HAMILTON, Bermuda, July 29 /EMWNews/ -- XL Capital Ltd

("XL" or the "Company") (NYSE: XL) announced today that it has agreed to

sell 125,000,000 ordinary shares (the "Ordinary Shares") (plus up to an

additional 18,750,000 shares issuable upon exercise of the underwriters'

option to purchase additional Ordinary Shares) (the "Ordinary Share

Offering") pursuant to the Company's shelf registration statement. The

Ordinary Shares are being issued at a price to the public of $16.00 per

Ordinary Share.



    In addition, the Company has agreed to sell 20,000,000 equity security

units (the "Equity Security Units") (plus up to an additional 3,000,000

Equity Security Units issuable upon exercise of the underwriters' option to

purchase additional Equity Security Units), with a stated amount of $25 per

unit, consisting of (i) a forward purchase contract requiring the holder to

purchase, and XL to issue, a variable number of ordinary shares of XL and

(ii) an ownership interest in a debt security of XL (the "Equity Security

Unit Offering" and, together with the Ordinary Share Offering, the

"Offerings") also pursuant to XL's shelf registration statement.



    The forward purchase contracts of the Equity Security Units require

each investor to purchase on the stock purchase date of August 15, 2011, a

number of the Company's Ordinary Shares to be determined based on the

average trading price of the Company's Ordinary Shares for a period

preceding that date, or, in certain situations, a fixed number of Ordinary

Shares.



    Total annual distributions on the Equity Security Units will be at the

rate of 10.75%, consisting of interest payments at the rate of 8.25% on the

senior notes and contract adjustment payments at the rate of 2.50% under

the forward purchase contracts. The reference price for the Equity Security

Units is $16.00 per Ordinary Share, the price to public in the Ordinary

Share Offering, and the threshold appreciation price is $18.88 per Ordinary

Share, which represents a premium of approximately 18% over the reference

price.



    The Company expects total gross proceeds from the Offerings to be

approximately $2.5 billion.



    The Company intends to use the net proceeds from the Offerings to pay

$1.775 billion in connection with an agreement it entered into on July 28,

2008 with Security Capital Assurance Ltd and certain of its subsidiaries

(sometimes collectively referred to herein as "SCA") and certain other

parties thereto in connection with the termination of certain reinsurance

and other agreements and for general corporate purposes including capital

funding of certain of the Company's subsidiaries.



    The joint book-running managers for the Offerings are Goldman, Sachs &

Co. and UBS Investment Bank. Full details of the Offerings, including a

description of the Ordinary Shares and the Equity Security Units and

certain risk factors related to the Company and these securities, will be

contained in a prospectus supplement that is available through the

underwriters. Any offer will be made only by means of a prospectus,

including a prospectus supplement, forming a part of the Company's

effective shelf registration statement. A copy of the prospectus supplement

meeting the requirements of Section 10 of the Securities Act of 1933 may be

obtained from either (i) Goldman, Sachs & Co., Attn: Prospectus Department,

85 Broad St., New York, NY 10004 or by faxing (212) 902-9316 or by emailing

[email protected] or (ii) UBS Prospectus Department, UBS

Investment Bank, Attn: Prospectus Department, 299 Park Avenue, New York, NY

10171 or by calling (888) 827-7275.



    This press release does not constitute an offer to sell or the

solicitation of an offer to buy any of the Ordinary Shares, Equity Security

Units or any other securities, nor will there be any sale of the Ordinary

Shares, Equity Security Units or any other securities in any state or

jurisdiction in which such offer, solicitation or sale would be unlawful

prior to registration or qualification under the securities laws of any

such state or jurisdiction.



    # # #



    This press release contains forward-looking statements. Statements that

are not historical facts, including statements about XL's beliefs, plans or

expectations, are forward-looking statements. These statements are based on

current plans, estimates, and expectations. Actual results may differ

materially from those included 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 (a) the

risk that the transactions described above are not completed for any

reason; (b) greater risk of loss in connection with obligations guaranteed

by certain of our insurance company operating affiliates due to recent

deterioration in the credit markets stemming from the poor performance of

sub-prime residential mortgage loans; (c) greater frequency or severity of

claims and loss activity than XL's underwriting, reserving or investment

practices anticipate based on historical experience or industry data; (d)

trends in rates for property and casualty insurance and reinsurance; (e)

developments in the world's financial and capital markets that adversely

affect the performance of XL's investments or access to such markets

including, but not limited to, further market developments relating to

sub-prime and residential mortgages; (f) changes in general economic

conditions, including foreign currency exchange rates, inflation and other

factors; (g) changes in the size of XL's claims relating to natural

catastrophe losses due to the preliminary nature of some reports and

estimates of loss and damage to date and (h) the other factors set forth in

XL's most recent reports on Form 10-K, Form 10-Q, and other documents on

file with the Securities and Exchange Commission, as well as management's

response to any of the aforementioned factors. XL undertakes no obligation

to update or revise publicly any forward-looking statement, whether as a

result of new information, future developments or otherwise.