XL Capital Announces Its Election To Pay For Any Liquid Yield Option Notes

Hamilton, Bermuda (August 5, 2002) - XL Capital Ltd (NYSE: XL) ("XL") announced today that, to the extent that holders of XL's Liquid Yield Option„¢ Notes due 2021 ("LYONs") tender any LYONs for purchase by XL on September 9, 2002 (the "Purchase Date"), XL has elected to pay all of the purchase price for such LYONs in cash. A company notice containing details of the LYONs repurchase will be available from State Street Bank and Trust Company (the trustee under the indenture (the "Indenture") governing the LYONs), which will be forwarded to each holder of the LYONs who wishes to tender their LYONs for purchase by XL.

Holders of LYONs may require XL to purchase all or a portion of their LYONs as of the Purchase Date at a purchase price of $581.37 per $1,000 aggregate principal amount at maturity of the LYONs properly tendered for purchase. In the event all of the outstanding LYONs are tendered for repurchase, the aggregate purchase price would be approximately $295.8 million, plus accrued and unpaid Contingent Cash Interest (as defined in the Indenture) and accrued Contingent Additional Principal (as defined in the Indenture), if any.

XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional servicefirms, insurance companies, and other enterprises on a worldwide basis. As of June 30, 2002, XL Capital Ltd had consolidated assets of approximately $31.2 billion and consolidated shareholders' equity of approximately $5.4 billion. More information about XL Capital Ltd is available at www.xlcapital.com.