XL Capital Reports Q3 results-$184 Million Net, $221 Million Operating

October 31, 2002

Bermuda’s XL Capital Ltd’s third quarter results seem to have trumped rival ACE Limited with a reported net income available to ordinary shareholders for the quarter ended September 30 of $184 million, or $1.34 per share, compared with a net loss of $840 million, or $6.70 per share, in the third quarter of 2001.

The company posted net operating income for the third quarter of $221 million, or $1.61 per share, compared with a net operating loss of $761.8 million, or $6.07 per share, for the quarter ended September 30, 2001. The results include figures from le Mans Re operations, which were consolidated with XL’s beginning in January, and Winterthur International, which officially became part of the group in July.

XL, along with the rest of the insurance industry, was severely impacted by losses related to the Sept. 11 attacks. It seems to have come back extremely well, however, posting gross written premiums for the quarter of $2.6555 billion, compared to $1.1933 billion in the same period last year. For the first nine months, XL’s gross written premiums have doubled from $3.350 billion last year to $7.0526 billion in 2002.

Commenting on the third quarter 2002 results, Brian M. O’Hara, President and CEO stated that, “Our insurance and reinsurance businesses have enjoyed a robust third quarter, with significant rate increases and new business contributing to strong underwriting results in the quarter. I am particularly pleased with our general operations combined ratio of 91.0% in the quarter.”

He did note, however that, “while the managers of our investment affiliates generally outperformed their benchmarks and the overall investment markets in the third quarter, their absolute performance resulted in a small loss when compared to their strong performance a year ago.” A “small loss” is better than most companies have done recently. ACE reported a $57 million net loss due primarily to decreases in investments. (see IJ Website Oct. 30)

O’Hara expressed confidence that “the property and casualty markets will remain hard for some time, ” and indicated that “XL is well positioned to capitalize on the long overdue price increases and improvements in terms and conditions currently being achieved in virtually all lines of business.”

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