8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 12, 2007

XL CAPITAL LTD
(Exact name of registrant as specified in its charter)

Cayman Islands	1-10809	98-0191089
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer Identification No.)
of incorporation)

XL House, One Bermudiana Road, Hamilton, Bermuda HM 11
(Address of principal executive offices)

Registrant’s telephone number, including area code: (441) 292 8515

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Preference Share Offering

          On March 12, 2007, XL Capital Ltd (the “Company”) and J.P. Morgan Securities Inc., Citigoup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the underwriters named therein (the “Underwriters”), entered into an underwriting agreement (the “Agreement”) pursuant to which the Underwriters agreed to purchase, subject to and upon terms and conditions set forth in the Agreement, an aggregate of 1,000,000 of the Company’s Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares, liquidation preference US$1,000 per share (the “Series E Preference Shares”). A copy of the Underwriting Agreement is filed as an exhibit hereto.

          Until April 15, 2017, dividends on the Series E Preference Shares will be payable semiannually on a non-cumulative basis, when, as and if declared by the Company’s board of directors, on April 15 and October 15 of each year at a fixed rate equal to 6.500% per annum on the liquidation preference. From and after April 15, 2017, dividends on the Series E Preference Shares will be payable quarterly on a non-cumulative basis, when, as and if declared by the Company’s board of directors, on January 15, April 15, July 15 and October 15 of each year at a floating rate equal to three-month LIBOR plus 2.4575% on the liquidation preference. Dividends on the Series E Preference Shares, if declared, will be payable commencing on October 15, 2007. The Series E Preference Shares will be perpetual securities with no fixed maturity date and will not be convertible into any of the Company’s other securities. The Company received net proceeds of approximately $983 million from the offering.

          The Series E Preference Shares were offered and sold by the Company pursuant to its registration statement on Form S-3ASR (File No. 333-130036) filed by the Company with the Securities Exchange Commission (the “Commission”), and the related prospectus supplement, dated March 12, 2007 (the “Prospectus Supplement”), with respect to the Series E Preference Shares. The terms of the Series E Preference Shares are set forth in the Prospectus Supplement as filed with the Commission pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, on March 13, 2006.

          On March 12, 2007, in connection with the transaction described above, the Company approved the terms of the Series E Preferred Shares by resolution of a Committee of the Board of Directors of the Company. An extract of these resolutions is filed as an exhibit hereto.

Replacement Capital Covenant

          On March 15, 2007, in connection with the sale of the Series E Preference Shares, the Company entered into a Replacement Capital Covenant (the “Replacement Capital Covenant”), whereby the Company agreed for the initial benefit of the holders of the Company’s 6.375% senior notes due 2024 (the “Senior Notes”) that all or any part of the Series E Preference Shares will not be redeemed or purchased by the Company on or before April 15, 2047, unless during the six months on or prior to the date of that redemption or purchase, the Company receives a specified amount of proceeds from the sale of ordinary shares and certain other securities that have characteristics that are the same as, or more equity-like than, the applicable characteristics of the Series E Preference Shares being redeemed or purchased at that time. A copy of the Replacement Capital Covenant is filed as an exhibit hereto.

          In order to give effect to the intent of the Company set forth in Recital C of the Replacement Capital Covenant, the Company is entering into and disclosing the content of the Replacement Capital Covenant with the intent that the covenants provided for in the Replacement Capital Covenant be enforceable by each Covered Debtholder (as defined in the Replacement Capital Covenant), and that the Company be estopped from disregarding its covenants in the Replacement Capital Covenant. Initially, the holders of the Senior Notes will be the Covered Debtholders, although such designation may change without the consent of the holders of the Senior Notes. The Replacement Capital Covenant may be terminated if (i) holders of at least a majority by principal amount of the then-effective series of covered debt consent or agree in writing to terminate the Replacement Capital Covenant, (ii) the Company no longer has outstanding any indebtedness that qualifies as covered debt or (iii) the Company no longer has any outstanding Series E Preference Shares. In addition, if not earlier terminated, the Replacement Capital Covenant will terminate on April 15, 2047; provided, however, that the April 15, 2047 termination date may be extended at the Company’s option. A copy of the Replacement Capital Covenant is filed as an exhibit hereto.

          The foregoing descriptions of the Underwriting Agreement and the Replacement Capital Covenant do not purport to be complete and are qualified in their entirety by reference to the full text of the Underwriting Agreement and the Replacement Capital Covenant, both of which are filed as exhibits hereto and are incorporated by reference herein.

Item 3.03. Material Modification to Rights of Security Holders.

          The disclosure contained and the exhibits identified in Item 1.01, “Entry into a Material Definitive Agreement,” of this current report on Form 8-K are hereby incorporated by reference into this Item 3.03.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits. The following exhibits are filed herewith:
Exhibit No.		Description
1.1		Underwriting Agreement, dated March 12, 2007, among XL Capital Ltd and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the underwriters named therein.
4.1		Form of Series E Preference Share Certificate.
4.2		Extract of the Minutes of a Meeting of a Committee of the Board of Directors pursuant to Article 75 of the Company’s Articles of Association held on March 12, 2007.
10.1		Replacement Capital Covenant, dated March 15, 2007.

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 15, 2007

XL CAPITAL LTD
(Registrant)
By:	/s/ Kirstin Romann Gould
	Name:	Kirstin Romann Gould
	Title:	Secretary

EX-1.1

Exhibit 1.1

XL Capital Ltd

Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares

Underwriting Agreement

March 12, 2007

J.P. Morgan Securities Inc.
Citigroup Global Markets Inc.
Merril Lynch, Pierce, Fenner & Smith
                       Incorporated
               As representatives of the several Underwriters
               named in Schedule I hereto
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:

          XL Capital Ltd, a Cayman Islands exempted limited company (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of 1,000,000 Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares, having a liquidation preference of $1,000 per share (the “Securities”). Any references in this Agreement to “you” relate to J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merril Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several Underwriters named in Schedule I hereto.

          1. The Company represents and warrants to, and agrees with, each of the Underwriters that:

          (a) An “automatic shelf registration statement” as defined under Rule 405 under the U.S. Securities Act of 1933, as amended (the “Act”), on Form S-3 (File No. 333-130036) in respect of the Securities has been filed with the U.S. Securities and Exchange Commission (the “Commission”) not earlier than three years prior to the date hereof; such registration statement, and any post-effective amendment thereto, became effective on filing; and no stop order suspending the effectiveness of such registration statement or any part thereof has been issued and no proceeding for that purpose has been initiated or threatened by the Commission, and no notice of objection of the Commission to the use of such registration statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act has been received by the Company (the base prospectus filed as part of such registration statement, in the form in which it has most recently been filed with the Commission on or prior to the date of this Agreement, is hereinafter called the “Basic Prospectus”; any preliminary prospectus (including any preliminary prospectus supplement) relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter called a “Preliminary Prospectus”; the various parts of such registration statement,

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including all exhibits thereto but excluding Form T-1 and including any prospectus supplement relating to the Securities that is filed with the Commission and deemed by virtue of Rule 430B to be part of such registration statement, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the “Registration Statement”; the Basic Prospectus, as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is hereinafter called the “Pricing Prospectus”; the form of the final prospectus relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof is hereinafter called the “Prospectus”; any reference herein to the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the respective prospectus; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act and any documents filed under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated by reference therein, in each case after the date of the Basic Prospectus, such Preliminary Prospectus, or the Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Securities is hereinafter called an “Issuer Free Writing Prospectus”);

          (b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through J.P. Morgan Securities Inc. expressly for use therein;

          (c) For the purposes of this Agreement, the “Applicable Time” is 5:18 p.m. (Eastern time) on the date of this Agreement; the Pricing Prospectus as supplemented by the final term sheet in the form attached as Schedule III hereto and to be filed pursuant to Section 5(a) hereof, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule II hereto does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus and each such

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Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, including all of the risk factors and other disclosures included therein, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through J.P. Morgan Securities Inc. expressly for use therein;

          (d) The documents incorporated by reference in the Pricing Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and no such documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule II hereto;

          (e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements in the Registration Statement not misleading and the statements in the Prospectus in the light of the circumstances under which they were made not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through J.P. Morgan Securities Inc. expressly for use therein;

          (f) Neither the Company nor any of its Significant Subsidiaries (as defined below) has sustained since the date of the latest audited financial statements included or incorporated by reference in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, which loss or interference would have a

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Material Adverse Effect (as defined below), or would reasonably be expected to have a prospective Material Adverse Effect; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been any change in the capital stock (other than changes resulting from the exercise of stock options or the conversions of warrants or capital stock which were outstanding as of such date, or from the exercise of options granted after such date in the ordinary course of business or from repurchases of capital stock) or long-term debt of the Company or any of its Significant Subsidiaries or any material adverse change, or any development that would reasonably be expected to involve a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its Significant Subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus;

          (g) The Company has been duly incorporated and is validly existing as an exempted limited company in good standing under the laws of the Cayman Islands, with full corporate power and authority to own its properties and conduct its business as described in the Pricing Prospectus and to enter into and perform its obligations under this Agreement and the Securities and to consummate the transactions to be performed by it pursuant to this Agreement and the Securities and has been duly qualified as a foreign company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where such failure to be so qualified in any such jurisdiction or to have any such power or authority would not have a material adverse effect on the current or future condition (financial or other), business, properties or results of operations of the Company and its Subsidiaries taken as a whole or on the transactions contemplated by this Agreement (a “Material Adverse Effect”); and each Significant Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation;

          (h) The Company had, on December 31, 2006, an authorized capitalization as set forth in the Pricing Prospectus under the caption “Actual” under the heading “Capitalization,” and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and conform to the description thereof contained in the Pricing Disclosure Package and the Prospectus;

          (i) The Securities have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform to the description of the Securities contained in the Pricing Disclosure Package and the Prospectus; the stockholders of the Company have no preemptive or similar rights with respect to the Securities and no shareholder consents are required in connection with the Company’s issuance and sale of the Securities;

          (j) This Agreement has been duly authorized, executed and delivered by the Company;

          (k) [Reserved]

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          (l) The issue and sale of the Securities, the execution and delivery of this Agreement and the compliance by the Company with all of the provisions of this Agreement and the consummation by the Company of the transactions contemplated herein and in the Pricing Prospectus and the Prospectus will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Significant Subsidiaries is a party or by which the Company or any of its Significant Subsidiaries is bound or to which any of the property or assets of the Company or any of its Significant Subsidiaries is subject, nor will such action result in any violation of the provisions of the Articles of Association or the Memorandum of Association (or similar organizational documents) of the Company or any of its Significant Subsidiaries or any statute or any order, rule or regulation of any court or governmental agency or body (a “Governmental Agency”) having jurisdiction over the Company or any of its Significant Subsidiaries or any of its respective properties except in each case (other than with respect to such Articles of Association or Memorandum of Association (or similar organizational documents)) for such conflicts, violations, breaches or defaults which would not result in a Material Adverse Effect;

          (m) No consent, approval, authorization, order, filing, registration or qualification of or with any Governmental Agency (a “Governmental Authorization”) is required for the issue and sale by the Company of the Securities or the consummation by the Company of the transactions contemplated by this Agreement, except such as have been, or will have been prior to the first Time of Delivery, obtained under the Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Underwriters;

          (n) All of the issued share capital of each Significant Subsidiary of the Company which is a corporation has been duly and validly authorized and issued, is fully paid and non-assessable and (except for (i) an approximately 37% interest in Security Capital Assurance Ltd owned by third parties, (ii) a 15% ownership interest in XL Financial Assurance Ltd. owned by a third party and (iii) directors’ qualifying shares) is owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (for purposes of this Agreement, “Subsidiary” means, as applied to any person, any corporation, limited or general partnership, trust, association or other business entity of which an aggregate of greater than 50% of the outstanding Voting Shares of such person is, at any time, directly or indirectly, owned by such person and/or one or more subsidiaries of such person and “Significant Subsidiary” shall have the meaning of “significant subsidiary” as set forth in Regulation S-X under the Act; for purposes of the definition of “Subsidiary,” “Voting Shares” means, with respect to any corporation, the capital stock having the general voting power under ordinary circumstances to elect at least a majority of the board of directors (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency));

          (o) Prior to the date hereof, neither the Company nor, to the Company’s knowledge, any of its affiliates has taken any action which is

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designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the offering of the Securities in violation of the Exchange Act;

          (p) Other than as set forth or incorporated by reference in the Pricing Prospectus prior to the date hereof, or as encountered in the ordinary course of business in the Company’s claims activities, there are no legal or governmental actions, suits or proceedings pending to which the Company or any of its Significant Subsidiaries is a party or of which any property of the Company or any of its Significant Subsidiaries is the subject, which would individually or in the aggregate reasonably be expected to have a Material Adverse Effect on the operations of the Company and its Significant Subsidiaries; and, to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;

          (q) The financial statements of the Company and its consolidated Subsidiaries incorporated by reference in the Pricing Prospectus and the Prospectus present fairly the financial position of the Company and its consolidated Subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and except as otherwise disclosed in the Pricing Prospectus, such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis;

          (r) Each of the Company and its Significant Subsidiaries possess adequate certificates, authorities, licenses or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and have not received any written notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

          (s) Neither the Company nor any of its Significant Subsidiaries is in violation of its Articles of Association or Memorandum of Association (or similar organizational documents) or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except for such defaults which would not result in a Material Adverse Effect;

          (t) The statements set forth in the Pricing Prospectus and the Prospectus under the captions “Description of the Series E Preference Shares” insofar as they purport to constitute a summary of the terms of the Securities and the other transaction documents described therein, and the statements set forth under the caption “Certain Tax Considerations” in the Pricing Prospectus and the Prospectus, insofar as they purport to describe the provisions of the laws referred to therein, are accurate, complete and fair in all material respects;

          (u) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company,” as such term is defined in

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the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”);

          (v) PricewaterhouseCoopers LLP, who have certified certain financial statements of the Company and its Subsidiaries, and have audited the Company’s internal control over financial reporting and management’s assessment thereof, are an independent registered public accounting firm as required by the Act and the rules and regulations of the Commission thereunder;

          (w) No stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Underwriters to the Cayman Islands or any political subdivision or taxing authority thereof or therein in connection with (A) the issuance, sale and delivery by the Company to or for the respective accounts of the Underwriters of the Securities or (B) the sale or delivery outside the Cayman Islands by the Underwriters of the Securities to the initial purchasers thereof, other than as described in the opinion of Appleby Hunter Bailhache delivered pursuant to Section 8(d) of this Agreement;

          (x) (A) (i) At the time of filing the Registration Statement, (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), and (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) under the Act) made any offer relating to the Securities in reliance on the exemption of Rule 163 under the Act, the Company was a “well-known seasoned issuer” as defined in Rule 405 under the Act; and (B) at the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Securities, the Company was not an “ineligible issuer” as defined in Rule 405 under the Act;

          (y) The Company and its Subsidiaries maintain a system of “internal control over financial reporting” (as such term is defined in Rule 13a-15(f) under the Exchange Act). The Company’s and its Subsidiaries’ internal control over financial reporting is effective and the Company and its Subsidiaries are not aware of any material weaknesses in its internal control over financial reporting; and

          (z) The Company and its Subsidiaries maintain “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act); such disclosure controls and procedures are effective.

          2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price per Security of $985.96, the number of Securities set forth opposite the name of such Underwriter in Schedule I hereto.

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          3. Upon the authorization by you of the release of the Securities, the several Underwriters propose to offer the Securities for sale upon the terms and conditions set forth in the Prospectus.

          4. (a) The Securities to be purchased by each Underwriter hereunder will be represented by one or more definitive global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Securities to J.P. Morgan Securities Inc., for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company to J.P. Morgan Securities Inc. at least twenty-four hours in advance, by causing DTC to credit the Securities to the account of J.P. Morgan Securities Inc. at DTC. The Company will, upon request by J.P. Morgan Securities Inc., cause the certificates representing the Securities to be made available to J.P. Morgan Securities Inc. for checking at least twenty-four hours prior to the Time of Delivery (as defined below) with respect thereto at the office of DTC or its designated custodian (the “Designated Office”). The time and date of such delivery and payment shall be, with respect to the Securities, 9:30 a.m., New York City time, on March 15, 2007 or such other time and date as J.P. Morgan Securities Inc. and the Company may agree upon in writing. Such time and date for delivery of the Securities is herein called the “Time of Delivery.”

          (b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Securities and any additional documents requested by the Underwriters pursuant to Section 8(n) hereof, will be delivered at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 (the “Closing Location”), and the Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 3:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto.

          5. The Company agrees with each of the Underwriters:

          (a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement; to make no further amendment or any supplement to the Registration Statement, the Basic Prospectus or the Prospectus prior to the Time of Delivery which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish you with copies thereof; to prepare a final term sheet containing a description of the Securities, in the form attached hereto as Schedule III and approved by you and to file such term sheet pursuant to Rule 433(d) under the Act within the time required by such Rule; to file promptly all other material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice

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referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Securities; to advise you, promptly after it receives notice thereof, of the issuance by the Commission prior to the completion of the distribution of the Securities contemplated by this Agreement (the date of which shall be confirmed to the Company by you) of any stop order or of any order preventing or suspending the use of any preliminary prospectus or other prospectus in respect of the Securities, of any notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission prior to the completion of the distribution of the Securities contemplated by this Agreement for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any preliminary prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; and in the event of the issuance of any such notice of objection, promptly to amend the Registration Statement in such manner as may be required to permit offers and sales of the Securities;

          (b) If required by Rule 430B (h) under the Act in connection with the offering of the Securities contemplated by this Agreement, to prepare a form of prospectus in a form approved by you and to file such form of prospectus pursuant to Rule 424(b) under the Act not later than may be required by Rule 424(b) under the Act; and to make no further amendment or supplement to such form of prospectus which shall be disapproved by you promptly after reasonable notice thereof;

          (c) Promptly from time to time to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;

          (d) If by the third anniversary (the “Renewal Deadline”) of the initial effective date of the Registration Statement, any of the Securities remain unsold by the Underwriters, the Company will file, if it has not already done so and is eligible to do so, a new automatic shelf registration statement relating to the Securities, in a form satisfactory to you. If at the Renewal Deadline the Company is no longer eligible to file an automatic shelf registration statement and the distribution of the Securities contemplated by this Agreement has not yet been completed, the Company will, if it has not already done so, file a new shelf registration statement relating to the Securities, in a form satisfactory to you and will use its best efforts to cause such registration statement to be declared effective within 180 days after the Renewal Deadline. The Company will take all other action necessary or appropriate to permit the public offering and sale of the Securities to continue as contemplated in the expired registration statement relating to the Securities. References herein to the Registration Statement shall include such new automatic shelf registration statement or such new shelf registration statement, as the case may be.

          (e) Prior to 3:00 p.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the

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Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act or the Exchange Act, to notify you and upon your request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act; you will inform the Company when the Underwriters’ obligation to deliver a prospectus has expired.

          (f) To make generally available to its security holders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its Subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);

          (g) For a period of 30 days after the date of the initial public offering of the Securities, the Company will not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any Securities or any securities convertible into or exercisable or exchangeable for the Securities or (ii) enter into any swap or other agreement that transfer, in whole or in part, any of the economic consequences of ownership of the Securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Securities or such other securities, in cash or otherwise, without the prior written consent of J.P. Morgan Securities Inc., other than the Securities to be sold hereunder;

          (h) To pay the required Commission filing fees relating to the Securities within the time required by Rule 456(b)(1) under the Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) under the Act;

          (i) To take all reasonable actions necessary, including engaging advisers to act on behalf of the Company, to enable Moody’s Investors Service, Standard & Poor’s

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Ratings Service, Fitch, Inc. and A.M. Best Company to provide at the Time of Delivery their respective credit ratings of the Securities;

          (j) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Pricing Prospectus and Prospectus under the caption “Use of Proceeds”;

          (k) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Securities (the “License”); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred; and

          6. (a) (i) The Company represents and agrees that, other than the final term sheet in the form attached as Schedule III hereto and filed pursuant to Section 5(a) hereof, without the prior consent of J.P. Morgan Securities Inc., it has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under the Act; (ii) each Underwriter represents and agrees that, other than one or more term sheets relating to the Securities containing customary information and conveyed to the purchasers of the Securities, without the prior consent of the Company and J.P. Morgan Securities Inc. (as to both form and content), it has not made and will not make any offer relating to the Securities that would constitute a free writing prospectus; and (iii) any such free writing prospectus, the use and content of which have been consented to by the Company and J.P. Morgan Securities Inc. (including the final term sheet in the form attached as Schedule III hereto and filed pursuant to Section 5(a) hereof) is listed on Schedule II hereto;

          (b) The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and

          (c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and, if requested by J.P. Morgan Securities Inc. or Citigroup Global Markets Inc. or Merrill Lynch, Pierce, Fenner & Smith Incorporated, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this covenant shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through J.P. Morgan Securities Inc. expressly for use therein.

          7. Subject to the last sentence of this Section 7, the Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Securities under the Act and the

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issuance and sale of the Securities and all other expenses in connection with the preparation, printing and filing of the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky and Legal Investment Memoranda and closing documents (including any compilations thereof); (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(c) hereof, including the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Memoranda; (iv) any filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required reviews by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of any transfer agent or registrar or dividend disbursing agent; (vii) all expenses and taxes arising as a result of the issuance, sale and delivery of the Securities and of the sale and delivery outside of the Cayman Islands of the Securities by the Underwriters to the initial purchasers thereof in the manner contemplated under this Agreement, including, in any such case, any Cayman Islands income, capital gains, withholding, transfer or other tax asserted against an Underwriter by reason of the purchase and sale of the Securities pursuant to this Agreement; and (viii) all other costs and expenses incident to the performance of the Company’s obligations hereunder which are not otherwise specifically provided for in this Section 7. It is understood, however, that, except as provided in this Section 7, and Sections 9, 12 and 24 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. Notwithstanding the foregoing, the Underwriters have agreed to reimburse the Company for $500,000 of its direct expenses in connection with the offering of Securities.

          8. The obligations of the Underwriters hereunder, as to the Securities to be delivered at the Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of the Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:

          (a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; the final term sheet in the form attached as Schedule III hereto and filed as contemplated by Section 5(a) hereof, and any other material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission and no notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act shall have been received; no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional

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information on the part of the Commission shall have been complied with to your reasonable satisfaction;

          (b) Simpson Thacher & Bartlett LLP, counsel for the Underwriters, shall have furnished to you their written opinion or opinions and letter, dated the Time of Delivery, in form and substance reasonably satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

          (c) Cahill Gordon & Reindel LLP, United States counsel for the Company, shall have furnished to you their written opinion or opinions and letter, dated the Time of Delivery, in form and substance reasonably satisfactory to you, in the form attached hereto in Annex I-1 and Annex I-2, respectively;

          (d) Appleby Hunter Bailhache, Cayman Islands counsel for the Company, shall have furnished to you their written opinion or opinions, dated the Time of Delivery, in form and substance reasonably satisfactory to you, in the form attached hereto in Annex II;

          (e) Kirstin Romann Gould, Executive Vice President and General Counsel–Corporate Affairs to the Company, shall have furnished to you his written opinion or opinions, dated the Time of Delivery, in form and substance reasonably satisfactory to you, in the form attached hereto in Annex III;

          (f) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement but prior to the Time of Delivery, PricewaterhouseCoopers LLP, the independent registered public accounting firm of the Company, who have certified the financial statements of the Company and its Subsidiaries and have audited the Company’s internal control over financial reporting and management’s assessment thereof included or incorporated by reference in the Registration Statement, shall have furnished to you a “comfort” letter or letters, dated the respective dates of delivery thereof, in form and substance reasonably satisfactory to you;

          (g) (i) Neither the Company nor any of its Significant Subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus, there shall not have been any change in the capital stock (other than changes resulting from the exercise of options or the conversion of warrants or capital stock which were outstanding as of such date, or from the exercise of options granted after such date in the ordinary course of business or from repurchases of capital stock) or long-term debt of the Company or any of its Significant Subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its Significant Subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impractical or inadvisable to

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proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and the Prospectus;

          (h) At the Time of Delivery, the Securities shall be rated at least “Baa2” by Moody’s Investors Service, “BBB” by Standard & Poor’s Ratings Service, “A-” by Fitch, Inc. and “bbb” by A.M. Best Company and each such rating agency shall have delivered to J.P. Morgan Securities Inc. or to the Company a letter dated as of the Time of Delivery, or other evidence reasonably satisfactory to J.P. Morgan Securities Inc., confirming that the Securities have such ratings; and on or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Securities or any of the Company’s debt securities or preference shares or the Company’s or any Significant Subsidiary’s financial strength or claims paying ability by any “nationally recognized statistical rating organization,” as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Securities or any of the Company’s debt securities or preference shares or the Company’s or its Significant Subsidiaries’ financial strength or claims paying ability;

          (i) On or after the date of the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company’s securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities in New York, the Cayman Islands or Bermuda declared by the relevant authority or a material disruption in commercial banking or securities settlement or clearance services in the United States or any other relevant jurisdiction; (iv) the outbreak or escalation of hostilities involving the United States, the Cayman Islands or Bermuda or the declaration by the United States, the Cayman Islands or Bermuda of a national emergency or war, if the effect of any such event specified in this clause (iv) in your judgment is so material and adverse as to make it impractical or inadvisable to proceed with the public offering or the delivery of the Securities being delivered at the Time of Delivery on the terms and in the manner contemplated in the Prospectus; (v) a change or development involving a prospective change in the Cayman Islands or Bermuda taxation affecting the Company, the Securities or the transfer thereof or the imposition of exchange controls by the United States, Bermuda or the Cayman Islands; or (vi) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or currency exchange rates or controls in the United States, the Cayman Islands, Bermuda or elsewhere, if the effect of any such event specified in this clause (vi) in your judgment is so material and adverse as to make it impractical or inadvisable to proceed with the public offering or the delivery of the Securities being delivered at the Time of Delivery on the terms and in the manner contemplated in the Prospectus;

          (j) [Reserved]

          (k) The Company shall have complied with the provisions of Section 5(e) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;

          (l) [Reserved]

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          (m) The Company shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Company satisfactory to you as to the accuracy of the representations and warranties of the Company herein at and as of the Time of Delivery, as to the performance by the Company of all of its obligations hereunder to be performed at or prior to the Time of Delivery, as to the matters set forth in subsections (a), (g) and (h) of this Section 8 and as to such other matters as you may reasonably request; and

          (n) Prior to the Time of Delivery, the Company shall have furnished to you such further information, certificates and documents as you may reasonably request.

          9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal expenses of one counsel (in addition to any local counsel) engaged reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by any Underwriter through J.P. Morgan Securities Inc. expressly for use therein.

          (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, the Prospectus or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by such Underwriter through J.P. Morgan Securities Inc. expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred, including the

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reasonable fees and expenses of one counsel (in addition to any applicable local counsel).

          (c) [Reserved]

          (d) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation (except as set forth below). Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action, or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (1) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (2) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

          (e) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the

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other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (d) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.

          (f) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act.

          10. (a) If any Underwriter shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder at the Time of Delivery, you may in your discretion arrange for you or another party or other parties satisfactory to the Company to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within

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which to procure another party or other parties satisfactory to you to purchase such Securities on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Securities, or the Company notifies you that it has so arranged for the purchase of such Securities, you or the Company shall have the right to postpone the Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section 10 with like effect as if such person had originally been a party to this Agreement with respect to such Securities.

          (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased does not exceed one eleventh of the aggregate number of all the Securities to be purchased at the Time of Delivery, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of shares which such Underwriter agreed to purchase hereunder at the Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Securities which such Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

          (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by you and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased exceeds one eleventh of the aggregate number of all the Securities to be purchased at the Time of Delivery, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Securities of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

          11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Securities.

          12. If this Agreement shall be terminated pursuant to Section 10 hereof, the Company shall not then be under any liability to any Underwriter except as provided in Sections 7, 9 and 24 hereof; but, if for any other reason, any Securities are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters through you for all out of pocket expenses approved in writing by you,

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including reasonable fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Securities not so delivered, but the Company shall then be under no further liability to any Underwriter except as provided in Sections 7, 9 and 24 hereof.

          13. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you.

          All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to you as the representatives in care of J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017, Attention: High Grade Syndicate, Fax No.: 212-834-6081; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 9(e) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

          14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

          15. The Company irrevocably (i) agrees that any legal suit, action or proceeding against the Company brought by any Underwriter or by any person who controls any Underwriter arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal district court for the Southern District of New York and the New York County Court, (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has appointed CT Corporation System, New York, New York, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in the federal district court for the Southern District of New York and the New York County Court by any Underwriter or by any person who controls any Underwriter, expressly consents to the jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company.

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          16. Time shall be of the essence in this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business. “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.

          17. The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not as the agent or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

          18. For the avoidance of doubt and anything in this Agreement to the contrary notwithstanding, all references in this Agreement to the Pricing Disclosure Package as of the Applicable Time shall be deemed to include the final term sheet relating to the Securities in the form attached as Schedule III hereto and to be filed with the Commission on March 13, 2007.

          19. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.

          20. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

          21. The Company and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

          22. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

          23. [Reserved]

          24. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the “judgment currency”) other than United States dollars, the Company will indemnify each Underwriter against any loss incurred by such Underwriter as a result of any variation between (i) the rate of exchange at which the United States dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which

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an Underwriter is able to purchase United States dollars with the amount of judgment currency actually received by such Underwriter. The foregoing indemnity shall constitute a separate and independent obligation of the Company and shall continue in full force and effect notwithstanding any such judgment or order aforesaid. The term “rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United States dollars.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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          If the foregoing is in accordance with your understanding, please sign and return to us one for the Company and each of you plus one for each counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters and the Company. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof.

Very truly yours,
XL Capital Ltd
	By:	/s/ Kirstin R. Gould
	Name: Kirstin Romann Gould
	Title: EVP, General Counsel of Corporate Affairs & Secretary

Accepted as of the date hereof:
J.P. Morgan Securities Inc.
By:	/s/ Jose Padilla
Name: Jose Padilla
Title: Vice President

Citigroup Global Markets Inc.
By:	/s/ Chandru Harjani
Name: Chandru Harjani
Title: Associate

Merrill Lynch, Pierce, Fenner & Smith                   Incorporated
By:	/s/ Marjoleine Slappendel
Name: Marjoleine Slappendel
Title: Director

On behalf of each of the Underwriters

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SCHEDULE I

Underwriter	Number of Securities to be Purchased
J.P. Morgan Securities Inc.	330,000
Citigroup Global Markets Inc.	280,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated	150,000
ABN AMRO Incorporated	30,000
Barclays Capital Inc.	30,000
Deutsche Bank Securities Inc.	30,000
Goldman, Sachs & Co.	30,000
RBS Greenwich Capital Markets, Inc.	30,000
Wachovia Capital Markets, LLC	30,000
BNY Capital Markets, Inc.	8,571
CALYON	8,571
HSBC Securities (USA) Inc.	8,571
ING Belgium SA/NV	8,571
KeyBanc Capital Markets, a division of McDonald Investments Inc.	8,572
Lazard Capital Markets LLC	8,572
Lloyds TSB Bank plc	8,572
Total	1,000,000

SCHEDULE II

          Issuer Free Writing Prospectuses:

          1.          Bloomberg Electronic Roadshow

          2.          Final Term Sheet in the form of Schedule III hereto and to be filed by the Company with the Commission on March 13, 2007

SCHEDULE III

TERM SHEET

Pricing Term Sheet dated March 12, 2007

XL Capital Ltd

1,000,000 Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares

Issuer:	XL Capital Ltd
Issuance Format:	SEC registered
Title:	Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares
Number of Series E Preference Shares:	1,000,000
Liquidation Preference:	$1,000
Pricing Date:	March 12, 2007
Settlement Date:	March 15, 2007
Maturity Date:	None
Dividend Rate During Fixed Rate Period:	From Settlement Date until April 15, 2017, if declared, at the annual fixed rate of 6.500% of the liquidation preference, payable semiannually on April 15 and October 15 of each year, beginning on October 15, 2007
Dividend Rate During Floating Rate Period:	From and after April 15, 2017, if declared, at a floating rate based on the 3-month LIBOR Rate plus 2.4575% of the liquidation preference, payable quarterly on January 15, April 15, July 15 and October 15 of each year
Price to Public:	99.596% of the liquidation preference
Purchase Price by Underwriters:	98.596% of the liquidation preference
Treasury Benchmark:	4.625% due 02/15/17
Benchmark Yield:	4.554%
Spread to Benchmark Treasury:	200 basis points
Reoffer Yield:	6.554%
Mandatory Call:	None
Par Call:	At any time on and after April 15, 2017 at 100% of the liquidation preference plus declared and unpaid dividends
Submission of Shareholder Proposal Call:	At any time prior to April 15, 2017 at Make Whole plus declared and unpaid dividends
Change in Tax Law Call:	At any time at Make Whole plus declared and unpaid dividends
Rating Agency Event Call:	At any time at Make Whole plus declared and unpaid dividends
Make Whole:	Greater of (i) aggregate liquidation preference and (ii) sum of present values of aggregate liquidation preference and remaining scheduled payments of dividends up to but excluding April 15, 2017 discounted to the redemption date on a semi-annual basis at the treasury rate plus 50 basis points
CUSIP / ISIN Number:	98372P AJ7 / US98372PAJ75
Replacement Capital Covenant:	Issuer will covenant in the Replacement Capital Covenant for the benefit of holders of a designated series of its long-term

	debt that it will not redeem or purchase the Series E Preference Shares on or before April 15, 2047, unless, subject to certain limitations, during the six months prior to the date of that redemption or purchase the issuer has received a specified amount of proceeds from the sale of qualifying securities that have characteristics that are the same as, or more equity-like than, the applicable characteristics of the Series E Preference Shares at the time of redemption or purchase.
Expected Credit Ratings*
Moody’s Investors Service, Inc.:	Baa2
Standard & Poor’s Ratings Services:	BBB
Fitch, Inc.:	A-
A.M. Best Company:	bbb
Representatives:
J.P. Morgan Securities Inc. (Sole Structuring Advisor and Joint Book-runner)
Citigroup Global Markets Inc. (Joint Book-runner)
Merrill Lynch, Pierce, Fenner & Smith Incorporated (Joint Book-runner)
Senior Co-Managers:
ABN AMRO Incorporated
Barclays Capital Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
RBS Greenwich Capital Markets, Inc.
Wachovia Capital Markets, LLC
Co-Managers:
BNY Capital Markets, Inc.
CALYON
HSBC Securities (USA) Inc.
ING Belgium SA/NV
KeyBanc Capital Markets, a division of McDonald Investments Inc.
Lazard Capital Markets LLC
Lloyds TSB Bank plc

*A security rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating. The rating is subject to revision or withdrawal at any time by the assigning rating organization.

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling J.P. Morgan Securities Inc. collect at 1-212-834-4533.

III-2

ANNEX I-1

CAHILL GORDON & REINDEL LLP FORM OF OPINION

          1. To such counsel’s knowledge, the issuance and sale of the Securities, the execution, delivery and performance by the Company of the Underwriting Agreement and the compliance by the Company with all the provisions of the Securities and this Agreement, and the consummation of the transactions by the Company contemplated therein to be performed by the Company will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any of the agreements listed on a schedule to such counsel’s opinion, (ii) require any consent, approval, authorization or other order of any United States federal or State of New York court or governmental body or agency or (iii) violate or conflict with, or result in any contravention of, any applicable law, rule or administrative regulation of the United States or the State of New York, or any order or administrative or court decree of any United States or State of New York governmental body or agency or court of which such counsel has knowledge.

          2. Insofar as the laws of the State of New York are applicable thereto, the Underwriting Agreement has been duly executed and delivered by the Company.

          3. To such counsel’s knowledge, other than as set forth or incorporated by reference in the Pricing Disclosure Package and the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Significant Subsidiaries is a party or of which any property of the Company or any of its Significant Subsidiaries is the subject, which is required to be disclosed in such Pricing Disclosure Package or Prospectus and is not so disclosed.

          4. The Company is not and will not become, as a result of the offering and sale of the Securities and the other transactions contemplated by the Pricing Disclosure Package and the Prospectus, an “investment company,” as such term is defined in the Investment Company Act.

          5. The Registration Statement has become effective under the Act and the Prospectus Supplement was filed on March [__], 2007 pursuant to Rule 424(b)(5) of the rules and regulations of the Commission under the Act and, to such counsel’s knowledge, no stop order suspending the effectiveness of the Registration Statement or order suspending or preventing the use of the Prospectus or Preliminary Prospectus has been issued or proceeding for that purpose has been instituted or threatened by the Commission.

          6. Except as to (i) financial statements, financial schedules and other financial and statistical data included or incorporated by reference therein and (ii) the documents incorporated by reference in the Registration Statement or the Prospectus, as to which we have not been requested to and do not express any opinion, the Registration Statement and the Prospectus comply as to form in all material respects with the applicable requirements of the Act and the rules and regulations of the Commission thereunder.

          7. Each of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, Annual Proxy Statement on Schedule 14A filed on March 23, 2006 and Current Reports on Form 8-K filed on February 1, 2007, February 22, 2007, February 26, 2007, March 12, 2007 and [add others], in each case incorporated by

reference in the Pricing Prospectus and the Prospectus (except for the financial statements, financial schedules and other financial and statistical data included or incorporated by reference therein as to which such counsel need not express an opinion), as of the date it was filed with the Commission, appears on its face to have been appropriately responsive in all material respects to the requirements of the Exchange Act.

          8. The statements set forth in the Pricing Disclosure Package and the Prospectus under the caption “Description of the Series E Preference Shares,” insofar as they purport, in the context of the purpose stated in the Pricing Disclosure Package and the Prospectus for such section, to constitute a summary of the terms of the Securities are accurate in all material respects and fairly summarize the terms of the Securities in all material respects.

          9. The statements set forth in the Pricing Disclosure Package and the Prospectus under the captions “Certain Tax Considerations—Taxation of XL Capital and XL—United States,” “Certain Tax Considerations—Taxation of Shareholders—United States,” and “Certain Tax Considerations—Backup Withholding Tax and Information Reporting,” insofar as they purport to describe the provisions of the federal income tax laws of the United States of America referred to therein or legal conclusions with respect thereto, are accurate and complete in all material respects.

I-1-2

ANNEX I-2

CAHILL GORDON & REINDEL LLP FORM OF NEGATIVE ASSURANCE LETTER

          We have participated in conferences with officers and other representatives of the Company, representatives of Cayman Islands and Bermuda counsel to the Company, representatives of the independent registered public accounting firm for the Company, representatives of counsel for the Underwriters and representatives of the Underwriters at which the contents of the Registration Statement, the Prospectus and the Pricing Prospectus, as supplemented by the final term sheet attached to this Agreement and filed with the Commission pursuant to Rule 433 (the “Pricing Disclosure Package”) and related matters were discussed. Although we have made certain inquiries and investigations in connection with the preparation of the Registration Statement, the Prospectus and the Pricing Disclosure Package, the limitations inherent in the role of outside counsel to the Company are such that we cannot and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in such documents, except as provided in paragraphs 8 and 9 of our opinion to you of even date herewith. Subject to the foregoing, we advise you that no facts have come to our attention that lead us to believe that (i) the Registration Statement, as of each date it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Prospectus, as of its date or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Pricing Disclosure Package, taken together, as of the Applicable Time, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we have not been requested to and do not express any comment with respect to the financial statements or other financial data that is included in or omitted from the Registration Statement, the Prospectus or the Pricing Disclosure Package).

ANNEX II

APPLEBY HUNTER BAILHACHE FORM OF OPINION

          1. The Company is an exempted company duly incorporated with limited liability and existing under the laws of the Cayman Islands. The Company possesses the capacity to sue and be sued in its own name and is in good standing under the laws of the Cayman Islands.

          2. The Company’s authorised share capital is US$9,999,900 divided into 999,990,000 Ordinary Shares of a nominal or par value of US$0.01 each.

          3. The authorised share capital of the Company is described in its Memorandum of Association as consisting of “Ordinary Shares.” The Memorandum of Association provides that the Company has power, insofar as is permitted by law, to issue any part of its capital, whether original, redeemed or increased, with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions. The Articles of Association provide that, without prejudice to any special rights previously conferred on the holders of existing shares, any share may be issued with such preferred, deferred or other special rights, terms or conditions, or such restrictions, whether in regard to dividends, voting, return of share capital, exchange for other classes of shares, exchangeability for other securities or otherwise, as the Directors may from time to time determine. Therefore, the issue by the Company of the Securities described in the Pricing Disclosure Package and the Prospectus is within the power of the Company’s Board of Directors.

          4. The Company has, at the date of this opinion, sufficient authorised share capital to issue the Securities. The Securities to be issued in accordance with the Underwriting Agreement have been duly authorised and, when issued, paid for with the consideration set forth in the Underwriting Agreement, and registered in the Company’s Register of Members in accordance with the Articles of Association of the Company and the Underwriting Agreement, will be legally and validly issued, fully paid and non-assessable.

          5. The issuance of the Securities is not subject to any pre-emptive or other similar rights under Cayman Islands law or the Memorandum and Articles of Association of the Company or, based and in reliance solely on the Officer’s Certificate, any material contract to which the Company is a party. There are no proposals of which such counsel is aware at the date hereof to change the laws of the Cayman Islands so as to render the issuance of the Securities pursuant to the Underwriting Agreement unlawful under Cayman Islands law.

          6. Upon the valid issue of the Securities, the holders of such shares will have the rights conferred upon the holders of such shares as set forth in the Committee Resolutions.

          7. The Company has all requisite corporate power and authority to carry on its business as contemplated in the Pricing Prospectus and the Prospectus, to issue the Securities, to enter into, execute, deliver and perform its obligations under the Underwriting Agreement and to take all action as may be necessary to complete the transactions contemplated thereby.

          8. The execution, delivery and performance by the Company of the Underwriting Agreement and the transactions contemplated thereby, including the issuance of the Securities in accordance with the Underwriting Agreement, have been duly authorised by all necessary corporate action on the part of the Company.

          9. The Underwriting Agreement has been duly executed by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

          10. No consent, licence or authorisation of, filing or registration with, or other act by or in respect of, any governmental authority, public body or court of the Cayman Islands is required to be obtained by the Company in connection with the entry into, execution, delivery or performance by the Company of the Underwriting Agreement or to ensure the legality, validity, admissibility into evidence or enforceability as to the Company, of the Underwriting Agreement or the consummation of the transactions contemplated thereby, including the issue of the Securities in accordance with the terms of the Underwriting Agreement.

          11. The execution, delivery and performance by the Company of the Underwriting Agreement and the transactions contemplated thereby, including the issuance of the Securities, do not and will not violate, conflict with or constitute a default under (a) any requirement of any law, statute, decree, rule or regulation of the Cayman Islands, (b) the Constitutional Documents, or (c) based and in reliance solely on the Officer’s Certificate, any material contract to which the Company is a party.

          12. The transactions contemplated by the Underwriting Agreement are not subject to any currency deposit or reserve requirements in the Cayman Islands. There is no restriction or requirement of the Cayman Islands binding on the Company which limits the availability or transfer of foreign exchange (i.e. monies denominated in currencies other than Cayman Islands dollars) for the purposes of the performance by the Company of its obligations under the Underwriting Agreement.

          13. The choice of the laws of the State of New York as the proper law to govern the Underwriting Agreement is a valid choice of law under Cayman Islands law and such choice of law would be recognised, upheld and applied by the courts of the Cayman Islands as the proper law of the Underwriting Agreement in proceedings brought before them in relation to the Underwriting Agreement provided that (a) the point is specifically pleaded; (b) such choice of law is valid and binding under the laws of the State of New York; and (c) recognition would not be contrary to public policy as that term is understood under Cayman Islands law.

          14. The submission by the Company to the jurisdiction of the courts of the State of New York pursuant to the Underwriting Agreement is not contrary to Cayman Islands law and would be recognised by the courts of the Cayman Islands as a legal, valid and binding submission to the jurisdiction of the courts of New York, if such submission is accepted by such courts and is legal, valid and binding under the laws of the State of New York.

          15. A final and conclusive judgment in personam of a competent foreign court against the Company based upon the Underwriting Agreement under which a definite sum of money is payable (not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other similar penalty) may be the subject of

II-2

enforcement proceedings in the Grand Court of the Cayman Islands under the common law doctrine of obligation by action on the debt evidenced by the judgment of such competent foreign court. A final opinion as to the availability of this remedy should be sought when the facts surrounding the foreign court’s judgment are known, but, on general principles, such counsel would expect such proceedings to be successful provided that:

          (a) the court which gave the judgment was competent to hear the action in accordance with private international law principles as applied in the Cayman Islands; and

          (b) the judgment is not contrary to public policy in Cayman Islands, has not been obtained by fraud or in proceedings contrary to natural justice and is not based on an error in Cayman Islands law.

          16. Neither the Company nor any of its assets or property enjoys, under Cayman Islands law, immunity on the grounds of sovereignty from any legal or other proceedings whatsoever or from enforcement, execution or attachment in respect of its obligations under the Underwriting Agreement or the Securities.

          17. Based solely upon the Litigation Search and the Officer’s Certificate:

          (a) no litigation, arbitration or administrative or other proceeding of or before the Grand Court of the Cayman Islands is pending against the Company; and

          (b) no resolution of members has been passed to wind up or appoint a liquidator or receiver of the Company and no application to wind up the Company or to reorganise its affairs pursuant to a scheme of arrangement and no petition or application for the appointment of a receiver has been filed with the Grand Court of the Cayman Islands.

          18. There are, subject as provided in paragraph (__) under “Reservations” below in such opinion, no taxes, stamp or documentary taxes, duties or similar charges under the laws of the Cayman Islands now due, or which could in the future become due to any governmental authority of or in the Cayman Islands, in connection with the execution, delivery, performance or enforcement of the Underwriting Agreement or the transactions contemplated thereby, including the issuance of the Securities, or in connection with the admissibility in evidence thereof and the Company is not required by any Cayman Islands law or regulation to make any deductions or withholdings in the Cayman Islands from any payment it may make thereunder.

          19. The statements contained in the Pricing Prospectus and the Prospectus with regard to Cayman Islands law (a) in relation to the Company and the incorporation and legal status of the Company (b) under the captions “The Offering,” “Description of the Series E Preference Shares,” “Description of XL Capital Share Capital” and “Description of XL Capital Preference Ordinary Shares” are true and accurate.

          20. The statements made in the Pricing Prospectus and the Prospectus under the headings “The Offering” within “Prospectus Supplement Summary,” “Description of the Series E Preference Shares,” “Description of XL Capital Share Capital,” “Description of XL Capital Ordinary Shares” and “Description of XL Capital Preference Ordinary

II-3

Shares,” in so far as such statements purport to constitute summaries of the terms of the Securities, conform to the rights conferred upon the holders of the Securities in the Resolutions authorising the issue of such preference shares and constitute accurate summaries of such terms of the Securities in all material respects. The statements made in the third paragraph beginning “Each Class A ordinary share” and ending “Internal Revenue Code of 1986, as amended).” under heading “Part II – Market for Registrant’s Common Equity, related Stockholder Matters and Issuer Purchases of Equity Securities,” on page 49 of the Company’s Annual Report on Form 10-K for the year ended 31 December 2006 and “Risk Factors – Risks Related to Our Ordinary Shares – Provisions in our Articles of Association may restrict the ownership and transfer of our ordinary shares” and “Risk Factors – Risks Related to Our Ordinary Shares – It may be difficult for you to enforce judgments against XL Capital Ltd or its directors and executive officers,” in so far as they purport to constitute a summary of the Memorandum and Articles of Association of the Company, constitute an accurate summary of such documents and the terms of the Securities in all material respects. The statements made in the Pricing Prospectus and the Prospectus under the caption “Certain Tax Considerations – Taxation of XL Capital and XL – Cayman Islands” and “Certain Tax Considerations – Taxation of Shareholders – Cayman Islands” and in the Annual Report on Form 10-K for the year ended 31 December 2006 under the caption “Risk Factors – Risks Related to Taxation – We may become subject to taxes in the Cayman Islands after June 2, 2018, which may have a material advisor effect on our results of operations” are accurate in all material respects.

          21. It is not necessary under the laws of the Cayman Islands that any of the Underwriters be authorized or qualified to carry on business in the Cayman Islands for their entry into, execution, delivery, performance or enforcement of the Underwriting Agreement. None of the Underwriters will be deemed to be residents, domiciled, carrying on business or subject to taxation in the Cayman Islands by reason only of their entry into, execution, delivery, performance or enforcement of the Underwriting Agreement. The foregoing opinion and the opinion in paragraph 23 below is subject to any statutory or regulatory obligation imposed under the laws of the Cayman Islands if a Cayman Islands branch or company carrying on business in or from the Cayman Islands enters into the Underwriting Agreement as one of the parties thereto.

II-4

ANNEX III

XL CAPITAL LTD FORM OF OPINION

          1. The Company is not in violation of any organizational document, corporate minute or resolution or any instrument or agreement of which such counsel has knowledge after due inquiry, in each case binding on it or affecting its property in any manner which could have a Material Adverse Effect.

          2. There is no litigation or governmental proceeding by or against the Company or any Significant Subsidiary of the Company or concerning any property of the Company or any of its Significant Subsidiaries, pending or threatened, that (A) could reasonably be expected (in light of reserves and total shareholder’s equity of the Company after taking into account the Company’s business and activities) to have a Material Adverse Effect if adversely determined or (B) is required to be disclosed in the Registration Statement, Pricing Disclosure Package or Prospectus and is not so disclosed, other than in the case of clause (A), as routinely encountered in claims activity or as disclosed in the Pricing Disclosure Package and the Prospectus or the documents incorporated therein by reference.

          3. The execution, delivery and performance of the Underwriting Agreement and the transactions contemplated thereby, and the issuance of the Securities by the Company will not (A) violate or conflict with the terms, conditions or provisions of the Memorandum of Association and Articles of Association or other organizational documents of the Company or any applicable law, rule or administrative regulation of the United States or the State of New York, or any order or administrative decree of any United States or State of New York governmental body or agency or court of which such counsel has knowledge or (B) constitute a violation of, or a default under, any covenant, restriction or provision with respect to financial ratios or tests to which the Company or any Significant Subsidiary of the Company is subject or any aspect of the financial condition or results of operations of the Company or any of its subsidiaries.

          4. There are no contracts, agreements or understandings between the Company and any person granting such person the right (other than rights which have been waived or satisfied) to require the Company to include any securities of the Company owned by such person in the Prospectus or Registration Statement.

          5. There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Company’s capital stock pursuant to the Company’s Memorandum of Association or Articles of Association or any agreement or other instrument.

EX-4.1

Exhibit 4.1

FORM OF GLOBAL SERIES E PREFERENCE SHARE CERTIFICATE

XL CAPITAL LTD

UNLESS THIS GLOBAL SERIES E PREFERENCE SHARE CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL SERIES E PREFERENCE SHARE CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SERIES E PREFERENCE SHARE CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE.

XL CAPITAL LTD

CUSIP:
ISIN:
Certificate No.

Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares

XL CAPITAL LTD, an exempted limited company duly organized and existing under the laws of the Cayman Islands (the “Company”), hereby certifies that [                    ] is the registered holder of [        ] Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares of the Company, par value $0.01 per share and liquidation preference of $1,000 per share (the “Series E Preference Shares”). The specific rights, preferences, limitations and other terms of the Series E Preference Shares represented hereby are set forth in, and subject to, the provisions of the resolutions of an authorized committee of the board of directors of the Company, dated as of [     ] [ ], 20[ ] (the “Committee Resolutions”), and the Memorandum and Articles of Association of the Company. Capitalized terms used herein but not defined shall have the respective meanings given them in the Committee Resolutions.

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          THIS GLOBAL SERIES E PREFERENCE SHARE CERTIFICATE IS ISSUED BY the Company on this ___ day of [    ], 20[     ].

XL CAPITAL LTD

By:

Name:

Title:

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ASSIGNMENT FORM

For value received the undersigned hereby sells, assigns and transfers unto:

Please insert social security or other identifying number of assignee:

Please print or type name and address, including zip code, of assignee:

__________ Series E Preference Shares and does hereby irrevocably constitute and appoint ___________ as Attorney to transfer the Series E Preference Shares on the books of the Company with full power of substitution in the premises.

Date:	Your Signature:
		(Sign exactly as your name
		appears on the Global Series E
		Preference Share Certificate)

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The issuance on the Closing Date is [          ] Series E Preference Shares. The following exchanges of a part of this Global Series E Preference Share Certificate have been made:

Date
of
Exchange Amount of decrease in
number of shares
represented by this
Global Series E
Preference Share
Certificate Amount of increase in
number of shares
represented by this
Global Series E
Preference Share
Certificate Number of shares
represented by this
Global Series E
Preference Share
Certificate following
such decrease or
increase Signature of
authorized officer of
Registrar

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EX-4.2

Exhibit 4.2

XL Capital Ltd
Extract of the Minutes of a Meeting of
a Committee of the Board of Directors pursuant to Article 75
of the Company’s Articles of Association held on March 12, 2007

1. Background

At a meeting held on February 23, 2007 the Board of Directors (the “Board of Directors”) of XL Capital Ltd (the “Company”) (i) resolved that the Company issue and sell (the “Issuance”), on or before July 1, 2007, in an underwritten public offering, one or more series of non-cumulative Preference Ordinary Shares, par value $0.01 per share (the “Preference Ordinary Shares”), upon the terms approved by a Committee (the “Committee”) appointed pursuant to Article 75 of the Company’s Articles of Association comprising the Attorneys (as defined below) on behalf of the Board of Directors, (ii) resolved that the Company execute and deliver a replacement capital covenant for the benefit of persons holding certain series of the Company’s long-term indebtedness prohibiting the Company from redeeming or repurchasing such Preference Ordinary Shares other than in accordance with such replacement capital covenant (the “Replacement Capital Covenant”) in the form presented at such meeting with such changes thereto as approved by the Committee comprised of the Attorneys on behalf of the Board of Directors and (iii) resolved that the Company issue a power of attorney in favor of the members of the Committee being Brian M. O’Hara, President and Chief Executive Officer of the Company, Michael P. Esposito, Chairman of the Board of Directors of the Company, and Herbert Haag, a director of the Company (the “Power of Attorney”), appointing each such individual as the attorney-in-fact (each an “Attorney” and together the “Attorneys”) of the Company, among other things, (a) to determine the amount of and the rights and preferences as to one or more series of Preference Ordinary Shares and (b) to agree, in connection with the Issuance, to the terms and conditions of and execute under hand or seal (as appropriate) each of the Replacement Capital Covenant, an underwriting agreement by and among the Company and the representatives of the several underwriters named therein (the “Underwriting Agreement”), and any other documents, agreements, contracts, instruments and certificates to which the Company is a party or is affected, considered by any such Attorney to be necessary, desirable or advisable to complete the transactions in connection with the Issuance.

It was stated that the purpose of the meeting (the “Meeting”) was for the Committee, on behalf of the Board of Directors, to consider approving (i) the issuance of the Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares, liquidation preference US$1,000 per share (the “Series E Preference Ordinary Shares”), which may be issued pursuant to the Underwriting Agreement between the Company and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named therein, (ii) the execution and delivery of the Replacement Capital Covenant, (iii) the execution and delivery of the Underwriting Agreement and (iv) such other matters as they deem necessary, desirable or advisable to complete the transactions in connection with the Issuance. The Series E Preference Ordinary Shares will be issued pursuant to a prospectus supplement (the “Prospectus Supplement”) to the prospectus (the “Base Prospectus”) filed with the Securities and Exchange Commission (the “Commission”) as part of the Company’s registration Statement on Form S-3 ASR, File No. 333-130036 (the “Registration Statement”) under the

Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations thereunder.

There were circulated and described as to their provisions at the Meeting the following documents:

(i)	the Underwriting Agreement;
(ii)	the Replacement Capital Covenant;
(iii)	the preliminary Prospectus Supplement (the “Preliminary Prospectus Supplement”) and Base Prospectus; and
(iv)	the executed Power of Attorney.

The above documents are hereinafter collectively referred to as the “Documents.” The transactions described in and contemplated by the Documents are hereinafter collectively referred to as the “Transactions.”

Mr. Michael Mathisen made a presentation to the Committee regarding management’s recommendations with respect to the issuance and sale of the Series E Preference Ordinary Shares and the entry by the Company into the Transactions.

Following the presentation, the Committee discussed the proposals and the Transactions, including the relevant legal, tax, accounting and regulatory implications thereof.

2. Resolutions

After full and careful consideration of the terms of the Documents and the Transactions as contemplated thereby, the nature and scale of the liabilities and obligations to be undertaken thereunder and of the commercial and financial consequences, direct and indirect, of the execution of the Documents and the consummation of the Transactions as contemplated thereby, in so far as they affect the Company, upon motion duly made and seconded, the following resolutions were unanimously adopted by the Committee, on behalf of the Board of Directors (it being acknowledged that each of Brian M. O’Hara, Michael P. Esposito and Herbert Haag be and hereby is authorized pursuant to these resolutions, the February 23, 2007 resolutions of the Board of Directors and the accompanying Power of Attorney to negotiate, agree to, determine and complete all the terms of the Transactions currently represented by the blanks set out below and approve and make such other changes, amendments or alterations to the terms of the Transactions and the Documents as each of them shall determine in his sole discretion to be necessary, advisable or desirable):

3.1 Transaction and Documents

RESOLVED that the Transactions and the Documents substantially in the forms described or produced at the Meeting be approved and that the Company execute and deliver, to the extent the Company is a party thereto, or approve all such deeds, contracts, agreements, documents, in-

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struments and certificates (including, without limitation, the Documents) as any officer of the Company in his or her discretion shall determine or deem necessary, desirable or advisable in connection with the Transactions, the execution and delivery by any such officer of any such contract, agreement, document or certificate being conclusive evidence of such determination; and

RESOLVED that the Transactions, including the issuance of the Series E Preference Ordinary Shares and the execution and delivery of the Replacement Capital Covenant and the Underwriting Agreement, are in the best interest of and to the advantage and benefit of the Company and provide a substantial commercial benefit to it.

3.2 Designation and Offering of Fixed/Floating Rate Preference Ordinary Shares

RESOLVED that (i) a series of 1,000,000 ordinary shares in the capital of the Company be designated as “Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares” and (ii) such Series E Preference Ordinary Shares be issued on the terms of and in accordance with the Company’s Memorandum and Articles of Association and the Underwriting Agreement;

3.3 Series E Preference Ordinary Shares

RESOLVED that the Series E Preference Ordinary Shares (i) will have, on the date the Transactions are consummated (the “Closing Date”), an aggregate liquidation preference of US$1,000,000,000 (the “Series E Aggregate Available Liquidation Preference”), and (ii) be non-cumulative preference ordinary shares with a nominal par value of US$0.01 per share; and

FURTHER RESOLVED that the Series E Preference Ordinary Shares have, subject to the Memorandum and Articles of Association of the Company (the “Articles”) and the provisions of, and restrictions contained in, the Companies Law (2004 Revision) and every statutory modification or re-enactment thereof for the time being in force (the “Law”), the following preferences and rights and be subject to the following restrictions.

(a)

Liquidation Preference.

Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets of the Company legally available for distribution among shareholders shall be applied first in repaying to the holders of the Series E Preference Ordinary Shares (the “Series E Holders”) an amount equal to US$1,000 per Series E Preference Ordinary Share (inclusive of the nominal amount thereof) plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date fixed for distribution, in preference to the repayment of the nominal amount of and any share premium or other amounts paid on ordinary shares of the Company (the “Ordinary Shares”) or any other shares ranking junior in right of payment to the Series E Preference Ordinary Shares as to dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Company (together with the Ordinary Shares, the “Series E Junior Shares”) to the holders of such Series E Junior Shares, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior Series E Dividend Period (as defined below) to the extent not declared and payable in respect of such

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	Series E Dividend Period. In the event that upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets of the Company available are insufficient to pay the amount of the liquidating distributions on all outstanding Series E Preference Ordinary Shares as referred to above and the corresponding amounts payable on all other shares ranking pari passu on a pro rata basis with the Series E Preference Ordinary Shares with respect to the payment of dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Company (including, without limitation, the Series A Preference Ordinary Shares, the Series B Preference Ordinary Shares, if issued, the Class C Preference Ordinary Shares, if issued, and the Class D Preference Ordinary Shares) (“Series E Parity Shares”), then the Series E Holders, and all such Series E Parity Shares shall share on a pro rata basis in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. The Series E Preference Ordinary Shares will not be convertible into, exchangeable for or carry rights or options to purchase, any Ordinary Shares or any other class or series of securities of the Company or any other entity. For purposes of this Section 3.3(a), a consolidation, amalgamation, merger, arrangement or reconstruction involving the Company or the sale or transfer of all or substantially all of the shares or property or business of the Company will not be deemed to constitute a liquidation, dissolution or winding up.
(b)	Dividend Rights.
	(i)	During the Series E Fixed Rate Period (as defined below), Series E Holders will be entitled to receive, when, as and if declared by the Board of Directors, cash dividends at a fixed annual rate equal to 6.500% of the US$1,000 liquidation preference per share on April 15 and October 15. During the Series E Floating Rate Period (as defined below), Series E Holders will be entitled to receive, when, as and if declared by the Board of Directors, cash dividends at a floating annual rate equal to Three-Month LIBOR for the applicable Series E Dividend Period, plus 2.4575% on the liquidation preference of US$1,000 per share.
		“Three-Month LIBOR” with respect to any Series E Dividend Period shall be the rate (expressed as a percentage per annum) for deposits in United States dollars for a three-month period beginning on the first day of such Series E Dividend Period that appears on Reuters LIBOR01 Page (as defined below) as of 11:00 a.m., London time, on the Determination Date (as defined below). If the Reuters LIBOR01 Page as of 11:00 a.m., London time, does not include the applicable rate or is unavailable on the Determination Date (as defined below), the calculation agent will request the principal London office of each of four major banks in the London interbank market, as selected by the calculation agent, to provide that bank’s offered quotation (expressed as a percentage per annum) as of approximately 11:00 a.m., London time, on the Determination Date to prime banks in the London interbank market for deposits in a Representative Amount (as defined below) for a three-month period beginning on the first day of such Series E Dividend Period. If at least two offered quotations are so provided, LIBOR for such Series E Dividend Period will be the arithmetic mean (rounded upward if neces-

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sary to the nearest whole multiple of 0.00001%) of those quotations. If fewer than two quotations are so provided, the calculation agent will request each of three major banks in New York City, as selected by the calculation agent, to provide that bank’s rate (expressed as a percentage per annum), as of approximately 11:00 a.m., New York City time, on the Determination Date for loans in a Representative Amount to leading European banks for a three-month period beginning on the first day of such Series E Dividend Period. If at least three rates are so provided, LIBOR for such Series E Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of those rates. If fewer than three rates are so provided, then LIBOR for the Series E Dividend Period will be LIBOR in effect with respect to the immediately preceding Series E Dividend Period.

“Business Day” means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in Bermuda, the Cayman Islands, London and New York City.

“Determination Date” with respect to any Series E Dividend Period will be the second London Banking Day preceding the first day of that Series E Dividend Period. London Banking Day is any day in which dealings in United States dollars are transacted or, with respect to any future date, are expected to be transacted in the London interbank market.

“Representative Amount” means a principal amount of not less than US$1,000,000 for a single transaction in the relevant market at the relevant time.

“Reuters LIBOR01 Page” means the display designated on page LIBOR01 on the Reuters Page (or such other page as may replace the LIBOR01 page on the Reuters Page or such other service as may be nominated by the British Bankers Association for the purpose of displaying London interbank offered rates for U.S. Dollar deposits).

“Reuters Page” means the display on Reuters Money 3000 Service, or any successor service.

The dividend rates applicable during the Series E Fixed Rate Period and the Series E Floating Rate Period are referred to collectively as the “Series E Dividend Rate.” The rights of the Series E Holders to receive dividends are non-cumulative. Accordingly, to the extent dividends are neither declared nor paid in respect of any Series E Dividend Period in respect of the Series E Preference Ordinary Shares, Series E Holders will have no right to receive dividends in respect of that Series E Dividend Period in respect of the Series E Preference Ordinary Shares and the Company will have no obligation to pay dividends in respect of that Series E Dividend Period in respect of the Series E Preference Ordinary Shares, whether or not dividends are payable in respect of any future Series E Dividend Period in respect of the Series E Preference Ordinary Shares. Subject to

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the next sentence, dividends will be payable semi-annually, during the Series E Fixed Rate Period, and quarterly, during the Series E Floating Rate Period, in each case when, as and if declared by the Company’s Board of Directors, in arrears, on April 15 and October 15 (or if such date is not a Business Day, on the Business Day immediately after such date), during the Series E Fixed Rate Period, and on January 15, April 15, July 15, and October 15 (or if such date is not a Business Day, on the Business Day immediately after such date), during the Series E Floating Rate Period, of each year (each such date during the Series E Fixed Rate Period or the Series E Floating Rate Period a “Series E Dividend Payment Date”). The first dividend will represent the period of time from and including the date of original issuance to but excluding October 15, 2007, calculated as described below.

During the Series E Fixed Rate Period, the amount of the dividend that is to be payable to the Series E Holder of each Series E Preference Ordinary Share with respect to each Dividend Period in respect of Series E Preference Ordinary Shares will be calculated as follows: the product, rounded to the nearest cent (half a cent being rounded upwards), of (i) 6.500%, (ii) US$1,000 and (iii) a fraction, (A) the numerator of which will be 180 (or, in the case of a long or partial Series E Dividend Period in respect of Series E Preference Ordinary Shares, the actual number of days elapsed in such Series E Dividend Period), and (B) the denominator of which will be 360.

Each Series E Dividend Period in respect of Series E Preference Ordinary Shares during the Series E Fixed Rate Period will commence on and include each April 15 and October 15 (whether or not a Business Day) and will end on and exclude the first day of the next Series E Dividend Period in respect of Series E Preference Ordinary Shares (whether or not a Business Day); provided, however, that the first Series E Dividend Period will commence on the date of original issuance.

During the Series E Floating Rate Period, the amount of the dividend that is to be payable to the Series E Holder of each Series E Preference Ordinary Share with respect to each Series E Dividend Period in respect of Series E Preference Ordinary Shares will be calculated as follows: the product, rounded to the nearest cent (half a cent being rounded upwards), of (i) three-Month LIBOR for such Dividend Period in respect of Series E Preference Ordinary Shares plus 2.4575%, (ii) US$1,000 and (iii) a fraction, (A) the numerator of which will be the actual number of days in the Series E Dividend Period, and (B) the denominator of which will be 360.

Each Series E Dividend Period in respect of Series E Preference Ordinary Shares during the Series E Floating Rate Period will commence on and include each January 15, April 15, July 15 and October 15 for the preceding period and end on and exclude the first day of the next Series E Dividend Period in respect of Series E Preference Ordinary Shares (whether or not a Business Day).

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	If declared, dividends will be payable to Series E Holders of record as they appear in the Company’s register of members at the close of business on the applicable record date, which will be one day prior to the Series E Dividend Payment Date as long as all of the Series E Preference Ordinary Shares remain in book-entry form. If all of the Series E Preference Ordinary Shares are not in book-entry form, the record date with respect to the Series E Preference Ordinary Shares will be 15 days prior to the Series E Dividend Payment Date (whether or not such date is a Business Day). Holders will not be entitled to any dividends other than as described above. Dividends on the Series E Preference Ordinary Shares will be non-cumulative, but will be payable only if there are funds legally available for the payment of such dividends and such dividends are declared. No interest or sum of money in lieu of interest will be payable on any dividend payment.
	“Series E Dividend Period” shall mean the period from and including a Series E Dividend Payment Date (or the date of the original issuance if there has not been a Series E Dividend Payment Date) to but excluding the immediately succeeding Series E Dividend Payment Date.
	“Series E Fixed Rate Period” means the period from and including the Closing Date to but excluding April 15, 2017.
	“Series E Floating Rate Period” means the period from and after April 15, 2017.
(ii)	As long as any Series E Preference Ordinary Shares are outstanding, no dividends or other distributions may be declared or paid or set apart for payment on any class or series of Series E Parity Shares for any period unless either (1) full dividends have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof set apart for such payments on the Series E Preference Ordinary Shares for the then-current Series E Dividend Period or (2) all dividends declared upon the Series E Preference Ordinary Shares and any Series E Parity Shares are declared pro rata so that the amount of dividends declared per share on the Series E Preference Ordinary Shares and any Series E Parity Shares will in all cases bear to each other the same ratio that accrued but unpaid dividends per share on the Series E Preference Ordinary Shares (with respect to the then-current Series E Dividend Period) and such Series E Parity Shares bear to each other.
(iii)	As long as any Series E Preference Ordinary Shares are outstanding (1) no dividends (other than those paid in Ordinary Shares or other shares ranking junior in right of payment to the Series E Preference Ordinary Shares as to dividends and the distribution of assets upon any liquidation, dissolution or winding up of the Company (together with the Ordinary Shares, “Series E Fully Junior Shares”)), may be declared or paid or set apart for payment upon any Series E Junior Shares, (2) no other distribution (other than those paid in Series E Fully Junior Shares) may be declared or paid or set apart for payment upon any Series E Junior Shares and (3) no Series E Junior Shares may be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Ordinary Shares

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		made for purposes of any employee incentive, stock, benefit or any similar plan of the Company or any of its subsidiaries) for any consideration (or any moneys be paid to or made available for a sinking fund or the redemption of any Series E Junior Shares) by the Company (except by conversion into or exchange for Series E Fully Junior Shares), unless, in any such case, full dividends on the Series E Preference Ordinary Shares and any Series E Parity Shares have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for payment, for the then-current Series E Dividend Period.
(c)	Voting Rights.
	(i)	Subject to paragraphs (ii) and (iii) below, and unless required by law or court order, the Series E Holders shall not be entitled to receive notice of nor to attend nor to vote at any general meeting of the Company.
	(ii)	The Series E Holders shall be entitled to one vote for each Series E Preference Ordinary Share held at any separate general meeting of that class or series (i.e., Preference Ordinary Shares or Series E Preference Ordinary Shares, respectively), subject to the provisions of Article 41 of the Articles. Subject to the applicable provisions of the Articles and the Law, unless the Series E Preference Ordinary Shares have been previously redeemed or called for redemption (and funds necessary for such redemption have been set apart by the Company in trust for the benefit of the Series E Preference Ordinary Shares so called for redemption), the Company may not take any action which would vary the rights attached to the Series E Preference Ordinary Shares and no class or series of shares may be created which ranks senior to the Series E Preference Ordinary Shares as to dividend rights or as to the liquidation, dissolution or winding up of the Company, in each case, without the approval of a special resolution in writing by the Holders of 100% of the Series E Preference Ordinary Shares or the sanction of a special resolution passed by the votes of at least two-thirds of the outstanding Series E Preference Ordinary Shares cast at a separate general meeting of the Series E Holders. At every separate meeting of Series E Holders, the necessary quorum shall be any one or more persons present in person or by proxy holding not less than 50% of the issued shares of that class. Notwithstanding the foregoing and subject to the applicable provisions of the Articles and the Law, Series E Holders are not entitled to vote on any sale of all or substantially all of the assets of the Company, or the issuance of any shares that rank pari passu with the Series E Preference Ordinary Shares as to the payment of dividends and the distribution of assets upon the liquidation, dissolution or winding up of the Company.
	(ii)	If at any time dividends payable on the Series E Preference Ordinary Shares shall not have been paid (whether or not such dividends shall have been declared) in an aggregate amount equivalent to dividends for six or more full quarterly periods, which, during the Series E Fixed Rate Period, shall mean three or more Series E Dividend Periods and, during the Series E Floating Rate Period, shall mean six or more Series E Dividend Periods (in each case, whether or not consecutive), then

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during such period until all such dividends shall have been paid in full, and only during such period (the “Series E Voting Period”), the Series E Holders voting together with any other series or classes of Preference Ordinary Shares also in not having been paid and having such right shall be entitled by ordinary resolution at a separate meeting of such holders to elect two persons and nominate such elected persons for appointment by the Board of Directors as additional Directors of the Company. In no event shall there be more than two Directors elected by the holders of the Series E Preference Ordinary Shares (whether voting alone as a series or class or with another series or class so in arrears and having such right). The right of the holders of the Series E Preference Ordinary Shares will cease (subject always to the same provision for the vesting of such rights if dividends on the Series E Preference Ordinary Shares are not paid in future periods) upon the earlier to occur of (i) the first date as of which full dividends on the Series E Preference Ordinary Shares have been paid for at least four consecutive quarterly periods, which, during the Series E Fixed Rate Period, shall mean two or more Series E Dividend Periods and, during the Series E Floating Rate Period, shall mean four or more Series E Dividend Periods, and (ii) the redemption of all Series E Preference Ordinary Shares.

(iv)

Any Director who shall have been elected pursuant to paragraph 3.3(c)(iii) above may be removed at any time during a Series E Voting Period, either for or without cause, by, and only by, ordinary resolution of the holders of the outstanding Preference Ordinary Shares of the relevant class or series at a special separate general meeting of such holders called for that purpose. Any vacancy thereby created may be filled during such Series E Voting Period by ordinary resolution of the holders of Preference Ordinary Shares of all relevant series at such a meeting. Any Director elected by holders of Preference Ordinary Shares pursuant to this provision, or by any Director so elected as herein contemplated, who dies, resigns or otherwise ceases to be a Director during a Series E Voting Period shall, except as otherwise provided in the preceding sentence, be replaced by the remaining Director theretofore elected by the holders of Preference Ordinary Shares nominating a replacement for appointment by the Board of Directors; provided that, if no remaining additional Director is then in office, additional Directors will be elected in accordance with the procedures described above. At the end of the Series E Voting Period, the holders of Preference Ordinary Shares of all the relevant series shall be automatically divested of all voting powers vested in them by the provision, but subject always to subsequent vesting of such voting power in the holders of Preference Ordinary Shares in the event of any similar cumulated arrearage in payment of quarterly dividends occurring thereafter. The term of all Directors elected and appointed pursuant to this provision shall in all events expire at the end of the applicable Series E Voting Period and if the size of the Board of Directors was increased for the purpose of the additional Directors, the number of Directors constituting the Board of Directors shall be reduced accordingly. The provisions of the Articles relating to general meetings and the provisions of Article 41 of the Articles shall apply, mutatis mutandis, to every such separate meeting, except that the necessary quorum shall be any one or more persons present in per-

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		son or by proxy holding not less than fifty percent (50%) of the issued Preference Ordinary Shares of the relevant series.
(d)	Redemption.
	The Company shall be entitled to redeem all or any of the Series E Preference Ordinary Shares as follows:
	(i)	General. Subject to Section 3.3(j) and paragraphs (ii), (iii), (iv) and (v) below, the Series E Preference Ordinary Shares shall not be redeemable by the Company prior to April 15, 2017. From or after such date, the Company shall be entitled at any time in whole or from time to time in part, upon not less than thirty (30) days’ nor more than sixty (60) days’ prior written notice to the Series E Holders, in such form and given in such manner as the Directors shall from time to time determine and in accordance with paragraph (e) below, to redeem all or any of the Series E Preference Ordinary Shares pursuant to this paragraph for cash at a redemption price of US$1,000 per share being redeemed (inclusive of the nominal value thereof) plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date of redemption, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior Series E Dividend Period to the extent not declared and payable in respect of such Series E Dividend Period.
	(ii)	Redemption upon the Submission of Certain Shareholder Proposals. At any time prior to April 15, 2017, provided that at such time some or all of the Series E Preference Ordinary Shares are outstanding, if the Company shall have (i) submitted to holders of Ordinary Shares a proposal for an amalgamation, consolidation, merger, arrangement, reconstruction, reincorporation, deregistration or any other similar transaction involving the Company that requires or (ii) submitted any proposal for any other matter that, as a result of any change in Cayman Islands law after the date of the final Prospectus Supplement relating to the issuance and sale of the Series E Preference Ordinary Shares (whether by enactment or official interpretation) requires, in each case, a vote of Series E Holders voting separately as a single class (alone or with one or more class or series of preference ordinary shares, including, without limitation, the Company’s Series A Preference Ordinary Shares, Series B Preference Ordinary Shares, Series C Preference Ordinary Shares and Series D Preference Ordinary Shares), the Company shall be entitled, upon not less than thirty (30) days’ nor more than sixty (60) days’ prior written notice to the Series E Holders, in such form and given in such manner as the Directors shall from time to time determine and in accordance with paragraph (e) below, to redeem all of the outstanding Series E Preference Ordinary Shares pursuant to this paragraph for cash at a redemption price equal to the Make Whole Amount for the Series E Preference Ordinary Shares described in clause (vi) below, plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date of redemption, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior

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Series E Dividend Period to the extent not declared and payable in respect of such Series E Dividend Period.

(iii)

Redemption on Tax Event. If (a) there is a “change in tax law” that would require the Company or any successor company to pay any additional amounts with respect to any then issued and outstanding Series E Preference Ordinary Shares and (b) the payment of those additional amounts cannot be avoided by the use of any reasonable measures available to the Company or any successor company, the Company shall be entitled at any time thereafter, upon not less than thirty (30) days’ nor more than sixty (60) days’ prior written notice to the Series E Holders, in such form and given in such manner as the Directors shall from time to time determine and in accordance with paragraph (e) below, to redeem, in whole but not in part, the Series E Preference Ordinary Shares pursuant to this paragraph for cash at a redemption price equal to the Make Whole Amount for the Series E Preference Ordinary Shares described in clause (vi) below, plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date of redemption, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior Series E Dividend Period to the extent not declared in respect of such Series E Dividend Period.

For the purpose of this provision a “change in tax law” shall be (a) a change in or amendment to laws, regulations or rulings of any jurisdiction, political subdivision or taxing authority described in the next sentence, (b) a change in the official application or interpretation of those laws, regulations or rulings, or (c) any execution of or amendment to any treaty affecting taxation to which any jurisdiction, political subdivision or taxing authority described in the next sentence is party after the date of the final Prospectus Supplement. The jurisdictions, political subdivisions and taxing authorities referred to in the previous sentence are (a) the Cayman Islands or any political subdivision or governmental authority of or in the Cayman Islands with the power to tax, (b) any jurisdiction from or through which the Company or its paying agent is making payments on the Series E Preference Ordinary Shares or any political subdivision or governmental authority of or in that jurisdiction with the power to tax, or (c) any other jurisdiction in which the Company or its successor company is organized or generally subject to taxation or any political subdivision or governmental authority of or in that jurisdiction with the power to tax.

(iv)

Tax Event on Consolidation. If the entity formed by a consolidation, merger or amalgamation involving the Company or the entity to which the Company conveys, transfers or leases substantially all of its properties and assets would be required to pay additional amounts in respect of any tax, assessment or governmental charge imposed on any Series E Holder as a result of a change in tax law that occurred after the date of the consolidation, merger, amalgamation, conveyance, transfer or lease, and the payment of those amounts cannot be avoided by the use of any reasonable measures available to the Company or any successor company, the Company shall be entitled to at any time thereafter, upon not less than thirty

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	(30) days’ nor more than sixty (60) days’ prior written notice to the Series E Holders, in such form and given in such manner as the Directors shall from time to time determine and in accordance with paragraph (e) below, to redeem, in whole but not in part, the Series E Preference Ordinary Shares outstanding at such time, if any, pursuant to this paragraph for cash at a redemption price equal to the Make Whole Amount for the Series E Preference Ordinary Shares described in clause (vi) below, plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date of redemption, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior Series E Dividend Period to the extent not declared and payable in respect of such Series E Dividend Period.
(v)	Redemption upon the Occurrence of a Rating Agency Event. At any time prior to April 15, 2017, provided that at such time some or all of the Series E Preference Ordinary Shares are outstanding, if there shall occur a Rating Agency Event in respect of the Series E Preference Ordinary Shares, the Company shall be entitled, upon not less than thirty (30) days’ nor more than sixty (60) days’ prior written notice to the Series E Holders, in such form and given in such manner as the Directors shall from time to time determine and in accordance with paragraph (e) below, to redeem all of the outstanding Series E Preference Ordinary Shares pursuant to this paragraph for cash at a redemption price equal to the Make Whole Amount for the Series E Preference Ordinary Shares described in clause (vi) below, plus any declared but unpaid dividends with respect to the then-current Series E Dividend Period to the date of redemption, without interest on such declared but unpaid dividends and without accumulation of dividends for any prior Series E Dividend Period to the extent not declared and payable in respect of such Series E Dividend Period.
	For purposes of the preceding paragraph, “Rating Agency Event” means a change by any nationally recognized statistical rating organization within the meaning of Rule 15c3-1 under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), that currently publishes a rating for the Company (a “Rating Agency”) to the Company’s equity credit criteria for the Series E Preference Ordinary Shares, as such criteria are in effect on the date of the final Prospectus Supplement (the “Current Criteria”), which change results in (a) the shortening of the length of time for which such current equity credit is scheduled to be in effect with respect to the Series E Preference Ordinary Shares, or (b) a lower equity credit being given to the Series E Preference Ordinary Shares as of the date of such change than the equity credit that would have been assigned to the Series E Preference Ordinary Shares as of the date of such change by such Rating Agency pursuant to its Current Criteria.
(vi)	Make Whole Amount. With respect to the Series E Preference Ordinary Shares, the “Make Whole Amount” will be in US dollars and will be equal to the greater of (i) the aggregate liquidation preference of the Series E Preference Ordinary Shares to be redeemed and (ii) the sum of the present values of the aggregate liq-

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uidation preference of the Series E Preference Ordinary Shares to be redeemed and the remaining scheduled payments of dividends on the Series E Preference Ordinary Shares to be redeemed up to but excluding April 15, 2017 discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the Treasury Rate (as defined below) plus 50 basis points.

For the purposes of the preceding paragraph:
•	“Comparable Treasury Issue” means the United States Treasury security selected by the Reference Treasury Dealer as having a maturity comparable to the period from and including the redemption date to but excluding April 15, 2017 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to such period of time. If no United States Treasury security has a maturity which is within a period from three months before to three months after the remaining life, the two most closely corresponding United States Treasury securities, as selected by the Reference Treasury Dealer, shall be used as the Comparable Treasury Issue, and the adjusted Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month, using such securities.
•	“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such distribution date, as set forth in the H.15 Daily Update published on such Business Day, or (ii) if such release (or any successor release) is not published or does not contain prices on such Business Day, the Reference Treasury Dealer Quotation actually obtained by the calculation agent for such redemption date.
•	“H.15 (519)” means the weekly statistical release entitled “H.15 (519) Selected Interest Rates,” or any successor publication, published by the Board of Governors of the Federal Reserve System.
•	“H.15 Daily Update” means the daily update of H.15 (519) available through the world wide website of the Board of Governors of the Federal Reserve System or any successor site or publication.
•	“Reference Treasury Dealer” means a nationally recognized investment bank that is a primary U.S. government securities dealer in New York City selected by the Company.
•	“Reference Treasury Dealer Quotation” means, with respect to the Reference Treasury Dealer and redemption date, the average, as determined by the calculation agent, of the bid and asked prices for the Comparable Treasury Issue

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	(expressed in each case as a percentage of its principal amount) quoted in writing to the calculation agent by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.
•	“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

(e)	Notices of Redemption.
	Notice of any redemption at the option of the Company described herein will be mailed at least thirty (30) days but not more than sixty (60) days before the redemption date to each Series E Holder of record of Series E Preference Ordinary Shares to be redeemed at the address shown in the register of members of the Company; provided that, if the Series E Preference Ordinary Shares are then held in book-entry form through The Depository Trust Company (“DTC”), the Company may give notice to the Series E Holders in any manner permitted by DTC. Each notice will state as appropriate: (1) the redemption date; (2) the number of Series E Preference Ordinary Shares to be redeemed; (3) the redemption price; (4) the place or places where certificates for Series E Preference Ordinary Shares are to be surrendered for payment of the redemption price if any such certificates are outstanding; and (5) where applicable, that dividends on the Series E Preference Ordinary Shares to be redeemed will cease to accrue on such redemption date. If fewer than all Series E Preference Ordinary Shares are to be redeemed, the notice provided to each such Series E Holder will also specify the number of Series E Preference Ordinary Shares to be redeemed from such Series E Holder. The notice shall contain (i) the name and address of the relevant bank or trust company to be used for purposes of redemption (if any) and (ii) a statement as to the deposit or intent to deposit the redemption funds in such trust account.
(f)	Directors Determine Shares Redeemed.
	If fewer than all of the Series E Preference Ordinary Shares are to be redeemed at the option of the Company, the number of shares to be redeemed will be determined by the Directors in their absolute discretion and such Series E Preference Ordinary Shares may be redeemed pro rata from the Series E Holders of record in proportion to the number of Series E Preference Ordinary Shares held by such Series E Holders (with adjustments to avoid redemption of fractional shares), or by lot.
(g)	Dividends Cease.
	If notice of redemption of any Series E Preference Ordinary Shares has been given and if the funds necessary for such redemption have been set apart by the Company in trust for the benefit of the Series E Holders of such Series E Preference Ordinary Shares so called for redemption, then from and after the redemption date, dividends will cease to accrue

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	on the Series E Preference Ordinary Shares being redeemed, the Series E Preference Ordinary Shares so redeemed will no longer be deemed to be outstanding and all rights of the Series E Holders of such Series E Preference Ordinary Shares will terminate, except the right to receive the redemption price.
(h)	Dividends Payable to Record Date.
	If a redemption date falls after a dividend record date with respect to which a dividend has been declared and prior to the corresponding Series E Dividend Payment Date, the Series E Holders at the close of business on the dividend record date will be entitled to receive the dividend payable with respect to such Series E Preference Ordinary Shares on the corresponding Series E Dividend Payment Date notwithstanding the redemption thereof between the dividend record date and the corresponding Series E Dividend Payment Date or a default in the payment of the dividend due on such Series E Dividend Payment Date.
(i)	Dividends Paid.
	Unless full dividends on the Series E Preference Ordinary Shares and all Series E Parity Shares for the then-current Series E Dividend Period shall have been declared and paid, or declared and a sum sufficient for the payment thereof set apart for payment for all such dividends on or prior to the date of a redemption, purchase or other acquisition, no Series E Preference Ordinary Shares or Series E Parity Shares may be redeemed, purchased or otherwise acquired by the Company unless all outstanding Series E Preference Ordinary Shares and any Series E Parity Shares are redeemed; provided that the Company may acquire fewer than all of the outstanding Series E Preference Ordinary Shares or any Series E Parity Shares pursuant to a purchase or exchange offer made on the same terms to Series E Holders of all outstanding Series E Preference Ordinary Shares and Series E Parity Shares as determined in good faith by the Board of Directors of the Company.
(j)	Right to Purchase Series E Preference Ordinary Shares.
	Subject to (1) the terms of the Replacement Capital Covenant described in the final Prospectus Supplement relating to the Series E Preference Ordinary Shares, (2) certain limitations contained in the Company’s Articles, (3) the special rights granted to any of the Company’s issued and outstanding shares, (4) applicable law and (5) the Company’s requirement pursuant to paragraph 3.3(i) to make a purchase or exchange offering on the same terms to Series E Holders of all outstanding Series E Preference Ordinary Shares and Series E Parity Shares, the Company may, at any time and from time to time, purchase outstanding Series E Preference Ordinary Shares. Any such purchase made by the Company may be made in the open market, by tender to all Series E Holders, by private agreement or otherwise as the Directors see fit. Any Series E Preference Ordinary Shares purchased by the Company for its own account (other than in the ordinary course of business of dealing in securities) will be cancelled by the Company and will no longer be issued and outstanding.

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(k)	Redemption Proceeds.
	The Series E Preference Ordinary Shares may be purchased or redeemed by the Company either out of profits or from the proceeds of a new issue of shares made for the purpose of the redemption or purchase out of capital or the share premium account.
(l)	Cancellation of Share Certificates.
	Payment of the redemption amount shall only be effected upon surrender to the Company for cancellation of any share certificate in respect of the Series E Preference Ordinary Shares (to the extent such certificates are outstanding) to be redeemed and shall be made as promptly as practicable. If any certificate so surrendered includes Series E Preference Ordinary Shares not being redeemed, a new certificate for the remaining Series E Preference Ordinary Shares shall be issued to the Series E Holder in accordance with the Articles without charge to such Series E Holder.
(m)	Redemption Process.
	The Directors may make such further regulations concerning the administerial process of redemption as they shall from time to time deem necessary so long as the rights of the Series E Holders are not varied.
(n)	Rights Not Varied.
	The rights conferred upon the Series E Holders of the Series E Preference Ordinary Shares shall not be deemed to be varied by the creation or issue of any Series E Parity Shares, Series E Junior Shares or Series E Fully Junior Shares.
(o)	Payments of Additional Amounts.
	All payments on the Series E Preference Ordinary Shares shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, assessments or other governmental charges imposed by any jurisdiction, political subdivision or taxing authority described in paragraph 3.3(d)(iii) of these Resolutions, unless the deduction or withholding of such taxes, assessments or other governmental charges is required by law, regulations or rulings or the application or official interpretation of such law, regulations or rulings. In that event, the Company shall pay, or cause to be paid, additional amounts to the registered Series E Holders as additional dividends to make up for any deduction or withholding for any present or future taxes, assessments or other governmental charges imposed by any jurisdiction, political subdivision or taxing authority described in paragraph 3.3(d)(iii) of these Resolutions in respect of any amounts that the Company or a successor company must pay with respect to the Series E Preference Ordinary Shares, so that the net amounts paid to the Series E Holders, after that deduction or withholding, shall equal the respective amounts that would have been receivable by such Series E Holders had no such withholding or deduction been required. For the avoidance of doubt, all references to payments on the Series E Preference Ordinary Shares, including without limitation, payments of liquidation amounts, redemptions prices and divi-

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dends, shall be deemed to include the payment of any such additional dividends in respect of additional amounts. However, the Company shall not be obligated to pay additional amounts to any Series E Holder that:

(i)

resides in or is a citizen of the jurisdiction, political subdivision or taxing authority imposing the taxes, assessments or other governmental charges that would otherwise trigger the Company’s obligation to pay additional amounts; or

(ii)

is a fiduciary, partnership, limited liability company or other pass-through entity if, and to the extent that, the payment of additional amounts would be required by a jurisdiction, political subdivision or taxing authority described in paragraph 3.3(d)(iii) of these Resolutions to be included in the income for tax purposes of a beneficiary or settlor with respect to that fiduciary or a member of that partnership, limited liability company or other pass-through entity who would not have been entitled to any additional amounts had that beneficiary, settlor or member held those Series E Preference Ordinary Shares directly.

(p)	No Payment of Additional Amounts.
	In addition, the Company shall not be obligated to pay any additional amounts to a Series E Holder on account of:
	(i)	any tax, assessment or other governmental charge that would not have been imposed but for the existence of any present or former connection between the Series E Holder and the taxing jurisdiction or political subdivision, or any Series E Preference Ordinary Share presented for payment more than thirty (30) days after the relevant date, which means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the depositary on or prior to such due date, it means the first date on which the full amount of such moneys having been so received and being available for payments to Series E Holders, and notice to that effect shall have been duly given to the Series E Holders;
	(ii)	any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or other governmental charge;
	(iii)	any tax, assessment or other governmental charge that is payable other than by withholding or deduction from payment of the liquidation preference of or any dividends on the Series E Preference Ordinary Shares;
	(iv)	any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Series E Holder or the beneficial owner of the Series E Preference Ordinary Shares to promptly comply with a request by the Company to (a) provide information, documents, certifications or other evidence concerning the nationality, residence or identity of the Series E Holder or beneficial owner of such Series E Preference Ordinary Shares or (b) make and deliver any declaration or other similar claim, other than a claim for refund of a tax, assessment or other

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		governmental charge withheld by the Company, or satisfy any information or reporting requirements, which, in the case of clause (a) or (b) of this subparagraph, is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of that tax, assessment or other governmental charge; or
	(v)	any combination of the items identified by the subparagraphs above.
(q)	No Preemptive Rights.
	The Series E Preference Ordinary Shares shall not be entitled to the benefits of any sinking fund. No Series E Holder, solely by reason of being a Series E Holder, has or will have any preemptive right to subscribe for any additional issue of the Company’s shares of any class or series or to any security convertible into or carrying rights or options to purchase any such shares.
(r)	Ranking.
	Any class or series of shares of the Company shall be deemed to rank (1) senior to the Series E Preference Ordinary Shares and the Series E Parity Shares, as to the payment of dividends and as to any voluntary or involuntary return of assets on liquidation, dissolution or winding up of the Company, if holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon any voluntary or involuntary return of assets on liquidation, dissolution or winding up, as the case may be, of the Company in preference or priority to the Series E Holders and the holders of the Series E Parity Shares, (2) pari passu with the Series E Preference Ordinary Shares and the Series E Parity Shares as to the payment of dividends and as to distribution of assets upon any voluntary or involuntary return of assets on liquidation, dissolution or winding up of the Company, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof shall be different from those of the Series E Preference Ordinary Shares or the Series E Parity Shares, if holders of such class or series, the Series E Preference Ordinary Shares and the Series E Parity Shares shall be entitled to the receipt of dividends and of amounts distributable upon any voluntary or involuntary return of assets on liquidation, dissolution or winding up of the Company in proportion to their respective amounts of accrued but unpaid dividends per share or liquidation preferences, without preference or priority of one over the other or (3) junior to the Series E Preference Ordinary Shares and the Series E Parity Shares, as to the payment of dividends or as to distribution of assets upon any voluntary or involuntary return of assets on liquidation, dissolution or winding up of the Company, if such class or series is ordinary shares or other shares ranking junior in right of payment to the Series E Preference Ordinary Shares and the Series E Parity Shares as to dividends or as to the distribution of assets upon any voluntary or involuntary return of assets on liquidation, dissolution or winding up on the basis set out above of the Company. The Series E Preference Ordinary Shares will therefore rank pari passu on the basis set out above with the Company’s Series A Preference Ordinary Shares, the Series B Preference Ordinary Shares and, if issued, the Series C Preference Ordinary Shares, if issued, the Series D Preference Ordinary Shares, including as to the payment dividends and as to distribution of assets upon

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any voluntary or involuntary return of assets on liquidation, dissolution or winding up of the Company.

3.4	Election of Directors
	(a)	RESOLVED that, in the event that the Series E Holders may, voting together with any other Series E Parity Shares as necessary, select two persons and nominate such elected persons for appointment by the Board of Directors as additional Directors of the Company pursuant to paragraph 3.3(c)(iii) of these Resolutions during a Series E Voting Period, the Board of Directors hereby, pursuant to Article 52 of the Articles, increase the number of persons consisting of the Board of Directors by two persons (subject to the limit in the number of Directors stated in Article 52) and hereby appoint, pursuant to Article 82 of the Articles, such persons elected and nominated by the holders of preference ordinary shares as additional Directors of the Company. Such additional Directors shall be apportioned among the classes of Directors in accordance with Article 81(a) of the Articles. Such appointment is conditional upon and subject to the following:
		(i)	The term of office of each such Director shall in all events automatically expire at the end of the applicable voting period; and
		(ii)	Prior to the appointment of each such elected person as a Director becoming effective, each such person shall provide to the Company notice in writing that he resigns from the office of Director, in the form attached to these Resolutions, which form is hereby approved, such notice to only be effective upon the earliest of: (i) the expiration of the applicable voting period during which such Director was appointed or (ii) the passing of an ordinary resolution by the holders of the relevant series of outstanding preference ordinary shares for the removal of such Director (in accordance with paragraph 3.3(c)(iv) of these Resolutions).
	(b)	RESOLVED that, in the event that it is necessary for any Director elected and nominated by the Series E Holders to be removed from office in accordance with the provisions of paragraph 3.3(c)(iv) of these Resolutions, the Board of Directors shall put a special resolution to the Company at the immediately following Annual General Meeting of the Company for the removal of such Director or Directors pursuant to Article 81(b) of the Articles.
	(c)	RESOLVED that, in the event that to give effect to the rights granted to the Series E Holders by the provisions of paragraph 3.3(c)(iii) of these Resolutions it is necessary to increase the limit in the number of Directors specified in Article 52 of the Articles, the Directors shall put an ordinary resolution to the Company at the next Annual General Meeting of the Company to increase the limit in the number of Directors.

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3.5	Approval of Transaction and Share Offering
	(a)	RESOLVED that the Company be, and it hereby is, authorized to issue and sell the Series E Aggregate Available Liquidation Preference of Series E Preference Ordinary Shares, par value US$0.01 per share, in accordance with the terms and conditions of the Underwriting Agreement. All determinations in respect of the Series E Preference Ordinary Shares made by any officer or director of the Company, including, without limitation, approval of the form of share certificates, are hereby ratified and confirmed.
	(b)	RESOLVED that the Company is, and it hereby is, authorized to make any periodic payments required under the Documents.
	(c)	RESOLVED that any officer or director of the Company be, and each of them individually hereby is, authorised and directed in the name and on behalf of the Company to agree (in his or their absolute discretion and including any variations to the forms and terms thereof) to the terms and conditions of and (where appropriate) to execute under hand, under seal or as a deed and deliver, in the name and on behalf of the Company, the documents relating to the Series E Preference Ordinary Shares and the Transactions (including, without limitation, the Documents) and any and all other documents, instruments and certificates considered in the absolute discretion of such director or officer necessary, desirable or advisable to complete the Transactions described at the Meeting, execution thereof by any officer or Director of the Company being conclusive evidence of his or their and the Company’s agreement to the final terms and conditions of such Documents or any other documents.
	(d)	RESOLVED that the Company is hereby authorized to appoint Mellon Investor Services LLC to serve as Transfer Agent, Paying Agent and Registrar with respect to the Series E Preference Ordinary Shares.
3.6	Approval of General Enabling Resolutions
	(a)	RESOLVED that any officer or Director of the Company be, and each of them individually hereby is, authorized and directed in the name and on behalf of the Company, to (i) take or cause to be taken any and all such further actions (including, without limitation, execution and delivery of such deeds, contracts, agreements, instruments, documents and certificates as each of them shall deem in his or her absolute discretion necessary, advisable or desirable, such execution and delivery being conclusive evidence of it being so deemed) and to cause the Company to prepare, execute and deliver and where necessary or appropriate, file or cause to be filed with the appropriate governmental authorities, all such other instruments and documents, including, but not limited to, all certificates, contracts, bonds, agreements, documents, instruments, receipts or other papers, (ii) incur and pay or cause to be paid all fees and expenses, and (iii) engage such persons as they shall in their judgment determine to be necessary or appropriate to carry out

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	fully the intent and purposes of the foregoing resolutions and each of the transactions contemplated thereby.
(b)	RESOLVED that any person dealing with any officer or Director of the Company in connection with any of the foregoing matters shall be conclusively entitled to rely upon the authority of such officer or Director and by his execution of any document, agreement, instrument or certificate, the same shall be a valid and binding obligation of the Company enforceable in accordance with its terms.
(c)	RESOLVED that all actions previously taken by any officer or Director of the Company in connection with the actions contemplated by the foregoing resolutions be, and each hereby is, adopted, ratified, confirmed and approved in all respects.

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EX-10.1

Exhibit 10.1

Replacement Capital Covenant, dated as of March 15, 2007 (this “Replacement Capital Covenant”), by XL Capital Ltd, a limited company duly organized and existing under the laws of the Cayman Islands (together with its successors and assigns, the “Company”), in favor of and for the benefit of each Covered Debtholder (as defined below).

Recitals

A. On the date hereof, the Company is issuing 1,000,000 Series E Perpetual Non-Cumulative Preference Ordinary Shares, liquidation preference U.S. $1,000 per share (the “Series E Preference Shares”). The Company may from time to time elect to issue additional Series E Preference Shares, and all such additional Series E Preference Shares would be deemed to form a single series with the 1,000,000 Series E Preference Shares being issued on the date hereof.

B. The Series E Preference Shares and this Replacement Capital Covenant are described in the Prospectus Supplement, dated March 12, 2007, filed with the United States Securities and Exchange Commission (the “Commission”) by the Company pursuant to Rule 424(b)(5) on March 13, 2007 relating to the offering of Series E Preference Shares.

C. The Company is entering into and disclosing the content of this Replacement Capital Covenant in the manner provided below with the intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Company be estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law.

D. The Company acknowledges that reliance by each Covered Debtholder upon the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Company and that, were the Company to disregard its covenants in this Replacement Capital Covenant, each Covered Debtholder would have sustained an injury as a result of its reliance on such covenants.

NOW, THEREFORE, the Company hereby covenants and agrees as follows in favor of and for the benefit of each Covered Debtholder.

SECTION 1. Definitions. Capitalized terms used in this Replacement Capital Covenant (including the Recitals) have the meanings set forth in Schedule I hereto.

SECTION 2. Limitations on Redemption or Repurchase of Series E Preference Shares. The Company hereby promises and covenants to and for the benefit of each Covered Debtholder that, on or before the RCC Termination Date, neither the Company nor any of its Subsidiaries shall redeem or purchase all or any part of the Series E Preference Shares, except to the extent that the applicable redemption or purchase price (exclusive of declared and unpaid dividends thereon) does not exceed the sum of the following amounts:

(i) the Applicable Percentage of (a) the aggregate amount of net cash proceeds received by the Company and its Subsidiaries from the sale of Ordinary Shares and Qualifying Warrants to Persons other than the Company and its Subsidiaries and (b) the Market Value of any Ordinary Shares that the Company and its Subsidiaries have issued to persons other than the Company and its Subsidiaries in connec-

	tion with the conversion of any convertible or exchangeable securities, other than securities for which the Company or any of its Subsidiaries has received equity credit from any NRSRO (as defined below), in each case since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period); plus
(ii)	100% of the aggregate amount of net cash proceeds received by the Company and its Subsidiaries since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period) from the sale of Mandatorily Convertible Preferred Stock, Debt Exchangeable for Preferred Equity and Debt Exchangeable for Common Equity to Persons other than the Company and its Subsidiaries; plus
(iii)	100% of the aggregate amount of net cash proceeds received by the Company and its Subsidiaries since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period) from the sale of any other Qualifying Capital Securities to Persons other than the Company and its Subsidiaries.

SECTION 3. Covered Debt.

(a) The Company represents and warrants that the Initial Covered Debt is Eligible Debt.

(b) The Company shall follow the procedures set forth in Section 3(c) for redesignating the Covered Debt in the event that the Covered Debt then in effect is Eligible Senior Debt and the Company subsequently issues Eligible Subordinated Debt, in which case the Company shall redesignate such newly-issued Eligible Subordinated Debt as the Covered Debt. In addition, the Company shall follow the procedures set forth in Section 3(c) for redesignating the Covered Debt on (i) the date that is two years prior to the final maturity date of the Covered Debt then in effect or (ii) the applicable redemption or repurchase date in the event the Company elects to redeem, or the Company or a Subsidiary of the Company elects to repurchase, such Covered Debt in whole or in part with the consequence that after giving effect to such redemption or repurchase, the outstanding principal amount of such Covered Debt is less than $100,000,000.

(c) During the 30-calendar-day period immediately preceding any Redesignation Date with respect to the Covered Debt then in effect, the Company shall identify the series of Eligible Debt that will become the Covered Debt on and after such Redesignation Date in accordance with the following procedures:

(i)	the Company shall identify each series of its then outstanding long-term indebtedness for money borrowed that is Eligible Debt;
(ii)	if only one series of the Company’s then outstanding long-term indebtedness for money borrowed is Eligible Debt, such series shall become the Covered Debt commencing on the related Redesignation Date; and

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(iii) if the Company has more than one outstanding series of long-term indebtedness for money borrowed that is Eligible Debt, the series that has the latest occurring final maturity date shall become the Covered Debt on the related Redesignation Date.

The series of outstanding long-term indebtedness for money borrowed that is determined to be Covered Debt pursuant to clause (c)(ii) or (c)(iii) above shall be the Covered Debt for purposes of this Replacement Capital Covenant for the period commencing on the related Redesignation Date and continuing to, but not including, the Redesignation Date as of which a new series of outstanding long-term indebtedness is next determined to be the Covered Debt pursuant to the procedures set forth in this Section 3(c).

In connection with the identification of any new series of Covered Debt, the Company shall give the notices and/or make the filings or website postings provided for in Section 3(d) within the time frame provided for in such section.

(d) Notice. In order to give effect to the intent of the Company described in Recital C, the Company covenants that:

(i)

simultaneously with the execution of this Replacement Capital Covenant or as soon as practicable after the date hereof, it shall give notice to the Holder(s) of the Initial Covered Debt, in the manner provided in the indenture, fiscal agency agreement or other instrument relating to the Initial Covered Debt, of this Replacement Capital Covenant and the rights granted to such Holder(s) hereunder and (A) if the Initial Covered Debt includes securities issued in the United States, file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a Current Report on Form 8-K under the Exchange Act or (B) if the Initial Covered Debt was predominately offered outside of the United States, (I) post a copy of this Replacement Capital Covenant on the Company’s website (currently: www.xlcapital.com), (II) as promptly as practicable, cause a notice of the execution of this Replacement Capital Covenant to be posted on the Bloomberg screen for the Initial Covered Debt or any successor Bloomberg screen or similar vendor’s screen the Company reasonably believes is appropriate (each an “Investor Screen”) and (III) cause a hyperlink to the execution copy of this Replacement Capital Covenant to be included on the Investor Screen for the Initial Covered Debt;

(ii)

it shall, if a series of the Company’s long-term indebtedness for money borrowed that includes securities issued in the United States (1) becomes Covered Debt or (2) ceases to be Covered Debt, (A) give notice of such occurrence within 30 calendar days to the holders of such long-term indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency agreement or other instrument under which such long-term indebtedness for money borrowed was issued and (B) if and so long as it is a reporting company under the Exchange Act, report such change by filing a Current Report on Form 8-K under the Exchange Act containing a description of the covenant set forth in Section 2 and identifying the series of long-term indebtedness for borrowed money that is Covered Debt as

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	of the date of such filing and including or incorporating by reference a copy of this Replacement Capital Covenant as an exhibit;
(iii)	it shall, if a series of the Company’s long-term indebtedness for money borrowed that was predominately offered outside of the United States (1) becomes Covered Debt or (2) ceases to be Covered Debt, (A) give notice of such occurrence within 30 calendar days to the holders of such long-term indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency agreement or other instrument under which such long-term indebtedness for money borrowed was issued, (C) as promptly as practicable, post a notice of such change on the Company’s website, (D) as promptly as practicable, cause a notice of such occurrence to be posted on the Investor Screen for the then-effective series of Covered Debt and (E) cause a hyperlink to the execution copy of this Replacement Capital Covenant to be included on the Investor Screen for such Covered Debt;
(iv)	to the extent that the Company has posted information pursuant to clause (i)(B) or clause (iii), at least once annually, it shall verify that the postings required in such clauses are functional and accessible and, if necessary, cause such functionality and accessibility to be restored;
(v)	if and so long as it is a reporting company under the Exchange Act, the Company shall include in each annual report filed with the Commission on Form 10-K under the Exchange Act a description of the covenant set forth in Section 2 and identify the series of long-term indebtedness for borrowed money that is Covered Debt as of the date such Form 10-K is filed with the Commission;
(vi)	if and so long as it is not a reporting company under the Exchange Act, the Company shall post on its website the information required by clauses (d)(ii) and (d)(v); and
(vii)	promptly upon request by any Holder of Covered Debt, provide such Holder with an executed copy of this Replacement Capital Covenant.

SECTION 4. Termination, Amendment and Waiver.

(a) The obligations of the Company pursuant to this Replacement Capital Covenant shall remain in full force and effect until the earliest date (the “Termination Date”) to occur of:

(i)	April 15, 2047, subject to extension as provided in Section 4(b)(iii);
(ii)	the date, if any, on which the Holder(s) of a majority by principal amount of the then-effective series of Covered Debt consent or agree in writing to the termination of this Replacement Capital Covenant and the obligations of the Company hereunder;

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(iii)	the date on which the Company does not have any series of outstanding Eligible Subordinated Debt or Eligible Senior Debt (in each case without giving effect to the rating requirement in clause (b) of the definition of each such term); and
(iv)	the date on which the Company does not have any outstanding Series E Preference Shares.

From and after the Termination Date, the obligations of the Company pursuant to this Replacement Capital Covenant shall be of no further force and effect.

(b) This Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed by the Company with the consent of the Holder(s) of a majority by principal amount of the then-effective series of Covered Debt, provided that this Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed only by the Company (and without the consent of the Holder(s) of the then-effective series of Covered Debt) if:

(i)	the effect of such amendment or supplement is solely to impose additional restrictions on the types of securities qualifying as Replacement Capital Securities, and an officer of the Company has delivered to the Holders of the then-effective series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate to that effect;
(ii)	the effect of such amendment or supplement is solely to eliminate Ordinary Shares, Mandatorily Convertible Preference Shares or Debt Exchangeable for Common Equity as a security or securities covered by Sections 2(i) and (ii), provided that the Company has been advised in writing by a nationally recognized independent accounting firm that there is more than an insubstantial risk that the failure to do so would result in a reduction in the Company’s earnings per share as calculated for financial reporting purposes;
(iii)	the effect of such amendment or supplement is solely to impose additional restrictions on the ability of the Company to redeem or purchase Series E Preference Shares in any circumstance, including extending the termination date specified in Section 4(a)(i), the dates specified in the definition of Applicable Percentage and the dates specified in the definition of Qualifying Capital Securities; or
(iv)	such amendment or supplement is not adverse to the Holder(s) of the then-effective series of Covered Debt and an officer of the Company has delivered to the Holder(s) of the then effective series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate stating that, in his or her determination, such amendment or supplement is not adverse to the Holder(s) of the then-effective series of Covered Debt.

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(c) For purposes of Sections 4(a) and 4(b), the Holder(s) whose consent or agreement is required to terminate, amend or supplement the obligations of the Company under this Replacement Capital Covenant shall be the Holder(s) of the then-effective series of Covered Debt as of a record date established by the Company that is not more than 30 calendar days prior to the date on which the Company proposes that such termination, amendment or supplement becomes effective.

SECTION 5. Miscellaneous.

(a) This Replacement Capital Covenant shall be governed by, and construed in accordance with, the laws of the State of New York.

(b) This Replacement Capital Covenant shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Covered Debtholders as they exist from time-to-time (it being understood and agreed by the Company that any Person who is a Covered Debtholder at the time such Person initiates a claim or proceeding to enforce such Person’s rights under this Replacement Capital Covenant after the Company has violated its covenants in Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not terminate by reason of such series of long-term indebtedness for money borrowed no longer being Covered Debt until the termination of such claim or proceeding). Except as specifically provided herein, this Replacement Capital Covenant shall have no other beneficiaries, and no Persons other than a Holder of Covered Debt is entitled to rely on this Replacement Capital Covenant.

(c) All demands, notices, requests and other communications to the Company under this Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and:

(i)	if served by personal delivery upon the Company, on the day so delivered (or, if such day is not a Business Day, the next succeeding Business Day);
(ii)	if delivered by registered post or certified mail, return receipt requested, or sent to the Company by a national or international courier service, on the date of receipt by the Company (or, if such date of receipt is not a Business Day, the next succeeding Business Day); or
(iii)	if sent by telecopier, on the day telecopied, or if not a Business Day, the next succeeding Business Day, provided that the telecopy is promptly confirmed by telephone confirmation thereof,

and in each case to the Company at the address set forth below, or at such other address as the Company may thereafter notify to Covered Debtholders or post on its website as the address for notices under this Replacement Capital Covenant:

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XL Capital Ltd
XL House
1 Bermudiana Road
Hamilton HM 11
Bermuda
Attention:
Facsimile No:

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IN WITNESS WHEREOF, the Company has caused this Replacement Capital Covenant to be executed by its duly authorized officer, as of the day and year first above written.

XL Capital Ltd

By:	/s/ Kirstin Romann Gould
	Name: Kirstin Romann Gould
	Title: EVP, General Counsel of Corporate
	Affairs & Secretary

Schedule 1

Definitions

“Alternative Payment Mechanism” means, with respect to any securities or combination of securities (together in this definition, “such securities”), provisions in the related transaction documents requiring the Company to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the deferred Distributions on such securities and apply the proceeds to pay unpaid Distributions on such securities, commencing on the earlier of (x) the first Distribution Date after commencement of a deferral period on which the Company pays current Distributions on such securities and (y) the fifth anniversary of the commencement of such deferral period, and that:

(a)	define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance or sale of the relevant securities, where applicable, and including the fair market value of property received by the Company or any of its Subsidiaries as consideration for such securities) that the Company has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities, up to the Preferred Cap (as defined in paragraph (f) below) in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock;
(b)	permit the Company to pay current Distributions on any Distribution Date out of any source of funds but prohibit the Company from paying deferred Distributions out of any source of funds other than eligible proceeds;
(c)	if deferral of Distributions continues for more than one year (or such shorter period as provided for in the terms of such securities), require the Company not to repay, redeem or purchase any APM Qualifying Securities of the Company or any securities of the Company that on a bankruptcy or liquidation of the Company rank pari passu or junior to such APM Qualifying Securities until at least one year after all deferred Distributions have been paid;
(d)	may include a provision that, notwithstanding the Common Cap (as defined in paragraph (f) below) and the Preferred Cap, for purposes of paying deferred Distributions, limits the ability of the Company to sell Ordinary Shares, Qualifying Warrants, or Mandatorily Convertible Preferred Stock above an aggregate cap specified in the transaction documents (a “Share Cap”), subject to the Company’s agreement to use commercially reasonable efforts to increase the Share Cap amount (i) only to the extent that it can do so and simultaneously satisfy its future fixed or contingent obligations under other securities and derivative instruments that provide for settlement or payment in Ordinary Shares or (ii) if the Company cannot increase the Share Cap amount as contemplated in the preceding clause, by requesting its Board of Directors to adopt a resolution for shareholder

	vote at the next occurring annual shareholders meeting to increase the number of shares of the Company’s authorized Ordinary Shares for purposes of satisfying the Company’s obligations to pay deferred Distributions;
(e)	permit the Company, at its option, to provide that if the Company is involved in a merger, consolidation, amalgamation or conveyance, transfer or lease of assets substantially as an entirety to any other person (a “business combination”) where immediately after the consummation of the business combination more than 50% of the voting stock of the surviving entity of the business combination, or the person to whom all or substantially all of the Company’s assets are conveyed, transferred or leased, is owned by the shareholders of the other party to the business combination, then clauses (a), (b) and (c) above will not apply to any deferral period that is terminated on the next interest payment date following the date of consummation of the business combination; and
(f)	limit the obligation of the Company to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities up to:

	(i)	in the case of APM Qualifying Securities that are Ordinary Shares or Qualifying Warrants, an aggregate amount of all Ordinary Shares issued or issuable upon the exercise of such Qualifying Warrants pursuant to the Alternative Payment Mechanism with respect to deferred Distributions during the first five years of any deferral period equal to 2% of the total number of issued and outstanding shares of the Ordinary Shares of the Company as of the date of the Company’s most recently publicly available consolidated financial statements as of the date of such issuance (the “Common Cap”), provided (and it being understood) that the Common Cap shall cease to apply to such deferral period by a date (as specified in the related transaction documents) which shall be not later than the fifth anniversary of the commencement of such deferral period; and
	(ii)	in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock, an amount from the issuance thereof pursuant to the related Alternative Payment Mechanism (including at any point in time from all prior issuances of Qualifying Non-Cumulative Perpetual Preferred Stock and still-outstanding Mandatorily Convertible Preferred Stock pursuant to such Alternative Payment Mechanism) equal to 25% of the initial principal or stated amount of the securities that are the subject of the related Alternative Payment Mechanism (the “Preferred Cap”);
provided (and it being understood) that:

(a) the Company shall not be obligated to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is continuing;

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(b) if, due to a Market Disruption Event or otherwise, the Company is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the Company will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order subject to the Common Cap, the Preferred Cap and the Share Cap (if any), as applicable; and if the Company has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the Company from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis in proportion to the total amounts that are due on such securities.

“APM Qualifying Securities” means:

(a)	Ordinary Shares;
(b)	Qualifying Warrants;
(c)	Qualifying Non-Cumulative Perpetual Preferred Stock; or
(d)	Mandatorily Convertible Preferred Stock.

“Applicable Percentage” means: 1 divided by (i) 75% with respect to any repayment, redemption or purchase prior to April 15, 2017, (ii) 50% with respect to any repayment, redemption or purchase on or after April 15, 2017 and prior to April 15, 2037 and (iii) 25% with respect to any repayment, redemption or purchase on or after April 15, 2037 (for example, prior to April 15, 2017, the Applicable Percentage in the case of such securities will be 133.33%).

“Bankruptcy Claim Limitation Provision” means, with respect to any Qualifying Capital Securities that have a Mandatory Trigger Provision or a No Payment Provision, provisions that, upon any liquidation, dissolution, winding up or reorganization or in connection with any insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer, limit the claim of the holders of such securities (other than non-cumulative perpetual Preference Ordinary Shares) to Distributions that accumulate during (A) any period in which the issuer fails to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in the case of securities that have a Mandatory Trigger Provision, or (B) any deferral period, in the case of securities that have a No Payment Provision, to:

(a) in the case of Qualifying Capital Securities with respect to which the APM Qualifying Securities do not include Qualifying Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of the stated or principal amount of such Qualifying Capital Securities then outstanding; and

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(b) in the case of any other Qualified Capital Securities, an amount not in excess of the sum of (x) two years of accumulated and unpaid Distributions (including compound amounts thereon) and (y) an amount equal to the excess, if any, of the Preferred Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative Perpetual Preferred Stock that the issuer has applied to pay such Distributions pursuant to the Mandatory Trigger Provision or No Payment Provision; provided that the holders of such Qualifying Capital Securities are deemed to agree that, to the extent the remaining claim exceeds the amount set forth in clause (x), the amount they receive in respect of such excess shall not exceed the amount they would have received had the claim for such excess ranked pari passu with the interests of the holders, if any, of Qualifying Non-Cumulative Perpetual Preferred Stock.

“Business Day” means each day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, and, on or after April 15, 2017 a day that is not a London business day.

“Commission” means the United States Securities and Exchange Commission.

“Company” has the meaning specified in the introduction to this instrument.

“Covered Debt” means (a) at the date of this Replacement Capital Covenant and continuing to but not including the first Redesignation Date, the Initial Covered Debt and (b) thereafter, commencing with each Redesignation Date and continuing to but not including the next succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such period.

“Covered Debtholder” means each Person (whether a Holder or a beneficial owner holding through a participant in a clearing agency) that buys, holds or sells long-term indebtedness for money borrowed of the Company during the period that such long-term indebtedness for money borrowed is Covered Debt.

“Debt Exchangeable for Common Equity” means a security or combination of securities (together in this definition, “such securities”) that:

(a)

gives the holder a beneficial interest in (i) debt securities of the Company that are not redeemable prior to settlement of the stock purchase contract referred to in subclause (ii) hereof and (ii) an interest in a stock purchase contract for an Ordinary Share of the Company that will be settled in three years or less, with the number of Ordinary Shares purchasable pursuant to such stock purchase contract to be within a range established at the time of issuance of such debt securities;

(b)

provides that the investors directly or indirectly grant to the Company a security interest in such debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase Ordinary Shares of the Company pursuant to such stock purchase contracts;

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(c)

includes a remarketing feature pursuant to which the debt securities of the Company are remarketed to new investors commencing not later than 30 days prior to the settlement date of the purchase contract;

(d)

provides for the proceeds raised in the remarketing to be used to purchase Ordinary Shares of the Company under the stock purchase contracts and, if there has not been a successful remarketing by the settlement date of the purchase contract, provides that the stock purchase contracts will be settled by the Company foreclosing on its debt securities or other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Common Equity.

“Debt Exchangeable for Preferred Equity” means a security or combination of securities (together in this definition, “such securities”) that:

(a)	gives the holder a beneficial interest in (i) subordinated debt securities of the Company that include a provision requiring the Company to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising proceeds at least equal to the deferred Distributions on such subordinated debt securities commencing not later than the second anniversary of the commencement of such deferral period and that are the most junior subordinated debt of the Company (or rank pari passu with the Most Junior Subordinated Debt Securities of the Company) (in this definition, “subordinated debt” of the Company) and (ii) an interest in a stock purchase contract for a share of non-cumulative perpetual preferred stock of the Company that ranks pari passu with or junior to all other Preference Ordinary Shares of the Company (in this definition, “preferred stock” of the Company);
(b)	provides that the investors directly or indirectly grant to the Company a security interest in such subordinated debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase preferred stock of the Company pursuant to such stock purchase contracts;
(c)	includes a remarketing feature pursuant to which the subordinated debt of the Company is remarketed to new investors commencing not later than the first Distribution Date that is at least five years after the date of issuance of securities or earlier in the event of an early settlement event based on: (i) the dissolution of the issuer of such debt exchangeable for preferred equity or (ii) one or more financial tests set forth in the terms of the instrument governing such debt exchangeable for preferred equity;
(d)	provides for the proceeds raised in the remarketing to be used to purchase preferred stock of the Company under the stock purchase contracts and, if there has not been a successful remarketing by the first Distribution Date that is six years after the date of issuance of such securities, provides that the stock purchase contracts will be settled by the Company foreclosing on its subordinated debt securi-

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	ties or other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Preferred Equity;
(e)	includes a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant that will apply to such securities and to the preferred stock of the Company, and will not include Debt Exchangeable for Preferred Equity or Debt Exchangeable for Common Equity as a Replacement Capital Security; and
(f)	if applicable, after the issuance of such preferred stock of the Company, provides the holders of such securities with a beneficial interest in such preferred stock of the Company.

“Distribution Date” means, as to any securities or combination of securities, the dates on which periodic Distributions on such securities are scheduled to be made.

“Distribution Period” means, as to any securities or combination of securities, each period from and including the later of the issue date and a Distribution Date for such securities to but excluding the next succeeding Distribution Date for such securities.

“Distributions” means, as to a security or combination of securities, dividends, interest payments or other income distributions to the holders thereof that are not Subsidiaries of the Company.

“Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

“Eligible Senior Debt” means, at any time in respect of any issuer, each series of outstanding unsecured long-term indebtedness for money borrowed of such issuer that (a) upon a bankruptcy, liquidation, dissolution or winding-up of the issuer, ranks most senior among the issuer’s then outstanding classes of indebtedness for money borrowed, (b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

“Eligible Subordinated Debt” means, at any time in respect of any issuer, each series of the issuer’s then outstanding unsecured long-term indebtedness for money borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding-up of the issuer, ranks subordinate to the issuer’s then outstanding series of indebtedness for money borrowed that ranks most senior, (b) is then

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assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding subordinated long-term indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Holder” means, as to the Covered Debt then in effect, each holder of such Covered Debt as reflected on the securities register maintained by or on behalf of the Company with respect to such Covered Debt.

“Initial Covered Debt” means the Company’s 6.375% Senior Notes Due November 15, 2024 issued in the aggregate principal amount of $350,000,000 (CUSIP: 98372PAG3).

“Intent-Based Replacement Disclosure” means, as to any security or combination of securities (together in this definition, “securities”), that the issuer has publicly stated its intention, either in the prospectus or other offering document under which such securities were initially offered for sale or in filings with the Commission made by the issuer under the Exchange Act prior to or contemporaneously with the issuance of such securities, that the issuer, to the extent the securities provide the issuer with equity credit, will repay, redeem or purchase such securities only with the proceeds of replacement capital securities that have terms and provisions at the time of repayment, redemption or purchase that are as or more equity-like than the securities then being repaid, redeemed or purchased, raised within 180 days prior to the applicable repayment, redemption or purchase date.

“London business day” is any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

“Mandatorily Convertible Preferred Stock” means Preference Ordinary Shares with (a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (b) a requirement that such Preference Ordinary Shares convert into Ordinary Shares within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of such Preference Ordinary Shares.

“Mandatory Trigger Provision” means, as to any security or combination of securities (together in this definition, “securities”), provisions in the terms thereof or of the related transaction agreements that (a) require or, at its option in the case of non-cumulative perpetual Preference Ordinary Shares, permit the issuer of such securities to make payment of Distributions on such securities only pursuant to the issue and sale of APM Qualifying Securities, within no more than

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two years of a failure to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in an amount such that the net proceeds of such sale are at least equal to the amount of unpaid Distributions on such securities (including without limitation all deferred and accumulated amounts) and in either case require the application of the net proceeds of such sale to pay such unpaid Distributions, provided that: (1) if the APM Qualifying Securities issued and sold are Qualifying Non-Cumulative Perpetual Preferred Stock or Mandatorily Convertible Preferred Stock, the amount of the net proceeds of Qualifying Non-Cumulative Perpetual Preferred Stock and Mandatorily Convertible Preferred Stock applied, together with the net proceeds of all prior issuances of Qualifying Non-Cumulative Preferred Stock and any still-outstanding Mandatorily Convertible Preferred Stock applied during the current and all prior deferral periods, to pay such Distributions pursuant to such provision may not exceed 25% of the initial liquidation or principal amount of such securities and (2) if the APM Qualifying Securities issued and sold are Ordinary Shares or Qualifying Warrants and if the Mandatory Trigger provision does not require such issuance and sale within one year of such failure, the number of Ordinary Shares issued or issuable upon the exercise of such Qualifying Warrants plus the number of Ordinary Shares previously issued or issuable upon the exercise of previously issued Qualifying Warrants may not exceed 2% of the total number of issued and outstanding shares of the Company’s Ordinary Shares as of the date of the Company’s most recent publicly available consolidated financial statements as of the date of such issuance, provided (and it being understood) that: (1) the Company shall not be obligated to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is continuing and (2) if, due to a Market Disruption Event or otherwise, the Company is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the Company will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order subject to the Share Cap (if any); and if the Company has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the Company from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis in proportion to the total amounts that are due on such securities, (b) prohibit the issuer from purchasing any APM Qualifying Securities or any of the Company’s securities that on the Company’s bankruptcy or liquidation rank pari passu or junior to such APM qualifying securities prior to the date that is six months after the issuer applies the net proceeds of the sales described in clause (a) to pay such unpaid Distributions, and (c) include a Bankruptcy Claim Limitation Provision. No remedy other than Permitted Remedies may arise by the terms of such securities or related transaction agreements in favor of the holders of such securities as a result of the issuer’s failure to pay Distributions because of the Mandatory Trigger Provision or as a result of the issuer’s exercise of its right under an Optional Deferral Provision until Distributions have been deferred for one or more Distribution Periods that total together at least ten years.

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“Market Disruption Events” means the occurrence or existence of any of the following events or sets of circumstances:

(a)	trading in securities generally, or shares of our securities specifically, on the New York Stock Exchange or any other national securities exchange, or in the over-the-counter market on which any APM Qualifying Securities or Qualifying Capital Securities, as the case may be, are then listed or traded shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices such that trading shall have been materially disrupted shall have been established on any such exchange or market by the Commission, the relevant exchange or by any other regulatory body or governmental agency having jurisdiction;
(b)	the Company would be required to obtain the consent or approval of its stockholders or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue or sell APM Qualifying Securities pursuant to the alternative payment mechanism or to issue Qualifying Capital Securities pursuant to the Company’s repayment obligations in respect thereof, as the case may be, and that consent or approval has not yet been obtained notwithstanding the Company’s commercially reasonable efforts to obtain that consent or approval;
(c)	a banking moratorium shall have been declared by the federal or state authorities of the United States such that market trading in the APM Qualifying Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased; a material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States such that market trading in the APM Qualifying Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased;
(d)	the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or international calamity or crisis such that market trading in the APM Qualifying Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased;
(e)	there shall have occurred such a material adverse change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such that trading in any of the APM Qualifying Securities or Qualifying Capital Securities, as the case may be, has been materially disrupted;
(f)	an event occurs and is continuing as a result of which the offering document for the offer and sale of APM Qualifying Securities or Qualifying Capital Securities, as the case may be, would, in the Company’s reasonable judgment, contain an

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untrue statement of a material fact or omit to state a material fact required to be stated in that offering document or necessary to make the statements in that offering document not misleading and either (a) the disclosure of that event at such time, in the Company’s reasonable judgment, is not otherwise required by law and would have a material adverse effect on our business or (b) the disclosure relates to a previously undisclosed proposed or pending material business transaction, provided that no single suspension period described in this bullet shall exceed 90 consecutive days and multiple suspension periods described in this bullet shall not exceed an aggregate of 180 days in any 360-day period; or

(g)

the Company reasonably believes that the offering document for the offer and the sale of APM Qualifying Securities or Qualifying Capital Securities, as the case may be, would not be in compliance with a rule or regulation of the Commission (for reasons other than those described in the immediately preceding bullet) and the Company determines that it is unable to comply with such rule or regulation or such compliance is unduly burdensome, provided that no single suspension period described in this bullet shall exceed 90 consecutive days and multiple suspension periods described in this bullet shall not exceed an aggregate of 180 days in any 360-day period.

“Market Value” means, on any date, the closing sale price per share of Ordinary Shares (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions by the New York Stock Exchange or, if the Ordinary Shares are not then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange on which the Ordinary Shares are traded or quoted; if the Ordinary Shares are not either listed or quoted on any U.S. securities exchange on the relevant date, the market price will be the average of the mid-point of the bid and ask prices for the Ordinary Shares on the relevant date submitted by at least three nationally recognized independent investment banking firms selected by the Company for this purpose.

“Measurement Date” means, with respect to any redemption or purchase of the Preferred Shares, the date that is 180 days prior to delivery of notice of such redemption or the date of such purchase.

“Measurement Period” means, with respect to any notice date or purchase date, the period (i) beginning on the Measurement Date with respect to such notice date or purchase date and (ii) ending on such notice date or purchase date. Measurement Periods cannot run concurrently.

“Most Junior Subordinated Debt Securities” mean debt securities of the Company that rank upon a liquidation, dissolution or winding-up of the Company junior to all of the Company’s other long-term indebtedness for money borrowed (other than the Company’s long-term indebtedness for money borrowed from time to time outstanding that by its terms ranks pari passu with such securities) and pari passu with the claims of the Company’s trade creditors.

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“No Payment Provision” means a provision or provisions in the transaction documents for securities (referred to in this definition as “such securities”) that include the following:

(a)	an Alternative Payment Mechanism;
(b)	an Optional Deferral Provision modified and supplemented from the general definition of that term to provide that the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if a Market Disruption Event has occurred and is continuing, ten years, without any remedy other than Permitted Remedies and the obligations (and limitations on obligations) described in the definition of “Alternative Payment Mechanism” applying; and
(c)	a Bankruptcy Claim Limitation Provision.

“Non-Cumulative” means, with respect to any securities, that the issuer may elect not to make any number of periodic Distributions without any remedy arising under the terms of the securities or related agreements in favor of the holders, other than one or more Permitted Remedies. Any securities that include a No Payment Provision shall also be deemed to be Non-Cumulative for all purposes of this Replacement Capital Covenant.

“NRSRO” means a nationally recognized statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.

“Optional Deferral Provision” means, as to any securities, provisions in the terms thereof or of the related transaction agreements to the effect of either (a) or (b) below:

(a)

(i) the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if a Market Disruption Event is continuing, ten years, without any remedy other than Permitted Remedies and (ii) an Alternative Payment Mechanism (provided that such Alternative Payment Mechanism need not apply during the first five years of any deferral period and need not include a Common Cap or Preferred Cap); or

(b)

the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods up to ten years, without any remedy other than Permitted Remedies.

All Preference Ordinary Shares of the Company shall be deemed to include an Optional Deferral Provision.

“Ordinary Shares” means Class A Ordinary Shares of the Company (including treasury shares), Class A Ordinary Shares issued pursuant to any dividend reinvestment plan or employee benefit plan of the Company, a security ranking upon the liquidation, dissolution or winding up of the Company junior to the Qualifying Non-Cumulative Perpetual Preferred Stock and pari passu with

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the Ordinary Shares of the Company, that tracks the performance of, or relates to the results of, a business, unit or division of the Company, and any securities issued in exchange therefor in connection with a merger, consolidation, binding share exchange, business combination, recapitalization or other similar event.

“Other Qualifying Capital Replacement Covenant” means a replacement capital covenant, as identified by the Company’s Board of Directors acting in good faith and in its reasonable discretion and reasonably construing the definitions and other terms of this Replacement Capital Covenant, (i) entered into by a company that at the time it enters into such replacement capital covenant is a reporting company under the Exchange Act and (ii) that restricts the related issuer from redeeming or purchasing identified securities except from the applicable percentage of the proceeds of specified replacement capital securities that have terms and provisions at the time of redemption or purchase that are as or more equity-like than the securities then being redeemed or purchased, raised within 180 days prior to the applicable redemption or purchase date.

“Permitted Remedies” means, with respect to any securities, one or more of the following remedies:

(a)	rights in favor of the holders of such securities permitting such holders to elect one or more directors of the issuer (including any such rights required by the listing requirements of any stock or securities exchange on which such securities may be listed or traded), and
(b)	complete or partial prohibitions preventing the issuer from paying Distributions on or purchasing Ordinary Shares or other securities that rank pari passu with or junior as to Distributions to such securities for so long as Distributions on such securities, including unpaid Distributions, remain unpaid.

“Person” means any individual, Company, partnership, joint venture, trust, limited liability company or Company, unincorporated organization or government or any agency or political subdivision thereof.

“Preference Ordinary Shares” means preference ordinary shares of the Company and any securities issued in exchange therefor in connection with a merger, consolidation, binding share exchange, business combination, recapitalization or other similar event.

“Prospectus Supplement” has the meaning specified in Recital B.

“Qualifying Capital Securities” means securities (other than Ordinary Shares, Qualifying Warrants, Mandatorily Convertible Preferred Stock, Debt Exchangeable for Preferred Equity and Debt Exchangeable for Common Equity) that rank pari passu with or junior to the Most Junior Subordinated Debt Securities upon the liquidation, dissolution or winding up of the Company and, in the determination of the Company’s Board of Directors reasonably construing the definitions and other terms of this Replacement Capital Covenant, meet one of the following criteria:

(a) in connection with any repayment, redemption or purchase of Series E Preference Shares prior to April 15, 2017:

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	(i)	securities issued by the Company or its Subsidiaries that (A) have no maturity or a maturity of at least 60 years and (B) either (x) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant and are Non-Cumulative or (y) have a Mandatory Trigger Provision and are subject to Intent-Based Replacement Disclosure and have an Optional Deferral Provision; or
	(ii)	securities issued by the Company or its Subsidiaries that (A) have no maturity or a maturity of at least 40 years, (B) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant, (C) have an Optional Deferral Provision and (D) have a Mandatory Trigger Provision; or
(b)	in connection with any repayment, redemption or purchase of Series E Preference Shares at any time on or after April 15, 2017 but prior to April 15, 2037:
	(i)	all securities described under clause (a) of this definition;
	(ii)	securities issued by the Company or its Subsidiaries that (A) have no maturity or a maturity of at least 60 years, (B) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant and (C) have an Optional Deferral Provision;
	(iii)	securities issued by the Company or its Subsidiaries that (A) are Non-Cumulative and (B) (x) have no maturity or a maturity of at least 60 years and (y) are subject to Intent-Based Replacement Disclosure;
	(iv)	securities issued by the Company or its Subsidiaries that (A) have an Optional Deferral Provision, (B) have a Mandatory Trigger Provision and (C) have no maturity or a maturity of at least 60 years;
	(v)	securities issued by the Company or its subsidiaries that (A) are Non Cumulative, (B) have no maturity or a maturity of at least 40 years and (C) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant; or
	(vi)	securities issued by the Company or its Subsidiaries that (A) have an Optional Deferral Provision, (B) have a Mandatory Trigger Provision and (C) either (x) have no maturity or a maturity of at least 40 years and Intent-Based Replacement Disclosure or (y) have no maturity or a maturity of at least 25 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant; or

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(c)	in connection with any repayment, redemption or purchase of Series E Preference Shares at any time on or after April 15, 2037:
	(i)	securities described under clause (b) of this definition;
	(ii)	securities issued by the Company or its Subsidiaries that (A) (x) have no maturity or a maturity of at least 60 years and (y) is subject to Intent-Based Replacement Disclosure and (B) have an Optional Deferral Provision;
	(iii)	securities issued by the Company or its Subsidiaries that (A) have no maturity or a maturity of at least 60 years and (B) are Non-Cumulative;
	(iv)	securities issued by the Company or its Subsidiaries that (A) (x) have no maturity or a maturity of at least 40 years and (y) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant and (B) have an Optional Deferral Provision;
	(v)	securities issued by the Company or its Subsidiaries that (A) either (x) have no maturity or a maturity of at least 40 years and are subject to Intent-Based Replacement Disclosure or (y) have no maturity or a maturity at least 25 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant and (B) are Non-Cumulative; or
	(vi)	securities issued by the Company or its Subsidiaries that (A) have an Optional Deferral Provision, (B) have a Mandatory Trigger Provision, (C) have no maturity or a maturity of more than 30 years and (D) are subject to Intent-Based Replacement Disclosure.

“Qualifying Non-Cumulative Perpetual Preferred Stock” means non-cumulative Preference Ordinary Shares of the Company that rank pari passu with or junior to all other Preference Ordinary Shares of the Company, is perpetual and (a) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or an Other Qualifying Capital Replacement Covenant or (b) is subject to both (i) mandatory suspension of dividends in the event the Company breaches certain financial metrics specified within the offering documents, and (ii) Intent-Based Replacement Disclosure. Additionally, the transaction documents shall provide for no remedies as a consequence of non-payment of Distributions other than Permitted Remedies.

“Qualifying Warrants” means any net share settled warrants to purchase the Company’s Ordinary Shares that (1) have an exercise price greater than the current stock market price, determined as specified in the instrument governing such warrants, of the Company’s Ordinary Shares, and (2) the Company is not entitled to redeem for cash and the holders of which are not entitled to require the Company to purchase for cash in any circumstances.

“RCC Termination Date” means April 15, 2047.

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“Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest of (a) the date that is two years prior to the final maturity date of such Covered Debt, (b) if the Company elects to redeem or repay, or the Company or a Subsidiary of the Company elects to purchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such redemption, repayment or purchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption, repayment or purchase date and (c) if such Covered Debt is not Eligible Subordinated Debt, the date on which the Company issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.

“Replacement Capital Covenant” has the meaning specified in the introduction to this instrument.

“Replacement Capital Securities” means:

(a)	Ordinary Shares and Qualifying Warrants;
(b)	Mandatorily Convertible Preferred Stock;
(c)	Debt Exchangeable for Preferred Equity;
(d)	Debt Exchangeable for Common Equity; and
(e)	Qualifying Capital Securities.

“Series E Preference Shares” has the meaning specified in Recital A.

“Subsidiary” means, at any time, any Person the shares of stock or other ownership interests of which having ordinary voting power to elect a majority of the board of directors or other managers of such Person are at the time owned, or the management or policies of which are otherwise at the time controlled, directly or indirectly through one or more intermediaries (including other Subsidiaries) or both, by another Person.

“Termination Date” has the meaning specified in Section 4(a).

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