) of such Part B
Bank's Defaulted Loan, in Dollars and in immediately available funds and (ii)
the Agent will make available to the Borrower the aggregate of the amounts so
made available by the Part C Banks on such day at its Payment Office.

          Section 2.05 Notes. The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced by a promissory
note duly executed and delivered by the Borrower substantially in the form of
Exhibit B with blanks appropriately completed in conformity herewith (each a
"Note" and, collectively, the "Notes"). Each Note shall (i) be payable to the
order of such Bank and be dated the date of its issuance, (ii) be in a stated
principal amount equal to such Bank's Commitment or such Bank's Contingent
Commitment, as appropriate, and be payable in the principal amount of the Loans
evidenced thereby, (iii) mature, with respect to each Loan evidenced thereby, on
the earliest Expiry Date then in effect, (iv) bear interest as provided in the
appropriate clause of Section 2.06 in respect of the Loans evidenced thereby and
(v) be entitled to the benefits of this Agreement and be secured by the Security
Agreement. Each Bank will note on its internal records the amount of each Loan
made by it and each payment in respect thereof and will prior to any transfer of
its Note endorse on the reverse side thereof the outstanding principal amount of
Loans evidenced thereby. Failure to make any such notation shall not affect the
Borrower's obligations in respect of such Loans.

          Section 2.06 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Loan from the date the proceeds
thereof are made available to the Borrower until the maturity thereof (whether
by acceleration or otherwise) at a rate per annum which shall be equal to the
Base Rate in effect from time to time plus the Applicable Margin.

          (b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable by the
Borrower hereunder shall bear interest from the date payment thereof was due
until (but not including) the date of actual payment at a rate per annum equal
to 4.0% per annum in excess of the Base Rate in effect from time to time.

          (c) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Loan, quarterly in arrears on the last Business Day of each
March, June, September and December, and (ii) in respect of each Loan, on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.

          Section 2.07 Capital Adequacy. If any Bank determines at any time that
any applicable law or governmental rule, regulation, order or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect

                                      -12-

<PAGE>

of increasing the amount of capital required or expected to be maintained by
such Bank based on the existence of its Commitment and/or Contingent Commitment
hereunder or its obligations hereunder, then the Borrower shall pay to such
Bank, upon its written demand therefor, such additional amounts as shall be
required to compensate such Bank for the increased cost to such Bank as a result
of such increase of capital. In determining such additional amounts, such Bank
will act reasonably and in good faith and will use averaging and attribution
methods which are reasonable, provided that such Bank's determination of
compensation owing under this Section 2.07 shall, absent manifest error, be
final and conclusive and binding on all the parties hereto. Each Bank, upon
determining that any additional amounts will be payable pursuant to this Section
2.07, will give prompt written notice thereof to the Borrower, which notice
shall show the basis for the calculation of such additional amounts. The failure
to give any such notice shall not be deemed to be a waiver of any of the
Borrower's obligations to pay additional amounts pursuant to this Section 2.07,
provided that the Borrower shall not be required to pay any such amounts until
it receives written notice from a Bank in accordance with this Section 2.07.

          Section 2.08 Obligations of Defaulting Banks. Anything contained in
this Agreement to the contrary notwithstanding, in the event any Part C Bank
makes a Loan pursuant to Section 2.01(b) (a "Part C Loan") because of a Part B
Bank failing to make a Loan required to be made pursuant to this Agreement, such
Part C Bank, in addition to any other right or remedy it may have pursuant to
this Agreement or any other Credit Document, shall be entitled to receive, from
such Part B Bank, upon demand, the principal amount of such Part C Loan, plus
interest thereon, from the date made until paid, at the Federal Funds Rate for
the first three days and at the Base Rate plus 2% per annum thereafter. Upon any
such payment by a Part B Bank, such Part B Bank shall be subrogated to the
rights of the relevant Part C Bank with respect to the relevant Part C Loan. In
addition, for so long as any amounts are owed to any Part C Bank with respect to
any Part C Loan, any amounts otherwise owing by a Part B Bank pursuant to this
Agreement or any other Credit Document shall be paid on a pro rata basis to the
Part C Banks until all amounts with respect to outstanding Part C Loans have
been repaid.

SECTION 3. COMMITMENT FEES, FEES; AND TERMINATIONS, EXTENSIONS AND INCREASES
          OF COMMITMENTS AND CONTINGENT COMMITMENTS

          Section 3.01 Fees. (a) The Borrower agrees to pay to each Bank a
commitment fee (such commitment fee, together with the commitment fee payable
pursuant to Section 3.01(b), being referred to herein as the "Commitment Fees")
as agreed in writing from time to time by the Borrower and such Bank; provided,
however, that any Commitment Fee accrued with respect to the Unutilized
Commitment of a Defaulting Bank during the period prior to the time such Bank
became a Defaulting Bank and unpaid at such time shall not be payable by the
Borrower so long as such Bank shall be a Defaulting Bank except to the extent
that such Commitment Fee shall otherwise have been due and payable by the
Borrower prior to such time; and provided further that no Commitment Fee shall
accrue on the Unutilized Commitment of a Defaulting Bank so long as such Bank
shall be a Defaulting Bank.

          (b) The Borrower agrees to pay each Part C Bank a Commitment Fee as
agreed in writing from time to time by the Borrower and such Part C Bank.

          (c) Accrued Commitment Fees shall be due and payable quarterly in
arrears

                                      -13-

<PAGE>

on the last Business Day of each March, June, September and December of each
year and, with respect to each Bank, on the Expiry Date applicable to such Bank
or upon such earlier date as the Commitments or the Contingent Commitments, as
the case may be, shall be terminated, and shall be based on a 365/366-day year
and actual days elapsed.

          (d) The Borrower shall pay to the Agent such fees in connection with
the Credit Documents as may be agreed to from time to time between the Borrower
and the Agent.

          Section 3.02 Voluntary Termination of Unutilized Commitments and
Unutilized Contingent Commitments. Upon at least five Business Days' prior
notice to the Agent at its Notice Office, the Borrower shall have the right to
terminate the Unutilized Commitments or the Unutilized Contingent Commitments,
or both, in whole or in part, in minimum aggregate amounts of $5,000,000 (or, if
greater, in integral multiples of $1,000,000) for the Unutilized Commitments and
the Unutilized Contingent Commitments, provided that the Borrower shall
concurrently satisfy its obligations, if any at such time, under Section 3.01.

          Section 3.03 Termination of Commitments and Contingent Commitments.
(a) The Commitment of each Bank shall be permanently reduced on each date a Loan
is made by such Bank pursuant to Section 2.01(a) by the amount of such Loan. The
Contingent Commitment of each Part C Bank shall be permanently reduced on each
date a Loan is made by such Bank pursuant to Section 2.01(b) by the amount of
such Loan.

          (b) Notwithstanding anything herein to the contrary, the Borrower
shall have the right to unilaterally terminate the Commitment and/or Contingent
Commitment of any Bank if the unsecured senior debt rating (or shadow rating as
reflected in a letter) of such Bank or its parent shall be downgraded by Moody's
or S&P, such termination to be effective 60 days after providing to such Bank a
notice of termination. The Borrower shall, concurrent with such termination, pay
to such Bank the aggregate amount, if any, payable at such time by the Borrower
to such Bank under this Agreement.

          (c) In addition to any other mandatory Commitment reductions pursuant
to this Section 3.03, the Commitment of each Bank, and the Contingent Commitment
of each Part C Bank, shall each terminate in its entirety on the Expiry Date
applicable to such Bank.

          Section 3.04 Expiry Date. (a) The expiration of the Commitments and
the Contingent Commitments shall be May 11, 2012 (with respect to Rabobank) and
May 11, 2015 (with respect to each other Bank) (as to each Bank, as relevant,
the "Expiry Date"; it being agreed that on and after May 11, 2015, the Expiry
Date shall be the same for all Banks); provided, however, that before (but not
earlier than 120 days nor later than 90 days before) each May 11 (commencing
with May 11, 2006, with respect to Rabobank, and May 11, 2008, with respect to
each other Bank) the Borrower may make a written request (an "Extension
Request") to the Agent at its Notice Office (who shall forward a copy to each
relevant Bank) that the Expiry Date as to each relevant Bank be extended by one
calendar year. Such Extension Request shall include a certification by a senior
officer of the Borrower that no Default or Event of Default has occurred and is
continuing and all representations and warranties contained herein and the other
Credit Documents are true and correct in all material aspects on and as of the
date of the Extension Request (it being understood and agreed that any
representation or warranty

                                      -14-

<PAGE>

which expressly refers by its terms to a specified date shall be required to be
true only as of such date). If by the date occurring 30 days next succeeding the
Agent's receipt of such Extension Request, any relevant Bank agrees thereto in
writing by so indicating on counterparts of the Extension Request and delivering
such counterpart to the Borrower, "Expiry Date" as to such Bank shall mean the
May 11 occurring in the calendar year next succeeding the Expiry Date then in
effect, provided that any failure to so notify the Borrower shall be deemed to
be a disapproval by such Bank of the Borrower's Extension Request. The
Commitment and Contingent Commitment of any Bank which does not so agree shall
terminate upon the Expiry Date then in effect as to such Bank. No Bank shall be
obligated to grant any extension pursuant to this Section 3.04(a) and any such
extension shall be in the sole discretion of each Bank. The Borrower shall pay
to each Bank which does not so agree all amounts owing under its Note and this
Agreement on the effective date of the termination of such Bank's Commitment.

          (b) If less than all of the Banks to which an Extension Request is
delivered consent to an Extension Request (each Bank that has not so consented
being a "Declining Bank", and each other Bank being an "Extending Bank"), the
Borrower shall have the right to require any Declining Bank to assign in full
its rights and obligations under this Agreement (i) to any one or more Extending
Banks designated by the Borrower that have offered in their returned counterpart
of the Extension Request to increase their respective Commitments (and, if any
such Extending Bank is a Part C Bank, its Contingent Commitment) in an aggregate
amount at least equal to the amount of such Declining Bank's Commitment (and, if
such Declining Bank is a Part C Bank, its Contingent Commitment) (each such
Extending Bank being an "Increasing Extending Bank") and (ii) to the extent of
any shortfall in the aggregate amount of extended Commitments or extended
Contingent Commitments, to any one or more Eligible Transferees designated by
the Borrower that agree to assume all of such rights and obligations (each such
Eligible Transferee being a "Replacement Bank"), provided that (1) such
Declining Bank shall have received payment of all amounts owing under its Note
and this Agreement on the effective date of such assignment, (2) such assignment
shall otherwise have occurred in compliance with Section 12.04 including,
without limitation, clauses (iii) and (iv) of subsection (b) thereof and (3) the
effective date of such assignment shall be the date specified by the Borrower
and agreed to by the Replacement Bank or Increasing Extending Bank, as the case
may be, which date shall be on or prior to the applicable Expiry Date.

SECTION 4. PREPAYMENTS: PAYMENTS

          Section 4.01 Voluntary Prepayments. The Borrower shall have the right
to prepay the Loans, without premium or penalty, in whole or in part from time
to time, provided that the Borrower shall give the Agent at its Notice Office at
least three Business Days' prior notice of its intent to prepay the Loans.

          Section 4.02 Mandatory Prepayments. On each Pledged Reserve Repayment
Date, an amount equal to 100% of the Pledged Reserves Account Funds with respect
to which the Borrower has delivered a Pledged Reserve Release Notice as required
by Section 8.12 shall be applied as a mandatory prepayment of principal of
outstanding Loans.

          Section 4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Agent not

                                      -15-

<PAGE>

later than 12:00 Noon (New York time) on the date when due and shall be made in
Dollars in immediately available funds at the Agent's Payment Office. Whenever
any payment to be made hereunder or under the Note shall be stated to be due on
a day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.

          Section 4.04 Net Payments. All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payment (but excluding any tax imposed on or
measured by the net income or gross income or gross receipts of any Bank (other
than withholding taxes or taxes in lieu of withholding taxes) pursuant to the
laws of the jurisdiction (or any political subdivision or taxing authority
thereof or therein) in which the principal office or lending office of such Bank
is located or in which such Bank is organized or in which such Bank is doing
business through a branch or office from which such jurisdiction treats a Loan
as having been made) and all interest, penalties or similar liabilities with
respect thereto (collectively, "Taxes"). If any Taxes are so levied or imposed,
the Borrower agrees to pay the full amount of such Taxes and such additional
amounts as may be necessary so that every payment of all amounts due hereunder
or under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note. The
Borrower shall also reimburse each Bank, upon its written request, which request
shall show the basis for calculation of such reimbursement, for taxes imposed on
or measured by the net income of such Bank pursuant to the laws of the
jurisdiction (or any political subdivision or taxing authority thereof or
therein) in which its principal office or lending office is located or in which
such Bank is organized or in which such Bank is doing business through a branch
or office from which such jurisdiction treats a Loan as having been made as it
shall determine are payable by it in respect of amounts paid to or on behalf of
such Bank pursuant to the preceding sentence. The Borrower will furnish to the
applicable Bank within 45 days after the date the payment of any Taxes is due
pursuant to applicable law certified copies of any tax receipts available to the
Borrower evidencing such payment by the Borrower. The Borrower will indemnify
and hold harmless each Bank, and reimburse each Bank upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Bank.

          Section 4.05 Limitations on Sources of Payment. Notwithstanding any
other provision of this Agreement or of any other Credit Document, the
obligations of the Borrower to make payments of principal and interest on the
Loans and the Notes are limited recourse obligations of the Borrower payable
solely from the Pledged Recoveries, the Pledged Premiums, the Pledged Reserves
Account Funds and the other Collateral, and none of the Agent, the Collateral
Agent, any Bank or any other Person shall be entitled to procure any money
judgment against or to levy or foreclose upon or attach any other assets or
properties of the Borrower for payment of such obligations; provided, however,
that nothing herein contained shall limit, restrict or impair the lien created
by the Security Agreement or the right of any Bank to exercise any of its rights
herein or in any of the other Credit Documents upon the occurrence of an Event
of Default or otherwise, or to bring suit and obtain a judgment against the
Borrower (recourse thereon being limited as to payment of principal and interest
on the Loans and the Notes as provided in this Section 4.05).

                                      -16-

<PAGE>

SECTION 5. RESERVED

SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS

          The obligation of the Banks to make Loans is subject, at the time of
each such Credit Event, to the satisfaction of the following conditions:

          Section 6.01 Loss Threshold Incurrence Date. At or prior to the time
of each such Credit Event, the Loss Threshold Incurrence Date shall have
occurred.

          Section 6.02 Notice of Borrowing. Prior to the making of each Loan,
the Agent shall have received a Notice of Borrowing meeting the requirements of
Section 2.03.

The acceptance of the proceeds of each Credit Event shall constitute a
representation and warranty by the Borrower to each Bank that the Loss Threshold
Incurrence Date has occurred.

SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS

          In order to induce the Banks to enter into this Agreement, the
Borrower makes the following representations, warranties and agreements as of
the date hereof, which shall survive the execution and delivery of this
Agreement and the Notes (it being understood and agreed that any representation
or warranty which expressly refers by its terms to a specified date shall be
required to be true and correct in all material respects only as of such date):

          Section 7.01 Corporate Status. The Borrower (i) is a duly organized
and validly existing limited liability company in good standing under the laws
of Bermuda, (ii) has the power and authority to own its property and assets and
to transact the business in which it is engaged and (iii) is duly qualified as a
foreign corporation and in good standing in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its business
requires such qualification, except where the failure to qualify would not have
a material adverse effect on the business, operations, property, assets,
liabilities, prospects or condition (financial or otherwise) of the Borrower.

          Section 7.02 Corporate Power and Authority. The Borrower has the
corporate power to execute, deliver and perform the terms and provisions of each
of the Credit Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it of
each of such Credit Documents. The Borrower has duly executed and delivered each
of the Credit Documents to which it is party, and each of such Credit Documents
constitutes or, in the case of each such other Credit Document when executed and
delivered, will constitute, its legal, valid and binding obligation enforceable
in accordance with its terms.

          Section 7.03 No Violation. Neither the execution, delivery or
performance by the Borrower of the Credit Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, nor the use of the
proceeds of the Loans (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in

                                      -17-

<PAGE>

the creation or imposition of (or the obligation to create or impose) any Lien
(other than Permitted Liens) upon any of the property or assets of the Borrower
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other agreement, contract or instrument to
which the Borrower is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
Memorandum of Association or By-Laws of the Borrower.

          Section 7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made), or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution, delivery and
performance of any Credit Document to which the Borrower is a party or (ii) the
legality, validity, binding effect or enforceability of any such Credit
Document.

          Section 7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; etc. (a) The combined balance sheet of the Group at December 31,
2004, and the related combined statements of income and retained earnings and
changes in financial position of the Group for the fiscal year ended on such
date, all heretofore furnished to the Banks, present fairly the combined
financial condition of the Group at December 31, 2004 and the combined results
of the operations of the Group for the fiscal year ended on such date. All such
financial statements have been prepared in accordance with generally accepted
accounting principles and practices consistently applied. Since December 31,
2004, there has been no material adverse change in the business, operations,
property, assets, liabilities, prospects or condition (financial or otherwise)
of the Borrower or of the Group taken as a whole.

          (b) Except as fully reflected in the financial statements delivered
pursuant to Section 7.05(a), there are no liabilities or obligations with
respect to the Group of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, would be material to the Borrower or to the Group taken as a whole.
The Borrower does not know of any basis for the assertion against the Borrower
or the Group of any liability or obligation of any nature whatsoever that is not
fully reflected in the financial statements delivered pursuant to Section
7.05(a) which, either individually or in the aggregate, could reasonably be
expected to be material to the Borrower or to the Group taken as a whole. At
December 31, 2004 Average Annual Debt Service was $1,363,000,000. As of March
31, 2005 the Borrower had aggregate Losses (net of recoveries) since formation
of less than $8,000,000.

          Section 7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened (i) with respect
to any Credit Document or (ii) that are reasonably likely to materially and
adversely affect the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower.

          Section 7.07 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower in writing to the Banks (including without limitation all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of the

                                      -18-

<PAGE>

Borrower in writing to the Banks will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading at such time in light of the circumstances
under which such information was provided.

          Section 7.08 Use of Proceeds; Margin Regulations. All proceeds of each
Loan shall be used by the Borrower only to establish and/or maintain Permitted
Reserves in the Pledged Reserves Account and/or to pay or reimburse itself for
the payment of Losses in respect of the Covered Portfolio and no part of the
proceeds of any Loan will be used by the Borrower to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulations T, U or X of the Board of Governors of the Federal Reserve System.

          Section 7.09 Tax Returns and Payments. The Borrower has filed all tax
returns required to be filed by it and has paid all income taxes payable by it
which have become due pursuant to such tax returns and all other taxes and
assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith and for which adequate
reserves have been established. The Borrower has paid, or has provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal and state income taxes applicable for all prior fiscal
years and for the current fiscal year to the date hereof.

          Section 7.10 No ERISA Plans. The Borrower has not maintained or
contributed to any Plan.

          Section 7.11 Capitalization. The authorized capital stock of the
Borrower consists of 250,000 shares of Class A common shares, $1.00 par value,
of which 107,488 shares were issued and outstanding at March 31, 2005, 2,500,000
shares of Class B common shares, $1.00 par value, of which 1,886,197 shares were
issued and outstanding at March 31, 2005, 500.1 shares of Class B preference
shares, $1,000 per value, of which no shares were issued and outstanding at
March 31, 2005, and 40,000,000 shares of Class A preference shares, $1.00 par
value, of which 40,000,000 shares were issued and outstanding at March 31, 2005.
All such outstanding shares have been duly and validly issued, and are fully
paid and non-assessable.

          Section 7.12 Subsidiaries. The Borrower has no Subsidiaries.

          Section 7.13 Compliance with Statutes, etc. The Borrower is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), except such noncompliances as
would not reasonably be expected to have, in the aggregate, a material adverse
effect on the business, operations, property, assets, liabilities, prospects or
condition (financial or otherwise) of the Borrower.

          Section 7.14 Investment Company Act. The Borrower is not an
"investment

                                      -19-

<PAGE>

company" within the meaning of the Investment Company Act of 1940, as amended.

          Section 7.15 Public Utility Holding Company Act. The Borrower is not a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

          Section 7.16 Compliance with Insurance Law. The Borrower is duly
licensed to transact business as a Class 3 insurance limited liability company
by the Bermuda Registrar of Companies and (a) has all other requisite federal,
state and other governmental licenses, authorizations, permits, consents and
approvals to conduct its insurance and other business as presently conducted and
proposed to be conducted in Bermuda and in each jurisdiction in which it writes
or issues policies of insurance (including without limitation any form of
financial guaranty insurance, fidelity and surety insurance or credit
insurance), surety bonds, guaranties, contracts of reinsurance or other
undertakings similar to the foregoing (collectively, "Insurance Contracts") or
in which it conducts business, except for failures, if any, to have such
licenses, authorizations, permits, consents and approvals which singly or in the
aggregate could not reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, prospects or condition
(financial or otherwise) of the Borrower or the ability of the Borrower to
perform its obligations under this Agreement or any of the other Credit
Documents, (b) has duly established and maintains all reserves required under
the Bermuda Insurance Act and related regulations, except for failures, if any,
to maintain reserves which could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower or the ability
of the Borrower to perform its obligations under this Agreement or any of the
other Credit Documents, (c) has duly filed all annual statements, financial
statements and other information and reports required to have been filed with
the Bermuda Registrar of Companies, except for failures, if any, to file which
singly or in the aggregate could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower or the ability
of the Borrower to perform its obligations under this Agreement or any of the
Credit Documents, and (d) is in compliance (and has not received any notice from
any administrative or governmental body or an authorized representative thereof
claiming that it is not in compliance) with the Bermuda Insurance Act and
related regulations, except with respect to failures, if any, to comply which
singly or in the aggregate could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
prospects or condition (financial or otherwise) of the Borrower or the ability
of the Borrower to perform its obligations under this Agreement or any of the
other Credit Documents.

          Section 7.17 Covered Portfolio. Substantially all of the Insured
Obligations in the Covered Portfolio are reinsured by the Borrower under
Insurance Contracts in the form or forms heretofore supplied to the Agent in
accordance with the Borrower's underwriting criteria. The Borrower has no reason
to believe that its rights included among the Collateral are not valid and
binding against the obligors thereunder in accordance with their respective
terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and the availability of equitable remedies, except
for such Collateral which, in the aggregate, could not reasonably be expected to

                                      -20-

<PAGE>

have a material adverse effect on the right and ability of the Collateral Agent,
in accordance with the Security Agreement, to realize upon the Collateral as a
whole. Schedule II attached hereto sets forth a listing, as of December 31,
2004, of the reinsurer and the related amounts (both ceded par inforce and ceded
principal and interest inforce) of reinsured Insured Obligations as of such
date.

          Section 7.18 Ratings. The Borrower's Rating assigned by S&P is AAA and
the Borrower's Rating assigned by Moody's is Aa3.

SECTION 8. AFFIRMATIVE COVENANTS

          The Borrower covenants and agrees that on and after the date hereof
and until the Commitments have terminated and the Loans and the Notes, together
with interest, Fees and all other obligations incurred hereunder and thereunder,
are paid in full:

          Section 8.01 Information Covenants. The Borrower will furnish directly
to each Bank:

          (a) Quarterly Financial Statements. Within 60 days after the close of
each of the first three quarterly accounting periods in each fiscal year of the
Borrower, the combined balance sheet of the Group as at the end of such
quarterly period and the related combined statements of income and retained
earnings for such quarterly period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, in each case setting
forth comparative figures for the related periods in the prior fiscal year, all
of which shall be certified by the chief financial officer or the treasurer of
the Borrower, subject to normal year-end audit adjustments.

          (b) Annual Financial Statements. Within 120 days after the close of
each fiscal year of the Borrower, (i) the combined balance sheet of the Group as
at the end of such fiscal year and the related combined statements of income and
retained earnings and of cash flows for such fiscal year setting forth
comparative figures for the preceding fiscal year and audited by
PricewaterhouseCoopers or such other independent certified public accountants of
recognized national standing reasonably acceptable to the Agent, together with a
report of such accounting firm stating that in the course of its regular audit
of the financial statements of the Group and its Subsidiaries, the audit was
conducted in accordance with generally accepted auditing standards, (ii) the
balance sheet of the Borrower as at the end of such fiscal year and the related
statements of income and retained earnings and of cash flows for such fiscal
year setting forth comparative figures for the preceding fiscal year and audited
by PricewaterhouseCoopers or such other public accountants of recognized
national standing reasonably acceptable to the Agent, together with a report of
such accounting firm stating that in the course of its regular audit of the
financial statements of the Borrower, the audit was conducted in accordance with
generally accepted auditing standards and (iii) if prepared, management's
discussions and analysis of the important operational and financial developments
during such fiscal year.

          (c) Management Letters. Promptly after the receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any "management letter" received
by the Borrower or such Subsidiary from its certified public accountants and the
management's responses thereto.

                                      -21-

<PAGE>

          (d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 8.01(a) or 8.01(b), a certificate
of the chief financial officer or treasurer of the Borrower (i) listing the
Insured Obligations in the Covered Portfolio (and if the Loss Threshold
Incurrence Date has occurred identifying the Insurance Contracts with respect
thereto) and calculating in reasonable detail as of the date of such financial
statements (A) if such date is prior to the Loss Threshold Incurrence Date, (1)
the Borrower's Cumulative Losses (stating separately any Permitted Reserves
included therein) for the current Loss Incurrence Period and (2) the Average
Annual Debt Service, and (B) if such date is on or after the occurrence of the
Loss Threshold Incurrence Date, (1) the date of the occurrence thereof, (2)
evidence of the occurrence thereof, (3) the amount of Permitted Reserves as of
the date of such financial statements, and (4) the aggregate amount of Pledged
Recoveries received by or for the account of the Borrower during the current
Loss Incurrence Period on or prior to the date of such financial statements,
(ii) certifying information with respect to reinsured Insured Obligations as of
the date of such financial statements in a format reasonably satisfactory to the
Agent and (iii) to the effect that, to the best of his knowledge, no Default or
Event of Default has occurred and is continuing or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and extent
thereof.

          (e) Notice of Default or Litigation. Promptly, and in any event within
four Business Days, after an Authorized Officer obtains knowledge thereof,
written notice of (i) the occurrence of any event which constitutes a Default or
Event of Default, (ii) any litigation or governmental proceeding pending (A)
against the Borrower or any of its Subsidiaries which could reasonably be
expected to have a materially adverse effect upon the business, operations,
property, assets, liabilities, prospects or condition (financial or otherwise)
of the Borrower or any of its Subsidiaries or (B) with respect to any Credit
Document, (iii) any other event which could reasonably be expected to have a
materially adverse effect upon the business, operations, property, assets,
liabilities, prospects or condition (financial or otherwise) of the Borrower or
any of its Subsidiaries, (iv) any rating report received by the Borrower
published by Moody's, S&P or, if either Moody's or S&P no longer rates the
claims-paying ability of the Borrower, any other nationally recognized rating
agency which, with the consent of the Borrower, rates the creditworthiness of
obligations insured by the Borrower, (v) each Loss in excess of $10,000,
including without limitation, identification of the Insured Obligation with
respect to which such Loss occurred, (vi) each default by the issuer of any
Insured Obligation in the Covered Portfolio or other obligor with respect
thereto which could form the basis of a claim in excess of $10,000 under an
Insurance Contract and (vii) each default by any party to a reinsurance
agreement or similar arrangement with the Borrower which covers any material
amount of Insured Obligations in the Covered Portfolio.

          (f) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and reports, if any, which
the Group, the Borrower or any Subsidiary of the Borrower shall file with the
Securities and Exchange Commission or any successor thereto.

          (g) Other Information. From time to time, such other information or
documents (financial or otherwise) as any Bank may reasonably request,
including, without limitation, information with respect to, and copies of, any
relevant reinsurance agreement.

                                      -22-

<PAGE>

          Section 8.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with generally accepted
accounting principles in the United States and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or any Bank to visit
and inspect, during regular business hours and under guidance of officers of the
Borrower or such Subsidiary, any of the properties of the Borrower or such
Subsidiary, and to examine the books of account of the Borrower or such
Subsidiary and discuss the affairs, finances and accounts of the Borrower or
such Subsidiary with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and to
such reasonable extent as the Agent or such Bank may request.

          Section 8.03 Corporate Franchises. The Borrower will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and its material rights, franchises, licenses and patents; provided,
however, that nothing in this Section 8.03 shall prevent (i) transactions by the
Borrower or any of its Subsidiaries which are permitted as exceptions to the
restrictions of Section 9.02 or (ii) the withdrawal by the Borrower of its
qualification as a foreign corporation in any jurisdiction where such withdrawal
could not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, prospects or condition
(financial or otherwise) of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.

          Section 8.04 Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, prospects or condition
(financial or otherwise) of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.

          Section 8.05 ERISA. The Borrower covenants and agrees that neither it
nor any ERISA Affiliate will maintain or contribute to (or have an obligation to
contribute to) a Plan.

          Section 8.06 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, prospects or condition
(financial or otherwise) of the Borrower or of the Borrower and its Subsidiaries
taken as a whole.

          Section 8.07 Use of Proceeds. The Borrower will use the proceeds of
the Loans only to pay or reimburse itself for the payment of Losses (including
establishing and/or maintaining Permitted Reserves in the Pledged Reserves
Account) in respect of the Covered

                                      -23-

<PAGE>

Portfolio.

          Section 8.08 Conduct of Business. The Borrower will continue to engage
in business of the same general type as conducted by it on the date hereof.

          Section 8.09 Underwriting Criteria. The Borrower shall maintain its
criteria for underwriting (i.e., reinsuring) Insurance Contracts substantially
as heretofore in effect.

          Section 8.10 Collection of Pledged Recoveries and Pledged Premiums.
The Borrower shall at all times use its commercially reasonable efforts to
collect and otherwise realize upon all Pledged Recoveries and Pledged Premiums
in compliance with applicable law and in a commercially reasonable manner.

          Section 8.11 Pledged Reserve Release Notice. The Borrower hereby
acknowledges and agrees that if, at any time, it shall cease to maintain all or
any portion of Permitted Reserves in respect of which Pledged Reserves Account
Funds have been deposited in the Pledged Reserves Account, the Borrower as
promptly as possible (and in any event within three Business Days) after it
shall cease to maintain such Permitted Reserves shall give written notice
thereof (each such notice, a "Pledged Reserve Release Notice") to the Agent and
the Collateral Agent which notice shall provide the amount of such Pledged
Reserves Account Funds that have been released.

          Section 8.12 Registry. The Borrower hereby covenants that it shall
maintain a register on which it will record the Commitment from time to time of
each of the Banks, the Loans made by each of the Banks and each repayment in
respect of the principal amount of the Loans of each Bank. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of such Loans. Upon the request of the
Borrower, the Agent hereby agrees to use its reasonable efforts to provide to
the Borrower such information not otherwise available to the Borrower, as the
Borrower shall reasonably request from time to time in order to enable it to
fulfill its obligations pursuant to this Section 8.12.

SECTION 9. NEGATIVE COVENANTS

          The Borrower covenants and agrees that on and after the date hereof
and until the Commitments have terminated and the Loans and the Notes, together
with interest, Fees and all other obligations incurred hereunder and thereunder,
are paid in full:

          Section 9.01 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any Pledged Recoveries, Pledged Premiums, Pledged Reserves
Account Funds or other Collateral, provided that the provisions of this Section
9.01 shall not prevent the creation, incurrence, assumption or existence of the
following (Liens described below are herein referred to as "Permitted Liens"):

          (i) the Lien in favor of the Banks under the Security Agreement or
otherwise permitted thereunder;

          (ii) inchoate Liens for taxes, assessments or governmental charges or
levies

                                      -24-

<PAGE>

not yet due or Liens for taxes, assessments or governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles;

          (iii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other similar Liens
arising in the ordinary course of business, which relate to Indebtedness which
has not been paid when due and payable in accordance with its terms and which
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;

          (iv) Liens incurred in connection with reinsurer trust agreements
entered into pursuant to Section 114 of the New York Insurance Law; and

          (v) a Lien on the Collateral in favor of any provider of a "backstop"
facility with respect to any Commitment or Contingent Commitment, provided such
Lien is subordinate and junior (to the extent acceptable to the Agent and the
Majority Banks) to the Lien in favor of the Banks pursuant to the Security
Agreement.

          Section 9.02 Consolidation, Merger, Sale of Assets, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any substantial part of its property or
assets, or purchase or otherwise acquire (in one or a series of related
transactions) all or substantially all of the property or assets (other than
purchases or other acquisitions of inventory, materials and equipment in the
ordinary course of business) of any Person, or permit any of its Subsidiaries so
to do any of the foregoing, except that:

          (i) each of the Borrower and its Subsidiaries may in the ordinary
course of business sell or lease assets;

          (ii) any Subsidiary may wind up its affairs or liquidate or dissolve
into, and may consolidate or merge with or into, the Borrower or any other
Subsidiary of the Borrower;

          (iii) the assets or stock of any Subsidiary of the Borrower may be
purchased or otherwise acquired by the Borrower or any other Subsidiary of the
Borrower;

          (iv) the Borrower or any of its Subsidiaries may purchase or otherwise
acquire all or substantially all of the properties or assets of any Person
(other than the Borrower) or acquire such Person by merger so long as (a) no
Default or Event of Default has occurred and is continuing or would occur after
giving effect thereto, (b) such purchase, acquisition or merger shall not result
in any downgrading of the Borrower's Rating assigned by Moody's or S&P from that
in effect immediately prior to such purchase, acquisition or merger and (c) the
Borrower shall deliver to the Agent a certificate of the chief financial officer
of the Borrower stating that such purchase, merger or acquisition complied with
the conditions contained in this clause (iv); and

                                      -25-

<PAGE>

          (v) the Borrower or any Subsidiary may merge into another entity so
long as (a) the surviving corporation assumes all obligations of the Borrower or
such Subsidiary under the Credit Documents and (b) no Default or Event of
Default has occurred and is continuing or would occur after giving effect
thereto.

SECTION 10. EVENTS OF DEFAULT

          Upon the occurrence of any of the following specified events (each an
"Event of Default"):

          Section 10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for two or more Business Days, in the payment
when due of any interest on any Loan or any Note or any Fees or any other
amounts owing hereunder or under any Note; or

          Section 10.02 Representations, etc. Any representation, warranty or
statement made by or on behalf of the Borrower herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or

          Section 10.03 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(e)(i), 8.07, 8.08, 8.09, 8.10, 8.11 or 9 or (ii) default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in Sections 10.01 and 10.02 and clause (i) of this Section
10.03) contained in this Agreement and such default shall continue unremedied
for a period of 30 days after written notice to the Borrower by the Agent or any
Bank; or

          Section 10.04 Default Under Other Agreements. The Borrower or any of
its Subsidiaries shall (i) default in any payment of any Indebtedness (other
than the Notes) with an outstanding principal balance in excess of $10,000,000
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (ii) default in the observance or
performance of any agreement or condition relating to any such Indebtedness
beyond the grace period as provided therein (other than the Notes) or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of any such default or
other event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or

          Section 10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Borrower or any of its Subsidiaries, and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for,

                                      -26-

<PAGE>

or takes charge of, all or substantially all of the property of the Borrower or
any of its Subsidiaries, or the Borrower or any of its Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries, or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed or unstayed for a
period of 60 days, or the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Borrower or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by the Borrower or
any of its Subsidiaries for the purpose of effecting any of the foregoing; or

          Section 10.06 Security Agreement. (i) The Security Agreement or any
provision thereof shall cease to be in full force and effect, or shall cease in
any material respect to give the Collateral Agent for the benefit of the Banks,
the Liens, rights, powers and privileges purported to be created thereby, or
(ii) the Borrower shall otherwise default in any material respect in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Security Agreement and such default shall
continue unremedied for a period of 30 days after written notice to the Borrower
by the Agent or, in the event there is no Agent, any Bank; or

          Section 10.07 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by insurance) of $1,000,000 or more at any one time, and all such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days after the entry thereof; or

          Section 10.08 Change of Control. A Change of Control shall occur;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may or shall upon direction from the
Majority Banks, by written notice to the Borrower, take the following actions to
the extent permitted below (provided, that, if an Event of Default specified in
Section 10.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice to the Borrower as specified below shall
occur automatically without the giving of any such notice): if any Event of
Default has occurred and is continuing, the Agent may declare the principal of
and any accrued interest in respect of all Loans and the Notes and all
obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.

SECTION 11. THE AGENT

          Section 11.01 Appointment. The Banks hereby designate Norddeutsche
Landesbank Girozentrale, New York Branch, as Agent (for purposes of this Section
11, the term "Agent" shall also include Norddeutsche Landesbank Girozentrale,
New York Branch, in its

                                      -27-

<PAGE>

capacity as Collateral Agent pursuant to the Security Agreement) to act as
specified herein and in the other Credit Documents. Each Bank hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its officers, directors, agents or employees.

          Section 11.02 Nature of Duties. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Agreement. Neither the Agent nor any of its officers, directors, agents
or employees shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or any other Credit Document except as expressly
set forth herein or therein.

          Section 11.03 Lack of Reliance on the Agent. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower in
connection with the making and the continuance of the Loans and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of the Borrower and, except as expressly provided in this
Agreement, the Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower or the existence or possible existence of
any Default or Event of Default.

          Section 11.04 Certain Rights of the Agent. If the Agent shall request
instructions from the Banks with respect to any act or action (including failure
to act) in connection with this Agreement or any other Credit Document, the
Agent shall be entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from the Majority Banks or
all the Banks to the extent required by Section 12.11; and the Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank or the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the

                                      -28-

<PAGE>

Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Majority Banks or all the
Banks, as the case may be.

          Section 11.05 Reliance. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.

          Section 11.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, each Bank will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.

          Section 11.07 The Agent in Its Individual Capacity. With respect to
its obligation to make Loans under this Agreement, the Agent shall have the
rights and powers specified herein for a "Bank" and may exercise the same rights
and powers as though it was not performing the duties specified herein; and the
term "Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any Affiliate of the
Borrower as if they were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.

          Section 11.08 Resignation by the Agent. (a) The Agent may resign from
the performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. In the case of the resignation by the Agent, such
resignation shall take effect upon the appointment of a successor Agent pursuant
to Section 11.08(b) or 11.08(c) or as otherwise provided in Section 11.08(d).

          (b) Upon any such notice of resignation by the Agent, the Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrower (it being understood and
agreed that any Bank is deemed to be acceptable to the Borrower).

          (c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks

                                      -29-

<PAGE>

appoint a successor Agent as provided above.

          (d) If no successor Agent has been appointed pursuant to Section
11.08(b) or 11.08(c) by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent may appoint any other Bank which
agrees to such appointment to act as successor Agent.

SECTION 12. MISCELLANEOUS

          Section 12.01 Payment of Expenses, etc. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses (a) of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case, LLP, counsel
for the Agent) in connection with the preparation, execution and delivery of
this Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto and (b) of the Agent and the Banks in connection with the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent and the Banks);
(ii) pay and hold each Bank harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save such Bank harmless from and against any and all liabilities with respect to
or resulting from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and (iii) except as otherwise provided in
Section 4.05, indemnify each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, and reasonable costs, expenses and disbursements incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not
such Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other Credit Document or the use of the proceeds of any
Loans hereunder or the consummation of any transactions contemplated herein or
in any other Credit Document, including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such liabilities, obligations,
losses, etc., to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).

          Section 12.02 Right of Setoff. Except as otherwise provided in Section
4.05, in addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights and to the extent
permitted by applicable law, during the continuance of an Event of Default, each
Bank is hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special), and any other
Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for the
credit or the account of the Borrower against and on account of the Obligations
and liabilities of the Borrower to such Bank under this Agreement or under any
of the other Credit Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not the

                                      -30-

<PAGE>

Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured,
provided however that (i) except to the extent provided in the next succeeding
clause (ii), no Bank is authorized hereunder to take any of the foregoing
actions, nor shall any Bank exercise any other right of setoff or bankers' lien
or any other right now or hereafter granted under applicable law with respect to
the Pledged Reserves Account or any portion of the Pledged Reserves Account
Funds or any Collateral contained in the Pledged Reserves Account (each of the
Agent, the Collateral Agent and each Bank hereby waiving, to the extent
permitted by applicable law, any such right) and (ii) from and after receipt by
the Agent or the Collateral Agent of any Pledged Reserve Release Notice, the
Agent, the Collateral Agent or any Bank is authorized to and may exercise, to
the extent permitted by applicable law, any of such foregoing actions or such
rights only with respect to the amount of Pledged Reserves Account Funds
described in such Pledged Reserve Release Notice and the other Collateral
contained in the Pledged Reserves Account in an amount equal to the interest and
other earnings on such Pledged Reserves Account Funds.

          Section 12.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower or any
Bank, at its address listed opposite its name on the signature page hereto; and
if to the Agent at its Notice Office; or, as to any Bank or the Agent, at such
other address as shall be designated by such party in a written notice to the
other parties hereto and, as to each other party, at such other address as shall
be designated by such party in a written notice to the Borrower and the Agent.
All such notices and communications shall not be effective until received by the
Agent or the Borrower.

          Section 12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, that the
Borrower may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Banks and, provided further, that, no
Bank may transfer or assign its rights or obligations hereunder or under any of
the other Credit Documents, except as provided in this Section 12.04, provided
further, that no Bank shall transfer, grant or assign any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any of the other Credit Documents (i) except to the extent
such amendment or waiver (A) extends the final maturity of any Loan or Note
other than in accordance with Section 3.04, or reduces the rate or extends the
time of payment of interest or Fees thereon, or reduces the principal amount
thereof, or increases the Commitment of any Bank over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default
shall not constitute a change in the terms of any Commitment of any Bank), (B)
releases any material portion of the Collateral under the Security Agreement
except as shall be otherwise provided in any Credit Document, (C) consents to
the assignment or transfer by the Borrower of any of its rights and obligations
under any Credit Document, (D) amends the definition of Loss Threshold
Incurrence Date other than to increase the dollar amount or the percentage
specified therein, (E) reduces the percentage specified in the definition of
Majority Participants or (F) amends, modifies or waives any provision of this
Section 12.04 or (ii) except to the extent that a Bank may permit its Majority
Participants to approve any material written amendment, modification, waiver or
release of any other provision of this Agreement or any other Credit Document
which would, if effected, materially adversely affect the interests of its

                                      -31-

<PAGE>

participants. "Majority Participants" for purposes of this Section 12.04 shall
mean, with respect to each Bank, at any time participants of such Bank
participating in at least 51% of the aggregate principal amount of Loans made by
such Bank and outstanding at such time, or if no such Loans are outstanding at
such time, participants of such Bank participating in at least 51% of the
Commitment of such Bank at such time. In the case of any such participation, the
participant shall not constitute a "Bank" hereunder and shall not have any
rights under this Agreement or any of the other Credit Documents (the
participant's rights against any Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Section 2.07 or 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been transferred, granted or assigned.

          (b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (and, at the direction of the Borrower following a
rating downgrade of such Bank, shall) assign all or a portion of its Commitment
(plus, if such Bank shall be a Part C Bank, such Bank's Contingent Commitment)
and related outstanding rights and Obligations hereunder to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Bank and, if applicable, a Part C Bank by execution of an Assignment and
Assumption Agreement and delivery of such Assignment and Assumption Agreement to
the Borrower and the Agent, provided that (i) new Notes will be issued to such
new Bank in the stated amount of its assumed Commitment (plus, if such Bank
shall be a Part C Bank, such Bank's Contingent Commitment), and to the assigning
Bank in the stated amount of the Commitment (plus, if such Bank shall be a Part
C Bank, the Contingent Commitment) if any, retained by it upon the request of
such new Bank or assigning Bank and the surrender of the Note previously issued
to the assigning Bank (or the execution and delivery to the Borrower of an
indemnity satisfactory to the Borrower), such new Notes to be in conformity with
the requirements of Section 2.05 to the extent needed to reflect the revised
Commitments and, if applicable, Contingent Commitments, (ii) unless such
assignment is to an Affiliate of such assigning Bank with the same or higher
unsecured senior debt rating, and so long as no Default or Event of Default
exists at the time of such assignment, the Borrower shall have consented to such
assignment, (iii) at the time of such assignment, the new Bank or (except to the
extent the new Bank is an affiliate of the assigning Bank) its parent shall have
an unsecured senior debt rating (or shadow rating as reflected in a letter) by
each of Moody's and S&P (A) acceptable to the Borrower (if such assignment is at
the direction of the Borrower) or (B) no lower than the unsecured senior debt
rating (or shadow rating as reflected in a letter) by each of Moody's and S&P of
the assigning Bank or its parent (if such assignment is not at the direction of
the Borrower), (iv) in the case of any assignment of all or a portion of a Part
C Bank's Contingent Commitment, the new Part C Bank or its parent shall have, at
the time of such assignment, an unsecured senior debt rating (or shadow rating
as reflected in a letter) by each of Moody's and S&P of Aaa and AAA,
respectively, (v) such assignment shall not result in a downgrading of the
Borrower's Rating by Moody's or S&P from that in effect immediately prior to
such assignment, (vi) the assigning Bank shall provide notice of any such
assignment to the Agent and the Borrower and the Borrower shall provide notice
of same to Moody's and S&P and (vii) the new Bank shall deliver a legal opinion
addressed to each of the Borrower, Moody's and S&P dated the effective date of
the applicable assignment to the effect that this Agreement constitutes its

                                      -32-

<PAGE>

legal, valid and binding obligation enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditor's rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law) as the same
may be applied in the event of bankruptcy or similar proceedings with respect to
such new Bank. To the extent of any assignment pursuant to this Section
12.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitment. To the extent that an assignment of all or
any portion of a Bank's Commitment and related outstanding Obligations pursuant
to this Section 12.04(b) would at the time of such assignment, result in
increased costs under Section 2.07 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower shall be
obligated to pay any other increased costs of the type described above resulting
from changes in applicable law, or government rules, regulations, orders or
requests after the date of the respective assignment).

          (c) Upon the execution and delivery of an Assignment and Assumption
Agreement in accordance with, and subject to the restrictions of, Section
12.04(b), the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder and under the other Credit Documents have
been assigned to it pursuant to such Assignment and Assumption Agreement, have
the rights and obligations of a "Bank" hereunder and thereunder.

          (d) Any Bank claiming any amounts payable pursuant to Section 4.04
shall use reasonable efforts (consistent with legal and regulatory restrictions
and subject to overall policy considerations of such Bank) to designate another
lending office for its Commitment or Loans or take such other action to minimize
such amounts, as may be reasonably requested by the Borrower, provided that such
designation is made or such other action is taken on such terms that such Bank
and its lending office suffer no economic, legal or regulatory disadvantage.

          (e) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.

          (f) Each Bank shall promptly notify the Borrower of any change in the
location of its applicable lending office.

          Section 12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Bank or the holder of any Note in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and any Bank or the holder of any Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. Except as otherwise expressly provided herein or in any
other Credit Document, the rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which any Bank would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Bank or the holder of any Note to any other or
further action in any circumstances

                                      -33-

<PAGE>

without notice or demand.

          Section 12.06 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant to Section 8.01(a) and (b) shall be made
and prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks).

          (b) All computations of interest hereunder shall be made on the basis
of a year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.

          Section 12.07 Governing Law; Submission to Jurisdiction; Venue. (a)
This Agreement and the other Credit Documents and the rights and obligations of
the parties hereunder and thereunder shall be construed in accordance with and
be governed by the law of the State of New York. Any legal action or proceeding
against the Borrower with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Except as otherwise provided in Section
4.05, nothing herein shall affect the right of the Agent or any Bank under this
Agreement to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in any other
jurisdiction.

          (b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in Section 12.07(a) and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.

          Section 12.08 Obligation to Make Payments in Dollars. Subject to the
provisions of Section 4.05, the obligation of the Borrower to make payment in
Dollars of the principal of and interest on the Notes and any other amounts due
hereunder or under any other Credit Document to the Payment Office of the Agent
as provided in Section 4.03 shall not be discharged or satisfied by any tender,
or any recovery pursuant to any judgment, which is expressed in or converted
into any currency other than Dollars, except to the extent such tender or
recovery shall result in the actual receipt by the Agent at its Payment Office
of the full amount of Dollars expressed to be payable in respect of the
principal of and interest on the Notes and all other amounts due hereunder or
under any other Credit Document. Subject to the provisions of Section 4.05, the
obligation of the Borrower to make payments in Dollars as aforesaid shall be
enforceable as an alternative or additional cause of action for the purpose of
recovery in Dollars of the amount, if any, by which such actual receipt shall
fall short of the full amount of Dollars

                                      -34-

<PAGE>

expressed to be payable in respect of the principal of and interest on the Notes
and any other amounts due under any other Credit Document, and shall not be
affected by judgment being obtained for any other sums due under this Agreement
or under any other Credit Document.

          Section 12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.

          Section 12.10 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

          Section 12.11 Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Majority Banks and the Agent; provided, however, that
no such change, waiver, discharge or termination shall, without the consent of
each Bank (other than any Bank that is, at the time of the proposed extension,
release, amendment, reduction or consent, a Defaulting Bank; provided, however,
that, with respect to any matter described in clause (i) or (ii) of this Section
12.11, the consent of each Defaulting Bank which at such time has a Loan
outstanding shall also be required) (i) extend the final maturity of any Loan or
Note other than in accordance with Section 3.04 or reduce the rate or extend the
time of payment of interest or Fees thereon, or reduce the principal amount
thereof, or increase the Commitment of any Bank over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default
shall not constitute a change in the terms of any Commitment of any Bank), (ii)
release any material portion of the Collateral under the Security Agreement
except as shall be otherwise provided in any Credit Document, (iii) amend,
modify or waive any provision of this Section 12.11, (iv) reduce the percentage
specified in the definition of Majority Banks, (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under any Credit
Document or (vi) amend the definition of Loss Threshold Incurrence Date other
than to increase the dollar amount or the percentage specified therein.

          Section 12.12 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.07, 4.04 and 12.01 shall survive the execution
and delivery of this Agreement and the Notes and the making and repayment of the
Loans.

          Section 12.13 Exclusions from Covered Portfolio. In the event that any
Bank (or any participant to whom such Bank has transferred, granted or assigned
any participation in its rights and obligations hereunder and under the other
Credit Documents) is, or upon the occurrence of any contingency would be,
obligated under the terms of a line of credit, standby bond purchase agreement,
letter of credit, liquidity agreement or similar agreement or arrangement to
purchase any Insured Obligation listed in a certificate delivered by the
Borrower to the Agent pursuant to Section 5.06 or 8.01(d), such Bank (or such
participant) shall promptly notify the Agent, and the Agent shall promptly
notify the Borrower, that such Bank (or such participant) is or would be so
obligated to purchase such Insured Obligation. Upon delivery by

                                      -35-

<PAGE>

the Agent to the Borrower of any such notice with respect to an Insured
Obligation, such Insured Obligation shall, effective upon delivery of such
notice by the Agent to the Borrower, be excluded from the Covered Portfolio.

          Section 12.14 Confidentiality. Each of the Agent and each Bank agrees
to take and cause its respective Affiliates to take normal and reasonable
precautions and exercise due care to maintain the confidentially of all
financial information and all other information reasonably identified as
"confidential" or "secret" by the Borrower and provided to it by either Owner or
the Borrower or by the Agent on the Borrower's behalf, and neither it nor any of
its Affiliates shall use such information other than is connection with or in
enforcement of this Agreement and the other Credit Documents or in connection
with other business now or hereafter existing or contemplated with the Borrower,
except to the extent such information (i) was or becomes generally available to
the public other than as a result of a disclosure by the Agent or any Bank or
(ii) was or becomes available on a non-confidential basis from a source other
than the Borrower, provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Agent or such Bank; provided, however,
that the Agent or any Bank may disclose such information (a) at the request or
pursuant to any requirement of any authority to which the Agent or such Bank is
subject or in connection with an examination of the Agent or such Bank by any
such authority; (b) pursuant to subpoena or other court process, provided that
if not provided by law, the Agent or such Bank will make reasonable efforts to
provide notice to the Borrower of the receipt of such subpoena prior to
delivering confidential material in response thereto; (c) when required to do so
in accordance with the provisions of any applicable law or regulation; (d) to
the extent reasonably required in connection with any litigation or proceeding
with respect to the transactions contemplated hereby to which the Agent or any
Bank or their respective Affiliates may be party; (e) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Credit Document; (f) to the Agent's or such Bank's independent auditors
and other professional advisors with a need to know and who agrees to keep such
information confidential to the extent required of the Agent or such Bank
hereunder; and (g) to any assignee or participant, actual or potential, provided
that such Person agrees to keep such information confidential to the same extent
required of the Agent or the Bank hereunder.

          Section 12.15 No Default. No Default or Event of Default exists or
will exist as of the date hereof upon execution of this Agreement.

          IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Agreement as of the date
first above written.

Address:
                                        RAM REINSURANCE COMPANY LTD.
RAM Re House
46 Reid Street
Hamilton, HM 12                         By
Bermuda                                    -------------------------------------
                                        Title:
                                               ---------------------------------

                                      -36-

<PAGE>

                                        NORDDEUTSCHE LANDESBANK
1114 Avenue of the Americas                GIROZENTRALE, NEW YORK BRANCH,
New York, New York 10036                   Individually and as Agent

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        BAYERISCHE LANDESBANK
560 Lexington Avenue                       (f/k/a Bayerische Landesbank
22nd Floor                                 Girozentrale)
New York, New York 10027

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        COOPERATIEVE CENTRALE
245 Park Avenue                            RAIFFEISEN-BOERENLEENBANK B.A.
37th Floor                                 "RABOBANK INTERNATIONAL",
New York, New York 10167                   NEW YORK BRANCH

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                      -37-

<PAGE>

                                                                      SCHEDULE I

                                     PART A

                                   Commitments

<TABLE>
<CAPTION>
Name                                     Commitment
----                                    -----------
<S>                                     <C>
Norddeutsche Landesbank Girozentrale,   $50,000,000
   New York Branch

Bayerische Landesbank                    40,000,000
                                        -----------

      Total Commitment                  $90,000,000
                                        ===========
</TABLE>

                                     PART B

                                  Part B Banks

Norddeutsche Bank Girozentrale,
   New York Branch

                                     PART C

                       Part C Banks/Contingent Commitments

<TABLE>
<CAPTION>
Name                                    Contingent Commitment
----                                    ---------------------
<S>                                     <C>
Bayerische Landesbank                        $30,000,000
Cooperatieve Centrale Raiffeisen-             20,000,000
                                             -----------
   Boerenleenbank B.A. "Rabobank
   International", New York Branch
      Total Contingent Commitment            $50,000,000
                                             ===========
</TABLE>

<PAGE>

                                                                     SCHEDULE II

                             Reinsurance Agreements

None

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