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XL Capital Ltd. 01 July 2008

Company News Alert

Significant decline in NYSE common stock price on 30 June 2008

NYSE HOLD XL Capital Ltd.’s (XL Capital) NYSE common stock price declined significantly on 30 June 2008
following the announcement by Fitch Ratings that its ratings are on negative watch. We intend to revise
Common our estimates and target price downwards when we come to revalue the stock in view of weakness in
premium rates and volatility in global financial markets. Therefore, we maintain our current HOLD
Stock rating for the NYSE common stock, although the current target price suggests a BUY.
Ticker: XL
Target price: US$72.25 Direct access to the full report free of charge at
Current price: US$20.56 http://www.iirgroup.com/researchoracle/viewreport/show/20148
Price change
(64.9%)
since last report: We will reassess our common stock rating for XL Capital in our next full update 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 in our next
Stock1 full update report. We no longer expect a significant currency impact on the European common stock
Ticker: XL.F over our investment horizon.
Target price: €50.46
Current price: €14.83
Price change
(60.4%)
since last report: We will reassess the European stock rating for XL Capital in our next full update report.

Supervisor: Somnath Banerjee

Analyst: Poonam Jindal
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, 28

July-07 August 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.
Having demonstrated a steady declining trend over the last year, the XL Capital NYSE common stock
price declined a significant 13.5% on 30 June 2008 to close at US$20.56. The decline in the NYSE
common stock price followed Fitch Ratings announcement that it might downgrade XL Capital’s issuer
default ratings and the financial strength ratings of 14 of its property and casualty subsidiaries, if the
company fails to restore its capital base in the event of a significant charge. Fitch is concerned by XL
Capital’s ongoing exposure to bond insurer Security Capital Assurance Ltd.s (SCA) losses. SCA is at risk
from its exposure to subprime mortgage-backed bonds. XL Capital holds a 46% stake in SCA, the value
of which was written down to zero at the end of FY 2007. General investor concerns over increasing
competition and softening premium rates in the industry has also contributed to the poor performance
of the NYSE common stock price.
We are concerned that if XL Capital’s ratings are downgraded, or even if the threat of further
downgrades continues for too long, it will adversely impact the company's ability to generate new
business. Moreover, softening premium rates in the industry and weakness in global financial markets
are also likely to impact the stock. Therefore, we intend to revise our estimates downwards when we
come to revalue the stock in our next full update report. Consequently, we maintain our current HOLD
rating for the NYSE common stock, although the current target price suggests a BUY.

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