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XL Capital Ltd. Company News Alert Significant decline in NYSE common stock price on 10 July 2008 NYSE Common Stock
Ticker: Target price: Current price: Price change since last report:

11 July 2008

HOLD
XL US$72.25 US$17.53 (70.0%)

XL Capital Ltd.’s (XL Capital) NYSE common stock price declined significantly on 10 July 2008 to reach Direct access to the full report free of charge on its lowest price since the mid-1990s, after staging a brief recoveryat 08 July 2008, as fears over the impact of the company’s exposure to Security Capital Assurance Ltd. (SCA) returned. In light of broadhttp://www.iirgroup.com/researchoracle/viewreport/show/20285 based weakness in global financial markets, increasing competition and softening premium rates in the insurance and reinsurance industry, and the impact of potential ratings downgrades and exposure to SCA’s losses on the company, we intend to revise our estimates and target price downwards in our next update report. Therefore, we maintain our current HOLD rating for the NYSE common stock even though the current price suggests a BUY. We will reassess our common stock rating for XL Capital in our next full update report. 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 in our next full update report. We no longer expect a significant currency impact on the European common stock over our investment horizon.

European Stock1
Ticker: Target price: Current price: Price change since last report:

HOLD
XL.F €50.46 €12.21 (67.4%)

We will reassess the European stock rating for XL Capital in our next full update report.

Supervisor: Somnath Banerjee Analyst: Dewanshi Doshi Editor: Heloise Capon Global Research Director: Satish Betadpur, CFA Next news due: 2Q 08 results, 22 July 2008

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.

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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