Reinsurance
Product Family

First Quarter Highlights
  • • Net income excluding net realized gains and losses"(1) was $276.9 million, or $1.57 per ordinary share
  • • Combined ratio from P&C operations was 93.6% for the quarter
  • • Return on ordinary shareholders' equity, based on "net income excluding net realized gains and losses"(1), was 12.9% for the quarter
  • • Basic and diluted book value per ordinary share was $46.11 at March 31, 2008

HAMILTON, Bermuda, April 22, 2008 --- XL Capital Ltd("XL" or the "Company") today reported net income available to ordinaryshareholders for the quarter ended March 31, 2008 of $211.9 million, or $1.20per ordinary share, compared with $549.7 million, or $3.06 per ordinary share,for the quarter ended March 31, 2007. The reduction in net income of$337.8 million is due primarily to the following:

    -- A decrease in net income from investment affiliates of $107.1 million    -- Net realized losses on investments of $102.3 million, as compared to a       gain of $9.3 million in the prior year quarter    -- A decrease in underwriting profit from Property and Casualty operations       of $52.4 million    -- An increase in foreign exchange losses of $44.2 million    -- A decrease in net income from financial operating affiliates of       $39.6 million

"Net income excluding net realized gains and losses"(1) for the firstquarter of 2008 was $276.9 million, or $1.57 per ordinary share, compared with$540.0 million, or $3.01 per ordinary share, for the prior year quarter.

Annualized return on ordinary shareholders' equity was 9.9% and 22.7% forthe three months ended March 31, 2008 and 2007, respectively. Return onordinary shareholders' equity, based on net income excluding net realizedgains and losses was 12.9% and 22.3% for the three months ended March 31, 2008and 2007, respectively.

At March 31, 2008, diluted and basic book value per ordinary share was$46.11, as compared to diluted book value of $50.29 and basic book value of$50.30 as at December 31, 2007. The decrease is due primarily to the increasein the net unrealized losses on investments, which has more than offset netincome and positive currency translation adjustments.

Commenting on the current quarter results, President, Chief ExecutiveOfficer and Acting Chairman Brian M. O'Hara said: "Although XL is steadilynavigating through some extremely difficult global credit market conditions,which is reflected in our lower investment performance relative to theoutstanding results in the prior year quarter, we have still achieved anothersolid performance from our Insurance, Reinsurance, and Life operations."

SEGMENT HIGHLIGHTS -- FIRST QUARTER 2008 VERSUS FIRST QUARTER 2007

Insurance

Underwriting profit for the quarter ended March 31, 2008 was $40.7 millioncompared with $116.8 million in the prior year quarter. Included in thecurrent quarter's underwriting results is net favorable prior year developmentof $17.3 million, as compared with $20.2 million in the prior year quarter.

    -- Gross premiums written increased 3.1% primarily due to higher levels of       long-term agreements, positive foreign exchange movements, favorable       customer retention, and selective writing of new business.  These       increases have been partially offset by the decline in premium rates       across most lines and lower premiums from the run off of ICAT.    -- Net premiums earned decreased 4.1% mainly as a result of an increase in       ceded premiums related to the purchase of an adverse development cover       related to our Lloyd's operations.    -- The combined ratio was 96.7% compared with 89.2% for the prior year       quarter.  The loss ratio excluding the impact of net prior year       development for the current and prior year quarter was 69.6% and 63.5%,       respectively.  The increase in the loss ratio reflects an increase in       property risk and catastrophe losses in the current quarter relative to       the prior year quarter, as well as the effect of the decline in premium       rates.

Reinsurance

Underwriting profit for the quarter ended March 31, 2008 was $67.4 millioncompared with $43.6 million for the prior year quarter. Included in thecurrent quarter's underwriting results is net favorable prior year developmentof $49.7 million, as compared with $44.5 million in the prior year quarter.

    -- Gross premiums written decreased by 22.0% due principally to selective       treaty cancellations and competitive market conditions.  Favorable       foreign exchange movements offset the impact of timing differences on       certain large contracts.    -- Net premiums earned decreased marginally by 0.4% primarily due to lower       net premiums written in previous quarters that have been partially       offset by the earned impact of the decrease in the cession rate to       Cyrus Re.    -- The combined ratio was 87.8% compared with 92.0% in the prior year       quarter.  The loss ratio excluding the impact of net prior year       development for the current and prior year quarter was 67.2% and 71.9%,       respectively.  The decrease in the loss ratio is due mainly to a lower       level of property catastrophe losses in the current quarter relative to       the prior year quarter that included Windstorm Kyrill.

Life Operations

Gross premiums written were $235.0 million compared with $213.3 million inthe prior year quarter. The contribution to earnings from life operations was$27.4 million as compared with $23.1 million in the first quarter last year,due mainly to business growth, higher net investment income and favorableforeign exchange movements.

Investment Operations

Net investment income from P&C operations, excluding investment incomefrom Structured Products, decreased 2.0% from the prior year period to$308.0 million primarily due to lower investment yields. Net income frominvestment affiliates was $11.8 million in the first quarter of 2008 comparedwith $118.9 million in the first quarter of 2007. Net income from investmentmanager affiliates was $12.9 million as compared with $37.4 million for theprior year period.

Net realized losses on investments were $102.3 million in the currentquarter. This includes charges of $114.8 million for "other than temporaryimpairments."

Net unrealized losses on investments, net of tax, were $1.4 billion atMarch 31, 2008 compared with net unrealized losses, net of tax of$332.5 million at December 31, 2007. The increase in net unrealized losses of$1.1 billion for the quarter was substantially due to continuing wideningcredit spreads on corporate and structured credit investments, and unfavorableforeign exchange rate movements, partially offset by declines in interestrates.

Total investments available for sale decreased from $36.3 billion atDecember 31, 2007 to $32.2 billion at March 31, 2008 due mainly to asset salesto fund the redemption of the Company's muni-GIC liabilities.

Other Items

Total operating expenses were $263.8 million for the first quarter 2008, adecrease from $280.5 million in the prior year quarter. The decrease isprimarily due to the inclusion of $24.1 million of operating expenses of SCAin the prior year quarter.

The quarter ended March 31, 2008 includes a foreign exchange loss of$67.7 million as compared with a loss of $23.6 million in the prior yearquarter. The current quarter loss is primarily driven by the significantdecline of the U.S. Dollar against most European currencies. The overallimpact of foreign exchange movement has been accretive to shareholders'equity, as the foreign exchange loss in the current quarter was more thanoffset by currency translation gains.

The quarter ended March 31, 2007 included $23.5 million of net income fromSCA as a consolidated subsidiary and $11.1 million of income from XL's shareof earnings from Primus Guaranty Ltd ("Primus"). The current quarter includesa charge of $4.8 million related to the unwinding of the discounted lossreserves ceded by SCA and no equity earnings from SCA or Primus.

The Company declared a semi-annual dividend of $32.50 per share on theCompany's Fixed/Floating Series E Perpetual Non-Cumulative Preference Shareson February 22, 2008. The dividend was paid on April 15, 2008.

The Company will host a conference call to discuss its First Quarter 2008results on Wednesday, April 23, 2008 at 10:00 a.m. Eastern time. Theconference call can be accessed through a listen-only dial-in number orthrough a live webcast. To listen to the conference call, please dial(877) 422-4657 or (706) 679-0474, Conference ID# 41008704. 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 April 23, 2008through midnight Eastern time on May 23, 2008.

A telephone replay of the conference call will be available beginning atapproximately 1:00 pm. Eastern time on April 23, 2008 until midnight Easterntime on May 14, 2008 by dialing (800) 642-1687 or (706) 645-9291, ConferenceID # 41008704. An unaudited financial supplement relating to the Company'sFirst Quarter 2008 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 March 31, 2008, XL Capital Ltd had consolidated assetsof $54.8 billion and consolidated shareholders' equity of $9.3 billion. Moreinformation about XL Capital Ltd is available at www.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 thisrelease for a reconciliation of net income/loss excluding net realized gainsand losses to net income available to ordinary shareholders.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA                         (U.S. dollars in thousands)                                             Three Months Ended     Income Statement Data:                       March 31                                                (Unaudited)                                             2008          2007    Revenues:                                            (Note 1)    Gross premiums written:            - P&C operations           $2,700,894    $2,954,292           - Life operations              234,958       213,275      - Financial operations                    -       104,958    Net premiums written:            - P&C operations            2,136,553     2,398,007           - Life operations              224,213       202,938      - Financial operations                    -        84,725    Net premiums earned:            - P&C operations            1,552,780     1,597,671           - Life operations              159,582       146,994      - Financial operations                    -        46,379    Net investment income                 499,229       553,092    Net realized (losses)     gains on investments                (102,251)        9,292    Net realized and unrealized     gains on derivative instruments       44,682         7,741    Net income from     investment affiliates                 11,799       118,936    Fee and other income                    8,291         3,337                     Total revenues    $2,174,112    $2,483,442    Expenses:    Net losses and loss     expenses incurred                 $1,000,893      $994,787    Claims and policy benefits            196,299       188,343    Acquisition costs                     266,297       259,951    Operating expenses                    263,824       280,503    Exchange losses                        67,745        23,569    Interest expense                      124,112       142,791    Amortization of     intangible assets                        420           420                     Total expenses    $1,919,590    $1,890,364    Net income before     minority interest,     income tax and     net income from     operating affiliates                $254,522      $593,078    Minority interest in     net income of subsidiary                   -        14,898    Income tax                             30,702        72,755    Net (income) from     operating affiliates                 (20,553)      (57,082)    Net income                           $244,373      $562,507    Preference share dividends            (32,500)      (12,789)    Net income available     to ordinary shareholders            $211,873      $549,718

Note 1: Certain amounts in 2007 have been represented to conform with thecurrent period presentation.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA               (Shares in thousands, except per share amounts)                                         Three Months Ended    Income Statement Data (continued):          March 31                                               (Unaudited)                                            2008         2007                                                       (Note 1)    Weighted average number     of ordinary shares and     ordinary share equivalents:                      Basic              176,336      178,772                    Diluted              176,827      179,601    Per Share Data:    Net income available     to ordinary shareholders              $1.20        $3.06    Ratios -- P&C operations:    Loss ratio                              64.5%        62.3%    Expense ratio                           29.1%        27.9%    Combined ratio                          93.6%        90.2%

Note 1: Certain amounts in 2007 have been represented to conform with thecurrent period presentation.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA            (U.S. dollars in thousands, except per share amounts)    Balance Sheet Data:                    As at                As at                                      March 31, 2008      December 31, 2007                                       (Unaudited)    Total investments     available for sale                  $32,221,387            $36,265,803    Cash and cash equivalents              3,904,966              3,880,030    Investments in affiliates              2,508,796              2,611,149    Unpaid losses and loss     expenses recoverable                  4,664,039              4,697,471    Total assets                          54,801,075             57,762,264    Unpaid losses and loss expenses       23,365,213             23,207,694    Deposit liabilities                    3,888,731              7,920,085    Future policy benefit reserves         6,907,053              6,772,042    Unearned premiums                      5,531,248              4,681,989    Notes payable and debt                 2,868,980              2,868,731    Total shareholders' equity             9,255,351              9,948,142    Diluted book value per ordinary share     $46.11                 $50.29    Basic book value per ordinary share       $46.11                 $50.30                                XL Capital Ltd                                RECONCILIATION

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 months ended March 31, 2008 and 2007 (U.S.dollars in thousands, except per share amounts):

                                               Three Months Ended                                                    March 31                                                   (Unaudited)                                              2008             2007                                                             (Note 1)    Net income available to     ordinary shareholders                $211,873         $549,718    Net realized losses (gains)     on investments, net of tax             98,377          (13,042)    Net realized and unrealized     losses (gains) on investment     derivatives, net of tax               (34,120)          (4,694)    Net realized and unrealized     losses (gains) on credit     and structured financial     derivatives, net of tax                    57           11,410    Net realized and unrealized     losses (gains) on investments     and derivatives of the     Company's insurance company     operating affiliates                      680           (3,385)    Net income excluding net     realized gains and losses (Note 2)   $276,867         $540,007    Per ordinary share results:    Net income available to     ordinary shareholders                   $1.20            $3.06    Net income excluding net     realized gains and losses (Note 2)      $1.57            $3.01    Weighted average ordinary     shares outstanding:    Basic                                  176,336          178,772    Diluted                                176,827          179,601    Return on Ordinary     Shareholders' Equity:    Average ordinary     shareholders' equity               $8,601,747       $9,704,357    Net income excluding     net realized gains     and losses (Note 2)                  $276,867         $540,007    Annualized net income     excluding net realized     gains and losses (Note 2)          $1,107,468       $2,160,028    Annualized Return on     Ordinary Shareholders'     Equity - Net income     excluding net realized     gains and losses (Note 2)                12.9%            22.3%

Note 1: Certain amounts in 2007 have been represented to conform with thecurrent period presentation.

Note 2: Defined as "net income available to ordinary shareholdersexcluding 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."

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, and (ii) annualized return on ordinary shareholders'equity (based on net income minus the Exclusions) to average ordinaryshareholders' equity. These items are "non-GAAP financial measures" asdefined in Regulation G. The reconciliation of such measures to the mostdirectly comparable GAAP financial measures in accordance with Regulation G isincluded 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, net realized and unrealized gains and losses on credit,structured financial and investment derivatives, net of tax'. Investmentderivatives include all derivatives entered into by XL other than weather andenergy and credit derivatives (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, thedetermination to realize capital gains (or losses) is independent of theunderwriting process. In addition, under applicable GAAP accountingrequirements, losses can be created as the result of other-than-temporarydeclines in value without actual realization. In this regard, certain usersof XL's financial information, including certain rating agencies, evaluateearnings before tax and capital gains to understand the profitability of therecurring sources of income without the effects of these two variables.Furthermore, these users believe that, for many companies, the timing of therealization of capital gains is largely opportunistic and are a function ofeconomic and interest rate conditions.

In addition, with respect to credit derivatives, because XL and itsinsurance company operating affiliates generally hold financial guarantycontracts written in credit default derivative form to maturity, the neteffects of the changes in fair value of these credit derivatives are excluded(similar with other companies in the financial guarantee business) as thechanges in fair value each quarter are not indicative of underlying businessperformance. Unlike these credit derivatives, XL's weather and energyderivatives are actively traded (i.e., they are not held to maturity) and are,therefore, not excluded from net income as any gains or losses from thisbusiness are considered by management when evaluating and managing theunderlying 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 agenciesthat follow XL (and the insurance industry as a whole) exclude these itemsfrom their analyses for the same reasons and they request that XL provide thisnon-GAAP financial information on a regular basis.

Return on average ordinary shareholder's equity ("ROE") excluding netrealized gains and losses on investments and net realized and unrealized gainsand losses on credit and investment derivative instruments, net of tax, forthe Company and its share of these items for SCA and the Company's otherinsurance company operating affiliates (the "Exclusions"), is a widely usedmeasure of any company's profitability. Annualized return on average ordinaryshareholders' equity (minus the Exclusions) is calculated by dividingannualized net income minus the Exclusions for any period by the average ofthe opening and closing ordinary shareholders' equity. The Company establishestarget ROEs (minus the Exclusions) for its total operations, segments andlines of business. If the Company's ROE (minus the Exclusions) return targetsare not met with respect to any line of business over time, the Company seeksto re-evaluate these lines. In addition, the Company's compensation of itssenior officers is dependant upon, among other things, the achievement of theCompany's performance goals to enhance shareholder value which include ROE(minus the Exclusions).