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XL Capital Ltd makes strategic investment in Primus Guaranty, Ltd.

Hamilton, Bermuda (March 20, 2002) - XL Capital Ltd (NYSE: XL) ("XL") announced today that on March 14, 2002, it made a $72.75 million investment in Primus Guaranty, Ltd. ("Primus"), a newly formed company specializing in providing credit risk protection for individual corporations, sovereigns and financial institutions. XL is the lead investor in a group of four financial institutions, with XL taking an approximately 43% ownership of Primus in equity capital. XL's share of Primus' results will be part of XL's 'equity in earnings of affiliates' income statement line item.
Robert Lusardi, CEO of XL's Financial Products and Services operations, said: "We believe that credit risk protection will be one of the fastest growing risk transfer markets over the next five years. Credit risk is inherent in corporate trade and buyer/supplier transactions, is embedded in virtually every structured finance transaction and is the dominant issue in the corporate loan and investing communities. The market for credit risk protection, as measured by the credit default swap market, has expanded exponentially over the past couple of years. Primus is a new entrant with large financial capacity and the highest counterparty ratings.
"XL, through our financial guaranty operations, provides credit protection but only on pools of corporate obligations and only on an excess basis. We had been actively studying the single name, ground up credit default insurance market when we were introduced to Primus. In turn, Primus had spent considerable time and effort developing pricing and trading models and credit and control systems and had successfully recruited extremely experienced credit and management executives. Over the past several months, XL and Primus worked closely together to create a corporate structure and develop institutional backing to ensure that Primus becomes one of the stronger entities in the credit risk market, as evidenced by the 'AAA' ratings from S&P and Moody's. Primus fits squarely in XL's strategy of developing and investing in businesses that are at the forefront of the 'convergence' of insurance and capital markets and aligning ourselves with highly talented people."
XL will receive two seats on Primus' Board of Directors. XL Chairman Michael Esposito, Jr. will serve as the Chairman of Primus and Robert Lusardi will serve as a director and Chairman of the Finance and Investment Committee.
Primus' executive management includes: Thomas Jasper, Chief Executive Officer, former Managing Director and Global Treasurer of Salomon Smith Barney Holdings, Inc. and co-founder and former chairman of the International Swaps and Derivatives Association; and Joseph Bauman, Chief Financial Officer, former Head of International Financial Management and Derivatives Sales and Structuring at Bank of America and former ISDA chairman.
Primus Financial Products, Inc., a subsidiary of Primus Guaranty, Ltd., is the only AAA rated company dedicated to providing investment grade credit risk protection to derivatives dealers and credit portfolio managers. Primus Financial seeks to invest in credit risk by selling protection to its customers in the form of credit default swaps on more than 1,200 investment-grade corporates and sovereigns.
XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis. As at December 31, 2001, XL had consolidated assets of approximately $28.0 billion and consolidated shareholders' equity of approximately $5.4 billion. More information about XL is available at www.xlgroup.com.
This press release contains forward-looking statements. Such statements are based on current plans, estimates and expectations. Accordingly, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement, including, without limitation, that potential synergies between XL Capital Group's insurance, reinsurance, and financial products and services businesses and the investment in Primus Guaranty, Ltd. may not develop to the extent anticipated and that investment returns may be less than expected due to a variety of economic factors. A non-exclusive list of other important factors that could cause actual results to differ materially from those in such forward-looking statements is set forth in XL's most recent report on Form 10-K and XL's other documents on file with the Securities and Exchange Commission. XL Capital Group undertakes no duty to publicly update or revise any forward-looking statements contained herein in light of new information, future developments or otherwise.

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