Document:

Exhibit 4.15(b)

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                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                 XL CAPITAL LTD

                          Dated as of January 23, 2003

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                                TABLE OF CONTENTS

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                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.    Definitions and Interpretation.................................2

                          ARTICLE II

                      TRUST INDENTURE ACT

SECTION 2.1.    Trust Indenture Act; Application...............................6
SECTION 2.2.    Lists of Holders of Securities.................................6
SECTION 2.3.    Reports by the Preferred Guarantee Trustee.....................6
SECTION 2.4.    Periodic Reports to Preferred Guarantee Trustee................7
SECTION 2.5.    Evidence of Compliance with Conditions Precedent...............7
SECTION 2.6.    Events of Default; Waiver......................................7
SECTION 2.7.    Events of Default; Notice......................................7
SECTION 2.8.    Conflicting Interests..........................................8

                                   ARTICLE III

            POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.1.    Powers and Duties of the Preferred Guarantee Trustee...........8
SECTION 3.2.    Certain Rights of Preferred Guarantee Trustee.................10
SECTION 3.3.    Not Responsible for Recitals or Issuance of Guarantee.........13

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1.    Preferred Guarantee Trustee; Eligibility......................13
SECTION 4.2.    Appointment, Removal and Resignation of
                  Preferred Guarantee Trustees................................14

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                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1.    Guarantee.....................................................15
SECTION 5.2.    Waiver of Notice and Demand...................................15
SECTION 5.3.    Obligations Not Affected......................................15
SECTION 5.4.    Rights of Holders.............................................17
SECTION 5.5.    Guarantee of Payment..........................................17
SECTION 5.6.    Subrogation...................................................17
SECTION 5.7.    Independent Obligations.......................................18

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1.    Limitation of Transactions....................................18
SECTION 6.2.    Ranking.......................................................19

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1.    Termination...................................................19

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1.    Exculpation...................................................19
SECTION 8.2.    Indemnification...............................................20

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.    Successors and Assigns........................................21
SECTION 9.2.    Amendments....................................................21
SECTION 9.3.    Notices.......................................................22
SECTION 9.4.    Benefit.......................................................23
SECTION 9.5.    Governing Law.................................................23
SECTION 9.6.    No Recourse Against Certain Persons...........................23

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                    PREFERRED SECURITIES GUARANTEE AGREEMENT

              This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as January 23, 2003, is executed and delivered by XL Capital Ltd, a Cayman
Islands exempted limited company (the "Guarantor"), and U.S. Bank National
Association, a national banking association, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of XL Capital Trust
I, a Delaware statutory business trust (the "Issuer").

                                   WITNESSETH:

              WHEREAS, pursuant to an amended and restated Declaration of Trust
(the "Declaration")to be entered into by the Issuer, the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer will
issue Trust Preferred Securities (the "Preferred Securities")pursuant to the
Issuer's Registration Statement on Form S-3 (Registration No. 333-101288) (the
"Registration Statement"), the specific terms of which will be set forth in a
prospectus supplement to the Registration Statement;

              WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;

              WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") with substantially
identical terms as this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an
Indenture Event of Default (as defined herein), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
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              NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.         DEFINITIONS AND INTERPRETATION

              In this Preferred Securities Guarantee, unless the context
otherwise requires:

              (a)    capitalized terms used in this Preferred Securities
                     Guarantee but not defined in the preamble above have the
                     respective meanings assigned to them in this Section 1.1;

              (b)    a term defined anywhere in this Preferred Securities
                     Guarantee has the same meaning throughout;

              (c)    all references to "the Preferred Securities Guarantee" or
                     "this Preferred Securities Guarantee" are to this Preferred
                     Securities Guarantee as modified, supplemented or amended
                     from time to time;

              (d)    all references in this Preferred Securities Guarantee to
                     Articles and Sections are to Articles and Sections of this
                     Preferred Securities Guarantee, unless otherwise specified;

              (e)    a term defined in the Trust Indenture Act has the same
                     meaning when used in this Preferred Securities Guarantee,
                     unless otherwise defined in this Preferred Securities
                     Guarantee or unless the context otherwise requires; and

              (f)    a reference to the singular includes the plural and vice
                     versa.
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              "AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.

              "BUSINESS DAY" means any day other than a Saturday, a Sunday or
any other day on which banking institutions in New York, New York are authorized
or required by law to close.

              "COMMON SECURITIES" means the securities representing common
undivided beneficial interests in the assets of the Issuer.

              "COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.

              "EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee after
giving effect to all applicable cure periods.

              "GUARANTEE PAYMENTS" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer has funds available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Subordinated Notes to the Holders in exchange for Preferred
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an Indenture Event of Default has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.

              "HOLDER" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities;

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PROVIDED, HOWEVER, that, in determining whether the holders of the requisite
percentage of Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.

              "INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.

              "INDENTURE" means the Indenture dated as of January 23, 2003,
between the Guarantor and U.S. Bank National Association, as trustee, and the
First Supplemental Indenture thereto pursuant to which certain subordinated debt
securities of the Guarantor are to be issued to the Property Trustee (as defined
in the Declaration), as from time to time amended.

              "INDENTURE EVENT OF DEFAULT" has the same meaning as that given to
the term "Event of Default" in the Indenture.

              "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities
outstanding as of the date of determination.

              "OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Preferred Securities Guarantee
shall include:

              (a)    a statement that each officer signing the Officers'
       Certificate has read the covenant or condition;

              (b)    a brief statement of the nature and scope of the
       examination or investigation undertaken by each officer in rendering the
       Officers' Certificate;

              (c)    a statement that each such officer has made such
       examination or investigation as, in such officer's opinion, is necessary
       to enable such officer to express an in-

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       formed opinion as to whether or not such covenant or condition has been
       complied with; and

              (d)    a statement as to whether, in the opinion of each such
       officer, such condition or covenant has been complied with.

              "PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

              "PREFERRED GUARANTEE TRUSTEE" means U.S. Bank National
Association, until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.

              "PROPERTY TRUSTEE" shall have the meaning ascribed to such term in
the Declaration.

              "RESPONSIBLE OFFICER" means, with respect to the Preferred
Guarantee Trustee, (a) any vice president, any assistant vice president, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the corporate trust
department of the Preferred Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject and (b) who shall have direct
responsibility for the administration of this Agreement.

              "SUBORDINATED NOTES" means the series of subordinated debt
securities of the Guarantor issued pursuant to the Indenture and held by the
Property Trustee.

              "SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

              "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
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              "XL" means XL Capital Ltd, a Cayman Islands exempted limited
company.

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1.         TRUST INDENTURE ACT; APPLICATION

              (a)    This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.

              (b)    If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

SECTION 2.2.         LISTS OF HOLDERS OF SECURITIES

              (a)    The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") (i) as of January 1 and June 30 of each year, within 20
Business Days thereafter, and (ii) at any other time within 30 days of receipt
by the Guarantor of a written request from the Preferred Guarantee Trustee for a
List of Holders, which shall be as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee; PROVIDED, HOWEVER,
that the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.

              (b)    The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.

SECTION 2.3.               REPORTS BY THE PREFERRED GUARANTEE TRUSTEE

              Within 60 days after each May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the

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Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.4.         Periodic Reports to Preferred Guarantee Trustee

              The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

SECTION 2.5.         EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT

              The Guarantor shall provide to the Preferred Guarantee Trustee
with a certification of compliance with any conditions precedent, if any,
provided for in this Preferred Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) of
the Trust Indenture Act may be given in the form of an Officers' Certificate.

SECTION 2.6.         EVENTS OF DEFAULT; WAIVER

              The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

SECTION 2.7.         EVENTS OF DEFAULT; NOTICE

              (a)    The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default that is actually known to the Preferred
Guarantee Trustee (or as soon as reasonably practical thereafter), transmit by
mail, first class postage prepaid, to the Holders of the Pre-

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ferred Securities, notices of all Events of Default actually known to the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; PROVIDED, HOWEVER, that the Preferred Guarantee Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Preferred Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Preferred Securities.

              (b)    The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received actual knowledge, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.

SECTION 2.8.         CONFLICTING INTERESTS

              The Declaration shall be deemed to be specifically described in
this Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

                                   ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                           PREFERRED GUARANTEE TRUSTEE

SECTION 3.1.         POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE

              (a)    This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting (and cessation as to the Preferred Guarantee Trustee) of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Preferred Guarantee Trustee.
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              (b)    If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.

              (c)    The Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

             (d)    No provision of this Preferred Securities Guarantee shall
be construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

              (i)    prior to the occurrence of any Event of Default and after
       the curing or waiving of all such Events of Default that may have
       occurred:

                     (A)    the duties and obligations of the Preferred
              Guarantee Trustee shall be determined solely by the express
              provisions of this Preferred Securities Guarantee, and the
              Preferred Guarantee Trustee shall not be liable except for the
              performance of such duties and obligations as are specifically set
              forth in this Preferred Securities Guarantee, and no implied
              covenants or obligations shall be read into this Preferred
              Securities Guarantee against the Preferred Guarantee Trustee; and

                     (B)    in the absence of bad faith on the part of the
              Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
              conclusively rely, as to the truth of the statements and the
              correctness of the opinions expressed therein, upon any
              certificates or opinions furnished to the Preferred Guarantee
              Trustee and conforming to the requirements of this Preferred
              Securities Guarantee; but in the case of any such certifi-

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                                      -10-

              cates or opinions that by any provision hereof are specifically
              required to be furnished to the Preferred Guarantee Trustee, the
              Preferred Guarantee Trustee shall be under a duty to examine the
              same to determine whether or not they conform to the requirements
              of this Preferred Securities Guarantee (but need not confirm or
              investigate the accuracy of mathematical calculations or other
              facts stated therein);

              (ii)   the Preferred Guarantee Trustee shall not be liable for any
       error of judgment made in good faith by a Responsible Officer of the
       Preferred Guarantee Trustee, unless it shall be proved that the Preferred
       Guarantee Trustee was negligent in ascertaining the pertinent facts upon
       which such judgment was made;

              (iii)  the Preferred Guarantee Trustee shall not be liable with
       respect to any action taken or omitted to be taken by it in good faith in
       accordance with the direction of the Holders of not less than a Majority
       in liquidation amount of the Preferred Securities relating to the time,
       method and place of conducting any proceeding for any remedy available to
       the Preferred Guarantee Trustee, or exercising any trust or power
       conferred upon the Preferred Guarantee Trustee under this Preferred
       Securities Guarantee; and

              (iv)   no provision of this Preferred Securities Guarantee shall
       require the Preferred Guarantee Trustee to expend or risk its own funds
       or otherwise incur personal financial liability in the performance of any
       of its duties or in the exercise of any of its rights or powers, if the
       Preferred Guarantee Trustee shall have reasonable grounds for believing
       that the repayment of such funds or liability is not reasonably assured
       to it under the terms of this Preferred Securities Guarantee or adequate
       indemnity against such risk or liability is not reasonably assured to it.

SECTION 3.2.         CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE

              (a)    Subject to the provisions of Section 3.1:

              (i)    The Preferred Guarantee Trustee may conclusively rely, and
       shall be fully protected in acting or refraining from acting upon, any
       resolution, certificate, statement,

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       instrument, opinion, report, notice, request, direction, consent, order,
       bond, debenture, note, other evidence of indebtedness or other paper or
       document believed by it to be genuine and to have been signed, sent or
       presented by the proper party or parties.

              (ii)   Any direction or act of the Guarantor contemplated by this
       Preferred Securities Guarantee shall be sufficiently evidenced by a
       Direction (as defined in the Declaration) or an Officers' Certificate.

              (iii)  Whenever, in the administration of this Preferred
       Securities Guarantee, the Preferred Guarantee Trustee shall deem it
       desirable that a matter be proved or established before taking, suffering
       or omitting any action hereunder, the Preferred Guarantee Trustee (unless
       other evidence is herein specifically prescribed) may, in the absence of
       bad faith on its part, request and conclusively rely upon an Officers'
       Certificate which, upon receipt of such request, shall be promptly
       delivered by the Guarantor.

              (iv)   The Preferred Guarantee Trustee shall have no duty to see
       to any recording, filing or registration of any instrument (or any
       rerecording, refiling or reregistration thereof).

              (v)    The Preferred Guarantee Trustee may consult with counsel of
       its selection, and the advice or opinion of such counsel with respect to
       legal matters shall be full and complete authorization and protection in
       respect of any action taken, suffered or omitted by it hereunder in good
       faith and in accordance with such advice or opinion. Such counsel may be
       counsel to the Guarantor or any of its Affiliates and may include any of
       its employees. The Preferred Guarantee Trustee shall have the right at
       any time to seek instructions concerning the administration of this
       Preferred Securities Guarantee from any court of competent jurisdiction.

              (vi)   The Preferred Guarantee Trustee shall be under no
       obligation to exercise any of the rights or powers vested in it by this
       Preferred Securities Guarantee at the request or direction of any Holder,
       unless such Holder shall have provided to the Preferred Guarantee Trustee
       such adequate security and indemnity as would satisfy a reasonable person
       in the position of the Preferred Guarantee Trustee, against the costs,
       expenses (including attor-

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       neys' fees and expenses) and liabilities that might be incurred by it in
       complying with such request or direction, including such reasonable
       advances as may be requested by the Preferred Guarantee Trustee;
       PROVIDED, HOWEVER, that nothing contained in this Section 3.2(a)(vi)
       shall be taken to relieve the Preferred Guarantee Trustee, upon the
       occurrence of an Event of Default, of its obligation to exercise the
       rights and powers vested in it by this Preferred Securities Guarantee.

              (vii)  The Preferred Guarantee Trustee shall not be bound to make
       any investigation into the facts or matters stated in any resolution,
       certificate, statement, instrument, opinion, report, notice, request,
       direction, consent, order, bond, debenture, note, other evidence of
       indebtedness or other paper or document, but the Preferred Guarantee
       Trustee, in its discretion, may make such further inquiry or
       investigation into such facts or matters as it may see fit.

              (viii) The Preferred Guarantee Trustee may execute any of the
       trusts or powers hereunder or perform any duties hereunder either
       directly or by or through agents or attorneys, and the Preferred
       Guarantee Trustee shall not be responsible for any misconduct or
       negligence on the part of any agent or attorney appointed with due care
       by it hereunder.

              (ix)   Any action taken by the Preferred Guarantee Trustee or its
       agents hereunder shall bind the Holders of the Preferred Securities, and
       the signature of the Preferred Guarantee Trustee or its agents alone
       shall be sufficient and effective to perform any such action. No third
       party shall be required to inquire as to the authority of the Preferred
       Guarantee Trustee to so act or as to its compliance with any of the terms
       and provisions of this Preferred Securities Guarantee, both of which
       shall be conclusively evidenced by the Preferred Guarantee Trustee's or
       its agent's taking such action.

              (x)    Whenever in the administration of this Preferred Securities
       Guarantee the Preferred Guarantee Trustee shall deem it desirable to
       receive instructions with respect to enforcing any remedy or right or
       taking any other action hereunder, the Preferred Guarantee Trustee (i)
       may request instructions from the Holders of a Majority in liquidation
       amount of the Preferred Securities, (ii) may refrain from enforcing such
       remedy or right or taking such other action

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                                      -13-

       until such instructions are received, and (iii) shall be protected in
       acting in accordance with such instructions.

              (b)    No provision of this Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.

SECTION 3.3.         NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE

              The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1.         PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY

              (a)    There shall at all times be a Preferred Guarantee Trustee
which shall:

              (i)    not be an Affiliate of the Guarantor; and

              (ii)   be a corporation organized and doing business under the
       laws of the United States of America or any State or Territory thereof or
       of the District of Columbia, or a corporation or Person permitted by the
       Securities and Exchange Commission to act as an institutional trustee
       under the Trust Indenture Act, authorized under such laws to exercise
       corporate trust powers, having (or in the case of a subsidiary of a bank
       holding company that guarantees the obligations of the Preferred
       Guarantee Trustee under this Preferred Securities Guarantee, such bank
       holding company parent shall have) a combined capital and surplus of at

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                                      -14-

       least 50 million U.S. dollars ($50,000,000), and subject to supervision
       or examination by Federal, State, Territorial or District of Columbia
       authority. If such corporation or holding company parent publishes
       reports of condition at least annually, pursuant to law or to the
       requirements of the supervising or examining authority referred to above,
       then, for the purposes of this Section 4.1(a)(ii), the combined capital
       and surplus of such corporation or holding company parent shall be deemed
       to be its combined capital and surplus as set forth in its most recent
       report of condition so published.

              (b)    If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).

              (c)    If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2.         APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
                     TRUSTEES

              (a)    Subject to Section 4.2(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.

              (b)    The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

              (c)    The Preferred Guarantee Trustee appointed to office shall
hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
<PAGE>
                                      -15-

              (d)    If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may (at the expense of the
Guarantor) petition any court of competent jurisdiction for appointment of a
Successor Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Preferred Guarantee Trustee.

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1.         GUARANTEE

              The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

SECTION 5.2.         WAIVER OF NOTICE AND DEMAND

              The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.

SECTION 5.3.         OBLIGATIONS NOT AFFECTED

              The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

              (a)    the release or waiver, by operation of law or otherwise, of
       the performance or observance by the Issuer of any express or implied
       agreement, covenant, term or

<PAGE>
                                      -16-

       condition relating to the Preferred Securities to be performed or
       observed by the Issuer;

              (b)    the extension of time for the payment by the Issuer of all
       or any portion of the Distributions, Redemption Price, Liquidation
       Distribution or any other sums payable under the terms of the Preferred
       Securities or the extension of time for the performance of any other
       obligation under, arising out of, or in connection with, the Preferred
       Securities (other than an extension of time for payment of Distributions
       or other sum payable that results from the extension of any interest
       payment period on the Subordinated Notes permitted by the Indenture);

              (c)    any failure, omission, delay or lack of diligence on the
       part of the Holders to enforce, assert or exercise any right, privilege,
       power or remedy conferred on the Holders pursuant to the terms of the
       Preferred Securities, or any action on the part of the Issuer granting
       indulgence or extension of any kind;

              (d)    the voluntary or involuntary liquidation, dissolution, sale
       of any collateral, receivership, insolvency, bankruptcy, assignment for
       the benefit of creditors, reorganization, arrangement, composition or
       readjustment of debt of, or other similar proceedings affecting, the
       Issuer or any of the assets of the Issuer;

              (e)    any invalidity of, or defect or deficiency in, the
       Preferred Securities;

              (f)    the settlement or compromise of any obligation guaranteed
       hereby or hereby incurred; or

              (g)    any other circumstance whatsoever that might otherwise
       constitute a legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.

              There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
<PAGE>
                                      -17-

SECTION 5.4.         RIGHTS OF HOLDERS

              (a)    The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.

              (b)    If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.

              (c)    Notwithstanding subsection 5.4(b), any Holder of Preferred
Securities may directly institute proceedings against the Guarantor to obtain
Guarantee Payments in respect of the Preferred Securities owned by such Holder,
without first waiting to determine if the Preferred Guarantee Trustee has
enforced this Preferred Securities Guarantee or first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.

SECTION 5.5.         GUARANTEE OF PAYMENT

              This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.

SECTION 5.6.         SUBROGATION

              The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in

<PAGE>
                                      -18-

trust for the Holders and to pay over such amount to the Holders.

SECTION 5.7.         INDEPENDENT OBLIGATIONS

              The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1.         LIMITATION OF TRANSACTIONS

              (a)    So long as any Preferred Securities remain outstanding, if
an Event of Default or Indenture Event of Default shall exist, then (a) the
Guarantor shall not declare or pay any dividend on, or make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank PARI PASSU with or
junior to the Subordinated Notes.

              (b)    Notwithstanding subsection 6.1(a) or any other language to
the contrary contained in this Preferred Securities Guarantee, nothing shall
prevent the Guarantor from: (i) declaring or paying any dividend on, or making
any distribution with respect to, or redeeming, purchasing, acquiring or making
a liquidation payment with respect to, any of its capital stock in or with
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (ii) paying any interest, principal or premium on, or repaying,
repurchasing or redeeming, any debt securities issued by the Guarantor which
rank PARI PASSU with or junior to the Subordinated Notes, with (x) securities of
the Guarantor (including capital stock) that rank junior to such debt securities
or (y) securities (including capital stock) of XL.
<PAGE>
                                      -19-

SECTION 6.2.         RANKING

              This Preferred Securities Guarantee constitutes an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, except those liabilities of
the Guarantor expressly made PARI PASSU with or subordinate to this Preferred
Securities Guarantee by their terms, (ii) PARI PASSU with the most senior
preferred or preference stock issued by the Guarantor from time to time and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor and (iii) senior
to the Guarantor's common stock.

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1.         TERMINATION

              This Preferred Securities Guarantee shall automatically terminate
upon the earliest to occur of (i) the full payment of the Redemption Price of
all Preferred Securities, (ii) the distribution of Subordinated Notes to the
Holder(s) of all of the Preferred Securities or (iii) full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1.         EXCULPATION

              (a)    No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Pre-

<PAGE>
                                      -20-

ferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omission.

              (b)    An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions, the Redemption Price or the Liquidation
Distribution to Holders of Preferred Securities might properly be paid.

              (c)    The provisions of this Section 8.1 shall survive the
termination of this Preferred Securities Guarantee.

SECTION 8.2.         INDEMNIFICATION

              (a)    The Guarantor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person in accordance
with this Preferred Securities Guarantee, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.

              (b)    Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that

<PAGE>
                                      -21-

the Indemnified Person is not entitled to be indemnified as authorized in
Section 8.2(a).

              (c)    The Guarantor agrees

              (i)    to pay to the Preferred Guarantee Trustee from time to time
       such compensation as the Guarantor and the Preferred Guarantee Trustee
       shall from time to time agree in writing for all services rendered by it
       hereunder (which compensation shall not be limited by any provision of
       law in regard to the compensation of a trustee of an express trust);

              (ii)   except as otherwise expressly provided herein, to reimburse
       the Trustee upon its request for all reasonable expenses, disbursements
       and advances incurred or made by the Preferred Guarantee Trustee in
       accordance with any provision of this Agreement (including the reasonable
       compensation and expenses and disbursements of its agents and counsel).

              (d)    The provisions of this Section 8.2 shall survive the
termination of this Preferred Securities Guarantee.

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.         SUCCESSORS AND ASSIGNS

              All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

SECTION 9.2.         AMENDMENTS

              Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
<PAGE>
                                      -22-

              In executing, or accepting the additional trusts created by, and
amendment permitted by this Section or the modification thereby of the trust
created by this Agreement, the Preferred Guarantee Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Preferred Guarantee Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.

SECTION 9.3.         NOTICES

              All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:

              (a)    If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):

              U.S. Bank National Association
              180 East Fifth Street
              St. Paul, MN 55101
              Attention:  Corporate Trust Administration
              (XL Capital Ltd)

              (b)    If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):

              XL Capital Ltd
              XL House
              One Bermudiana Road
              Hamilton HM11
              Bermuda
              Attention:  Paul S. Giordano

              (c)    If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.

              All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
<PAGE>
                                      -23-

SECTION 9.4.         BENEFIT

              This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.

SECTION 9.5.         GOVERNING LAW

              THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

SECTION 9.6.         NO RECOURSE AGAINST CERTAIN PERSONS

              No past, present or future director, officer, employee or
stockholder, as such, of the Guarantor or any successor thereof shall have any
liability for any obligations of the Guarantor under this Preferred Securities
Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creation and all such liability is hereby waived and
released. Such waiver and release are part of the consideration for the issue of
this Preferred Securities Guarantee and the Preferred Securities.
<PAGE>
                                      -24-

              IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Preferred
Securities Guarantee Agreement to be duly executed as a deed the day and year
first before written.

The common seal of )
XL CAPITAL LTD     )
was hereunto       )
affixed in the     )
presence of        )

   /s/ Brian M. O'Hara
------------------------------------------
Name:  Brian M. O'Hara
Title: President & Chief Executive Officer

Witness:

   /s/ Paul S. Giordano
------------------------------------------
Name:  Paul S. Giordano
Title: Executive Vice President,
       General Counsel & Secretary
<PAGE>
                                      -25-

              IN WITNESS WHEREOF, the undersigned, being duly authorized, has
executed this Preferred Securities Guarantee Agreement as of the date first
above written.

                                       U.S. BANK NATIONAL ASSOCIATION,
                                          as Preferred Guarantee Trustee

                                       By:    /s/ Arthur L. Blakeslee
                                           ------------------------------
                                           Name:  Arthur L. Blakeslee
                                           Title: Assistant Vice PresidentExhibit 4.15(c)

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

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                 XL CAPITAL LTD

                          Dated as of January 23, 2003

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.    Definitions and Interpretation................................2

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1.    Trust Indenture Act; Application..............................6
SECTION 2.2.    Lists of Holders of Securities................................6
SECTION 2.3.    Reports by the Preferred Guarantee Trustee....................6
SECTION 2.4.    Periodic Reports to Preferred Guarantee Trustee...............7
SECTION 2.5.    Evidence of Compliance with Conditions Precedent..............7
SECTION 2.6.    Events of Default; Waiver.....................................7
SECTION 2.7.    Events of Default; Notice.....................................7
SECTION 2.8.    Conflicting Interests.........................................8

                                   ARTICLE III

            POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.1.    Powers and Duties of the Preferred Guarantee Trustee...........8
SECTION 3.2.    Certain Rights of Preferred Guarantee Trustee.................10
SECTION 3.3.    Not Responsible for Recitals or Issuance of Guarantee.........13

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1.    Preferred Guarantee Trustee; Eligibility......................13
SECTION 4.2.    Appointment, Removal and Resignation of Preferred
                  Guarantee Trustees..........................................14

                                      -i-
<PAGE>

                                                                            PAGE
                                                                            ----
                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1.    Guarantee.....................................................15
SECTION 5.2.    Waiver of Notice and Demand...................................15
SECTION 5.3.    Obligations Not Affected......................................15
SECTION 5.4.    Rights of Holders.............................................17
SECTION 5.5.    Guarantee of Payment..........................................17
SECTION 5.6.    Subrogation...................................................17
SECTION 5.7.    Independent Obligations.......................................18

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1.    Limitation of Transactions....................................18
SECTION 6.2.    Ranking.......................................................19

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1.    Termination...................................................19

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1.    Exculpation...................................................19
SECTION 8.2.    Indemnification...............................................20

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.    Successors and Assigns........................................21
SECTION 9.2.    Amendments....................................................21
SECTION 9.3.    Notices.......................................................22
SECTION 9.4.    Benefit.......................................................23
SECTION 9.5.    Governing Law.................................................23
SECTION 9.6.    No Recourse Against Certain Persons...........................23

                                      -ii-
<PAGE>

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

              This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as January 23, 2003, is executed and delivered by XL Capital Ltd, a Cayman
Islands exempted limited company (the "Guarantor"), and U.S. Bank National
Association, a national banking association, as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of XL Capital Trust
II, a Delaware statutory business trust (the "Issuer").

                                   WITNESSETH:

              WHEREAS, pursuant to an amended and restated Declaration of Trust
(the "Declaration")to be entered into by the Issuer, the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer will
issue Trust Preferred Securities (the "Preferred Securities")pursuant to the
Issuer's Registration Statement on Form S-3 (Registration No. 333-101288) (the
"Registration Statement"), the specific terms of which will be set forth in a
prospectus supplement to the Registration Statement;

              WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;

              WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") with substantially
identical terms as this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an
Indenture Event of Default (as defined herein), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
<PAGE>
                                      -2-

              NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.         DEFINITIONS AND INTERPRETATION

              In this Preferred Securities Guarantee, unless the context
otherwise requires:

              (a)    capitalized terms used in this Preferred Securities
                     Guarantee but not defined in the preamble above have the
                     respective meanings assigned to them in this Section 1.1;

              (b)    a term defined anywhere in this Preferred Securities
                     Guarantee has the same meaning throughout;

              (c)    all references to "the Preferred Securities Guarantee" or
                     "this Preferred Securities Guarantee" are to this Preferred
                     Securities Guarantee as modified, supplemented or amended
                     from time to time;

              (d)    all references in this Preferred Securities Guarantee to
                     Articles and Sections are to Articles and Sections of this
                     Preferred Securities Guarantee, unless otherwise specified;

              (e)    a term defined in the Trust Indenture Act has the same
                     meaning when used in this Preferred Securities Guarantee,
                     unless otherwise defined in this Preferred Securities
                     Guarantee or unless the context otherwise requires; and

              (f)    a reference to the singular includes the plural and vice
                     versa.
<PAGE>
                                      -3-

              "AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.

              "BUSINESS DAY" means any day other than a Saturday, a Sunday or
any other day on which banking institutions in New York, New York are authorized
or required by law to close.

              "COMMON SECURITIES" means the securities representing common
undivided beneficial interests in the assets of the Issuer.

              "COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.

              "EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee after
giving effect to all applicable cure periods.

              "GUARANTEE PAYMENTS" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer has funds available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Subordinated Notes to the Holders in exchange for Preferred
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an Indenture Event of Default has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.

              "HOLDER" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities;

<PAGE>
                                      -4-

PROVIDED, HOWEVER, that, in determining whether the holders of the requisite
percentage of Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.

              "INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.

              "INDENTURE" means the Indenture dated as of January 23, 2003,
between the Guarantor and U.S. Bank National Association, as trustee, and the
First Supplemental Indenture thereto pursuant to which certain subordinated debt
securities of the Guarantor are to be issued to the Property Trustee (as defined
in the Declaration), as from time to time amended.

              "INDENTURE EVENT OF DEFAULT" has the same meaning as that given to
the term "Event of Default" in the Indenture.

              "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities
outstanding as of the date of determination.

              "OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Preferred Securities Guarantee
shall include:

              (a)    a statement that each officer signing the Officers'
       Certificate has read the covenant or condition;

              (b)    a brief statement of the nature and scope of the
       examination or investigation undertaken by each officer in rendering the
       Officers' Certificate;

              (c)    a statement that each such officer has made such
       examination or investigation as, in such officer's opinion, is necessary
       to enable such officer to express an in-

<PAGE>
                                      -5-

       formed opinion as to whether or not such covenant or condition has been
       complied with; and

              (d)    a statement as to whether, in the opinion of each such
       officer, such condition or covenant has been complied with.

              "PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

              "PREFERRED GUARANTEE TRUSTEE" means U.S. Bank National
Association, until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.

              "PROPERTY TRUSTEE" shall have the meaning ascribed to such term in
the Declaration.

              "RESPONSIBLE OFFICER" means, with respect to the Preferred
Guarantee Trustee, (a) any vice president, any assistant vice president, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the corporate trust
department of the Preferred Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject and (b) who shall have direct
responsibility for the administration of this Agreement.

              "SUBORDINATED NOTES" means the series of subordinated debt
securities of the Guarantor issued pursuant to the Indenture and held by the
Property Trustee.

              "SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

              "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
<PAGE>
                                      -6-

              "XL" means XL Capital Ltd, a Cayman Islands exempted limited
company.

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1.         TRUST INDENTURE ACT; APPLICATION

              (a)    This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.

              (b)    If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 323, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

SECTION 2.2.         LISTS OF HOLDERS OF SECURITIES

              (a)    The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") (i) as of January 1 and June 30 of each year, within 20
Business Days thereafter, and (ii) at any other time within 30 days of receipt
by the Guarantor of a written request from the Preferred Guarantee Trustee for a
List of Holders, which shall be as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee; PROVIDED, HOWEVER,
that the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.

              (b)    The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.

SECTION 2.3.         REPORTS BY THE PREFERRED GUARANTEE TRUSTEE

              Within 60 days after each May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the

<PAGE>
                                      -7-

Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.4.         PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE

              The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

SECTION 2.5.         EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT

              The Guarantor shall provide to the Preferred Guarantee Trustee
with a certification of compliance with any conditions precedent, if any,
provided for in this Preferred Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) of
the Trust Indenture Act may be given in the form of an Officers' Certificate.

SECTION 2.6.         EVENTS OF DEFAULT; WAIVER

              The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

SECTION 2.7.         EVENTS OF DEFAULT; NOTICE

              (a)    The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default that is actually known to the Preferred
Guarantee Trustee (or as soon as reasonably practical thereafter), transmit by
mail, first class postage prepaid, to the Holders of the Preferred Securities,
notices of all Events of Default actually known to the Pre-

<PAGE>
                                      -8-

ferred Guarantee Trustee, unless such defaults have been cured before the giving
of such notice; PROVIDED, HOWEVER, that the Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Preferred
Securities.

              (b)    The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received actual knowledge, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.

SECTION 2.8.         CONFLICTING INTERESTS

              The Declaration shall be deemed to be specifically described in
this Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

                                   ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                           PREFERRED GUARANTEE TRUSTEE

SECTION 3.1.         POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE

              (a)    This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting (and cessation as to the Preferred Guarantee Trustee) of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Preferred Guarantee Trustee.
<PAGE>
                                      -9-

              (b)    If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.

              (c)    The Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

              (d)    No provision of this Preferred Securities Guarantee shall
be construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

              (i)    prior to the occurrence of any Event of Default and after
       the curing or waiving of all such Events of Default that may have
       occurred:

                     (A)    the duties and obligations of the Preferred
              Guarantee Trustee shall be determined solely by the express
              provisions of this Preferred Securities Guarantee, and the
              Preferred Guarantee Trustee shall not be liable except for the
              performance of such duties and obligations as are specifically set
              forth in this Preferred Securities Guarantee, and no implied
              covenants or obligations shall be read into this Preferred
              Securities Guarantee against the Preferred Guarantee Trustee; and

                     (B)    in the absence of bad faith on the part of the
              Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
              conclusively rely, as to the truth of the statements and the
              correctness of the opinions expressed therein, upon any
              certificates or opinions furnished to the Preferred Guarantee
              Trustee and conforming to the requirements of this Preferred
              Securities Guarantee; but in the case of any such certifi-

<PAGE>
                                      -10-

              cates or opinions that by any provision hereof are specifically
              required to be furnished to the Preferred Guarantee Trustee, the
              Preferred Guarantee Trustee shall be under a duty to examine the
              same to determine whether or not they conform to the requirements
              of this Preferred Securities Guarantee (but need not confirm or
              investigate the accuracy of mathematical calculations or other
              facts stated therein);

              (ii)   the Preferred Guarantee Trustee shall not be liable for any
       error of judgment made in good faith by a Responsible Officer of the
       Preferred Guarantee Trustee, unless it shall be proved that the Preferred
       Guarantee Trustee was negligent in ascertaining the pertinent facts upon
       which such judgment was made;

              (iii)  the Preferred Guarantee Trustee shall not be liable with
       respect to any action taken or omitted to be taken by it in good faith in
       accordance with the direction of the Holders of not less than a Majority
       in liquidation amount of the Preferred Securities relating to the time,
       method and place of conducting any proceeding for any remedy available to
       the Preferred Guarantee Trustee, or exercising any trust or power
       conferred upon the Preferred Guarantee Trustee under this Preferred
       Securities Guarantee; and

              (iv)   no provision of this Preferred Securities Guarantee shall
       require the Preferred Guarantee Trustee to expend or risk its own funds
       or otherwise incur personal financial liability in the performance of any
       of its duties or in the exercise of any of its rights or powers, if the
       Preferred Guarantee Trustee shall have reasonable grounds for believing
       that the repayment of such funds or liability is not reasonably assured
       to it under the terms of this Preferred Securities Guarantee or adequate
       indemnity against such risk or liability is not reasonably assured to it.

SECTION 3.2.         CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE

              (a)    Subject to the provisions of Section 3.1:

              (i)    The Preferred Guarantee Trustee may conclusively rely, and
       shall be fully protected in acting or refraining from acting upon, any
       resolution, certificate, statement,

<PAGE>
                                      -11-

       instrument, opinion, report, notice, request, direction, consent, order,
       bond, debenture, note, other evidence of indebtedness or other paper or
       document believed by it to be genuine and to have been signed, sent or
       presented by the proper party or parties.

              (ii)   Any direction or act of the Guarantor contemplated by this
       Preferred Securities Guarantee shall be sufficiently evidenced by a
       Direction (as defined in the Declaration) or an Officers' Certificate.

              (iii)  Whenever, in the administration of this Preferred
       Securities Guarantee, the Preferred Guarantee Trustee shall deem it
       desirable that a matter be proved or established before taking, suffering
       or omitting any action hereunder, the Preferred Guarantee Trustee (unless
       other evidence is herein specifically prescribed) may, in the absence of
       bad faith on its part, request and conclusively rely upon an Officers'
       Certificate which, upon receipt of such request, shall be promptly
       delivered by the Guarantor.

              (iv)   The Preferred Guarantee Trustee shall have no duty to see
       to any recording, filing or registration of any instrument (or any
       rerecording, refiling or reregistration thereof).

              (v)    The Preferred Guarantee Trustee may consult with counsel of
       its selection, and the advice or opinion of such counsel with respect to
       legal matters shall be full and complete authorization and protection in
       respect of any action taken, suffered or omitted by it hereunder in good
       faith and in accordance with such advice or opinion. Such counsel may be
       counsel to the Guarantor or any of its Affiliates and may include any of
       its employees. The Preferred Guarantee Trustee shall have the right at
       any time to seek instructions concerning the administration of this
       Preferred Securities Guarantee from any court of competent jurisdiction.

              (vi)   The Preferred Guarantee Trustee shall be under no
       obligation to exercise any of the rights or powers vested in it by this
       Preferred Securities Guarantee at the request or direction of any Holder,
       unless such Holder shall have provided to the Preferred Guarantee Trustee
       such adequate security and indemnity as would satisfy a reasonable person
       in the position of the Preferred Guarantee Trustee, against the costs,
       expenses (including attor-

<PAGE>
                                      -12-

       neys' fees and expenses) and liabilities that might be incurred by it in
       complying with such request or direction, including such reasonable
       advances as may be requested by the Preferred Guarantee Trustee;
       PROVIDED, HOWEVER, that nothing contained in this Section 3.2(a)(vi)
       shall be taken to relieve the Preferred Guarantee Trustee, upon the
       occurrence of an Event of Default, of its obligation to exercise the
       rights and powers vested in it by this Preferred Securities Guarantee.

              (vii)  The Preferred Guarantee Trustee shall not be bound to make
       any investigation into the facts or matters stated in any resolution,
       certificate, statement, instrument, opinion, report, notice, request,
       direction, consent, order, bond, debenture, note, other evidence of
       indebtedness or other paper or document, but the Preferred Guarantee
       Trustee, in its discretion, may make such further inquiry or
       investigation into such facts or matters as it may see fit.

              (viii) The Preferred Guarantee Trustee may execute any of the
       trusts or powers hereunder or perform any duties hereunder either
       directly or by or through agents or attorneys, and the Preferred
       Guarantee Trustee shall not be responsible for any misconduct or
       negligence on the part of any agent or attorney appointed with due care
       by it hereunder.

              (ix)   Any action taken by the Preferred Guarantee Trustee or its
       agents hereunder shall bind the Holders of the Preferred Securities, and
       the signature of the Preferred Guarantee Trustee or its agents alone
       shall be sufficient and effective to perform any such action. No third
       party shall be required to inquire as to the authority of the Preferred
       Guarantee Trustee to so act or as to its compliance with any of the terms
       and provisions of this Preferred Securities Guarantee, both of which
       shall be conclusively evidenced by the Preferred Guarantee Trustee's or
       its agent's taking such action.

              (x)    Whenever in the administration of this Preferred Securities
       Guarantee the Preferred Guarantee Trustee shall deem it desirable to
       receive instructions with respect to enforcing any remedy or right or
       taking any other action hereunder, the Preferred Guarantee Trustee (i)
       may request instructions from the Holders of a Majority in liquidation
       amount of the Preferred Securities, (ii) may refrain from enforcing such
       remedy or right or taking such other action

<PAGE>
                                      -13-

       until such instructions are received, and (iii) shall be protected in
       acting in accordance with such instructions.

              (b)    No provision of this Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.

SECTION 3.3.         NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE

              The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1.         PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY

              (a)    There shall at all times be a Preferred Guarantee Trustee
which shall:

              (i)    not be an Affiliate of the Guarantor; and

              (ii)   be a corporation organized and doing business under the
       laws of the United States of America or any State or Territory thereof or
       of the District of Columbia, or a corporation or Person permitted by the
       Securities and Exchange Commission to act as an institutional trustee
       under the Trust Indenture Act, authorized under such laws to exercise
       corporate trust powers, having (or in the case of a subsidiary of a bank
       holding company that guarantees the obligations of the Preferred
       Guarantee Trustee under this Preferred Securities Guarantee, such bank
       holding company parent shall have) a combined capital and surplus of at
<PAGE>
                                      -14-

       least 50 million U.S. dollars ($50,000,000), and subject to supervision
       or examination by Federal, State, Territorial or District of Columbia
       authority. If such corporation or holding company parent publishes
       reports of condition at least annually, pursuant to law or to the
       requirements of the supervising or examining authority referred to above,
       then, for the purposes of this Section 4.1(a)(ii), the combined capital
       and surplus of such corporation or holding company parent shall be deemed
       to be its combined capital and surplus as set forth in its most recent
       report of condition so published.

              (b)    If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).

              (c)    If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2.         APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
                     TRUSTEES

              (a)    Subject to Section 4.2(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.

              (b)    The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

              (c)    The Preferred Guarantee Trustee appointed to office shall
hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
<PAGE>
                                      -15-

              (d)    If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may (at the expense of the
Guarantor) petition any court of competent jurisdiction for appointment of a
Successor Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Preferred Guarantee Trustee.

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1.         GUARANTEE

              The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

SECTION 5.2.         WAIVER OF NOTICE AND DEMAND

              The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.

SECTION 5.3.         OBLIGATIONS NOT AFFECTED

              The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

              (a)    the release or waiver, by operation of law or otherwise, of
       the performance or observance by the Issuer of any express or implied
       agreement, covenant, term or

<PAGE>
                                      -16-

       condition relating to the Preferred Securities to be performed or
       observed by the Issuer;

              (b)    the extension of time for the payment by the Issuer of all
       or any portion of the Distributions, Redemption Price, Liquidation
       Distribution or any other sums payable under the terms of the Preferred
       Securities or the extension of time for the performance of any other
       obligation under, arising out of, or in connection with, the Preferred
       Securities (other than an extension of time for payment of Distributions
       or other sum payable that results from the extension of any interest
       payment period on the Subordinated Notes permitted by the Indenture);

              (c)    any failure, omission, delay or lack of diligence on the
       part of the Holders to enforce, assert or exercise any right, privilege,
       power or remedy conferred on the Holders pursuant to the terms of the
       Preferred Securities, or any action on the part of the Issuer granting
       indulgence or extension of any kind;

              (d)    the voluntary or involuntary liquidation, dissolution, sale
       of any collateral, receivership, insolvency, bankruptcy, assignment for
       the benefit of creditors, reorganization, arrangement, composition or
       readjustment of debt of, or other similar proceedings affecting, the
       Issuer or any of the assets of the Issuer;

              (e)    any invalidity of, or defect or deficiency in, the
       Preferred Securities;

              (f)    the settlement or compromise of any obligation guaranteed
       hereby or hereby incurred; or

              (g)    any other circumstance whatsoever that might otherwise
       constitute a legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.

              There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
<PAGE>
                                      -17-

SECTION 5.4.         RIGHTS OF HOLDERS

              (a)    The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.

              (b)    If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.

              (c)    Notwithstanding subsection 5.4(b), any Holder of Preferred
Securities may directly institute proceedings against the Guarantor to obtain
Guarantee Payments in respect of the Preferred Securities owned by such Holder,
without first waiting to determine if the Preferred Guarantee Trustee has
enforced this Preferred Securities Guarantee or first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.

SECTION 5.5.         GUARANTEE OF PAYMENT

              This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.

SECTION 5.6.         SUBROGATION

              The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in

<PAGE>
                                      -18-

trust for the Holders and to pay over such amount to the Holders.

SECTION 5.7.         INDEPENDENT OBLIGATIONS

              The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1.         LIMITATION OF TRANSACTIONS

              (a)    So long as any Preferred Securities remain outstanding, if
an Event of Default or Indenture Event of Default shall exist, then (a) the
Guarantor shall not declare or pay any dividend on, or make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank PARI PASSU with or
junior to the Subordinated Notes.

              (b)    Notwithstanding subsection 6.1(a) or any other language to
the contrary contained in this Preferred Securities Guarantee, nothing shall
prevent the Guarantor from: (i) declaring or paying any dividend on, or making
any distribution with respect to, or redeeming, purchasing, acquiring or making
a liquidation payment with respect to, any of its capital stock in or with
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (ii) paying any interest, principal or premium on, or repaying,
repurchasing or redeeming, any debt securities issued by the Guarantor which
rank PARI PASSU with or junior to the Subordinated Notes, with (x) securities of
the Guarantor (including capital stock) that rank junior to such debt securities
or (y) securities (including capital stock) of XL.
<PAGE>
                                      -19-

SECTION 6.2.         RANKING

              This Preferred Securities Guarantee constitutes an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, except those liabilities of
the Guarantor expressly made PARI PASSU with or subordinate to this Preferred
Securities Guarantee by their terms, (ii) PARI PASSU with the most senior
preferred or preference stock issued by the Guarantor from time to time and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor and (iii) senior
to the Guarantor's common stock.

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1.         TERMINATION

              This Preferred Securities Guarantee shall automatically terminate
upon the earliest to occur of (i) the full payment of the Redemption Price of
all Preferred Securities, (ii) the distribution of Subordinated Notes to the
Holder(s) of all of the Preferred Securities or (iii) full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1.         EXCULPATION

              (a)    No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Pre-

<PAGE>
                                      -20-

ferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omission.

              (b)    An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions, the Redemption Price or the Liquidation
Distribution to Holders of Preferred Securities might properly be paid.

              (c)    The provisions of this Section 8.1 shall survive the
termination of this Preferred Securities Guarantee.

SECTION 8.2.         INDEMNIFICATION

              (a)    The Guarantor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person in accordance
with this Preferred Securities Guarantee, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.

              (b)    Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that

<PAGE>
                                      -21-

the Indemnified Person is not entitled to be indemnified as authorized in
Section 8.2(a).

              (c)    The Guarantor agrees

              (i)    to pay to the Preferred Guarantee Trustee from time to time
       such compensation as the Guarantor and the Preferred Guarantee Trustee
       shall from time to time agree in writing for all services rendered by it
       hereunder (which compensation shall not be limited by any provision of
       law in regard to the compensation of a trustee of an express trust);

              (ii)   except as otherwise expressly provided herein, to reimburse
       the Trustee upon its request for all reasonable expenses, disbursements
       and advances incurred or made by the Preferred Guarantee Trustee in
       accordance with any provision of this Agreement (including the reasonable
       compensation and expenses and disbursements of its agents and counsel).

              (d)    The provisions of this Section 8.2 shall survive the
termination of this Preferred Securities Guarantee.

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.         SUCCESSORS AND ASSIGNS

              All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

SECTION 9.2.         AMENDMENTS

              Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may only be amended with the prior approval
of the Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
<PAGE>
                                      -22-

              In executing, or accepting the additional trusts created by, and
amendment permitted by this Section or the modification thereby of the trust
created by this Agreement, the Preferred Guarantee Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Preferred Guarantee Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.

SECTION 9.3.         NOTICES

              All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:

              (a)    If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):

              U.S. Bank National Association
              180 East Fifth Street
              St. Paul, MN 55101
              Attention:  Corporate Trust Administration
              (XL Capital Ltd)

              (b)    If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):

              XL Capital Ltd
              XL House
              One Bermudiana Road
              Hamilton HM11
              Bermuda
              Attention:  Paul S. Giordano

              (c)    If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.

              All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
<PAGE>
                                      -23-

SECTION 9.4.         BENEFIT

              This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.

SECTION 9.5.         GOVERNING LAW

              THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

SECTION 9.6.         NO RECOURSE AGAINST CERTAIN PERSONS

              No past, present or future director, officer, employee or
stockholder, as such, of the Guarantor or any successor thereof shall have any
liability for any obligations of the Guarantor under this Preferred Securities
Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creation and all such liability is hereby waived and
released. Such waiver and release are part of the consideration for the issue of
this Preferred Securities Guarantee and the Preferred Securities.
<PAGE>
                                      -24-

              IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Preferred
Securities Guarantee Agreement to be duly executed as a deed the day and year
first before written.

The common seal of )
XL CAPITAL LTD     )
was hereunto       )
affixed in the     )
presence of        )

   /s/ Brian M. O'Hara
------------------------------------------
Name:  Brian M. O'Hara
Title: President & Chief Executive Officer

Witness:

   /s/ Paul S. Giordano
------------------------------------------
Name:  Paul S. Giordano
Title: Executive Vice President,
       General Counsel & Secretary

<PAGE>
                                      -25-

              IN WITNESS WHEREOF, the undersigned, being duly authorized, has
executed this Preferred Securities Guarantee Agreement as of the date first
above written.

                                       U.S. BANK NATIONAL ASSOCIATION,
                                          as Preferred Guarantee Trustee

                                       By:    /s/ Arthur L. Blakeslee
                                           ------------------------------
                                           Name:  Arthur L. Blakeslee
                                           Title: Assistant Vice President

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