Document:

Exhibit 4.2

ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER
OF SUCH SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN THE
BYE-LAWS OF PRIMUS GUARANTY, LTD. (THE "COMPANY"), THE SUBSCRIPTION AGREEMENT
AND THE SHAREHOLDERS' AGREEMENT WHICH ARE AVAILABLE FOR EXAMINATION BY HOLDERS
OF THESE SECURITIES AT THE REGISTERED OFFICE OF THE COMPANY.

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON THEIR CONVERSION OR EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE
UPON THEIR CONVERSION OR EXERCISE MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.

ANY TRANSFER OR ASSIGNMENT OF THESE SECURITIES AS WELL AS ANY ISSUE, TRANSFER OR
ASSIGNMENT OF THE SHARES REFERRED TO BELOW REQUIRES THE PRIOR APPROVAL OF THE
BERMUDA MONETARY AUTHORITY. CERTAIN PERMISSIONS HAVE BEEN RECEIVED FROM THE
BERMUDA MONETARY AUTHORITY FOR ISSUES, TRANSFERS AND ASSIGNMENTS SUBJECT TO
COMPLIANCE WITH CONDITIONS.

                 COMMON SHARE PURCHASE WARRANT CERTIFICATE NO. 1

                       Warrant Issue Date: March 14, 2002

                     to purchase 11,317,972 Common Shares of

                              Primus Guaranty, Ltd.

                            Void after March 14, 2007

          Primus Guaranty, Ltd., a Bermuda Company (the "Company"), hereby
certifies that XL Insurance (Bermuda) Ltd, or any permitted successor,
transferee or assignee (as applicable, the "Holder"), for value received, is
entitled to purchase from the Company, on the terms and conditions specified
herein, Eleven Million, Three Hundred Seventeen Thousand, Nine Hundred
Seventy-Two (11,317,972 shares (each a "Share" and collectively, the "Shares")
of the Company's Common Shares (the "Common Shares"), at an exercise price equal
to the greater of the then par value of the Shares and US$0.6481 per Share (the
"Exercise Price") (US$7,335,177.65 in the aggregate for all such Shares (the
"Aggregate Exercise Price"). The number of Shares purchasable

                                       1

hereunder and the Exercise Price are subject to adjustment as provided in
Section 4 hereof.

     1. Exercise of Warrant Certificate.

          (a) Upon presentation and surrender of this warrant certificate (the
"Warrant Certificate"), or a Lost Certificate Affidavit (as defined in Section
2(b) hereof), accompanied by (x) a completed Election to Purchase in the form
attached hereto as Exhibit A (the "Election to Purchase") duly executed, to the
Secretary of the Company at the registered office of the Company (or at the
offices of the Transfer Agent for this Warrant Certificate or such other office
or agency of the Company as it may designate by notice to the Holder in
writing), together with (y) either cash, a certified or cashier's check payable
to the Company or written confirmation of a successful wire transfer to a bank
account designated by the Company in the amount of the Exercise Price multiplied
by the number of Shares being purchased, the Company or the Company's transfer
agent (the "Transfer Agent"), as the case may be, shall, within five (5) Trading
Days (as defined below) of receipt of the foregoing, register and deliver to the
Holder hereof, certificates of fully paid and nonassessable Common Shares which
in the aggregate represent the number of Shares being purchased, as provided in
Section 5 hereof. The certificates so delivered shall be in such denominations
as may be reasonably requested by the Holder and shall be registered in the name
of the Holder or such other name as shall be designated by the Holder (subject
to compliance with applicable Bermuda law, including, but not limited to, any
applicable requirements for and conditions to permission of the Bermuda Monetary
Authority). This Warrant Certificate may be exercised in whole or in part,
subject to the provisions of Section 1(b) below. In the case that this Warrant
Certificate is exercised in part, the Company, upon surrender hereof, will at
the Company's expense register and promptly deliver to the Holder a new warrant
certificate or warrant certificates (in such denominations as may be requested
by the Holder) of like tenor and dated the date hereof entitling said Holder to
purchase the number of Shares represented by the portion of this Warrant
Certificate which has not been exercised, and all other rights with respect to
the Shares which the Holder has on the date hereof. For purposes of this Warrant
Certificate, the term "Trading Day" shall mean

                                       2

any day other than a Saturday or Sunday that is neither a legal holiday nor a
day on which banking institutions are authorized or required by law or
regulation to close in New York, New York or Hamilton, Bermuda and if the Common
Shares are publicly traded, that is also a day on which a securities exchange on
which the Common Shares are listed is open for trading.

          (b) Commencement and Duration of Exercisability. This Warrant
Certificate shall be exercisable at any time following the date hereof and on or
prior to the fifth anniversary of the date hereof.

          (c) Special Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, but subject to the Company
being able to comply with section 42A of the Bermuda Companies Act 1981 (or
other like statutory provision which may affect the Company's ability to
repurchase its shares or to give effect to a cashless exercise of this Warrant
Certificate), the Holder shall have the right to receive a reduced number of
Shares in lieu of tendering the Exercise Price in cash. In such case, the number
of Shares to be issued to the Holder shall be computed using the following
formula:

                                   X = Y(A-B)
                                       ------
                                         A

where:    X = the number of Shares to be issued to the Holder pursuant to such a
          cashless exercise;

          Y = the number of Shares for which this Warrant Certificate is then
          being exercised pursuant to this Section 1(c);

          A = the Market Value (as defined below) of one (1) Share; and

          B = the Exercise Price.

As used in this Agreement, "Market Value" shall be determined as follows: the
average of the closing prices of the Common Shares (as reported by Bloomberg,
L.P.) over the

                                       3

thirty (30) day period ending three (3) Trading Days before the date of
determination of Market Value. Notwithstanding the foregoing definition, if the
Common Shares are not listed on a securities exchange the Market Value of the
Common Shares shall be the fair market value as determined in good faith by the
Board of Directors of the Company (the "Board"), and if at the time of
determination the Company is subject to a binding merger, acquisition or other
consolidation pursuant to which the Company is not the surviving entity, the
Market Value of the Common Shares shall be deemed to be the value to be received
per share by holders of the Common Shares pursuant to such merger, acquisition
or other consolidation.

     If the Market Value is determined by the Board in accordance with this
Section 1(c), the Holder may, within ten (10) Trading Days of receiving notice
of such determination, object to the fair market value determined by the Board
by providing written notice to the Company in accordance with Section 7 hereof,
which notice will set forth the basis of such objection. Such objection shall be
submitted to the Company's independent auditor for review (at the expense of the
Company) and the determination of the Company's independent auditor shall be
binding.

          (d) Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant Certificate, will be duly and
validly issued, fully paid and nonassessable. The Holder shall acquire good and
marketable title to the Shares, free and clear of all Encumbrances (except as
may result from any facts or circumstances relating solely to the Holder or
restrictions on transfer pursuant to (i) that certain shareholders' agreement
(the "Shareholders' Agreement"), dated March 14, 2002 between the Company and
its shareholders (each individually a "Shareholder" and collectively, the
"Shareholders"), (ii) applicable securities laws and (iii) conditions to any
applicable Bermuda Monetary Authority permissions) and the Holder will be
entitled to all rights of a holder of the Shares. For purposes of this Section
1(d), "Encumbrances" means any lien, pledge, mortgage, security interest,
assessment, claim, lease, charge, option, right of first refusal, imperfection
of title, easement, transfer restriction under any

                                       4

shareholder or similar agreement, encumbrance or other restriction or limitation
of any kind whatsoever.

     2. Exchange, Transfer and Replacement.

          (a) At any time prior to the exercise hereof, this Warrant Certificate
may be exchanged upon presentation and surrender to the Company, alone or with
other warrant certificates of like tenor of different denominations registered
in the name of the same Holder, for another warrant certificate or warrant
certificates of like tenor in the name of such Holder exercisable for the
aggregate number of Shares as this Warrant Certificate and shares as such other
warrant certificate or warrant certificates surrendered.

          (b) Replacement of Warrant Certificate. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant Certificate and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company (collectively, a "Lost Certificate
Affidavit"), or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company, at its expense, will
register, issue and deliver in lieu thereof, a new warrant certificate of like
tenor.

          (c) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant Certificate in connection with any transfer, exchange or replacement as
provided in this Section 2, this Warrant Certificate shall be promptly canceled
by the Company. The Company shall pay all taxes (other than securities transfer
and income taxes) and all other expenses (other than legal expenses, if any,
incurred by the Holder) and charges payable in connection with the preparation,
execution and delivery of warrant certificates pursuant to this Section 2.

          (d) Warrant Register. The Company shall maintain, at its registered
office (or at the offices of the Transfer Agent for this Warrant Certificate or
such other office or agency of the Company as it may designate by notice to the
Holder in writing), a register for this Warrant Certificate (the "Warrant
Register"), in which the Company shall record the name and address of the person
in whose name this Warrant Certificate has

                                       5

been issued, as well as the name and address of each permitted successor,
transferee or assignee and each prior owner of this Warrant Certificate.

          (e) Transfer or Assignment. Upon any attempted transfer or assignment
of this Warrant Certificate, the Holder shall provide a completed Notice of
Assignment in the form attached hereto as Exhibit B (the "Notice of
Assignment"), duly executed, together with this Warrant Certificate, to the
Secretary of the Company at the Company's registered office (or at the offices
of the Transfer Agent for this Warrant Certificate or such other office or
agency of the Company as it may designate by notice to the Holder in writing).
Within five (5) Trading Days of the Company's receipt of the foregoing
documents, the Company, at its expense, will (x) cause to be registered in the
Warrant Register the name of such transferee or assignee and the number of fully
paid and non-assessable Common Shares to which such transferee or assignee shall
be entitled on exercise of a warrant certificate of like tenor and (y) cause a
warrant certificate or certificates of like tenor to be delivered to such
transferee or assignee; provided, however, the Company shall have no obligation
to accept any attempted transfer or assignment which would violate applicable
securities laws or other legal or regulatory restrictions (including, but not
limited to, any applicable requirements for and conditions to permission of the
Bermuda Monetary Authority), the Shareholders' Agreement or other contractual
restrictions; provided, further, that any transferee or assignee shall have no
rights as a Holder under this Warrant Certificate until the name of such
transferee or assignee shall have been registered in the Warrant Register.

     3. Rights and Obligations of Holder of this Warrant Certificate. The Holder
of this Warrant Certificate shall not, by virtue hereof, be entitled to any
rights of a Shareholder, either at law or in equity, including, without
limitation, any right to vote any Common Shares or other securities, receive any
dividends or other distribution thereon, or exercise any preemptive rights;
provided, however, that the Holder of this Warrant Certificate shall be
entitled, to the extent not otherwise provided to the Holder, to (x) receive
notice of and attend all general meetings of the Shareholders, as well as all
meetings of the holders of the Common Shares and (y) receive, for informational
purposes only, copies of any written resolutions executed in lieu of a general
meeting of

                                       6

the Shareholders or any meeting of holders of the Common Shares; but provided,
further, that the Holder of this Warrant Certificate shall not, by virtue
hereof, be entitled to participate and shall not be entitled to any other rights
of a Shareholder at any such meeting or in connection with any such resolution.
Upon the Holder's proper exercise of this Warrant Certificate, entry of the
Holder's name into the register of shareholders of the Company (the "Share
Register") in accordance with Section 5 hereof and while a holder of record of
such Common Shares, the Holder shall enjoy all rights of a Shareholder of the
Company.

     4. Adjustment of Number of Shares Subject to Warrant and Exercise Price.

          The number of Shares purchasable upon exercise of this Warrant
Certificate and the Exercise Price shall be subject to adjustment from time to
time as set forth in this Section 4. Adjustments to the Exercise Price pursuant
to this Section 4 shall cause appropriate adjustments to be made to the purchase
price payable per Share and/or the number of Shares purchasable upon the
exercise of this Warrant Certificate, but the Aggregate Exercise Price payable
for the total number of Shares purchasable under this Warrant Certificate (as
adjusted) shall remain the same. Each time the Exercise Price is adjusted
pursuant to this Section 4, the number of Shares purchasable upon exercise of
this Warrant Certificate shall also be adjusted to equal the quotient of the
Aggregate Exercise Price divided by the adjusted Exercise Price. Notwithstanding
any provision in this Section 4 of this Warrant Certificate, the Exercise Price
shall in no event be less than the then-par value per share of a Common Share
(or, if applicable, any other security to be issued upon the exercise of this
Warrant Certificate).

          (a) Adjustments for Recapitalizations, Etc. In case the Company shall
(i) subdivide the issued and outstanding Common Shares, (ii) combine the issued
and outstanding Common Shares into a smaller number of shares, or (iii) issue by
reclassification of its Common Shares, any shares of the Company, then, in any
such case, the Exercise Price in effect immediately prior to such action shall
be adjusted to a price such that if the Holder were to exercise this Warrant
Certificate in full immediately after such action, the Holder would be entitled
to receive the number of shares of the

                                       7

Company which the Holder would have owned immediately following such action had
this Warrant Certificate been exercised immediately prior thereto (with any
record date requirement being deemed to have been satisfied), and, in any such
case, the Exercise Price shall thereafter be subject to further adjustments
under this Section 4. An adjustment made pursuant to this sub-section (a) shall
become effective retroactively immediately after the effective date of such
adjustment.

          (b) Adjustments for Issuances of Additional Shares. Subject to the
exceptions referred to in Section 4(d) hereof, in case the Company shall at any
time or from time to time after the date hereof issue any additional Common
Shares ("Additional Common Shares"), for a consideration per share either (i)
less than the Exercise Price immediately prior to the issuance of such
Additional Common Shares, or (ii) without consideration, then (in the case of
either clause (i) or (ii)), and thereafter successively upon each such issuance,
the Exercise Price shall be adjusted pursuant to the following formula:

                               NEP = OEP x OB + X
                                           ------
                                             OA

     where NEP = the new Exercise Price

          OEP  = the existing Exercise Price immediately before the new issue
                 ("Old Exercise Price")

          OB   = the total outstanding Common Shares (on a fully diluted basis)
                 immediately before the new issue

          X    = number of Common Shares issuable at the Old Exercise Price for
                 the total consideration to be received for the new issue

          OA   = the total outstanding Common Shares (on a fully diluted basis)
                 immediately after the new issue

                                       8

provided, however, that such adjustment shall be made only if such adjustment
results in an adjusted Exercise Price less than the Old Exercise Price and
provided further, that unless Bermuda law (or other applicable law governing the
issuance of the Additional Common Shares) permits such issuance, in no event
shall the Company issue Additional Common Shares for an amount less than the par
value per Common Share (or, if applicable, any other security to be issued upon
the exercise of this Warrant Certificate). The Company may, but shall not be
required to, make any adjustment of the Exercise Price if the amount of such
adjustment shall be less than one percent (1%) of the Old Exercise Price, but
any adjustment that would otherwise be required then to be made which is not so
made shall be carried forward and shall be made at the time of (and together
with) the next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to not less than one percent (1%) of the Old
Exercise Price.

          (c) Certain Rules in Applying the Adjustment for Additional Share
Issuances. For purposes of any adjustment as provided in Section 4(b) hereof,
the following provisions shall also be applicable:

               (i) Cash Consideration. In case of the issuance of Additional
Common Shares for cash, the consideration received by the Company therefor shall
(subject to the last sentence of Section 4(f) hereof) be deemed to be the cash
proceeds received by the Company for such Additional Common Shares after
deducting any commissions or other expenses paid or incurred by the Company for
any underwriting of, or otherwise in connection with the issuance of such
Additional Common Shares.

               (ii) Non-Cash Consideration. In case of the issuance of
Additional Common Shares for a consideration other than cash, or a consideration
a part of which shall be other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the value of such
consideration at the time of its receipt by the Company as determined in good
faith by the Board, except that where the non-cash consideration consists of the
cancellation, surrender or exchange of outstanding obligations of the Company
(or where such obligations are otherwise converted into Common Shares), the
value of the non-cash consideration shall be deemed

                                       9

to be the amount (including principal, interest and premium, if any) of the
obligations canceled, surrendered, satisfied, exchanged or converted. If the
Company receives consideration, part or all of which consists of publicly traded
securities (i.e., in lieu of cash), the value of such non-cash consideration
shall be the aggregate fair market value of such securities (based on the latest
reported sale price regular way) as of the close of the day immediately
preceding the date of their receipt by the Company.

               (iii) Options, Warrants, Convertibles, Etc.

                    (A) In case of the issuance, whether by distribution or sale
to holders of its Common Shares or to others, by the Company of (x) any security
(other than the Series A Preferred Shares and the Radian Warrants (as such terms
are defined in Section 9(b) hereof)) that is convertible or exchangeable into or
for Common Shares, or (y) any rights, options or warrants to purchase Common
Shares (other than the Radian Warrants), if inclusion thereof in calculating
adjustments under this Section 4 would result in an Exercise Price lower than if
excluded, the Company shall be deemed to have issued, for the consideration
described below, the number of Common Shares into or for which such convertible
or exchangeable security may be converted or exchanged when first convertible or
exchangeable, or the number of Common Shares deliverable upon the exercise of
such rights, options or warrants when first exercisable, as the case may be (and
such shares shall be deemed to be Additional Common Shares for purposes of
Section 4(b) hereof).

                    (B) The consideration deemed to be received by the Company
at the time of the issuance of such convertible or exchangeable securities or
such rights, options or warrants shall be the consideration so received
determined as provided in Section 4(c)(i) and (ii) hereof plus (x) any
consideration or adjustment payment to be received by the Company in connection
with such conversion or exchange, as applicable and (y) the aggregate price at
which Common Shares are to be delivered upon the exercise of such rights,
options or warrants when first exercisable (or, if no price is specified and
such shares are to be delivered at an option price related to the market value
of the subject Common Shares, an aggregate option price bearing the same
relation

                                       10

to the market value of the subject Common Shares at the time such rights,
options or warrants were granted).

                    (C) If, subsequently, (x) such number of shares into or for
which such convertible or exchangeable security is convertible or exchangeable,
or which are deliverable upon the exercise of such rights, options or warrants,
is increased or (y) the conversion or exercise price of such convertible or
exchangeable security, rights, options or warrants is decreased, then the
calculations under the preceding two sentences (and any resulting adjustment to
the Exercise Price under Section 4(b) hereof) with respect to such convertible
or exchangeable security, rights, options or warrants, as the case may be, shall
be recalculated as of the time of such issuance but giving effect to such
changes (but any such recalculation shall not result in the Exercise Price being
higher than that which would be calculated without regard to such issuance).

                    (D) On the expiration or termination of such rights, options
or warrants, or rights to convert or exchange such convertible or exchangeable
securities, the Exercise Price hereunder shall be readjusted (up or down as the
case may be) to such Exercise Price as would have been obtained had the
adjustments made with respect to the issuance of such rights, options, warrants
or convertible or exchangeable securities been made upon the basis of the
delivery of only the number of Common Shares actually delivered upon the
exercise of such rights, options or warrants or upon the conversion or exchange
of any such convertible or exchangeable securities and at the actual exercise or
conversion or exchange prices (but any such recalculation shall not result in
the Exercise Price being higher than that which would be calculated without
regard to such issuance).

               (iv) Number of Shares Outstanding. The number of Common Shares as
at any given time outstanding shall exclude all Common Shares then owned or held
by or for the account of the Company but shall include (A) the aggregate number
of Common Shares outstanding; (B) the aggregate number of Common Shares at the
time deliverable in respect of issued and outstanding convertible or
exchangeable securities, rights, options and warrants, to the extent vested at
the time of the applicable calculation; provided, that to the extent that such
rights, options, warrants or conversion or exchange

                                       11

privileges are not exercised, such Common Shares shall be deemed to be issued
and outstanding only until the expiration dates of the rights, warrants, options
or conversion or exchange privileges or the prior cancellation thereof and (C)
the number of Common Shares calculated by subtracting (x) the number of Employee
Shares (as such term is defined in Section 4(d)(ii) hereof) issued prior to the
time of the applicable calculation, from (y) 4,700,000.

          (d) Exclusions from Adjustments for Issuances of Additional Shares. No
adjustment of the Exercise Price under Section 4(b) hereof shall be made as a
result of or in connection with (i) the issuance of Common Shares upon
conversion of Series A Preferred Shares or upon the exercise of any warrants set
forth on Schedule A attached hereto, including, without limitation, the Radian
Warrants, (ii) the issuance or grant of any options, warrants or other rights
(and the shares issuable upon any exercise thereof) to employees, officers,
directors, consultants and service providers of the Company and its subsidiaries
pursuant to restricted stock agreements or stock option or other equity
compensation plans approved by the Board or the issuance of the Company's shares
thereunder, including, without limitation, 4,700,000 Common Shares (the
"Employee Shares") as contemplated by the Summary of Proposed Terms of Employee
Equity listed on Schedule II to the Shareholders' Agreement, (iii) in connection
with acquisitions of businesses or other similar transactions where
non-convertible debt securities are the primary component (i.e., greater than
95% of the total consideration) or (iv) the issuance of the warrants (and the
shares issuable upon any exercise thereof) set forth on Schedule A attached
hereto, including, without limitation, the Radian Warrants.

          (e) Accountants' Certification. Whenever the Exercise Price is
adjusted as provided in this Section 4, the Company will promptly obtain a
certificate of the Chief Financial Officer of the Company setting forth the
Exercise Price as so adjusted, the computation of such adjustment and a brief
statement of the facts accounting for such adjustment, and will mail to the
Holder a copy of such certificate. The Holder may, within sixty (60) days,
object to the calculation of the Exercise Price by providing written notice to
the Company in accordance with Section 7 hereof, which notice will set forth the
basis of such objection. Such objection shall be submitted to the

                                       12

Company's auditor for review (at the expense of the Company) and the
determination of the Company's auditor shall be binding, absent manifest error.

          (f) Antidilution Adjustments under other Securities. Without limiting
any other rights available hereunder to the Holder, if there is an antidilution
adjustment (x) under any security which is convertible into or exchangeable for
Common Shares whether issued prior to or after the date hereof (except for the
Series A Preferred Shares and the Radian Warrants) or (y) under any right,
option or warrant to purchase Common Shares whether issued prior to or after the
date hereof, including, without limitation, the Radian Warrants, which (in the
case of clause (x) or (y)) results in a reduction in the exercise or purchase
price with respect to such security, right, option or warrant to an amount less
than the Exercise Price in effect at that time or results in an increase in the
number of shares obtainable under such security, right, option or warrant which
has an effect equivalent to lowering the conversion, exchange or exercise price
to an amount less than such Exercise Price, then an adjustment shall be made
under this Section 4(f) to such Exercise Price. Any such adjustment under this
Section 4(f) shall be whichever of the following results in a lower Exercise
Price:

               (i) a reduction in the Exercise Price equal to the percentage
reduction in such exercise or purchase price with respect to such security,
right, option or warrant multiplied by the Exercise Price, or

               (ii) a reduction in the Exercise Price which will result in the
same percentage increase in the number of Common Shares available under this
Section 4 as the percentage increase in the number of shares available under
such security, right, option or warrant.

Any such adjustment under this Section 4(f) shall only be made if it would
result in a lower Exercise Price than that which would be determined pursuant to
any other antidilution adjustment otherwise required under this Section 4 as a
result of the event or circumstance which triggered the adjustment to the
security, right, option or warrant described in clause (x) or (y) of this
Section 4(f) (and if any such adjustment is so made

                                       13

under this Section 4(f), then such other antidilution adjustment otherwise
required under this Section 4 shall not be made as a result of such event or
circumstance).

          (g) Other Adjustments. In case any event shall occur as to which any
of the provisions of this Section 4 are not strictly applicable but the failure
to make any adjustment would not fairly protect the rights represented by this
Warrant Certificate in accordance with the essential intent and principles of
Sections 3 and 4 hereof, then, in each such case, upon the request of the
Holder, the Company shall appoint a firm of independent public accountants being
or affiliated with a readily recognized U.S. or international firm as selected
by the Board (where such independent public accountants may not be the regular
auditors of the Company), which shall give their opinion upon the adjustment, if
any, on a basis consistent with the essential intent and principles established
in Sections 3 and 4 hereof, necessary to preserve, without dilution, the rights
represented by this Warrant Certificate. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Holder and shall make the
adjustments described therein.

          (h) Meaning of "Issuance". References in this Warrant Certificate to
"issuances" of shares by the Company include issuances by the Company of
previously unissued shares and issuances or other transfers by the Company of
treasury stock (if and when treasury stock is permitted under law).

          (i) Consolidation, Merger or Amalgamation. If the Company shall at any
time consolidate with or merge into another corporation (where the Company is
not the continuing corporation after such merger or consolidation) or if the
Company is amalgamated with one or more companies or corporations, or the
Company shall sell, transfer or lease all or substantially all of its assets, or
the Company shall change its Common Shares into property other than a class of
shares, then, in any such case, the Holder shall thereupon (and thereafter) be
entitled to receive, upon the exercise of this Warrant Certificate in whole or
in part, the securities or other property to which (and upon the same terms and
with the same rights as) a holder of the number of Common Shares deliverable
upon exercise of this Warrant Certificate would have been entitled if

                                       14

such exercise had occurred immediately prior to such consolidation, merger or
amalgamation, such sale of assets or such change (with any record date
requirement being deemed to have been satisfied), and such exercise rights shall
thereafter continue to be subject to further adjustments under this Section 4,
without limiting any other rights of the Holder. The Company shall take such
steps in connection with such consolidation, merger or amalgamation, such sale
of assets or such change as may be necessary to assure the Holder that the
provisions of this Warrant Certificate shall thereafter continue to be
applicable in relation to any securities or property thereafter deliverable upon
the exercise of this Warrant Certificate, including, without limitation,
obtaining a written obligation to supply such securities or property upon such
exercise and to be so bound by this Warrant Certificate.

          (j) Notices. In case at any time:

               (i) the Company shall take any action which would require an
adjustment in the Exercise Price pursuant to this Section 4; or

               (ii) the Company shall authorize the granting to the holders of
its Common Shares of any dividends or distributions on Common Shares; or

               (iii) there shall be any reorganization, reclassification or
change of Common Shares (other than a change in par value or, if and when
permitted by law, from par value to no par value or from no par value to par
value), or any consolidation, merger or amalgamation to which the Company is a
party and for which approval of any Shareholders of the Company is required, or
any sale, transfer or lease of all or substantially all of the assets of the
Company; or

               (iv) there shall be a voluntary dissolution, liquidation or
winding-up of the Company;

then, in any one or more of such cases, unless the matter is to be determined at
a general meeting of Shareholders, the Company shall give written notice to the
Holder, not less than thirty (30) days before any record date or other date set
for definitive action, of the date on which such action, dividend, distribution,
reorganization, reclassification, change,

                                       15

sale, transfer, lease, consolidation, merger, amalgamation, dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also set forth such facts as shall indicate the effect of any such action
(to the extent such effect may be known at the date of such notice) on the
Exercise Price and the kind and amount of the shares and other securities and
property deliverable upon exercise of this Warrant Certificate. Such notice
shall also specify any date as of which the holders of the Common Shares of
record shall be entitled to exchange their Common Shares for securities or other
property deliverable upon any such reorganization, reclassification, change,
sale, transfer, lease, consolidation, merger, dissolution, liquidation or
winding-up, as the case may be.

     5. Issuance and Registration of Common Shares. Within five (5) Trading Days
of receipt of a duly completed Election to Purchase form, together with this
Warrant Certificate and payment of the Exercise Price in available funds, the
Company, at its expense, will (x) cause to be registered in the Share Register,
effective as of the date of the proper exercise of this Warrant Certificate, the
name of the Holder of this Warrant Certificate and the number of fully paid and
non-assessable Common Shares to which that Holder shall be entitled on such
exercise and (y) cause a certificate or certificates for such Common Shares to
be issued and forwarded for delivery to such Holder. In lieu of issuance of a
fractional share upon any exercise hereunder, the Company will pay the cash
value of that fractional share, calculated on the basis of the Exercise Price.
Prior to Registration (as defined in Section 8(a)(2) hereof) of the resale of
the Common Shares underlying this Warrant Certificate, all such certificates
shall bear a restrictive legend to the effect that the Common Shares represented
by such certificate have not been registered under the Securities Act (as
defined in Section 6(d) hereof), and that the Common Shares may not be sold or
transferred in the absence of such Registration or an exemption therefrom, such
legend to be the substantially in the form of the second bold-face paragraph
appearing at the top of page 1 of this Warrant Certificate. In addition, all
such certificates shall at all times bear a restrictive legend to the effect
that any transfer or assignment of the Common Shares requires the prior approval
of the Bermuda Monetary

                                       16

Authority, such legend to be substantially in the form of the third bold-face
paragraph appearing at the top of page 1 of this Warrant Certificate.

     6. Representations, Warranties and Agreements of the Holder. The Holder
hereby represents and warrants to the Company and agrees for the benefit of the
Company, in each case as of the date of this Warrant Certificate, the date of
each exercise hereof and the date of any reissuance of this Warrant Certificate,
in whole or in part, that:

          (a) Purchase Entirely for Own Account. This Warrant Certificate is
made with the Holder in reliance upon the Holder's representation to the Company
that the Warrant Certificate and the Shares issuable upon exercise thereof
(collectively, the "Securities") will be acquired for investment for such
Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant Certificate, the Holder further represents
that the Holder does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.

          (b) Investment Experience. The Holder is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the warrants represented by this Warrant Certificate and investment in
the Common Shares. If other than an individual, the Holder also represents it
has not been organized for the purpose of acquiring the Securities.

          (c) Accredited Investor. The Holder is an "accredited investor" as
defined under Rule 501(a) of Regulation D of the rules and regulations of the
Securities Act (as defined in Section 6(d) hereof).

          (d) Restricted Securities. The Holder understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws

                                       17

inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended, or any successor Federal statute, and the rules and
regulations of the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act thereunder, all as the same
shall be in effect at the time, and the rules and regulations thereunder (the
"Securities Act"), only in certain limited circumstances. In this connection,
the Holder represents that it is familiar with Rule 144, as presently in effect,
adopted by the Commission under the Securities Act ("Rule 144") and understands
the resale limitations imposed thereby and under the Securities Act. The Holder
of this Warrant Certificate, and any holder and transferee of any Securities, by
acceptance thereof, agrees that no public distribution of Securities will be
made in violation of the provisions of the Securities Act. Further, the Holder
understands that the Securities it is purchasing are subject to Bermuda Monetary
Authority permissions and must be issued and transferred in compliance with the
conditions attached to such permissions. The Holder of this Warrant Certificate,
and any holder and transferee of any Securities, by acceptance thereof, agrees
that (x) no issuance, transfer or assignment of the Securities, including the
Common Shares to be issued on any exercise hereof, will be made unless any such
issuance, transfer or assignment is in compliance with the Securities Act and
any Bermuda Monetary Authority permissions and the conditions attached to such
permissions, (y) no issuance, transfer or assignment of any Securities,
including the Common Shares to be issued on any exercise hereof, will be made
unless Bermuda Monetary Authority approval, if necessary, shall have been
obtained prior to any such issuance, transfer or assignment and (z) this Warrant
Certificate is being issued and the Common Shares will be issued in reliance
upon, among other matters, the Holder or relevant Shareholder at any and all
material times being an "accredited investor" (as defined under Rule 501(a) of
Regulation D of the rules and regulations of the Securities Act) or a director,
officer or employee of the Company.

          (e) Further Limitations on Disposition. Without in any way limiting
the representations set forth above or the terms of the Shareholders' Agreement,
the Holder further agrees not to make any disposition of all or any portion of
the Securities

                                       18

unless and until (x) the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 6 and the Shareholders' Agreement and all
other terms and conditions of this Warrant Certificate and to abide by any
restrictions on transfer or assignment of the Securities pursuant to the
Company's bye-laws and the Shareholders' Agreement, (y) there is then in effect
a registration statement under the Securities Act and/or other applicable
securities laws covering such proposed disposition or there is available an
applicable exemption from the registration requirements of the Securities Act
and any applicable state securities laws and such disposition is made in
accordance with such registration statement or the terms of such applicable
exemption and (z) such disposition complies with all applicable Bermuda law.

     7. Notices. Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered by hand or shall be sent by
facsimile (confirmed by registered, certified or mail courier, postage and
delivery charges prepaid), to the following addresses:

     If to Holder: at the Holder's address as set forth in the register of
shareholders of the Company, or such other address as may have been furnished to
the Company by the Holder in writing; or

     If to the Company: c/o Codan Services Limited, Clarendon House, Church
Street, Hamilton, HM 11, Bermuda, Attention: Resident Representative, Facsimile:
441-299-4988 or at such other address as may have been furnished in writing by
the Company to the Holder. Whenever any notice is required to be given
hereunder, such notice shall be deemed given and such requirement satisfied only
when such notice is delivered or, if sent by facsimile, when received, unless
otherwise expressly specified or permitted by the terms of this Warrant
Certificate.

Notwithstanding the time of effectiveness of notices set forth in this Section
7, an Election to Purchase shall not be deemed effectively given until it has
been duly

                                       19

completed and submitted to the Company together with the original Warrant
Certificate to be exercised and payment of the Exercise Price.

     8. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Warrant
Certificate, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.

     9. Representations and Warranties of the Company. The Company hereby
represents and warrants to Holder, as of the date hereof, that:

          (a) Corporate Existence, Power and Authority.

               (i) The Company is duly organized, validly existing and in good
standing under the laws of Bermuda. The Company is duly qualified, licensed and
authorized to do business and is in good standing in each jurisdiction in which
it owns or leases any material property or in which the conduct of its business
requires it to so qualify or be so licensed.

               (ii) No proceeding has been commenced looking toward the
dissolution, merger or amalgamation of the Company or the amendment of its
memorandum of association, other than any amendments related to any increases in
authorized share capital. The Company is not in violation of its memorandum of
association or bye-laws.

               (iii) The Company has all requisite power and authority to own or
to hold under lease and to operate the properties it owns or holds and to
conduct its business as now being conducted.

               (iv) The Company has all requisite power and authority to
execute, deliver, enter into, consummate and perform this Warrant Certificate
(including, without limitation, the issuance by the Company of the Shares as
contemplated herein). The execution, delivery and performance of this Warrant
Certificate by the Company (including, without limitation, the issuance by the
Company of the Shares as

                                       20

contemplated herein) have been duly authorized by all required corporate and
Shareholder actions. The Company has duly executed and delivered this Warrant
Certificate. This Warrant Certificate constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally.

          (b) Capitalization. The authorized capital shares of the Company
consists of (i) 501,500,000 Common Shares, $0.01 par value per share and (ii)
100,000,000 Series A Convertible Voting Preferred Shares, $0.01 par value per
share (the "Series A Preferred Shares"). All outstanding Common Shares and
Series A Preferred Shares are duly authorized, validly issued, fully paid and
non-assessable. The Company has also issued to Radian Group Inc. a Warrant to
purchase 8,488,479 Common Shares and to Radian Group Inc. a Warrant to purchase
up to 8,751,010 Common Shares (the "Radian Warrants").

          (c) No Defaults or Conflicts. The Company is not in violation or
default in any respect (and is not in default in any respect regarding any
indebtedness) under any material indenture, agreement or instrument to which it
is a party or by which it or its properties may be bound. The Company is not in
default under any order, writ, injunction, judgment or decree of any court or
other governmental authority or arbitrator. The execution, delivery and
performance by the Company of this Warrant Certificate, and any of the
transactions contemplated hereby (including, without limitation, the issuance of
the Shares as contemplated herein) does not and will not (i) violate or conflict
with, with or without the giving of notice or the passage of time or both, any
provision of (A) the memorandum of association or bye-laws of the Company or (B)
any law, rule, regulation or order of any federal, state, county, municipal or
other governmental authority, or any judgment, writ, injunction, decree, award
or other action of any court or governmental authority or arbitrator, or any
agreement, indenture or other instrument applicable to the Company or any of its
properties, (ii) result in the creation of any lien upon any of the Company's
properties, assets or revenues, (iii) except as may be required under Section 6
hereof, require the consent, waiver, approval, order or authorization of,

                                       21

or declaration, registration, qualification or filing with, any person (whether
or not a governmental authority and including, without limitation, any
Shareholder approval) or (iv) cause anti-dilution clauses of any outstanding
securities to become operative or give rise to any preemptive right.

     10. Reservation of Common Shares. The Company shall at all times reserve
and keep available out of authorized but unissued Common Shares the maximum
number of Common Shares which are issuable upon the exercise of this Warrant
Certificate.

     11. Increase in Par Value. The Company shall not increase the par value of
the Common Shares to an amount greater than what the Exercise Price would have
been but for such increase in par value, without either (i) obtaining the
consent of the Holder, which such consent shall not be unreasonably withheld, or
(ii) putting the Holder in the same economic position it would have been had
there been no increase in the par value of the Common Shares.

     12. Transfers of Warrant Certificate. Subject to the provisions of Section
6(d) and 6(e) hereof, this Warrant Certificate is transferable pursuant to the
terms and conditions governing the transfer of Company Securities (as such term
is defined in the Shareholders' Agreement) as set forth in Section 1 of the
Shareholders' Agreement.

     13. Governing Law. This Warrant Certificate and all rights and obligations
hereunder shall be deemed to be made under and governed by the laws of the State
of New York as applied to agreements among New York residents made and to be
performed entirely within the State of New York (i) except where this Warrant
Certificate expressly refers to the laws or regulations of Bermuda and (ii)
except that it is the intent of the parties hereto that the laws of Bermuda
govern any articles, bye-laws, contracts or agreements created thereunder or
expressed to be governed thereby.

     14. Successors and Assigns. This Warrant Certificate shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Company may not assign its rights or
delegate its obligations under this Warrant Certificate without the prior
written consent of the Holder.

                                       22

     15. Headings. The headings of various sections of this Warrant Certificate
have been inserted for reference only and shall not affect the meaning or
construction of any of the provisions hereof.

     16. Severability. If any provision of this Warrant Certificate is held to
be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.

     17. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.

     18. Specific Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Warrant Certificate were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Warrant Certificate and to enforce specifically the terms
and provisions hereof, this being in addition to any other remedy to which
either of them may be entitled by law or equity.

                                       23

          IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.

                                        PRIMUS GUARANTY, LTD.

Date: March    , 2002                   By:
            --                              ------------------------------------
                                            Name:
                                            Title:

       [Signature Page to Common Share Purchase Warrant Certificate No. 1]

                                   SCHEDULE A

                                    WARRANTS

Common Share Purchase Warrant Certificate No. 2, dated March 14, 2002, issued to
Radian Group Inc., for 8,488,479 shares.

Common Share Purchase Warrant Certificate No. 3, dated March 14, 2002, issued to
Radian Group Inc. for up to 8,751,010 shares.

                                       25

                                    EXHIBIT A

                              ELECTION TO PURCHASE

       (To Be Executed by the Holder in Order to Exercise the Common Share
                         Purchase Warrant Certificate)

     The undersigned Holder hereby elects to exercise the attached Common Share
Purchase Warrant Certificate (the "Warrant Certificate"), pursuant to:

     Check applicable Box

     [_] Section 1(a) of the Warrant Certificate and to purchase ______________
Common Shares issuable upon such exercise, or

     [_] Section 1(c) of the Warrant Certificate and elects to acquire _________
Common Shares issuable upon such election,

and requests that the Common Shares be registered and a certificate or
certificates representing the Common Shares be issued in denominations of
______________ Common Shares in the name of and delivered to the following:

           ----------------------------------------------------------

           ----------------------------------------------------------

           ----------------------------------------------------------
                     (Please type or print name and address)

           ----------------------------------------------------------

                 (Social Security or Tax Identification Number)

     [_] Check box, if applicable.

     The Warrant Certificate is being exercised only in part. The undersigned
Holder requests that a new warrant certificate or warrant certificates in the
following amounts be registered in the name of, issued and delivered to the
Holder at the address set forth below the Holder's signature:

           ----------------------------------------------------------

           ----------------------------------------------------------

     In full payment of the purchase price with respect to the Common Shares
purchased pursuant to an exercise under Section 1(a) of this Warrant Certificate
and transfer taxes, if any, the undersigned hereby tenders payment of
$_____________ by check, money order or wire transfer payable in United States
currency to the order of Primus Guaranty, Ltd.

     Each of the representations, warranties and agreements of the Holder
contained in Section 6 of the Warrant Certificate is hereby incorporated by
reference as if set forth in full herein and is hereby repeated by the Holder
for the benefit of the Company.

                                        HOLDER

Date:                                   By:
      ----------------------                ------------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------
                                            Address:
                                                     ---------------------------

                                                     ---------------------------

                                            (Signature must conform to name of
                                            Holder as specified on the face of
                                            the Warrant Certificate)

                                    EXHIBIT B

                              NOTICE OF ASSIGNMENT

             (To be signed only on transfer of Warrant Certificate)

     For value received, the undersigned hereby sells, assigns, and transfers to
_______________ the rights represented by the attached Common Share Purchase
Warrant Certificate (the "Warrant Certificate") to purchase __________ Common
Shares of Primus Guaranty, Ltd., a Bermuda company (the "Company"), to which the
Warrant Certificate relates, appoints _______________ attorney-in-fact for the
purpose of registering such transfer on the books of the Company, with full
power of substitution of premises and requests that a warrant certificate be
issued and delivered to _________________ at the following address:

           ----------------------------------------------------------

           ----------------------------------------------------------

           ----------------------------------------------------------

                         (Please type or print address)

           ----------------------------------------------------------

                 (Social Security or Tax Identification Number)

     [_] Check box, if applicable.

     The Warrant Certificate is being sold, assigned, and transferred only in
part. The undersigned Holder requests that a new warrant certificate or warrant
certificates in the following amounts be registered in the name of, issued and
delivered to the Holder at the address set forth below the Holder's signature:

           ----------------------------------------------------------

           ----------------------------------------------------------

     Each of the representations, warranties and agreements of the Holder
contained in Section 6 of the Warrant Certificate is hereby incorporated by
reference as if set forth in full herein and is hereby repeated by the Holder
for the benefit of the Company.

                                        HOLDER

Date:                                   By:
      ----------------------                ------------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------
                                            Address:
                                                     ---------------------------

                                                     ---------------------------

                                            (Signature must conform to name of
                                            Holder as specified on the face of
                                            the Warrant Certificate)

Signed in the presence of:

Date:                                   By:
      ----------------------                ------------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------
                                            Address:
                                                     ---------------------------

                                                     ---------------------------Exhibit 4.3

ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER
OF SUCH SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN THE
BYE-LAWS OF PRIMUS GUARANTY, LTD. (THE "COMPANY"), THE SUBSCRIPTION AGREEMENT
AND THE SHAREHOLDERS' AGREEMENT WHICH ARE AVAILABLE FOR EXAMINATION BY HOLDERS
OF THESE SECURITIES AT THE REGISTERED OFFICE OF THE COMPANY.

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON THEIR CONVERSION OR EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE
UPON THEIR CONVERSION OR EXERCISE MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.

ANY TRANSFER OR ASSIGNMENT OF THESE SECURITIES AS WELL AS ANY ISSUE, TRANSFER OR
ASSIGNMENT OF THE SHARES REFERRED TO BELOW REQUIRES THE PRIOR APPROVAL OF THE
BERMUDA MONETARY AUTHORITY. CERTAIN PERMISSIONS HAVE BEEN RECEIVED FROM THE
BERMUDA MONETARY AUTHORITY FOR ISSUES, TRANSFERS AND ASSIGNMENTS SUBJECT TO
COMPLIANCE WITH CONDITIONS.

                 COMMON SHARE PURCHASE WARRANT CERTIFICATE NO. 2

                       Warrant Issue Date: March 14, 2002

                     to purchase 8,488,479 Common Shares of

                              Primus Guaranty, Ltd.

                            Void after March 14, 2007

          Primus Guaranty, Ltd., a Bermuda Company (the "Company"), hereby
certifies that Radian Group Inc., or any permitted successor, transferee or
assignee (as applicable, the "Holder"), for value received, is entitled to
purchase from the Company, on the terms and conditions specified herein, Eight
Million, Four Hundred Eighty-Eight Thousand, Four Hundred Seventy-Nine
(8,488,479) shares (each a "Share" and collectively, the "Shares") of the
Company's Common Shares (the "Common Shares"), at an exercise price equal to the
greater of the then par value of the Shares and US$0.6481 per Share (the
"Exercise Price") (US$5,501,383.24 in the aggregate for all such Shares (the
"Aggregate Exercise Price")). The number of Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 4 hereof.

                                       1

     1.   Exercise of Warrant Certificate.

          (a) Upon presentation and surrender of this warrant certificate (the
"Warrant Certificate"), or a Lost Certificate Affidavit (as defined in Section
2(b) hereof), accompanied by (x) a completed Election to Purchase in the form
attached hereto as Exhibit A (the "Election to Purchase") duly executed, to the
Secretary of the Company at the registered office of the Company (or at the
offices of the Transfer Agent for this Warrant Certificate or such other office
or agency of the Company as it may designate by notice to the Holder in
writing), together with (y) either cash, a certified or cashier's check payable
to the Company or written confirmation of a successful wire transfer to a bank
account designated by the Company in the amount of the Exercise Price multiplied
by the number of Shares being purchased, the Company or the Company's transfer
agent (the "Transfer Agent"), as the case may be, shall, within five (5) Trading
Days (as defined below) of receipt of the foregoing, register and deliver to the
Holder hereof, certificates of fully paid and nonassessable Common Shares which
in the aggregate represent the number of Shares being purchased, as provided in
Section 5 hereof. The certificates so delivered shall be in such denominations
as may be reasonably requested by the Holder and shall be registered in the name
of the Holder or such other name as shall be designated by the Holder (subject
to compliance with applicable Bermuda law, including, but not limited to, any
applicable requirements for and conditions to permission of the Bermuda Monetary
Authority). This Warrant Certificate may be exercised in whole or in part,
subject to the provisions of Section 1(b) below. In the case that this Warrant
Certificate is exercised in part, the Company, upon surrender hereof, will at
the Company's expense register and promptly deliver to the Holder a new warrant
certificate or warrant certificates (in such denominations as may be requested
by the Holder) of like tenor and dated the date hereof entitling said Holder to
purchase the number of Shares represented by the portion of this Warrant
Certificate which has not been exercised, and all other rights with respect to
the Shares which the Holder has on the date hereof. For purposes of this Warrant
Certificate, the term "Trading Day" shall mean any day other than a Saturday or
Sunday that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or regulation to close in New York,

                                       2

New York or Hamilton, Bermuda and if the Common Shares are publicly traded, that
is also a day on which a securities exchange on which the Common Shares are
listed is open for trading.

          (b) Commencement and Duration of Exercisability. This Warrant
Certificate shall be exercisable at any time following the date hereof and on or
prior to the fifth anniversary of the date hereof.

          (c) Special Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, but subject to the Company
being able to comply with section 42A of the Bermuda Companies Act 1981 (or
other like statutory provision which may affect the Company's ability to
repurchase its shares or to give effect to a cashless exercise of this Warrant
Certificate), the Holder shall have the right to receive a reduced number of
Shares in lieu of tendering the Exercise Price in cash. In such case, the number
of Shares to be issued to the Holder shall be computed using the following
formula:

                                   X = Y(A-B)
                                       ------
                                          A

where:   X = the number of Shares to be issued to the Holder pursuant to such a
         cashless exercise;
         Y = the number of Shares for which this Warrant Certificate is
         then being exercised pursuant to this Section 1(c);
         A = the Market Value (as defined below) of one (1) Share; and
         B = the Exercise Price.

As used in this Agreement, "Market Value" shall be determined as follows: the
average of the closing prices of the Common Shares (as reported by Bloomberg,
L.P.) over the thirty (30) day period ending three (3) Trading Days before the
date of determination of Market Value. Notwithstanding the foregoing definition,
if the Common Shares are not

                                       3

listed on a securities exchange the Market Value of the Common Shares shall be
the fair market value as determined in good faith by the Board of Directors of
the Company (the "Board"), and if at the time of determination the Company is
subject to a binding merger, acquisition or other consolidation pursuant to
which the Company is not the surviving entity, the Market Value of the Common
Shares shall be deemed to be the value to be received per share by holders of
the Common Shares pursuant to such merger, acquisition or other consolidation.

     If the Market Value is determined by the Board in accordance with this
Section 1(c), the Holder may, within ten (10) Trading Days of receiving notice
of such determination, object to the fair market value determined by the Board
by providing written notice to the Company in accordance with Section 7 hereof,
which notice will set forth the basis of such objection. Such objection shall be
submitted to the Company's independent auditor for review (at the expense of the
Company) and the determination of the Company's independent auditor shall be
binding.

          (d) Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant Certificate, will be duly and
validly issued, fully paid and nonassessable. The Holder shall acquire good and
marketable title to the Shares, free and clear of all Encumbrances (except as
may result from any facts or circumstances relating solely to the Holder or
restrictions on transfer pursuant to (i) that certain shareholders' agreement
(the "Shareholders' Agreement"), dated March 14, 2002 between the Company and
its shareholders (each individually a "Shareholder" and collectively, the
"Shareholders"), (ii) applicable securities laws and (iii) conditions to any
applicable Bermuda Monetary Authority permissions) and the Holder will be
entitled to all rights of a holder of the Shares. For purposes of this Section
1(d), "Encumbrances" means any lien, pledge, mortgage, security interest,
assessment, claim, lease, charge, option, right of first refusal, imperfection
of title, easement, transfer restriction under any shareholder or similar
agreement, encumbrance or other restriction or limitation of any kind
whatsoever.

                                       4

     2. Exchange, Transfer and Replacement.

          (a) At any time prior to the exercise hereof, this Warrant Certificate
may be exchanged upon presentation and surrender to the Company, alone or with
other warrant certificates of like tenor of different denominations registered
in the name of the same Holder, for another warrant certificate or warrant
certificates of like tenor in the name of such Holder exercisable for the
aggregate number of Shares as this Warrant Certificate and shares as such other
warrant certificate or warrant certificates surrendered.

          (b) Replacement of Warrant Certificate. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant Certificate and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company (collectively, a "Lost Certificate
Affidavit"), or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company, at its expense, will
register, issue and deliver in lieu thereof, a new warrant certificate of like
tenor.

          (c) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant Certificate in connection with any transfer, exchange or replacement as
provided in this Section 2, this Warrant Certificate shall be promptly canceled
by the Company. The Company shall pay all taxes (other than securities transfer
and income taxes) and all other expenses (other than legal expenses, if any,
incurred by the Holder) and charges payable in connection with the preparation,
execution and delivery of warrant certificates pursuant to this Section 2.

          (d) Warrant Register. The Company shall maintain, at its registered
office (or at the offices of the Transfer Agent for this Warrant Certificate or
such other office or agency of the Company as it may designate by notice to the
Holder in writing), a register for this Warrant Certificate (the "Warrant
Register"), in which the Company shall record the name and address of the person
in whose name this Warrant Certificate has been issued, as well as the name and
address of each permitted successor, transferee or assignee and each prior owner
of this Warrant Certificate.

                                       5

          (e) Transfer or Assignment. Upon any attempted transfer or assignment
of this Warrant Certificate, the Holder shall provide a completed Notice of
Assignment in the form attached hereto as Exhibit B (the "Notice of
Assignment"), duly executed, together with this Warrant Certificate, to the
Secretary of the Company at the Company's registered office (or at the offices
of the Transfer Agent for this Warrant Certificate or such other office or
agency of the Company as it may designate by notice to the Holder in writing).
Within five (5) Trading Days of the Company's receipt of the foregoing
documents, the Company, at its expense, will (x) cause to be registered in the
Warrant Register the name of such transferee or assignee and the number of fully
paid and non-assessable Common Shares to which such transferee or assignee shall
be entitled on exercise of a warrant certificate of like tenor and (y) cause a
warrant certificate or certificates of like tenor to be delivered to such
transferee or assignee; provided, however, the Company shall have no obligation
to accept any attempted transfer or assignment which would violate applicable
securities laws or other legal or regulatory restrictions (including, but not
limited to, any applicable requirements for and conditions to permission of the
Bermuda Monetary Authority), the Shareholders' Agreement or other contractual
restrictions; provided, further, that any transferee or assignee shall have no
rights as a Holder under this Warrant Certificate until the name of such
transferee or assignee shall have been registered in the Warrant Register.

     3. Rights and Obligations of Holder of this Warrant Certificate. The Holder
of this Warrant Certificate shall not, by virtue hereof, be entitled to any
rights of a Shareholder, either at law or in equity, including, without
limitation, any right to vote any Common Shares or other securities, receive any
dividends or other distribution thereon, or exercise any preemptive rights;
provided, however, that the Holder of this Warrant Certificate shall be
entitled, to the extent not otherwise provided to the Holder, to (x) receive
notice of and attend all general meetings of the Shareholders, as well as all
meetings of the holders of the Common Shares and (y) receive, for informational
purposes only, copies of any written resolutions executed in lieu of a general
meeting of the Shareholders or any meeting of holders of the Common Shares; but
provided, further, that the Holder of this Warrant Certificate shall not, by
virtue hereof, be entitled to participate and shall not be entitled to any other
rights of a Shareholder at any such

                                       6

meeting or in connection with any such resolution. Upon the Holder's proper
exercise of this Warrant Certificate, entry of the Holder's name into the
register of shareholders of the Company (the "Share Register") in accordance
with Section 5 hereof and while a holder of record of such Common Shares, the
Holder shall enjoy all rights of a Shareholder of the Company.

     4. Adjustment of Number of Shares Subject to Warrant and Exercise Price.

          The number of Shares purchasable upon exercise of this Warrant
Certificate and the Exercise Price shall be subject to adjustment from time to
time as set forth in this Section 4. Adjustments to the Exercise Price pursuant
to this Section 4 shall cause appropriate adjustments to be made to the purchase
price payable per Share and/or the number of Shares purchasable upon the
exercise of this Warrant Certificate, but the Aggregate Exercise Price payable
for the total number of Shares purchasable under this Warrant Certificate (as
adjusted) shall remain the same. Each time the Exercise Price is adjusted
pursuant to this Section 4, the number of Shares purchasable upon exercise of
this Warrant Certificate shall also be adjusted to equal the quotient of the
Aggregate Exercise Price divided by the adjusted Exercise Price. Notwithstanding
any provision in this Section 4 of this Warrant Certificate, the Exercise Price
shall in no event be less than the then-par value per share of a Common Share
(or, if applicable, any other security to be issued upon the exercise of this
Warrant Certificate).

          (a) Adjustments for Recapitalizations, Etc. In case the Company shall
(i) subdivide the issued and outstanding Common Shares, (ii) combine the issued
and outstanding Common Shares into a smaller number of shares, or (iii) issue by
reclassification of its Common Shares, any shares of the Company, then, in any
such case, the Exercise Price in effect immediately prior to such action shall
be adjusted to a price such that if the Holder were to exercise this Warrant
Certificate in full immediately after such action, the Holder would be entitled
to receive the number of shares of the Company which the Holder would have owned
immediately following such action had this Warrant Certificate been exercised
immediately prior thereto (with any record date requirement being deemed to have
been satisfied), and, in any such case, the Exercise

                                       7

Price shall thereafter be subject to further adjustments under this Section 4.
An adjustment made pursuant to this sub-section (a) shall become effective
retroactively immediately after the effective date of such adjustment.

          (b) Adjustments for Issuances of Additional Shares. Subject to the
exceptions referred to in Section 4(d) hereof, in case the Company shall at any
time or from time to time after the date hereof issue any additional Common
Shares ("Additional Common Shares"), for a consideration per share either (i)
less than the Exercise Price immediately prior to the issuance of such
Additional Common Shares, or (ii) without consideration, then (in the case of
either clause (i) or (ii)), and thereafter successively upon each such issuance,
the Exercise Price shall be adjusted pursuant to the following formula:

                             NEP = OEP x OB + X
                                         ------
                                           OA

    where NEP  = the new Exercise Price

          OEP  = the existing Exercise Price immediately before the new issue
                 ("Old Exercise Price")

          OB   = the total outstanding Common Shares (on a fully diluted basis)
                 immediately before the new issue

          X    = number of Common Shares issuable at the Old Exercise Price for
                 the total consideration to be received for the new issue

          OA   = the total outstanding Common Shares (on a fully diluted basis)
                 immediately after the new issue

provided, however, that such adjustment shall be made only if such adjustment
results in an adjusted Exercise Price less than the Old Exercise Price and
provided further, that unless Bermuda law (or other applicable law governing the
issuance of the Additional Common Shares) permits such issuance, in no event
shall the Company issue Additional

                                       8

Common Shares for an amount less than the par value per Common Share (or, if
applicable, any other security to be issued upon the exercise of this Warrant
Certificate). The Company may, but shall not be required to, make any adjustment
of the Exercise Price if the amount of such adjustment shall be less than one
percent (1%) of the Old Exercise Price, but any adjustment that would otherwise
be required then to be made which is not so made shall be carried forward and
shall be made at the time of (and together with) the next subsequent adjustment
which, together with any adjustments so carried forward, shall amount to not
less than one percent (1%) of the Old Exercise Price.

          (c) Certain Rules in Applying the Adjustment for Additional Share
Issuances. For purposes of any adjustment as provided in Section 4(b) hereof,
the following provisions shall also be applicable:

               (i) Cash Consideration. In case of the issuance of Additional
Common Shares for cash, the consideration received by the Company therefor shall
(subject to the last sentence of Section 4(f) hereof) be deemed to be the cash
proceeds received by the Company for such Additional Common Shares after
deducting any commissions or other expenses paid or incurred by the Company for
any underwriting of, or otherwise in connection with the issuance of such
Additional Common Shares.

               (ii) Non-Cash Consideration. In case of the issuance of
Additional Common Shares for a consideration other than cash, or a consideration
a part of which shall be other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the value of such
consideration at the time of its receipt by the Company as determined in good
faith by the Board, except that where the non-cash consideration consists of the
cancellation, surrender or exchange of outstanding obligations of the Company
(or where such obligations are otherwise converted into Common Shares), the
value of the non-cash consideration shall be deemed to be the amount (including
principal, interest and premium, if any) of the obligations canceled,
surrendered, satisfied, exchanged or converted. If the Company receives
consideration, part or all of which consists of publicly traded securities
(i.e., in lieu of cash), the value of such non-cash consideration shall be the
aggregate fair market value

                                       9

of such securities (based on the latest reported sale price regular way) as of
the close of the day immediately preceding the date of their receipt by the
Company.

               (iii) Options, Warrants, Convertibles, Etc.

                    (A) In case of the issuance, whether by distribution or sale
to holders of its Common Shares or to others, by the Company of (x) any security
(other than the Series A Preferred Shares and the XL Warrant and the Other
Radian Warrant (as such terms are defined in Section 9(b) hereof)) that is
convertible or exchangeable into or for Common Shares, or (y) any rights,
options or warrants to purchase Common Shares (other than the XL Warrant and the
Other Radian Warrant), if inclusion thereof in calculating adjustments under
this Section 4 would result in an Exercise Price lower than if excluded, the
Company shall be deemed to have issued, for the consideration described below,
the number of Common Shares into or for which such convertible or exchangeable
security may be converted or exchanged when first convertible or exchangeable,
or the number of Common Shares deliverable upon the exercise of such rights,
options or warrants when first exercisable, as the case may be (and such shares
shall be deemed to be Additional Common Shares for purposes of Section 4(b)
hereof).

                    (B) The consideration deemed to be received by the Company
at the time of the issuance of such convertible or exchangeable securities or
such rights, options or warrants shall be the consideration so received
determined as provided in Section 4(c)(i) and (ii) hereof plus (x) any
consideration or adjustment payment to be received by the Company in connection
with such conversion or exchange, as applicable and (y) the aggregate price at
which Common Shares are to be delivered upon the exercise of such rights,
options or warrants when first exercisable (or, if no price is specified and
such shares are to be delivered at an option price related to the market value
of the subject Common Shares, an aggregate option price bearing the same
relation to the market value of the subject Common Shares at the time such
rights, options or warrants were granted).

                    (C) If, subsequently, (x) such number of shares into or for
which such convertible or exchangeable security is convertible or exchangeable,
or which

                                       10

are deliverable upon the exercise of such rights, options or warrants,
is increased or (y) the conversion or exercise price of such convertible or
exchangeable security, rights, options or warrants is decreased, then the
calculations under the preceding two sentences (and any resulting adjustment to
the Exercise Price under Section 4(b) hereof) with respect to such convertible
or exchangeable security, rights, options or warrants, as the case may be, shall
be recalculated as of the time of such issuance but giving effect to such
changes (but any such recalculation shall not result in the Exercise Price being
higher than that which would be calculated without regard to such issuance).

                    (D) On the expiration or termination of such rights, options
or warrants, or rights to convert or exchange such convertible or exchangeable
securities, the Exercise Price hereunder shall be readjusted (up or down as the
case may be) to such Exercise Price as would have been obtained had the
adjustments made with respect to the issuance of such rights, options, warrants
or convertible or exchangeable securities been made upon the basis of the
delivery of only the number of Common Shares actually delivered upon the
exercise of such rights, options or warrants or upon the conversion or exchange
of any such convertible or exchangeable securities and at the actual exercise or
conversion or exchange prices (but any such recalculation shall not result in
the Exercise Price being higher than that which would be calculated without
regard to such issuance).

               (iv) Number of Shares Outstanding. The number of Common Shares as
at any given time outstanding shall exclude all Common Shares then owned or held
by or for the account of the Company but shall include (A) the aggregate number
of Common Shares outstanding; (B) the aggregate number of Common Shares at the
time deliverable in respect of issued and outstanding convertible or
exchangeable securities, rights, options and warrants, to the extent vested at
the time of the applicable calculation; provided, that to the extent that such
rights, options, warrants or conversion or exchange privileges are not
exercised, such Common Shares shall be deemed to be issued and outstanding only
until the expiration dates of the rights, warrants, options or conversion or
exchange privileges or the prior cancellation thereof and (C) the number of
Common Shares calculated by subtracting (x) the number of Employee Shares (as
such term is

                                       11

defined in Section 4(d)(ii) hereof) issued prior to the time of the applicable
calculation, from (y) 4,700,000.

          (d) Exclusions from Adjustments for Issuances of Additional Shares. No
adjustment of the Exercise Price under Section 4(b) hereof shall be made as a
result of or in connection with (i) the issuance of Common Shares upon
conversion of Series A Preferred Shares or upon the exercise of any warrants set
forth on Schedule A attached hereto including, without limitation, the XL
Warrant and the Other Radian Warrant, (ii) the issuance or grant of any options,
warrants or other rights (and the shares issuable upon any exercise thereof) to
employees, officers, directors, consultants and service providers of the Company
and its subsidiaries pursuant to restricted stock agreements or stock option or
other equity compensation plans approved by the Board or the issuance of the
Company's shares thereunder, including, without limitation, 4,700,000 Common
Shares (the "Employee Shares") as contemplated by the Summary of Proposed Terms
of Employee Equity listed on Schedule II to the Shareholders' Agreement, (iii)
in connection with acquisitions of businesses or other similar transactions
where non-convertible debt securities are the primary component (i.e., greater
than 95% of the total consideration), or (iv) the issuance of the warrants (and
the shares issuable upon any exercise thereof) set forth on Schedule A attached
hereto, including without limitation, the XL Warrant and the Other Radian
Warrant.

          (e) Accountants' Certification. Whenever the Exercise Price is
adjusted as provided in this Section 4, the Company will promptly obtain a
certificate of the Chief Financial Officer of the Company setting forth the
Exercise Price as so adjusted, the computation of such adjustment and a brief
statement of the facts accounting for such adjustment, and will mail to the
Holder a copy of such certificate. The Holder may, within sixty (60) days,
object to the calculation of the Exercise Price by providing written notice to
the Company in accordance with Section 7 hereof, which notice will set forth the
basis of such objection. Such objection shall be submitted to the Company's
auditor for review (at the expense of the Company) and the determination of the
Company's auditor shall be binding, absent manifest error.

                                       12

          (f) Antidilution Adjustments under other Securities. Without limiting
any other rights available hereunder to the Holder, if there is an antidilution
adjustment (x) under any security which is convertible into or exchangeable for
Common Shares whether issued prior to or after the date hereof (except for the
Series A Preferred Shares and the XL Warrant and the Other Radian Warrant) or
(y) under any right, option or warrant to purchase Common Shares whether issued
prior to or after the date hereof, including without limitation, the XL Warrant
and the Other Radian Warrant, which (in the case of clause (x) or (y)) results
in a reduction in the exercise or purchase price with respect to such security,
right, option or warrant to an amount less than the Exercise Price in effect at
that time or results in an increase in the number of shares obtainable under
such security, right, option or warrant which has an effect equivalent to
lowering the conversion, exchange or exercise price to an amount less than such
Exercise Price, then an adjustment shall be made under this Section 4(f) to such
Exercise Price. Any such adjustment under this Section 4(f) shall be whichever
of the following results in a lower Exercise Price:

               (i) a reduction in the Exercise Price equal to the percentage
reduction in such exercise or purchase price with respect to such security,
right, option or warrant multiplied by the Exercise Price, or

               (ii) a reduction in the Exercise Price which will result in the
same percentage increase in the number of Common Shares available under this
Section 4 as the percentage increase in the number of shares available under
such security, right, option or warrant.

Any such adjustment under this Section 4(f) shall only be made if it would
result in a lower Exercise Price than that which would be determined pursuant to
any other antidilution adjustment otherwise required under this Section 4 as a
result of the event or circumstance which triggered the adjustment to the
security, right, option or warrant described in clause (x) or (y) of this
Section 4(f) (and if any such adjustment is so made under this Section 4(f),
then such other antidilution adjustment otherwise required under this Section 4
shall not be made as a result of such event or circumstance).

                                       13

          (g) Other Adjustments. In case any event shall occur as to which any
of the provisions of this Section 4 are not strictly applicable but the failure
to make any adjustment would not fairly protect the rights represented by this
Warrant Certificate in accordance with the essential intent and principles of
Sections 3 and 4 hereof, then, in each such case, upon the request of the
Holder, the Company shall appoint a firm of independent public accountants being
or affiliated with a readily recognized U.S. or international firm as selected
by the Board (where such independent public accountants may not be the regular
auditors of the Company), which shall give their opinion upon the adjustment, if
any, on a basis consistent with the essential intent and principles established
in Sections 3 and 4 hereof, necessary to preserve, without dilution, the rights
represented by this Warrant Certificate. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Holder and shall make the
adjustments described therein.

          (h) Meaning of "Issuance". References in this Warrant Certificate to
"issuances" of shares by the Company include issuances by the Company of
previously unissued shares and issuances or other transfers by the Company of
treasury stock (if and when treasury stock is permitted under law).

          (i) Consolidation, Merger or Amalgamation. If the Company shall at any
time consolidate with or merge into another corporation (where the Company is
not the continuing corporation after such merger or consolidation) or if the
Company is amalgamated with one or more companies or corporations, or the
Company shall sell, transfer or lease all or substantially all of its assets, or
the Company shall change its Common Shares into property other than a class of
shares, then, in any such case, the Holder shall thereupon (and thereafter) be
entitled to receive, upon the exercise of this Warrant Certificate in whole or
in part, the securities or other property to which (and upon the same terms and
with the same rights as) a holder of the number of Common Shares deliverable
upon exercise of this Warrant Certificate would have been entitled if such
exercise had occurred immediately prior to such consolidation, merger or
amalgamation, such sale of assets or such change (with any record date
requirement

                                       14

being deemed to have been satisfied), and such exercise rights shall
thereafter continue to be subject to further adjustments under this Section 4,
without limiting any other rights of the Holder. The Company shall take such
steps in connection with such consolidation, merger or amalgamation, such sale
of assets or such change as may be necessary to assure the Holder that the
provisions of this Warrant Certificate shall thereafter continue to be
applicable in relation to any securities or property thereafter deliverable upon
the exercise of this Warrant Certificate, including, without limitation,
obtaining a written obligation to supply such securities or property upon such
exercise and to be so bound by this Warrant Certificate.

          (j) Notices. In case at any time:

               (i) the Company shall take any action which would require an
adjustment in the Exercise Price pursuant to this Section 4; or

               (ii) the Company shall authorize the granting to the holders of
its Common Shares of any dividends or distributions on Common Shares; or

               (iii) there shall be any reorganization, reclassification or
change of Common Shares (other than a change in par value or, if and when
permitted by law, from par value to no par value or from no par value to par
value), or any consolidation, merger or amalgamation to which the Company is a
party and for which approval of any Shareholders of the Company is required, or
any sale, transfer or lease of all or substantially all of the assets of the
Company; or

               (iv) there shall be a voluntary dissolution, liquidation or
winding-up of the Company;

then, in any one or more of such cases, unless the matter is to be determined at
a general meeting of Shareholders, the Company shall give written notice to the
Holder, not less than thirty (30) days before any record date or other date set
for definitive action, of the date on which such action, dividend, distribution,
reorganization, reclassification, change, sale, transfer, lease, consolidation,
merger, amalgamation, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also set forth such

                                       15

facts as shall indicate the effect of any such action (to the extent such effect
may be known at the date of such notice) on the Exercise Price and the kind and
amount of the shares and other securities and property deliverable upon exercise
of this Warrant Certificate. Such notice shall also specify any date as of which
the holders of the Common Shares of record shall be entitled to exchange their
Common Shares for securities or other property deliverable upon any such
reorganization, reclassification, change, sale, transfer, lease, consolidation,
merger, dissolution, liquidation or winding-up, as the case may be.

     5. Issuance and Registration of Common Shares. Within five (5) Trading Days
of receipt of a duly completed Election to Purchase form, together with this
Warrant Certificate and payment of the Exercise Price in available funds, the
Company, at its expense, will (x) cause to be registered in the Share Register,
effective as of the date of the proper exercise of this Warrant Certificate, the
name of the Holder of this Warrant Certificate and the number of fully paid and
non-assessable Common Shares to which that Holder shall be entitled on such
exercise and (y) cause a certificate or certificates for such Common Shares to
be issued and forwarded for delivery to such Holder. In lieu of issuance of a
fractional share upon any exercise hereunder, the Company will pay the cash
value of that fractional share, calculated on the basis of the Exercise Price.
Prior to Registration (as defined in Section 8(a)(2) hereof) of the resale of
the Common Shares underlying this Warrant Certificate, all such certificates
shall bear a restrictive legend to the effect that the Common Shares represented
by such certificate have not been registered under the Securities Act (as
defined in Section 6(d) hereof), and that the Common Shares may not be sold or
transferred in the absence of such Registration or an exemption therefrom, such
legend to be the substantially in the form of the second bold-face paragraph
appearing at the top of page 1 of this Warrant Certificate. In addition, all
such certificates shall at all times bear a restrictive legend to the effect
that any transfer or assignment of the Common Shares requires the prior approval
of the Bermuda Monetary Authority, such legend to be substantially in the form
of the third bold-face paragraph appearing at the top of page 1 of this Warrant
Certificate.

                                       16

     6. Representations, Warranties and Agreements of the Holder. The Holder
hereby represents and warrants to the Company and agrees for the benefit of the
Company, in each case as of the date of this Warrant Certificate, the date of
each exercise hereof and the date of any reissuance of this Warrant Certificate,
in whole or in part, that:

          (a) Purchase Entirely for Own Account. This Warrant Certificate is
made with the Holder in reliance upon the Holder's representation to the Company
that the Warrant Certificate and the Shares issuable upon exercise thereof
(collectively, the "Securities") will be acquired for investment for such
Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant Certificate, the Holder further represents
that the Holder does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.

          (b) Investment Experience. The Holder is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the warrants represented by this Warrant Certificate and investment in
the Common Shares. If other than an individual, the Holder also represents it
has not been organized for the purpose of acquiring the Securities.

          (c) Accredited Investor. The Holder is an "accredited investor" as
defined under Rule 501(a) of Regulation D of the rules and regulations of the
Securities Act (as defined in Section 6(d) hereof).

          (d) Restricted Securities. The Holder understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended, or any

                                       17

successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission or any other Federal agency at the time administering the
Securities Act thereunder, all as the same shall be in effect at the time, and
the rules and regulations thereunder (the "Securities Act"), only in certain
limited circumstances. In this connection, the Holder represents that it is
familiar with Rule 144, as presently in effect, adopted by the Commission under
the Securities Act ("Rule 144") and understands the resale limitations imposed
thereby and under the Securities Act. The Holder of this Warrant Certificate,
and any holder and transferee of any Securities, by acceptance thereof, agrees
that no public distribution of Securities will be made in violation of the
provisions of the Securities Act. Further, the Holder understands that the
Securities it is purchasing are subject to Bermuda Monetary Authority
permissions and must be issued and transferred in compliance with the conditions
attached to such permissions. The Holder of this Warrant Certificate, and any
holder and transferee of any Securities, by acceptance thereof, agrees that (x)
no issuance, transfer or assignment of the Securities, including the Common
Shares to be issued on any exercise hereof, will be made unless any such
issuance, transfer or assignment is in compliance with the Securities Act and
any Bermuda Monetary Authority permissions and the conditions attached to such
permissions, (y) no issuance, transfer or assignment of any Securities,
including the Common Shares to be issued on any exercise hereof, will be made
unless Bermuda Monetary Authority approval, if necessary, shall have been
obtained prior to any such issuance, transfer or assignment and (z) this Warrant
Certificate is being issued and the Common Shares will be issued in reliance
upon, among other matters, the Holder or relevant Shareholder at any and all
material times being an "accredited investor" (as defined under Rule 501(a) of
Regulation D of the rules and regulations of the Securities Act) or a director,
officer or employee of the Company.

          (e) Further Limitations on Disposition. Without in any way limiting
the representations set forth above or the terms of the Shareholders' Agreement,
the Holder further agrees not to make any disposition of all or any portion of
the Securities unless and until (x) the transferee has agreed in writing for the
benefit of the Company to be bound by this Section 6 and the Shareholders'
Agreement and all other terms and conditions of this Warrant Certificate and to
abide by any restrictions on transfer or

                                       18

assignment of the Securities pursuant to the Company's bye-laws and the
Shareholders' Agreement, (y) there is then in effect a registration statement
under the Securities Act and/or other applicable securities laws covering such
proposed disposition or there is available an applicable exemption from the
registration requirements of the Securities Act and any applicable state
securities laws and such disposition is made in accordance with such
registration statement or the terms of such applicable exemption and (z) such
disposition complies with all applicable Bermuda law.

     7. Notices. Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered by hand or shall be sent by
facsimile (confirmed by registered, certified or mail courier, postage and
delivery charges prepaid), to the following addresses:

     If to Holder: at the Holder's address as set forth in the register of
shareholders of the Company, or such other address as may have been furnished to
the Company by the Holder in writing; or

     If to the Company: c/o Codan Services Limited, Clarendon House, Church
Street, Hamilton, HM 11, Bermuda, Attention: Resident Representative, Facsimile:
441-299-4988 or at such other address as may have been furnished in writing by
the Company to the Holder. Whenever any notice is required to be given
hereunder, such notice shall be deemed given and such requirement satisfied only
when such notice is delivered or, if sent by facsimile, when received, unless
otherwise expressly specified or permitted by the terms of this Warrant
Certificate.

Notwithstanding the time of effectiveness of notices set forth in this Section
7, an Election to Purchase shall not be deemed effectively given until it has
been duly completed and submitted to the Company together with the original
Warrant Certificate to be exercised and payment of the Exercise Price.

                                       19

     8. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this Warrant
Certificate, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.

     9. Representations and Warranties of the Company. The Company hereby
represents and warrants to Holder, as of the date hereof, that:

          (a) Corporate Existence, Power and Authority.

               (i) The Company is duly organized, validly existing and in good
standing under the laws of Bermuda. The Company is duly qualified, licensed and
authorized to do business and is in good standing in each jurisdiction in which
it owns or leases any material property or in which the conduct of its business
requires it to so qualify or be so licensed.

               (ii) No proceeding has been commenced looking toward the
dissolution, merger or amalgamation of the Company or the amendment of its
memorandum of association, other than any amendments related to any increases in
authorized share capital. The Company is not in violation of its memorandum of
association or bye-laws.

               (iii) The Company has all requisite power and authority to own or
to hold under lease and to operate the properties it owns or holds and to
conduct its business as now being conducted.

               (iv) The Company has all requisite power and authority to
execute, deliver, enter into, consummate and perform this Warrant Certificate
(including, without limitation, the issuance by the Company of the Shares as
contemplated herein). The execution, delivery and performance of this Warrant
Certificate by the Company (including, without limitation, the issuance by the
Company of the Shares as contemplated herein) have been duly authorized by all
required corporate and Shareholder actions. The Company has duly executed and
delivered this Warrant Certificate. This Warrant Certificate constitutes the
legal, valid and binding obligation of

                                       20

the Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to the
rights of creditors generally.

          (b) Capitalization. The authorized capital shares of the Company
consists of (i) 501,500,000 Common Shares, $0.01 par value per share and (ii)
100,000,000 Series A Convertible Voting Preferred Shares, $0.01 par value per
share (the "Series A Preferred Shares"). All outstanding Common Shares and
Series A Preferred Shares are duly authorized, validly issued, fully paid and
non-assessable. The Company has duly issued to XL Insurance (Bermuda) Ltd a
Warrant to purchase 11,317,972 Common Shares (the "XL Warrant") and to Radian
Group Inc. a Warrant to purchase up to 8,751,010 Common Shares pursuant to a
separate Warrant Certificate (the "Other Radian Warrant").

          (c) No Defaults or Conflicts. The Company is not in violation or
default in any respect (and is not in default in any respect regarding any
indebtedness) under any material indenture, agreement or instrument to which it
is a party or by which it or its properties may be bound. The Company is not in
default under any order, writ, injunction, judgment or decree of any court or
other governmental authority or arbitrator. The execution, delivery and
performance by the Company of this Warrant Certificate, and any of the
transactions contemplated hereby (including, without limitation, the issuance of
the Shares as contemplated herein) does not and will not (i) violate or conflict
with, with or without the giving of notice or the passage of time or both, any
provision of (A) the memorandum of association or bye-laws of the Company or (B)
any law, rule, regulation or order of any federal, state, county, municipal or
other governmental authority, or any judgment, writ, injunction, decree, award
or other action of any court or governmental authority or arbitrator, or any
agreement, indenture or other instrument applicable to the Company or any of its
properties, (ii) result in the creation of any lien upon any of the Company's
properties, assets or revenues, (iii) except as may be required under Section 6
hereof, require the consent, waiver, approval, order or authorization of, or
declaration, registration, qualification or filing with, any person (whether or
not a governmental authority and including, without limitation, any Shareholder
approval) or

                                       21

(iv) cause anti-dilution clauses of any outstanding securities to
become operative or give rise to any preemptive right.

     10. Reservation of Common Shares. The Company shall at all times reserve
and keep available out of authorized but unissued Common Shares the maximum
number of Common Shares which are issuable upon the exercise of this Warrant
Certificate.

     11. Increase in Par Value. The Company shall not increase the par value of
the Common Shares to an amount greater than what the Exercise Price would have
been but for such increase in par value, without either (i) obtaining the
consent of the Holder, which such consent shall not be unreasonably withheld, or
(ii) putting the Holder in the same economic position it would have been had
there been no increase in the par value of the Common Shares.

     12. Transfers of Warrant Certificate. Subject to the provisions of Section
6(d) and 6(e) hereof, this Warrant Certificate is transferable pursuant to the
terms and conditions governing the transfer of Company Securities (as such term
is defined in the Shareholders' Agreement) as set forth in Section 1 of the
Shareholders' Agreement.

     13. Governing Law. This Warrant Certificate and all rights and obligations
hereunder shall be deemed to be made under and governed by the laws of the State
of New York as applied to agreements among New York residents made and to be
performed entirely within the State of New York (i) except where this Warrant
Certificate expressly refers to the laws or regulations of Bermuda and (ii)
except that it is the intent of the parties hereto that the laws of Bermuda
govern any articles, bye-laws, contracts or agreements created thereunder or
expressed to be governed thereby.

     14. Successors and Assigns. This Warrant Certificate shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Company may not assign its rights nor
delegate its obligations under this Warrant Certificate without the prior
written consent of the Holder.

                                       22

     15. Headings. The headings of various sections of this Warrant Certificate
have been inserted for reference only and shall not affect the meaning or
construction of any of the provisions hereof.

     16. Severability. If any provision of this Warrant Certificate is held to
be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.

     17. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.

     18. Specific Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Warrant Certificate were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Warrant Certificate and to enforce specifically the terms
and provisions hereof, this being in addition to any other remedy to which
either of them may be entitled by law or equity.

                                       23

          IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.

                                                     PRIMUS GUARANTY, LTD.

Date: March   , 2002                                 By:
            --                                           -----------------------
                                                         Name:
                                                         Title:

       [Signature Page to Common Share Purchase Warrant Certificate No. 2]

                                   SCHEDULE A

                                    WARRANTS

Common Share Purchase Warrant Certificate No. 1, dated March 14, 2002, issued to
XL Insurance (Bermuda) Ltd for 11,317,972 shares.

Common Share Purchase Warrant Certificate No. 3, dated March 14, 2002, issued to
Radian Group Inc. for up to 8,751,010 shares.

                                       25

                                    EXHIBIT A

                              ELECTION TO PURCHASE

       (To Be Executed by the Holder in Order to Exercise the Common Share
                          Purchase Warrant Certificate)

     The undersigned Holder hereby elects to exercise the attached Common Share
Purchase Warrant Certificate (the "Warrant Certificate"), pursuant to:

     Check applicable Box

     [_] Section 1(a) of the Warrant Certificate and to purchase ______________
Common Shares issuable upon such exercise, or

     [_] Section 1(c) of the Warrant Certificate and elects to acquire _________
Common Shares issuable upon such election,

and requests that the Common Shares be registered and a certificate or
certificates representing the Common Shares be issued in denominations of
______________ Common Shares in the name of and delivered to the following:

           ----------------------------------------------------------

           ----------------------------------------------------------

           ----------------------------------------------------------

                     (Please type or print name and address)

           ----------------------------------------------------------

                 (Social Security or Tax Identification Number)

     [_] Check box, if applicable.

     The Warrant Certificate is being exercised only in part. The undersigned
Holder requests that a new warrant certificate or warrant certificates in the
following amounts be registered in the name of, issued and delivered to the
Holder at the address set forth below the Holder's signature:

           ----------------------------------------------------------

           ----------------------------------------------------------

     In full payment of the purchase price with respect to the Common Shares
purchased pursuant to an election under Section 1(a) of this Warrant Certificate
and transfer taxes, if any, the undersigned hereby tenders payment of
$_____________ by check, money order or wire transfer payable in United States
currency to the order of Primus Guaranty, Ltd.

     Each of the representations, warranties and agreements of the Holder
contained in Section 6 of the Warrant Certificate is hereby incorporated by
reference as if set forth in full herein and is hereby repeated by the Holder
for the benefit of the Company.

                                   HOLDER

Date:                              By:
     -------------------------         -----------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------
                                       Address:
                                                --------------------------------

                                                --------------------------------

                                       (Signature must conform to name of Holder
                                       as specified on the face of the Warrant
                                       Certificate)

                                    EXHIBIT B

                              NOTICE OF ASSIGNMENT

             (To be signed only on transfer of Warrant Certificate)

     For value received, the undersigned hereby sells, assigns, and transfers to
_______________ the rights represented by the attached Common Share Purchase
Warrant Certificate (the "Warrant Certificate") to purchase __________ Common
Shares of Primus Guaranty, Ltd., a Bermuda company (the "Company"), to which the
Warrant Certificate relates, appoints _______________ attorney-in-fact for the
purpose of registering such transfer on the books of the Company, with full
power of substitution of premises and requests that a warrant certificate be
issued and delivered to _________________ at the following address:

           ----------------------------------------------------------

           ----------------------------------------------------------

           ----------------------------------------------------------

                         (Please type or print address)

           ----------------------------------------------------------

                 (Social Security or Tax Identification Number)

     [_] Check box, if applicable.

     The Warrant Certificate is being sold, assigned, and transferred only in
part. The undersigned Holder requests that a new warrant certificate or warrant
certificates in the following amounts be registered in the name of, issued and
delivered to the Holder at the address set forth below the Holder's signature:

           ----------------------------------------------------------

           ----------------------------------------------------------

     Each of the representations, warranties and agreements of the Holder
contained in Section 6 of the Warrant Certificate is hereby incorporated by
reference as if set forth in full herein and is hereby repeated by the Holder
for the benefit of the Company.

                                   HOLDER

Date:                              By:
     -------------------------         -----------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------
                                       Address:
                                                --------------------------------

                                                --------------------------------

                                       (Signature must conform to name of Holder
                                       as specified on the face of the Warrant
                                       Certificate)

Signed in the presence of:

Date:                              By:
     -------------------------         -----------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------
                                       Address:
                                                --------------------------------

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