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  • •  P&C combined ratio of 89.4% for the quarter and 95.7% for the year
  • •  Book value per ordinary share was $15.46 at December 31, 2008
  • •  Net loss for the quarter of $4.36 per ordinary share largely driven by non-cash goodwill impairment and voluntary investment portfolio restructuring charges
  • •  Operating income (1) for the quarter of $0.58 per ordinary share
  • • Hurricanes Ike and Gustav estimates within previously announced range
  • •  Reduction of quarterly dividend to $0.10 per ordinary share and declaration of such dividend
  • HAMILTON, Bermuda, Feb. 10 / -- XL Capital Ltd("XL" or the "Company") today reported fourth quarter and full year2008 results.

    Chief Executive Officer, Mr. Michael S. McGavick, commenting on theresults said, "No one is happier to see 2008 behind us or more excited to have2009 before us than we are at XL. 2008 has been the toughest year in XL'shistory; albeit one in which we have put a number of issues behind us andemerged on a solid footing. Not only did we deal with the SCA overhang, wetook major steps to de-risk our investment portfolio and simplify our balancesheet. The $400 million investment portfolio restructuring charge we havechosen to take in the fourth quarter of 2008 allows us to accelerate ourde-risking activities through selective and targeted sales, thereby loweringour exposure to credit market volatility. Our non-cash goodwill charge of$990 million removes another distraction, while having no impact on our ratingagency or regulatory capital or tangible book value and leaves our balancesheet strong and easily understood. We also made dramatic improvements to ourrisk management capabilities in 2008.

    "Not only are we happy to say 'goodbye' to 2008, we are excited at theprospects for 2009. We have ample capital for our ratings, we have marketleading talent and as evidenced by our January 1 renewals, a quality book ofbusiness. We have completed one cost reduction initiative on time and onbudget and have identified further ways to deliver cost effective support toour underwriters that we will implement in 2009. Even at what we expect to bethe lowest point of the insurance cycle we expect to report an ROE in the lowto mid teens for 2009. We have reached this position by maintaining oursteadfast commitment to disciplined underwriting and by reducing uncertaintyin many elements of our business. We are becoming again an XL with the simpleand defining mission of being a global provider of specialty property andcasualty insurance and reinsurance through superior, technical underwriting."

    2008 Fourth Quarter and Full Year Highlights

    The net loss for the quarter ended December 31, 2008 was $1.43 billion, or$4.36 per ordinary share, compared with a net loss of $1.22 billion, or$6.88 per ordinary share, for the quarter ended December 31, 2007.

    Operating Income for the quarter ended December 31, 2008 was$189.5 million, or $0.58 per ordinary share, compared with $98.0 million, or$0.55 per ordinary share, for the quarter ended December 31, 2007. Return onOrdinary Shareholders' Equity, based on Operating Income, was 12.4% for thequarter and 12.0% for the full year.

    Net loss for the quarter ended December 31, 2008 was largely driven by a$990 million non-cash charge for the partial impairment of goodwill and otherthan temporary impairments of $608.5 million, which includes an investmentportfolio restructuring charge of $400.0 million. The net loss for thequarter ended December 31, 2007 included $416.3 million for other thantemporary impairments primarily related to deterioration in structured creditassets. Also included in the quarter ended December 31, 2008 were$214.2 million of net losses from investment fund affiliates, in line with theCompany's pre-announcement in December 2008, compared to net income of$70.6 million in the quarter ended December 31, 2007. The net loss for thequarter ended December 31, 2007 included charges of $1.05 billion related tothe Company's investment in, and certain reinsurance and other agreementswith, Syncora.

    For the twelve months ended December 31, 2008, the net loss was$2.63 billion, or $11.02 per ordinary share, compared with net income of$206.4 million, or $1.15 per ordinary share, for the twelve months endedDecember 31, 2007.

    Operating Income for the twelve months ended December 31, 2008, was$840.3 million, or $3.51 per ordinary share, as compared with $1.73 billion,or $9.61 per ordinary share, for the twelve months ended December 31, 2007.

    Return on ordinary shareholders' equity, based on Operating Income was12.0% and 18.6% for the twelve months ended December 31, 2008 and 2007,respectively.

    P&C Operations

    P&C Operations gross premiums written for the quarter ended December 31,2008 included $1,077.8 million from the Insurance segment and $104.5 millionfrom the Reinsurance segment compared with $1,267.6 million and$138.0 million, respectively, in the fourth quarter of 2007. The loss ratiofor the fourth quarter of 2008 was 58.0% with a combined ratio of 89.4% ascompared to 62.0% and 93.3%, respectively, in the fourth quarter of 2007. Theresults for the current quarter benefited from favorable prior yeardevelopment of $268.3 million as compared with favorable prior yeardevelopment of $92.6 million in the fourth quarter of 2007.

    Further details of the performance of the operating segments for thequarter are set forth below and a summary for the full year is included in theattached tables.

    Commenting on the results of the P&C Operations for the quarter Mr.McGavick said, "We continued to have strong underwriting performances fromboth our insurance and reinsurance segments. Our combined ratio of 89.4% forthe quarter is 4 points better than the fourth quarter of 2007 and is atestament to our excellent underwriting over a number of years. We understandthe risks we write and notably our revised estimates for Hurricanes Ike andGustav are at the mid-point of our original range.

    Life Operations & Other Financial Lines

    The Life Operations & Other Financial Lines segments contributed$27.1 million and $0.5 million, respectively, in the fourth quarter of 2008,compared with contributions of $4.0 million and $15.7 million, respectively,in the fourth quarter of 2007. The fourth quarter 2007 contribution from theLife Operations segment included a $25.4 million increase in policy benefitreserves with respect to certain novated blocks of US-based term-lifemortality reinsurance business.

    Mr. McGavick said, "During the fourth quarter of 2008, we sold the renewalrights for our Life, Accident and Health business, which is a small block, andwe continue to explore various strategic options for the annuity book, themortality and critical illness book and for our US life company."

    Investments and Other Operations

    Net investment income was $393.1 million for the quarter as compared to$560.5 million in the fourth quarter of 2007. The decrease in net investmentincome was driven by a decrease in net investment income from both theCompany's P&C and Other Financial Lines Operations.

    The net investment income from P&C operations, excluding investment incomefrom structured products, was $275.6 million for the quarter as compared to$326.8 million in the fourth quarter of 2007. Net investment income from P&Cstructured products in the fourth quarter of 2008 was $24.1 million ascompared to $33.0 million in the fourth quarter of 2007. Both reductions werecaused principally by declines in prevailing U.S. interest rates, along withhigher allocations to lower yielding US Treasuries, Agencies and cash.

    The net investment income from the Other Financial Lines segment was$8.2 million for the fourth quarter 2008 compared to $99.2 million for thefourth quarter of 2007. The decrease of $91.1 million results from theredemption of $4 billion of Guaranteed Investment Contracts and $1.2 billionof maturing funding agreements during the year. There was a correspondingdecrease in the interest expense related to these contracts.

    For the Life Operations segment, investment income was $85.2 million inthe fourth quarter of 2008 as compared to $101.4 million in the fourth quarterof 2007. This movement was caused largely by foreign exchange movementsarising from the stronger US Dollar against Sterling in particular.

    Total net realized losses on investments were $568.9 million for thefourth quarter of 2008 as compared to $470.6 million in the fourth quarter of2007. The loss for the fourth quarter of 2008 included realized gains onsecurities sales of $39.6 million and other than temporary impairments of$608.5 million which included the investment portfolio restructuring charge of$400 million. The realized loss in the fourth quarter of 2007 comprised otherthan temporary impairments of $416.3 million and realized losses on securitiessales of $54.3 million.

    The fourth quarter of 2008 includes $214.2 million of net losses frominvestment fund affiliates, compared to net income of $70.6 million in thequarter ended December 31, 2007. The principal driver was a negativequarterly return of 12.5% on the Company's alternative portfolio which was dueto the extremely difficult market conditions for hedge funds in September,October and November.

    Net loss from operating affiliates, was $5.6 million as compared to a lossof $1.20 billion in the fourth quarter of 2007. The net loss from operatingaffiliates in 2007 included a charge of $1.05 billion related to the Company'sinvestment in, and certain reinsurance and other agreements with, Syncora.

    The quarter ended December 31, 2008 included a foreign exchange gain of$120.7 million as compared with a gain of $39.7 million in the prior yearquarter. Both gains were driven primarily by the increase in the value of theUS Dollar against most European currencies. The overall impact of foreignexchange fluctuations in the quarter was a reduction of $196.6 million in theCompany's capital.

    Operating expenses for the quarter were $280.4 million compared with$287.3 million in the fourth quarter of 2007. The decrease is due primarilyto changes in foreign exchange rates, offset in part by the inclusion of$8.7 million of expenses related to the actions taken last quarter to reducethe expense base of the Company going forward.

    Mr. McGavick said, "We have completed the initiatives announced in July2008 to reduce costs. We are on track to deliver the savings targeted and thecosts of this exercise are within our initial estimates.

    "However, the ground has shifted in the past six months for the insuranceindustry, the global economy, and XL. We must recognize these changes andadjust. We will focus on our businesses that deliver the best return oncapital. As a result, we do expect a meaningful reduction in gross writtenpremium for 2009 as we reduce those activities that do not meet our hurdlerates and in response to effects we have seen in a few long-tail lines as aresult of our new S&P rating. Therefore, we will look to trim approximately10% of our current global workforce this year to streamline operations to bestposition XL to compete effectively. The job eliminations will be primarilyfocused on the corporate and functional areas. But efficiency means more thanjust job eliminations. We have also revisited other expenses and investmentsas we emphasize simplicity in our operations and processes. These actions areexpected to cost approximately $60-80 million and will lead to a reduction inthe underlying expense base of $100-$120 million a year for 2010 onwards."

    Capital Position

    At December 31, 2008, book value per ordinary share was $15.46, ascompared to $21.65 as of September 30, 2008. This decline of $2.0 billion or$6.19 per ordinary share was due primarily to the goodwill impairment chargeof $990 million or $2.99 per ordinary share, and a reduction in the value ofthe Company's investment portfolio, after tax, of $858.7 million or $2.60 perordinary share. The decrease in the value of the Company's investmentportfolio was primarily due to a continued widening of credit spreads on bothcorporate and structured credit investments in the extremely difficult capitalmarket conditions again during the fourth quarter.

    The Company's investment portfolio was $34.3 billion as of December 31,2008, of which $31.9 billion was held in fixed income securities with anaverage credit quality of AA, including approximately $17.2 billion in AAAsecurities. 75% of the portfolio was in either AAA or AA rated securities.

    Mr. McGavick said, "We are continuing to de-risk the investment portfolioand the restructuring charge that we have chosen to take this quarter is animportant step in this exercise.

    "The non-cash charge against goodwill, primarily related to the Mid-Oceanacquisition in 1998 that provided the platform for our property catastrophereinsurance operations, has removed any distractions that item may havecaused, and combined with other efforts has simplified our balance sheet.This business is strong, we remain committed to it and I fully expect it todeliver strong ROEs going forward, as it has in the past. However, the fallin share prices in the fourth quarter and the increased cost of capital meanthat we no longer feel it appropriate to carry the goodwill at previouslevels. It's important to note that this non-cash charge has no impact onrating agency or regulatory capital or tangible book value.

    "Our tangible book value per ordinary share was $12.88 at the end ofDecember 2008 compared to $16.15 at the end of September 2008. It's worthmentioning that our tangible book value will increase by approximately$1.75 per ordinary share as a result of the scheduled conversion of our EquitySecurity Units on February 17, 2009."

    "XL is financially and operationally positioned to deliver for itscustomers as an independent company, and that's our exclusive focus. Allindications from the rating agencies lead us to believe we have ample capitalfor our ratings."

    2009 Actions

    Dividend Reduction and Declaration of Dividend

    The Company also announced that XL's Board of Directors has approved areduction in the quarterly dividend payable on the Company's Class A OrdinaryShares to $0.10 per ordinary share. In line with that reduction, the Board ofDirectors declared a quarterly dividend of $0.10 per ordinary share payable onMarch 31, 2009 to ordinary shareholders of record as of March 13, 2009.

    Mr. McGavick said, "The reduction in our dividend brings our prospectiveyield much more in line with where we expect industry yields to be in 2009.Despite the difficulties of 2008, we enter 2009 toughened by having had tocompete in these challenging circumstances. Our January renewals came outwell and I am heartened by the confidence shown in us by our customers, ouremployees and by the rating agencies. The expense initiatives noted abovewill only make us more efficient and we believe we are well-positioned tocapitalize on the market turn, and remain committed to providing value to ourclients and our shareholders."

    Segment Highlights - Fourth Quarter and Full Year 2008 versus 2007

    Insurance

    Mr. McGavick commenting on the Insurance Segment results said, "Despiteconsiderable challenges, XL Insurance delivered, by and large, retentions athistorical levels; 83% for 2008 versus 2007's exceptional 86%, while at thesame time pushing rate. Our January 2009 renewals, led by excellent Europeanretentions across all lines, are turning out to be in the same range as 2008.We've done all this and showed our pricing power, demonstrating the strengthof our franchise."

    Gross and net premiums written decreased by 15.0% and 13.9%, respectively,during the three months ended December 31, 2008 compared with the three monthsended December 31, 2007. For the year ended December 31, 2008, gross and netwritten premiums decreased 2.3% and 4.8% to $5.3 billion and $4.0 billion,respectively. Gross premiums written in the fourth quarter decreasedprimarily due to competitive market conditions impacting pricing across mostlines of business, lower levels of long term agreements and changes in foreignexchange rates. This was partially offset by new business. Net premiumswritten decreased primarily as a result of the factors noted above affectinggross premiums written.

    Net premiums earned decreased by 7.2% in the three months ended December31, 2008 compared with the three months ended December 31, 2007. For the yearended December 31, 2008, net premiums earned decreased 2.9%. The decrease wasmainly due to lower net premiums written in prior periods.

    The loss ratio was 60.7% and the combined ratio was 94.4% in the fourthquarter of 2008 compared to 65.3% and 98.4%, respectively, in the fourthquarter of 2007. The full year 2008 loss ratio was 68.4% and the combinedratio was 98.4% compared to 63.0% and 91.4% for the same period in 2007. The2008 fourth quarter and full year results included favorable prior yeardevelopment of $183.4 million (or 19.8 loss ratio points) and $305.5 million(or 7.6 loss ratio points), respectively, as compared to $33.5 million (or 3.3loss ratio points) and $158.1 million (or 3.9 loss ratio points),respectively, in the fourth quarter and full year of 2007. The fourth quarterand full year of 2008 favorable prior year development included $80.8 millionrelated to an agreement with AXA Insurance Ltd (formerly Winterthur SwissInsurance Company). The Agreement releases the funds from the collateralizedescrow arrangement that was put in place in June 2006, as described in theCompany's Form 8-K filed on June 8, 2006, and releases both parties from allfurther obligations under such agreement. Also included in the fourth quarterof 2008, was the favorable impact of $23.8 million related to current yearnatural catastrophe losses, primarily Hurricane Ike. The full year 2008included losses of $138.0 million related to current year natural catastrophelosses as compared to $37.0 million during the full year of 2007. Excludingthe impact of prior year development and natural catastrophes, the loss ratiowas 82.7% and 72.5%, respectively, in the fourth quarter and full year of 2008as compared with 68.6% and 66.0%, respectively, in the fourth quarter and fullyear of 2007. The increase was due primarily to a higher level of largeproperty risk losses impacting the current quarter and full year loss ratios,the impact of higher loss ratios in professional lines due to subprime and therelated credit crisis, and higher loss ratios in certain specialty lines.Additionally, there was a one time adjustment that impacted the loss ratio forthe quarter by approximately 2 points, reflecting revisions to earningpatterns for certain contracts.

    Reinsurance

    Mr. McGavick commenting on the Reinsurance Segment results said, "XL Reachieved excellent results in 2008, evidenced by a combined ratio of 79.6% inthe quarter and 90.4% for the full year. In the January 2009 renewal, we lostonly 11% of our renewable premium to security decisions made by clientsfollowing rating agency actions. Overall premium written at January 1, 2009was also impacted due to selective cancellations by us and to industry widetrends, such as increased retentions by clients. XL Re remains a leadreinsurer in its chosen markets and continues to retain its key people. Ofthe 75 staff who have underwriting authority in the Reinsurance Segment, onlythree have left in 2008 which, I believe, leaves us well placed to capitalizeon the attractive market conditions ahead."

    Gross and net premiums written during the three months ended December 31,2008 decreased by 24.3% and 10.9%, respectively, as compared to the fourthquarter in 2007. For the year ended December 31, 2008, gross and net writtenpremiums decreased 15.1% and 16.9% to $2.3 billion and $1.8 billion,respectively. The decrease in gross premium written is due principally to thecommutation of a large structured reinsurance contract in the fourth quarterresulting in a $35 million reduction in written premium, selective treatycancellations, increased retentions by clients and competitive marketconditions affecting rates across most lines, partially offset by a fourthquarter 2008 positive premium adjustment of $23.7 million related to certainagricultural contracts.

    Net premiums earned in the fourth quarter of 2008 decreased by 18.9% ascompared to the fourth quarter of 2007. For the year ended December 31, 2008,net premiums earned decreased 13.4%. This decrease was a reflection of theoverall reduction of net premiums written over the last 24 months includingthe purchase of additional catastrophe loss protection in the second quarterof 2008, partially offset by $40.2 million of earned premium related to thepremium adjustments on the agricultural contracts noted above.

    The loss ratio was 52.6% and the combined ratio was 79.6% in the threemonths ended December 31, 2008 compared to 56.4% and 84.7%, respectively, inthe fourth quarter of 2007. The full year 2008 loss ratio was 61.7% and thecombined ratio was 90.4% compared to 54.1% and 84.0% for the same period in2007. The 2008 fourth quarter and full year results included favorable prioryear development of $84.9 million (or 17.9 loss ratio points) and$305.2 million (or 15.3 loss ratio points), respectively. The fourth quarterand full year 2008 results also included the adverse impact of $31.1 millionand $251.0 million, respectively, from current year natural catastrophelosses. The fourth quarter and full year of 2007 included $59.1 million (or10.1 loss ratio points) and $267.3 million (or 11.6 loss ratio points),respectively, of favorable prior year development and $16.7 million and$102.4 million, respectively, from natural catastrophe loss activity.Excluding the impact of prior year development and natural catastrophe losses,the loss ratio was 64.4% and 65.0%, respectively, in the fourth quarter andfull year of 2008 as compared to 63.6% and 61.4% in the fourth quarter andfull year of 2007, respectively.

    Life Operations

    Gross written premiums for the Life Operations segment was $138.6 millionduring the three months ended December 31, 2008 as compared to $154.3 millionin the three months ended December 31, 2007. Gross written premiums for theLife operations was $690.9 million during the twelve months ended December 31,2008 as compared to $743.2 million for the same period in 2007. The decreasewas due primarily to foreign exchange rate movements, partially offset byhigher premiums on the regular premium portfolio as well as growth in U.S.business. The contribution for the fourth quarter and full year 2008 was$27.1 million and $120.2 million, respectively, as compared to $4.0 millionand $78.7 million in the fourth quarter and full year 2007. The increase wasdriven principally by an increase in business written and foreign exchangegains, partially offset by lower net investment income. In addition, thefourth quarter of 2007 included a $25.4 million increase in policy benefitreserves with respect to certain novated blocks of US-based term-lifemortality reinsurance business.

    Other Financial Lines

    The Other Financial Lines segment recorded a contribution of $0.5 millionduring the three months ended December 31, 2008 as compared to a contributionof $15.7 million in the prior year quarter. For the twelve months endedDecember 31, 2008 the contribution from the Other Financial Lines segment was$18.1 million as compared to $48.1 million. The lower income in the quarterarose from lower underlying balances as a result of the redemption of$4 billion of Guaranteed Investment Contracts and $1.2 billion of fundingagreements during the year and was partially offset by reduced operatingexpenses.

    The Company will host a conference call to discuss its Fourth Quarter andYear end 2008 results on Wednesday, February 11, 2009 at 9.00 a.m. Easterntime. The conference call can be accessed through a listen-only dial innumber or though a live web cast. To listen to the conference call, pleasedial (877) 422-4657 or (706) 679-0474 Conference ID# 79946546. The webcastwill be available at the Company's website located at www.xlgroup.com andwill be archived there from approximately 12.00 p.m. Eastern time on February11, 2009, through midnight Eastern time on March 11,2009. The Company hasalso posted its unaudited financial and fixed income portfolio datasupplements to its website. These documents provide additional information onthe Company's fourth quarter and full year 2008 results and on its financialposition at December 31, 2008. A telephone replay of the conference call willalso be available beginning at 12.00 p.m. Eastern time on February 11, 2009,until midnight Eastern time on March 4, 2009, by dialing (800) 642-1687 or(706) 645-9291, Conference ID# 79946546.

    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 (a) changes in ratings,rating agency policies or practices; (b) greater frequency or severity ofclaims and loss activity than XL's underwriting, reserving or investmentpractices anticipate based on historical experience or industry data; (c)trends in rates for property and casualty insurance and reinsurance; (d)developments, including future volatility, in the world's credit, financialand capital markets that adversely affect the performance and valuation ofXL's investments or access to such markets; (e) other changes in generaleconomic conditions, including changes in interest rates, credit spreads,foreign currency exchange rates, inflation and other factors; (f) thepotential for changes to methodologies; estimations and assumptions thatunderlie the valuation of the Company's financial instruments that couldresult in changes to investment valuations; (g) changes to the Company'sassumptions as to whether it has the ability and intent to holdavailable-for-sale securities to recovery; (h) the outcome of the Company'sreview of its Life Operations; (i) the potential effect of domestic andforeign regulatory developments, including those which could increase XL'sbusiness costs and required capital levels; (j) the ability of XL'ssubsidiaries to pay dividends to the Company; (k) changes in the size of XL'sclaims relating to natural catastrophe losses due to the preliminary nature ofsome reports and estimates of loss and damage to date and (l) the otherfactors set forth in XL's reports on Form 10-K, Form 10-Q, and other documentson file with the Securities and Exchange Commission, as well as management'sresponse to any of the aforementioned factors. XL undertakes no obligation toupdate or revise publicly any forward-looking statement, whether as a resultof new information, future developments or otherwise.

                                      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)                                   2008         2007         2008        2007    Revenues:    Gross premiums written:          - P&C operations   $1,182,291   $1,405,544   $7,569,391  $8,097,760         - Life operations      138,558      154,290      690,915     743,220    - Financial operations            -            -           -      156,983    Net premiums written:          - P&C operations      984,359    1,139,062    5,738,293   6,297,720         - Life operations      128,957      141,915      649,844     698,693    - Financial operations            -            -           -      130,445    Net premiums earned:          - P&C operations    1,403,661    1,586,464    5,990,251   6,418,627         - Life operations      147,726      166,961      649,851     701,047    - Financial operations            -            -           -       85,682    Net investment income       393,115      560,513    1,768,977   2,248,807    Net realized (losses)     on investments            (568,940)    (470,648)    (962,054)   (603,268)    Net realized and     unrealized (losses)     on derivative     instruments                (67,720)     (14,218)     (73,368)    (55,451)    Net (loss) income from     investment affiliates     (214,174)      70,593     (277,696)    326,007    Fee and other income         11,939        2,632       52,158      14,271            Total revenues   $1,105,607   $1,902,297   $7,148,119  $9,135,722    Expenses:    Net losses and loss     expenses incurred         $813,855     $983,704   $3,962,898  $3,841,003    Claims and policy     benefits                   163,119      225,775      769,004     888,658    Acquisition costs           215,047      252,664      944,460   1,063,713    Operating expenses          280,380      287,315    1,161,934   1,144,910    Exchange (gains)           (120,668)     (39,699)    (184,454)    (19,734)    Interest expense             84,247      163,401      374,327     621,905    Impairment of goodwill      989,971           -       989,971          -    Amortization of     intangible assets              742          420        2,968       1,680            Total expenses   $2,426,693   $1,873,580   $8,021,108  $7,542,135    Net (loss) income     before minority     interest, income tax     and net income from      operating affiliates  $(1,321,086)     $28,717    $(872,989) $1,593,587    Minority interest in     net income of     subsidiary                      -           (66)          -       23,928    Income tax                   92,828       41,164      222,578     233,922    Net loss from operating     affiliates                   5,599    1,200,488    1,458,246   1,059,848    Net (loss) income       $(1,419,513) $(1,212,869) $(2,553,813)   $275,889    Preference share     dividends                  (13,645)      (2,984)     (78,645)    (69,514)    Net (loss) income     available to ordinary     shareholders           $(1,433,158) $(1,215,853) $(2,632,458)   $206,375                                  XL Capital Ltd                       SUMMARY CONSOLIDATED FINANCIAL DATA                 (Shares in thousands, except per share amounts)                                        Three Months Ended Twelve Months Ended    Income Statement Data (continued):      December 31         December 31                                        (Unaudited)        (Unaudited)                                            2008     2007       2008    2007      Weighted average number of ordinary       shares and ordinary share equivalents:                                Basic    328,806  176,802    238,862 178,500                     Diluted (Note 2)    329,502  177,467    244,407 179,693      Per Share Data (Note 1):      Net income (loss) available to       ordinary shareholders              ($4.36)  ($6.88)   ($11.02)  $1.15      Ratios - P&C operations:      Loss ratio                           58.0%    62.0%      66.2%    59.8%      Expense ratio                        31.4%    31.3%      29.6%    28.9%      Combined ratio                       89.4%    93.3%      95.7%    88.7%      Note 1: 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.      Note