XL Capital Reports Second Quarter 2007 Net Income of $544.5 Million, or $3.00 Per Ordinary Share.

Included in net realized gains and losses on investments for the quarterended June 30, 2007 is a gain of $81.3 million related to the previouslyannounced sale of 16.6% of Security Capital Assurance Ltd ("SCA") commonshares. After the sale, the Company owns approximately 46% of SCA commonshares.

Commenting on the current quarter results, President and Chief ExecutiveOfficer Brian M. O'Hara said: "XL's six consecutive quarters of excellentearnings demonstrate the advantages of our unique dual platform. Ourcontinuous improvement in risk management, commitment to disciplined growth,along with our sharpened strategic focus, have all contributed to theachievement of record results, and as we have demonstrated in this quarter,provide a solid platform for delivering shareholder value."

For the first half of 2007, net income available to ordinary shareholderswas a record $1.09 billion, or $6.06 per ordinary share, compared with$835.6 million, or $4.64 per ordinary share, in the first half of 2006. "Netincome excluding net realized gains and losses" for the same period was$1.06 billion, or $5.87 per ordinary share, as compared with $781.4 million,or $4.34 per ordinary share, in the first half of 2006.

At June 30, 2007, fully diluted book value per ordinary share was $54.74,as compared to $54.85 as at March 31, 2007. Offsetting net income for thequarter was a decrease in net unrealized gains/losses on investments of$615.5 million, due to the rise in interest rates. Basic book value perordinary share was $55.01 at June 30, 2007 as compared to $54.95 and $53.12 asat March 31, 2007 and December 31, 2006, respectively.

Segment results reflect the Company's previously announced realignment ofits operating segments. As a result, information related to prior periods hasbeen re-presented to conform to the current period presentation. There was noeffect on net income as a result of these changes.

SEGMENT HIGHLIGHTS - SECOND QUARTER 2007 VERSUS SECOND QUARTER 2006

Insurance

Underwriting profit for the quarter ended June 30, 2007 was $102.2 millioncompared with $63.8 million in the prior year period. This increase was duemainly to net favorable prior year development of $43.7 million, as comparedto net adverse development of $4.8 million in the prior year.

    -- Gross premiums written increased 2.1% primarily as a result of       favorable foreign exchange movements and new business operations.    -- Net premiums written decreased by 1.7% mainly due to the effect of       commutations of ceded treaties in the prior year quarter.    -- Net premiums earned increased marginally as a result of the above       factors.    -- The combined ratio was 90.6% compared with 94.7% for the prior year       period. The loss ratio excluding the impact of net prior year       development for the current and prior year quarter was 66.8% and 67.9%,       respectively.

Reinsurance

Underwriting profit for the quarter ended June 30, 2007 was $129.8 millioncompared with $81.8 million for the prior year period. The increase isprincipally due to net favorable prior year development of $80.4 million,compared to net adverse development of $3.0 million in the prior year period.The current quarter net favorable prior year development of $80.4 millionincludes $48.5 million related to property and other short-tail lines and$31.9 million related to casualty and other lines.

    -- Gross premiums written decreased by 13.1% due primarily to continued       increased retentions by cedants and reduced share participations on       certain casualty lines as well as the impact of positive premium       adjustments in the prior year quarter.    -- Net premiums earned decreased 11.3% reflecting the effects of lower net       premiums written in the current and prior periods.    -- The combined ratio was 78.4% compared with 87.7% in the prior year       period. The loss ratio excluding the impact of the net prior year       development for the current and prior year quarter was 60.3% and 59.0%,       respectively.

Life Operations

Gross premiums written were $235.0 million compared with $194.7 million inthe prior year quarter, reflecting continued growth in the underlying businessand favorable foreign exchange movements. Net income was $24.7 million ascompared with $27.7 million in the second quarter last year.

Financial Operations

SCA's results for the quarter ended June 30, 2007 are consolidated for theperiod through the effective date of the sale. Comparative results for thequarter ended June 30, 2006 are for the full quarter. XL's share of SCA'sresults from the date of sale to June 30, 2007 are included in net income fromoperating affiliates.

Net income for the segment before equity minority interest was$23.5 million compared with $38.3 million in the prior year quarter. Thecurrent quarter included an equity minority interest charge of $9.1 million.

Investment Operations

Net investment income from P&C operations, excluding investment incomefrom Structured Products, increased 23.6% from the prior year period to$323.0 million due to a continued rise in average yields. Net income frominvestment affiliates was $67.0 million in the second quarter of 2007 comparedwith $28.8 million in the second quarter of 2006. Net income from investmentmanager affiliates increased to $43.9 million as compared to $28.3 million forthe prior year period.

Total net realized gains on investments were $18.3 million in the quarter,or a loss of $63.0 million excluding the gain on sale of SCA shares, comparedwith net realized losses of $23.6 million in the prior year period. Netunrealized losses on investments, net of tax, were $309.9 million at June 30,2007 compared with net unrealized gains of $305.6 million and $410.5 millionat March 31, 2007 and December 31, 2006, respectively. This decrease of$615.5 million for the quarter and $720.4 million for the six months endedJune 30, 2007, was substantially due to the rise in U.S., U.K. and Euro-Zoneinterest rates during these periods.

Other Items

Total operating expenses were $306.6 million in the quarter, up from$279.5 million in the prior year period. The increase was due mainly to anincrease in compensation costs related to both business developmentinitiatives and performance-based programs and the impact of foreign exchange.

During the quarter, the Company repurchased 7.7 million ordinary shares atan average price of $77.92 per share. Year to date, the Company repurchased10.9 million ordinary shares at an average price of $75.56 per share. TheCompany has approximately $177.1 million remaining from its previouslyauthorized share repurchase program.

On May 15, 2007, the Company settled the purchase contract component ofits Equity Security Units originally issued on March 23, 2004, and also boughtback all of its 2.53% Senior Notes due 2009 that formed a part thereof. Thesettlement of the purchase contracts resulted in the issuance of approximately10.8 million of the Company's ordinary shares.

On May 7, 2007, the Company issued $325 million of 6.25% Senior Notes.

The Company will host a conference call to discuss its second quarter 2007results on Wednesday, July 25, 2007 at 10:00 a.m. Eastern time. The conferencecall can be accessed through a listen-only dial-in number or through a livewebcast. To listen to the conference call, please dial (877) 422-4657 or(706) 679-0474, Conference ID# 4428219. The webcast will be available on XL'swebsite located at www.xlgroup.com and will be archived on this site fromapproximately 1:00 p.m. Eastern time on July 25, 2007 through midnight Easterntime on August 27, 2007. A slide presentation accompanying the Company'sdiscussion of its second quarter results will also be available on theCompany's website located at www.xlgroup.com beginning approximately 15minutes before the commencement of the conference call.

A telephone replay of the conference call will be available beginning atapproximately 1:00 pm. Eastern time on July 25, 2007 until midnight Easterntime on August 15, 2007 by dialing (800) 642-1687 or (706) 645-9291,Conference ID # 4428219. An unaudited financial supplement relating to theCompany's second 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 June 30, 2007, XL Capital Ltd had consolidated assetsof $60.2 billion and consolidated shareholders' equity of $11.5 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 frequency or severity of claims and loss activity than XL'sunderwriting, reserving or investment practices anticipate based on historicalexperience or industry data; (b) trends in rates for property and casualtyinsurance and reinsurance; (c) developments in the world's financial andcapital markets that adversely affect the performance of XL's investments oraccess to such markets; (d) changes in general economic conditions, includingforeign currency exchange rates, inflation and other factors; and (e) theother factors set forth in XL's most recent reports on Form 10-K, Form 10-Q,and other documents on file with the Securities and Exchange Commission, aswell as management's response to any of the aforementioned factors. XLundertakes no obligation to update or revise publicly any forward-lookingstatement, whether as a result of new information, future developments orotherwise.

(1) Defined as net income excluding net realized gains and losses oninvestments and net realized and unrealized gains and losses on credit,structured financial and investment derivatives, net of tax, herein referredto as "net income excluding net realized gains and losses". "Net incomeexcluding net realized gains and losses" is a non-GAAP measure. See theschedule entitled "Reconciliation" at the end of this release for areconciliation of net income/loss excluding net realized gains and losses tonet income available to ordinary shareholders.

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA                         (U.S. dollars in thousands)                                    Three Months Ended       Six Months Ended    Income Statement Data:               June 30                  June 30                                       (Unaudited)              (Unaudited)                                    2007         2006        2007        2006    Revenues:                                (Note 1)                 (Note 1)    Gross premiums written:            - P&C operations  $1,944,186   $1,995,325  $4,898,478  $4,985,515           - Life operations     234,961      194,682     448,236     366,442      - Financial operations      52,025      106,174     156,983     186,737    Net premiums written:            - P&C operations   1,504,533    1,587,270   3,902,540   3,975,337           - Life operations     224,487      185,335     427,425     347,159      - Financial operations      45,720      102,222     130,445     181,269    Net premiums earned:            - P&C operations   1,651,149    1,723,231   3,248,820   3,389,567           - Life operations     239,853      201,911     386,847     310,547      - Financial operations      39,303       59,448      85,682     103,025    Net investment income        567,215      473,622   1,120,307     937,364    Net realized gains (losses)     on investments               18,296      (23,604)     27,588        (839)    Net realized and     unrealized gains on     derivative investments        9,188       29,238      16,929      78,089    Net income from     investment affiliates        67,043       28,849     185,979     135,242    Fee and other income           4,649        6,630       7,986      19,592              Total revenues  $2,596,696   $2,499,325  $5,080,138  $4,972,587    Expenses:    Net losses and loss     expenses incurred          $941,948   $1,115,004  $1,936,735  $2,203,509    Claims and policy benefits   279,100      237,010     467,443     388,509    Acquisition costs            298,021      295,512     557,972     562,599    Operating expenses           306,552      279,464     587,055     541,025    Exchange losses               22,600       22,693      46,169      53,442    Interest expense             164,695      134,632     307,486     262,501    Amortization of     intangible assets               420          420         840       1,515              Total expenses  $2,013,336   $2,084,735  $3,903,700  $4,013,100      Net income before       minority interest,       income tax and net       income from operating       affiliates               $583,360     $414,590  $1,176,438    $959,487    Minority interest in     net income of subsidiary      9,096            0      23,994       2,258    Income tax                    61,288       66,437     134,043     133,073    Net (income) from     operating affiliates        (41,639)     (39,016)    (98,721)    (31,596)    Net income                  $554,615     $387,169  $1,117,122    $855,752    Preference share dividends   (10,080)     (10,080)    (22,869)    (20,160)    Net income available     to ordinary shareholders   $544,535     $377,089  $1,094,253    $835,592

Note 1: Certain amounts in 2006 have been reclassified to conform with thecurrent period presentation

                                XL Capital Ltd                     SUMMARY CONSOLIDATED FINANCIAL DATA               (Shares in thousands, except per share amounts)                                    Three Months Ended       Six Months Ended    Income Statement Data (continued):   June 30                  June 30                                       (Unaudited)              (Unaudited)                                    2007         2006        2007         2006                                             (Note 1)                 (Note 1)    Weighted average number     of ordinary shares and     ordinary share equivalents:                       Basic     178,378      178,728     178,650     179,631                     Diluted     181,613      179,198     180,570     180,069    Per Share Data:    Net income available     to ordinary shareholders      $3.00        $2.10       $6.06       $4.64    Ratios - P&C operations:    Loss ratio                      56.9%        64.6%       59.6%       64.8%    Expense ratio                   29.4%        27.3%       28.6%       26.5%    Combined ratio                  86.3%        91.9%       88.2%       91.3%

Note 1: Certain amounts in 2006 have been reclassified 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                                   June 30, 2007    December 31, 2006                                    (Unaudited)                                                        (Note 1)    Total investments     available for sale              $38,461,012          $39,350,983    Cash and cash equivalents          2,744,352            2,223,748    Investments in affiliates          3,150,499            2,308,781    Unpaid losses and loss     expenses recoverable              4,745,898            5,027,772    Total assets                      60,196,683           59,308,870    Unpaid losses and loss expenses   22,689,706           22,895,021    Deposit liabilities                8,496,507            7,857,827    Future policy benefit reserves     6,700,987            6,476,057    Unearned premiums                  5,659,415            5,652,897    Notes payable and debt             2,868,226            3,368,376    Total shareholders' equity        11,522,046           10,131,166    Fully diluted book value     per ordinary share                   $54.74               $53.01    Basic book value per ordinary share   $55.01               $53.12    Note 1: Certain amounts in 2006 have been reclassified to conform with thecurrent period presentation                                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' (which is a non-GAAP measure, the "Exclusions") and (ii) annualizedreturn on ordinary shareholders' equity (based on net income (loss) minus theExclusions) to average ordinary shareholders' equity for the three and sixmonths ended June 30, 2007 and 2006 (U.S. dollars in millions, except pershare amounts):

                                    Three Months Ended      Six Months Ended                                         June 30                 June 30                                       (Unaudited)             (Unaudited)                                    2007         2006       2007         2006    Net income available to     ordinary shareholders        $544.5       $377.1   $1,094.3       $835.6    Net realized losses (gains)     on investments, net of tax    (21.5)        26.2      (34.7)         1.0    Net realized and unrealized     (gains) losses on investment     derivatives, net of tax       (19.7)       (25.7)     (24.3)       (55.3)    Net realized and unrealized     (gains) losses on credit and     structured financial     derivatives, net of tax        12.9         (1.8)      24.3          0.1    Net income excluding     net realized gains     and losses (Note 1)          $516.2       $375.8   $1,059.6       $781.4    Per ordinary share results:    Net income available to     ordinary shareholders         $3.00        $2.10      $6.06        $4.64    Net income excluding     net realized gains     and losses (Note 1)           $2.84        $2.10      $5.87        $4.34    Weighted average ordinary     shares outstanding:    Basic                        178,378      178,728    178,650      179,631    Diluted                      181,613      179,198    180,570      180,069    Return on Ordinary     Shareholders' Equity:    Average ordinary     shareholders' equity       $9,899.8     $8,001.4   $9,809.1     $7,992.0    Net income excluding     net realized gains     and losses (Note 1)          $516.2       $375.8   $1,059.6       $781.4    Annualized net income     excluding net realized     gains and losses (Note 1)  $2,064.8     $1,503.2   $2,119.2     $1,562.8    Annualized Return on     Ordinary Shareholders'     Equity - Net income     excluding net realized     gains and losses (Note 1)      20.9%        18.8%      21.6%        19.6%

Note 1: Defined as "net income excluding net realized gains and losses oninvestments and net realized and unrealized gains and losses on credit,structured financial and investment derivatives, net of tax".

Comment on Regulation G

This press release contains the presentation of (i) 'net income (loss)excluding net realized gains and losses on investments and net realized andunrealized gains and losses on credit, structured financial and investmentderivatives, net of tax' (the "Exclusions") and (ii) annualized return onordinary shareholders' equity (based on net income minus the Exclusions) toaverage ordinary shareholders' equity. These items are "non-GAAP financialmeasures" as defined in Regulation G. The reconciliation of such measures tothe most directly comparable GAAP financial measures in accordance withRegulation 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,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 creditderivatives, because XL generally holds its financial guaranty 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 guaranty 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.

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 (the"Exclusions"), is a widely used measure of any company's profitability.Annualized return on average ordinary shareholders' equity (minus theExclusions) is calculated by dividing annualized net income minus theExclusions for any period by the average of the opening and closing ordinaryshareholder's equity. The Company establishes target ROE's for its totaloperations, segments and lines of business. If the Company's ROE returntargets are not met with respect to any line of business over time, theCompany seeks to re-evaluate these lines. In addition, the Company'scompensation of its senior officers is significantly dependant on theachievement of the Company's performance goals to enhance shareholder valuewhich include ROE.