XL Capital Posts $240 million Q1 Net Income

April 29, 2003

Bermuda’s XL Capital Ltd. reported net income available to ordinary shareholders for the quarter ended March 31, 2003 of $239.9 million, or $1.74 per ordinary share, compared with net income of $89.5 million, or $0.65 per ordinary share, in the first quarter of 2002.

Net operating income for the period was even higher at $250.1 million, or $1.82 per ordinary share, compared with net operating income of $207.6 million, or $1.51 per ordinary share, for the quarter ended March 31, 2002. XL’s profits were dragged down, however, by the ongoing weakness in the investment area as equity values and interest rates continue to be depressed. XL’s first quarter 2003 net operating results were also impacted by a write down of its investment in Annuity and Life Re Holdings Ltd. of $40.9 million

Largely as a result of the troubled investment sector, XL’s first quarter performance fell below analysts’ consensus estimates of $1.86 per share, despite the fact that gross premiums written increased to $3.147 billion during the period, as compared to $2.805 million in Q1 2002, while net premiums earned increased to $1.552 billion from $1.065 billion last year.

Commenting on the first quarter 2003 results, President and CEO Brian M. O’Hara stated: “We had a very strong first quarter with excellent underwriting results reflected in our combined ratio of 86.1% and net earned premium growth of 42% in our general insurance and reinsurance operations. Our net operating income return on ordinary shareholders’ equity exceeded 16% and book value per ordinary share increased to $46.09, a record level for XL. Our general insurance and reinsurance businesses continue to see very strong pricing, most notably in casualty, professional lines and marine worldwide.”

Addressing the investment environment, O’Hara noted that it “continues to be challenging with reinvestment rates at extremely low levels.” He said the current climate “will continue to put pressure on industry results and underscores the need to maintain underwriting discipline in the market.”

XL will host a live on-line web cast of its results with analysts and investors at 10:00 a.m. Eastern Time today at: www.xlcapital.com.

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