FISCAL AGENCY AGREEMENT

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                                                                     Exhibit 4.2

                             FISCAL AGENCY AGREEMENT

                                     between

                                RAM HOLDINGS LTD.
                                       and

                              THE BANK OF NEW YORK,
                                 as Fiscal Agent

                           dated as of March 26, 2004

                                    regarding

                $40,000,000 6.875% Senior Notes due April 1, 2024

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS......................................................    1

SECTION 1.1.     Definitions...............................................    1
SECTION 1.2.     Rules of Construction.....................................    9

ARTICLE II THE NOTES.......................................................    9

SECTION 2.1.     Form......................................................    9
SECTION 2.2.     Execution and Authentication..............................   10
SECTION 2.3.     Registrar, Paying Agent, Depository and Custodian.........   10
SECTION 2.4.     Payment on Notes..........................................   11
SECTION 2.5.     Noteholder Lists..........................................   12
SECTION 2.6.     Replacement Notes.........................................   12
SECTION 2.7.     Outstanding Notes.........................................   12
SECTION 2.8.     Treasury Notes............................................   13
SECTION 2.9.     Cancellation..............................................   13
SECTION 2.10.    Person Deemed Owner.......................................   13
SECTION 2.11.    CUSIP Numbers.............................................   13
SECTION 2.12.    Payments Free and Clear of Taxes..........................   14

ARTICLE III TRANSFER, EXCHANGE AND REDEMPTION; TRANSFER RESTRICTIONS.......   15

SECTION 3.1.     Transfer and Exchange.....................................   15
SECTION 3.2.     Optional Redemption.......................................   20
SECTION 3.3.     ERISA Restrictions........................................   22

ARTICLE IV COVENANTS.......................................................   23

SECTION 4.1.     Payment of Principal and Interest.........................   23
SECTION 4.2.     Rule 144A and Other Information...........................   23
SECTION 4.3.     Limitation on Liens.......................................   23

ARTICLE V EVENTS OF DEFAULT................................................   23

ARTICLE VI REMEDIES........................................................   25

SECTION 6.1.     Acceleration..............................................   25
SECTION 6.2.     Other Remedies............................................   25
SECTION 6.3.     Rescission................................................   25
SECTION 6.4.     No Waivers or Election of Remedies, Expenses, Etc.........   26

ARTICLE VII FISCAL AGENT...................................................   26

SECTION 7.1.     Duties of Fiscal Agent....................................   26
SECTION 7.2.     Rights of Fiscal Agent....................................   26
SECTION 7.3.     Individual Rights of Fiscal Agent.........................   28
SECTION 7.4.     Fiscal Agent's Disclaimer.................................   28
SECTION 7.5.     Compensation and Indemnity................................   28
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<TABLE>
<S>                                                                           <C>
SECTION 7.6.     Replacement of Fiscal Agent...............................   29
SECTION 7.7.     Successor Fiscal Agent, Agent by Merger, Etc..............   29
SECTION 7.8.     Eligibility...............................................   30

ARTICLE VIII AMENDMENTS, SUPPLEMENTS AND WAIVERS...........................   30

SECTION 8.1.     Without Consent of Noteholders............................   30
SECTION 8.2.     With Consent of Noteholders...............................   30
SECTION 8.3.     Revocation and Effect of Consents.........................   31
SECTION 8.4.     Notation on or Exchange of Notes..........................   32
SECTION 8.5.     Fiscal Agent to Sign Amendments Etc.......................   32

ARTICLE IX MEETING OF NOTEHOLDERS..........................................   32

SECTION 9.1.     Purposes for Which Meetings May Be Called.................   32
SECTION 9.2.     Call, Notice and Place of Meetings........................   32
SECTION 9.3.     Persons Entitled to Vote at Meetings......................   33
SECTION 9.4.     Quorum....................................................   33
SECTION 9.5.     Action by Written Consent.................................   33
SECTION 9.6.     Determination of Voting Rights; Conduct and Adjournment
                 of Meetings...............................................   33
SECTION 9.7.     Counting Votes and Recording Action of Meetings...........   34

ARTICLE X MISCELLANEOUS....................................................   34

SECTION 10.1.    Notices...................................................   34
SECTION 10.2.    Tax Information...........................................   35
SECTION 10.3.    Governing Law; Jury Trial.................................   35
SECTION 10.4.    No Recourse Against Others................................   36
SECTION 10.5.    Duplicate Originals; Counterparts.........................   36
SECTION 10.6.    Headings and Table of Contents............................   36
SECTION 10.7.    Successor and Assigns.....................................   36
SECTION 10.8.    Separability..............................................   36
SECTION 10.9.    Legal Holidays............................................   36
SECTION 10.10.   Force Majeure.............................................   36
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     FISCAL AGENCY AGREEMENT dated as of March 26, 2004, between RAM HOLDINGS
LTD., a limited liability company organized under the laws of Bermuda (the
"Company"), and THE BANK OF NEW YORK, a New York banking corporation, as Fiscal
Agent (together with any permitted successor Fiscal Agent hereunder, the "Fiscal
Agent").

     Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Company's 6.875% unsecured
senior notes due 2024 (the "Notes"):

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.1. Definitions.

     In this Agreement, unless the context otherwise requires:

     "Agent" means any Registrar, Paying Agent, Co-Registrar or Custodian.

     "Agreement" means this Agreement, as amended or supplemented from time to
time.

     "Authenticating Agent" means the Fiscal Agent, in its capacity as
Authenticating Agent.

     "Authorized Officer" means any officer or assistant officer of the Fiscal
Agent assigned by the Fiscal Agent to administer the transactions contemplated
hereby.

     "Backstop Facility" means a credit agreement or other contractual
arrangement which provides (i) for advances thereunder if one or more parties to
a Soft Capital Facility shall fail to make an advance under such Soft Capital
Facility and (ii) that recourse for the obligations incurred thereunder are
limited to the collateral securing such Soft Capital Facility.

     "Beneficial Holder" means each participant in the Depository that holds an
interest in a Note, as indicated in the Participant List.

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions are authorized or required by law or executive
order to close in New York, New York or in Hamilton, Bermuda.

     "Closing Date" means March 26, 2004.

     "Code" means the United States Internal Revenue Code of 1986, as amended
from time to time. Any reference to a particular section of the Code shall
include any successor Code section.

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     "Company Order" means any request, instruction, order or directive signed
by an authorized signatory of the Company.

     "Contingent Capital Facility" means a facility which provides a pool of
capital which may be drawn upon by the Company or any Subsidiary at its option
in connection with the purchase of either Debt or preferred stock issued by the
Company or any Subsidiary.

     "Consolidated Net Worth" means the combined shareholders' equity of the
Guarantor, the Company and its Subsidiaries as determined in accordance with
U.S. GAAP.

     "Co-Registrar" has the meaning set forth in Section 2.3(a).

     "Custodian" has the meaning set forth in Section 2.1(b).

     "Debt" of any Person means, all obligations of such Person for borrowed
money (including obligations of such Person evidenced by bonds, debentures,
notes or similar instruments).

     "Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

     "Default Rate" means the rate of interest that is 2% per annum above the
Stated Rate.

     "Definitive Note" has the meaning set forth in Section 2.1(a).

     "Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.3 as the Depository
with respect to the Global Notes, until a successor shall have been appointed
and becomes such pursuant to the applicable provisions of this Agreement, and,
thereafter, "Depository" shall mean such successor.

     "DTC" means The Depository Trust Company.

     "Event of Default" has the meaning set forth in Article V.

     "Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.

     "Existing Credit Agreements" means the Credit Agreement, dated as of May
11, 1999, among RAM Re, various banks and Norddeutsche Landesbank Girozentrale,
New York Branch, as Agent, as amended, restated or replaced from time to time.

     "Global Note" has the meaning set forth in Section 2.1(a).

     "Guarantor" means RAM Holdings II Ltd., as guarantor pursuant to the
Guaranty.


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     "Guaranty" means the guaranty by Holdings II in favor of the Holders, dated
as of March 26, 2004.

     "Guaranty Event of Default" has the meaning set forth in the Guaranty.

     "Holdings II" means RAM Holdings II Ltd., a limited liability company
organized under the laws of Bermuda.

     "Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.

     "Interest Payment Date" means each April 1st and October 1st, commencing
October 1, 2004.

     "Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, or on
such asset, and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
related to such asset.

     "Liquidity Facility" means unsecured lines of credit that provide any
Subsidiary with liquidity to pay claims in respect of financial guaranty
insurance policies or to meet other operating short-term cash short-falls that
may occur in the ordinary course of business.

     "Make-Whole Amount" has the meaning set forth in Section 3.2(a).

     "material" means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.

     "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries, taken as a whole, or (b) the ability of the
Company to perform its obligations under the Transaction Documents, or (c) the
validity or enforceability of the Transaction Documents.

     "Maturity Date" means April 1, 2024.

     "Notes" has the meaning set forth in the second paragraph hereof.

     "Officer" means any of the Chairman, President, Chief Executive Officer,
Chief Financial Officer, Managing Director Finance or Senior Vice President of
the Company.

     "Officer's Certificate" means a certificate signed by an Officer.

     "Opinion of Counsel" means a written opinion from the general counsel of
the Company.


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     "Outstanding Notes" means, at any given point in time, the Notes
outstanding at such time as determined in accordance with Section 2.7.

     "Participant List" means the list furnished by the Depository showing
participants that have a beneficial interest in the Notes evidenced by any
Global Note held by the Depository and the amount of such interest. If DTC is
the Depository, then the Participant List shall be the DTC Security Position
Listing Report furnished by DTC showing DTC participants that have a beneficial
interest in the Notes evidenced by any Global Note held by DTC and the amount of
such interest.

     "Paying Agent" has the meaning set forth in Section 2.3(b).

     "Payment Date" means an Interest Payment Date, Maturity Date or Redemption
Date, as the context requires.

     "Permitted Liens" means:

     (i)  Liens for taxes, assessments or other governmental charges that are
          not yet due and payable or the payment of which are being contested in
          good faith and by appropriate proceedings and adequate reserves with
          respect thereto are maintained on the books of the Company;

     (ii) Liens to secure statutory obligations (including obligations under
          workers compensation, unemployment insurance and other social welfare
          legislation), incurred in the ordinary course of business and not in
          connection with the borrowing of money;

     (iii) easements, rights-of-way, restrictions and similar encumbrances
          incurred in the ordinary course of business and subleases, leases, and
          statutory liens of landlords which are not material in amount and do
          not detract from the value of the properties of the Company or
          interfere with the ordinary conduct of business of the Company;

     (iv) Liens in respect of property or assets of the Company imposed by law,
          which are incurred in the ordinary course of business, such as
          carriers, warehousemen's and mechanics' Liens, Liens on insurance
          license security deposits and other similar Liens arising in the
          ordinary course of business and not in connection with borrowing money
          and (a) which do not in the aggregate materially detract from the
          value of the properties of the Company, taken as a whole, or (b) which
          are being contested in good faith by appropriate proceedings, which
          proceedings have the effect of preventing the forfeiture or sale of
          the property or assets subject to such Lien;

     (v)  Liens on assets in any trust established for the benefit of
          reinsurance cedents;


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     (vi) Liens on cash and securities incurred as part of the management of the
          investment portfolios of the Company and its Subsidiaries in the
          ordinary course of business;

     (vii) Liens arising in the ordinary course of business on operating
          accounts (including any related securities accounts) maintained by the
          Company or any of its Subsidiaries in the ordinary course of business;

     (viii) Liens incurred pursuant to security arrangements in connection with
          insurance and reinsurance polices;

     (ix) Attachments, judgments and other similar Liens, provided that the
          execution or enforcement of such Lien is stayed, contested in good
          faith and bonded;

     (x)  Liens existing on the Closing Date;

     (xi) Liens securing Debt of the Company or any Subsidiary under the
          Existing Credit Agreements, any Soft Capital Facility and any Backstop
          Facility;

     (xii) Liens securing Debt under Contingent Capital Facilities;

     (xiii) Liens securing Liquidity Facilities in an aggregate amount not in
          excess of the greater of $60,000,000 and 30% of Consolidated Net
          Worth;

     (xiv) Liens securing other credit facilities entered into by the Company or
          any of its Subsidiaries from time to time in order solely to provide
          support for a specified transaction or transactions in which
          obligations are insured or reinsured by the Company or any of its
          Subsidiaries under an insurance policy or contract selling or
          providing protection, provided that such Liens in respect of each such
          transaction are limited to the interests of the Company or such
          Subsidiary in connection with such transaction;

     (xv) Liens incurred after the Closing Date given to secure the payment of
          the purchase price incurred in connection with the acquisition,
          construction or improvement of property useful and intended to be used
          in carrying on the business of the Company, including Liens existing
          on such property at the time of acquisition or construction thereof
          (or created within 180 days after such acquisition), provided that (a)
          the Lien shall attach solely to the property acquired, purchased,
          constructed or improved; (b) at the time of acquisition, construction
          or improvement of such property, the aggregate amount remaining unpaid
          on all Debt secured by Liens on such property, whether or not assumed
          by the Company or a


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          Subsidiary, shall not exceed the cost of such acquisition,
          construction or improvement; and (c) at the time of such incurrence
          and after giving effect thereto, no Default or Event of Default would
          exist;

     (xvi) any Lien existing on property of a Person immediately prior to its
          being consolidated with or merged into the Company, or any Lien
          existing on any property acquired by the Company at the time such
          property is so acquired (whether or not the Debt secured thereby shall
          have been assumed), provided that (a) no such Lien shall have been
          created or assumed in contemplation of such consolidation or merger or
          such acquisition of property, (b) each such Lien shall extend solely
          to the item or items of property so acquired and, if required by the
          terms of the instrument originally creating such Lien, other property
          which is an improvement to or is acquired for specific use in
          connection with such acquired property, and (c) at the time of such
          incurrence and after giving effect thereto, no Default or Event of
          Default would exist;

     (xvii) in addition to the Liens permitted by the preceding subparagraphs
          (i) through (xvi), Liens securing Debt of the Company, provided that
          the aggregate principal amount of Debt secured by Liens pursuant to
          this clause shall not exceed the greater of $30,000,000 and 10% of
          Consolidated Net Worth; and

     (xviii) any extension, renewal or replacement of any Lien permitted by the
          foregoing, provided, that no additional property (other than a
          substitution of like property) shall be encumbered thereby unless such
          additional Lien on such property would have been permitted in
          connection with the original creation, incurrence or assumption of
          such Lien.

     "Permitted Corporate Transaction" means the consolidation, amalgamation or
merger by the Company with any other Person or the conveyance, transfer or lease
by the Company of substantially all of the assets of the Company in a single
transaction or series of transactions to any other Person; provided that:

     (i)  the successor formed by such consolidation or amalgamation or the
          survivor of such merger or the Person that acquires by conveyance,
          transfer or lease substantially all of the assets of the Company as an
          entirety (the "Successor Corporation"), shall be a solvent
          corporation, partnership or trust organized and existing under the
          laws of the United States of America, any State thereof, the District
          of Columbia or Bermuda;

     (ii) if the Company is not the Successor Corporation, such Successor
          Corporation shall have executed and delivered to each Holder its


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          assumption of the due and punctual performance and observance of each
          covenant and condition of this Agreement and the Notes; provided,
          however, to the extent that the Successor Corporation is legally bound
          under Bermuda law to assume the obligations under this Agreement and
          the Notes pursuant to an amalgamation, such assumption shall not be
          required; and

     (iii) immediately after giving effect to such transaction no Default or
          Event of Default would exist.

     "Permitted Holdings II Transaction" means the consolidation or merger or
amalgamation by the Guarantor with any other corporation or the conveyance,
transfer or lease by the Guarantor of substantially all assets of the Guarantor,
as the case may be, in a single transaction or series of transactions to any
other Person; provided that:

     (i)  the successor formed by such consolidation or amalgamation or the
          survivor of such merger or the Person that acquires by conveyance,
          transfer or lease substantially all of the assets of the Guarantor as
          an entirety, as the case may be (the "Successor Guarantor"), shall be
          a solvent corporation organized and existing under the laws of the
          United States of America, any State thereof, the District of Columbia
          or Bermuda;

     (ii) if the Guarantor is not the Successor Guarantor, such Successor
          Guarantor shall have executed and delivered to each Holder its
          assumption of the due and punctual performance and observance of each
          covenant and condition of the Guaranty; provided, however, to the
          extent that the Successor Guarantor is legally bound under Bermuda law
          to assume the obligations under the Guaranty pursuant to an
          amalgamation, such assumption shall not be required; and

     (iii) immediately after giving effect to such transaction no default under
          the Guaranty or Guaranty Event of Default would exist.

     "Person" means any individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization or a government or
agency or political subdivision thereof.

     "Plan" has the meaning set forth in Section 3.3.

     "Purchase Agreement" has the meaning set forth in Section 2.1(a).

     "Purchaser" means the Purchaser named in the Purchase Agreement.

     "QIB" means a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act.


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     "RAM Re" means RAM Reinsurance Company Ltd., a Subsidiary of the Company.

     "Record Date" means with respect to an Interest Payment Date, the March 15
or September 15 next preceding such Interest Payment Date.

     "Redemption Date" has the meaning set forth in Section 3.2(a).

     "Registrar" has the meaning set forth in Section 2.3(a).

     "Register" means the register of the Notes maintained pursuant to Section
2.3.

     "Responsible Officer" means any named executive officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

     "Restricted Note" means any Note that bears or is required to bear the
legend set forth in Section 3.1.

     "Rule 144A" has the meaning set forth in Section 2.1(a).

     "Rule 144A Information" has the meaning set forth in Section 4.2.

     "Securities Act" means the United States Securities Act of 1933, as amended
from time to time.

     "Significant Subsidiary" means each Subsidiary of the Company in which (i)
the Company has a direct or indirect equity ownership interest in the shares of
capital stock of such Subsidiary, and (ii) the Company's direct and indirect
equity interests in and advances to such Subsidiary constitute 25% or more of
the total assets of the Company and its Subsidiaries on a combined basis.

     "Soft Capital Facility" means credit agreements and other contractual
arrangements which (i) are similar to the Existing Credit Agreements, (ii)
contractually transfer a portion of the risk of loss under insured obligations
from the Company and its Subsidiaries to a third party, and (iii) provide that
recourse for any advance made thereunder is limited to the premiums, collateral
and proceeds of collateral securing the insured obligations in respect of which
such advance shall have been made.

     "Stated Rate" means a rate of interest equal to 6.875% per annum.

     "Subsidiary" means, as to any Person, any corporation, association, or
other business entity in which at least a majority of the outstanding voting
securities shall be beneficially owned, directly or indirectly, by such Person.
The term "Subsidiary" shall mean a Subsidiary of the Company.

     "U.S. GAAP" means those generally accepted accounting principles as in
effect from time to time in the United States. U.S. GAAP currently requires that
the


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Company's financial statements be presented on a combined rather than
consolidated basis.

     SECTION 1.2. Rules of Construction. In this Agreement, unless the context
otherwise requires:

          (i) the words "herein," "hereof" and "hereunder" and other words of
     similar import refer to this Agreement and the forms of Note included as
     exhibits hereto as a whole, and not any particular Article, Section or
     other subdivision;

          (ii) words in the singular include the plural, and words in the plural
     include the singular;

          (iii) provisions apply to successive events and transactions; and

          (iv) any reference to a party includes its permitted successors from
     time to time.

                                   ARTICLE II

                                    THE NOTES

     SECTION 2.1. Form. (a) The Notes are being offered and sold by the Company,
pursuant to a Note Purchase Agreement, dated March 23, 2004 (the "Purchase
Agreement"), between the Company and the Purchaser, which Notes will be in fully
registered form without coupons. The Notes may be represented by registered
notes in global form ("Global Notes") or notes in certificated form registered
in the name of an individual purchaser or its nominee ("Definitive Notes"). The
Definitive Notes shall be substantially in the form attached as Exhibit A
hereto. The Global Note shall be substantially in the form attached as Exhibit
B. Any applicable legends for the Notes shall be provided in Exhibit A and
Exhibit B, as applicable.

     (b) Each Note sold by the Purchaser in an initial resale to a QIB in
reliance on Rule 144A ("Rule 144A") under the Securities Act shall be
represented by one or more permanent Global Notes, with such legends applicable
to such form of Note as are applicable to Global Notes included thereon. Each
such Global Note shall be deposited with a Person (which may be the Fiscal
Agent) appointed by the Company to act as custodian for the Depository (the
"Custodian") and registered in the name of the Depository or nominee thereof.

     (c) Each Global Note shall represent such of the Outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of Outstanding Notes from time to time endorsed thereon and that the
aggregate amount of Outstanding Notes represented thereby may, from time to
time, be increased or reduced to reflect transfers or exchanges. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the amount
of Outstanding Notes represented thereby shall be made by the Fiscal Agent or
the Custodian, at the direction of the Fiscal Agent, in such manner and upon
instructions given by the Holder thereof. Payment of


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any interest on any Global Note shall be made to the Holder thereof as of the
close of business on the relevant Record Date.

     (d) The Notes may have notations, legends or endorsements required by law,
securities exchange rule or usage. Each Note shall be dated the date of its
authentication.

     (e) The Notes shall be issuable in minimum denominations of $100,000 and
any amount in excess thereof that is an integral multiple of $1,000.

     SECTION 2.2. Execution and Authentication. (a) Any two Officers shall sign
the Notes on behalf of the Company by manual or facsimile signature.

     (b) If an Officer whose signature is on a Note no longer holds that office
at the time the Note is authenticated, the Note shall nevertheless be valid.

     (c) A Note shall not be valid until authenticated by the manual signature
of an Authorized Officer of the Fiscal Agent. The Fiscal Agent's signature shall
be conclusive evidence that the Note has been authenticated under this
Agreement.

     (d) The Fiscal Agent shall authenticate the Notes for original issue in the
aggregate principal amount of $40,000,000 upon a written order of the Company
signed by any two Officers. The aggregate principal amount of Outstanding Notes
at any time may not exceed the sum of (i) $40,000,000, and (ii) the principal
amount of lost, destroyed or stolen Notes for which replacement Notes are issued
pursuant to Section 2.6.

     (e) The Fiscal Agent is hereby appointed as the Authenticating Agent to
authenticate Notes. The Authenticating Agent may authenticate Notes whenever the
Fiscal Agent may do so, other than upon original issuance or pursuant to Section
2.6. Each reference in this Agreement to authentication by the Fiscal Agent
includes authentication by such agent. The Authenticating Agent has the same
rights as an Agent to deal with the Company.

     SECTION 2.3. Registrar, Paying Agent, Depository and Custodian. (a) The
Company shall appoint itself or another Person to maintain an office or agency
where Notes may be presented for registration of transfer or exchange (the
Company or such other Person being referred to, in such capacity, as the
"Registrar"); provided, however, that the Company shall at all times maintain an
office of the Registrar in the Borough of Manhattan, The City of New York. As
set forth in Article IV hereof, the Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-Registrars (each, a "Co-Registrar") and may act as Co-Registrar. The Company
initially appoints the Fiscal Agent to act as Registrar.

     (b) The Company shall appoint itself or another Person to maintain an
office or agency where Notes may be presented for payment (the Company or such
other Person being referred to, in such capacity, as the "Paying Agent"). The
term "Paying Agent" includes any additional paying agent. The Company initially
appoints the Fiscal Agent to act as Paying Agent.


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     (c) The Company shall appoint one or more other Persons to act as
depository (the "Depository") with respect to any Global Notes. The Company
initially appoints DTC to act as Depository with respect to the Global Notes. As
set forth in Section 3.1(d), the Company may, in certain circumstances, appoint
a successor Depository or determine that the Notes issued in the form of Global
Notes shall no longer be represented by such Global Notes.

     (d) The Company shall appoint itself or one or more other Persons to act as
Custodian with respect to any Global Note. The Company initially appoints the
Fiscal Agent to act as Custodian with respect to the Global Notes.

     (e) The Company shall notify the Fiscal Agent of the name and address of
the Depository and of any Agent not a party to this Agreement, and shall give
the Fiscal Agent at least 30 days' notice prior to changing the Depository or
any such Agent.

     SECTION 2.4. Payment on Notes. (a) The Company shall use its best efforts
to provide to the Paying Agent, in immediately available funds on or prior to
10:00 a.m., New York time, on each Interest Payment Date or the applicable
Maturity Date or Redemption Date, such amount, in U.S. dollars, as is necessary
to make such payment as is due, and the Company hereby authorizes and directs
the Paying Agent from funds so provided to it to make or cause to be made
payment of the principal of and interest on, and Make-Whole Amount with respect
to, the Notes in the manner, at the times and for the purposes set forth herein
and in the text of the Notes; provided that any payment of interest on the Notes
may be made on the Payment Date by check mailed to the Noteholders as of the
close of business on the relevant Record Date. Payments of interest on or
principal of, and any Make-Whole Amount with respect to, the Notes may be made,
in the case of a Noteholder of at least $5,000,000 aggregate principal amount of
Notes, by electronic funds transfer providing immediately available funds on the
Payment Date to an account maintained by the payee with a bank if such
Noteholder so elects by giving written notice to the Paying Agent, not less than
15 days prior to the date on which such payments are scheduled to be made, of
such election and of the account to which payment is to be made. Unless such
designation is revoked not less than 15 days prior to a Payment Date, any such
designation made by such Noteholder with respect to such Notes shall remain in
effect with respect to any future payments with respect to the Notes payable to
such Noteholder. The Company shall pay any reasonable administrative costs in
connection with making any such payments. Any monies held in respect of the
Notes remaining unclaimed at the end of two years after such amounts shall have
become payable (whether at the Maturity Date, Redemption Date or otherwise) and
monies sufficient therefor shall have been duly made available for payment
shall, together with any interest made available for payment thereon, be repaid
to the Company upon written request and upon such repayment all liability of the
Fiscal Agent with respect thereto shall cease, without, however, limiting in any
way any obligation the Company may have to pay principal of and interest on the
Notes and any Make-Whole Amount.

     (b) Interest will continue to accrue at (i) the Stated Rate on any unpaid
principal, and (ii) to the extent permitted by applicable law, the Default Rate
on any


                                       11

<PAGE>

payment of interest which is not punctually paid or duly provided for on the
applicable Interest Payment Date, in each case to, but not including, the date
of actual payment.

     (c) The Company shall require each Paying Agent other than the Fiscal Agent
to agree in writing that the Paying Agent will hold in trust for the benefit of
Noteholders or the Fiscal Agent all money held by the Paying Agent for the
payment of principal of or interest on, or the Make-Whole Amount with respect
to, the Notes, and will notify the Fiscal Agent of any failure by the Company to
make any such payment. Until any such failure has been remedied, the Fiscal
Agent may require a Paying Agent to pay all money held by it to the Fiscal
Agent. In the event the Company wishes to terminate the Fiscal Agent's
appointment as Paying Agent, the Company shall provide 30 days' prior written
notice to the Fiscal Agent that the Fiscal Agent's appointment to act as Paying
Agent is so terminated and the Fiscal Agent may rely on such notice. The Company
at any time may require a Paying Agent to pay all money held by the Paying Agent
to the Fiscal Agent. Upon doing so the Paying Agent shall have no further
liability for the money so paid.

     SECTION 2.5. Noteholder Lists. The Fiscal Agent shall preserve, in as
current a form as is reasonably practicable, a list of names and addresses of
Noteholders. If the Fiscal Agent is not the Registrar, the Company shall cause
the Registrar to furnish to the Fiscal Agent not less than five Business Days
prior to each Interest Payment Date and at such other times as the Fiscal Agent
may request in writing a list of the names and addresses of Noteholders in such
form and as of such date as the Fiscal Agent may reasonably require.

     SECTION 2.6. Replacement Notes. If any Note shall be mutilated, destroyed,
lost or stolen, the Company shall, upon the written request of the Holder of
such Note, issue and execute, and the Fiscal Agent shall authenticate and make
available for delivery, in replacement thereof, a replacement Note payable to
such Noteholder and in the same principal amount as the Note so mutilated,
destroyed, lost or stolen. If the Note being replaced has become mutilated, the
Noteholder shall surrender such Note to the Fiscal Agent to save harmless the
Company and the Fiscal Agent. If the Note has been destroyed, lost or stolen,
the Holder of such Note shall furnish to the Company and the Fiscal Agent (i)
satisfactory evidence of such Noteholder's ownership of such Note, (ii)
satisfactory evidence of the destruction, loss or theft of such Note, and (iii)
such security or indemnity as may be required by the Company and the Fiscal
Agent to save harmless the Company and the Fiscal Agent. Upon the issuance of a
replacement Note pursuant to this Section, the Noteholder requesting such
replacement Note shall pay to the Fiscal Agent a sum sufficient to cover any
transfer tax or governmental charge payable in connection with the issuance of
such replacement Note. Any Note issued pursuant to this Section shall be
registered with the Registrar.

     Every replacement Note shall be an obligation of the Company.

     SECTION 2.7. Outstanding Notes. (a) The Notes deemed to be outstanding at
any time are only those Notes authenticated by the Fiscal Agent (or an
authenticating agent appointed pursuant to Section 2.2) except for those
cancelled by the Fiscal Agent,


                                       12

<PAGE>

those delivered to the Fiscal Agent for cancellation, those reductions in the
interests in a Global Note effected by the Fiscal Agent hereunder, and those
described in this Section as not outstanding.

     (b) A Note does not cease to be outstanding because the Company holds the
Note.

     (c) If a Note is replaced pursuant to Section 2.6, it ceases to be
outstanding unless the Fiscal Agent receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

     (d) Notes are not outstanding which have been called for redemption in
accordance with Section 4.2 or which otherwise have become payable at the
Maturity Date and, in each case, monies sufficient to pay the principal thereof,
any interest thereon and the Make-Whole Amount with respect thereto have been
paid.

     SECTION 2.8. Treasury Notes. In determining whether the Noteholders of the
required principal amount of Outstanding Notes have concurred in any direction,
waiver or consent, Notes owned by the Company or any subsidiary or affiliate of
the Company shall be disregarded, except that for the purposes of determining
whether the Fiscal Agent shall be protected in relying on any such direction,
waiver or consent, only Notes which an Authorized Officer of the Fiscal Agent
actually knows are so owned by the Company or any subsidiary or affiliate of the
Company shall be so disregarded.

     SECTION 2.9. Cancellation. The Company at any time may deliver Notes to the
Fiscal Agent for cancellation. The Registrar and Paying Agent shall promptly
forward to the Fiscal Agent any Notes surrendered to them for registration of
transfer, exchange or payment. The Fiscal Agent shall cancel all Notes
surrendered for registration of transfer, exchange, payment or cancellation and
shall dispose of such cancelled Notes in accordance with its customary
procedures. The Company may not issue new Notes to replace Notes that it has
paid or delivered to the Fiscal Agent for cancellation.

     SECTION 2.10. Person Deemed Owner. Prior to due presentment for
registration of transfer, the Company, the Fiscal Agent, the Authenticating
Agent, if any, and any Agent may treat the Person in whose name a Note is
registered on the Registrar's books as the owner of such Note for the purpose of
receiving payment of principal of, interest on, and the Make-Whole Amount with
respect to, such Note and for all other purposes whatsoever, and neither the
Company, the Fiscal Agent, the Authenticating Agent, nor any other Agent shall
be affected by notice to the contrary.

     SECTION 2.11. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Fiscal Agent may use
"CUSIP" numbers in notices to Noteholders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption.
The Company will promptly notify the Fiscal Agent in writing of any change in
the CUSIP numbers.


                                       13

<PAGE>

     SECTION 2.12. Payments Free and Clear of Taxes. The Company will make all
payments of principal, interest and any other amounts on, or in respect of, the
Notes without withholding or deduction at source for, or on account of, any
present or future taxes, fees, duties, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of Bermuda or any other
jurisdiction in which the Company is organized or any other jurisdiction from
which or through which a payment is made by the Company (a "taxing
jurisdiction") or any political subdivision or taxing authority thereof or
therein, unless such taxes, fees, duties, assessments or governmental charges
are required to be withheld or deducted by (a) the laws (or any regulations or
rulings promulgated thereunder) of a taxing jurisdiction or any political
subdivision or taxing authority thereof or therein, or (b) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including, without limitation, a holding by a
court of competent jurisdiction or by a taxing authority in a taxing
jurisdiction or any political subdivision thereof). If a withholding or
deduction at source is required, the Company will, subject to certain
limitations and exceptions described below, pay to the Noteholder such
additional amounts as may be necessary so that every net payment of principal,
interest or any other amount made to such Noteholder, after the withholding or
deduction, will not be less than the amount provided for in such Note and
pursuant to the terms of this Agreement to be then due and payable. The Company
will not be required to pay any additional amounts for or on account of:

     (i)  any tax, fee, duty, assessment or governmental charge of whatever
          nature which would not have been imposed but for the fact that such
          holder (A) was a resident, domiciliary or national of, or engaged in
          business or maintained a permanent establishment or was physically
          present in, the relevant taxing jurisdiction or any political
          subdivision thereof or otherwise had some connection with the relevant
          taxing jurisdiction other than by reason of the mere ownership of, or
          receipt of payment under, or enforcement of claims under such Note,
          (B) presented such Note for payment in the relevant taxing
          jurisdiction or any political subdivision thereof, unless such Note
          could not have been presented for payment elsewhere without incurring
          taxes, or (C) presented such Note for payment more than 30 days after
          the date on which the payment in respect of such Note became due and
          payable or provided for, whichever is later, except to the extent that
          the holder would have been entitled to such additional amounts if it
          had presented such Note for payment on any day within that 30-day
          period;

     (ii) any estate, inheritance, gift, sale, transfer, personal property or
          similar tax, assessment or other governmental charge;

     (iii) any tax, assessment or other governmental charge that is imposed or
          withheld by reason of the failure by the holder or the beneficial
          owner of such Note to comply with any reasonable request by the
          Company addressed to the holder within 90 days of such request (such
          request to include any relevant form required to provide the following
          information or


                                       14

<PAGE>

          declaration in English) (A) to provide information concerning the
          nationality, residence or identity of the holder or such beneficial
          owner, or (B) to make any declaration or other similar claim or
          satisfy any information or reporting requirement, which is required or
          imposed by statute, treaty, regulation or administrative practice of
          the relevant taxing jurisdiction or any political subdivision thereof
          as a precondition to exemption from all or part of such tax,
          assessment or other governmental charge;

     (iv) any withholding or deduction required to be made pursuant to any EU
          Directive on the taxation of savings implementing the conclusions of
          ECOFIN Council meetings of 26-27 November 2000 or 3 June 2003 or any
          law implementing or complying with, or introduced in order to conform
          to, such EU Directive; or

     (v)  any combination of items (i), (ii), (iii) and (iv).

In addition, the Company will not pay additional amounts with respect to any
payment of principal, interest or any other amounts on, any such Note to any
Holder who is a fiduciary or partnership or other than the sole beneficial owner
of such Note to the extent such payment would be required by the laws of the
relevant taxing jurisdiction (or any political subdivision or relevant taxing
authority thereof or therein) to be included in the income for tax purposes of a
beneficiary or partner or settlor with respect to such fiduciary or a member of
such partnership or a beneficial owner who would not have been entitled to such
additional amounts had it been the Holder of the Note.

                                  ARTICLE III

            TRANSFER, EXCHANGE AND REDEMPTION; TRANSFER RESTRICTIONS

     SECTION 3.1. Transfer and Exchange. (a) When Definitive Notes are presented
to the Registrar with a request to register the transfer of such Definitive
Notes or to exchange such Definitive Notes for an equal principal amount of
Definitive Notes of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Definitive Notes surrendered
for registration of transfer or exchange (A) shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Noteholder thereof or its
attorney, duly authorized in writing, and (B) in the case of definitive
Restricted Notes only, shall be accompanied by the following additional
information and documents, as applicable:

               (i) if such definitive Restricted Note is being exchanged,
          without transfer, a certification from such Noteholder to that effect
          (in substantially the form of Exhibit C hereto); or


                                       15

<PAGE>

               (ii) if such definitive Restricted Note is being transferred to a
          QIB in accordance with Rule 144A or pursuant to an exemption from
          registration in accordance with Rule 144(k) under the Securities Act,
          certifications from the transferor and the transferee to that effect
          (in substantially the form of Exhibit C hereto).

To permit registrations of transfers and exchanges, the Company shall execute
and the Fiscal Agent (or an authenticating agent appointed pursuant to Section
2.2) shall authenticate and make available for delivery definitive Notes at the
Registrar's request, and upon written direction of the Company. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other governmental charge payable in connection with any registration of
transfer or exchange. All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Agreement, as the Notes
surrendered upon such registration of transfer or exchange.

     (b) Except as permitted by this Section 4.1(b), each certificate evidencing
the Global Notes and each of the Definitive Notes (and all securities issued in
exchange therefor or substitution thereof) shall bear a legend in substantially
the following form:

     THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF RAM HOLDINGS LTD. THAT
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO RAM HOLDINGS LTD. OR (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE, TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER", AS DEFINED IN RULE 144A (TOGETHER WITH ANY SUCCESSOR PROVISION THERETO,
AND AS MAY BE HEREAFTER AMENDED FROM TIME TO TIME, "RULE 144A") UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN A TRANSACTION IN
ACCORDANCE WITH RULE 144A, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAW OF
THE STATES OF THE UNITED STATES, SUBJECT IN EACH CASE TO ANY REQUIREMENT OF LAWS
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF ANY SUCH ACCOUNT OR
ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL. ANY RESALE OR OTHER
TRANSFER OF THIS NOTE WHICH IS PROPOSED TO BE MADE PURSUANT TO CLAUSE (B) ABOVE
SHALL REQUIRE THAT THE TRANSFEROR AND THE TRANSFEREE COMPLETE THE CERTIFICATE OF
TRANSFER APPEARING ON THE REVERSE OF THIS NOTE AND DELIVER SUCH CERTIFICATE OF
TRANSFER TO THE FISCAL AGENT UNDER THE FISCAL AGENCY AGREEMENT DATED AS OF MARCH
26, 2004 (THE "FISCAL AGENT").

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT IT IS ITS INTENT AND IT UNDERSTANDS
IT IS THE INTENT OF RAM HOLDINGS LTD., FOR PURPOSES OF UNITED STATES FEDERAL,
STATE AND LOCAL INCOME TAXES, THAT THE NOTES BE TREATED AS INDEBTEDNESS


                                       16

<PAGE>

OF RAM HOLDINGS LTD., AGREES TO SUCH TREATMENT AND AGREES TO TAKE NO ACTION
INCONSISTENT WITH SUCH TREATMENT.

     THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE ACT, AND MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM AND IN ACCORDANCE WITH THE FISCAL AGENCY
AGREEMENT DATED AS OF MARCH 26, 2004, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL CORPORATE TRUST OFFICE OF THE FISCAL AGENT. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A THEREUNDER.

     BY ITS ACCEPTANCE OF THE NOTES, EACH HOLDER OF THE NOTES SHALL BE DEEMED TO
HAVE REPRESENTED TO RAM HOLDINGS LTD. THAT SUCH HOLDER IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF PERSONS WHO
ARE QUALIFIED INSTITUTIONAL BUYERS.

Upon any request for registration of transfer of a Restricted Note (including
any Restricted Notes represented by a Global Note) made subsequent to the date
which is two years (or such period as may be required by Rule 144(k) under the
Securities Act, or any successor rule or regulation) after the later of (i) the
date of original issuance of the Notes, and (ii) the last date on which the
Company or an affiliate of the Company within the meaning of Rule 144 under the
Securities Act was the Noteholder of such Restricted Note and with respect to
which a certification substantially in the form of Exhibit C hereto is furnished
by the transferor, (a) in the case of any Definitive Restricted Note, the
Registrar shall permit the Noteholder thereof to exchange such Restricted Note
for Definitive Notes that do not bear the legend set forth above and such
request shall be effective to rescind any restriction on the further transfer of
such Note, and (b) any such Restricted Notes represented by a Global Note shall
not be subject to any restriction on transfer set forth above; and in each such
case, such Notes (whether in definitive or global form) shall no longer
constitute "Restricted Notes" for purposes of this Agreement. The Registrar (at
the direction of the Company) and the Company shall be entitled (but not
obligated) to require such additional certificates, opinions of counsel and
information as it may reasonably deem necessary to demonstrate that any sale or
other transfer of a Restricted Note is made in compliance with the applicable
restrictions set forth above and with applicable securities laws. The Company
shall give the Registrar written direction as to the additional information
which is necessary to evidence such compliance.

     (c) Notwithstanding any other provisions of this Agreement or the Notes, a
Global Note shall not be exchanged in whole or in part for a Note registered in
the name of any Person other than the Depository or a nominee thereof, provided
that a Global Note may be exchanged for Notes registered in the names of any
Person designated by


                                       17

<PAGE>

the Depository in the event that (i) the Depository has notified the Company
that it is unwilling or unable to continue as Depository for such Global Note
and the Company has not appointed a successor Depository within 60 days of
receiving such notice, or such Depository has ceased to be a "clearing agency"
registered under the Exchange Act, (ii) an Event of Default has occurred and is
continuing, (iii) the exchange is pursuant to a request made in accordance with
Section 3.1(f), or (iv) the Company, at its sole discretion, determines that the
Notes issued in the form of Global Notes shall no longer be represented by such
Global Notes. Any Global Note exchanged pursuant to clause (i) or (iv) above
shall be so exchanged in whole and not in part and any Global Note exchanged
pursuant to clause (ii) or (iii) above may be exchanged in whole or from time to
time in part as directed by the Depository. Any Note issued in exchange for a
Global Note or any portion thereof shall be a Global Note, provided that any
such Note so issued that is registered in the name of a Person other than the
Depository or a nominee thereof shall not be a Global Note.

     (d) If at any time the Depository for the Notes notifies the Company that
it is unwilling or unable to continue as Depository for the Notes, the Company
may within 60 days of receiving such notice appoint a successor Depository with
respect to the Notes.

     (e) If in accordance with Section 3.1(c), the Notes will no longer be
represented by Global Notes, the Company will execute, and the Fiscal Agent,
upon receipt of an Officer's Certificate for the authentication and delivery of
Definitive Notes by the Company, will authenticate and make available for
delivery, Notes in definitive form in an aggregate principal amount equal to the
principal amount of the Notes in global form, in exchange for such Notes in
global form. If a Definitive Note is issued in exchange for any portion of a
Global Note after the close of business at the office or agency where such
exchange occurs on any Record Date and before the opening of business at such
office or agency on the next succeeding Interest Payment Date, interest will not
be payable on such Interest Payment Date in respect of such Definitive Note, but
will be payable on such Interest Payment Date only to the Noteholder to whom
interest in respect of such portion of such Global Note is payable in accordance
with the provisions of this Agreement. Definitive Notes issued in exchange for a
Global Note pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Fiscal
Agent. Upon execution and authentication, the Fiscal Agent shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.

     (f) Any Person having a beneficial interest in Global Notes may upon
request exchange its interest in the Global Notes for a Definitive Note at any
time by giving at least 60 days' prior written notice to the Fiscal Agent in
accordance with the Depository's customary procedures; provided that such