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XL Capital forms strategic relationship with PlusFunds Inc. to support products designed to track the S&P Hedge Fund Index

Hamilton, Bermuda (October 31, 2002) – XL Capital Ltd (NYSE: XL) (“XL”) announced today that it has formed a strategic relationship with PlusFunds Inc. to support the development of investment products based on Standard & Poor’s latest index, the S&P Hedge Fund Index (the “Index”). XL’s involvement in the launch of this important new benchmark for the hedge fund industry is in line with its overall strategy to participate in all aspects of the alternative asset management sector.
The Index is designed to be investable and representative of the broad-based investment experience of the hedge fund marketplace. It comprises nine distinct hedge fund investment strategies grouped into three broad style categories—Arbitrage, Event-Driven and Directional/Tactical. More information about the structure, design and components of the S&P Hedge Fund Index can be found on www.spglobal.com.
As part of this new initiative with PlusFunds, which holds the exclusive license to develop certain investment products based on the S&P Hedge Fund Index, XL will work actively with PlusFunds to develop investment products based on the Index.
Christopher V. Greetham, Executive Vice President and Chief Investment Officer of XL Capital Group, said: “The rapid growth in interest in alternative assets—particularly amongst institutions—over the past few years has brought to the forefront the issue of benchmarking the performance of alternative strategy allocations. Increasingly, investors are seeking greater clarity and transparency for their alternative investments as well as analytical tools to understand the drivers of returns and sources of risk. Daily pricing information and comprehensive risk analytics across a diversified range of hedge fund strategies will be a major step forward in the development of this asset class and will enhance its attractiveness to a broader set of investors. We believe that Standard & Poor’s highly sophisticated approach to building an index of hedge funds gives investors what they want in a benchmark.”
“Indexing is the next major development in the hedge fund industry”, said Christopher Sugrue, Chairman of PlusFunds. “We believe that investment products based on the S&P Hedge Fund Index and its sub-indices will be extremely valuable to investors in the alternative investment market. We look forward to working with XL to develop products based on the S&P Hedge Fund Index for a number of important investor segments.”
Paul Aaronson, Executive Managing Director, Standard & Poor’s, said: “XL Capital Group is a sophisticated institutional investor with a deep understanding of the alternatives market. XL quickly grasped the role that an S&P Hedge Fund Index could play in the institutionalization of the hedge fund industry and provided valuable insights during the construction phase of the Index. We are confident that the S&P Hedge Fund Index will become an invaluable tool serving investors in this important asset class.”
XL, 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 September 30, 2002, XL had consolidated assets of approximately $34.1 billion and consolidated shareholders' equity of approximately $5.9 billion. More information about XL Capital Ltd 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 results to differ materially from those contained in any forward looking statement. Actual results may differ materially from those projected in such forward-looking statements, including, without limitation, that potential synergies between XL’s insurance, reinsurance and financial products and services businesses and the strategic relationship with Plusfunds Inc. may not develop to the extent anticipated due to a variety of important factors. A non-exclusive list of the 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 annual report on Form 10-K, quarterly report on Form 10-Q and XL’s other documents on file with the Securities and Exchange Commission. XL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Inclusion of a hedge fund or managed account as a component of the S&P Hedge Fund Index does not represent an endorsement or recommendation of the hedge fund or managed account by Standard & Poor’s .

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