Exhibit 3 (ii)

 

 

 

 

 

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                                    I N D E X

                                    ---------

 

Bye-Law              Subject

- -------              -------

 

1                    Share Capital

2                    Common Shares

3                    Authority of Board to Issue Shares and Divide Shares

                     Into Different Classes

4                    The Series B Shares

5                    Restrictions on Certain "Business Combinations"

6                    Employee Share Purchase

7                    Repurchase by Company of its Own Shares

8                    Trusts Not Recognised by Company

9                    Share Certificates

10                   Lost Share Certificates

11                   Certificates to be under Seal

12                   Register of Members

13-16                Transfer of Shares

17-19                Transmission of Shares

20-22                Increase of Capital

23                   Alteration of Capital

24-25                Reduction of Capital

26                   General Meetings

27-28                Notice of General Meetings

29-34                Proceedings at General Meetings

35                   Inspectors

36-47                Voting

48-53                Proxies and Corporate Representatives

54-56                Appointment and Removal of Directors

57                   Resignation and Disqualification of Directors

58                   Directors' Fees and Additional Remuneration and Expenses

59                   Directors' Interests

60                   Powers and Duties of the Board

61-66                Officers

67                   Compensation of Officers of the Company

68-71                Delegation of the Board's Powers

 

<PAGE>

 

72                   Proceedings of the Board

73-80                Telephonic Board Meetings

81                   Minutes

82-83                Secretary

84                   The Seal

85-91                Dividends and Other Payments

92                   Reserves

93-94                Capitalization of Profits

95                   Record Dates

96-98                Accounting Records

99                   Audit

100-101              Service of Notices and Other Documents

102                  Winding Up

103-106              Indemnity

107                  Alteration of Bye-Laws

108                  Registered Office

109                  Interpretation

 

<PAGE>

 

 

                                    BYE-LAWS

                                       of

                           MUTUAL RISK MANAGEMENT LTD.

 

                                  SHARE CAPITAL

 

 

1.   The authorised share capital of the Company is $23,551,835 divided into the

     following classes of shares:

 

     (i)  60,000,000 Common Shares of $0.01 each (the "Common Shares");

 

     (ii) 2,951,835 Series B Non-Voting Redeemable Preferred Shares of $0.01

          each (the "Series B Shares"); and;

 

     (iii) $20,000,000 of Preferred Shares of such par value (being not less

          than $0.01 each) as the Board shall determine pursuant to the terms of

          Bye-Law 3 hereof (the "Preferred Shares").

 

                                  COMMON SHARES

 

2.   (1)  At a general meeting of the Company every holder of Common shares

          shall, on a show of hands, be entitled to one vote, and on a poll,

          shall be entitled to one vote for every share held by him.

 

     (2)  The Board may in its discretion, at any time, and from time to time,

          issue or cause to be issued all or any part of the authorised but

          unissued Common Shares of the Company for consideration of such

          character and value as the Board shall in its absolute discretion from

          time to time fix or determine.

 

          AUTHORITY OF BOARD TO ISSUE AND DIVIDE PREFERRED SHARES INTO

                                DIFFERENT CLASSES

 

3.   (1)  The Board may in its discretion at any time, and from time to time,

          issue or cause to be issued all or any part of the authorised but

          unissued Preferred Shares of the Company for consideration of such

          character and value as the Board shall in its absolute discretion from

          time to time fix or determine.

 

     (2)  Without prejudice to the generality of (1) hereof, the Board is hereby

          further expressly authorised at any time, and from time to time, to

          divide any or all of the authorised but unissued Preferred Shares of

          the Company into several

 

<PAGE>

 

          classes, to consolidate or sub-divide and to set the par value of any

          of the unissued Preferred Shares, and in the resolution or resolutions

          establishing a particular series, before issuance of any of the shares

          thereof, to fix and determine the number of shares and the designation

          of such series, so as to distinguish it from the shares of all other

          series and classes, and to fix and determine the voting rights,

          preferences, qualifications, privileges, limitations, options,

          conversion rights, redemption features, restrictions, and other

          special or relative rights of such series. Each of such series may

          differ from every other series previously authorised, as may be

          determined by the Board in any or all respects, to the fullest extent

          now, or hereafter permitted by the laws of Bermuda including, but not

          limited to, the variations between different series in the following

          respects:

 

          (a)  the distinctive designation of such series and the number of

               shares which shall constitute such series, which number may be

               increased or decreased (but not below the number of shares

               thereof then outstanding) from time to time by the Board;

 

          (b)  the annual dividend or dividend rate for such series, and the

               date or dates from which dividends shall commence to accrue;

 

          (c)  the par value of the shares prior to issue, provided however,

               that the par value shall in no case be set at less than $0.01 per

               share;

 

          (d)  the price or prices at which, and the terms and conditions on

               which, if any, the shares of such series may be redeemed or made

               redeemable;

 

          (e)  the purchase or sinking fund provisions, if any, for the purchase

               or redemption of shares of such series;

 

          (f)  subject to the terms of Bye-Law 4 hereof, the preferential amount

               or amounts, if any, payable upon shares of such series in the

               event of the liquidation, dissolution, or winding up of the

               Company;

 

          (g)  the terms and conditions, if any, upon which shares of such

               series may be converted and the class or series of shares of the

               Company or other securities into which such shares may be

               converted;

 

          (h)  the relative seniority, priority or junior rank of such series as

               to dividends or assets in relation to any other classes or series

               of capital shares then or thereafter to be issued;

 

          (i)  such other terms, preferences, qualifications, privileges,

               limitations, options, restrictions, and other special rights, if

               any, of shares of such series as the Board may, at the time of

               such resolution or resolutions, lawfully fix or determine;

 

 

<PAGE>

 

          (j)  cancel shares which, at the date of the passing of the resolution

               in that behalf, have not been taken or agreed to be taken by any

               person;

 

          (k)  where any difficulty arises in regard to any division,

               consolidation, or sub-division under this Bye-Law, the Board may

               settle the same as it thinks expedient and, in particular, may

               arrange for the sale of the shares representing fractions and the

               distribution of the net proceeds of sale in due proportion

               amongst the Members who would have been entitled to the

               fractions, and for this purpose the Board may authorise some

               person to transfer the shares representing fractions to the

               purchaser thereof, who shall not be bound to see to the

               application of the purchase money nor shall his title to the

               shares be affected by any irregularity or invalidity in the

               proceedings relating to the sale.

 

 

                               THE SERIES B SHARES

 

4.   (1)  The Series B Shares shall confer on the holders thereof the right, in

          priority to the shares of any other class of the Company, to fixed

          cumulative preferential semi-annual dividends, payable on l5th

          February and l5th August in each year, commencing on 15th August 1987,

          at an annual rate which shall be computed on the par value of US$1.00

          per Series B Share equal to the six-months London Interbank Offered

          Rate ruling on the lst August, in the case of the semiannual dividend

          payable on 15th February and on lst January in the case of the

          semi-annual dividend payable on 15th August in each year, or if no

          such rate shall have been quoted on that date, on the next following

          date upon which such rate shall have been quoted. Provided that, if

          the aggregate amount of any semi-annual dividend payable to the

          holders of the Series B Shares shall be greater than an amount equal

          to the net profit (as hereinafter defined) of the Company for the

          first or second half (as the case may be) of its financial year ended

          immediately prior to the date for payment of such semi-annual

          dividend, then and in such event the aggregate amount of such dividend

          so payable may be reduced to an amount equal to the net profit of the

          Company established as aforesaid for the relevant half of its said

          financial year and the annual rate of such dividend shall be computed

          accordingly. Provided that, if on any date for the payment of a

          semi-annual dividend on the Series B Shares the Company shall either:

 

 

<PAGE>

 

          (a)  be permitted to pay a reduced semi-annual dividend for the reason

               hereinbefore in this paragraph described, or

 

          (b)  have insufficient moneys available to enable it to pay the

               semi-annual dividend without borrowing additional monies for the

               purpose, or

 

          (c)  if the Board shall, in its discretion, have decided that it is

               contrary to the interests of the Company to pay all or part of a

               semi-annual dividend on the due date for payment thereof, or that

               it is in the interests of the Company to transfer moneys

               otherwise available for payment of dividends to reserves created

               to meet one or more specified contingencies,

 

          any amount of semi-annual dividend unpaid shall accumulate, with

          interest at the rate hereinafter mentioned, and shall be added to the

          next semi-annual dividend payable thereafter and thenceforth until the

          same shall have been paid in full with interest as aforesaid and no

          dividend shall be paid on any share of any other class of the Company

          while any semi-annual dividend on the Series B Shares, or any part

          thereof, or any interest accrued thereon shall be in arrears and

          unpaid. Provided that the amount of any semi-annual dividend which

          shall be unpaid on the due date for payment thereof shall bear

          interest at the same rate as is applicable to the fixed cumulative

          preferential semi-annual dividends pursuant to paragraph 1 hereof,

          such interest to accrue from the said due date and be paid by the

          Company on the date of payment of the arrears of semi-annual dividend

          from which it shall have arisen.

 

     (2)  In the event that payment of all or any part of a semiannual dividend

          on the Series B Shares shall not be made on the due date for payment

          thereof by decision of the Board pursuant to sub-paragraph (c) of

          paragraph 1 hereof, and if, by subsequent decisions of the Board

          pursuant to the same sub-paragraph (c), payment thereof shall not have

          been made at the expiration of two years from the said due date, the

          discretions granted to the Board by the said sub-paragraph (c) shall

          ipso facto be vested in the holders of the Series B Shares, so that

          any decision to defer further the payment of the said semi-annual

          dividend shall be made only with the consent in writing of the holders

          of a majority of the Series B Shares, or with the sanction of a

          resolution passed at a separate general meeting of the holders of such

          shares and the Board shall, forthwith upon the expiry of the said

          period of two years, or upon the first date thereafter when the

          Company shall have funds lawfully available for the payment of such

          deferred

 

<PAGE>

 

          dividend and the moneys with which to pay the same, either cause the

          Company to pay the full amount of the deferred dividend, with interest

          as aforesaid, or take all such steps as may be necessary to obtain

          such consent or sanction without delay.

 

     (3)  The expression "net profit" shall mean in relation to the Series B

          Shares the total of all the operating revenues of the Company and its

          subsidiaries for the period in question, including realised gains,

          less the total of all the operating expenses of the Company and its

          said subsidiaries, including realised losses, after eliminating the

          balances of all inter-company accounts between the Company and its

          said subsidiaries and between any two of such subsidiaries.

 

     (4)  The Company shall on 15th August, 1997 redeem at the price of $1.00

          (U.S.) per share all of the Series B Shares. No dividend shall be

          declared or paid on any share of any class of the Company on or after

          the 15th August, 1997, until all of the Series B Shares shall have

          been redeemed as aforesaid.

 

     (5)  Without prejudice to the foregoing, the Company may at any time and

          from time to time prior to 15th August, 1997, upon giving not less

          than one month's prior notice in writing to the holders thereof,

          redeem all or any part of the Series B Shares at the price of $1.00

          (U.S.) per share out of moneys of the Company which may be lawfully be

          applied for that purpose. In the case of any redemption of less than

          all of the Series B Shares, the Board shall have power to decide in

          its discretion the manner in which the particular Series B Shares to

          be redeemed shall be determined and the manner in which any fractions

          of Series B Shares arising on a partial redemption shall be dealt

          with.

 

     (6)  The holders of the Series B Shares shall be entitled on a winding-up

          in priority to the holders of shares of any other class of the

          Company, to receive out of the assets of the Company available for

          distribution to Members a sum equal to the amount which would have

          been received by the holder of the Series B Shares in the event that

          all of the Series B Shares outstanding on the day prior to the date of

          commencement of winding up had been redeemed on that day.

 

     (7)  The provisions of these Bye-Laws relating to the convening of a

          Special General Meeting of the Company shall mutatis mutandis apply to

          the convening of a

 

<PAGE>

 

          Special General Meeting of the holders of Series B Shares for the

          matters referred to herein.

 

     (8)  The holders of the Series B Shares shall not be entitled to any

          further or other right to participate in the profits or assets of the

          Company.

 

     (9)  The holders of the Series B Shares shall not be entitled to receive

          notice of, or to attend or vote at, any annual general meeting or

          special general meeting of Members of the Company.

 

     (10) Series B Shares are not convertible.

 

                RESTRICTIONS ON CERTAIN "'BUSINESS COMBINATIONS"

 

5.   (1)  Except as permitted by sub-section (2) of this Bye-Law, no Interested

          Shareholder (as hereinafter defined) shall, whether directly or

          indirect, be a party to or take any action in connection with any

          Business Combination with the Company or any of its subsidiary

          companies for a period of five years commencing on the date such

          person first became an interested Shareholder.

 

     (2)  The restrictions contained in sub-section (1) of this section shall

          not apply to a Business Combination:(i) if the Business Combination is

          approved by prior resolution of the Continuing Directors (as that term

          is hereinafter defined) of the Board (whether such approval is made

          prior to or subsequent to the acquisition of, or announcement of

          public disclosure of the intention to acquire, beneficial ownership of

          voting shares that caused the Interested Shareholder to become an

          Interested Shareholder); or (ii) if the Business Combination is

          approved by prior resolution of a majority of outstanding voting

          shares of the Company other than those beneficially held by an

          Interested Shareholder.

 

     (3)  For the purposes of this Bye-Law:-

 

          (a)  "beneficial owner" when used with respect to any share means a

               person:-

 

               (i)  who individually or with or through any Subsidiary or

                    Affiliate beneficially owns such share, directly or

                    indirectly; or

 

 

<PAGE>

 

               (ii) who individually or with or through any Subsidiary or

                    Affiliate beneficially owns such share, directly or

                    indirectly; or (2) who individually or with or through any

                    Subsidiary or Affiliate has:-

 

                    (a)  the right to acquire such share (whether such right is

                         exercisable immediately or only after the passage of

                         time) pursuant to an-v agreement, arrangement or

                         understanding (whether or not in writing), or upon the

                         exercise of conversion rights, exchange rights,

                         warrants or options or otherwise; provided however,

                         that a person shall not be deemed the beneficial owner

                         of any share tendered pursuant to a tender or exchange

                         offer until such offer is accepted; or

 

                    (b)  the right to vote such share pursuant to any agreement,

                         arrangement or understanding (whether or not in

                         writing); provided however, that a person shall not be

                         deemed the beneficial owner of any share under this

                         sub-paragraph (ii) if the right to vote such share

                         arises:-

 

                         (i)  solely from a revocable proxy or consent given in

                              response to a proxy or consent solicitation made

                              to shareholders or any class of shareholders

                              generally; or

 

                         (ii) solely under a nominee or trustee agreement where

                              the nominee or trustee has no economic interest in

                              the share (other than the right to be paid normal

                              nominee or trustee fees or remuneration);

 

                         (iii) who has any agreement, arrangement or

                              understanding (whether or not in writing) for the

                              purpose of acquiring, holding, voting (except

                              where the right to vote is within the exclusion of

                              sub-paragraphs (i) or (ii) of paragraph (2)(b)

                              above or disposing of such share with any other

                              person who beneficially owns, or whose

                              subsidiaries or affiliates directly or indirectly

                              beneficially own such share or any interest

                              therein; but does not include an underwriter,

                              acting in the ordinary course of his business as

                              an underwriter, who acquires shares pursuant to

                              any issue or offer of shares underwritten by him.

 

          (b)  "Business Combination" means:-

 

 

<PAGE>

 

               (i)  any scheme of arrangement, reconstruction or amalgamation

                    involving the Company or any of its Subsidiaries and an

                    Interested Shareholder;

 

               (ii) any transaction or series of transactions involving the

                    sale, purchase, lease, exchange, mortgage, pledge, transfer

                    or other disposition or encumbrance of assets between the

                    Company or any of its Subsidiaries and any Interested

                    Shareholder having an aggregate market value in excess of 5%

                    of the consolidated value in the Company and its

                    Subsidiaries prior to the relevant transaction or series of

                    transactions;

 

               (iii) the issue or transfer to an Interested Shareholder or any

                    Affiliate thereof of any securities by the Company or any of

                    its Subsidiaries other than an issue or distribution to all

                    Shareholders of the Company entitled to participate therein

                    (such entitlement not being dependent upon or affected by

                    any scheme or proposed by an Interested Shareholder) pro

                    rata to their respective entitlements;

 

               (iv) the adoption of any plan or proposal for the liquidation or

                    dissolution of the Company or any of its Subsidiaries unless

                    such plan or proposal is initiated, proposed or adopted

                    independently of, and not by agreement or arrangement with,

                    any Interested Shareholder or any Affiliate thereof;

 

               (v)  the reclassification of any securities or other

                    restructuring of the capital of the Company or any of its

                    Subsidiary companies in such a way as to confer a benefit on

                    an Interested Shareholder or any Affiliate thereof which is

                    not conferred on the Members generally; or (vi) the making

                    by the Company or any of its Subsidiaries of any loans,

                    advances, guarantees, pledges or financial assistance to an

                    Interested Shareholder;

 

          (c)  The term "Continuing Director" means (i) any member of the Board,

               while such person is a member of the Board who is not

 

<PAGE>

 

               an Interested Shareholder or an Affiliate or Associate or

               representative of the Interested Shareholder and was a member of

               the Board prior to the time that the Interested Shareholder

               became an Interested Shareholder, and (ii) any person who

               subsequently becomes a member of the Board, while such person is

               a member of the Board, who is not an Interested Shareholder or an

               Affiliate or Associate or representative of the Interested

               Shareholder, if such person's nomination for election or election

               to the Board is recommended or approved by a majority of the

               Continuing Directors then in office;

 

          (d)  "Interested Shareholder" means a Member of the Company (other

               than the Company or any Subsidiary, any profit-sharing employee

               share ownership or other employee benefit plan of the Company or

               any Subsidiary or any trustee of or fiduciary with respect to any

               such plan when acting in such capacity) who is, or has announced

               or publicly disclosed a plan or intention to become, the

               beneficial owner of Common Shares representing ten percent (10%)

               or more of the votes entitled to be cast by the holders of all

               then outstanding voting shares of the Company. For the purposes

               of determining whether a person is an Interested Shareholder for

               the purposes hereof, the number of shares deemed to be

               outstanding shall include shares deemed beneficially owned by

               such person through application of this paragraph (3) hereof, but

               shall not include any other shares that may be issuable pursuant

               to any agreement, arrangement or understanding, or upon exercise

               of conversion rights, warrants or options, otherwise;

 

          (e)  "person" includes:-

 

               (i)  any person acting in concert with him or any nominee for him

                    or person acting on his behalf; (ii) any company in which

                    such person holds or beneficially owns 10% or more of the

                    shares carrying voting rights or rights over shares; or

                    (iii) any person or entity over which the person acquiring

                    the shares has, directly or indirectly,

 

<PAGE>

 

                    the power to direct or cause the direction of management or

                    policies;

 

          (f)  "persons acting in concert" include:-

 

               (i)  persons who, pursuant to an agreement, arrangement or

                    understanding (whether formal or informal), actively

                    co-operate either in the acquisition by any of them of any

                    holding of shares or of the beneficial ownership of shares

                    or right over shares in the Company or in the exercise of

                    voting rights with respect to shares in the Company;

 

               (ii) a company with any of its directors (or their close

                    relatives, nominees, related trusts or companies in which

                    any director holds or beneficially owns 10% or more of the

                    shares carrying voting rights or rights over shares);

 

               (iii) a company with the trustees or managers of any of its

                    pension, provident or employee benefit funds or any employee

                    stock option scheme which involves the issue of shares in

                    the company to such trustees for the benefit of employees;

 

               (iv) a person who is a fund manager with any investment company,

                    unit trust or other person whose investments such person

                    manages on a discretionary basis, in respect of the relevant

                    investment accounts;

 

               (v)  a company with its parent company or any of its Subsidiary

                    companies; or

 

               (vi) a company, in which 10% or more of the shares carrying

                    voting rights or rights over shares are held or beneficially

                    owned by a person, with any other company in which 10% or

                    more of the shares carrying voting rights or rights over

                    shares are held or beneficially owned by the same person;

 

          (g)  "rights over shares" includes any rights acquired by a person of

               an agreement to acquire shares of an option to acquire shares or

               an irrevocable commitment to accept an offer to acquire shares

               and includes warrants or options to subscribe for shares in a

 

<PAGE>

 

               company if immediately exercisable, as if such warrants or option

               had at the relevant time been exercised;

 

               (h)  "securities" includes shares, debentures, and options or

                    warrants to subscribe for or purchase any shares or

                    debentures, and any rights in respect thereof or any other

                    right which if exercised would enable a person not otherwise

                    able so to do, to exercise voting rights in excess of the

                    threshold;

 

               (i)  "threshold" means 10% or more of the voting rights;

 

               (j)  "voting rights" means all the voting rights attributable to

                    the share capital of the Company which are currently

                    exercisable, or, in the case of options and warrants to

                    subscribe for shares, would be exercisable if those options

                    and warrants were themselves exercised, at a general meeting

                    of the Company;

 

               (k)  a person shall be deemed not to acquire or hold any share if

                    he acquires or holds such share solely as nominee or bare

                    trustee thereof and has no beneficial or economic interest

                    therein other than the right to be paid normal nominee or

                    trustee fees or remuneration;

 

               (l)  the terms "Affiliate" and "Associate" shall have the

                    respective meanings ascribed to such terms in Rule 12b-2

                    under the United States Securities Exchange Act as in effect

                    on April 10, 1991 (the term "registrant" in said Rule 12b-2

                    meaning in this case the Company);

 

               (m)  the term "Subsidiary" for the purposes of this Bye-Law means

                    any company of which a majority of any class of equity

                    security is beneficially owned by the Company.

 

 

<PAGE>

 

 

                             EMPLOYEE SHARE PURCHASE

 

6.   (1)  The Board may from time to time:-

 

          (a)  establish a scheme or schemes whereby the Company provides money

               for the purchase of, or subscription for, fully-paid shares or

               share options or in relation to share bonus plans for Common

               Shares in the Company or its holding company, if any, being a

               purchase of subscription by trustees of or for shares to be held

               by or for the benefit of employees of the Company or of its

               associated company;

 

          (b)  provide for the making by the Company of loans to persons, other

               than Directors, bona fide in the employment of the Company or of

               its associated company, with a view to enabling those persons to

               purchase or subscribe for fully-paid shares in the Company or its

               holding company, to be held by themselves by way of beneficial

               ownership; and

 

          (c)  provide for the giving by the Company, directly or indirectly of

               financial assistance, whether by means of a loan, guarantee, the

               provision of security or otherwise, to its bona fide employees,

               or the bona fide employees of any associated company or not they

               shall also be Directors, in order that they shall also be

               Directors, in order that they may buy shares in the Company and

               the Board may, in its discretion, from time to time require, as

               one of the terms of issue of any such shares or by contract, that

               any such employee shall be required or allowed to sell such

               shares to the Company, upon such terms and at such price as the

               Board may by such terms of issue or contract establish, when such

               employee ceases to be employed by the Company or its associated

               company.

 

     (2)  For the purposes of this Bye-Law a company shall be deemed to be an

          associated company of the Company if shares of the first-mentioned

          company carrying fifty percent or more of the votes for the election

          of directors are held, otherwise than by way of security directly or

          indirectly, by or for the benefit of the Company.

 

 

 

<PAGE>

 

                     REPURCHASE BY COMPANY OF ITS OWN SHARES

 

7.   Subject to these Bye-Laws any purchase by the Company of any class of its

     own shares in exercise of the powers conferred by Section 42A of the

     Companies Act 1981, shall be on such terms and conditions as the Board

     shall determine.

 

                        TRUSTS NOT RECOGNISED BY COMPANY

 

8.   Except as ordered by a court of competent jurisdiction or as required by

     law, no person shall be recognised by the Company as holding any share upon

     trust and the Company shall not be bound by or required in any way to

     recognise (even when having notice thereof) any equitable, contingent,

     future or partial interest in any share or any interest in any fractional

     part of a share or (except only as otherwise provided in these Bye-laws or

     by law) any other right in respect of any share except an absolute right to

     the entirety thereof in the registered holder.

 

                               SHARE CERTIFICATES

 

9.   The preparation, issue and delivery of certificates shall be governed by

     the Companies Acts. In the case of a share held jointly be several persons,

     delivery of a certificate to one of several joint holders shall be

     sufficient delivery to all.

 

                             LOST SHARE CERTIFICATES

 

10.  If a share certificate is defaced, lost or destroyed it may be replaced

     without fee but on such terms (if any) as to evidence and indemnity and to

     payment of the costs and out of pocket expenses of the Company in

     investigating such evidence and preparing such indemnity as the Board may

     think fit and, in the case of defacement, on delivery of the old

     certificate to the Company.

 

                          CERTIFICATES TO BE UNDER SEAL

 

11.  All certificates for share or loan capital or other securities of the

     Company (other than letters of allotment, scrip certificates and other like

     documents) shall, except to the extent that the terms and conditions for

     the time being relating thereto otherwise provide, be issued under the

     Seal. The Board may by resolution determine, either generally or in any

     particular case, that any signatures on any such certificates need not be

     autographic but may be affixed to such

 

<PAGE>

 

     certificates by some mechanical means or may be printed thereon or that

     such certificates need not be signed by any persons.

 

                               REGISTER OF MEMBERS

 

12.  (1)  The Secretary and/or the Company's duly appointed Registrar and

          Transfer Agent shall establish and maintain the Register of Members

          which shall be available for inspection at the office of the Registrar

          and Transfer Agent and at the Registered Office in the manner

          prescribed by the Companies Acts. Unless the Board otherwise

          determines, the Register of Members shall be open to inspection in the

          manner prescribed by the Companies Acts between 10:00 a.m. and 12:00

          noon on every working day. Unless the Board so determines, no Member

          or intending Member shall be entitled to have entered in the Register

          any indication of any trust or any equitable, contingent, future or

          partial interest in any share or any interest in any fractional part

          of a share and if any such entry exists or is permitted by the Board

          it shall not be deemed to abrogate any of the provisions of Bye-Law 8.

 

     (2)  The Secretary and/or the Company's duly appointed Registrar and

          Transfer Agent, if there be one then acting, shall prepare and make,

          at least ten days before every meeting of Members, a complete list of

          the Members entitled to vote at the meeting, arranged in alphabetical

          order, and showing the address of each Member and the number of shares

          registered in the name of each Member. Such list shall be open to the

          examination of any Member, for any purpose germane to the meeting,

          during ordinary business hours, for a period of at least ten days

          prior to the meeting, either at a place within the city where the

          meeting is to be held, at the place where the meeting is to be held or

          at the office of the Transfer Agent. The list shall also be produced

          and kept at the time and place of the meeting during the whole time

          thereof, and may be inspected by any Member who is present.

 

     (3)  For the purposes of this Bye-Law, "Registrar and Transfer Agent" shall

          be deemed to include the duly appointed Co-Registrar and Co-Transfer

          Agent of the Company.

 

                               TRANSFER OF SHARES

 

 

<PAGE>

 

13.  Subject to the Companies Acts and to the restrictions contained in these

     Bye-Laws as may be applicable, any Member may transfer all or any of his

     shares by an instrument of transfer in the usual common form or in any

     other form which the Board may approve.

 

14.  The instrument of transfer of a share shall be signed by or on behalf of

     the transferor and where any share is not fully-paid the transferee, and

     the transferor shall be deemed to remain the holder of the share until the

     name of the transferee is entered in the Register in respect thereof. All

     instruments of transfer when registered may be retained by the Company. The

     Board may, in its absolute discretion and without assigning any reason

     therefor, decline to register any transfer of any share which is not a

     fully-paid share.

 

     The Board may also decline to register any transfer unless:-

 

          (a)  the instrument of transfer is lodged with the Company,

               accompanied by the certificate for the shares to which it

               relates, and such other evidence as the Board may reasonably

               require to show the right of the transferor to make the transfer,

 

          (b)  the instrument of transfer is in respect of any one class of

               share,

 

          (c)  where applicable, the permission of the Bermuda Monetary

               Authority with respect thereto has been obtained,

 

          (d)  it shall be satisfied that the proposed transfer is in compliance

               with the United States Securities Act of 1933.

 

15.  If the Board declines to register a transfer it shall, within three months

     after the date on which the instrument of transfer was lodged, send to the

     transferee notice of such refusal.

 

16.  No fee, other than reimbursement of any expenses or taxes incurred by the

     Company, shall be charged by the Company for registering any transfer,

     probate, letters of administration, certificate of death or marriage, power

     of attorney, distringas or stop notice, order of court or other instrument

     relating to or affecting the title to any share, or otherwise making an

     entry in the Register relating to any share.

 

                             TRANSMISSION OF SHARES

 

17.  Subject to the Companies Act and these Bye-Laws, in the case of the death

     of a Member, the survivor or survivors, where the deceased was joint

     holder, and the estate representative, where he was sole holder, shall be

     the only person recognised by the Company as having any title to his

     shares; but nothing herein contained shall release the

 

<PAGE>

 

     estate of a deceased holder (whether the sole or joint) from any liability

     in respect of any share held by him solely or jointly with other persons.

     For the purpose of this Bye-Law, estate representative means the person to

     whom probate or letters of administration has or have been granted in

     Bermuda or, failing any such person, such other person as the Board may in

     its absolute discretion determine to be the person recognised by the

     Company for the purpose of this Bye-Law.

 

18.  Subject to the Companies Acts and these Bye-Laws, any person becoming

     entitled to a share in consequence of the death of a Member or otherwise by

     operation of applicable law may, subject as hereafter provided and upon

     such evidence being produced as may from time to time be required by the

     Board as to his entitlement, either be registered himself as the holder of

     the share or elect to have some person nominated by him registered as the

     transferee thereof. If the person so becoming entitled elects to be

     registered himself, he shall deliver or send to the Company a notice in

     writing signed by him stating that he so elects. If he shall elect to have

     his nominee registered, he shall signify his election by signing an

     instrument of transfer of such share in favour of his nominee. All the

     limitations, restrictions and provisions of these Bye-Laws relating to the

     right to transfer and the registration of transfer of shares shall be

     applicable to any such notice or instrument of transfer as aforesaid as if

     the death of the Member or other event giving rise to the transmission had

     not occurred and the notice or instrument of transfer as an instrument of

     transfer signed by such Member.

 

19.  A person becoming entitled to a share in consequence of the death of a

     Member or otherwise by operation of applicable law shall (upon such

     evidence being produced as may from time to time be required by the Board

     as to his entitlement) be entitled to receive and may give a discharge for

     any dividends or other moneys payable in respect of the share to receive

     notices of or to attend or vote at general meetings of the Company or, save

     as aforesaid, to exercise in respect of the share of any of the rights or

     privileges of a member until he shall have become registered as the holder

     thereof. The Board may at any time give notice requiring such person to

     elect either to be registered himself or to transfer the share and if the

     notice is not complied with within sixty days the Board may thereafter

     withhold payment of all dividends and other moneys payable in respect of

     the shares until the requirements of the notice have been complied with.

 

 

<PAGE>

 

                               INCREASE OF CAPITAL

 

20.  Without prejudice to the powers conferred on the Board of Directors in

     Bye-Laws 2 and 3 hereof and subject to the Companies Acts and these

     Bye-Laws, the Company may from time to time increase its authorised share

     capital detailed in Bye-Law 1 hereof by such sum to be divided into shares

     of such par value as the Company in general meeting shall prescribe.

 

21.  The Company may, but shall not be bound to do so, by the resolution

     increasing the capital, direct that the new shares or any of them shall be

     offered n the first instance either at par or at a premium or (subject to

     the provisions of the Companies Acts) at a discount to all the holders for

     the time being of shares of any class or classes in proportion to the

     number of such shares held by them respectively or make any other provision

     as to the issue of the new shares.

 

22.  The new shares shall be subject to all the provisions of these Bye-Laws.

 

                              ALTERATION OF CAPITAL

 

23.  Subject to the Companies Acts and to any confirmation or consent required

     by law or these Bye-Laws, the Company may by resolution in general meeting

     from time to time convert any preference shares into redeemable preference

     shares.

 

                              REDUCTION OF CAPITAL

 

24.  Subject to the Companies Acts, its memorandum and any confirmation or

     consent required by law or these Bye-Laws, the Company may from time to

     time in general meeting authorise the reduction of its authorised share

     capital or any capital redemption reserve fund or any share premium or

     contributed surplus account in any manner; provided however, that any

     resolution for the reduction of the authorised share capital of the Company

     shall only be effective if the same is approved by the affirmative vote of

     seventy five percent (75%) of the outstanding Voting Shares of the Company

     duly case at a general meeting of the Company called for that purpose.

 

 

<PAGE>

 

25.  In relation to any such reduction, the Company may in general meeting

     determine the term upon which such reduction is to be effected including in

     the case of a reduction of part only of a class of shares, those shares to

     be affected.

 

                                GENERAL MEETINGS

 

26.  (1)  The Board shall convene and the Company shall hold general meetings as

          Annual General Meetings in accordance with the requirements of the

          Companies Acts. The Board may, whenever it thinks fit, and shall, when

          required by the Companies Acts, convene general meetings other than

          Annual General Meetings which shall be called Special General

          Meetings. Except with the unanimous approval of the Board, all Annual

          and Special General Meetings of the Company shall be held in Bermuda.

          Any resolution or matter which requires the approval of the Members of

          the Company shall only be approved at an annual or special general

          meeting of the Company called for the purpose in accordance with the

          provisions of these Bye-Laws and, for the avoidance of any doubt,

          Members may not act by written consent or a resolution in writing.

 

     (2)  In accordance with the terms of the Mutual Risk Management Ltd.

          Company Act 1991, the percentage of the paid up capital of the Company

          carrying the right to vote at general meetings of the Company which

          shall be necessary to requisition a Special General Meeting of the

          Members pursuant to Section 74 of the Companies Act shall be 50% or

          more.

 

                           NOTICE OF GENERAL MEETINGS

 

27.  (1)  An Annual General Meeting and any Special General Meeting shall be

          called by not less than 21 clear days' notice in writing. For the

          purposes of this Bye-Law, the expression "clear days'" means that the

          day on which the notice is dispatched and the day of the meeting shall

          not be counted in calculating the notice period.

 

          Notice of every general meeting shall be given in any manner permitted

          by these Bye-Laws to all Members other than such as, under the

          provisions of these Bye-Laws or the terms of issue of the shares they

          hold, are not entitled to receive such notice from the Company.

 

 

<PAGE>

 

          Notwithstanding that a meeting of the Company is called by shorter

          notice than that specified in this Bye-Law, it shall be deemed to have

          been duly called if it is so agreed:-

 

          (a)  in the case of a meeting called as an Annual General Meeting, by

               all the Members entitled to attend and vote thereat;

 

          (b)  in the case of any other meeting, by a majority in number of the

               Members having the right to attend and vote at the meeting, being

               a majority together holding not less than 95 percent in nominal

               value of the shares giving that right.

 

     (2)  At any annual or Special General Meeting of the Members, only such

          business shall be conducted as shall have been properly brought before

          the meeting. To be properly brought before an Annual or Special

          General Meeting, business must be specified in the notice of meeting

          (or any supplement thereto) given by or at the direction of the Board,

          otherwise properly brought before the meeting by or at the direction

          of the Board, or otherwise properly brought before the meeting by a

          Member. In addition to any other applicable requirements, for business

          to be properly brought before an Annual or Special General Meeting by

          a Member, the Member must have given timely notice thereof in writing

          to the Secretary of the Company. To be timely, a Member's notice must

          be delivered to or mailed and received at the registered office of the

          Company, not less than 50 days nor more than 75 days prior to the

          meeting; provided however, that in the event that less than 65 days'

          notice or prior public disclosure of the date of the meeting is given

          or made to Members, notice by the Member to be timely must be so

          received not later than the close of business on the 15th day

          following the day on which such notice of the date of the Annual or

          Special General Meeting was mailed or such public disclosure was made.

          A Member's notice to the Secretary shall set forth as to each matter

          the Member proposes to bring before the meeting (i) a brief

          description of the business desired to be brought before the meeting

          and the reasons for conducting such business at the meeting, (ii) the

          name and record address of the Member proposing such business, (iii)

          the class and number of shares of the Company which are beneficially

          owned by the Member, (iv) any material interest of the Member in such

          business. Provided at all times that Members may only give notice to

          the Secretary of matters to be brought before an Annual or Special

          General Meeting for the purposes of this

 

<PAGE>

 

          Bye-Law that are matters that are suitable and appropriate for

          submission to general meetings of the Members of a publicly-quoted

          company.

 

          Notwithstanding anything in the Bye-Laws to the contrary, no business

          shall be conducted at an Annual or Special General Meeting except in

          accordance with the procedures set forth in this Bye-Law. Provided

          however, that nothing in this Bye-Law shall be deemed to preclude

          discussion by any Member of any business properly brought before the

          Annual or Special General Meeting in accordance with the procedures

          herein detailed.

 

          The Chairman of an Annual or Special General Meeting shall, if the

          facts warrant, determine and declare to the meeting that business was

          not properly brought before the meeting in accordance with the

          provisions of this Bye-Law, and if he should so determine, he shall so

          declare to the meeting and any such business not properly brought

          before the meeting shall not be transacted.

 

          For the avoidance of doubt, it is hereby noted that any nomination or

          nominations of persons for election to the Board of the Company made

          in accordance with the provisions of Bye-Law 54 hereof shall be deemed

          for the purposes of this Bye-Law to constitute business properly

          brought before an Annual or Special General Meeting, as the case may

          be.

 

28.  The accidental omission to give notice of a meeting or (in cases where

     instruments of proxy are sent out with the notice) the accidental omission

     to send such instrument of proxy to, or the non-receipt of notice of a

     meeting or such instrument of proxy by, any person entitled to receive such

     notice shall not invalidate the proceedings at that meeting.

 

                         PROCEEDINGS AT GENERAL MEETINGS

 

29.  No business shall be transacted at any general meeting unless it shall have

     been properly brought before the Annual or Special General Meeting in

     accordance with Bye-Law 27(2) hereof and a quorum is present when the

     meeting proceeds to business, but the absence of a quorum shall not

     preclude the appointment, choice or election of a chairman which shall not

     be treated as part of the business of the meeting. Save as otherwise

     provided in these Bye-Laws, at least two Members representing not less than

 

<PAGE>

 

     30% of the outstanding shares carrying the right to vote in the Company,

     represented in person or by proxy, shall constitute a quorum for all

     purposes.

 

30.  If within five minutes (or such longer time as the Chairman of the meeting

     may determine to wait) after the time appointed for the meeting, a quorum

     is not present, the meeting, if convened on the requisition of Members,

     shall be dissolved. In any other case, it shall stand adjourned to such

     other day and such other time and place as the Chairman of the meeting may

     determine and at such adjourned meeting two Members present in person

     (whatever the number of shares held by them) shall be a quorum. The Company

     shall give not less than 7 days' notice of any meeting adjourned through

     want of a quorum and such notice shall state that two Members present in

     person (whatever the number of shares held by them) shall be a quorum.

 

31.  Each Director shall be entitled to attend and speak at any general meeting

     of the Company.

 

32.  The Chairman of the Board shall preside as Chairman at every general

     meeting. In his absence, the following shall preside in the order stated:

     the President or any Senior Vice President. If none of the foregoing is

     present within five minutes after the time appointed for holding the

     meeting, or if none of them is willing to act as Chairman, the Directors

     present shall choose one of their number to act or if one Director only is

     present he shall preside as Chairman if willing to act. If no Director is

     present or if each of the Directors present declines to take the chair, the

     persons present and entitled to vote on a poll shall elect one of their

     number to be Chairman.

 

33.  The Chairman may, with the consent of any meeting at which a quorum is

     present (and shall if so directed by the meeting), adjourn the meeting from

     time to time and from place to place but no business shall be transacted at

     any adjourned meeting except business which might lawfully have been

     transacted at the meeting from which the adjournment took place. When a

     meeting is adjourned for three months or more, notice of the adjourned

     meeting shall be given as in the case of an original meeting.

 

34.  Save as expressly provided by these Bye-Laws, it shall not be necessary to

     give any notice of an adjournment or of the business to be transacted at an

     adjourned meeting.

 

 

 

<PAGE>

 

                                   INSPECTORS

 

35.  The Board may, in advance of any meeting of Members, appoint one or more

     inspectors to act at such meeting or any adjournment thereof. If the

     inspectors shall not be so appointed or if any of them shall fail to appear

     or act, the Chairman of the meeting may and on the request of any Member

     entitled to vote thereat shall, appoint inspectors. Each inspector, before

     entering upon the discharge of his duties, shall take and sign an oath

     faithfully to exercise the duties of inspector at such meeting with strict

     impartiality and according to the best of his ability. The inspectors shall

     determine the number of shares outstanding and the voting power of each,

     the number of shares represented at the meeting, the existence of a quorum,

     the validity and effect of proxies, and shall receive votes, ballots or

     consents, hear and determine all challenges and questions arising in

     connection with the right to vote, count and tabulate all votes, ballots or

     consents, determine the result, and do such acts as are proper to conduct

     the election or vote with fairness to all Members. On the request of the

     Chairman of the meeting or any Member entitled to vote thereat, the

     inspectors shall make a report in writing of any challenge, request or

     matter determined by them and shall execute a certificate of any fact found

     by them. No director or candidate for the office of director shall act as

     inspector. Inspectors need not be Members.

 

                                     VOTING

 

36.  Save where a greater majority is required by the Companies Acts or these

     Bye-Laws any question proposed for consideration at any general meeting

     shall be decided on by a simple majority of votes cast. No matter or item

     of business shall be put to a vote of a general meeting of Members unless

     that matter or item of business is specifically articulated in the Notice

     and Agenda of the meeting and complies with the provisions of Bye-Laws

     27(2) and 54 hereof.

 

37.  At any general meeting, a resolution put to the vote of the meeting shall

     be decided on a show of hands unless (before or on the declaration of the

     result of the show of hands or on the withdrawal of any other demand for a

     poll) a poll is demanded by:-

 

          (a)  the Chairman of the meeting; or

 

          (b)  at least three Members present in person or represented by proxy;

               or

 

 

<PAGE>

 

          (c)  any Member of Members present in person or represented by proxy

               and holding between them not less than one tenth of the total

               voting rights of all the Members having the right to vote at such

               meeting; or

 

          (d)  a Member of Members present in person or represented by proxy

               holding shares conferring the right to vote at such meeting,

               being shares on which an aggregate sum has been paid up equal to

               not less than one tenth of the total sum paid up on all such

               shares conferring such right.

 

     Unless a poll is so demanded and the demand is not withdrawn, a declaration

     by the Chairman that a resolution has, on a show of hands, been carried or

     carried unanimously or by a particular majority or not carried by a

     particular majority or lost shall be final and conclusive, and an entry to

     that effect in the Minute Book of the Company shall be conclusive evidence

     of the fact without proof of the number of votes recorded for or against

     such resolution.

 

38.  If a poll is duly demanded, the result of the poll shall be deemed to be

     the resolution of the meeting at which the poll is demanded.

 

39.  A poll demanded on the election of a Chairman, or on a question of

     adjournment, shall be taken forthwith. A poll demanded on any other

     question shall be taken in such manner and either forthwith or at such time

     (being not later than three months after the date of the demand) and place

     as the Chairman shall direct. It shall not be necessary (unless the

     Chairman otherwise directs) for notice to be given of a poll.

 

40.  The demand for a poll shall not prevent the continuance of a meeting for

     the transaction of any business other than the question on which the poll

     has been demanded and it may be withdrawn at any time before the close of

     the meeting or the taking of the poll, whichever is the earlier.

 

41.  On a poll, votes may be cast either personally or by proxy.

 

42.  A person entitled to more than one vote on a poll need not use all of his

     votes or case all the votes he uses in the same way.

 

43.  In the case of an equality of votes at a general meeting, whether on a show

     of hands or on a poll, the Chairman of such meeting shall not be entitled

     to a second or casting vote.

 

 

<PAGE>

 

44.  In the case of joint holders of a share, the vote of the Senior who tenders

     a vote, whether in person or by proxy, shall be accepted to the exclusion

     of the votes of the other joint holders, and for this purpose seniority

     shall be determined by the order in which the names stand in the Register

     in respect of the joint holding.

 

45.  A Member who is a patient for any purpose of any statute or applicable law

     relating to mental health of in respect of whom an order has been made by

     any Court having jurisdiction for the protection or management of the

     affairs of persons incapable of managing their own affairs may vote,

     whether on a show of hands or on a poll, by his receiver, committee,

     curator bonis or other person in the nature of a receiver, committee,

     curator bonis appointed by such Court and such receiver, committee, curator

     bonis or other person may vote on a poll by proxy, and may otherwise act

     and be treated as such Member for the purpose of the general meeting.

 

46.  No Member shall, unless the Board otherwise determines, be entitled to vote

     at any general meeting unless all calls or other sums presently payable by

     him in respect of the shares in the Company have been paid.

 

47.  If (i) any objection shall be raised to the qualification of any voter or

     (ii) any votes have been counted which ought not have been counted or which

     might have been rejected or (iii) any votes are not counted which ought to

     have been counted, the objection or error shall not vitiate the decision of

     the meeting or adjourned meeting on any resolution unless the same is

     raised or pointed out at the meeting or, as the case may be, the adjourned

     meeting at which the vote objected to is given or tendered or at which the

     error occurs. Any objection or error shall be referred to the Chairman of

     the meeting and shall only vitiate the decision of the meeting on any

     resolution if the Chairman decides that the same may have affected the

     decision of the meeting. The decision of the Chairman on such matters shall

     be final and conclusive.

 

                      PROXIES AND CORPORATE REPRESENTATIVES

 

48.  The instrument appointing a proxy shall be in writing under the hand of the

     appointor or of his attorney authorised by him in writing or, if the

     appointer is a company, either under its seal or under the hand of an

     officer, attorney or other persons authorised to sign the same.

 

 

<PAGE>

 

49.  A Member may designate a person who is not a Member of the Company as his

     proxy to represent such Member and vote on his behalf at any General

     Meeting of the Company or any Meeting of the holders of any class of shares

     in the capital of the Company and the Company may appoint a representative

     as permitted by the Companies Act and such representative need not be a

     Member.

 

50.  The instrument appointing a proxy together with such other evidence as top

     its die execution as the Board may from time to time require, shall be

     delivered at the Registered Office (or at such place as may be specified in

     the notice convening the meeting or in any notice of adjournment or, in

     either case, in any document sent therewith) at least two business days

     prior to the holding of the meeting or adjourned meeting at which the

     persons named in the instrument proposes to vote or, in the case of a poll

     taken subsequent to the date of the a meeting or adjourned meeting, before

     the time appointed for the taking of the poll and in default the instrument

     of proxy shall not be treated as valid.

 

51.  Instruments of proxy shall be in any common form or in such other form as

     the Board may approve and the Board may, if it thinks fit, send out with

     the notice of any meeting forms of instruments of proxy for use at that

     meeting. The instrument of proxy shall be deemed to confer authority to

     demand or join in demanding a poll and to vote on any amendment of a

     resolution put to the meeting for which it is given as the proxy thinks

     fit. The instrument of proxy shall unless the contrary is stated therein be

     valid as well for any adjournment of the meeting as for the meeting to

     which it relates.

 

52.  (1)  A vote given in accordance with the terms of an instrument of proxy

          shall be valid notwithstanding the previous death or insanity of the

          principal, or revocation of the instrument of proxy or of the

          authority under which it was executed, provided that no intimation in

          writing of such death, insanity or revocation shall have been received

          by the Company at the Registered Office (or such other place as may be

          specified for the delivery of instruments of proxy in the notice

          convening the meeting or other documents sent therewith) one hour at

          least before the commencement of the meeting or adjourned meeting, or

          the taking of the poll, at which the instrument of proxy is used.

 

 

<PAGE>

 

     (2)  A proxyholder shall only vote in accordance with the direction made in

          the instrument of proxy duly executed by the Member granting such

          proxy and in the absence of such direction the proxyholder shall be

          bound to vote the proxy in favour of the proposals recommended by the

          Board of the Company.

 

53.  Subject to the Companies Acts, the Board may at its discretion waive any of

     the provisions of these Bye-Laws related to proxies or authorisations and,

     in particular, may accept such verbal or other assurances as it thinks fit

     as to the right of any person to attend and vote on behalf of any Member at

     general meetings.

 

                      APPOINTMENT AND REMOVAL OF DIRECTORS

 

54.  (1)  The number of Directors which shall constitute the whole Board of

          Directors of the Company shall not be more than fifteen (15). The

          Board is divided into three classes, Class I, Class II and Class III.

          The number of Directors in each class shall be the whole number

          contained in the quotient arrived at by dividing the authorised number

          of Directors by three and if a fraction is also contained in such

          quotient, then if such fraction is one-third ( ) the extra Director

          shall be a member of Class III and if the fraction is two-thirds ( )

          one of the Directors shall be member of Class III and the other shall

          be a member of Class II. Each Director shall serve for a term ending

          on the third annual meeting following the annual meeting at which such

          Director was elected; provided however, that the Directors first

          elected to Class I shall serve for a term ending on the annual meeting

          next ensuing, the Directors first elected to Class II shall serve for

          a term ending on the second annual meeting following the meeting at

          which such Directors were first elected, and the Directors first

          elected to Class III shall serve a full term as hereinbefore provided.

          The foregoing notwithstanding, each Director shall serve until his

          successor shall have been duly elected and qualified, unless he shall

          resign, become disqualified, disabled or shall otherwise be removed.

 

          For the purpose of the preceding paragraph, reference to the first

          election of Directors is to the election at the 1991 Annual General

          Meeting. At each annual election held thereafter, the Directors chosen

          to succeed those whose terms then expire shall be identified as being

          of the same class as the Directors they succeed. If for any reason the

          number of Directors in the various classes shall

 

<PAGE>

 

          not conform with the formula set forth in the preceding paragraph, the

          Board may redesignate any Director to a different class in order that

          the balance of Directors in such classes shall conform thereto.

 

     (2)  A Director need not be a Member.

 

     (3)  Only persons who are nominated in accordance with the following

          procedures shall be eligible for election as Directors. Nominations of

          persons for election to the Board of the Company may be made at a

          meeting of Members by or at the discretion of the Board, by any

          nominating committee or person appointed by the Board or by any Member

          of the Company entitled to vote for the election of Director at the

          meeting who complies with the notice procedures set forth in this

          Bye-Law. Such nominations, other than those made by or at the

          direction of the Board, shall be made pursuant to timely notice in

          writing to the Secretary of the Company. To be timely, a Member's

          notice shall be delivered to or mailed and received at the registered

          office of the Company not less than 50 days nor more than 75 days

          prior to the meeting; provided however that in the event that less

          than 65 days' notice or prior public disclosure of the date of the

          meeting is given or made to Members, notice by the Member to be timely

          must be received not later than the close of business on the 15th day

          following the day on which such notice of the date of the meeting was

          mailed or such public disclosure was made. Such Member's notice to the

          Secretary shall set forth (a) as to each person whom the Member

          proposes to nominate for election or re-election as a Director, (i)

          the name, age, business address and residence address of the persons,

          (ii) the principal occupation or employment of the person, (iii) the

          class and number of shares of Common Shares of the Company which are

          beneficially owned by the person and (iv) any other information

          relating to the person that is required to be disclosed in

          solicitations for proxies for election of Directors pursuant to

          Schedule 14A under the Securities Exchange Act of 1934, as amended;

          and (b) as to the Member giving the notice (i) the name and record

          address of the Member and (ii) the class and number of shares of

          capital stock of the Company which are beneficially owned by the

          Member. The Company may require any proposed nominee to furnish such

          other information as may reasonably be required by the Company to

          determine the eligibility of such proposed nominee to serve as a

          Director of the Company. No persons shall be eligible for election

 

<PAGE>

 

          as a Director of the Company unless nominated in accordance with the

          procedures set forth herein.

 

          The Chairman of the meeting shall, if the facts warrant, determine and

          declare to the meeting that a nomination was not made in accordance

          with the foregoing procedure, and if he should so determine, he shall

          so declare to the meeting and the defective nomination shall be

          disregarded.

 

55.  Without prejudice to the power of the Company in general meeting in

     pursuance of any of the provisions of these Bye-Laws to appoint any person

     to be a Director, the Board, so long as a quorum of Directors remains in

     office, shall have power at any time and from time to time to appoint any

     individual to be a Director so as to fill a casual vacancy. Any individual

     appointed as a Director to fill a casual vacancy shall service for the

     remainder of the unexpired term of the individual that he replaced.

 

56.  The Company may in Special General Meeting call for that purpose remove a

     Director for cause provided notice of any such meeting shall be served upon

     the Director concerned not less than 14 days before the meeting and he

     shall be entitled to be heard at that meeting. Any resolution to remove a

     Director of the Company pursuant to the terms of this Bye-Law shall require

     the affirmative vote of the holders of eighty percent (80%) of the

     outstanding shares of the Company then entitled to vote generally for the

     election of Directors. Any vacancy created by the removal of a Director at

     a Special General Meeting may be filled at the Meeting by the election of

     another Director in his place or, in the absence of any such election, by

     the Board.

 

                  RESIGNATION AND DISQUALIFICATION OF DIRECTORS

 

57.  The office of a Director shall be vacated upon the happening of any of the

     following events:

 

          (a)  if he resigns his office by notice in writing delivered to the

               Registered Office or tendered at a meeting of the Board;

 

          (b)  if he becomes of unsound mind or a patient for any purpose of any

               statute or applicable law relating to mental health and the Board

               resolves that his office is vacated;

 

          (c)  if he becomes bankrupt or compounds with his creditors;

 

 

<PAGE>

 

          (d)  if he is prohibited by law from being a Director;

 

          (e)  if he is removed from office by a resolution in writing in

               accordance with the procedure set out in Bye-Law 56.

 

            DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES

 

58.  The amount, if any, of Directors' fees shall from time to time be

     determined by the Compensation/Stock Option Committee of the Board. In

     addition, each Director shall be paid his reasonable traveling, hotel and

     incidental expenses in attending and returning from meetings of the Board

     or committees constituted pursuant to these Bye-Laws or general meeting and

     shall be paid all expenses properly and reasonably incurred by him in the

     conduct of the Company's business or in the discharge of his duties as

     Director. Any question as to the reasonableness of expenses as provided

     herein shall be a matter to be determined by the Compensation/Stock

     Committee of the Board. Any Director who, by request, goes or resides

     abroad for any purposes of the Company or who performs services which in

     the opinion of the Board go beyond the ordinary duties of a Director may be

     paid such extra remuneration (whether by way of salary, commission,

     participation in profits or otherwise) as the Board may determine, and such

     extra remuneration shall be in addition to any remuneration provided for by

     or pursuant to any other Bye-Law.

 

                              DIRECTORS' INTERESTS

 

59.       (a)  A Director may hold any other office or place of profit with the

               Company (except that of Auditor) in conjunction with this office

               of Director for such period and upon such terms as the Board may

               determine, and may be paid such extra remuneration therefor

               (whether by way of salary, commission, participation in profits

               or otherwise) as the Board may determine, and such extra

               remuneration shall be in addition to any remuneration provided

               for by or pursuant to any other Bye-Laws.

 

          (b)  A Director may act by himself or his firm in a professional

               capacity for the Company (otherwise than as auditor) and he or

               his firm shall be entitled to remuneration for professional

               services as if he were not a Director.

 

 

<PAGE>

 

          (c)  Subject to the provisions of the Companies Acts, a Director may

               notwithstanding his office be a party to, or otherwise interested

               in, any transaction or arrangement with the Company or in which

               the Company is otherwise interested; and be a Director or other

               officer of, or employed by, or a part to any transaction or

               arrangement with, or otherwise interested in, any body corporate

               promoted by the Company or in which the Company is interested.

               The Board may also cause the voting power conferred by the shares

               in any other company held or owned by the Company to be exercised

               in such manner in all respect as it thinks fit, including the

               exercise thereof in favour of any resolution appointing the

               Directors or any of them to be directors or officers of such

               other company, or voting or providing for the payment of

               remuneration to the directors or officers of such other company.

 

          (d)  So long as, where it is necessary, he declares the nature of his

               interest at the first opportunity at a meeting of the Board or by

               writing to the Directors as required by the Companies Acts, a

               Director shall not by reason of his office be accountable to the

               Company for any benefit which he derives from any office or

               employment to which these Bye-Laws allow him to be appointed or

               from any transaction or arrangement in which these Bye-Laws allow

               him to be interested, and no such transaction or arrangement

               shall be liable to be avoided on the ground on any interest or

               benefit.

 

          (e)  Subject to the Companies Acts and any further disclosures

               required thereby, a general notice to the Directors by a Director

               or officer declaring that he is a director or officer or has an

               interest in a person and is to be regarded as interested in any

               transaction or arrangement made with that person, shall be a

               sufficient declaration of interest in relation to any transaction

               or arrangement so made.

 

                         POWERS AND DUTIES OF THE BOARD

 

60.  Subject to the provisions of the Companies Acts and these Bye-Laws and to

     any directions given by the Company in general meeting, the Board shall

     manage all aspects of the business of the Company and in connection with

     the exercise of its powers shall have regard to the best interests of the

     Company and its Members and in determining what is in the best interests of

     the Company and its Members, the Board shall have

 

<PAGE>

 

     regard to all relevant factors including without limitation the possible

     effects that the exercise of any of its powers may have on the business of

     the Company and its subsidiaries and on the employees, customers, suppliers

     and creditors of the Company and its subsidiaries.

 

     No alteration of these Bye-Laws and no such direction shall invalidate any

     prior act of the Board which would have been valid if that alteration had

     not been made or that direction had not been given. All actions shall be

     taken by the Board (or its committees) conducting their duties as a

     corporate body, and no individual from time to time serving as a member of

     the Board shall have the authority in his capacity as a Board member to

     negotiate or conclude any contracts in the name of the Company or otherwise

     to bind the Company, except as set forth in a specific authorisation duly

     adopted by the Board. The powers given by this Bye-Law shall not be limited

     by any special power given to the Board by these Bye-Laws and a meeting of

     the Board at which a quorum is present shall be competent to exercise all

     the powers, authorities and discretions for the time being vested in or

     exercisable by the Board.

 

                                    OFFICERS

 

61.  The officers of the Company shall include a Chairman, a President and one

     or more Senior Vice Presidents who may not need not be Directors and shall

     be elected by the Board as soon as possible after each annual general

     meeting. The authority of the Chairman shall be that of a Chief Executive

     Officer.

 

     The authority of any Officer of the Company including the President and any

     Senior Vice Presidents so long as such officers, in the opinion of the

     Board, shall be resident in the United States shall be limited to

     maintaining an oversight and review of and providing recommendations and

     information to the Board, but not to any third party, regarding the affairs

     of the Company pertaining to its subsidiaries incorporated in the United

     States and otherwise to enable the Company to fulfil its role as the holder

     of shares of such subsidiaries. The President and any Senior Vice

     Presidents shall have no authority (i) to negotiate or conclude contracts

     in the name of the Company (or any of its subsidiaries not incorporated in

     the United States) or otherwise bind the Company (or any of its

     subsidiaries not incorporated in the United States) within the United

     States; or (ii) to conduct or manage any activities of the Company (or any

     of its subsidiaries not incorporated in the United States) within or

     outside of the United States, or (iii) to act in

 

<PAGE>

 

     any way which might result in the Company (or any of its subsidiaries not

     incorporated in the United States) being considered to be engaged in a

     trade of business in the United States within the meaning of the Internal

     Revenue Code of 1986 or any subsequent United States Tax Legislation.

 

     Any purported action or contract done or made by the President or any

     Senior Vice Presidents or any other duly appointed officer of the Company

     in violation of the provisions hereof shall be null and void ab initio and

     the Company or any of its subsidiaries shall in no way be bound or affected

     by any such action or contract done or made on violation of the provisions

     hereof.

 

     Any person elected or appointed pursuant to this Bye-Law Shall hold office

     for such period and upon such terms as the Board may determine and the

     Board may revoke or terminate any such election or appointment. Any such

     revocation or termination shall be without prejudice to any claim for

     damages that such officer may have against the Company or the Company may

     have against such officer for any breach of any contract of service between

     him and the Company which may be involved in such revocation or

     termination. Save as provided in the Companies Acts or these Bye-Laws, and

     subject to the limitations on the authority of the President and any Senior

     Vice Presidents contained in these Bye-Laws, the powers and duties of the

     officers of the Company shall be such (if any) as are determined from time

     to time by the Board.

 

62.  In addition to the provisions of Bye-Law 61 hereof, the Board may appoint

     any person whether or not he is a Director to hold such other office

     (including any additional Vice Presidencies) as the Board may from time to

     time determine. Any person elected or appointed pursuant to this Bye-Law

     shall hold office for such period and upon such terms and the Board may

     determine and the Board may revoke or terminate any such election or

     appointment. Any such revocation or termination shall be without prejudice

     to any claim for damages that such officer may have against the Company or

     the Company may have against such officer for any breach of contract of

     service between him and the Company which may be involved in such

     revocation or termination. Save as provided in the Companies Acts or these

     Bye-Laws, the powers and duties of the officers of the Company shall be

     such (if any) as are determined from time to time by the Board.

 

 

<PAGE>

 

63.  The Board may exercise all the powers of the Company to borrow money and to

     mortgage or charge all or any part of the undertaking, property and assets

     (present and future) and uncalled capital of the Company and to issue

     debentures and other securities, whether outright or as collateral security

     for any debt, liability or obligation of the Company or of any other

     persons.

 

64.  All cheques, promissory notes, drafts, bills or exchange or other

     instruments, whether negotiable or transferable or not, and all receipts

     for money paid to the Company shall be signed, drawn, accepted, endorsed or

     otherwise executed, as the case may be, in such manner as the Board shall

     from time to time by resolution determine.

 

65.  The Board on behalf of the Company may provide benefits, whether by the

     payment of gratuities or pensions or otherwise, for any persons including

     any Director of former Director who has held any executive officer or

     employment with the Company or with any body corporate which is or have

     been a subsidiary or affiliate of the Company or a predecessor in the

     business of the Company or of any such subsidiary or affiliate, and to any

     member of his family or any person who is or was dependent on him, and may

     contribute to any fund and pay premiums for the purchase or provision of

     any such gratuity, pension or other benefit, for the insurance of any such

     person.

 

66.  Subject to Bye-Law 61 hereof, the Board may from time to time appoint one

     or more of its body to hold any employment or executive office with the

     Company for such period and upon such terms as the Board may determine may

     revoke or terminate any such appointments. Any such revocation or

     termination as aforesaid shall be without prejudice to any claim for

     damages that such Director may have against the Company or the Company may

     have against such Director for any breach of any contract of service

     between him and the Company which may be involved in such revocation or

     termination. Any person so appointed shall receive remuneration (if any)

     (whether by way of salary, commission, participation in profits or

     otherwise) as the Board may determine, and either in addition to or in lieu

     of his remuneration as a Director.

 

                     COMPENSATION OF OFFICERS OF THE COMPANY

 

67.  The compensation payable by the Company to its Executive Officers as

     detailed herein and such other officers and employees of the Company as the

     Board may from time to time approve shall be determined by the

     Compensation/Stock Option Committee of the

 

<PAGE>

 

     Board. The said Compensation/Stock Option Committee shall have the absolute

     power to set remuneration of officers and employees of the Company in terms

     of salary, commission, participation in profits or otherwise of the Company

     as the said Committee in its absolute discretion shall determine. For the

     avoidance of doubt, the issue of compensation payable by the Company to its

     Executive Officers and employees shall be as provided herein, that is, it

     shall be a matter for the Compensation/Stock Option Committee of the Board

     only and shall not under any circumstances be a matter for action by

     Members in general meeting.

 

                        DELEGATION OF THE BOARD'S POWERS

 

68.  The Board may by power of attorney appoint any company, firm or person or

     any fluctuating body of persons, whether nominated directly or indirectly

     by the Board, to be the attorney or attorneys of the Company for such

     purposes and with such powers, authorities and discretions (not exceeding

     those vested in or exerciseable by the Board under these Bye-Laws) and for

     such period and subject to such conditions as it may think fit, and any

     such power of attorney may contain such provisions for the protection and

     convenience of persons dealing with any such attorney and of such attorney

     as the Board may think fit, and may also authorise any such attorney to

     sub-delegate all or any of the powers, authorities and discretions vested

     in him.

 

69.  The Board may entrust to and confer upon any Director or officer any of the

     powers exerciseable by it upon such terms and conditions with such

     restrictions as it thinks fit, and either collaterally with, or to the

     exclusion of, its own powers, and may from time to time revoke or vary all

     or any of such powers but no person dealing in good faith and without

     notice of such revocation or variation shall be affected thereby.

 

70.  The Board may delegate any of its powers, authorities and discretions to

     committees, consisting of such person or persons (whether a member or

     members of its body or not) as it thinks fit. Any committee so formed

     shall, in the exercise of the powers, authorities and discretions so

     delegated, conform to any regulations which may be imposed upon it by the

     Board.

 

71.  Subject to Bye-Law 61 hereof and without prejudice to the generality of

     Bye-Law 70, the Board shall, immediately following the Annual General

     Meeting each year, establish the following Committees of the Board:-

 

 

<PAGE>

 

     (1)  The Audit Committee

 

     (2)  The Executive Committee

 

     (3)  The Investment Committee

 

     (4)  The Compensation/Stock Option Committee

 

     (5)  The Reinsurance Security Committee, and

 

     (6)  The Nominating Committee

 

     The foregoing committees shall consist of such person or persons (whether a

     member or members of its body or not) as the Board thinks fit. The

     Committee shall, in the exercise of the powers, authorities and discretions

     delegated to them, conform to any regulations which may be imposed upon

     them from time to time by the Board.

 

                            PROCEEDINGS OF THE BOARD

 

72.  The Board may meet for the dispatch of business, adjourn or otherwise

     regulate its meetings as it thinks fit, provided that no business shall be

     transacted at a meeting of the Board unless not less than 7 clear days'

     notice in writing of the meeting shall be given to each director giving

     reasonable details of the business to be so transacted, and provided

     further that any director may by notice in writing to the Company agree

     that no notice need, or any shorter notice specified in the notice may, be

     given to him either generally or in respect of a particular meeting.

     Questions arising at any meeting shall be determined by a majority of

     votes. In the case of an equality of votes, the motion shall be deemed to

     have been lost. Any four Directors of the Company or the Chairman acting

     alone may summon a Board Meeting. A Director may, and the Secretary on the

     requisition of the Director shall at any time summon a Board meeting. For

     the purpose of this Bye-Law the expression `clear days' means that the day

     on which the notice is dispatched and the day of the meeting shall not be

     counted in calculating notice period. Except with the unanimous approval of

     the Directors, all Board Meetings shall be held in Bermuda.

 

                            TELEPHONIC BOARD MEETINGS

 

73.  Directors may participate in any meeting of the Board by means of

     conference telephone or other communications equipment through which all

     persons participating in the meeting can communicate with each other and

     such participation shall constitute

 

<PAGE>

 

     presence at a meeting as if those participating were present in person. A

     telephonic board meeting shall only be initiated from Bermuda where there

     is a quorum present in Bermuda when the telephone link-up is initiated and

     Bermuda shall thus be deemed to be the situs of the Board Meeting.

 

74.  Notice of a Board meeting shall be deemed to be duly given to a Director if

     it is given to him personally or sent to him by post, cable, telex,

     telecopier or other mode or representing or reproducing words in a legible

     and non-transitory form at his last known address or any other address

     given by him to the Company for this purpose. A Director may waive notice

     of any meeting either prospectively or retrospectively.

 

75.       (a)  The quorum necessary for the transaction of the business of the

               Board shall be two Directors. Any Director who ceases to be a

               Director at a board meeting may continue to be present and to act

               as a Director and be counted in the quorum until the termination

               of the Board meeting.

 

          (b)  A Director who to his knowledge is in any way, whether directly

               or indirectly, interested in a contract or proposed contract,

               transaction or arrangement with the Company has complied with the

               provisions of the Companies Acts and these Bye-Laws with regard

               to disclosure of his interests shall be entitled to vote in

               respect of any contract, transaction or arrangement in which he

               is so interested and if he shall do so his vote shall be counted,

               and he shall be taken into account in ascertaining whether a

               quorum is present.

 

76.  So long as a quorum of Directors remains in office, the continuing

     Directors may act notwithstanding any vacancy in the Board but, if no

     quorum of Directors remains, the continuing Directors or a sole continuing

     Director may act only for the purpose of calling a general meeting.

 

77.  The Board shall elect the Chairman of the Board from amongst its members.

     If the Chairman of the Board is absent, the President shall be Chairman. If

     at any meeting neither the Chairman of the Board nor the President is

     present within five minutes after the time appointed for the holding the

     same, the Directors present may choose one of their number to be Chairman

     of the meeting.

 

 

<PAGE>

 

78.  The meetings and proceedings of any committee consisting of two or more

     members shall be governed by the provisions contained in these Bye-Laws for

     regulating the meetings and proceedings of the Board so far as the same are

     applicable and are not superseded by any regulations imposed by the Board.

 

79.  A resolution in writing signed by all the Directors for the time being

     entitled to receive notice of a meeting of the Board or by all the members

     of a committee for the time being shall be valid and effectual as a

     resolution passed at a meeting of the Board or, as the case may be, of such

     committee duly called and constituted. Such resolution may be contained in

     one document or in several documents in the like form each signed by one or

     more of the Directors or members of the committee concerned.

 

80.  All acts done by the Board or by any committee or by any person acting as a

     Director or member of a committee or any person duly authorised by the

     Board or any committee, shall, notwithstanding that it is afterwards

     discovered that there was some defect in the appointment of any member of

     the Board or such committee or person acting as aforesaid or that they or

     any of them were disqualified or had vacated their office, be as valid as

     if every such person had been duly appointed and was qualified and had

     continued to be a Director, member of such committee or persons so

     authorised.

 

                                     MINUTES

 

81.  (1)  The Directors shall cause minutes to be made and books kept for the

          purpose of recording -

 

          (a)  all appointments of officers made by the Directors;

 

          (b)  the names of the Directors and other persons (if any) present at

               each meeting of Directors and of any committee;

 

          (c)  of all proceedings at meetings of the Company, of the holders of

               any class of shares in the Company, and of committees;

 

          (d)  of all proceedings of managers (if any).

 

     (2)  Save as expressly directed by the Chairman, the Secretary shall be

          under no obligation to circulate to the Members copies of the minutes

          of any general meeting. Copies of the same shall be available for

          inspection at the registered office of the Company without charge

          during normal business hours and the Secretary shall on request supply

          photocopies of the same to any Member.

 

 

 

<PAGE>

 

                                    SECRETARY

 

82.  The Secretary shall be appointed by the Board at such remuneration (if any)

     and upon such terms as it may think fit and any secretary so appointed may

     be removed by the Board. The duties of the Secretary shall be those

     prescribed by the Companies Acts together with such other duties as shall

     from time to time be prescribed by the Board.

 

83.  A provision of the Companies Acts or these Bye-Laws requiring or

     authorising a thing to be done by or to a Director and the Secretary shall

     not be satisfied by its being done or to the same person acting both as

     Director and as, or in the place of, the Secretary.

 

                                    THE SEAL

 

84.       (a)  The Seal shall consist of a circular metal device with the name

               of the Company around the outer margin thereof and the country

               and year of incorporation across the centre thereof.

 

          (b)  The Board shall provide for the custody of the Seal, which Seal

               shall only be used by authority of the Board or of a committee

               authorised by the Board in that behalf. Subject to these

               Bye-Laws, any instrument to which the seal is affixed shall be

               signed by a Director and by the Secretary or by a second

               Director; provided that the Secretary or a Director may affix the

               Seal over his signature only to authenticate copies of these

               Bye-Laws, the minutes of any meeting or any other documents

               requiring authentication.

 

          (c)  The Company may have one duplicate Seal which shall be known as

               the "Overseas Seal" and which shall be used for the execution of

               documents and instruments which require to be executed outside

               Bermuda. The provisions of paragraph (a) of this Bye-Law

               applicable to the Seal shall mutatis mutandis apply to the

               Overseas Seal.

 

          (d)  The Overseas Seal of the Company may be used outside Bermuda for

               the bona fide purposes of the Company and wherever and whenever

               so used shall be duly noted and recorded at a meeting of the

               Board and copies of all instruments sealed by the Overseas Seal

               shall be kept at, or remitted to, the registered office of the

               Company.

 

 

 

<PAGE>

 

                          DIVIDENDS AND OTHER PAYMENTS

 

85.  Subject to the Companies Acts and these Bye-Laws, the Board may from time

     to time declare cash dividends to be paid to the Members according to their

     rights and interests in the profits including such interim dividends as

     appear to the Board to be justified by the position of the Company. The

     Board may also pay any fixed cash dividend which is payable on any shares

     of the Company half yearly or on such other dates, whenever the position of

     the Company, in the opinion of the Board, justifies such payment. For the

     purpose of this Bye-Law, contributed surplus shall be deemed not be a

     profit of the Company and shall not be taken account of in calculating the

     amount of the profits available for distribution to the Members and shall

     not be available for distribution other than in the manner provided for in

     Bye-Law 91.

 

86.  Except insofar as the rights attaching to, or the terms of issue of, any

     share otherwise provide:-

 

          (a)  all dividends may be declared and paid according to the amounts

               paid up on the shares in respect of which the dividend is paid,

               and an amount paid up on a share in advance of calls may be

               treated for the purpose of this Bye-Law as paid-up on the share;

 

          (b)  dividends may be apportioned and paid pro rata according to the

               amounts paid-up on the shares during any portion or portions of

               the period in respect of which the dividend is paid.

 

87.  The Board may deduct from any dividend or other moneys payable to a Member

     by the Company on or in respect of any shares all sums of money (if any)

     presently payable by him to the Company on account of calls or otherwise in

     respect of shares of the Company.

 

88.  No dividend or other moneys payable by the Company on or in respect of any

     share shall bear interest against the Company.

 

89.  Any dividend, interest or other sum payable in cash to the holder of shares

     may be paid by cheque or warrant sent through the post addressed to the

     holder at his address in the Register or, in the case of joint holders,

     addressed to the holder whose name stands first in the Register in respect

     of the shares at his registered address as appears in the register or

     addressed to such person at such address as the holder or joint holders may

     in writing

 

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     direct. Every such cheque or warrant shall, unless the holder or joint

     holders otherwise direct, be made payable to the order of the holder or, in

     the case of joint holders, to the order of the holder whose name stands

     first in the Register in respect of such shares, and shall be sent at his

     or their risk and payment of the cheque or warrant by the bank on which it

     is drawn shall constitute a good discharge to the Company. Any one of two

     or more joint holders may give effectual receipts for any dividends or

     other moneys payable or property distributable in respect of the shares

     held by such joint holders.

 

90.  Any dividend unclaimed for a period of six years from the date of

     declaration of such dividend shall be forfeited and shall revert to the

     Company and the payment by the Board of any unclaimed dividend, interest or

     other sum payable on or in respect of the share into a separate account

     shall not constitute the Company a trustee in respect thereof.

 

91.  The Board may (a) declare a distribution to any Member out of contributed

     surplus and (b) may direct payment or satisfaction of such distribution or

     any dividend wholly or in part by the distribution of specific assets, and

     in particular of paid-up shares or debentures of any other company, and

     where any difficulty arises in regard to such distribution or dividend and

     Board may settle it as it thinks expedient, and in particular, may

     authorise any person to sell and transfer any fractions or may ignore

     fractions altogether, and may fix the value for distribution or dividend

     purposes of any such specific assets and may determine that cash payments

     shall be made to any Members upon the footing of the values so fixed in

     order to secure equality of distribution and may vest any such specific

     asset in trustees as may seem expedient to the Board.

 

                                    RESERVES

 

92.  The Board may, before recommending or declaring any dividend, set aside out

     of the profits of the Company such sums as it thinks proper as reserves

     which shall, at the discretion of the Board, be applicable for any purpose

     to which the profits of the Company may be properly applied and pending

     such application may, also at such discretion, either be employed in the

     business of the Company or be invested in such investments as the Board may

     from time to time think fit. The Board may also without placing the same to

     reserve carry forward any profits which it may think it prudent not to

     distribute.

 

 

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                            CAPITALIZATION OF PROFITS

 

93.  The Company may, upon the recommendation of the Board, at any time and from

     time to time resolve in general meeting to the effect that it is desirable

     to capitalize all or part of any amount for the time being standing to the

     credit of any reserve or fund which is available for distribution or to the

     credit of any share premium account or any capital redemption reserve fund

     and accordingly that such amount be set free for distribution amongst the

     Members or any class of Members who would be entitled thereto if

     distributed by way of dividend and in the same proportions, on the footing

     that the same be not paid in cash but be applied either in or towards

     paying up amounts for the time being unpaid on any shares in the Company

     held by such Members respectively or in payment up in full of unissued

     shares, debentures or other obligations of the Company, to be allotted and

     distributed credited as fully paid amongst such Members, or partly in one

     way and partly in the other, and the Board shall give effect to such

     resolution, provided that for the purpose of this Bye-Law, a share premium

     account and a capital redemption reserve fund may be applied only in paying

     up of unissued shares to be issued to such Members credited as fully paid.

 

94.  Where any difficulty arises in regard to any distribution under the last

     preceding Bye-Law the Board may settle the same as it thinks expedient and,

     in particular, may authorise any person to sell and transfer any fractions

     or may resolve that the distribution should be as nearly as may be

     practicable in the correct proportion but not exactly so or may ignore

     fractions altogether, and may determine that cash payments should be made

     to any Members in order to adjust the rights of all parties, as may seem

     expedient to the Board. The Board may appoint any person to sign on behalf

     of the persons entitled to participate in the distribution any contract

     necessary or desirable for giving effect thereto and such appointment shall

     be effective and binding upon the Members.

 

                                  RECORD DATES

 

95.  The Board may fix any date as the record date for the payment of any

     dividend or distribution or for the allotment or issue of shares in the

     Company. The Board shall also fix the record date for General Meetings of

     the Company identifying the persons entitled to receive notices of and vote

     at the General Meeting. Such record date for any General Meeting. Such

     record date for any General Meeting shall be a period fixed by the Board

     but shall not be more than 90 days or less than 7 days prior to the General

     Meeting.

 

 

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                               ACCOUNTING RECORDS

 

96.  The Board shall cause to be kept accounting records sufficient to give a

     true and fair view of the state of the Company's affairs and to show and

     explain its transactions, in accordance with the Companies Acts.

 

97.  The records of account shall be kept at the Registered Office or at such

     other place or places as the Board thinks fit, and shall at all times be

     open to inspection by the Directors, and provided that if the records of

     account are kept at some place outside Bermuda, there shall be kept at an

     office of the Company in Bermuda such records as will enable the Directors

     to ascertain with reasonable accuracy the financial position of the Company

     at the end of each three month period. No Member (other than an officer of

     the Company) shall have any right to inspect any accounting record or book

     or document of the Company except as conferred by law or authorised by the

     Board or the Company in general meeting.

 

98.  A copy of every balance sheet and statement of income and expenditure,

     including every document required by law to be annexed thereto, which is to

     be laid before the Company in general meeting, together with a copy of the

     auditors' report, shall be sent to each person entitled thereto in

     accordance with the requirements of the Companies Acts.

 

                                      AUDIT

 

99.  Save and to the extent that an audit is waived in the manner permitted by

     the Companies Acts, auditors shall be appointed and their duties regulated

     in accordance with the Companies Acts, any other applicable law and such

     requirements not inconsistent with the Companies Acts as the Board may from

     time to time determine.

 

                     SERVICE OF NOTICES AND OTHER DOCUMENTS

 

100. Any notice of a general meeting of the Company shall be deemed to be duly

     given to a Member if it is sent to him by cable, telex, telecopier or other

     mode of representing or reproducing words in a legible and non-transitory

     form at his address as appearing in the Register or any other address given

     by him to the Company for this purpose. Any such notice shall be deemed to

     have been served twenty-four hours after its dispatch.

 

 

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101. Any notice or other document delivered, sent or given to a Member in any

     manner permitted by these Bye-Laws shall, notwithstanding that such Member

     is then dead or bankrupt or than any other event has occurred, and whether

     or not the Company has notice of the death or bankruptcy or other event, be

     deemed to have been duly served or delivered in respect of any share

     registered in the name of such Member as sole or joint holder unless his

     name shall, at the time of the service or delivery of the notice or

     document, have been removed from the Register as the holder of the share,

     and such service or delivery shall for all purposes be deemed as sufficient

     service or delivery of such notice or document on all persons interested

     (whether jointly with or as claiming through or under him) in the share.

 

                                   WINDING UP

 

102. Subject to these Bye-Laws, if the Company shall be wound up, the liquidator

     may, with the sanction of a resolution of the Company and any other

     sanction required by the Companies Acts, divide amongst the Members in

     specie or kind the whole or any part of the assets of the Company (whether

     they shall consist of property of the same kind or not) and may for such

     purposes set such values as he deems fair upon any property to be divided

     as aforesaid and may determine how such division shall be carried out as

     between the Members or different classes of Members. The liquidator may,

     with the like sanction, vest the whole or any part of such assets in

     trustees upon such trust for the benefit of the contributories as the

     liquidator, with the like sanction, shall think fit, but so that no Member

     shall be compelled to accept any shares or other assets upon which there is

     any liability.

 

                                    INDEMNITY

 

103. Subject to the proviso below, every Director, officer of the Company and

     member of a committee constituted under Bye-Laws 70 and 71 shall be

     indemnified out of the funds of the Company against civil liabilities loss

     damage or expense (including but not limited to liabilities under contract,

     tort and statute or any applicable foreign law or regulation and all

     reasonable legal and other costs and expenses properly payable) incurred or

     suffered by him as such Director, officer or committee member and the

     indemnity contained in this Bye-law shall extend to any person acting as a

     Director, officer or committee member in the reasonable belief that he has

     been so appointed or

 

<PAGE>

 

     elected notwithstanding any defect in such appointment or election provided

     always that the indemnity contained in this Bye-law shall not extend to any

     matter which would render it void pursuant to the Companies Acts.

 

104. To the extent that any Director, officer or member of a committee duly

     constituted under these Bye-Laws is entitled to claim an indemnity pursuant

     to these Bye-Laws in respect of amounts paid or discharged by him, the

     relative indemnity shall take effect as an obligation of the Company to

     reimburse the person making such payment or effecting such discharge.

 

105. No Director, Secretary or other duly appointed Officer of the Company shall

     be personally liable to the Company or its Members for monetary damages in

     respect of the exercise or non-exercise of any power or duty vested in such

     Director, Secretary or Officer, provided however, the foregoing shall not

     extend to any matter which would be rendered void by the operation of

     Section 98 of the Companies Act.

 

106. Expenses incurred in defending a civil or criminal action, suit or

     proceeding shall be paid by the Company in advance of the final disposition

     of such action, suit or proceeding as authorised by the Board in the

     specific case upon receipt of an undertaking by or on behalf of the

     Director, Secretary, officer, liquidator or trustee to repay such amount

     unless it shall ultimately be determined that he is entitled to be

     indemnified by the Company as authorised in these Bye-Laws or otherwise

     pursuant to the laws of Bermuda.

 

                             ALTERATION TO BYE-LAWS

 

107. Any amendment to these Bye-Laws shall be decided on by a simple majority of

     votes cast at any General Meeting of the Company; provided however, that

     any proposed amendment to Bye-Laws 2, 3, 5, 24, 26, 27, 56, and 107 shall

     be decided on by the affirmative vote of 75% of the outstanding voting

     shares in the Company duly cast at a general meeting of the Company called

     for the purpose.

 

                                REGISTERED OFFICE

 

108. The Registered office shall be at such place in Bermuda as the Board shall

     from time to time appoint.

 

 

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                                 INTERPRETATION

 

109. In these Bye-Laws unless the context otherwise requires -

 

     "Bermuda" means the Islands of Bermuda;

 

     "Board" means the Board of Directors of the Company or the Directors

     present at a meeting of Directors at which there is a quorum;

 

     "Company" means Mutual Risk Management Ltd. incorporated in Bermuda on the

     5th day of September, 1977;

 

     "the Companies Acts" means every Bermuda statute from time to time in force

     concerning companies insofar as the same applies to the Company;

 

     "Member" means any person who agrees to become a member of the Company and

     whose name is entered in its register. The term "member" and "shareholder"

     are hereby deemed synonymous;

 

     "paid up" means paid up or credited as paid up;

 

     "Register" means the Register of Members of the Company;

 

     "Seal" means the common seal of the Company;

 

     "Secretary" includes a temporary or assistant Secretary and any person

     appointed by the Board to perform any of the duties of the Secretary;

 

     "these Bye-Laws" means these Bye-Laws in their present form or as from time

     to time amended;

 

     for the purposes of these Bye-Laws a corporation shall be deemed to be

     present in person if its representative duly authorised pursuant to the

     Companies Acts is present;

 

     words importing the singular number only include the plural number and vice

     versa;

 

 

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     words importing the masculine gender only include the feminine and neuter

     genders respectively;

 

     words importing persons include companies or associations or bodies of

     persons, whether corporate or un-incorporate;

 

     reference to writing shall include typewriting, printing, lithography,

     photography and other modes of representing or reproducing words in a

     legible and non-transitory form;

 

     any words or expressions defined in the Companies Acts in force at the date

     when these Bye-Laws any part thereof are adopted shall bear the same

     meaning in these Bye-Laws or such part (as the case may be).

 

 

 

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