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XL Capital Ltd Reports Fourth Quarter 2005 Net Loss of $821.9 Million, or a Net Loss of $5.51 per Ordinary Share After the Charge Associated With the Winterthur Decision and the Natural Catastrophes

Full Year 2005 Net Loss of $1,292.3 Million, or Net Loss of $9.14 per Ordinary Share


          Strong Underlying Fundamentals Overshadowed by 2005 Events
                    (Full Year 2005 Versus Full Year 2004)

    -- 2005 Contribution From Financial Operations Was $235 Million Compared
       With $141 Million
    -- General Operations Net Investment Income Was $799 Million Compared With
       $614 Million
    -- Combined Ratio, Excluding the Charge Associated With the Winterthur
       Decision and the Third and Fourth Quarter Natural Catastrophes,
       Was 92.1%


HAMILTON, Bermuda, Feb. 7 /PRNewswire-FirstCall/ -- XL Capital Ltd (NYSE: XL) ("XL" or the "Company") today reported a net loss to ordinary shareholders for the quarter ended December 31, 2005 of $821.9 million, or a net loss of $5.51 per ordinary share, compared with net income of $288.0 million, or net income of $2.07 per ordinary share, for the quarter ended December 31, 2004. Net loss for the quarter ended December 31, 2005 included net losses of $834.2 million, pre and post tax, associated with the Winterthur International independent actuarial decision ("Winterthur Decision"). The quarter ended December 31, 2005 also included pre-tax net losses from Hurricane Wilma of $247.1 million and additional pre-tax net losses of $210.8 million related to the 2005 third quarter natural catastrophes. These additional net losses arose from newly reported claims and increased severity on existing claims. Taking into account net reinstatement premiums and tax effects, the net income impact of Hurricane Wilma and the third quarter catastrophes in the fourth quarter 2005 was $225.6 million and $165.1 million respectively, for a total of $390.7 million. Net income for the quarter ended December 31, 2004 included net losses of $138.0 million, net of tax, from catastrophes. The Company's loss estimates involve the exercise of considerable judgment and are accordingly subject to revision. See attached table for further details.

"Net loss excluding net realized gains and losses"(1) for the quarter was $868.2 million, a net loss of $5.82 per ordinary share, compared with net income of $199.4 million, or net income of $1.43 per ordinary share, for the quarter a year ago. See below for a reconciliation of "net income/loss excluding net realized gains and losses"(1) to net loss to ordinary shareholders.

For the twelve months ended December 31, 2005, net loss to ordinary shareholders was $1,292.3 million, or a net loss of $9.14 per ordinary share, compared with net income of $1,126.3 million or net income of $8.13 per ordinary share for the twelve months ended December 31, 2004. "Net loss excluding net realized gains and losses"(1) for the twelve months ended December 31, 2005 was $1,535.4 million or a net loss of $10.86 per ordinary share compared with net income of $820.7 million or net income of $5.92 per ordinary share for the twelve months ended December 31, 2004.

The twelve months ended December 31, 2005 included a net loss of $1,865.1 million for the 2005 third and fourth quarter natural catastrophes, after taking into account net reinstatement premiums and tax effects. In addition, it also included a net loss of $808.9 million, net of interest received, associated with the Winterthur Decision. Net loss for the twelve months ended December 31, 2004 included a net loss of $558.2 million related to the 2004 third and fourth quarter natural catastrophes.

At December 31, 2005, total net invested assets were $41.6 billion, up 28.4% from December 31, 2004, and total assets were $58.4 billion, up 19% from December 31, 2004.

Commenting on these results, President and Chief Executive Officer Brian M. O'Hara said: "We are extremely disappointed with the impact the third and fourth quarters events had on our financial performance. However, the natural catastrophes of 2005 have led to more attractive markets, and in true XL tradition, we are executing on these opportunities with a focus on maximizing risk-adjusted returns. I believe that XL's solid balance sheet, geographic breadth and diversification of platforms will serve us well in 2006."


    HIGHLIGHTS (Fourth quarter 2005 versus fourth quarter 2004)
    -- Successfully raised a total of $3.2 billion through the issuance of
       ordinary shares and equity security units in December 2005 to replenish
       capital base
    -- Contribution from financial operations was up 54% to $71.2 million
    -- Cash flow from operations was $1,067 million, or $492 million excluding
       proceeds of $575 million related to the Winterthur Decision. Structured
       and spread businesses contributed a further $478 million to cash flow
       during the quarter
    -- Net investment income from general operations (excluding interest
       received related to the Winterthur Decision) was up 27%
    -- The combined ratio from general operations was 165.1% or 92.0%
       excluding the charge related to the Winterthur Decision and the 2005
       third and fourth quarter natural catastrophes
    -- Cyrus Re quota share executed for 2006 to support XL's strategy to
       maximize risk adjusted returns

    HIGHLIGHTS (Full year 2005 versus full year 2004)
    -- Contribution from financial operations was up 66% to $234.8 million
    -- Cash flow from operations was $4,249 million, or $3,674 million
       excluding proceeds of $575 million related to the Winterthur Decision.
       Structured and spread businesses contributed a further $2,024 million
       to cash flow during the year
    -- Net investment income from general operations (excluding interest
       received related to the Winterthur Decision and a structured credit
       transaction) was up 21%
    -- The combined ratio from general operations was 132.9% or 92.1%
       excluding the charge related to the Winterthur Decision and the 2005
       third and fourth quarter natural catastrophes

    SEGMENT HIGHLIGHTS:
    Insurance Operations

Underwriting loss for the quarter ended December 31, 2005 was $1,092.8 million compared with an underwriting profit of $49.1 million in the quarter ended December 31, 2004. These results included the pre-tax net impact of natural catastrophes of $285.1 million and $110.5 million in 2005 and 2004, respectively. The fourth quarter 2005 also included the charge related to the Winterthur Decision of $834.2 million pre and post tax. See attached table for further details.

Fourth quarter 2005 compared with fourth quarter 2004 results (excluding the impact of catastrophes and the charge related to the Winterthur Decision in the fourth quarter of 2005):

    -- Net premiums written were flat at $1,028.7 million
    -- Net premiums earned increased 3% as a result of business growth and
       higher net retention
    -- The combined ratio increased from 85.1% in 2004 to 97.5% in 2005 due to
       the favorable reduction in 2004 of the property loss ratio.

Underwriting loss for the year ended December 31, 2005 was $1,486.6 million compared with an underwriting profit of $159.7 million for the year ended December 31, 2004. These results included the pre-tax net impact of natural catastrophes of $1,036.1 million and $310.5 million in 2005 and 2004, respectively, and the charge related to the Winterthur Decision of $834.2 million in 2005.

Reinsurance Operations

General Operations -- Underwriting loss for the quarter ended December 31, 2005 was $32.3 million compared with an underwriting profit of $43.7 million in the quarter ended December 31, 2004. These results included the pre-tax net impact of catastrophes of $140.9 million and $39.5 million in 2005 and 2004, respectively.

Fourth quarter 2005 as compared with fourth quarter 2004 results (excluding the impact of natural catastrophes in both quarters):

    -- Gross and net premiums written were up 11.3% and 6.6%, respectively,
       excluding the impact of timing differences noted last quarter. For the
       full year 2005 as compared with 2004, gross and net premiums written
       were both down 4%
    -- Net premiums earned were down 3.6%, reflecting the effects of lower net
       premiums written over the previous twenty four months
    -- The combined ratio was 83.6% compared with 90.3% in the prior year
       quarter due mainly to a lower loss ratio. The loss ratio improved due
       to a lower level of non-catastrophe losses in the fourth quarter of
       2005

Underwriting loss for the year ended December 31, 2005 was $781.6 million compared with an underwriting profit of $184.3 million in the year ended December 31, 2004. These results included the pre-tax net impact of natural catastrophes of $943.2 million and $285.4 million in 2005 and 2004, respectively. See attached table for further details.

Life and Annuity Operations -- Gross premiums written decreased 36.3% as a result of $97 million of long duration annuity premiums assumed in the fourth quarter of 2004 with no similar transaction occurring in the fourth quarter of 2005. Net income was $9.8 million, an increase from $2.6 million in the fourth quarter of 2004 substantially due to higher net investment income.

For the twelve months ended December 31, 2005 as compared with 2004, gross premiums written increased 63% principally due to the $1.8 billion U.K. annuity reinsurance transaction assumed in the second quarter of 2005. Net loss for the 2005 year was $29.9 million as compared with net income of $28.4 million in 2004 due to the charge of $63.3 million in the second quarter 2005 for the increase in future policy benefit reserves and a write off of deferred acquisition costs on certain U.S.-based term-life mortality reinsurance business.

Financial Products and Services Operations

Underwriting profit for the segment rose to $16.8 million in the fourth quarter of 2005 compared with $10.1 million in the fourth quarter 2004. Total contribution for the segment was $71.2 million in the fourth quarter of 2005 compared with $46.3 million in the fourth quarter of 2004. This increase was driven largely by higher levels of business activity and higher net investment income due to a special dividend received from our joint venture with Financial Security Assurance. The year-over-year increase in net invested assets from municipal GIC and funding agreement issuances also added to total contribution in fourth quarter 2005.

For the year ended December 31, 2005, underwriting profit increased to $60.2 million as compared with $28.3 million for the year ended December 31, 2004 due mainly to lower net losses. Total contribution for the segment was $234.8 million in 2005 compared with $141.1 million in 2004 mainly due to higher underwriting profits and an increase in financial guaranty investment income.

Corporate Items

Net investment income from general operations increased 42.3% over the fourth quarter of 2004 to $233.1 million due to a higher investment base, a rise in average yields, and $25.3 million of interest related to the $575 million payment received in connection with the Winterthur Decision. Net income from investment affiliates was $38.4 million in the fourth quarter of 2005 compared with $47.3 million in the fourth quarter of 2004.

For the year ended December 31, 2005, net investment income from general operations (excluding interest received related to the Winterthur Decision and a structured credit transaction) was up 21% compared with 2004. Net income from investment affiliates was $154.8 million in 2005 compared with $124.0 million in 2004.

Net realized gains on investments were $37.9 million in the quarter, compared with $65.4 million in the prior year period. Net unrealized gains on investments, net of tax, were $396.2 million at December 31, 2005 compared with $551.6 million at September 30, 2005 primarily reflecting a rise in U.S. interest rates during the quarter.

Total operating expenses decreased to $224 million in the fourth quarter of 2005 from $288 million in the fourth quarter of 2004. Total operating expenses decreased to $982 million in the 2005 year from $1,053 million in the 2004 year. This was primarily due to continued productivity and expense management efforts and adjustments in certain 2005 compensation costs associated with XL's pay-for-performance focus.

The Company will host a conference call to discuss its fourth quarter and year end 2005 results on February 8, 2006 at 10:00 a.m. Eastern time. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen to the conference call, please dial (201) 689-8320 password XL208. The webcast will be available on XL's website located at www.xlgroup.com and will be archived on XL's website from approximately 1:00 p.m. Eastern time on February 8, 2006 through midnight Eastern time on March 8, 2006. A slide presentation accompanying the Company's discussion of its fourth quarter and year end 2005 results will also be available on the Company's website located at www.xlgroup.com beginning approximately 15 minutes before the commencement of the conference call.

A telephone replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern time February 8, 2006 until approximately 8:00 p.m. Eastern time on February 15, 2006 by dialing (201) 612-7415 (account number: 290 and conference I.D. number: 188545). An unaudited financial supplement relating to the Company's fourth quarter and year end 2005 results is available on its website located at www.xlgroup.com.

XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products and services to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. As of December 31, 2005, XL Capital Ltd had consolidated assets of approximately $58.4 billion and consolidated shareholders' equity of approximately $8.5 billion. More information about XL Capital Ltd is available at www.xlgroup.com.

This press release contains forward-looking statements. Statements that are not historical facts, including statements about XL's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates, and expectations. Actual results may differ materially from those included in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: (a) changes in the size of XL's claims relating to the hurricane losses described above due to the preliminary nature of some of the reports and estimates of loss and damage to date; (b) greater frequency or severity of claims and loss activity than XL's underwriting, reserving or investment practices anticipate based on historical experience or industry data; (c) trends in rates for property and casualty insurance and reinsurance; (d) developments in the world's financial and capital markets that adversely affect the performance of XL's investments or access to such markets; (e) changes in general economic conditions, including foreign currency exchange rates, inflation and other factors; and (f) the other 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, as well as management's response to any of the aforementioned factors. XL undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future developments or otherwise.


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




                                  XL Capital Ltd
                       SUMMARY CONSOLIDATED FINANCIAL DATA
                           (U.S. dollars in thousands)

                                  Three Months Ended       Twelve Months Ended
    Income Statement Data:           December 31               December 31
                                     (Unaudited)               (Unaudited)
                                   2005        2004         2005         2004
    Revenues:                               (Note 1)                  (Note 1)
    Gross premiums written:
       - general operations  $1,719,650  $1,811,336   $9,196,837   $9,381,462
         - life and annuity
                 operations     143,893     226,007    2,274,520    1,397,516
     - financial operations     115,306      97,331      378,140      345,235

    Net premiums written:
       - general operations   1,304,905   1,332,701    7,024,111    7,269,734
         - life and annuity
                 operations     134,877     193,146    2,236,903    1,363,131
     - financial operations     107,873      91,474      356,445      325,662

    Net premiums earned:
       - general operations   1,724,479   1,705,732    6,873,638    6,987,940
         - life and annuity
                 operations     135,071     193,326    2,237,721    1,365,176
     - financial operations      93,688      53,797      254,136      228,898
    Net investment income       432,741     287,474    1,475,039    1,035,012
    Net realized gains
     on investments              37,933      65,432      241,882      246,547
    Net realized and
     unrealized  gains
     on derivatives              13,639      38,679       28,858       73,493
    Net income from
     investment affiliates       38,371      47,328      154,844      124,008
    Fee income and other          3,564       9,447       19,297       35,317
             Total revenues  $2,479,486  $2,401,215  $11,285,415  $10,096,391
    Expenses:
    Net losses and loss
     expenses incurred       $2,469,264  $1,197,452   $7,465,001   $4,911,488
    Claims and policy
     benefits                   190,116     227,124    2,479,364    1,480,535
    Acquisition costs           293,944     299,176    1,195,344    1,264,864
    Operating expenses          223,638     288,267      982,059    1,053,135
    Exchange losses (gains)       5,566     (18,030)      10,954      (40,678)
    Interest expense            128,049      99,816      403,849      292,234
    Amortization of
     intangible assets            2,248       6,057       10,752       15,827
             Total expenses  $3,312,825  $2,099,862  $12,547,323   $8,977,405

    Net (loss) income before
     minority interest,
     income tax and net
     income from operating
     affiliates               $(833,339)   $301,353  $(1,261,908)  $1,118,986

    Minority interest in net
     income of subsidiary         1,445         346        8,210        8,387
    Income tax                    1,972       9,217       49,284       91,343
    Net (income) from
     operating affiliates       (24,901)     (6,338)     (67,426)    (147,357)

    Net (loss) income         $(811,855)   $298,128  $(1,251,976)  $1,166,613
    Preference share
     dividends                  (10,082)    (10,080)     (40,322)     (40,321)
    Net (loss) income
     available to ordinary
     shareholders             $(821,937)   $288,048  $(1,292,298)  $1,126,292

    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year presentation.



                                  XL Capital Ltd
                       SUMMARY CONSOLIDATED FINANCIAL DATA
                 (Shares in thousands, except per share amounts)

                                                              Twelve Months
                                          Three Months Ended      Ended
    Income Statement Data (continued):       December 31       December 31
                                             (Unaudited)       (Unaudited)
                                              2005     2004     2005     2004
                                                    (Note 1)          (Note 1)

      Weighted average
      number of ordinary shares
      and ordinary share
      equivalents:

                 Basic :                   149,177  138,195  141,406  137,903
                 Diluted :                 149,177  139,230  141,406  138,582

      Per Share Data:
      Net (loss) income
       available to
       ordinary shareholders                ($5.51)   $2.07   ($9.14)   $8.13

      Ratios – General insurance
       and reinsurance operations
      Loss ratio                            140.3%    69.2%   107.1%    68.6%
      Expense ratio                          24.8%    26.8%    25.8%    27.3%

      Combined ratio                        165.1%    96.0%   132.9%    95.9%

    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year presentation.



                                 XL Capital Ltd
                       SUMMARY CONSOLIDATED FINANCIAL DATA
              (U.S. dollars in thousands, except per share amounts)


    Balance Sheet Data:                        As at             As at
                                         December 31, 2005 December 31, 2004
                                            (Unaudited)         (Note 1)

    Total investments available for sale       $35,724,439       $27,823,828

    Net payable for investments purchased          639,034           273,535

    Cash and cash equivalents                    3,693,475         2,203,726

    Investments in affiliates                    2,046,721         1,936,852

    Unpaid losses and loss expenses
     recoverable                                 6,441,522         6,971,356

    Total assets                                58,454,901        49,245,469


    Unpaid losses and loss expenses             23,767,672        19,837,669

    Deposit liabilities and
     policy benefit reserves                    13,847,448        10,309,782

    Unearned premiums                            5,388,996         5,191,368

    Notes payable and debt                       3,412,698         2,721,431

    Total shareholders' equity                   8,471,811         7,738,695

    Book value per ordinary share                   $44.31            $51.98


    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year presentation.



                                 XL Capital Ltd
        SUMMARY OF FINANCIAL IMPACT OF THIRD AND FOURTH QUARTER 2005
                NATURAL CATASTROPHES AND CHARGE RELATED TO THE
                  WINTERTHUR INDEPENDENT ACTUARIAL DECISION
                            (U.S. dollars in millions)

    Qtr end December 31, 2005  Gross Reinsurance  Net Reinstatement Net impact
                                Loss  recoveries  loss   premium     pre tax
    Insurance
           Hurricane Katrina   $243.7   $149.6     $94.1  $(4.3)    $98.4
              Hurricane Rita    236.8    161.8      75.0   (2.1)     77.1
             Hurricane Wilma    172.7     64.3     108.4   (1.2)    109.6
           Winterthur charge      -     (834.2)    834.2    -       834.2
                               $653.2  $(458.5) $1,111.7  $(7.6) $1,119.3
    Reinsurance
           Hurricane Katrina    $48.0    $55.5     $(7.5)  $4.8    $(12.3)
              Hurricane Rita     33.9     14.6      19.3    4.9      14.4
             Hurricane Wilma    214.4     75.7     138.7    6.2     132.5
     Other catastrophes (Note 1)  6.3      -         6.3    -         6.3
                               $302.6   $145.8    $156.8  $15.9    $140.9
    Financial products
     and services
           Hurricane Katrina    $23.6     $-       $23.6  $23.6      $-

    TOTAL - Pre tax
           Hurricane Katrina   $315.3   $205.1    $110.2  $24.1     $86.1
              Hurricane Rita    270.7    176.4      94.3    2.8      91.5
             Hurricane Wilma    387.1    140.0     247.1    5.0     242.1
          Wintherthur charge      -     (834.2)    834.2    -       834.2
     Other catastrophes (Note 1)  6.3      -         6.3    -         6.3
                               $979.4  $(312.7) $1,292.1  $31.9  $1,260.2

      Net investment income                                         $25.3
                  Tax impact                                         35.3
            TOTAL - Post tax                                     $1,199.6


    Qtr end December 31, 2004

    Insurance (Note 2)         $150.3    $40.0    $110.3  $(0.2)   $110.5

    Reinsurance (Note 2)       $145.1   $111.0     $34.1  $(5.4)    $39.5

    TOTAL - Pre tax            $295.4   $151.0    $144.4  $(5.6)   $150.0

                  Tax impact                                        $12.0
            TOTAL - Post tax                                       $138.0

    Notes
    1. Includes European floods.
    2. Includes Hurricanes Charley, Frances, Ivan and Jeanne and the Indian
       Ocean Tsunami.



                                 XL Capital Ltd
        SUMMARY OF FINANCIAL IMPACT OF THIRD AND FOURTH QUARTER 2005
               NATURAL CATASTROPHES AND CHARGE RELATED TO THE
                  WINTERTHUR INDEPENDENT ACTUARIAL DECISION
                            (U.S. dollars in millions)

    Year end December 31, 2005 Gross Reinsurance  Net Reinstatement Net impact
                                Loss  recoveries  loss     premium   pre tax
    Insurance
       Hurricane Katrina       $1,339.7   $748.6   $591.1 $(74.6)   $665.7
          Hurricane Rita          521.9    312.9    209.0  (13.3)    222.3
         Hurricane Wilma          172.7     64.3    108.4   (1.2)    109.6
       Winterthur charge            -     (834.2)   834.2    -       834.2
    Other catastrophes (Note 1)    40.2      1.7     38.5    -        38.5
                               $2,074.5   $293.3 $1,781.2 $(89.1) $1,870.3
    Reinsurance
       Hurricane Katrina       $1,128.0   $495.2   $632.8  $16.3    $616.5
          Hurricane Rita          232.4     83.5    148.9    8.8     140.1
         Hurricane Wilma          214.4     75.7    138.7    6.2     132.5
    Other catastrophes (Note 1)    57.5      -       57.5    3.4      54.1
                               $1,632.3   $654.4   $977.9  $34.7    $943.2
    Financial products
     and services
       Hurricane Katrina          $45.0     $-      $45.0  $23.6     $21.4

    TOTAL - Pre tax
       Hurricane Katrina       $2,512.7 $1,243.8 $1,268.9 $(34.7) $1,303.6
          Hurricane Rita          754.3    396.4    357.9   (4.5)    362.4
         Hurricane Wilma          387.1    140.0    247.1    5.0     242.1
      Wintherthur charge            -     (834.2)   834.2    -       834.2
    Other catastrophes (Note 1)    97.7      1.7     96.0    3.4      92.6
                               $3,751.8   $947.7 $2,804.1 $(30.8) $2,834.9

   Net investment income                                             $25.3
              Tax impact                                             135.6
        TOTAL - Post tax                                          $2,674.0


    Year end December 31, 2004

    Insurance (Note 2)           $422.3   $124.0   $298.3 $(12.2)   $310.5

    Reinsurance (Note 2)         $429.3   $136.4   $292.9   $7.5    $285.4

    TOTAL - Pre tax              $851.6   $260.4   $591.2  $(4.7)   $595.9

              Tax impact                                             $37.7
        TOTAL - Post tax                                            $558.2


    Notes
    1. Includes Hurricanes Dennis, Emily, Ophelia, European and Mumbai Floods
       and Typhoon Mawar.
    2. Includes Hurricanes Charley, Frances, Ivan and Jeanne and the Indian
       Ocean Tsunami.



                                 XL Capital Ltd
        SUMMARY OF FINANCIAL IMPACT OF THIRD AND FOURTH QUARTER 2005

             NATURAL CATASTROPHES AND THE CHARGE RELATED TO THE
                  WINTERTHUR INDEPENDENT ACTUARIAL DECISION
                            (U.S. dollars in millions)

    GENERAL OPERATIONS                      Quarter end December 31, 2005

                                                                   Excluding
                                                    Catastrophes  Catastrophes
                                                         and         and
                                                      Winterthur  Winterthur
                                         As reported    charge      charge
    INSURANCE
    Gross premiums written                  $1,364.3        $1.2   $1,363.1
    Net premiums written                     1,021.1        (7.6)   1,028.7

    Net premiums earned                      1,032.8        (7.6)   1,040.4
    Fee and other income                         2.9         -          2.9

    Net losses and loss expenses             1,879.3     1,111.7      767.6
    Acquisition costs                          128.7         -        128.7
    Operating expenses                         118.1         -        118.1
    Exchange (gains) losses                      2.4         -          2.4
    Underwriting (loss) profit             $(1,092.8)  $(1,119.3)     $26.5

    Loss ratio                                182.0%                  73.8%
    Combined ratio                            205.9%                  97.5%

    REINSURANCE
    Gross premiums written                    $355.3       $23.0     $332.3
    Net premiums written                       283.8        15.9      267.9

    Net premiums earned                        691.7        15.9      675.8
    Fee and other income                         -           -          -

    Net losses and loss expenses               539.6       156.8      382.8
    Acquisition costs                          148.0         -        148.0
    Operating expenses                          34.0         -         34.0
    Exchange (gains) losses                      2.4         -          2.4
    Underwriting (loss) profit                $(32.3)    $(140.9)    $108.6

    Loss ratio                                 78.0%                  56.6%
    Combined ratio                            104.3%                  83.6%

    TOTAL
    Gross premiums written                  $1,719.6       $24.2   $1,695.4
    Net premiums written                     1,304.9         8.3    1,296.6

    Net premiums earned                      1,724.5         8.3    1,716.2
    Fee and other income                         2.9         -          2.9

    Net losses and loss expenses             2,418.9     1,268.5    1,150.4
    Acquisition costs                          276.7         -        276.7
    Operating expenses                         152.1         -        152.1
    Exchange (gains) losses                      4.8         -          4.8
    Underwriting (loss) profit             $(1,125.1)  $(1,260.2)    $135.1

    Loss ratio                                140.3%                  67.0%
    Combined ratio                            165.1%                  92.0%


    GENERAL OPERATIONS                      Quarter end December 31, 2004
                                                      (Note 1)
                                                     Catastrophes  Excluding
                                         As reported              Catastrophes
    INSURANCE
    Gross premiums written                  $1,358.6       $-      $1,358.6
    Net premiums written                     1,025.3       (0.2)    1,025.5

    Net premiums earned                      1,009.8       (0.2)    1,010.0
    Fee and other income                         6.8        -           6.8

    Net losses and loss expenses               723.4      110.3       613.1
    Acquisition costs                          118.7        -         118.7
    Operating expenses                         127.9        -         127.9
    Exchange (gains) losses                     (2.5)       -          (2.5)
    Underwriting (loss) profit                 $49.1    $(110.5)     $159.6

    Loss ratio                                 71.6%                  60.7%
    Combined ratio                             96.1%                  85.1%

    REINSURANCE
    Gross premiums written                    $452.7      $26.9      $425.8
    Net premiums written                       307.4       (5.4)      312.8

    Net premiums earned                        695.9       (5.4)      701.3
    Fee and other income                         0.1        -           0.1

    Net losses and loss expenses               457.4       34.1       423.3
    Acquisition costs                          153.6        -         153.6
    Operating expenses                          56.2        -          56.2
    Exchange (gains) losses                    (14.9)       -         (14.9)
    Underwriting (loss) profit                 $43.7     $(39.5)      $83.2

    Loss ratio                                 65.7%                  60.4%
    Combined ratio                             95.9%                  90.3%

    TOTAL
    Gross premiums written                  $1,811.3      $26.9    $1,784.4
    Net premiums written                     1,332.7       (5.6)    1,338.3

    Net premiums earned                      1,705.7       (5.6)    1,711.3
    Fee and other income                         6.9        -           6.9

    Net losses and loss expenses             1,180.8      144.4     1,036.4
    Acquisition costs                          272.3        -         272.3
    Operating expenses                         184.1        -         184.1
    Exchange (gains) losses                    (17.4)       -         (17.4)
    Underwriting (loss) profit                 $92.8    $(150.0)     $242.8

    Loss ratio                                 69.2%                  60.6%
    Combined ratio                             96.0%                  87.2%

    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year presentation.



                                 XL Capital Ltd
        SUMMARY OF FINANCIAL IMPACT OF THIRD AND FOURTH QUARTER 2005
             NATURAL CATASTROPHES AND THE CHARGE RELATED TO THE
                  WINTERTHUR INDEPENDENT ACTUARIAL DECISION
                            (U.S. dollars in millions)

    GENERAL OPERATIONS                       Year end December 31, 2005

                                                                    Excluding
                                                     Catastrophes Catastrophes
                                                         and          and
                                                      Winterthur   Winterthur
                                         As reported    charge       charge
    INSURANCE
    Gross premiums written                  $5,785.8        $-     $5,785.8
    Net premiums written                     4,248.1       (89.1)   4,337.2

    Net premiums earned                      4,102.7       (89.1)   4,191.8
    Fee and other income                         4.2         -          4.2

    Net losses and loss expenses             4,595.6     1,781.2    2,814.4
    Acquisition costs                          505.6         -        505.6
    Operating expenses                         517.8         -        517.8
    Exchange (gains) losses                    (25.5)        -        (25.5)
    Underwriting (loss) profit             $(1,486.6)  $(1,870.3)    $383.7

    Loss ratio                                112.0%                  67.1%
    Combined ratio                            137.0%                  91.6%

    REINSURANCE
    Gross premiums written                  $3,411.1      $135.3   $3,275.8
    Net premiums written                     2,776.0        34.7    2,741.3

    Net premiums earned                      2,770.9        34.7    2,736.2
    Fee and other income                        (0.3)        -         (0.3)

    Net losses and loss expenses             2,763.4       977.9    1,785.5
    Acquisition costs                          600.6         -        600.6
    Operating expenses                         155.1         -        155.1
    Exchange (gains) losses                     33.1         -         33.1
    Underwriting (loss) profit               $(781.6)    $(943.2)    $161.6

    Loss ratio                                 99.7%                  65.3%
    Combined ratio                            127.0%                  92.9%

    TOTAL
    Gross premiums written                  $9,196.9      $135.3   $9,061.6
    Net premiums written                     7,024.1       (54.4)   7,078.5

    Net premiums earned                      6,873.6       (54.4)   6,928.0
    Fee and other income                         3.9         -          3.9

    Net losses and loss expenses             7,359.0     2,759.1    4,599.9
    Acquisition costs                        1,106.2         -      1,106.2
    Operating expenses                         672.9         -        672.9
    Exchange (gains) losses                      7.6         -          7.6
    Underwriting (loss) profit             $(2,268.2)  $(2,813.5)    $545.3

    Loss ratio                                107.1%                  66.4%
    Combined ratio                            132.9%                  92.1%


    GENERAL OPERATIONS                       Year end December 31, 2004
                                                      (Note 1)
                                                     Catastrophes  Excluding
                                         As reported              Catastrophes
    INSURANCE
    Gross premiums written                  $5,925.0       $-      $5,925.0
    Net premiums written                     4,395.6      (12.2)    4,407.8

    Net premiums earned                      4,054.8      (12.2)    4,067.0
    Fee and other income                        23.5        -          23.5

    Net losses and loss expenses             2,859.9      298.3     2,561.6
    Acquisition costs                          537.1        -         537.1
    Operating expenses                         531.5        -         531.5
    Exchange (gains) losses                     (9.9)       -          (9.9)
    Underwriting (loss) profit                $159.7    $(310.5)     $470.2

    Loss ratio                                 70.5%                  63.0%
    Combined ratio                             96.9%                  89.3%

    REINSURANCE
    Gross premiums written                  $3,456.5      $41.4    $3,415.1
    Net premiums written                     2,874.1        7.5     2,866.6

    Net premiums earned                      2,933.2        7.5     2,925.7
    Fee and other income                         0.2        -           0.2

    Net losses and loss expenses             1,937.0      292.9     1,644.1
    Acquisition costs                          648.4        -         648.4
    Operating expenses                         190.8        -         190.8
    Exchange (gains) losses                    (27.1)       -         (27.1)
    Underwriting (loss) profit                $184.3    $(285.4)     $469.7

    Loss ratio                                 66.0%                  56.2%
    Combined ratio                             94.6%                  84.9%

    TOTAL
    Gross premiums written                  $9,381.5      $41.4    $9,340.1
    Net premiums written                     7,269.7       (4.7)    7,274.4

    Net premiums earned                      6,988.0       (4.7)    6,992.7
    Fee and other income                        23.7        -          23.7

    Net losses and loss expenses             4,796.9      591.2     4,205.7
    Acquisition costs                        1,185.5        -       1,185.5
    Operating expenses                         722.3        -         722.3
    Exchange (gains) losses                    (37.0)       -         (37.0)
    Underwriting (loss) profit                $344.0    $(595.9)     $939.9

    Loss ratio                                 68.6%                  60.1%
    Combined ratio                             95.9%                  87.4%

    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year 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 net realized gains and losses on investments and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax' (which is a non-GAAP measure, the "Exclusions") and (ii) annualized return on shareholders' equity (based on net income (loss) minus the Exclusions) to average ordinary shareholders' equity for the three and twelve months ended December 31, 2005 and 2004 ($ in millions, except per share amounts):




                                       Three Months Ended  Twelve Months Ended
                                          December 31          December 31
                                          (Unaudited)          (Unaudited)
                                          2005      2004      2005       2004
                                                 (Note 1)             (Note 1)
    Net (loss) income available
     to ordinary shareholders          $(821.9)   $288.0  $(1,292.3) $1,126.3

    Net realized (gains) on
     investments, net of tax             (34.9)    (63.0)    (232.7)   (240.8)

    Net realized and unrealized
     losses (gains) on investment
     derivatives, net of tax              (4.7)    (21.9)      17.3     (22.9)

    Net realized and unrealized
     losses (gains) on credit and
     structured financial
     derivatives, net of tax              (6.7)     (3.7)     (27.7)    (41.9)

    Net (loss) income excluding
     net realized gains and
     losses (Note 2)                   $(868.2)   $199.4  $(1,535.4)   $820.7

    Per ordinary share results:
    Net (loss) income available to
     ordinary shareholders              $(5.51)    $2.07     $(9.14)    $8.13

    Net (loss) income excluding
     net realized gains and
     losses (Note 2)                    $(5.82)    $1.43    $(10.86)    $5.92

    Weighted average ordinary
     shares outstanding:
    Basic                              149,177   138,195    141,406   137,903
    Diluted                            149,177   139,230    141,406   138,582

    Return on Ordinary
     Shareholders' Equity:
    Average ordinary
     shareholders' equity             $7,238.1  $7,037.7   $7,587.8  $6,820.3

    Net (loss) income excluding
     net realized gains and
     losses (Note 2)                   $(868.2)   $199.4  $(1,535.4)   $820.7

    Annualized net (loss) income
     excluding net realized gains
     and losses (Note 1)                    NM    $797.6         NM    $820.7

    Annualized Return on Ordinary
     Shareholders' Equity - Net
     income excluding net realized
     gains and losses (Note 2)              NM     11.3%         NM     12.0%

    Note 1: Certain amounts in prior periods have been reclassified to
            conform with the current year presentation.
    Note 2: Defined as "net income (loss) excluding net realized gains and
            losses on investments 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 (loss) income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit, structured financial and investment derivatives, net of tax' and (ii) annualized return on ordinary shareholders' equity (based on net income minus the Exclusions) to average ordinary shareholders' equity. These items are "non-GAAP financial measures" as defined in Regulation G. The reconciliation of such measures to the most directly comparable GAAP financial measures in accordance with Regulation G is included above.

XL presents its operations in the way it believes will be most meaningful and useful to investors, analysts, rating agencies and others who use XL's financial information in evaluating XL's performance. This presentation includes the use of 'net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivatives, net of tax'. Investment derivatives include all derivatives entered into by XL other than weather and energy and credit derivatives (discussed further below).

Although the investment of premiums to generate income (or loss) and realized capital gains (or losses) is an integral part of XL's operations, 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 temporary declines in value without actual realization. In this regard, certain users of XL's financial information, including certain rating agencies, evaluate earnings before tax and capital gains to understand the profitability of the recurring sources of income without the effects of these two variables. Furthermore, these users believe that, for many companies, the timing of the realization of capital gains is largely opportunistic and are a function of economic and interest rate conditions. In addition, with respect to credit derivatives, because XL generally holds its financial guarantee contracts written in credit default derivative form to maturity, the net effects of the changes in fair value of these credit derivatives are excluded (similar with other companies in the financial guarantee business) as the changes in fair value each quarter are not indicative of underlying business performance of XL's financial guarantee operations. Unlike these credit derivatives, XL's weather and energy derivatives 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 this business are considered by management when evaluating and managing the underlying business.

In summary, XL evaluates the performance of and manages its business to produce an underwriting profit. In addition to presenting net income (loss), XL believes that showing net income (loss) exclusive of the items mentioned above enables investors and other users of XL's financial information to analyze XL's performance in a manner similar how management of XL analyzes performance. In this regard, XL believes that providing only a GAAP presentation of net income (loss) makes it much more difficult for users of XL's financial information to evaluate XL's underlying business. Also, as stated above, XL believes that the equity analysts and certain rating agencies who follow XL (and the insurance industry as a whole) exclude these items from

their 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 net realized gains and losses on investments and net realized and unrealized gains and 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 the Exclusions) is calculated by dividing annualized net income minus the Exclusions for any period by the average of the opening and closing ordinary shareholder's equity. The Company establishes target ROE's for its total operations, segments and lines of business. If the Company's ROE return targets are not met with respect to any line of business over time, the Company seeks to re-evaluate these lines. In addition, the Company's compensation of its senior officers is significantly dependant on the achievement of the Company's performance goals to enhance shareholder value which include ROE.

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