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XL Capital Ltd Presents At The Bermuda Angle Conference

HAMILTON, BERMUDA (December 3, 2003) - XL Capital Ltd (NYSE: XL) presented today at the Bermuda Angle in Boca Raton, Florida. During the presentation Mr. Brian M. O'Hara, President and Chief Executive Officer of XL Capital Ltd, provided earnings guidance for 2004 of $9.05 to $9.25 per ordinary share, barring any large catastrophes or unusual loss activity. Earnings comprise 'net income excluding gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivatives, net of tax', which is a non- GAAP measure as defined in Regulation G (please refer to the last page for a description of this non-GAAP measure).
Commenting on the year ahead Mr. O'Hara stated, "While we are not top line driven, we do expect growth in revenue in all three business segments and we expect to compete based on our advantages of strategic positions, capital strength and quality underwriting". Mr. O'Hara also gave some commentary on the current market saying, "We believe the long tail casualty markets are likely to remain quite hard through 2004, while the property markets will feel the effects of increased levels of competition, but maintain adequate pricing levels. Overall, because our business portfolio is well positioned in our chosen markets, we have expectations of enjoying superior profit levels. This will be supported by the continued strength of our balance sheet and the success of our branding efforts."
During his presentation, Mr. O'Hara also provided an update on the status of the North American casualty reinsurance claims review currently being performed. Mr. O'Hara stated, "We expect to be able to announce the outcome around mid January after our independent auditor has completed its work and discussed its review with management and our Audit Committee. The timing will coincide with our normal year end reserve review. "
A replay of the presentation may be viewed on the Bermuda Angle website: and the XL's presentation slides are available on XL Capital's website:
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 September 30, 2003, XL Capital Ltd had consolidated assets of approximately $39.6 billion and consolidated shareholders' equity of approximately $7.4 billion. More information about XL Capital Ltd is available at
This press release contains forward-looking statements that involve inherent risks and uncertainties. Statements that are not historical facts, including statements about XL's beliefs, plans, expectations (including earnings guidance for 2004), are forward-looking statements. These statements are based on current plans, estimates, and expectations. Actual results may differ materially from those projected 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) rate increases and improvements in terms and conditions may not be as large or sustainable as XL is currently projecting; (b) greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than XL's underwriting, reserving or investment practices anticipate based on historical experience or industry data; (c) developments in the world's financial and capital markets which adversely affect the performance of XL's investments and XL's access to such markets; (d)) changes in general economic conditions, including foreign currency exchange rates, inflation and other factors; and (e) the other factors set forth in XL's most recent report on Form 10-K, Form 10-Q and XL's other documents on file with the Securities and Exchange Commission. XL undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Comment on Regulation G
This press release contains the presentation 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'. This presentation is a "non-GAAP financial measure" as defined in Regulation G. 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, XL believes that showing net income 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 to how management of XL analyzes performance. In this regard, XL believes that providing only a GAAP presentation of net income 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.

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