Document:

EXHIBIT 10.1

        TRANSITION AGREEMENT, dated as of August 4th, 2006 (this "Agreement"),
among XL Capital Ltd, a Cayman Islands company ("XL Capital"), XL Insurance
(Bermuda) Ltd, a Bermuda company ("XLI"), X.L. America, Inc., a Delaware
corporation ("XLA" and, together with XL Capital and XLI, the "XL Parties"), and
Security Capital Assurance Ltd, a Bermuda company ("SCA"). Certain terms used in
this Agreement are defined in Section 1.1.

                              W I T N E S S E T H:

        WHEREAS, SCA has been recently organized solely for the purposes, and
has not engaged in activities except, as contemplated hereby;

        WHEREAS, the respective boards of directors of the XL Parties and SCA
have approved the transactions described in this Agreement and the Ancillary
Agreements, including the consummation of the Public Offering;

        WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the transition of SCA to a public
company and certain other agreements that will, following the consummation of
the Public Offering, govern certain matters relating to such transition, the
Public Offering and the ongoing relationship of XL Capital, SCA and their
respective Subsidiaries.

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

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1    DEFINITIONS. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

        "Activities" has the meaning specified in Section 7.1.

        "Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.

        "Administrative Subsidiaries" has the meaning specified in Section 2.1.

        "Affiliate" means, with respect to any Person, an individual or
organization that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with such Person. For
the purposes of this definition, "control", with respect to any Person, means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise.

        "Ancillary Agreements" has the meaning specified in Section 3.1.

        "Business Day" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York or Hamilton, Bermuda have the option by law or
other governmental action to close.

         "Closing" has the meaning specified in Section 3.4.

        "Closing Time" has the meaning specified in Section 3.4.

        "Code" means the U.S. Internal Revenue Code of 1986, as amended and in
effect from time to time.

        "Commission" means the U.S. Securities and Exchange Commission.
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        "Common Shares" means the common shares of SCA.

        "Confidential Information" has the meaning specified in Section 7.9.

        "Determined Price" means the cash price paid by offerees of New
Securities (which may be a variable cash price set in reference to trading
prices of the Common Shares on the New York Stock Exchange, or any other
national securities exchange on which the Common Shares then trade) (less, if
applicable, any underwriting commission, brokerage or other discount or fee paid
to an underwriter, broker or agent acting in connection with the sale or
distribution of such New Securities), or if all or part of the issuance of New
Securities is to be for consideration other than cash, with respect to the
non-cash portion, (or if the New Securities are not then tracked on a national
securities exchange) the fair market value thereof as determined in good faith
by the SCA Board.

        "Effective Date" has the meaning specified in the recitals of this
Agreement.

        "Encumbrance" means any security interest, pledge, hypothecation,
mortgage, lien (including, without limitation, environmental and tax liens),
violation, charge, lease, license, encumbrance, servient easement, adverse
claim, reversion, reverter, preferential arrangement, restrictive covenant or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.

        "FSA" means Financial Security Assurance Inc.

        "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
self-regulatory organization having jurisdiction over any of the parties hereto
or any of the parties to any of the Ancillary Agreements, any United States or
non-United States federal, national, supranational, state, provincial, local or
similar government, governmental, regulatory (including, without limitation,
insurance regulatory) or administrative authority, legislative body, agency or
commission or any court, tribunal or judicial or arbitral body.

        "Indemnified Party" has the meaning specified in Section 8.2.

        "Indemnifying Party" has the meaning specified in Section 8.2.

        "Information" has the meaning specified in Section 7.3.

         "Losses" means any and all losses, liabilities, claims, damages,
obligations, payments, interest, penalties, fines, costs and expenses, matured
or unmatured, absolute or contingent, disclosed or undisclosed, determined or
determinable, accrued or unaccrued, liquidated or unliquidated, known or unknown
(including, without limitation, the costs and expenses of any Action, threatened
Action, demand, assessment, judgment, settlement and compromise relating thereto
and attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against, or settling any such Action or
threatened Action).

        "Misstatement" has the meaning specified in Section 8.1.

        "Person" includes an individual, a partnership, a joint venture, a
limited liability company, a corporation, a trust, a body corporate, an
unincorporated organization, a group and a government or other department or
agency thereof.

        "Plan Shares" has the meaning specified in Section 7.7(a).

        "Post-Closing Subsidiaries" with respect to either XL Capital or SCA
means collectively all of the Persons that will, immediately following the
Closing Time, be Subsidiaries of such entity.

        "Privilege" has the meaning specified in Section 9.3.

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        "Public Offering" means the offering of common shares of SCA pursuant to
the Registration Statement.

        "Registration Statement" means the Registration Statement No. 333-133066
on Form S-1, as amended and supplemented from time to time at or prior to the
Closing Time, filed with the Commission under the Securities Act relating to the
Public Offering.

        "Representatives" has the meaning specified in Section 7.3.

        "SCA" has the meaning specified in the preamble to this Agreement.

        "SCA Board" means the board of directors of SCA.

        "SCA Business" means the business conducted by SCA Group, as described
in the Registration Statement.

        "SCA Confidential Information" has the meaning specified in Section 7.9.

        "SCA Group" means SCA and each Post-Closing Subsidiary of SCA.

        "SCA Indemnified Parties" has the meaning specified in Section 8.1.

        "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

        "Subsidiary" means, as to any Person, any corporation, partnership or
other entity of which at the time of determination more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and/or
one or more Subsidiaries of such Person.

        "Termination of License Date" has the meaning specified in Section
7.5(e).

         "Underwriting Agreement" has the meaning specified in Section 6.1.

         "Voting Restriction Termination Event" means the time at which XL
Group's ownership of the then-outstanding common shares of SCA is first equal to
or less than 35% provided that at the time thereof, neither any Offer Notice (as
defined in Section 7.7) nor any election thereunder by XL Capital to purchase
New Securities is outstanding.

        "Voting Stock" means stock of any class or classes or other ownership
interest having general voting power under ordinary circumstances to elect a
majority of the board of directors, managers, trustees or persons with similar
functions of the entity in question; provided that, for the purposes of this
definition, stock which carries only the right to vote conditionally on the
happening of an event will not be considered Voting Stock, whether or not that
event has happened.

        "XL Capital" has the meaning specified in the preamble to this
Agreement.

        "XL Capital Group" means XL Capital and each Subsidiary of XL Capital
(other than the SCA Group).

        "XL Capital Confidential Information" has the meaning specified in
Section 7.9.

        "XLFA" has the meaning specified in Section 2.1.

        "XLFA Preferred Shares" means the Series A Redeemable Preferred Shares
of XLFA.

        "XLFA Shareholders Agreement" means the Amended and Restated
Shareholders Agreement dated as of April 27, 2001, among XLFA, XL Capital, XLI,
and parties related to Financial Security Assurance Inc. setting forth the
relative rights of each party thereto with respect to XLFA, as amended.

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        "XL Parties" means XL Capital and each Post-Closing Subsidiary of XL
Capital (other than the SCA Group).

        "XL Indemnified Party" has the meaning specified in Section 8.1.

        "XL Information" means the two paragraphs under the heading "Principal
and Selling Shareholder" in the Registration Statement.

        Section 1.2     OTHER DEFINITIONAL PROVISIONS. The words "hereof,"
"hereto," "herein," "hereunder" and words of similar import when used in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement, and references to any Article, Section, Exhibit or Schedule
are references to Articles, Sections, Exhibits or Schedules in or to this
Agreement unless otherwise specified.

                                   ARTICLE II

                      FORMATION TRANSACTIONS AND TRANSFERS

        Section 2.1     FORMATION TRANSACTIONS.

        (a)     XLI has formed SCA. SCA has issued certain of its common shares,
comprising 100% of its issued and outstanding common shares immediately prior to
the Closing Time and the events described in clause (b) of this Section 2.1, to
XLI.

        (b)     On or immediately prior to the Closing Time, the XL Capital
Group and SCA will enter into the transactions described under "Formation" in
the Registration Statement.

        (c)     The Bye-laws of SCA, as of the Closing Time, shall be in the
form of EXHIBIT 2.1(c).

                                   ARTICLE III

                          ANCILLARY AGREEMENTS; CLOSING

        Section 3.1     ANCILLARY AGREEMENTS.

               The appropriate parties hereto shall enter into, and (to the
extent indicated as parties thereto) shall cause their respective Subsidiaries
to enter into, the agreements listed in ANNEX 3.1 (collectively, the "Ancillary
Agreements"), in each case (unless otherwise specified in the form of Ancillary
Agreement) effective as of the Closing Time.

        Section 3.2     SETTLEMENT OF CERTAIN INTERCOMPANY ACCOUNTS. Except as
otherwise provided for in this Agreement or any of the Ancillary Agreements, all
intercompany accounts or balances arising on or prior to the Closing Time,
between any member of SCA Group and any member of the XL Capital Group shall be
invoiced promptly after the Closing Date and paid within 30 days of receipt of
invoice. For the avoidance of doubt, SCA shall pay (or, to the extent incurred
by and paid for by any member of the XL Parties prior to the Closing Time shall,
at or prior to the Closing Time, and, if incurred on or following the Closing
Time, promptly upon receipt of an invoice therefor, reimburse such member of the
XL Parties for any and all amounts so paid) the costs, fees, distributions and
expenses set forth in Schedule 3.2(a).

        Section 3.3     INSURANCE COVERAGE. It is expected that after the
Closing Time, other than as respects claims made after the Closing in respect of
acts, omissions or events or occurrences occurring up to and including the
Closing Time, each member of the SCA Group will cease to be covered under the
insurance policies covering XL Capital and its affiliates with respect to: (i)
directors' and officers' liability, (ii) employment practices liability, (iii)
errors and omission liability, (iv) pension trustees liability and (v) fidelity.
For a minimum of six years after

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the Closing Time, XL shall purchase annual limits of insurance consistent with
its levels of insurance coverage in place at the Closing Time, covering the SCA
Indemnified Parties with respect to acts, omissions or events or occurrences
that took place prior to the Closing Time, to the extent that, XL Capital has
reasonably determined that such limits are available on substantially the same
economic and other terms as to which they were available at the Closing Time. XL
Capital agrees that coverage provided under its corporate insurance program
(subject to the terms of such policies) shall include, but shall not be limited
to, claims arising out of or relating to (i) the Public Offering, (ii) any
public document connected with the Public Offering, including, but not limited
to, the Registration Statement or (iii) any actions taken by the any one or more
of the parties insured under the insurance policies and other welfare and
benefit plans covering XL Capital and its subsidiaries and affiliates, and their
employees and directors, including the SCA Group and its directors and
employees, prior to the Closing Time.

        It is expected that from and after the Closing until the Voting
Restriction Termination Event, each member of the SCA Group will continue to be
covered under the insurance policies covering XL Capital and its subsidiaries
with respect to: (i) commercial general liability, (ii) property, (iii) workers'
compensation, and (iv) certain other coverages previously agreed, all as set
forth in the applicable agreement listed on Annex 3.1(a), provided that no later
than 90 days prior to the applicable renewal of any policy the SCA Group may
give notice to XL Capital that it no longer wishes to be covered by any such
insurance policies which notice shall be irrevocable once delivered. SCA
acknowledges that coverages under such policies will be subject to the terms and
conditions, including limits, as from time to time established by XL Capital
with respect to such coverages for XL Capital and its subsidiaries, including
the SCA Group. Employees of members of SCA Group shall continue to be included
in insurance policies and other welfare and benefit plans of members of the XL
Parties in accordance with the Master Services Level Agreement (which is listed
on ANNEX 3.1(A)). XL Capital agrees that it will not change or alter coverages
under such policies with respect to such acts, omissions, events or occurrences
in a manner that would materially and adversely negatively effect the ability of
the SCA Group (or such officers or directors), based upon such policies as in
effect on the date hereof, to make a recovery thereunder.

        Premiums shall be paid in accordance with the applicable Ancillary
Agreement.

        XL Capital acknowledges, for the benefit of the directors and officers
of SCA Group, that the indemnification and related expense reimbursement
arrangements provided in the Articles of Association of XL Capital, as in effect
on the Closing Time shall, to the extent available by its applicable terms,
continue with respect to acts or omissions occurring prior to the Closing Time.
XL Capital also acknowledges that each of the directors of SCA Group designated
as a director designee in the Registration Statement is serving at the direction
of XL Capital through the Closing Time and are, therefore, covered by the
provisions of the Articles of Association of XL Capital.

        Section 3.4     CLOSING. All transactions contemplated by this Agreement
shall be consummated at a closing (the "Closing") to be held at the offices of
Cahill Gordon & Reindel LLP, New York, New York, on the date of the closing of
the Public Offering (and immediately prior to the consummation of the Public
Offering), or at such other place or at such other time or on such other date as
XL Capital and SCA may mutually agree upon in writing (the date and time at
which the Closing takes place being the "Closing Time").

        Section 3.5     DELIVERIES BY THE PARTIES. On or prior to the Closing
Time:

                (a)     XL Capital shall deliver or cause to be delivered to SCA
        copies of all Ancillary Agreements, executed by the relevant XL Capital
        Parties;

                (b)     SCA shall deliver or cause to be delivered to XL Capital
        copies of all Ancillary Agreements, executed by the relevant members of
        the SCA Group; and

                (c)     Certificates representing the issued and outstanding
        shares of common stock (or interests, as applicable) of XLFA, US Holdco,
        XLCA and each of the Administrative Subsidiaries shall be delivered by
        the respective owners to the appropriate transferees, as contemplated by
        Section 2.1, with blank stock powers duly executed.

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        Section 3.6     THIRD PARTY CONSENTS.

        (a)     Each member of the XL Parties and SCA Group shall use all
commercially reasonable efforts to obtain, and cooperate with the other in
obtaining, at or prior to the Closing Time any consent, approval or
authorization necessary for the transactions contemplated herein or in any of
the Ancillary Agreements to be performed or consummated by it at or prior to the
Closing Time.

        (b)     If any consent, approval or authorization necessary for the
transactions contemplated by this Agreement or any Ancillary Agreement has not
been obtained at or prior to the Closing Time, XL Capital shall, and shall cause
the appropriate member of the XL Parties to, and SCA shall, and shall cause the
appropriate member of SCA Group to, each at its own expense, reasonably
cooperate with the appropriate members of the XL Parties or SCA Group, as the
case may be, in continuing to attempt to obtain such consents, approvals or
authorizations as promptly thereafter as practicable except that no such member
shall be required to incur any material liability or undertake any material
obligation.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF XL PARTIES

        XL Capital represents and warrants to SCA, as to itself and each other
member of the XL Parties, as of the date of this Agreement and as of the Closing
Time, as follows:

        Section 4.1     ORGANIZATION AND AUTHORITY.

        (a)     Each member of the XL Parties is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or the laws under which it currently exists, and in good standing
in all jurisdictions in which the failure to qualify or be in good standing
could materially adversely affect the consummation or the validity of the
transactions provided for in this Agreement or any of the Ancillary Agreements.

        (b)     Each member of the XL Parties that is a party to this Agreement
has full corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement and each member of the XL
Parties will have taken all corporate action necessary to execute and deliver
the Ancillary Agreements to which it is a party and to perform its obligations
hereunder and thereunder. This Agreement has been, and each of the Ancillary
Agreements will be, duly authorized, executed and delivered by each member of
the XL Parties that is a party hereto and thereto and, assuming due
authorization, execution and delivery by all other parties to such agreement,
each of this Agreement and such Ancillary Agreements constitutes or will
constitute, as the case may be, the valid and legally binding obligation of such
member of the XL Parties, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.

        Section 4.2     NO CONFLICT. The authorization, execution, delivery and
performance of this Agreement and the Ancillary Agreements by each of the
members of the XL Parties that are parties hereto and thereto do not and will
not:

                (a)     violate, conflict with or result in the breach of any
        provision of the certificate of incorporation, the memorandum of
        association or by-laws (or similar organizational documents) of such
        member of the XL Parties; or

                (b)     conflict with or violate in any material respect any law
        or Governmental Order applicable to such member of the XL Parties or any
        of their respective assets, properties or businesses.

        Section 4.3     TRANSFERRED CAPITAL STOCK. Upon the transfers described
in Section 3.6(c), SCA will acquire good and marketable title to the shares or
interests of XLCA and XLFA indicated therein and in Section 2.1, free and clear
of any Encumbrance, and SCA will have acquired 100% of the then issued and
outstanding capital stock of XLFA and XLCA and each of the Administrative
Subsidiaries, except in the case of XLFA, to the extent of

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the XLFA Preferred Shares held by FSA. The shares of capital stock of each of
XLFA, XLCA and each of the Administrative Subsidiaries then issued and
outstanding constitute validly issued, fully paid and non-assessable shares (or
interests). None of the XLFA Shares other than as set forth in the XLFA
Shareholders Agreement (as described in the Registration Statement), the XLCA
Shares and the Administrative Subsidiaries interests, nor any of XLFA (except as
set forth in the XLFA Shareholders Agreement), XLCA, nor any of the
Administrative Subsidiaries are subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to, the voting, dividend rights or disposition of the XLFA
Shares, the XLCA Shares or the Administrative Subsidiaries interests, and there
are no options, warrants or any other rights to acquire any of the XLFA Shares,
the XLCA Shares and the Administrative Subsidiaries interests.

        Section 4.4     NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement and the Ancillary
Agreements, neither XL Capital nor any other Person makes any express or implied
representation or warranty on behalf of or with respect to XL Capital or any
other member of the XL Parties, and XL Capital hereby disclaims any
representation or warranty not contained herein or therein.

                                    ARTICLE V

                 REPRESENTATIONS AND WARRANTIES OF THE SCA GROUP

        SCA represents and warrants to XL Capital, as to itself and each other
member of SCA Group, as of the date of this Agreement and as of the Closing
Time, as follows:

        Section 5.1     ORGANIZATION AND AUTHORITY.

        (a)     SCA is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and in good standing in all
jurisdictions in which the failure to qualify or be in good standing could
materially adversely affect the consummation or the validity of the transactions
provided for in this Agreement or any of the Ancillary Agreements.

        (b)     SCA has full corporate power and authority and has taken all
corporate action necessary to execute and deliver this Agreement and SCA will
have taken all corporate action necessary to execute and deliver the Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder. This Agreement has been, and each of the Ancillary Agreements will
be, duly authorized, executed and delivered by SCA and, assuming due
authorization, execution and delivery by all other parties to such agreement,
each of this Agreement and such Ancillary Agreements constitutes or will
constitute, as the case may be, the valid and legally binding obligation of SCA,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

        Section 5.2     NO CONFLICT. The authorization, execution, delivery and
performance of this Agreement and the Ancillary Agreements by SCA does not and
will not:

                (a)     violate, conflict with or result in the breach of any
        provision of the certificate of incorporation, the memorandum of
        association or by-laws (or similar organizational documents) of SCA; or

                (b)     conflict with or violate in any material respect any law
        or Governmental Order applicable to SCA or any of its assets, properties
        or businesses.

        Section 5.3     COMMON SHARES. The Common Shares issued to XLI
constitute, immediately prior to the Closing Time, all of the issued and
outstanding share capital of SCA, are validly authorized and issued, fully paid
and non-assessable and are not subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the Common
Shares, except as may be described in the Registration Statement as existing at
the Closing Time; and as of the Closing Time there shall be no

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options, warrants or any other rights to acquire Common Shares except for any
such options, warrants or other rights described in the Registration Statement
as existing at the Closing Time.

        Section 5.4     NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement and the Ancillary
Agreements, neither SCA nor any other Person makes any express or implied
representation or warranty on behalf of or with respect to SCA or any other
member of SCA Group, and SCA hereby disclaims any representation or warranty not
contained herein or therein.

                                   ARTICLE VI

           THE PUBLIC OFFERING AND ACTIONS PENDING THE PUBLIC OFFERING

        Section 6.1     TRANSACTIONS PRIOR TO THE PUBLIC OFFERING. SCA and XL
Capital shall use all reasonable commercial efforts to consummate the Public
Offering in accordance with the terms of the underwriting agreement (the
"Underwriting Agreement") in the form filed as an exhibit to the Registration
Statement at the date of this Agreement. Notwithstanding anything to the
contrary contained herein, prior to the Closing Time, as between SCA and XL
Capital, XL Capital may in its sole discretion terminate or abandon any aspect
of the Public Offering and the other transactions contemplated hereby or by any
Ancillary Agreement in connection with such Public Offering, and SCA shall, at
XL Capital's expense, take all actions directed by XL Capital in that regard.

                                   ARTICLE VII

           OTHER AGREEMENTS; ACCESS TO INFORMATION; FURTHER ASSURANCES

        Section 7.1     ACCESS TO INFORMATION. (a) From and after the Closing
Time, XL Capital shall afford to SCA and its Subsidiaries and their respective
authorized accountants and independent public accountants, regulators, counsel
and other designated representatives (collectively, "Representatives")
reasonable, and reasonably prompt, access (including using commercially
reasonable efforts to give access to Persons possessing information) during
normal business hours to all data and information (collectively, "Information")
within the possession or under the control of XL Capital or any Post-Closing
Subsidiary of XL Capital relating to SCA Business. From and after the Closing
Time, SCA shall afford to XL Capital, any Post-Closing Subsidiary of XL Capital
and their respective Representatives reasonable, and reasonably prompt, access
(including using commercially reasonable efforts to give access to Persons
possessing information) during normal business hours to Information within the
possession or under the control of SCA or any Post-Closing Subsidiary of SCA (x)
relating to XL Capital or any Post-Closing Subsidiary of XL Capital or (y)
relating to SCA or any Post Closing Subsidiary of SCA with respect to the other
matters contemplated by this Agreement, including with respect to the matters
referred to in SCHEDULE 7.5 (including to the extent necessary so that XL
Capital can meet any legal, regulatory, accounting, audit or regulatory
examination requirements or requests that may be applicable to it). Information
may be requested under this Article VII for, without limitation, fulfilling
disclosure and reporting obligations. SCA shall (i) deliver to XL Capital SCA's
quarterly and annual financial statements and related information on a timely
basis in order to enable XL Capital to meet its timetable for the printing,
filing and public dissemination of its quarterly and annual earnings releases,
financial statements and filings with any regulatory body (including the
Securities and Exchange Commission) and (ii) use its commercially reasonably
efforts to facilitate XL Capital's independent certified public accountants
completing their audit on a timely basis and to enable XL Capital to meet its
timetable for the printing, filing and public dissemination of its annual
statements. SCA will request its independent certified accountants to make
available to the XL Capital's independent certified accountants both the
personnel who performed or are performing the annual audit ( and any review of
interim financial statements) of and, consistent with customary professional
practice and courtesy of such auditors with respect to the furnishing of work
papers, work papers related to the annual audit (and any review of interim
financial statements) of SCA, in all cases within a reasonable time that the XL
Capital's auditors are able to perform the procedures they consider necessary to
statements. In the case of access by XL Capital, until XL Capital no longer uses
the consolidation or equity accounting methods to account for its interest in
the Company, representatives shall include XL Capital's internal audit
department to conduct reviews in accordance with XL Capital's then internal
audit policies and procedures.

        (b)     Without limiting any of the foregoing:

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                (i)     Each party undertakes to the other party that it will
        provide to the other party reasonable access to (i) the first party's
        accounting records underlying transactions processed by the first party
        on behalf of the other party and (ii) related information technology
        systems and (iii) related employees involved in the processing, control
        and maintenance of systems with respect to services provided by the
        first party to the other party pursuant to any Ancillary Agreement where
        the service is viewed as a key control over financial reporting by the
        other party's management (collectively, the "Activities");

                (ii)    Each party undertakes to the other party that it will
        provide to the other party's independent public accountants reasonable
        access to (i) the other party's accounting records underlying
        transactions processed by the first party on behalf of the other party,
        (ii) related information technology systems and (iii) related employees
        involved in the processing, control and maintenance of systems; provided
        that, such access directly relates to the independent public
        accountants' financial statement and Section 404 audits over the
        Activities;

                (iii)   The key controls described in (i) above shall be
        identified in writing by a party to the other party, at a minimum, on an
        annual basis, and from time to time when a party's management identifies
        additional Activities within the scope of subsection (i) above; and

                (iv)    Each party shall give the other party reasonable notice
        of any proposed on site meetings or visits with employees and/or
        consultants within the scope of subsections (i) or (ii) above.

                The costs and expenses of the other party relating to this
Section 7(b), including the costs and expenses of the other party's independent
public accountants, shall be borne by such other party. Each party reserves the
right to charge the other party for the first party's employee and/or consultant
time related to the Activities described in this Section if significant time is
spent by such party's employees or consultants on the matters referred to in
this Section and each party hereby agrees to pay such reasonable amounts called
for by the terms hereof if and when billed for such time.

                This Section 7(b) shall cease upon the occurrence of the Voting
Restriction Termination Event.

        Section 7.2     RETENTION OF RECORDS. Each of XL Capital and SCA and
their respective Post-Closing Subsidiaries shall retain, at their own expense,
and shall cause their respective Post-Closing Subsidiaries to retain, following
the Closing Time, for a period consistent with the longer of their respective
document retention policies or such period as may be required by applicable law
or regulations, respectively, all significant information relating to the
business of the other and the other's Subsidiaries or the obligations of the
other or the other's Subsidiaries, and shall notify the other parties hereto
prior to disposing of such information and provide them with an opportunity to
obtain such information, at their own expense, prior to such disposal.

        Section 7.3     ATTORNEY CLIENT PRIVILEGE. The provision of any
Information or personnel pursuant to this Article VII shall not be deemed a
waiver of any privilege, including privileges arising under or related to the
attorney-client or any other applicable privilege (a "Privilege"). Neither party
nor its Subsidiaries will be required to provide any Information or personnel
pursuant to this Article VII if the provision of such information would serve as
a waiver of any Privilege afforded such information. Any Information owned by
one party that is provided to another party or its Representatives shall be
deemed to remain the property of the providing person. No party shall have any
liability to any other party in the event that any Information exchanged or
provided pursuant to this Agreement which is an estimate or forecast, or which
is based on an estimate or forecast, is found to be inaccurate in the absence of
willful misconduct by the party providing such Information. No party shall have
any liability to any other party, if any Information is destroyed after
commercially reasonable efforts by such party to comply with the provisions of
this Agreement.

                                      -9-
<PAGE>

        Section 7.4     OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION.

        (a)     The rights and obligations granted under this Article VII are
subject to any specific limitations, qualifications or additional provisions on
the sharing, exchange, retention or confidential treatment of Information set
forth in any Ancillary Agreement.

        (b)     When any Information provided by one Group to the other (other
than Information provided pursuant to Section 4.13) is no longer needed for the
purposes contemplated by this Agreement or any other Transaction Document or is
no longer required to be retained by applicable law, rule or regulation, the
receiving party will promptly after request of the other party either return to
the other party all Information in a tangible form (including all copies thereof
and all notes, extracts or summaries based thereon) or certify to the other
party that it has destroyed such Information (and such copies thereof and such
notes, extracts or summaries based thereon).

        Section 7.5     CONTINUING ARRANGEMENTS; POLICIES AND RIGHTS OF XL GROUP

        (a)     Until the occurrence of the Voting Restriction Termination
Event, SCA agrees that it shall, and shall cause each then member of the SCA
Group to be subject to the corporate policies and procedures then applicable to
Subsidiaries of XL Capital and communicated to SCA in writing, relating to the
matters listed in Schedule 7.5, unless (but only to the extent): (i) otherwise
agreed with XL Capital, or (ii) upon advice from counsel to SCA Group, the
adherence by such member of the SCA Group to such policy or procedure reasonably
would violate (or result in a violation of) any law, rule or regulation
(including without limitation any regulation of any applicable national
securities exchange on which the securities of SCA are then registered)
applicable to such member, (iii) if such policy or procedure is an accounting
matter, upon advice from the Audit Committee of SCA or the independent
accountants of SCA that adherence by such member of the SCA Group to such policy
or procedure would reasonably violate or be contrary to any United States
generally accepted accounting principle or rule or regulation of any regulatory
body applicable to such member; and in the case of clause (ii) or (iii) such
policy or procedure has not been otherwise amended by XL Capital to the extent
necessary to avoid such violation or contradiction within five Business Days
after notice thereof from SCA to XL Capital, or (iii) SCA and XL Capital have
been advised in writing by one of the leading national ratings agencies of
consequence to SCA that compliance therewith by a member of the SCA Group at the
Closing Time that is then rated by such rating agency would be unacceptable and
consequential to the then current ratings of such member.

        (b)     Until the occurrence of the Voting Restriction Termination
Event, SCA shall coordinate and give at least 48 hours prior notice to XL
Capital with respect to any written presentations by any members of the SCA
Group made to, or other communications with, any rating agencies (other than
ordinary course written communication with agencies with respect to the
prospective rating, or effect on the SCA Group's rating of, potential ordinary
course transactions to be entered into by a member of the SCA Group). SCA shall
promptly inform XL Capital in advance of any matters of potential consequence to
any member of the SCA Group or XL Capital as a result of any other
communications or presentations with rating agencies.

        (c)     Until the occurrence of the Voting Restriction Termination
Event, SCA shall coordinate and give at least 48 hours prior notice (with, to
the extent such presentation or communication is written, accompanied with
copies thereof) to XL Capital with respect to any presentations by any members
of the SCA Group made to, or other material communications with equity research
analysts and/or the investment banking community in general. SCA shall promptly
inform XL Capital of any matters of potential consequence to any member of the
SCA Group or XL Capital as a result of any communication or presentations with
research analysts or investment banks. Communications with investment bankers,
in their capacity as actual or prospective clients or sources of business for,
SCA Group shall not be covered by this paragraph. Until the occurrence of the
Voting Restriction Termination Event (unless otherwise prohibited by applicable
law, rule or regulation), SCA shall provide to XL Capital copies of all reports
and examinations of any applicable regulators or rating agencies of any member
of the SCA Group, promptly upon receipt thereof by the SCA Group.

        (d)     Notwithstanding that the Voting Restriction Termination Event
has occurred, if any member of the XL Capital Group is required during any
fiscal period, for external financial reporting purposes, to account for its
investment in SCA on a consolidated basis or under the equity method of
accounting, then in respect of all such fiscal periods, SCA shall reasonably
cooperate with XL Capital to, at XL Capital's expense, facilitate such
reporting.

                                      -10-
<PAGE>

        (e)     From and including the date hereof, until the second anniversary
of the date of this Agreement, SCA shall have the rights with respect to the XL
name and related matters as set forth in Schedule 7.5(e) hereto. (Such date
being referred to as the "Termination of License Date"). Until the Termination
of License Date, SCA shall continue to use the XL name in accordance with past
practice unless SCA determines that it no longer wishes to use the XL name in
which event SCA shall obtain the consent of XL Capital not to use the XL name,
such consent not to be unreasonably withheld by XL Capital. In the event such
consent is granted, such termination shall be subject to a reasonable and
mutually agreeable transition period.

        Section 7.6     VOTING BY XL CAPITAL GROUP; NOMINEES OF DIRECTORS; RISK
OVERSIGHT Committee.

        (a)     XL Capital will vote its Common Shares, and shall cause its
Subsidiaries to vote Common Shares held by them, to elect a majority of the SCA
Board that is both (i) "independent" (as defined in the corporate governance
rules of the listing standards of the New York Stock Exchange Inc) and (ii)
neither a director nor an officer of any member of the XL Capital Group.

        (b)     Until the occurrence of the Voting Restriction Termination
Event, XL Capital will have the right to nominate for the SCA Board (i) four of
the nine nominees for director and (ii) if, for any reason, the SCA Board
consists of more than nine directors, such number of nominees as would equal one
nominee less than a majority of the nominees for director. Such nominees will be
allocated among the classes of the SCA Board as follows: (i) two to the Class of
Directors that initially has a one year term and (ii) one each to the Classes of
Directors that initially have a two year and three year term (or as
substantially equivalent thereto if for any reason the Board consists of more
than nine directors). If, for any reason, there is a vacancy in the SCA Board,
which vacancy is of a director so nominated by XL Capital, SCA shall replace
that directorship as soon as practicable with a nominee selected by XL Capital.
Similarly, if there is a vacancy created by an increase in the number of
directors, then such vacancy shall be filled in a manner consistent with XL
Capital's rights set forth in the second sentence of this Section 7.6(b).

        (c)     Until the occurrence of the Voting Restriction Termination
Event, (i) XL Capital will have the right to nominate one member of the SCA
Compensation Committee and (ii) the SCA Compensation Committee shall consist of
three members which number of members shall not be changed without XL's prior
consent (subject to any restrictions imposed by applicable law, rule or
regulation).

        (d)     Until the occurrence of the Voting Restriction Termination
Event, SCA will maintain a Finance and Risk Oversight Committee whose charter
shall be substantially in the form of EXHIBIT 7.6(E) hereto (with such changes
thereto as may be agreed by a majority of the members of that Committee and the
SCA Board of Directors), and a majority of the members of such Committee shall
be directors of SCA appointed by those directors of the SCA Board of Directors
nominated by XL Capital, as contemplated by Section 7.6(b).

        (e)     As SCA intends to utilize the controlled company exemption under
the rules of the New York Stock Exchange Inc (or other national securities
exchange on which the Common Shares are then listed), so long as SCA meets the
definition of a controlled company under the rules of such exchange as may be
amended from time to time, SCA shall not take any action to change such status
without the prior consent of XL Capital. For the avoidance of doubt, nothing in
this Section 7(e) shall affect SCA's ability to sell Common Shares or enter into
other transactions if such sale or transaction is otherwise made in accordance
with the terms of this Agreement and the SCA Bye-Laws.

        (f)     All provisions of this Section 7.6 shall cease upon the
occurrence of the Voting Restriction Termination Event.

        Section 7.7     RIGHT TO MAINTAIN OWNERSHIP.

        (a)     If SCA proposes to issue any additional Common Shares or
securities or options exercisable or exchangeable for or convertible into Common
Shares, (other than (i) the issuance or grant of options or rights or the
issuance of Common Shares, in each case, pursuant to any SCA's Board of
Directors approved incentive plans for directors, employees or officers and
excluding, in the case of such options or rights, the issuance of Common Shares
upon exercise thereof, which are separately covered by Section 7.7(d) below;
(the issuance of Common Shares,

                                      -11-
<PAGE>

whether directly under such Plans or upon the exercise of such options or
rights, is collectively referred to hereinafter as "Plan Shares"); (ii) Common
Shares, securities or options issued pursuant to the terms of securities
exercisable or exchangeable for or convertible into common shares if such
securities have been issued or granted previously in compliance with this
Section 7.7 or (iii) pursuant to the Registration Statement) (collectively, "New
Securities"), SCA shall, not less than 20 days prior to such issuance (or such
lesser time as may be applicable if SCA shall have determined to issue such
securities less than 20 days prior to their issuance), give written notice (the
"Offer Notice") to XL Capital, stating the number of New Securities and the
price per share or unit, the terms of payment and all other terms and conditions
on which SCA proposes to make such issuance, as well as a calculation of the
maximum number and type of New Securities that XL Capital would have the right
to purchase under this Section 7.7 and the Determined Price therefor; provided
that XL Capital Group shall not be entitled to purchase New Securities to the
extent that the principal national securities exchange in the United States on
which the Common Shares is listed, if any, prohibits or limits that purchase. XL
Capital shall have the option to purchase, for a thirty day period commencing
contemporaneously with the issuance of such New Securities (such period to be
shortened or extended to the extent necessary to accommodate any legal,
regulatory or other similar requirement), without conditions other than payment
for such New Securities and compliance with laws, up to the number of New
Securities determined as set forth in Section 7.7(b) at their Determined Price.
In order to facilitate an issuance of New Securities, SCA may give the Offer
Notice prior to (but subject to) any issuance of New Securities and require XL
Capital to unconditionally elect, as a condition to participating in that offer,
whether or not (and to what extent) it will purchase New Securities.

        (b)     Subject to Section 7.7(a), XL Capital shall be entitled to
purchase up to that number of the New Securities necessary to maintain XL
Capital Group's then-outstanding and fully diluted equity ownership (assuming
for the purposes of such calculations, the exercise, exchange or conversion of
all New Securities exercisable, exchangeable for, or convertible into, Common
Shares (I.E., that XL Capital Group's economic ownership both before and after
giving effect to the issuance and, if applicable, exercise, exchange or
conversion, of New Securities would be the same)). In order to make such a
purchase, XL Capital must give written notice to the Company within 5 days after
SCA gives the Offer Notice, stating the number of New Securities which XL
Capital desires to purchase.

        (c)     If no notice is provided pursuant to Section 7.7(b) for the
purchase of any of the New Securities within such time period (or if the option
is exercised in the aggregate for less than the total amount of the New
Securities), SCA shall be free for a period of 90 days thereafter to sell the
New Securities as to which such option has not been exercised to the proposed
offerees at no less than the sale price set forth in the Offer Notice. If,
however, at the expiration of such 90 day period, such New Securities have not
been issued in accordance with the terms set forth in the Offer Notice, then any
other issuance or proposed issuance thereof shall be subject to all of the
provisions of Section 7.7(b) hereof. For the avoidance of doubt, options or
rights issued pursuant to plans described in clause (i) of the first sentence of
Section 7.7(a) shall be excluded in any calculation of fully diluted shares.

        (d)     Upon the issuance of Plan Shares, XL Capital shall have the
right to purchase a number of Common Shares from SCA necessary to maintain XL
Capital's then-outstanding and fully diluted equity ownership (calculated as
specified in Section 7.7(b). SCA shall give an Offer Notice with respect thereto
in accordance with the provisions of Sections (a), (b) and (c) of this Section
7.7 (MUTATIS MUTANDIS) except that (i) SCA may defer the giving of any Offer
Notice that results solely from the issuance of Plan Shares until the earlier
of: (x) the next succeeding time when an Offer Notice is otherwise required to
be delivered under this Section 7.7 and (y) five days prior to the expiration of
the final period in each fiscal year (commencing with the fiscal year ending
December 31, 2006), in which officers and directors of SCA are generally
permitted by SCA policy to purchase or sell Common Shares; and (ii) the purchase
price for any Common Shares that may be purchase by XL Capital pursuant to this
Section 7.7(d) shall be the average closing price of the Common Shares on the
principal national securities exchange on which the Common Shares then trade for
a 20 trading day period ending nearest to the date the Offer Notice is first
required to be delivered, excluding any dates on which officers and directors of
SCA are generally precluded by SCA policy from purchasing or selling Common
Shares (provided that if the Common Shares are not then listed on a principal
national securities exchange such price shall be set at the fair value thereof
as determined by the Board of Directors of SCA in good faith). Plan Shares
issued after the second Business Day prior to the giving of any Offer Notice as
a result of clause (ii) of the first sentence of this Section 7.7(d) need not be
included in that Offer Notice, but will be included in any subsequent Offer
Notice.

                                      -12-
<PAGE>

        (e)     XL Capital shall not be entitled to purchase shares pursuant to
any offer (and no offer need be made under this Section 7.7) to the extent that,
after giving effect thereto of such purchase, the XL Capital Group's would
exceed the lesser of (i) 65% (subject to upward adjustment as described in the
next succeeding sentence) or (ii) the maximum number that XL Capital may own
without such ownership having an adverse effect on any financial strength rating
provided by a nationally recognized rating agency with respect to any member of
the SCA Group. The percentage set forth in clause (i) of the prior sentence
shall be adjusted upwards upon receipt by SCA of written confirmation from each
nationally recognized rating agency then providing a financial strength rating
for SCA and/or its subsidiaries that such financial strength rating is or will
be determined without reference to the ratings of any member of the XL Group or
that the then financial strength rating issued by it will not at the time of
such confirmation be adversely affected by the elimination or adjustment of such
limitation.

        (f)     This Section 7.7 shall have no force and effect with respect to
any issuance of New Securities or Plan Shares subsequent to the occurrence of
the Voting Restriction Termination Event.

        (g)     XL Capital may assign all or any portion of its rights under
this Section 7.7 to members of the XL Group that then own securities of SCA,
subject, in each case, to applicable law, rule or regulation and provided that
no such assignment shall be effective if such assignment, in the good faith
judgment of SCA, would have material adverse tax, regulatory or ratings
consequences to any member of the SCA Group.

        Section 7.8     REGISTRATION RIGHTS. XL Capital shall have the
registration rights described in SCHEDULE 7.8(A).

        Section 7.9     CONFIDENTIAL INFORMATION.

        (a)     SCA shall not, and shall not permit any of its Post-Closing
Subsidiaries or any of their respective directors, officers and agents to
disclose any information of a known confidential nature received from a member
of the XL Parties ("XL Capital Confidential Information") and XL Capital shall
not, and shall not permit any of its Post-Closing Subsidiaries or any of their
respective directors, officers and agents to disclose any information of a
confidential nature received from a member of SCA Group ("SCA Confidential
Information" and, together with the XL Capital Confidential Information,
"Confidential Information").

        (b)     Confidential Information shall not include information which is
or becomes generally known on a non-confidential basis, provided that the source
of such information was not bound by a confidentiality agreement or other
obligation of confidentiality.

        (c)     If SCA or XL Capital or any of its Subsidiaries or any of their
respective directors, officers or agents is legally requested or required under
an order or subpoena issued by a court, administrative agency or arbitration
panel, or to comply with regulatory or ratings agency requests or requirements,
(through oral examination, interrogatories, requests for information or
documents, civil investigation demand or other legal, administrative or
arbitration processes) to disclose any Confidential Information, the party being
so requested or required to disclose such Confidential Information shall use
reasonable efforts to give the party whose Confidential Information is subject
to such request or requirement prompt written notice of the request,
requirement, subpoena or order to permit (to the extent reasonable) such other
party (if it so elects at its expense) to seek an appropriate protective order
preventing or limiting disclosure. If, in the absence of such protective order,
a party is compelled to disclose Confidential Information, such party may
disclose such Confidential Information without liability hereunder.

        (d)     Each party agrees that money damages would not be a sufficient
remedy for any breach of this Section 7.9 and that, in addition to all other
remedies, each party shall be entitled to specific performance and injunctive or
other equitable relief as a remedy for any such breach.

        Section 7.10    FURTHER ASSURANCES; NO AGENCY; SPECIFIC PERFORMANCE. If
at any time after the Closing Time any further action is reasonably necessary or
advisable to carry out the purposes of this Agreement or any Ancillary
Agreement, the proper officers of each party to this Agreement shall take all
such reasonable necessary or advisable action or cause the applicable
Post-Closing Subsidiaries to take all such action. Each of XL Capital and its
Post-Closing Subsidiaries and SCA and its Post-Closing Subsidiaries shall use
its commercially reasonable ef-

                                      -13-
<PAGE>

forts to obtain all consents and approvals, to enter into all amendatory
agreements and to make all filings and applications that may be required for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, all applicable
governmental, regulatory and rating agency requests or filings. Under no
circumstances does this Agreement or any of the Ancillary Agreements create an
agency relationship between XL Capital and SCA, except to the extent specified
in any such Ancillary Agreement. The parties each agree and acknowledge that
remedies at law for any breach of their obligations under this Section 7.10 are
inadequate and that in addition thereto each party, as applicable, shall be
entitled to equitable relief, including injunction and specific performance, in
the event of any such breach.

                                  ARTICLE VIII

                                 INDEMNIFICATION

        Section 8.1     GENERAL.

        (a)     Effective upon the Closing Time, XL Capital shall indemnify,
defend and hold harmless each member of SCA Group and their respective officers,
directors (which include director designees designated as such in the
Registration Statement), employees, representatives and agents (each an "SCA
Indemnified Party") from and against any and all Losses of such SCA Indemnified
Party arising out of, relating to, by reason of or otherwise in connection with:

                (i)     any untrue statement or alleged untrue statement of
        material fact relating to the XL Information contained in the
        Registration Statement or the prospectus that forms a part thereof, or
        any amendment or supplement thereto, or any omission or alleged omission
        to state therein a material fact required to be stated therein or
        necessary to make the statements therein, in light of the circumstances
        under which they are made, not misleading (a "Misstatement") but only to
        the extent such relates to the XL Parties; provided that Losses under
        this clause shall be limited to third-party claims by purchasers of the
        Common Shares in the Public Offering or thereafter (including, without
        limitation, the underwriters of the Public Offering);

                (ii)    any breach by any member of the XL Parties of any of
        their representations or warranties in, or any covenant, commitment,
        obligation, agreement or undertaking to be performed or complied with by
        any of them under, this Agreement or any Ancillary Agreement; and

                (iii)   any act or omission occurring on or prior to the Closing
        Time (other than with respect to policies of insurance, contracts of
        reinsurance or credit default swaps, or similar credit enhancement
        products provided by any member of the SCA Group or its Affiliates), but
        only if and to the extent that such act or omission (x) was covered by
        the indemnity provisions in XL Capital's Articles of Association as in
        effect on the Closing Time or (y) would constitute a Claim (as defined
        in the insurance policy described below) covered by the wording of the
        policy of insurance of Zurich American Insurance Company -- [Policy No.
        EOC 4911685 03] (irrespective of the dollar deductibles and aggregate
        dollar policy limits contained therein and assuming that SCA would be an
        insured party under such policy, but subject, in all cases, to the
        exclusions and other policy terms therein).

        (b)     Effective upon the Closing Time, SCA shall indemnify, defend and
hold harmless each member of the XL Parties and their respective officers,
directors, employees, representatives and agents (each an "XL Indemnified
Party") from and against any and all Losses of such XL Indemnified Party arising
out of, relating to, by reason of or otherwise in connection with:

                (i)     any Misstatement other than to the extent such
        Misstatement relates to the XL Parties; provided that Losses under this
        clause shall be limited to third-party claims by purchasers of the
        Common Shares in the Public Offering or thereafter (including, without
        limitation, the underwriters of the Public Offering); and

                                      -14-
<PAGE>

                (ii)    any breach by any member of SCA Group of any of their
        representations or warranties in, or any covenant, commitment,
        obligation, agreement or undertaking to be performed or complied with by
        any of them under, this Agreement or any Ancillary Agreement;

provided that the indemnity set forth in this Section 8.1(b) shall not cover any
matter to the extent indemnity from XL Capital would otherwise be available
under Section 8.1(a).

        (c)     The indemnity obligations contained in this Section 8.1 shall
(x) not cover any liabilities or other matters that are separately provided for
in any Ancillary Agreement and (y) be applicable whether or not any Action or
the facts or transactions giving rise to such Action arose prior to, on or
subsequent to the date of this Agreement. The Indemnifying Party shall (upon
payment to the Indemnified Party of all amounts with respect thereto) be
subrogated with respect to all rights and remedies of the Indemnified Party with
respect to the related claim.

        Section 8.2     INDEMNIFICATION PROCEDURES. If any Action is brought in
respect of which indemnity may be sought pursuant to this Agreement, the Person
seeking indemnification (the "Indemnified Party") shall promptly notify the
Person against whom indemnification is sought (the "Indemnifying Party") in
writing of the institution of such Action (but the failure so to notify will not
relieve the Indemnifying Party from any liability that it may have to the
Indemnified Party under this Article VIII to the extent the Indemnifying Party
is not materially prejudiced as a result thereof, and in no event shall it
relieve the Indemnifying Party from any liability it may have otherwise than
pursuant to this Article VIII), and the Indemnifying Party shall assume the
defense of such Action, including the employment of counsel reasonably
satisfactory to the Indemnified Party and payment of expenses. The Indemnified
Party shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of Indemnified Party
unless (i) the employment of such counsel shall have been authorized in writing
by the Indemnifying Party, (ii) the Indemnifying Party shall not have employed
counsel reasonably satisfactory to the Indemnified Party within a reasonable
time or (iii) such Indemnified Party shall have reasonably concluded (based on
the advice of counsel) that there may be defenses available to it or them which
are different from or additional to those available to the Indemnifying Party
and may present a conflict for counsel representing the Indemnified Party and
the Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such Action on behalf of the Indemnified Party),
in any of which events such fees and expenses shall be borne by the Indemnifying
Party and paid as incurred (it being understood, however, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one separate
counsel (in addition to local counsel) for the Indemnified Parties in any one
Action or series of related Actions in the same jurisdiction representing the
Indemnified Parties, unless such Indemnifying Party shall not have employed
counsel reasonably satisfactory to the Indemnified Party within a reasonable
time or such Indemnified Party shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the other Indemnified Party).
Anything in this Section 8.2 to the contrary notwithstanding, the Indemnifying
Party shall not be liable for any settlement effected without its prior written
consent unless the Indemnifying Party shall have failed to assume the defense of
such Action. An Indemnifying Party will not, without the prior written consent
of the Indemnified Party (which shall not be unreasonably withheld or delayed),
settle or compromise or consent to the entry of any judgment in any Action in
respect of which indemnification may be sought hereunder unless such settlement,
compromise or consent includes an unconditional release of the Indemnified
Parties from all liability arising out of the Action and does not subject any of
the Indemnified Parties to any admission of liability, consent decree, or any
other material and adverse condition or restriction of any kind.

        Section 8.3     REMEDIES CUMULATIVE. The remedies provided in this
Article VIII shall be cumulative and shall not preclude assertion by an
Indemnified Party of any other rights at law or in equity or the seeking of any
and all other remedies against any Indemnifying Party.

        Section 8.4     CONTRIBUTION. If any indemnification provided for in
this Article VIII is unavailable to an Indemnified Party in respect of any Loss
arising out of or related to information contained in the Registration Statement
as provided in Section 8.1(a)(ii) or Section 8.1(b)(ii), then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Loss, in
such proportion as is appropriate to reflect the relative fault of SCA and each
other member of SCA Group, on the one hand, and XL Capital and each other member
of the XL Parties, on the other hand, in connection with the Misstatements that
resulted in such Loss. With respect to any Loss relating to matters covered by
Section 8.1(a)(ii) or 8.1(b)(ii) or otherwise relating to misstatements or
omissions under securities or antifraud laws, the relative fault of

                                      -15-
<PAGE>

a member of SCA Group, on the one hand, and of a member of the XL Parties, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to a member of SCA Group or a
member of the XL Parties and was supplied by such member.

        Section 8.5     SURVIVAL OF INDEMNITIES. The obligations of SCA and XL
Capital under this Article VIII shall survive indefinitely.

        Section 8.6     OTHER INDEMNIFICATION PROVISIONS.

        (a)     Notwithstanding any provision of this Agreement to the contrary,
if a member of the SCA Group seeks to assert any right to indemnification
hereunder from XL Capital and such claim may be asserted against a Post-Closing
Subsidiary of XL Capital, such member of SCA Group shall first seek to recover
from the such Post-Closing Subsidiary unless doing so would materially prejudice
such member of SCA Group in obtaining relief.

        (b)     Claims for indemnification under any Ancillary Agreement shall
be subject to the procedures set forth in this Article VIII unless otherwise
specified in the Ancillary Agreement.

        (c)     For the avoidance of doubt, (i) indemnity claims that are
covered by both this Section 8.6 and an Ancillary Agreement shall, or that are
expressly waived or excluded by operation of the terms of an Ancillary Agreement
shall, not be covered by the provisions of this Section 8.6 and (ii) nothing
contained in this Article VIII shall affect, limit or amend any of the
indemnification provisions contained in any of the Ancillary Agreements.

                                   ARTICLE IX

                                  MISCELLANEOUS

        Section 9.1     TERMINATION. Notwithstanding any provision of this
Agreement or any Ancillary Agreement to the contrary, this Agreement may be
terminated and the Public Offering and other transactions contemplated hereby
may be abandoned at any time prior to the Closing Time by and in the sole
discretion of XL Capital. In the event of such termination, no party shall have
any liability of any kind to any other party on account of such termination,
except as set forth in Section 9.11.

        Section 9.2     SURVIVAL. All representations, covenants and agreements
contained or provided for herein shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the party
benefiting from any such covenant or agreement, and shall survive the execution
of this Agreement.

        Section 9.3     GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the state of New York, without regard
to its conflict of laws principles. The parties hereto consent to the
non-exclusive jurisdiction of the Courts of New York.

        Section 9.4     NOTICES. All notices, requests, claims, demands and
other communications hereunder and under the Ancillary Agreements shall be in
writing and shall be deemed to have been duly given if delivered by hand (with
receipt confirmed), or by certified mail, postage prepaid and return receipt
requested, or facsimile transmission addressed as follows (or to such other
address as a party may designate by written notice to the others) and shall be
deemed given on the date on which such notice is received:

                        If to XL Capital:

                        XL House
                        One Bermudiana Road
                        Hamilton HM 11, Bermuda
                        facsimile: (441) 296-7340
                        Attention:  Chief Financial Officer

                                      -16-
<PAGE>

                        with a copy to:

                        XL America Inc.
                        70 Seaview Avenue
                        Stamford, Connecticut  06902
                        facsimile (203) 964-5309
                        Attention:  General Counsel

                        If to SCA:

                        One Bermudiana Road
                        Hamilton HM 11, Bermuda
                        facsimile: (441) 295-5602
                        Attention:  Executive Vice President--
                          Financial Guaranty Reinsurance

                        with a copy to:

                        XL Capital Assurance, Ltd.
                        1221 Avenue of the Americas
                        New York, New York
                        facsimile:  (212) 478-3605
                        Attention:  Chief Financial Officer

        Section 9.5     AMENDMENT AND MODIFICATION. This Agreement may not be
amended, modified or waived, except by an instrument in writing duly signed on
behalf of the parties hereto.

        Section 9.6     SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

        Section 9.7     NO THIRD PARTY BENEFICIARIES. Except for the provisions
of Article VIII and Schedule 7.6(a), this Agreement is solely for the benefit of
the parties hereto and shall not be deemed to confer upon third parties
(including stockholders or members of any party hereto) any remedy, claim,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.

        Section 9.8     HEADINGS. The Article and Section headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.

        Section 9.9     SEVERABILITY. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remaining provisions of this Agreement shall be unaffected and
shall continue in full force and effect.

        Section 9.10    WAIVER. No failure by any party to take any action or
assert any right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise to such
right, unless expressly waived in writing.

        Section 9.11    EXPENSES. Except as otherwise specified in this
Agreement or any of the Ancillary Agreements, all costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement, the Ancillary
Agreements and the transactions contemplated hereby shall be paid by the party
for which such costs and expenses were borne or benefited, whether or not the
Closing Time shall have occurred. The parties shall cooperate with one another
with respect to allocation of any costs and expenses that are not clearly
allocable to, or borne for the benefit of, a particular party.

        Section 9.12    PUBLIC ANNOUNCEMENT. No party to this Agreement shall
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated hereby or oth-

                                      -17-
<PAGE>

erwise communicate with any news media without the prior consent of the other
party and the parties shall cooperate as to the timing and contents of any such
press release or public announcement.

        Section 9.13    ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between XL Capital and SCA with respect to
the subject matter hereof and thereof.

        Section 9.14    ASSIGNMENT OF THIS AGREEMENT. No party may assign this
Agreement by operation of law or otherwise without the express written consent
of the other parties; provided, however, this Agreement may be assigned by
operation of law or otherwise without the express written consent of the other
parties hereto by XL Capital and/or SCA to their respective Post-Closing
Subsidiaries so long as such assignment does not relieve the assigning party of
liability hereunder.

        Section 9.15    COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

                           [Intentionally left blank]

                                      -18-
<PAGE>

        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.

                                             XL CAPITAL LTD

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

                                             XL INSURANCE (BERMUDA) LTD

                                        By:   /s/ Charles Stanley Lee
                                             -----------------------------------
                                             Name:  Charles Stanley Lee
                                             Title: Chief Financial Officer

                                             X.L. AMERICA, INC.

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

                                             SECURITY CAPITAL ASSURANCE LTD

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

                             [Transition Agreement]

<PAGE>

                                                                 Schedule 3.2(a)

                           Expenses to be Borne by SCA

All expenses of the Public Offering including, without limitation, (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, issuance and delivery of the certificates for the
Common Shares to the underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Common Shares to the underwriters or as a result of the Transactions referred to
in Article II, (iii) the fees and disbursements of SCA' counsel, accountants and
other advisors, (iv) fees and expenses SCA is required to reimburse the
underwriters for in connection with the qualification of the Common Shares under
Blue Sky or state securities laws, (v) the printing and delivery to the
underwriters of copies of each preliminary prospectus and the prospectus and any
amendments or supplements thereto, (vi) the fees and expenses incurred in
connection with the listing of the Common Shares on the New York Stock Exchange,
and (vii) the out of pocket expenses incurred in connection with the road show.
For the avoidance of doubt, expenses shall not include underwriting discounts or
commissions with respect to shares sold by persons other than SCA.

<PAGE>

                                                                    Schedule 7.5

                  XL CAPITAL CORPORATE POLICIES AND PROCEDURES
                            TO APPLY TO THE SCA GROUP

                o   INTERNAL AND EXTERNAL ACCOUNTING POLICIES, PRACTICES AND
                    PROCEDURES. It is understood that SCA and its Post Closing
                    Subsidiaries shall comply with XL Capital's accounting
                    policies, practices and procedures generally applicable to
                    XL Capital's Subsidiaries, as they may be amended from time
                    to time, to the extent that such policies, practices and
                    procedures are applicable to SCA or its Post Closing
                    Subsidiaries business. SCA and its Post Closing Subsidiaries
                    shall give XL Capital reasonable notice of any proposed
                    material change in accounting policies or principles
                    including any changes mandated or required by the Securities
                    and Exchange Commission (the "SEC"); Financial Accounting
                    Standards Board or the Public Company Accounting Oversight
                    Board. In connection therewith, SCA and/or its Post Closing
                    Subsidiaries will consult with XL Capital and, if requested
                    by XL Capital, the independent public accountant for XL
                    Capital. Promptly, but in no event later than five business
                    days following the receipt thereof, SCA shall deliver to XL
                    Capital all reports submitted to SCA or any of its Post
                    Closing Subsidiaries by their independent public accountant,
                    including, without limitation, each report submitted to SCA
                    or its Subsidiaries concerning its accounting practices and
                    systems (including systems of internal controls) and any
                    comment letter submitted to management in connection with
                    any audit and all responses by management to such reports
                    and letters. SCA shall assist XL Capital in responding to
                    any inquiries from XL Capital's auditors with respect to
                    financial or accounting matters concerning the business of
                    SCA.

                o   COMPLIANCE, ETHICS AND CORE VALUES. SCA and its Post Closing
                    Subsidiaries shall adopt a Code of Business Conduct & Ethics
                    and Code of Ethics for Senior Financial Officers, which
                    shall be substantially the same as that then in effect from
                    time to time of XL Capital. Such code shall be applicable to
                    all current or future employees of SCA and its Post Closing
                    SUBSIDIARIES.

                o   ACTUARIAL POLICIES AND PROCEDURES;

                    It is understood that SCA and its Post Closing Subsidiaries
                    shall comply with XL Capital's actuarial policies, practices
                    and procedures generally applicable to XL Capital's
                    Subsidiaries, as they may be amended from time to time, to
                    the extent that such policies, practices and procedures are
                    applicable to SCA and its Post Closing Subsidiaries.

                o   INTERNAL AND EXTERNAL FINANCIAL AND REGULATORY REPORTING.

                    SCA and its Post Closing Subsidiaries shall deliver (on a
                    timely basis) to XL Capital the information reasonably
                    requested by XL Capital for inclusion with respect to: (i)
                    budgeting and financial planning processes; (ii) preparation
                    of annual and quarterly financial statements and related
                    earnings and other reports and press releases; and (iii)
                    meetings with regulators, rating agencies or equity
                    analysts.

                    Promptly following the filing by SCA or any of its Post
                    Closing Subsidiaries of quarterly or annual or other reports
                    with any state or other insurance regulatory authorities in
                    any jurisdiction, SCA shall deliver (or cause to be
                    delivered) such reports or copies thereof (in the form
                    filed) to XL Capital.

                o   DISCLOSURE CONTROLS AND PROCEDURES. SCA's Chief Executive
                    Officer and Chief Financial Officer shall submit quarterly
                    representations to XL Capital (consistent with those
                    required to be submitted in SCA's annual and quarterly
                    filings with the Securities and Exchange Commission and
                    those provided to SCA's independent public accountants)
                    attesting to the accuracy and completeness of the financial
                    and accounting records and other information provided to XL

                                      -19-
<PAGE>

                    Capital for pur-poses of preparing XL Capital's: (i) filings
                    with the SEC or any other regulatory body (including
                    insurance regulators) and (ii) earnings press releases. SCA
                    shall assist XL Capital in responding to any inquiries from
                    regulatory or rating agencies with respect to matters
                    concerning the business of SCA.

                o   INDEPENDENT PUBLIC ACCOUNTANT. SCA and its Post Closing
                    Subsidiaries shall endeavor (subject to applicable law, rule
                    and regulation) to engage the same independent public
                    accountant as shall be engaged by XL Capital Ltd from time
                    to time.

                o   OPERATING PRINCIPLES (See Appendix I to this Schedule 7.5)

<PAGE>

                                                                 Schedule 7.5(e)

        XL Capital is the owner of the trademarks, trade names, service marks,
brand names, trade dress and logos identified on ANNEX A (the "Licensed Marks"),
which are and have been used in connection with the SCA Business.

        In consideration of the premises and mutual covenants and agreements
contained in this Agreement, the XL Capitals and SCA agree as follows:

        1.      XL Capital hereby grants, subject to the terms and conditions
set forth in this Schedule 7.5(e), to the Licensee and the other entities in the
SCA Group (collectively, the "Licensees") a non-exclusive, non-transferable,
non-assignable, non-sublicenseable, royalty-free license (the "License") to use
the Licensed Marks solely in the SCA Business. SCA agrees that it shall, and
shall cause the other Licensees to, use the Licensed Marks in conformity in all
material respects to (i) the standards used by the Licensees in connection with
the operation of the SCA Business as of the date of this Agreement and (ii) XL
Capital Corporate Standards with respect to the general use of the Licensed
Marks or similar marks as from time to time communicated to SCA. SCA shall use
only the Licensed Marks, as provided by XL Capital. SCA shall not form any
combination marks or combine any other materials with the Licensed Marks. SCA
shall not modify, for public display or otherwise, any Licensed Marks. SCA shall
not sublicense, resell, assign or transfer any of its rights hereunder, without
the prior written approval of XL Capital, which approval shall be granted or
withheld in XL Capital's sole discretion. Any attempt to resell, assign or
transfer such rights absent such approval is void and shall, at XL Capital's
election, result in immediate termination of this License, without liability to
XL Capital. Additionally, SCA acknowledges that its breach of this provision
would cause XL Capital irreparable harm, and in addition to other available
remedies, XL Capital shall be entitled to appropriate injunctive relief in the
event of such a breach or threatened breach. All rights not expressly granted
hereunder are reserved to XL Capital. For the avoidance of doubt, this License
shall include, for the term of such License, the use of "XL" in the name of
those members of the SCA Group who have that name in their name as of the date
of this Agreement.

        2.      SCA acknowledges, on its behalf and on behalf of the other
Licensees and cause all other Licensees to acknowledge, that the Licensed Marks
and the goodwill associated therewith are the sole and exclusive property of XL
Capital, and agrees, on its behalf and on behalf of the other Licensees, that
all goodwill arising from Licensees' use of the Licensed Marks hereunder shall
inure to the benefit of and be the property of XL Capital hereunder, it being
expressly agreed that in any case, no compensation whatsoever will be due by XL
Capital to any Licensee for the creation, as the case may be, of any goodwill
arising from the use of the Licensed Marks pursuant to this Agreement. SCA
shall, and shall cause the other Licensees to, not contest, either directly or
indirectly, the validity, originality, or value of the Licensed Marks, or XL
Capital's exclusive rights to the Licensed Marks and the goodwill represented
thereby.

        3.      SCA agrees that it will, and will cause the other Licensees to,
cooperate promptly with XL Capital in maintaining the nature and quality of the
Licensees' use of the Licensed Marks. SCA shall, and shall cause the other
Licensees to, refrain from any act that would reasonably be expected to tarnish
any of the Licensed Marks or bring any of the Licensed Marks into disrepute. SCA
shall, and shall cause the other Licensees to, promptly provide XL Capital with
such data relating to the use of the Licensed Marks hereunder as XL Capital may
reasonably request.

        4.      SCA shall not, and shall cause or permit the other Licensees not
to, use the Licensed Marks except as expressly authorized by this Agreement.

        5.      Immediately upon the Termination of License Date, SCA shall, and
shall cause the other Licensees to, cease all use of such Licensed Marks,
including all marketing and advertising use of such Licensed Marks and all uses
of such Licensed Marks. No later than the Termination of License Date, SCA shall
cause the other Licensees to make all necessary filings and take all other
necessary actions to change the names of the other Licensees and to discontinue
any reference to any Licensed Mark.

        6.      SCA and the other Licensees may retain and use in the ordinary
course of business, which may include reproduction and delivery to third parties
and to governmental entities, its internal memoranda, reports, documents and
other records (collectively "Internal Documents") which bear a Licensed Mark or
any other trademark,

<PAGE>

trade name, service mark, brand name, trade dress or logo of XL Capital
(collectively "Other Marks"), which, in the case of Internal Documents bearing a
Licensed Mark, were created prior to the termination of the License for such
Licensed Mark, and in the case of Internal Documents bearing an Other Mark, were
created prior to the date of this Agreement, for so long as such Internal
Documents are retained pursuant to record retention standards.

        7.      THE LICENSED MARKS ARE PROVIDED "AS IS." XL CAPITAL DISCLAIMS
ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NONINFRINGEMENT.

                                      -2-
<PAGE>

                                                                 Annex A
                                                                   to
                                                                 Schedule 7.5(e)

                                 LICENSED MARKS

        ""XL"

        "XLCA"

        "XLFA"

        "XL" in combination with any other letters

<PAGE>

                                                                 Schedule 7.8(a)

                       REGISTRATION RIGHTS AND PROCEDURES

        (a)     PIGGYBACK RIGHTS. If SCA at any time proposes to register Common
Shares or any other equity securities under the Securities Act, for its own
account or for the account of any holder of its securities, on a form which
would permit registration of Common Shares held by XL Capital and its
Subsidiaries ("Registrable Shares") for sale to the public under the Securities
Act, or proposes to register any equity securities in a so-called "unallocated"
or "universal" shelf registration statement, SCA will at such time give 30 days
written notice to XL Capital of its intention to do so. XL Capital may by
written response delivered to SCA within 10 days after the giving of any such
notice request that all or a specified part of the Registrable Shares be
included in such registration. Such response shall also specify the intended
method of disposition of such Registrable Shares. SCA thereupon will use its
reasonable commercial efforts as a part of its filing of such form to effect the
registration under the Securities Act of all Registrable Shares which SCA has
been so requested to register, to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Shares so to be registered; provided that if a recognized financial
advisor and potential underwriter advises SCA that the number of shares to be
included in a registration pursuant hereto should be limited because the
inclusion thereof would adversely affect the market for the Common Shares or
such proposed offering, all or a part of the Registrable Shares sought to be
included as part of such proposed registration shall be excluded from such
registration to the extent necessary to comply with such advice. SCA shall be
under no obligation to complete any offering of its securities it proposes to
make and shall incur no liability for its failure to do so.

        (b)     DEMAND REGISTRATION. At any time after the 90th day following
the Closing Time (subject to any contractual agreement that XL Capital may have
entered into in connection with the Public Offering), XL Capital may request a
registration (a "Demand Registration") of an amount of Common Shares of at least
$50 million in value (or, if XL Capital and its Subsidiaries then hold Common
Shares in value less than such amount, all of the Common Shares held by XL
Capital and its Subsidiaries), calculated at the average of the closing price of
the Common Shares on the NYSE for the five preceding trading days, of the then
outstanding Registrable Shares held by XL Capital and its Subsidiaries as may be
specified in such request. Any such request will also specify the intended
method of disposition thereof. After receipt of a notice of a Demand
Registration pursuant to this provision, SCA will use all reasonable commercial
efforts to effect expeditiously the registration under the Securities Act (and,
if eligible to do so, on Form S-3 thereunder) of the Registrable Shares which
SCA has been requested to register. XL Capital shall have the right to
effectuate five Demand Registrations under this subsection (b). XL Capital shall
have the right (to the extent the applicable rules of the Securities and
Exchange Commission so provide) to require that any demand registration be in
the form of a "shelf" registration.

        (c)     POSTPONEMENT. SCA may postpone for a period of up to 60 days the
filing or the effectiveness of any requested registration if the Board of
Directors of SCA in good faith determines that such registration is likely to
have a material adverse effect on SCA (or require material change in its public
disclosures) provided, however, that SCA shall promptly provide written notice
of any such postponement to XL Capital.

        (d)     PAYMENT OF EXPENSES; INDEMNITY. SCA shall pay all expenses of
registration as specified in Section 3.2 as if the registration effected
hereunder were the "Public Offering" referenced in such Section.

        (e)     MISCELLANEOUS REGISTRATION MATTERS; COOPERATION OF SCA. In
connection with a registration hereunder: (i) if such registration is to be in
respect of an underwritten offering, the SCA Board in its discretion will select
a managing underwriter or underwriters (subject to the consent of XL Capital not
to be unreasonably withheld or delayed); (ii) SCA will use its reasonable
commercial efforts to cooperate with XL Capital in the disposition of the shares
covered by a registration statement, including without limitation in the case of
an underwritten offering, causing key executives of SCA to participate under the
direction of the managing underwriter in a "road show" scheduled by such
managing underwriter in such locations and of such duration as in the judgment
of such managing underwriter are appropriate for such underwritten offering;
(iii) SCA will use its reasonable commercial efforts to register or qualify such
Registrable Shares under such securities or blue sky laws of such jurisdictions
as XL Capital shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable each seller to consummate the
disposition in such jurisdictions of its Registrable Shares covered by such reg-

                                      -3-
<PAGE>

istration statement; provided, however, that SCA shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or subject SCA to taxation in any jurisdiction in which it is not so qualified;
and (iv) SCA will use its reasonable commercial efforts (A) to prepare or cause
to be prepared all reasonably required customary documentation, (B) to do or
cause to be done all actions, to obtain all opinions, certifications,
accountants "cold comfort" letters, and (C) to enter into standard agreements,
in each case as may customarily be required to effect registration of securities
under the Securities Act.

        (f)     COOPERATION OF XL CAPITAL. To participate in any registration of
shares pursuant hereto, XL Capital and its Subsidiaries shall be required to
provide such information and enter into such agreements (including underwriting
and "lock-up" agreements) as are customary and reasonably required by, if such
registration is in respect of an underwritten offering, the managing
underwriter(s). In connection with a registration hereunder, XL Capital and SCA
agree in good faith to give effect to the registration contemplated by this
Schedule 7.8(a) and otherwise cooperate with the registration processes
contemplated by this provision.

        (g)     ASSIGNABLE REGISTRATION RIGHTS. XL Capital may assign its rights
hereunder, in whole or in part in connection with any sale or transfer of Common
Shares by XL Capital in a transaction exempt from registration under the
Securities Act (other than any sale pursuant to Rule 144 thereunder), it being
understood that (x) such assignee may assign its rights hereunder to transferees
who acquire Common Shares in a transaction exempt from registration under the
Securities Act (other than any sale pursuant to Rule 144 thereunder) and (y)
with respect to any such assignee covered by this clause (g), other than a
member of the XL Capital Group, the provisions of this Schedule 7.8(a) will not
include shares that can be sold under Rule 144 without manner of sale or volume
limitations.

                                      -2-
<PAGE>

                                                                       ANNEX 3.1

                              ANCILLARY AGREEMENTS

        The Following Exhibits To The Registration Statement:

10.2    Form of Tax Indemnity Agreement
10.3    Form of Termination Agreement to the Fifth Amended Tax Sharing Agreement
        and Payment Agreement and the New York Addendum to the Tax Sharing and
        Payment Agreement
10.12   Form of Termination Agreement to the Amended and Restated General
        Services Agreement with XL Global Services, Inc.
10.13   Form of Termination Agreement to the Second Amended and Restated General
        Services Agreement with X.L. America, Inc.
10.14   Form of Master Services Agreement between XL Global Services, Inc. and
        XL Financial Administration Services Inc.
10.15   Form of Master Services Agreement between XL Services (Bermuda) Ltd and
        SCA Bermuda Administrative Ltd
10.16   Form of Master Services Agreement between XL Capital Ltd and SCA Bermuda
        Administrative Ltd
10.17   Form of Master Services Agreement between XL Services UK Limited and XL
        Capital Assurance (U.K.) Limited
10.18   Form of Master Services Agreement between XL Services UK Limited, in
        respect of its Spanish branch and XL Capital Assurance (U.K.) Limited,
        in respect of its Spanish branch
10.19   Form of General Services Agreement between XL Financial Administrative
        Services Inc. and XL Insurance (Bermuda) Ltd
10.20   Form of General Services Agreement between XL Financial Assurance Ltd.
        and XL Insurance (Bermuda) Ltd
10.21   Form of General Services Agreement between XL Capital Assurance Inc. and
        XL Global Services, Inc.
10.22   Form of Assignment and Assumption of Lease between Global Credit
        Analytics, Inc. and XL Capital Assurance, Inc.
10.23   Form of Agreement to Terminate the Amended and Restated Surplus
        Maintenance Agreement between XL Capital Assurance Inc. and XL
        Reinsurance America Inc.
10.24   Facultative Quota Share Reinsurance Treaty, dated as of August 17, 2001
        between XL Financial Assurance Ltd. and XL Insurance (Bermuda) Ltd
10.25   Form of Amendment No. 1 to Facultative Quota Share Reinsurance Agreement
        between XL Financial Assurance Ltd. and XL Insurance (Bermuda) Ltd
10.26   Form of Termination of Facultative Quota Share Reinsurance Treaty dated
        December 31, 1999 between XL Insurance (Bermuda) Ltd and XL Financial
        Assurance Ltd.
10.27   Excess of Loss Reinsurance Agreement dated October 1, 2001, between XL
        Financial Assurance Ltd. and XL Insurance (Bermuda) Ltd
10.28   Form of Amendment No. 1 to Excess of Loss Reinsurance Agreement between
        XL Financial Assurance Ltd. and XL Insurance (Bermuda) Ltd
10.29   Form of Third Amended and Restated Facultative Quota Share Reinsurance
        Treaty between XL Financial Assurance Ltd. and XL Capital Assurance Inc.
10.30   Form of Master Services Agreement between X.L. America, Inc. and XL
        Financial Administrative Services Inc.
10.31   Reinsurance Agreement Guarantee dated May 1, 2004 between XL Insurance
        (Ber-

<PAGE>

        muda) Ltd in respect of the Second Amended and Restated Facultative
        Quota Share Reinsurance Treaty between XL Financial Assurance Ltd. and
        XL Capital Assurance Inc. dated May 1, 2004
10.32   Form of Amendment and Termination of Reinsurance Guarantee Agreement
        between XL Insurance (Bermuda) Ltd, XL Capital Assurance Inc. and XL
        Financial Assurance Ltd.
10.33   Form of First Amended and Restated Facultative Master Certificate issued
        by XL Reinsurance America Inc. to XL Capital Assurance Inc.
10.35   Form of Termination of Investment Management Agreement -- Letter
        Agreement to the Management Agreement between XL Capital Assurance Inc.
        and XL Investment Management Ltd
10.36   Form of Termination of Investment Management Agreement -- Letter
        Agreement to the Management Agreement between XL Financial Assurance
        Ltd. and XL Investment Management Ltd
10.38   Amendment No. 1 to Agency Agreement between XL Financial Solutions Ltd,
        XL Re Ltd, XL Insurance (Bermuda) Ltd and XL Financial Assurance Ltd.
10.42   Form of Amended and Restated General Services Agreement between XL
        Capital Assurance Inc. and XL Financial Administrative Services Inc.
10.43   Form of Indemnification Agreement between XL Financial Assurance Ltd.
        and XL Insurance (Bermuda) Ltd
10.44   Form of Indemnification Agreement between XL Capital Assurance Inc. and
        X.L. America, Inc.
10.45   Form of Adverse Development Reinsurance Agreement between XL Capital
        Assurance Inc. and XL Reinsurance America Inc.EXHIBIT 10.2

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

                  This  Agreement  is made  this 4th day of  August  2006 by and
among XL Capital Ltd, a Cayman Islands  company ("XL  Capital"),  X.L.  America,
Inc.,  a Delaware  corporation  ("XLA" and,  together  with XL Capital,  the "XL
Parties"),  Security  Capital  Assurance  Ltd, a Bermuda  company  ("SCA"),  SCA
Holdings  US  Inc.,  a  Delaware  corporation  ("Holdings"),  and  XL  Financial
Assurance  Ltd.,  a Bermuda  company  ("XLFA").  Capitalized  terms used  herein
(unless otherwise defined) have the meanings set forth below in Section 2.

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

                  WHEREAS,  SCA was  organized on March 17, 2006 for the purpose
of  becoming  a  holding  company  for  the  financial  guaranty  insurance  and
reinsurance  businesses  conducted by Subsidiaries  of XL Capital,  including XL
Capital  Assurance  Inc.,  a New  York  financial  guarantee  insurance  company
("XLCA"), and XLFA;

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

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

<PAGE>
                                      -2-

                  WHEREAS,  in certain  taxable  periods ending on or before the
Closing Date,  XLCA has been a member of the  affiliated  group of  corporations
(within  the  meaning  of  Section  1504 of the Code) of which XLA is the common
parent (the "XLA Affiliated Group");

                  WHEREAS,  in certain  taxable  periods ending on or before the
Closing Date, XLCA has been a party to the Fifth Amended Tax Sharing and Payment
Agreement  effective  April  1,  2004,  by and  among  XLA  and  certain  of its
Subsidiaries (the "Tax Sharing and Payment Agreement");

                  WHEREAS,  in connection  with the Public  Offering,  XLCA will
leave  the XLA  Affiliated  Group and will  become a Former  Member  within  the
meaning of Article VIII of the Tax Sharing and Payment Agreement; and

                  WHEREAS,  the parties to this Agreement desire to allocate the
liability for the Taxes of SCA and the SCA Post-Closing Subsidiaries that may be
owed to or asserted by any governmental authority after the Public Offering.

                  NOW,  THEREFORE,  in consideration of the foregoing and of the
mutual promises,  covenants and conditions  hereinafter  contained,  the parties
hereto agree as follows:

                  1. INDEMNIFICATION BY THE XL PARTIES.

                  (a) The XL Parties will jointly and  severally  indemnify  and
hold  harmless  on an  After-Tax  Basis  SCA and  each  of the SCA  Post-Closing
Subsidiaries  from and against any Losses with  respect to (1) Taxes  imposed on
SCA or any of the SCA Post-Closing Sub-

<PAGE>
                                      -3-

sidiaries for all taxable periods (or portions  thereof) ending on or before the
Closing Date, (2) Taxes imposed on the XLA Affiliated Group for which SCA or any
of the SCA  Post-Closing  Subsidiaries  is severally  liable under United States
Treasury Regulation ss. 1.1502-6 solely by reason of having been a member of the
XLA Affiliated Group and (3) any other Taxes,  other than excise Taxes,  imposed
on SCA or  any of the  SCA  Post-Closing  Subsidiaries  other  than  XLCA  or XL
Financial  Administrative  Services Inc.  that result from  business  activities
conducted  by  SCA or any of the  SCA  Post-Closing  Subsidiaries  prior  to the
consummation  of the IPO;  provided,  however,  that this  Section 1(a) will not
apply to Losses with respect to any  liability  for Taxes that (i) is accrued or
reserved on the Financial Statement (other than as a deferred tax liability or a
reduction  in a deferred  tax asset) or would be so accrued or  reserved  if the
Financial  Statement  were prepared as of the Closing,  or (ii) results from (A)
any  decrease  in the amount of any  deduction  allowed in a taxable  period (or
portion  thereof)  ending  on or  prior  to the  Closing  Date if such  decrease
corresponds  to an increase  in any  deduction  allowed in a taxable  period (or
portion  thereof)  ending after the Closing Date, (B) any increase in the amount
of taxable income included in a taxable period ending on or prior to the Closing
Date if such increase  corresponds to a decrease in taxable income included in a
taxable  period (or portion  thereof)  ending  after the Closing Date or (C) any
similar  timing  difference.  The  parties  agree that to the extent  allowed by
applicable  law,  any  payments  made by the XL Parties to SCA or any of the SCA
Post-Closing  Subsidiaries  pursuant to this  Section  1(a) will be treated as a
contribution  to the capital of the  indemnitee  or, in the case of any payments
made pursuant to clause (2) above, as a tax-free reimbursement.

<PAGE>
                                      -4-

                  (b) SCA will  notify XL  Capital  (or cause XL  Capital  to be
notified) in writing within 30 days of the receipt of any  communication  by SCA
or any of its Subsidiaries  from or with any governmental  authority  concerning
Taxes  owed  by  SCA  or any of the  SCA  Post-Closing  Subsidiaries  for  which
indemnification may be claimed from the XL Parties pursuant to the provisions of
this Agreement.  In addition, SCA will notify XL Capital (or cause XL Capital to
be  notified)  in  writing  at least 15 days prior to the date SCA or any of its
Subsidiaries  intends to make a payment of any Taxes which may be  indemnifiable
by the XL Parties  pursuant to the provisions of this Agreement and will consult
in good faith with XL Capital prior to making any such payment.  XL Capital will
notify SCA (or cause SCA to be notified) in writing within 30 days of receipt of
any communication by XL Capital or any of the XL Post-Closing  Subsidiaries from
or with any  governmental  authority  concerning Taxes owed by SCA or any of the
SCA Post-Closing Subsidiaries.

                  2. DEFINITIONS.

                  (a) Unless  otherwise  indicated,  all capitalized  terms used
herein have the same meaning as in the Transition Agreement.

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

                  (1) "After-Tax Basis" means that, in determining the amount of
the payment  necessary to indemnify  any party  against,  or reimburse any party
for, Losses, the amount of such Losses will be determined net of any Tax benefit
derived by the indemnified  party as the result of sustaining  such Losses,  and
the amount of such in-

<PAGE>
                                      -5-

demnification  payment  will be  increased  (I.E.,  "grossed  up") by the amount
necessary to satisfy any Tax liabilities  incurred by the indemnified party as a
result of its receipt, or right to receive, such indemnification  payment (as so
increased),  so that the  indemnified  party  is put in the  same net  after-Tax
economic position as if it had not incurred such Losses.

                  (2) "Closing Date" means the date of the Closing.

                  (3) "Final  Determination" means a determination as defined in
Section  1313(a) of the Code or any other event  (including  the  execution of a
Form 870-AD or any other form having  substantially the same effect for purposes
of any Tax law) that  finally  and  conclusively  establishes  the amount of any
liability for Tax.

                  (4)  "Financial  Statement"  means the U.S. GAAP  consolidated
balance sheet of SCA and the SCA  Post-Closing  Subsidiaries  prepared as of the
end of the most recent fiscal quarter ended prior to the Closing.

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

                  (6) "Tax" or  "Taxes"  means (i) any and all  taxes,  charges,
fees,  duties,  levies or other  assessments,  including  all net income,  gross
income, gross receipts,  excise,
<PAGE>
                                      -6-

stamp,  premium,  real or personal  property,  ad valorem,  sales,  withholding,
estimated, social security, employment, unemployment,  occupation, use, service,
service use, license, net worth, payroll, franchise,  environmental,  severance,
transfer,  recording,  escheat, or other taxes, duties, assessments, or charges,
whether  computed on a separate,  consolidated,  unitary,  combined or any other
basis,  imposed by any  governmental  authority;  (ii) all interest,  penalties,
fines,  or  additions to tax  attributable  thereto;  and (iii) all  transferee,
successor,  joint  and  several,  contractual,  or  other  liability  (including
pursuant  to the Tax  Sharing  and  Payment  Agreement)  in respect of any items
described in clauses (i) or (ii).

                  (7) "Tax  Return"  means any  report,  document,  declaration,
information,  return, or filing (including any related or supporting information
and any amendments to any of the  foregoing)  filed or required to be filed with
respect to Taxes.

                  (8) "XL Post-Closing  Subsidiaries"  means collectively all of
the Persons that are, at any time after the Closing, Subsidiaries of XL Capital.

                  (c)  References  in this  Agreement to any Person  include the
successors, predecessors, and permitted assigns of such Person.

3.       INDEMNIFICATION BY SCA, HOLDINGS AND XLFA.

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

<PAGE>
                                      -7-

Subsidiaries from and against any Losses with respect to Taxes imposed on SCA or
any of the SCA Post-Closing  Subsidiaries  other than those Losses for which the
XL Parties are responsible pursuant to Section 1(a).

                  (b) SCA,  Holdings  and XLFA will make  payments  from time to
time to XLI or XL  Capital  (as  applicable)  equal to the amount of any net Tax
benefit  obtained by SCA or any of the SCA Subsidiaries as the result of (1) the
exercise of any compensatory stock option granted by XL Capital (with respect to
its stock) to any Person who is an employee (or former employee) or director (or
former  director) of SCA or any of the SCA  Subsidiaries at the time such option
is  exercised  or (2) any other  compensation  paid after the Closing by XLI, XL
Capital or any other Post-Closing  Subsidiary of XL Capital to any Person who is
an employee (or former  employee) or director (or former director) of SCA or any
of the SCA Subsidiaries at the time such payment is made.

                  (c) The parties agree that for applicable income tax purposes,
to the extent allowed by applicable  law, any payments made by SCA,  Holdings or
XLFA  pursuant to Section  3(b) will be treated as a reduction  in the amount of
the  contribution  to the capital of SCA that would  otherwise be deemed to have
been made as the result of the event  described  in  subparagraph  (1) or (2) of
such Section 3(b).

                  4. CONTROL.

                  (a) XL  Capital  will  have  the  exclusive  right to file any
amended Tax Returns and to control any audit or other administrative or judicial
proceeding with respect to
<PAGE>
                                      -8-

(i) the Tax liability of SCA and/or the SCA  Post-Closing  Subsidiaries  for any
taxable  period (or portion  thereof)  ending on or before the Closing  Date and
(ii) any other matter involving any asserted Tax liability with respect to which
any of the XL Parties provides  indemnification under this Agreement. XL Capital
will  consult  in good faith with SCA with  respect to each  defense  against or
compromise or settlement of any indemnified  Tax liability.  At its own expense,
SCA will be permitted to participate in, and be represented at, each conference,
hearing, or meeting with representatives of the pertinent governmental authority
(and will be notified reasonably in advance thereof).

                  (b)  Except as  provided  in Section  4(a),  SCA will have the
exclusive  right  to  control  any  audit or other  administrative  or  judicial
proceeding  with  respect  to the  Tax  liability  of  SCA  or  any  of the  SCA
Post-Closing Subsidiaries.

                  5. REFUNDS.

                  (a)  Except  for any  refund  shown as an asset or taken  into
account as an offset to the amount of any  liability  (other than a deferred tax
asset or liability)  on the  Financial  Statement or any refund that would be so
shown or taken into account if the Financial  Statement  were prepared as of the
Closing,  XL Capital will be entitled to any refunds  (including  interest  paid
therewith),  whether  received in cash,  as a credit or offset,  or in any other
form, in respect of (i) any Tax liability of SCA or any of the SCA  Post-Closing
Subsidiaries in respect of any taxable period (or portion  thereof) ending on or
prior to the Closing  Date,  and (ii) any other Tax  liability  for which the XL
Parties are  responsible  under this  Agreement;

<PAGE>
                                      -9-

PROVIDED,  HOWEVER,  that this  Section  5(a)  will not  apply to a refund  that
results  from (A) any  increase  in the  amount of any  deduction  allowed  in a
taxable  period (or portion  thereof)  ending on or prior to the Closing Date if
such increase  corresponds  to a decrease in any deduction  allowed in a taxable
period (or portion  thereof)  ending after the Closing Date, (B) any decrease in
the amount of taxable income  included in a taxable period ending on or prior to
the Closing Date if such decrease  corresponds  to an increase in taxable income
included in a taxable period (or portion  thereof) ending after the Closing Date
or (C) any similar timing difference.

                  (b) Except as provided in paragraph (a) of this Section 5, SCA
will be entitled to any refunds  (including  interest paid therewith) in respect
of the Tax liability of SCA or any of the SCA Post-Closing Subsidiaries.

                  (c) In the event of any change to the  liability of SCA or any
of the SCA  Post-Closing  Subsidiaries for Taxes or entitlement to a refund as a
result of an audit, carryover,  carryback, or otherwise,  the amounts previously
payable under this Agreement will be appropriately  adjusted and SCA will pay to
XL  Capital,  or XL Capital  will pay to SCA,  without  duplication,  the amount
required as a result of such adjustment,  together with interest at the rate per
annum  determined  from  time to  time  under  Section  6621(a)(2)  of the  Code
compounded  daily for the period from the original date of the payment  affected
by the adjustment to the date on which the payment is made.

<PAGE>
                                      -10-

                  6. INTEREST. In the event that any payment required to be made
under  this  Agreement  is made  after the date on which  said  payment  is due,
interest will accrue on such amount from the due date of the payment through the
date such payment is actually  made at the  applicable  short-term  federal rate
determined  from time to time under Section  1274(d)(1) of the Code,  compounded
semi-annually.

                  7. TAX COOPERATION.

                  (a) XL Capital and SCA and their respective  Subsidiaries will
cooperate with each other in all Tax matters, including the conduct of any audit
or other  proceeding  related to any Tax liability  with respect to which the XL
Parties provide indemnification under this Agreement,  and each will execute and
deliver  such powers of attorney and other  documents as are  necessary to carry
out the  intent  of this  Agreement.  Without  limiting  the  generality  of the
foregoing,  XL Capital  and SCA will  furnish or cause to be  furnished  to each
other, upon request, as promptly as practicable, such information and assistance
relating to SCA and its  Subsidiaries or their  respective  assets or businesses
(including,  without  limitation,  access to books and records) as is reasonably
necessary for the filing of all Tax Returns,  the  preparation  for any audit by
any governmental authority, and the prosecution or defense of any claim, suit or
proceeding  relating to any Tax  liability  with respect to which the XL Parties
provide  indemnification under this Agreement.  The party requesting cooperation
under  this  Section  7(a)  will  reimburse  the  other  party  for  any  actual
out-of-pocket expenses incurred in furnishing such cooperation.

<PAGE>
                                      -11-

                  (b) Unless there has previously been a Final  Determination to
the  contrary,  none of SCA and its  Subsidiaries  will take any  position  with
respect  to Taxes  (including  on any Tax Return or in  connection  with any Tax
controversy)  for any taxable period (or the portion  thereof)  ending after the
Closing Date that is  inconsistent  with any position taken by the SCA or any of
its  Subsidiaries  for any taxable period (or the portion  thereof) ending on or
before the  Closing  Date  (including  any  position  relating  to the timing or
character of any income, deduction, credit, or other item).

                  (c) XL  Capital  and SCA (and their  respective  Subsidiaries)
agree to report to the other any communication from or with the Internal Revenue
Service or any other  taxing  authority  that  reasonably  could  affect any Tax
liability  with  respect  to which the XL  Parties  may be  required  to provide
indemnification under this Agreement.

                  8.   TERMINATION.   Notwithstanding   any  provision  of  this
Agreement, the Transition Agreement, or any Ancillary Agreement to the contrary,
this  Agreement may be terminated at any time prior to the Closing by and in the
sole discretion of XL Capital.  In the event of such termination,  no party will
have  any  liability  of  any  kind  to any  other  party  on  account  of  such
termination, except as set forth in Section 9.11 of the Separation Agreement.

                  9. SURVIVAL.  The covenants,  agreements and other obligations
of the parties  contained in this  Agreement will survive the Closing Date until
45 days after the expiration of the applicable statutes of limitations.

<PAGE>
                                      -12-

                  10.  SUCCESSORS  AND ASSIGNS.  This  Agreement will be binding
upon  and  inure  to the  benefit  of the  parties  hereto  and  the  respective
successors and permitted assigns.

                  11. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the  benefit of the  parties  hereto and will not be deemed to confer upon third
parties (including  stockholders or members of any party hereto) and any remedy,
claim,  reimbursement,  claim of  action,  or other  right  in  excess  of those
existing without reference to this Agreement.

                  12. HEADINGS. The section headings contained in this Agreement
are for  reference  purposes  only and will not in any way affect the meaning or
interpretation of this Agreement.

                  13.  SEVERABILITY.   To  the  extent  any  provision  of  this
Agreement is invalid or unenforceable, such provision will be considered deleted
herefrom and the remaining  provisions of this  Agreement will be unaffected and
will continue in full force and effect.

                  14.  ASSIGNMENT  OF THIS  AGREEMENT.  No party may assign this
Agreement by operation of law or otherwise  without the express  written consent
of the other  parties;  provided,  however,  this  Agreement  may be assigned by
operation of law or otherwise  without the express  written consent of the other
parties  hereto  by XL  Capital  and/or  SCA to  their  respective  Post-Closing
Subsidiaries  so long as such assignment does not relieve the assigning party of
liability hereunder.

<PAGE>
                                      -13-

                  15.  COUNTERPARTS.  This  Agreement  may be executed in one or
more  counterparts,  each of which will be deemed an original,  but all of which
will constitute one and the same instrument.

                  16.  AMENDMENT;  WAIVER. No provision of this Agreement may be
amended, waived, or otherwise modified without the prior written consent of each
of the parties hereto.

                  17.  GOVERNING  LAW. This  Agreement  will be governed by, and
construed  in  accordance  with,  the  internal  laws of the  State of New York,
without reference to the principles of conflicts of law.

                           [Intentionally left blank]

<PAGE>
                                      -14-

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

                        XL CAPITAL LTD

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

                        X.L. AMERICA, INC.

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

                        SECURITY CAPITAL ASSURANCE LTD

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

                        SCA HOLDINGS US INC.

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

                        XL FINANCIAL ASSURANCE LTD.

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

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