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Fourth Quarter 2003 Net Loss $314.8 million, or $2.29 per ordinary shareFull year 2003 Net Income $371.7 million, or $2.69 per ordinary share

HAMILTON, Bermuda, Feb 10, 2004 /PRNewswire-FirstCall via COMTEX/ -- XL Capital Ltd(NYSE: XL) ("XL" or the "Company") today reported a net loss available toordinary shareholders for the quarter ended December 31, 2003, of $314.8million, or a loss of $2.29 per ordinary share. This result includes theimpact of the previously announced $694.1 million pre tax ($647.1 millionafter tax) fourth quarter charge summarized in the attached table. Net incomefor the fourth quarter of 2002 was $214.1 million, or income of $1.56 perordinary share.

For the year ended December 31, 2003, net income available to ordinaryshareholders was $371.7 million, or income of $2.69 per ordinary share,compared with net income of $396.0 million, or income of $2.88 per ordinaryshare, for the year ended December 31, 2002.

'Net loss excluding net realized gains and losses on investments and netrealized and unrealized gains and losses on credit and investment derivativeinstruments, net of tax' for the fourth quarter of 2003 was $349.3 million, ora loss of $2.54 per ordinary share, compared with income of $250.2 million, or$1.82 per ordinary share, for the quarter ended December 31, 2002.

'Net income excluding net realized gains and losses on investments and netrealized and unrealized gains and losses on credit and investment derivativeinstruments, net of tax' for the year ended December 31, 2003 was $293.6million or income of $2.12 per share, compared with income of $700.8 million,or $5.10 per ordinary share, for the year ended December 31, 2002.

'Net income or loss excluding net realized and unrealized gains and losseson credit and investment derivative instruments, net of tax' is a non-GAAPmeasure. A reconciliation of this measure to net income or loss available toordinary shareholders is provided on the attached table entitled"Reconciliation".

    Operating Highlights for Full Year 2003 Compared to Full Year 2002:    -- Net premiums earned from general operations increased by 24%.    -- Total net invested assets increased 26% to $25 billion.    -- Investment income increased 6% to $780 million.    -- Earnings in investment affiliates increased by 107% to $134 million.    -- Cash flow from operations was a record $3.4 billion.    -- Total assets increased 14% to $41 billion.    -- Book value increased 5% to $46.74 per ordinary share.   

Commenting on the fourth quarter 2003 results, Brian M. O'Hara, Presidentand Chief Executive Officer of XL, stated: "The positive underlying dynamicsin our fourth quarter reflect the continuing favorable underwriting marketconditions and XL's strong position in our chosen markets. We are producingsolid growth and strong underlying profitability. I am confident that therealignment of our management team in both our insurance and reinsuranceoperations should enhance our execution of the encouraging businessopportunities at hand."

Total assets as of December 31, 2003, were $40.8 billion compared with$35.6 billion as of December 31, 2002. Book value per ordinary share as atDecember 31, 2003, increased to $46.74 from $44.48 as at December 31, 2002.

A live on-line web cast of XL's call with analysts and investors to reviewthe fourth quarter and full year 2003 results will be held at 10:00 a.m.Eastern Time on February 11, 2004, at www.xlgroup.com. A telephone replay ofthe conference call will be available beginning at 1:00 p.m. Eastern Time onFebruary 11, until 8:00 p.m. Eastern Time on February 18, 2004 by dialing(201) 612-7415 (account number: 7716 and conference I.D. number: 91322). Anunaudited financial information supplement relating to the Company's 2003 and2002 quarterly and full year results, as well as the slides that willaccompany XL's call, are available on its website: www.xlgroup.com.

XL Capital Ltd, through its operating subsidiaries, is a leading providerof insurance and reinsurance coverages and financial products and services toindustrial, commercial and professional service firms, insurance companies andother enterprises on a worldwide basis.

This presentation contains forward-looking statements that involveinherent risks and uncertainties. Statements that are not historical facts,including statements about XL's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates,and expectations. Actual results may differ materially from those projected insuch forward-looking statements and therefore you should not place unduereliance on them. A non-exclusive list of the important factors that couldcause actual results to differ materially from those in such forward-lookingstatements includes the following: (a) rate increases and improvements interms and conditions may not be as large or sustainable as XL is currentlyprojecting; (b) greater frequency or severity of claims and loss activity thanXL's underwriting, reserving or investment practices anticipate based onhistorical experience or industry data; (c) developments in the world'sfinancial and capital markets which adversely affect the performance of XL'sinvestments or access to such markets; (d) changes in general economicconditions, including foreign currency exchange rates, inflation and otherfactors; and (e) 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. XL undertakes no obligation to update or revise publiclyany forward-looking statement, whether as a result of new information, futuredevelopments or otherwise.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA                   (In thousands, except per share amounts)                                        Three Months Ended    Income Statement Data:                  December 31                                            (Unaudited)                                     2003                    2002    Revenues:    Gross premiums written    -_ general operations      $1,669,382              $1,719,911    -_ life and annuity      operations                  491,888                 220,678    -_ financial operations        71,242                  54,912    Net premiums written    -_ general operations       1,256,889               1,317,281    -_ life and annuity      operations                  494,557                 187,604    -_ financial operations        61,193                  54,493    Net premiums earned    -_ general operations       1,515,913               1,507,193    -_ life and annuity      operations                  498,814                 186,919    -_ financial operations        41,535                  25,461    Net investment income         206,340                 201,350    Net realized gains      (losses) on investments      39,864                  24,948    Net realized and unrealized      losses on derivative    Instruments                   (1,432)                (46,635)    Equity in net income      of investment affiliates     46,558                  26,522    Fee and other income           15,756                  16,473                               $2,363,348              $1,942,231    Expenses:    Net losses and loss      expenses incurred        $1,614,219              $1,028,715    Claims and policy      benefit reserves            516,157                 199,136    Acquisition costs             304,411                 322,829    Operating expenses            200,088                 179,933    Exchange gains                (8,489)                (33,342)    Interest expense               57,314                  34,510    Amortization of      intangible assets             3,512                   4,687                               $2,687,212              $1,736,468    (Loss) income before      minority interest,      income tax expense and      equity in net (income)      loss of insurance and      financial affiliates     $(323,864)                $205,763    Minority interest               3,473                   6,843    Income tax (benefit)      expense                    (15,880)                (38,493)    Equity in net (income)      loss of insurance and      financial affiliates        (6,708)                  16,023    Net (loss) income          $(304,749)                $221,390    Preference dividend          (10,080)                 (7,251)    Net (loss) income available      to ordinary shareholders $(314,829)                $214,139    Weighted average number of     ordinary shares and     ordinary share equivalents    Basic                         137,275                 135,887    Diluted                       138,594                 137,582    Per Share Data: (b)            $(2.29)                  $1.56    Ratios - General Insurance     and reinsurance operations     Loss Ratio                     106.0%                   69.0%     Expense Ratio                   27.2%                   28.3%     Combined Ratio                 133.2%                   97.3%                                             Year Ended    Income Statement Data:                  December 31                                            (Unaudited)                                     2003                    2002    Revenues:    Gross premiums written    -_ general operations      $8,624,080              $7,714,005    -_ life and annuity      operations                  768,089               1,072,248    -_ financial operations       313,916                 199,913    Net premiums written    -_ general operations       6,552,280               5,771,626    -_ life and annuity      operations                  739,869               1,023,604    -_ financial operations       299,240                 177,794    Net premiums earned    -_ general operations       6,081,033               4,899,073    -_ life and annuity      operations                  748,495               1,022,992    -_ financial operations       139,622                  67,745    Net investment income         779,558                 734,535    Net realized gains      (losses) on investments     120,195               (214,160)    Net realized and unrealized      losses on derivative      Instruments                (27,542)                (51,761)    Equity in net income      of investment affiliates    133,902                  64,662    Fee and other income           41,745                  54,963                               $8,017,008              $6,578,049    Expenses:    Net losses and loss      expenses incurred        $4,610,606              $3,327,315    Claims and policy      benefit reserves            818,894               1,069,456    Acquisition costs           1,167,186                 955,331    Operating expenses            797,826                 674,403    Exchange gains               (38,619)                (80,294)    Interest expense              199,407                 168,086    Amortization of      intangible assets             4,637                   6,187                               $7,559,937              $6,120,484    (Loss) income before      minority interest,      income tax expense and      equity in net (income)      loss of insurance and      financial affiliates       $457,071                $457,565    Minority interest               9,264                  13,371    Income tax (benefit)      expense                      30,049                  22,647    Equity in net (income)      loss of insurance and      financial affiliates          5,779                  15,976    Net (loss) income            $411,979                $405,571    Preference dividend          (40,321)                 (9,620)    Net (loss) income available      to ordinary shareholders   $371,658                $395,951    Weighted average number of     ordinary shares and     ordinary share equivalents    Basic                         136,906                 135,636    Diluted                       138,187                 137,388    Per Share Data: (b)             $2.69                   $2.88    Ratios - General Insurance     and reinsurance operations     Loss Ratio                      75.3%                   68.0%     Expense Ratio                   27.3%                   29.0%     Combined Ratio                 102.6%                   97.0%

Note:

a) Certain reclassifications, which have no effect on net income, havebeen made in the presentation of prior period results to conform to currentpresentation.

b) Average stock options outstanding have been excluded where anti-dilutive to earnings per share. Consequently where there is a net loss, basicweighted average ordinary shares outstanding are used to calculate net lossper share.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA                   (In thousands, except per share amounts)                                            As at Dec. 31,   As at Dec. 31,                                                      2003             2002                                               (Unaudited)      (Unaudited)    Balance Sheet Data:    Total investments available for sale      $ 20,775,256     $ 16,059,733    Net payable for investments purchased           96,571        1,546,276    Cash and cash equivalents                    2,403,121        3,557,815    Investments in affiliates                    1,903,341        1,750,005    Total assets                                40,764,215       35,647,369    Unpaid losses and loss expenses             16,558,788       13,202,736    Deposit liabilities and policy     benefit reserves                            7,284,179        4,889,996    Notes payable and debt                       1,905,483        1,877,957    Total shareholders' equity                   6,936,915        6,569,589    Book value per ordinary share                  $ 46.74          $ 44.48                                XL Capital Ltd                                RECONCILIATION                        

The following is a reconciliation of the Company's net income (loss) to'net income (loss) excluding net realized gains and losses on investments andnet realized and unrealized gains and losses on credit and investmentderivative instruments, net of tax' (which is a non-GAAP measure) for thethree and twelve months ended December 31, 2003 and 2002 (in millions, exceptper share amounts):

                                         Three months ended     Year ended                                             December 31       December 31                                             (Unaudited)       (Unaudited)                                             2003     2002     2003     2002    Net (loss) income available to     ordinary shareholders                 ($314.8)  $214.1   $371.7   $396.0    Net realized (gains) losses on     investments, net of tax                 (30.3)    (9.2)  (105.2)   236.5    Net realized and unrealized (gains)     losses on investment     derivatives, net of tax                  (7.1)     9.7      0.5     22.2    Net realized and unrealized losses on     credit derivatives, net of tax            2.9     35.6     26.6     46.1  Net income (loss) excluding net     realized gains and losses on     investments and net realized     and unrealized gains and losses     on credit and investment     derivative instruments,     net of tax                            ($349.3)  $250.2   $293.6   $700.8    Per ordinary share results:    Net income (loss) available to     ordinary shareholders (a)              ($2.29)   $1.56    $2.69    $2.88    Net income (loss) excluding net     realized gains and losses on     investments and net realized and     unrealized gains and losses     on credit and investment     derivative instruments,     net of tax (a)                          ($2.54)   $1.82    $2.12    $5.10    Weighted average ordinary shares      outstanding:     Basic                                   137.3    135.9    136.9    135.6     Diluted                                 138.6    137.6    138.2    137.4

Note:

(a) 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 netloss per share.

                                XL Capital Ltd             SUMMARY OF 2003 PREVIOUSLY ANNOUNCED RESERVE CHARGES                                (In millions)                                               Three months    Year ended                                                  ended        Dec 31, 2003                                               Dec 31, 2003    (Unaudited)                                               (Unaudited)    XL Reinsurance America Inc (XLRA)    North American casualty reinsurance      losses:        Additional claim reserves                     $124           $308        Incurred but not reported reserves             539            569    Total                                             $663           $877    2003 Year End Reserve Review (excluding XLRA):     $62            $62        Reinsurance - excluding September          11 event        Insurance                                      150            150        Reinsurance - September 11 event              (181)          (181)    Total                                              $31            $31    Total Reserve Charge - Pre-tax                    $694           $908    Total Reserve Charge - After-tax                  $647           $837

Comment on Regulation G

This press release contains the presentation of 'net income excluding netrealized gains and losses on investments and net realized and unrealized gainsand losses on credit and investment derivatives, net of tax'. Thispresentation is a "non-GAAP financial measure" as defined in Regulation G.The reconciliation of such measure to net income (the most directly comparableGAAP financial measure) in accordance with Regulation G is included above.

XL presents its operations in the way it believes will be most meaningfuland useful to investors, analysts, rating agencies and others who use XL'sfinancial information in evaluating XL's performance. This presentationincludes the use of 'net income excluding net realized gains and losses oninvestments and net realized and unrealized gains and losses on credit andinvestment derivatives, net of tax'. Investment derivatives include allderivatives entered into by XL other than weather and energy and creditderivatives (discussed further below).

Although the investment of premiums to generate income (or loss) andrealized capital gains (or losses) is an integral part of XL's operations,the determination to realize capital gains (or losses) is independent of theunderwriting process. In addition, under applicable GAAP accountingrequirements, losses can be createunistic and are a function ofeconomic and interest rate conditions. In addition, with respect to creditderivatives, because XL generally holds its financial guarantee contractswritten in credit default derivative form to maturity, the net effects of thechanges in fair value of these credit derivatives are excluded (similar withother companies in the financial guarantee business) as the changes in fairvalue each quarter are not indicative of underlying business performance ofXL's financial guarantee operations. Unlike these credit derivatives, XL'sweather and energy derivatives are actively traded (i.e, they are not held tomaturity) and are, therefore, not excluded from net income as any gains orlosses from this business are considered by management when evaluating andmanaging the underlying business.

In summary, XL evaluates the performance of and manages its business toproduce an underwriting profit. In addition to presenting net income (loss),XL believes that showing net income (loss) exclusive of the items mentionedabove enables investors and other users of XL's financial information toanalyze XL's performance in a manner similar to how management of XL analyzesperformance. In this regard, XL believes that providing only a GAAPpresentation of net income (loss) makes it much more difficult for users ofXL's financial information to evaluate XL's underlying business. Also, asstated above, XL believes that the equity analysts and certain rating agencieswho follow XL (and the insurance industry as a whole) exclude these items fromtheir analyses for the same reasons and they request that XL provide this non-GAAP financial information on a regular basis.