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XL Capital Ltd. 11 July 2008

Company News Alert

Significant decline in NYSE common stock price on 10 July 2008

NYSE HOLD XL Capital Ltd.’s (XL Capital) NYSE common stock price declined significantly on 10 July 2008 to reach
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impact of the company’s exposure to Security Capital Assurance Ltd. (SCA) returned. In light of broad-
based weakness in global financial markets, increasing competition and softening premium rates in
Stock the insurance and reinsurance industry, and the impact of potential ratings downgrades and exposure
Ticker: XL to SCA’s losses on the company, we intend to revise our estimates and target price downwards in our
Target price: US$72.25 next update report. Therefore, we maintain our current HOLD rating for the NYSE common stock even
Current price: US$17.53 though the current price suggests a BUY.

Price change
(70.0%) We will reassess our common stock rating for XL Capital in our next full update report.
since last report:

European HOLD Although the current target price suggests a BUY rating, we maintain our current HOLD rating for the
European stock based on our fundamental outlook, and intend to reduce our target price significantly
Stock1 in our next full update report. We no longer expect a significant currency impact on the European
Ticker: XL.F common stock over our investment horizon.
Target price: €50.46
Current price: €12.21
Price change We will reassess the European stock rating for XL Capital in our next full update report.
(67.4%)
since last report:

Supervisor: Somnath Banerjee
Analyst: Dewanshi Doshi
Editor: Heloise Capon
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.

Next news due: 2Q 08 results, 22

July 2008 In our 3Q 07 update report, dated 03 December 2007 we reiterated the XL Capital NYSE common
stock a BUY with a 6-12 month target price of US$72.25 indicating a potential upside of 23%.
Subsequently, in our company news alert dated 18 January 2008 we downgraded the NYSE common
stock rating to a HOLD, reflecting concerns over our fundamental outlook. Our European stock was
also rated a HOLD.
In addition to the 10.1% decline on 10 July 2008, the XL Capital NYSE common stock price has
declined 70.0% since our previous update report to close at US$17.53 on 10 July 2008, its lowest
price since the mid-1990s. Yesterday’s decline in the NYSE common stock price followed a brief
recovery on 08 July 2008, but is in line with the long term decline, both reflecting general concerns
regarding weakness in global financial markets and the impact of increasing competition and softening
premium rates in the sector, and company specific issues. As outlined in our 01 July 2008 company
news alert, Fitch Ratings’ announcement that it might downgrade some of XL Capital’s ratings if the
company fails to restore its capital base in the event of a significant charge incurred on SCA’s losses
reignited fears over XL Capital’s ongoing exposure to the bond insurer, which is at risk from its
exposure to subprime mortgage-backed bonds, and how the company might respond to the issue.

In view of softening premium rates in the industry and weakness in global financial markets, in
addition to the impact of the potential ratings downgrades and exposure to SCA’s losses, we intend to
revise our estimates and target prices downwards when we come to revalue the stock in our next full
update report. Therefore, we maintain our HOLD rating for the NYSE common stock although the
current target price suggests a BUY.

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