Reinsurance
Product Family

Net Income $99.0 million, or $0.71 per ordinary share

HAMILTON, BERMUDA, October 29, 2003 -- XL Capital GroupLtd (“XL” or the “Company”)(NYSE: XL) today reported net income available to ordinaryshareholders for the quarter ended September 30, 2003of $99.0 million, or $0.71 per ordinary share. Thisresult includes the impact of a previously announced$184 million pre-tax ($160 million after-tax) chargefor adverse development primarily due to newly reportedcasualty reinsurance claims for the 1997 to 2000 underwritingyears. Net income for the prior year was $184.1 million,or $1.34 per ordinary share, in the third quarter of2002. ‘Net income excluding net realized gainsand losses on investments and net realized and unrealizedgains and losses on credit and investment derivativeinstruments, net of tax’ for the third quarterof 2003 was $124.1 million, or $0.90 per ordinary share,compared with $216.6 million, or $1.58 per ordinaryshare, for the quarter ended September 30, 2002. ‘Netincome excluding net realized gains and losses on investmentsand net realized and unrealized gains and losses oncredit and investment derivative instruments, net oftax’ is a non-GAAP measure. See below for a reconciliationof this measure to net income available to ordinaryshareholders.

Commenting on the third quarter 2003 results, BrianM. O’Hara, President and Chief Executive Officerof XL, stated, “We had strong current underwritingyear results in all three of our business segments,despite the previously announced $184 million pre taxcharge we took in our North American casualty reinsuranceoperations in the quarter. Absent this charge, our combinedratio was 87%, which demonstrates the quality underwritingcurrently being carried out in today’s favorablemarket environment.”

For the nine months ended September 30, 2003, net incomeavailable to ordinary shareholders was $686.5 million,or $4.97 per ordinary share, compared with $181.8 million,or $1.32 per ordinary share, in the nine months endedSeptember 30, 2002 which included $200 million relatedto the development of September 11th event and $239.1million in net realized losses on investments. ‘Netincome excluding net realized gains and losses on investmentsand net realized and unrealized gains and losses oncredit and investment derivative instruments, net oftax’ for the nine months ended September 30, 2003was $642.9 million, or $4.65 per ordinary share, comparedwith $450.6 million, or $3.28 per ordinary share, forthe nine months ended September 30, 2002. See belowfor the reconciliation of ‘net income excludingnet realized gains and losses on investments and netrealized and unrealized gains and losses on credit andinvestment derivative instruments, net of tax’to net income available to ordinary shareholders.

Total assets as of September 30, 2003 were $39.6 billioncompared with $35.6 billion as of December 31, 2002.Book value per ordinary share as at September 30, 2003was $50.15 compared with $44.48 as at December 31, 2002.

Summary unaudited consolidated financial data for thequarter and nine months ended September 30, 2003 and2002, respectively, are set forth below (in millions,except per share amounts):

                                       Three months ended  Nine months ended                                          September 30        September 30                                          (Unaudited)         (Unaudited)                                         2003      2002      2003      2002  Gross premiums written             $2,289.2  $2,647.7  $7,473.6  $6,990.7  Net premiums written                1,717.8   2,116.1   5,778.8   5,413.6  Net premiums earned - General   operations                         1,663.7   1,344.7   4,565.1   3,391.9  Net premiums earned - Life and   annuity operations                    86.4     786.4     249.7     836.1  Net premiums earned - Financial   operations                            35.3      16.9      98.1      42.3  Net income                           $109.1    $186.5    $716.7    $184.2  Preference dividend                   (10.1)     (2.4)    (30.2)     (2.4)  Net income available to ordinary   shareholders                         $99.0    $184.1    $686.5    $181.8  Per ordinary share results:  Net income available to ordinary   shareholders                         $0.71     $1.34     $4.97     $1.32

Gross premiums written for general operations in thethird quarter of 2003 were $2.1 billion compared with$1.8 billion in the third quarter of 2002. Net premiumswritten increased to $1.5 billion from $1.3 billionand net premiums earned rose to $1.7 billion from $1.3billion in the respective quarters of 2003 and 2002.For the nine months ended September 30, 2003, grosspremiums written for general operations were $7.0 billioncompared with $6.0 billion in the year ago period. Netpremiums written for the first nine months of 2003 were$5.3 billion compared with $4.5 billion a year ago.Net premiums earned were $4.6 billion for the firstnine months of 2003 as compared with $3.4 billion forthe first nine months of 2002.

Gross premiums written for life and annuity operations in the third quarterof 2003 were $89.0 million compared with $793.1 millionin the third quarter of 2002, which included a largelife reinsurance contract that contributed approximately$760 million in premiums. Net premiums written for lifeand annuity operations in the third quarter of 2003were $84.3 million compared with $787.5 million in thethird quarter of 2002 and net premiums earned were $86.4million in the third quarter of 2003 compared with $786.4million in the third quarter of 2002. For the nine monthsended September 30, 2003, gross premiums written forlife operations were $276.2 million compared with $851.6million in the year ago period. Net premiums writtenwere $245.3 million in the first nine months of 2003compared with $836.0 million in the first nine monthsof 2002. Net premiums earned were $249.7 million and$836.1 million in the respective nine month periodsof 2003 and 2002.

Gross premiums written for financial operations in the third quarter of 2003were $91.6 million compared with $42.9 million in thethird quarter of 2002. Net premiums written for financialoperations in the third quarter of 2003 were $89.6 millioncompared with $26.2 million in the third quarter of2002 and net premiums earned were $35.3 million in thethird quarter of 2003 compared with $16.9 million inthe third quarter of 2002. For the first nine monthsof 2003 gross premiums written for financial operationswere $242.7 million compared with $145.0 million inthe year ago period. Net premiums written for financialoperations were $238.0 million in the first nine monthsof 2003 compared with $123.3 million in 2002 and netpremiums earned were $98.1 million and $42.3 millionin the respective nine month periods of 2003 and 2002.

Net investment income from general operations was $142.2million in the third quarter of 2003, compared with$153.3 million in 2002’s third quarter. Net investmentincome from life and annuity and financial operationswas $48.6 million in the third quarter of 2003 comparedwith $34.1 million for the quarter ended September 30,2002. For the first nine months of 2003 net investmentincome from general operations was $436.3 million comparedwith $454.2 million in the year ago period. Net investmentincome from life and annuity and financial operationswas $137.0 million in the first nine months of 2003compared with $79.0 million for the first nine monthsof 2002.

The Company’s equity in the net income of its investment affiliates forthe third quarter of 2003 was $26.2 million versus aloss of $2.0 million in the third quarter of 2002. TheCompany’s equity in net income of its insuranceand financial affiliates was $12.1 million in the thirdquarter of 2003 versus a loss of $0.4 million in thethird quarter of 2002. The Company’s equity inthe net income of its investment affiliates for thefirst nine months of 2003 was $87.3 million versus $38.1million in the first nine months of 2002. The Company’sequity in net loss of its insurance and financial affiliateswas $12.5 million in the first nine months of 2003 versusnet income of $0.1 million in the first nine monthsof 2002.

The combined ratio for the Company’s general insurance and reinsuranceoperations was 98.0% in the third quarter of 2003, versus90.9% in the third quarter of 2002. The loss ratioswere 70.3% and 61.6% in the quarters ended September30, 2003 and 2002, with corresponding expense ratiosof 27.7% and 29.3% for the same quarters, respectively.The combined ratio for the Company’s general insuranceand reinsurance operations was 92.4% in the first ninemonths of 2003, versus 96.9% in the first nine monthsof 2002. The loss ratios were 65.1% and 67.5% in thenine months ended September 30, 2003 and 2002, withcorresponding expense ratios of 27.3% and 29.4% forthe same periods, respectively. In the quarter and ninemonths ended September 30, 2003, the Company’sresults were impacted by adverse development for NorthAmerican casualty reinsurance losses. In the nine monthsended September 30, 2002, the Company’s resultswere impacted by adverse development for the September11 event. The combined ratio excluding the third quarter2003 casualty losses for the quarter was 86.9% and forthe nine months ending September 2003 was 87.7%. Forthe nine months ending September 2002 excluding theSeptember 11th event loss the combined ratio was 91%.

A live on-line web cast of XL’s call with analysts and investors to reviewthe third quarter 2003 results will be held at 10 a.m.Eastern Time on October 30, 2003 at www.xlgroup.com.An unaudited financial information supplement relatingto the Company’s 2003 and 2002 quarterly and fullyear results is available on its website: www.xlgroup.com(under “Investor Information – FinancialReports”).

XL Capital Ltd, through its operating subsidiaries, is a leading provider ofinsurance and reinsurance coverages and financial productsand services to industrial, commercial and professionalservice firms, insurance companies and other enterpriseson a worldwide basis.

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This press release contains forward-looking statementsthat involve inherent risks and uncertainties. Statementsthat are not historical facts, including statementsabout XL’s beliefs, plans or expectations, areforward-looking statements. These statements are basedon current plans, estimates, and expectations. Actualresults may differ materially from those projected insuch forward-looking statements and therefore you shouldnot place undue reliance on them. A non-exclusive listof the important factors that could cause actual resultsto differ materially from those in such forward-lookingstatements includes the following: (a) the results ofthe reserve review and claims audits previously announcedby XL and scheduled to be completed in the fourth quarterof 2003 (b) rate increases and improvements in termsand conditions may not be as large or sustainable asXL is currently projecting; (c) greater frequency orseverity of claims and loss activity, including as aresult of natural or man-made catastrophic events, thanXL’s underwriting, reserving or investment practicesanticipate based on historical experience or industrydata; (d) developments in the world’s financialand capital markets which adversely affect the performanceof XL’s investments and XL’s access to suchmarkets; (e) changes in general economic conditions,including foreign currency exchange rates, inflationand other factors; and (f) the other factors set forthin XL’s most recent report on Form 10-K, Form10-Q and XL’s other documents on file with theSecurities and Exchange Commission. XL undertakes noobligation to update publicly or revise any forward-lookingstatement, whether as a result of new information, futuredevelopments or otherwise.

                                                                   XL Capital Ltd                       SUMMARY CONSOLIDATED FINANCIAL DATA        (In thousands of U.S. dollars, except share and per share amounts)                                   Three Months Ended      Nine Months Ended                                      September 30            September 30                                      (Unaudited)             (Unaudited)                                     2003     2002 (a)       2003     2002 (a)    Income Statement Data:    Revenues:    Gross premiums written -     general, life and annuity     and financial  operations $2,289,241  $2,647,732  $7,473,573  $6,990,665    Net premiums written -     general, life and annuity     and financial operations   1,717,784   2,116,133   5,778,750   5,413,646      Net premiums earned -       general operations      $1,663,713  $1,344,681  $4,565,120  $3,391,880      Net premiums earned -       life and annuity       operations                  86,428     786,383     249,681     836,073      Net premiums earned -       financial operations        35,307      16,917      98,087      42,284      Net investment income -       general operations         142,166     153,270     436,255     454,177      Net investment income -       life and annuity       operations                  43,136      26,263     120,829      58,606      Net investment income -       financial operations         5,461       7,782      16,134      20,402      Net realized (losses)       gains on investments        (8,693)    (23,086)     80,331    (239,108)      Net realized and       unrealized (losses)       gains on derivative       instruments                (28,346)      9,484     (26,110)     (5,126)      Equity in net income       (loss) of investment       affiliates                  26,240      (1,976)     87,344      38,140      Fee and other income          3,920      10,082      25,989      38,490                               $1,969,332  $2,329,800  $5,653,660  $4,635,818    Expenses:    Net losses and loss     expenses incurred -     general operations        $1,169,664    $828,199  $2,970,210  $2,289,568    Claims and policy benefit     reserves - life and     annuity operations            99,954     803,741     302,737     870,320    Net losses and loss     expenses incurred -     financial operations           3,894       6,006      26,177       9,032    Acquisition costs and     operating expenses           537,224     440,929   1,460,513   1,126,972    Exchange gains                 (4,076)    (15,382)    (30,130)    (46,952)    Interest expense               49,671      51,815     142,093     133,576    Amortization of intangible     assets                           375         875       1,125       1,500                               $1,856,706  $2,116,183  $4,872,725  $4,384,016    Income before minority     interest, income tax     expense and equity in net     (income) loss of     insurance and financial     affiliates                                 $112,626    $213,617    $780,935    $251,802    Minority interest                 763       2,494       5,791       6,528    Income tax expense             14,890      24,286      45,929      61,140    Equity in net (income)     loss of insurance and     financial affiliates         (12,078)        401      12,487         (47)    Net income                   $109,051    $186,436    $716,728    $184,181    Preference dividend           (10,080)     (2,369)    (30,241)     (2,369)    Net income available to     ordinary shareholders        $98,971    $184,067    $686,487    $181,812    Weighted average number of     ordinary shares and      ordinary share       equivalents : Basic        136,826     135,790     136,744     135,551      : Diluted                   138,423     137,349     138,170     137,291    Per  Share Data:      Net income available to       ordinary shareholders        $0.71       $1.34       $4.97       $1.32    Note:    a) Certain reclassifications, which have no effect on net income, have       been made to prior period  results to conform to current presentation.                                 XL Capital Ltd                       SUMMARY CONSOLIDATED FINANCIAL DATA            (In thousands of U.S. dollars, except per share amounts)                                   (Unaudited)                                                  As at             As at                                                 Sept.30,          Dec. 31,                                                   2003             2002    Balance Sheet Data:    Total investments available for sale       $19,410,426       $16,059,733    Net payable for investments purchased          112,219         1,546,276    Cash and cash equivalents                    2,059,609         3,557,815    Investments in affiliates                    1,855,989         1,750,005    Intangible assets                            1,677,726         1,653,700    Total assets                                39,586,850        35,647,369    Unpaid losses and loss expenses             15,161,820        13,202,736    Deposit liabilities and policy     benefit reserves                            6,160,554         4,889,996    Notes payable and debt                       1,898,959         1,877,957    Total shareholders' equity                   7,401,210         6,569,589    Book value per ordinary share                   $50.15            $44.48

XL Capital Ltd

RECONCILIATION

The following is a reconciliation of the Company’snet income to ‘net income excluding net realizedgains and losses on investments and net realized andunrealized gains and losses on credit and investmentderivative instruments, net of tax’ for the threeand nine months ended September 30, 2003 and 2002 (inmillions except per share amounts):

                                                                           Three months ended Nine months ended                                              September 30      September 30                                              (Unaudited)       (Unaudited)                                             2003     2002     2003     2002    Net income available to ordinary     shareholders                           $99.0   $184.1   $686.5   $181.8    Net realized losses (gains) on       investments, net of tax                7.3     28.0    (74.8)   245.8    Net realized and unrealized losses on     investment       derivatives, net of tax               16.1      2.7      7.5     12.5    Net realized and unrealized losses on     credit derivatives,       net of tax                             1.7      1.8     23.7     10.5    Net income 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                          $124.1   $216.6   $642.9   $450.6    Per ordinary share results:    Net income available to ordinary     shareholders                           $0.71    $1.34    $4.97    $1.32    Net income 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                           $0.90    $1.58    $4.65    $3.28    Weighted average ordinary shares      outstanding:    Basic                                   136.8    135.8    136.7    135.6    Diluted                                 138.4    137.3    138.2    137.3

Comment on Regulation G

This press release contains the presentation of ‘net income excludingnet realized gains and losses on investments and netrealized and unrealized gains and losses on credit andinvestment derivatives, net of tax’. This presentationis a “non-GAAP financial measure” as definedin Regulation G. The reconciliation of such measureto net income (the most directly comparable GAAP financialmeasure) in accordance with Regulation G is includedabove.

XL presents its operations in the way it believes will be most meaningful anduseful to investors, analysts, rating agencies and otherswho use XL’s financial information in evaluatingXL’s performance. This presentation includes theuse of ‘net income excluding net realized gainsand losses on investments and net realized and unrealizedgains and losses on credit and investment derivatives,net of tax’. Investment derivatives include allderivatives entered into by XL other than weather andenergy and credit derivatives (discussed further below).

Although the investment of premiums to generate income (or loss) and realizedcapital gains (or losses) is an integral part of XL’soperations, the determination to realize capital gains(or losses) is independent of the underwriting process.In addition, under applicable GAAP accounting requirements,losses can be created as the result of other than temporarydeclines in value without actual realization. In thisregard, certain users of XL’s financial information,including certain rating agencies, evaluate earningsbefore tax and capital gains to understand the profitabilityof the recurring sources of income without the effectsof these two variables. Furthermore, these users believethat, for many companies, the timing of the realizationof capital gains is largely opportunistic and are afunction of economic and interest rate conditions. Inaddition, with respect to credit derivatives, becauseXL generally holds its financial guarantee contractswritten in credit default derivative form to maturity,the net effects of the changes in fair value of thesecredit derivatives are excluded (similar with othercompanies in the financial guarantee business) as thechanges in fair value each quarter are not indicativeof underlying business performance of XL’s financialguarantee operations. Unlike these credit derivatives,XL’s weather and energy derivatives are activelytraded (i.e, they are not held to maturity) and are,therefore, not excluded from net income as any gainsor losses from this business are considered by managementwhen evaluating and managing the underlying business.

In summary, XL evaluates the performance of and managesits business to produce an underwriting profit. In additionto presenting net income, XL believes that showing netincome exclusive of the items mentioned above enablesinvestors and other users of XL’s financial informationto analyze XL’s performance in a manner similarto how management of XL analyzes performance. In thisregard, XL believes that providing only a GAAP presentationof net income makes it much more difficult for usersof XL’s financial information to evaluate XL’sunderlying business. Also, as stated above, XL believesthat the equity analysts and certain rating agencieswho follow XL (and the insurance industry as a whole)exclude these items from their analyses for the samereasons and they request that XL provide this non-GAAPfinancial information on a regular basis.