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Fourth Quarter 2007 net loss of $1.06 billion or $6.01 per ordinary share - in line with pre-announcement on January 23, 2008

Fourth Quarter and Full Year Highlights

  • • Net income available to ordinary shareholders for the quarter and year ended December 31, 2007 excluding previously announced charges was $439.9 million and $1.86 billion, respectively
  • • Combined ratio from P&C operations was 93.3% for the quarter and 88.8% for the year
  • • Net investment income for the quarter increased 7.3% to $560.5 million from the prior year quarter
  • •  Return on ordinary shareholders equity, based on "net income excluding net realized gains and losses" (1), was 4.9% for the quarter and 18.7% for the full year
  • • Basic and diluted book value per ordinary share was $51.16 at December 31, 2007

HAMILTON, Bermuda, February 5, 2008 --- XL Capital Ltd("XL" or the "Company") today reported a net loss to ordinaryshareholders for the quarter ended December 31, 2007 of $1.06 billion, or anet loss of $6.01 per ordinary share, compared with net income of$471.1 million, or net income of $2.62 per ordinary share, for the quarterended December 31, 2006. "Net income excluding net realized gains and losses"(1) for the fourthquarter of 2007 was $117.1 million, or $0.66 per ordinary share, compared with$510.4 million, or $2.84 per ordinary share, for the prior year quarter.

The net loss to ordinary shareholders for the quarter ended December 31,2007 includes previously announced charges of $1.5 billion, net of tax,related to credit market conditions. (See attached table) Excludingthese charges, net income available to ordinary shareholders was$439.9 million and $1.86 billion for the quarter and year ended December 31,2007, respectively.

For the twelve months ended December 31, 2007, net income available toordinary shareholders was $360.4 million, or $2.01 per ordinary share,compared with $1.72 billion, or $9.60 per ordinary share, for the twelvemonths ended December 31, 2006. "Net income excluding net realized gains andlosses" for the same period was $1.75 billion, or $9.72 per ordinary share, ascompared with $1.76 billion, or $9.79 per ordinary share, for the twelvemonths ended December 31, 2006.

Return on ordinary shareholders' equity was 3.9% and 19.6% for twelvemonths ended December 31, 2007 and 2006, respectively. Return on ordinaryshareholders' equity, based on net income excluding net realized gains andlosses was 18.7% and 20.0% for the twelve months ended December 31, 2007 and2006, respectively.

At December 31, 2007, diluted and basic book value per ordinary share was$51.16, as compared to diluted book value of $56.29 and basic book value of$56.45 as at September 30, 2007.

Commenting on the current quarter results, President, Chief ExecutiveOfficer and acting Chairman Brian M. O'Hara said:

"I believe that these previously announced fourth quarter charges, whiledisappointing, have reduced uncertainty and increased investors' ability torecognize the strength of XL's diversified and global insurance andreinsurance franchise, which continues to perform very well as evidenced byour full year combined ratio of 88.8%. In addition, our investment fund andmanager affiliates have had another strong performance in 2007. We remaincommitted to building shareholder value as we execute our strategy."

SEGMENT HIGHLIGHTS - FOURTH QUARTER 2007 VERSUS FOURTH QUARTER 2006Insurance

Underwriting profit for the quarter ended December 31, 2007 was$17.7 million compared with $63.0 million in the prior year period. Includedin the current quarter's underwriting results is net favorable prior yeardevelopment of $33.5 million, as compared with $20.1 million in the prior yearperiod.

    -- Gross premiums written decreased 7.4% primarily due to competitive       market conditions across most lines in the current quarter and specific       exposure initiatives, partially offset by favorable changes in foreign       exchange rates and an increase in long-term agreements.    -- Net premiums earned decreased 3.8% as a result of the earned impact of       lower levels of net premiums written in previous quarters.    -- The combined ratio was 98.3% compared with 94.6% for the prior year       period. The loss ratio excluding the impact of net prior year       development for the current and prior year quarter was 68.6% and 65.5%,       respectively.

Reinsurance

Underwriting profit for the quarter ended December 31, 2007 was$90.4 million compared with $128.3 million for the prior year period. Includedin the current quarter's underwriting results is net favorable prior yeardevelopment of $59.1 million, as compared with $82.8 million in the prior yearperiod.

    -- Gross premiums written decreased by 52.4% due primarily to timing       differences on certain large contracts, as well as premium adjustments       in the prior year quarter.  Excluding these items, gross premiums       written decreased $80.1 million or 27% compared to the prior year,       principally due to selective treaty cancellations and competitive       market conditions.    -- Net premiums earned decreased 4.3% reflecting the effects of lower net       premiums written throughout the year.    -- The combined ratio was 84.8% compared with 79.4% in the prior year       period. The loss ratio excluding the impact of net prior year       development for the current and prior year quarter was 66.5% and 63.8%,       respectively.

Life Operations

Gross premiums written were $154.3 million compared with $207.1 million inthe prior year quarter. Contributing to the decrease was a $78.7 millionsingle premium annuity contract that was included in the prior year quarter,which was partially offset by continued growth in the regular premiumbusiness. The fourth quarter 2007 included a $25.4 million increase in policyand benefit reserves with respect to certain novated blocks of U.S.-basedterm-life mortality reinsurance business. Contribution from life operationswas $4.0 million as compared with $25.6 million in the fourth quarter lastyear. Included in contribution for the current quarter is a foreign exchangeloss of $3.9 million as compared with a foreign exchange gain of $2.5 millionin the prior year quarter.

Investment Operations

Net investment income from P&C operations, excluding investment incomefrom Structured Products, increased 15.0% from the prior year period to$326.8 million primarily due to higher investment yields. Net income frominvestment affiliates was $70.6 million in the fourth quarter of 2007 comparedwith $94.4 million in the fourth quarter of 2006. Net loss from investmentmanager affiliates was $9.8 million as compared to net income of $49.7 millionfor the prior year period.

Total net realized losses on investments were $470.6 million, whichincludes $416.3 million for "other than temporary impairments" primarilyrelated to deterioration in structured credit assets and $54.3 million fromrealized losses.

Net unrealized losses on investments, net of tax, were $332.5 million atDecember 31, 2007 compared with net unrealized losses, net of tax of$452.2 million at September 30, 2007 and net unrealized gains, net of tax, of$410.5 million at December 31, 2006, respectively. The decrease in netunrealized losses of $119.7 million for the quarter was substantially due torealized losses and charges for other than temporary impairments and decliningU.S. and U.K. government interest rates. This was partially offset bywidening credit spreads on corporate and structured credit investments. TheCompany has also posted on its website Structured Credit data to providedetail on its exposures as at December 31, 2007.

Other Items

During the quarter, the Company repurchased 1.78 million ordinary sharesat an average price of $69.81 per share. For the full year, the Companyrepurchased 14.98 million ordinary shares at an average price of $75.05 pershare. As at December 31, 2007, there were 177.9 million ordinary sharesissued and outstanding. The Company redeemed its Series B preference sharesfor $290.5 million, including a dividend of $0.26 per share or $3.0 million onNovember 19, 2007. The Company also paid a dividend on the Company's Ordinaryshares of $0.38 per share on December 28, 2007.

Total operating expenses were $287.3 million for the fourth quarter 2007,a decrease from $365.5 million in the prior year quarter. The decrease isprimarily due to the inclusion of $23.5 million of operating expenses of SCAin the prior year quarter, together with a decrease in both professional feesand performance-based compensation costs.

Foreign exchange gains were $39.7 million compared with a loss of $14.0million in the prior year quarter.

All financial information contained in this release is unaudited andsubject to revision pending the completion of the audits of XL, SCA and XL'sother affiliates.

The Company will host a conference call to discuss its Fourth Quarter andYear End 2007 results on Wednesday, February 6, 2008 at 10:00 a.m. Easterntime. The conference call can be accessed through a listen-only dial-in numberor through a live webcast. To listen to the conference call, please dial(877) 422-4657 or (706) 679-0474, Conference ID# 30099493. The webcast willbe available on XL's website located at www.xlgroup.com and will be archivedon this site from approximately 1:00 p.m. Eastern time on February 6, 2008through midnight Eastern time on March 6, 2008.

A telephone replay of the conference call will be available beginning atapproximately 1:00 pm. Eastern time on February 6, 2008 until midnight Easterntime on February 27, 2008 dialing (800) 642-1687 or (706) 645-9291, ConferenceID #30099493. An unaudited financial supplement relating to the Company'sfourth quarter 2007 results is available on its website located atwww.xlgroup.com.

XL Capital Ltd, through its operating subsidiaries, is a leading providerof global insurance and reinsurance coverages to industrial, commercial andprofessional service firms, insurance companies and other enterprises on aworldwide basis. As of December 31, 2007, XL Capital Ltd had consolidatedassets of $57.9 billion and consolidated shareholders' equity of $10.1billion. More information about XL Capital Ltd is available atwww.xlgroup.com.

This press release contains forward-looking statements. Statements thatare not historical facts, including statements about XL's beliefs, plans orexpectations, are forward-looking statements. These statements are based oncurrent plans, estimates, and expectations. Actual results may differmaterially from those included in such forward-looking statements andtherefore you should not place undue reliance on them. A non-exclusive list ofthe important factors that could cause actual results to differ materiallyfrom those in such forward-looking statements includes the following: (a)greater risk of loss in connection with obligations guaranteed by certain ofour insurance company operating affiliates due to recent deterioration in thecredit markets stemming from the poor performance of sub-prime residentialmortgage loans; (b) greater frequency or severity of claims and loss activitythan XL's underwriting, reserving or investment practices anticipate based onhistorical experience or industry data; (c) trends in rates for property andcasualty insurance and reinsurance; (d) developments, including furthervolatility, in the world's credit, financial and capital markets thatadversely affect the performance of XL's investments or access to suchmarkets, including but not limited to, further market developments relating tosub-prime and residential mortgages; (e) changes in general economicconditions, including foreign currency exchange rates, inflation and otherfactors; and (f) the other factors set forth in XL's most recent reports onForm 10-K, Form 10-Q, and other documents on file with the Securities andExchange Commission, as well as management's response to any of theaforementioned factors. XL undertakes no obligation to update or revisepublicly any forward-looking statement, whether as a result of newinformation, future developments or otherwise.

(1) Defined as net income available to ordinary shareholders excluding netrealized gains and losses on investments, net realized and unrealized gainsand losses on credit, structured financial and investment derivatives, net oftax, for the Company and its share of these items for Security CapitalAssurance Ltd ("SCA") and the Company's other insurance company operatingaffiliates, herein referred to as "net income excluding net realized gains andlosses". "Net income excluding net realized gains and losses" is a non-GAAPmeasure. See the schedule entitled "Reconciliation" at the end of this releasefor a reconciliation of net income/loss excluding net realized gains andlosses to net income available to ordinary shareholders.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA                         (U.S. dollars in thousands)                              Three Months Ended     Twelve Months Ended    Income Statement Data:       December 31             December 31                          (Unaudited)              (Unaudited)                             2007         2006         2007         2006    Revenues:                           (Note 1)                  (Note 1)    Gross premiums written:      - P&C operations   $1,405,544   $1,659,074   $8,097,760   $8,693,431      - Life operations     154,290      207,093      743,220      686,906      - Financial operations      -      133,603      156,983      405,910    Net premiums written:      - P&C operations    1,139,062    1,322,643    6,297,720    6,569,712      - Life operations     141,915      196,143      698,693      646,608      - Financial operations      -      119,380      130,445      401,127    Net premiums earned:      - P&C operations    1,586,464    1,652,028    6,418,627    6,730,282      - Life operations     166,961      214,981      701,047      646,450      - Financial operations      -       44,306       85,682      192,786    Net investment income   560,513      522,539    2,248,807    1,978,184    Net realized (losses)     on investments        (470,648)     (62,963)    (603,268)    (116,458)    Net realized and     unrealized (losses)     gains on derivative     instruments            (14,218)      22,483      (55,451)     101,183    Net income from     investment affiliates   70,593       94,424      326,007      269,036    Fee and other income      2,632        8,646       14,271       31,732        Total revenues   $1,902,297   $2,496,444   $9,135,722   $9,833,195    Expenses:    Net losses and     loss expenses     incurred              $983,704     $971,945   $3,841,003   $4,201,194    Claims and policy     benefits               225,775      248,291      888,658      807,255    Acquisition costs       252,664      278,570    1,063,713    1,102,046    Operating expenses      287,315      365,489    1,144,910    1,182,939    Exchange (gains)     losses                 (39,699)      13,988      (19,734)      89,373    Interest expense        163,401      139,386      621,905      552,275    Amortization of     intangible assets          420          420        1,680        2,355    Total expenses       $1,873,580   $2,018,089   $7,542,135   $7,937,437      Net income before       minority interest,       income tax and       net income from       operating       affiliates           $28,717     $478,355   $1,593,587   $1,895,758    Minority interest     in net income of     subsidiary                 (66)      14,403       23,928       25,016    Income tax               43,000       42,917      235,758      219,645    Net loss/(income)     from operating     affiliates           1,044,585      (60,110)     903,945     (111,670)    Net (loss)/income   $(1,058,802)    $481,145     $429,956   $1,762,767    Preference share     dividends               (2,984)     (10,081)     (69,514)     (40,322)    Net (loss)/income     available to     ordinary     shareholders       $(1,061,786)    $471,064     $360,442   $1,722,445    Note 1: Certain amounts in 2006 have been reclassified to conform with    the current period presentation.                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA               (Shares in thousands, except per share amounts)                                Three Months Ended         Twelve Months Ended    Income Statement Data          December 31                December 31     (continued):             (Unaudited)              (Unaudited)                                 2007        2006          2007       2006                                           (Note 1)                 (Note 1)    Weighted average number     of ordinary shares     and ordinary share     equivalents:                    Basic      176,802      179,099      178,500     178,793                    Diluted    177,467      179,832      179,693     179,450    Per Share Data (Note 2):    Net (loss)/income     available to ordinary     shareholders               ($6.01)       $2.62        $2.01       $9.60    Ratios - P&C operations:    Loss ratio                    62.0%        58.6%        59.8%       62.2%    Expense ratio                 31.3%        30.3%        29.0%       27.3%    Combined ratio                93.3%        88.9%        88.8%       89.5%    Note 1: Certain amounts in 2006 have been reclassified to conform with    the current period presentation.    Note 2: Average stock options outstanding have been excluded where anti-    dilutive to earnings per share. Consequently where there is a net loss,    basic weighted average ordinary shares outstanding are used to calculate    net loss per share.                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA            (U.S. dollars in thousands, except per share amounts)    Balance Sheet Data:                          As at          As at                                          December 31, 2007 December 31, 2006                                             (Unaudited)                                                              (Note 1)    Total investments available for sale       $36,265,803   $39,350,983    Cash and cash equivalents                    3,880,030     2,223,748    Investments in affiliates                    2,728,118     2,308,781    Unpaid losses and loss expenses recoverable  4,697,471     5,027,772    Total assets                                57,879,233    59,308,870    Unpaid losses and loss expenses             23,186,706    22,895,021    Deposit liabilities                          7,920,085     7,857,827    Future policy benefit reserves               6,772,042     6,476,057    Unearned premiums                            4,681,989     5,652,897    Notes payable and debt                       2,868,731     3,368,376    Total shareholders' equity                  10,102,206    10,131,166    Diluted book value per ordinary share           $51.16        $53.01    Basic book value per ordinary share             $51.16        $53.12    Note 1: Certain amounts in 2006 have been reclassified to conform with the    current period presentation.                                XL Capital Ltd              SUMMARY FINANCIAL IMPACT OF FOURTH QUARTER CHARGES                     RELATED TO CREDIT MARKET CONDITIONS                     Three Months Ended December 31, 2007            (U.S. dollars in thousands, except per share amounts)                                 (Unaudited)                                                             Net income                                       Net income (loss)   excluding net                                   available to ordinary  realized gains and                                        shareholders         losses (1)    SCA related charges:        Reduction in value of investment      $523,725            $-        XL's share of Q3 net realized         and unrealized losses on         derivative financial instruments       61,754             -        Excess of loss reserve                 300,000       300,000        Facultative loss reserves               30,000        30,000                                               915,479       330,000    Primus related charges:        XL's share of Q3 net realized and         unrealized losses on derivative         financial instruments                  46,611             -        XL's share of Q4 net realized and         unrealized losses on derivative         financial instruments(2)              102,704             -                                               149,315             -    Realized losses on investments             470,648             -                                            $1,535,442      $330,000    Tax effect of above charges                (33,788)            -    Total charges, net of tax               $1,501,654      $330,000    Net (loss) to ordinary     shareholders / Net income excluding     net realized gains and losses(1), as     reported                              $(1,061,786)     $117,137    Net income available to ordinary     shareholders / Net income excluding net     realized gains and losses(1), excluding     the above charges                        $439,868      $447,137    Per ordinary share results:    Net income available to ordinary     shareholders / Net income excluding net     realized gains and losses(1),excluding     the above charges                           $2.48         $2.52    Reconciliation:    Net income available to ordinary     shareholders, excluding the above     charges                                  $439,868    Net realized and unrealized losses on     investment derivative instruments, net     of tax                                      8,177    Net realized and unrealized losses     on credit and structured financial    derivative instruments, net of tax             491    Net realized and unrealized (gains) on     investments and derivatives of the     Company's other insurance company operating     affiliates                                 (1,399)    Net income excluding net realized gains     and losses(1), excluding the above     charges                                  $447,137    (1) Defined as net income available to ordinary shareholders excluding net    realized gains and losses on investments, net realized and unrealized    gains and losses on credit, structured financial and investment    derivatives, net of tax, for the Company and its share of these items for    SCA and the Company's other insurance company operating affiliates.    (2) XL's share of Primus' Q4 net realized and unrealized losses on    derivative financial instruments that reduces XL's investment in Primus to    $nil at December 31, 2007.                                XL Capital Ltd                 SUMMARY OF CHANGE IN XL'S INVESTMENT IN SCA                         (U.S. dollars in thousands)    XL's carrying value as     at September 30, 2007                         $669,848         XL's share of SCA Q3 net          realized and unrealized          losses on derivative          financial instruments        (61,754)         XL's share of SCA Q3 net          income excluding net          realized and unrealized          losses on derivative          financial instruments         19,627    XL's share of SCA Q3 net loss                   (42,127)    XL's share of the Q3 change in     SCA accumulated other     comprehensive income                            13,574    XL's share of SCA Q3 dividend                      (601)    Reduction in value of investment               (523,725)    XL's carrying value as at     December 31, 2007 Market     price of $3.89 per share (Note 1)             $116,969    Note 1: SCA has not released its fourth quarter and full year results    at the time of this release. If XL's share of SCA's shareholders'    equity at December 31, 2007 is materially lower than $117 million, then XL    may record an additional charge of up to $117 million in its year end    audited financial statements.                               XL Capital Ltd                        RECONCILIATION - THREE MONTHS

The following is a reconciliation of the Company's (i) net income (loss)available to ordinary shareholders to 'net income (loss) excluding netrealized gains and losses on investments and net realized and unrealized gainsand losses on credit, structured financial and investment derivatives, net oftax' for the Company and its share of these items for SCA and the Company'sother insurance company operating affiliates (which is a non-GAAP measure, the"Exclusions") and (ii) annualized return on ordinary shareholders' equity(based on net income (loss) minus the Exclusions) to average ordinaryshareholders' equity for the three and twelve months ended December 31, 2007and 2006 (U.S. dollars in thousands, except per share amounts):

                                                    Three Months Ended                                                       December 31                                                (Unaudited)                                                    2007          2006                                                                (Note 1)    Net income available to     ordinary shareholders                   $(1,061,786)     $471,064    Net realized losses on     investments, net of tax                     436,860        61,780    Net realized and unrealized     losses (gains) on investment     derivatives, net of tax                       8,177       (18,705)    Net realized and unrealized     losses (gains) on credit and     structured financial derivatives,     net of tax                                      491          (352)    Reduction in value of     investment in SCA                           523,725             -    XL's share of SCA's Q3 net realized     and unrealized losses on investments     and derivative financial instruments         61,754             -    XL's share of Primus' Q3 net realized     and unrealized losses on investments     and derivative financial instruments         46,611        (3,426)    XL's share of Primus' Q4 net realized and     unrealized losses on investments and     derivative financial instruments (Note 3)   102,704             -    Net realized and unrealized (gains)     on investments and derivatives of     the Company's other insurance     company operating affiliates                 (1,399)            -    Net income excluding net realized     gains and losses (Note 2)                  $117,137      $510,361    Per ordinary share results:    Net income available to     ordinary shareholders                        $(6.01)        $2.62    Net income excluding net realized     gains and losses (Note 2)                     $0.66         $2.84    Weighted average ordinary shares outstanding:    Basic                                        176,802       179,099    Diluted                                      177,467       179,832    Return on Ordinary Shareholders' Equity:    Average ordinary shareholders' equity     $9,623,249    $9,310,071    Net income excluding net realized     gains and losses (Note 2)                  $117,137      $510,361    Annualized net income excluding net     realized gains and losses (Note 2)         $468,548    $2,041,444    Annualized Return on Ordinary     Shareholders' Equity - Net income     excluding net realized gains and     losses (Note 2)                                 4.9%         21.9%    Note 1: Certain amounts in 2006 have been reclassified to conform with the    current period presentation.    Note 2: Defined as "net income available to ordinary shareholders    excluding net realized gains and losses on investments, net realized and    unrealized gains and losses on credit, structured financial and investment    derivatives, net of tax for the Company and its share of these items for    SCA and the Company's other insurance company operating affiliates."    Note 3: XL's share of Primus' Q4 net realized losses on investments and    derivative financial instruments that reduces XL's investment in Primus to    $nil at December 31, 2007.                                 XL Capital Ltd                        RECONCILIATION - TWELVE MONTHS                                                   Twelve Months Ended                                                       December 31                                                (Unaudited)                                                    2007           2006                                                                 (Note 1)    Net income available to     ordinary shareholders                      $360,442     $1,722,445    Net realized losses on     investments, net of tax                     555,437        113,318    Net realized and unrealized     losses (gains) on investment     derivatives, net of tax                      39,785        (71,592)    Net realized and unrealized losses     (gains) on credit and structured     financial derivatives, net of tax            28,892           (846)    Reduction in value of investment in SCA      523,725              -    XL's share of SCA's net realized     and unrealized losses on investments     and derivative financial instruments         76,700              -    XL's share of Primus' net realized     and unrealized losses on investments     and derivative financial instruments         62,330         (7,349)    XL's share of Primus' Q4 net realized and     unrealized losses on investments and     derivative financial instruments (Note 3)   102,704              -    Net realized and unrealized (gains)     on investments and derivatives     of the Company's other insurance     company operating affiliates                 (3,745)             -    Net income excluding net realized     gains and losses (Note 2)               $ 1,746,270     $1,755,976    Per ordinary share results:    Net income available to     ordinary shareholders                         $2.01          $9.60    Net income excluding net realized     gains and losses (Note 2)                     $9.72          $9.79    Weighted average ordinary shares outstanding:    Basic                                        178,500        178,793    Diluted                                      179,693        179,450    Return on Ordinary Shareholders' Equity:    Average Ordinary Shareholders' Equity     $9,357,936     $8,783,989    Net income excluding net realized     gains and losses (Note 2)                $1,746,270     $1,755,976    Return on Ordinary Shareholders'     Equity - Net income excluding net     realized gains and losses (Note 2)             18.7%          20.0%    Note 1: Certain amounts in 2006 have been reclassified to conform with the    current period presentation.    Note 2: Defined as "net income available to ordinary shareholders    excluding net realized gains and losses on investments, net realized and    unrealized gains and losses on credit, structured financial and investment    derivatives, net of tax for the Company and its share of these items for    SCA and the Company's other insurance company operating affiliates."    Note 3: XL's share of Primus' Q4 net realized losses on investments and    derivative financial instruments that reduces XL's investment in Primus to    $nil at December 31, 2007.

Comment on Regulation G

This press release contains the presentation of (i) net income (loss)excluding net realized gains and losses on investments, net realized andunrealized gains and losses on credit, structured financial and investmentderivatives, net of tax, for the Company and its share of these items for SCAand the Company's other insurance company operating affiliates (the"Exclusions") and (ii) annualized return on ordinary shareholders' equity(based on net income minus the Exclusions) to average ordinary shareholders'equity. These