Exhibit 4.3 CLASS B WARRANT ESG RE LIMITED THIS WARRANT AND THE UNDERLYING COMMON SHARES MAY NOT BE TRANSFERRED EXCEPT (I) IN COMPLIANCE WITH THE PROVISIONS OF THE BYE-LAWS OF THE COMPANY AND ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS AND (II)...

                                                                     Exhibit 4.3


                                 CLASS B WARRANT

                                 ESG RE LIMITED

THIS WARRANT AND THE UNDERLYING COMMON SHARES MAY NOT BE TRANSFERRED EXCEPT (I)
IN COMPLIANCE WITH THE PROVISIONS OF THE BYE-LAWS OF THE COMPANY AND ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS AND (II) (A) PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
(B) IN COMPLIANCE WITH RULE 144 UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN AND IN COMPLIANCE WITH RULE 144A
UNDER THE ACT, (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE ACT OR (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
ACT IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. THIS WARRANT AND THE UNDERLYING COMMON
SHARES ARE SUBJECT TO CERTAIN ADDITIONAL RESTRICTIONS ON TRANSFER CONTAINED IN A
SUBSCRIPTION AGREEMENT AND THE COMPANY'S BYE-LAWS, COPIES OF WHICH ARE ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY.


            ESG RE LIMITED, a Bermuda corporation (the "Company"), hereby
certifies that, for value received, [Holder] (the "Holder"), or assigns, is 
entitled, subject to the terms set forth below, to purchase from the Company, at
any time and from time to time in whole or in part an aggregate of ____________
(the "Aggregate Warrant Number") fully paid and non-assessable Common Shares, 
par value $1.00 per share ("Common Shares"), of the Company during the period 
beginning, with respect to each Installment (as defined below), on the date of 
the vesting of such Installment (each a "Vesting Date") and ending, with respect
to each Installment, on the tenth anniversary of the Vesting Date with respect 
to such Installment (the "Exercise Period").

            The Common Shares within each Installment shall be purchased at a
purchase price per Common Share, subject to the provisions of Paragraph 3
hereof, equal to (a) $20 (the "Price to Public") until September 1, 2001, if
applicable and (b) $18.50 during the balance of the Exercise Period (in each
case as adjusted in accordance with the terms hereof, the "Purchase Price"). The
number and character of such Common Shares are subject to adjustment as provided
below, and the term




                                                                    2




"Common Shares" shall mean, unless the context otherwise requires, the Common
Shares or other securities or property at the time deliverable upon the exercise
of this Warrant. This Warrant is herein called the "Warrant."

            1. VESTING OF WARRANTS. Each of the 5 successive one-year periods
commencing on the earlier of the closing of the Company's initial public
offering of Common Shares and December 31, 1997 (the "Issue Date") and ending on
the day before the first 5 anniversary dates thereof is referred to below as an
"Anniversary Period". During each Anniversary Period 20% of the Aggregate Number
of Warrants (an "Installment") shall be eligible to become vested. Any Warrants
that are eligible to become vested during a particular Anniversary Period but
that do not become vested during that Anniversary Period shall be eligible to
become vested in the subsequent Anniversary Periods, in additional to the
Installment for that subsequent Anniversary Period. Any Warrants that are
unvested following the fifth Anniversary Period shall be forfeited and shall no
longer be deemed to be outstanding, without any further action on the part of
the Company. In the event of a Change of Control of the Company, all unvested
Warrants shall immediately and automatically vest. The Installments that are
available for vesting during any particular Anniversary Period shall become
vested if, on each trading day of any 20 consecutive trading days during such
Anniversary Period, (a) the change in the Market Price (as defined in Section
3.1) of the Common Shares from the Floor Price (the "Market Price Change"),
expressed as a percentage, exceeds (or in the event that the Market Price Change
and the Wilshire Index Change (as defined below) are both negative, is less
than) (b) the change in the Wilshire Index from the Wilshire Index Floor (the
"Wilshire Index Change"), expressed as a percentage, plus 5.0%.

            For purposes of this Paragraph 1, the following terms have the
following meanings:

            "CHANGE OF CONTROL" means the acquisition by any person, entity or
"group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more, in the
aggregate, of either the voting power of the then outstanding Common Shares or
the combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; provided, however, that
if such acquisition results in whole or in part from a transfer of any Common
Shares or other voting securities by the Holder hereof, such acquisition shall
not constitute a Change of Control unless such transfer is effected pursuant to
an offer by such acquiror to purchase all of the Company's outstanding Common
Shares.

            "FLOOR PRICE" means the Price to Public.




                                                                    3




            "WILSHIRE INDEX FLOOR" means the closing quotation of the Wilshire
5000 Index as of the Issue Date, as prepared by Wilshire Associates, Inc. and as
reported on Bloomberg Financial Markets.

            "WILSHIRE INDEX" as of any day means the average closing quotation
of the Wilshire 5000 Index for the 15 consecutive trading days concluding on
such day.

            "WILSHIRE 5000 INDEX" means the index of that name prepared by
Wilshire Associates, Inc., as reported on Bloomberg Financial Markets or, in the
event the Wilshire 5000 Index is no longer published, a comparable index
selected in good faith by the Board of Directors of the Company providing a
broad-based measurement of the changes in stock market conditions.

            2. EXERCISE OF WARRANT. The purchase rights evidenced by this
Warrant shall be exercised by the Holder surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such Holder (the
"Exercise Notice"), to the Company at its offices, 00 Xxxxxx Xxxxxx , Xxxxxxxx,
Xxxxxxxx Xxxxxx, Xxxxxxx, accompanied by payment as specified below of the
aggregate Purchase Price determined as of the Determination Date (as defined
below) of the Common Shares being purchased pursuant to such exercise. Payment
of the aggregate Purchase Price may be made, at the option of the Holder, (i) in
cash, (ii) by certified check or bank cashier's check payable to the order of
the Company in the amount of such Purchase Price, (iii) by delivering Common
Shares with an aggregate Market Price (as hereinafter defined) as of the day
prior to the Company's receipt of the Exercise Notice (the "Determination Date")
equal to the product of the Purchase Price and the number of Common Shares being
purchased, (iv) by the Company reducing, at the request of the Holder, the
number of Common Shares for which this Warrant is exercisable by a number of
Common Shares (the "Surrendered Shares") such that the product of (a) the Market
Price per Common Share as of the Determination Date less the Purchase Price in
effect on the Determination Date and (b) the number of Surrendered Shares equals
or exceeds the product of (x) the Purchase Price in effect on the Determination
Date and (y) the number of Common Shares being purchased, or any combination of
the methods of payment described in clauses (i) through (iv) above.

                  2.1 PARTIAL EXERCISE. This Warrant may be exercised for less
than the full number of Common Shares at the times called for hereby, in which
case the number of Common Shares receivable upon the exercise of this Warrant as
a whole, and the sum payable upon the exercise of this Warrant as a whole, shall
be proportionately reduced. Upon any such partial exercise, the Company at its
expense will forthwith issue to the holder hereof a new Warrant or Warrants of
like tenor calling for the number of Common Shares as to which rights have not
been exercised, such Warrant or Warrants to be issued in the name of the holder
hereof or his nominee (upon payment by such holder of any applicable transfer
taxes).




                                                                    4




                  2.2 DELIVERY OF CERTIFICATES FOR COMMON SHARES ON CONVERSION.
As soon as practicable after the exercise of this Warrant and payment of the
Purchase Price, and in any event within ten (10) days thereafter, the Company,
at its expense, will cause to be issued in the name of and delivered to the
holder hereof a certificate or certificates for the number of fully paid and
non-assessable Common Shares or other securities or property to which such
Holder shall be entitled upon such exercise, plus, in lieu of any fractional
share to which such holder would otherwise be entitled, cash in an amount
determined in accordance with Paragraph 3.9 hereof. The Common Shares so
received shall be deemed to be issued to the Holder as the record owner of such
Common Shares as of the close of business on the date on which this Warrant is
surrendered and payment made for such Common Shares as aforesaid.

            3.    ANTI-DILUTION PROVISIONS AND OTHER
ADJUSTMENTS. In order to prevent dilution of the right granted hereunder, the
Purchase Price shall be subject to adjustment from time to time in accordance
with this Paragraph 3. Upon each adjustment of the Purchase Price pursuant to
this Paragraph 3, the registered holder hereof shall thereafter be entitled to
acquire upon exercise of this Warrant, at the Purchase Price resulting from such
adjustment, the number of the Company's Common Shares obtainable by multiplying
the Purchase Price in effect immediately prior to such adjustment by the number
of the Company's Common Shares acquirable upon conversion thereof immediately
prior to such adjustment and dividing the product thereof by the Purchase Price
resulting from such adjustments.

                  3.1 ADJUSTMENT FOR ISSUE OR SALE OF COMMON SHARES AT LESS THAN
90% OF MARKET PRICE. Except as provided in Paragraph 3.2 or 3.5 below, if and
whenever on or after the date of issuance hereof the Company shall issue or
sell, or shall in accordance with subparagraphs 3.1(1) to (9), inclusive, be
deemed to have issued or sold, other than any issuance or sale in connection
with an underwritten public offering, any Common Shares for a consideration per
share less than 90% of the Market Price in effect immediately prior to the time
of such issue or sale, then forthwith upon such issue or sale (the "Triggering
Transaction"), the Purchase Price shall, subject to subparagraphs (1) to (9) of
this Paragraph 3.1, be reduced to the Purchase Price (calculated to the nearest
tenth of a cent) determined by multiplying the Purchase Price in effect
immediately prior to the time of such issue or sale by a fraction, the numerator
of which shall be the sum of (x) the product of the Number of Common Shares
Deemed Outstanding immediately prior to such Triggering Transaction multiplied
by the Market Price immediately prior to such Triggering Transaction plus (y)
the total amount, if any, received or receivable at any time by the Company as
consideration for the issuance or sale of such Common Shares and the denominator
of which shall be the product of (x) the Number of Common Shares Deemed
Outstanding immediately after such issue or sale, multiplied by (y) the Market
Price immediately prior to such issue or sale.




                                                                    5




            For purposes of this Paragraph 3, the term "Number of Common Shares
Deemed Outstanding" at any given time shall mean the sum of (i) the number of
the Company' s Common Shares outstanding at such time, and (ii) the number of
the Company's Common Shares deemed to be outstanding under subparagraphs 3.1(1)
to (9), inclusive, at such time. For purposes of this Agreement, the term
"Market Price" as of any day shall mean the average closing price of a Common
Share or other security for the 15 consecutive trading days concluding on such
day on the principal national securities exchange on which the Common Shares or
securities are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the average of the reported bid and
asked prices during such 15 trading day period in the over-the-counter market as
furnished by the National Quotation Bureau, Inc., or, if such firm is not then
engaged in the business of reporting such prices, as furnished by any member of
the National Association of Securities Dealers, Inc. selected by the Company or,
if the Common Shares or securities are not publicly traded, the Market Price for
such day shall be the fair market value thereof determined in good faith by the
Board of Directors of the Company.

            For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:

                  (1) In case the Company at any time shall in any manner grant
      (whether directly or by assumption in a merger or otherwise) any rights to
      subscribe for or to purchase, or any options for the purchase of, Common
      Shares or any other securities convertible into or exchangeable for Common
      Shares (such rights or options being herein called "Options" and such
      convertible or exchangeable shares or securities being herein called
      "Convertible Securities"), whether or not such Options or the right to
      convert or exchange any such Convertible Securities are immediately
      exercisable and the price per share for which the Common Shares are
      issuable upon exercise, conversion or exchange (determined by dividing (x)
      the total amount, if any, received or receivable by the Company as
      consideration for the granting of such Options, plus the minimum aggregate
      amount of additional consideration payable to the Company upon the
      exercise of all such Options, plus, in the case of such Options which
      relate to Convertible Securities, the minimum aggregate amount of
      additional consideration, if any, payable upon the issue or sale of such
      Convertible Securities and upon the conversion or exchange thereof, by (y)
      the total maximum number of Common Shares issuable upon the exercise of
      such Options or the conversion or exchange of such Convertible Securities)
      shall be less than 90% of the Market Price determined as of the date of
      such grant, then the total maximum number of Common Shares issuable upon
      exercise of such Options or conversion or exchange of all such Convertible
      Securities shall (as of the date of the grant of such Option) be deemed to
      be outstanding and to have been issued and sold by the Company for such
      price per share. No adjustment of the Purchase Price shall be made




                                                                    6




      upon exercise of such Options or conversion or exchange of such
      Convertible Securities, except as otherwise provided in subparagraph (3)
      below.

                  (2) In case the Company at any time shall in any manner issue
      (whether directly or by assumption in a merger or otherwise) or sell any
      Convertible Securities, whether or not the rights to exchange or convert
      thereunder are immediately exercisable, and the price per share for which
      Common Shares are issuable upon such conversion or exchange (determined by
      dividing (x) the total amount received or receivable by the Company as
      consideration for the issue or sale of such Convertible Securities, plus
      the minimum aggregate amount of additional consideration, if any, payable
      to the Company upon the conversion or exchange thereof, by (y) the total
      maximum number of Common Shares issuable upon the conversion or exchange
      of all such Convertible Securities) shall be less than the 90% of Market
      Price, determined as of the date of such issue or sale, as the case may
      be, then the total maximum number of Common Shares issuable upon
      conversion or exchange of all such Convertible Securities shall (as of the
      date of the issue or sale of such Convertible Securities) be deemed to be
      outstanding and to have been issued and sold by the Company for such price
      per share. No adjustment of the Purchase Price shall be made upon the
      actual issue of such Common Shares upon exercise of the rights to exchange
      or convert under such Convertible Securities, except as otherwise provided
      in subparagraph (3) below.

                  (3) If the exercise price provided for in any Options referred
      to in subparagraph (1), the additional consideration, if any, payable upon
      the conversion or exchange of any Convertible Securities referred to in
      subparagraphs (1) or (2), or the rate at which any Convertible Securities
      referred to in subparagraph (1) or (2) are convertible into or
      exchangeable for Common Shares shall change at any time (other than under
      or by reason of provisions designed to protect against dilution of the
      type set forth in Paragraph 3.1 or 3.3), the Purchase Price in effect at
      the time of such change shall forthwith be readjusted to the Purchase
      Price which would have been in effect at such time had such Options or
      Convertible Securities still outstanding provided for such changed
      purchase price, additional consideration or conversion or exchange rate,
      as the case may be, at the time initially granted, issued or sold. If the
      exercise price provided for in any Option referred to in subparagraph (1),
      the additional consideration, if any, payable upon the conversion or
      exchange of any Convertible Securities referred to in subparagraphs (1) or
      (2), or the rate at which any Convertible Securities referred to in
      subparagraphs (1) or (2) are convertible into or exchangeable for Common
      Shares, shall be reduced at any time under or by reason of provisions with
      respect thereto designed to protect against dilution, then in case of the
      delivery of Common Shares upon the exercise of any such Option or upon
      conversion or exchange of any such Convertible Security, the Purchase
      Price




                                                                    7




      then in effect hereunder shall forthwith be adjusted to such respective
      amount as would have been obtained had such Option or Convertible Security
      never been issued as to such Common Shares and had adjustments been made
      upon the issuance of Common Shares delivered as aforesaid, but only if as
      a result of such adjustment the Purchase Price then in effect hereunder is
      hereby reduced and provided that there shall be no duplication of any
      adjustments otherwise made in accordance with the terms hereof.

                  (4) On the expiration of any Option or the termination of any
      right to convert or exchange any Convertible Securities, the Purchase
      Price then in effect hereunder shall forthwith be increased to the
      Purchase Price which would have been in effect at the time of such
      expiration or termination had such Option or Convertible Securities, to
      the extent outstanding immediately prior to such expiration or
      termination, never been issued.

                  (5) In case any Options shall be issued in connection with the
      issue or sale of other securities of the Company, together comprising one
      integral transaction in which no specific consideration is allocated to
      such Options by the parties thereto, such Options shall be deemed to have
      been issued without consideration.

                  (6) In case any Common Shares, Options or Convertible
      Securities shall be issued or sold or deemed to have been issued or sold
      for cash, the consideration received therefor shall be deemed to be the
      amount received by the Company therefor. In case any Common Shares,
      Options or Convertible Securities shall be issued or sold for a
      consideration other than cash, the amount of the consideration other than
      cash received by the Company shall be the fair value of such consideration
      as determined in good faith by the Board of Directors of the Company.

                  (7) The number of Common Shares outstanding at any given time
      shall not include shares owned or held by or for the account of the
      Company, and the disposition of any shares so owned or held shall be
      considered an issue or sale of Common Shares for the purpose of this
      Paragraph 3.1.

                  (8) In case the Company shall declare a dividend or make any
      other distribution upon the shares of the Company payable in Common
      Shares, Options, or Convertible Securities, then in such case any Common
      Shares, Options or Convertible Securities, as the case may be, issuable in
      payment of such dividend or distribution shall be deemed to have been
      issued or sold without consideration.

                  (9) For purposes of this Paragraph 3.1, in case the Company
      shall take a record of the holders of its Common Shares for the purpose of




                                                                    8




      determining holders entitled (x) to receive a dividend or other
      distribution payable in Common Shares, Options or in Convertible
      Securities, or (y) to subscribe for or purchase Common Shares, Options or
      Convertible Securities, then such record date shall be deemed to be the
      date of the issue or sale of the Common Shares deemed to have been issued
      or sold upon the declaration of such dividend or the making of such other
      distribution or the date of the granting of such right or subscription or
      purchase, as the case may be.

                  3.2 DIVIDENDS NOT PAID OUT OF EARNINGS OR EARNED SURPLUS. In
the event the Company shall declare a dividend upon the Common Shares (other
than a dividend covered by subparagraph 3.1(8)) payable otherwise than out of
earnings or earned surplus, determined in accordance with generally accepted
accounting principles, including the making of appropriate deductions for
minority interests, if any, in subsidiaries (herein referred to as "Liquidating
Dividends"), then, as soon as possible after the exercise of this Warrant, the
Company shall pay to the person exercising such Warrant an amount equal to the
aggregate value at the time of such exercise of all Liquidating Dividends which
would have been payable to such person had such person exercised this Warrant on
the record date for determining persons entitled to such Liquidating Dividend.
For the purposes of this Paragraph 3.2, a dividend other than in cash shall be
considered payable out of earnings or earned surplus only to the extent that
such earnings or earned surplus are charged an amount equal to the fair value of
such dividend as determined in good faith by the Board of Directors of the
Company.

                  3.3 SUBDIVISIONS AND COMBINATIONS. In case the Company shall
at any time subdivide (other than by means of a dividend payable in Common
Shares covered by subparagraph 3.1(8)) its outstanding Common Shares into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be appropriately reduced, and conversely, in case the
outstanding Common Shares of the Company shall be combined into a smaller number
of shares, the Purchase Price in effect immediately prior to such combination
shall be proportion ately increased.

                  3.4 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE OF ASSETS. If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Shares shall
be entitled to receive stock, securities, cash or other property with respect to
or in exchange for Common Shares, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder of this Warrant shall have the right to acquire
and receive upon exercise hereof such common shares, securities, cash or other
property issuable or payable (as part of the reorganization, reclassification,
consolidation, merger or sale) with respect to or in exchange for such number of
outstanding Common Shares of the Company as




                                                                    9




would have been received upon exercise of the Warrant at the Purchase Price then
in effect. The Company will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument mailed or delivered
to the holder of this Warrant at the last address of such holder appearing on
the books of the Company, the obligation to deliver to such holder such common
shares, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase. In the event that pursuant to the terms
of this Paragraph 3.4, this Warrant becomes exercisable for securities other
than Common Shares, then the provisions of Section 3 shall apply to such
securities as though such securities were Common Shares. If a purchase, tender
or exchange offer is made to and accepted by the holders of more than 50% of the
outstanding Common Shares of the Company, the Company shall not effect any
consolidation, merger or sale with the person having made such offer or with any
Affiliate of such person, unless prior to the consum mation of such
consolidation, merger or sale the holder of this Warrant shall have been given a
reasonable opportunity to then elect to receive upon the exercise of this
Warrant either the common shares, securities or assets then issuable with
respect to the Common Shares of the Company or the common shares, securities or
assets, or the equivalent, issued to previous holders of the Common Shares in
accordance with such offer. For purposes hereof the term "Affiliate" with
respect to any given person shall mean any person controlling, controlled by or
under common control with the given person.

                  3.5 NO ADJUSTMENT FOR EXERCISE OF CERTAIN OPTIONS, WARRANTS,
ETC. The provisions of this Section 3 shall not apply to any Common Shares
issued, issuable or deemed outstanding under subparagraphs 3.1(1) to (9)
inclusive: (i) to any person pursuant to any stock option, stock purchase or
similar plan or arrangement for the benefit of employees, consultants or
directors of the Company or its subsidiaries or (ii) pursuant to options,
warrants and conversion rights in existence on the date of issuance hereof.

                  3.6   NOTICES OF RECORD DATE, ETC.  In the event that:

                  (1)   the Company shall declare any cash dividend upon its
            Common Shares, or

                  (2) the Company shall declare any dividend upon its Common
            Shares payable in common shares or make any special dividend or
            other distribution to the holders of its Common Shares, or

                  (3) the Company shall offer for subscription pro rata to the
            holders of its Common Shares any additional common shares of any
            class or other rights, or





                                                                    10




                  (4) there shall be any capital reorganization. or
            reclassification of the capital stock of the Company, including any
            subdivision or combination of its outstanding Common Shares, or
            consolidation or merger of the Company with, or sale of all or
            substantially all of its assets to, another corporation, or

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

then, in connection with such event, the Company shall give to the holder of
this Warrant:

            (i)   at least ten (10) days prior written notice of the date on
                  which the books of the Company shall close or a record shall
                  be taken for such dividend, distribution or subscription
                  rights or for determining rights to vote in respect of any
                  such reorganization, reclassification, consolidation, merger,
                  sale, dissolution, liquidation or winding up; and

            (ii)  in the case of any such reorganization, reclassification,
                  consolidation, merger, sale, dissolution, liquidation or
                  winding up, at least ten (10) days, prior written notice of
                  the date when the same shall take place.

            Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Shares shall be entitled thereto, and
such notice in accordance with the foregoing clause (ii) shall also specify the
date on which the holders of Common Shares shall be entitled to exchange their
Common Shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Each such written notice shall be
given by first class mail, postage prepaid, addressed to the holder of this
Warrant at the address of such holder as shown on the books of the Company.

            The failure to deliver any such notice shall not, however, affect
the validity of the action so taken by the Corporation.

                  3.7 GRANT, ISSUE OR SALE OF OPTIONS, CONVERTIBLE SECURITIES,
OR RIGHTS. If at any time or from time to time on or after the date of issuance
hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Shares of the Company and such grants,
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof (other than by reason of the fact that the issuance of such
shares was at a Purchase Price equal to or




                                                                    11




greater than 90% of the then current Market Price), then the holder of this
Warrant shall be entitled to acquire (within thirty (30) days after the later to
occur of the initial exercise date of such Purchase Rights or receipt by such
holder of the notice concerning Purchase Rights to which such holder shall be
entitled under Paragraph 3.6) upon the terms applicable to such Purchase Rights
either:

            (i)   the aggregate Purchase Rights which such holder could have
                  acquired if it had held the number of Common Shares acquirable
                  upon exercise of this Warrant immediately before the grant,
                  issuance or sale of such Purchase Rights; provided that if any
                  Purchase Rights were distributed to holders of Common Shares
                  without the payment of additional consideration by such
                  holders, corresponding Purchase Rights shall be distributed to
                  the exercising holder of this Warrant as soon as possible
                  after such exercise and it shall not be necessary for the
                  exercising holder of this Warrant specifically to request
                  delivery of such rights; or

            (ii)  in the event that any such Purchase Rights shall have expired
                  or shall expire prior to the end of said thirty (30) day
                  period, the number of Common Shares or the amount of property
                  which such holder could have acquired upon such exercise at
                  the time or times at which the Company granted, issued or sold
                  such expired Purchase Rights.

                  3.8 ADJUSTMENT BY BOARD OF DIRECTORS. If any event occurs as
to which, in the opinion of the Board of Directors of the Company, the
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holder of this Warrant in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such rights as aforesaid, but in no event shall any adjustment have the
effect of increasing the Purchase Price as otherwise determined pursuant to any
of the provisions of this Section 3 except in the case of a combination of
shares of a type contemplated in Paragraph 3.3 and then in no event to an amount
larger than the Purchase Price as adjusted pursuant to Paragraph 3.3.

                  3.9 FRACTIONAL SHARES. The Company shall not issue fractions
of Common Shares upon exercise of this Warrant or scrip in lieu thereof. If any
fraction of a Common Share would, except for the provisions of this Paragraph
3.9, be issuable upon exercise of this Warrant, the Company shall in lieu
thereof pay to the person entitled thereto an amount in cash equal to the
product of such fraction, calculated to the nearest one-hundredth (1/100), and
the Market Price of a Common Share as of such date of exercise.




                                                                    12




                  3.10 OFFICER'S STATEMENT AS TO ADJUSTMENTS. Whenever the
Purchase Price shall be adjusted as provided in Section 3 hereof, the Company
shall forthwith file at the office designated for the exercise of this Warrant,
a statement, signed by the Chairman of the Board, the President, any Vice
President or the Treasurer of the Company, showing in reasonable detail the
facts requiring such adjustment and the Purchase Price that will be effective
after such adjustment. The Company shall also cause a notice setting forth any
such adjustments to be sent by mail, first class, postage prepaid, to the record
holder of this Warrant at his or its address appearing on the Warrant register
of the Company. If such notice relates to an adjustment resulting from an event
referred to in Paragraph 3.6, such notice shall be included as part of the
notice required to be mailed and published under the provisions of Paragraph 3.6
hereof.

            4. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company shall not increase the par value of any
Common Shares receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Common Shares upon the exercise of
this Warrant.

            5. RESERVATION OF COMMON SHARES, ETC., ISSUABLE UPON EXERCISE OF
WARRANTS. The Company shall at all times reserve and keep available out of its
authorized but unissued Common Shares, solely for the issuance and delivery upon
the exercise of this Warrant and other similar Warrants, such number of its duly
authorized Common Shares as from time to time shall be issuable upon the
exercise of this Warrant and all other similar Warrants at the time outstanding.

            6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (which surety if reasonably required) in an amount
reasonably satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company shall issue, in lieu thereof, a new Warrant of
like tenor.

            7. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.




                                                                    13




            8. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms to all of which each taker or owner hereof consents and agrees:

                        (a)   This Warrant and the Common Shares issuable upon
exercise of this Warrant (the "Underlying Shares") may not be transferred except
(i) in compliance with the provisions of the Bye-laws of the Company and any
applicable state securities or "blue sky" laws and (ii)(a) pursuant to an
effective registration under the Securities Act of 1933, as amended (the "Act"),
(b) in compliance with Rule 144 under the Act, (c) inside the United States to a
"qualified institutional buyer" as defined in and in compliance with Rule 144A
under the Act, (d) outside the United States in compliance with Rule 904 of
Regulation S under the Act or (e) inside the United States to an institutional
"accredited investor" as defined in Rule 501(a) (1), (2), (3) or (7) under the
Act in a transaction which, in the opinion of counsel reasonably satisfactory to
the Company, qualifies as an exempt transaction under the Act and the rules and
regulations promulgated thereunder. This Warrant and the Underlying Shares are
subject to certain additional restrictions on transfer contained in a
Subscription Agreement and the Company's Bye-laws, copies of which are on file
at the principal office of the Company.

The provisions of this Section 8 shall be binding upon any transferee of this
Warrant and upon each holder of Underlying Shares.

                        (b) Subject to the limitations described in this
Paragraph 8, title to this Warrant may be transferred by endorsement (by the
holder hereof executing the form of assignment at the end hereof including
guaranty of signature) and delivery in the same manner as in the case of a
negotiable instrument transferable by endorsement and delivery.

                        (c) Any person in possession of this Warrant properly
endorsed and, if not the original holder hereof, to whom possession was
transferred in accordance with the provisions of Paragraphs 8(a) and (b) is
authorized to represent himself as absolute owner hereof and is granted power to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of every such bona fide
purchaser, and every such bona fide purchaser shall acquire title hereto and to
all rights represented hereby.

                        (d) Until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder of this Warrant as the
absolute owner hereof for all purposes without being affected by any notice to
the contrary.

                        (e) The Company shall not be required to pay any Bermuda
or U.S. Federal or state transfer tax or charge that may be payable in respect
of any transfer involved in the transfer or delivery of this Warrant or the
issuance or




                                                                    14




conversion or delivery of certificates for Common Shares in a name other than
that of the registered holder of this Warrant or to issue or deliver any
certificates for Common Shares upon the exercise of this Warrant until any and
all such taxes and charges shall have been paid by the holder of this Warrant or
until it has been established to the Company's satisfaction that no such tax or
charge is due.

            9. NO RIGHTS TO VOTE OR RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS.
Prior to the exercise of this Warrant, the holder hereof shall not be entitled
to any rights of a shareholder of the Company with respect to Common Shares for
which this Warrant shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

            10. MAILING OF NOTICES, ETC. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by firsts-class
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an address
to the Company in writing.

            11. CHANGE, WAIVER, ETC. The terms of this Warrant may not be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the holder of this Warrant against which enforcement of the
change, waiver, discharge or termination is sought.

                              ESG RE LIMITED


                              By:
                                    --------------------------------
                                    Name: Xxxxxxxx X. Xxxx
                                    Title:   Chief Executive Officer

Dated: December __, 1997








              [To be signed only upon transfer of Warrant]

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________ the within Warrant and
appoints _________________________________attorney to transfer said right on the
books of ESG Re Limited with full power of substitution in the premises.

Dated:


_________________



                                           _____________________________
                                          (Signature must conform in all
                                          respects to name of Holder as
                                          specified on the face of the
                                          Warrant)

                                           _____________________________
                                                      Address


In the presence of



_________________








            [To be signed only upon exercise of Warrant]



To ESG Re Limited

            The undersigned, the holder of the within Warrant hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____________ Common Shares of ESG Re Limited and herewith
makes payment of $ _____________ therefor and/or requests that the number of 
Common Shares for which the within Warrant is exercisable be reduced by ________
Common Shares (in addition to the Common Shares being purchased) and/or delivers
Common Shares, the aggregate of such payment being equal to the aggregate 
purchase price for the Common Shares being purchased, and requests that the 
certificates for the Common Shares being purchased be issued in the name of, 
and be delivered to, _________________ whose address is ________________________
_______________________________ .



Dated:



_________________



                                           _____________________________
                                          (Signature must conform in all
                                          respects to name of Holder as
                                          specified on the face of the
                                          Warrant)

                                           _____________________________
                                                      Address