The increase in the net loss reserves for Sept. 11 claims consists of approximately $135 million of additional reserves in the company's reinsurance segment, primarily due to higher business interruption losses and exposure to Lloyd's Central Fund, and about $65 million in the accident and health book of the Company's Lloyd's operations.

XL explained that the increase in reserves in the accident and health book at Lloyd's reflected that the Company's exposure ultimately included a higher concentration of victims in the World Trade Center than previously indicated.

Net investment losses in the quarter include losses in the company's fixed income portfolio for WorldCom, Adelphia and other telecommunication companies of approximately $92 million and the writedown of the Company's investment in Mutual Risk Management of approximately $20 million. In addition, investment losses include derivative losses and other investment losses net of realized investment gains.

"I am pleased to note that we had minimal underwriting exposure in both our insurance and reinsurance operations to the telecommunications and related industries during the quarter," Mr. O'Hara added.

Mr. O'Hara said, "Absent the impact of these charges, we believe our second-quarter results should be in line with consensus analyst estimates. I am confident that the recovery underway in the insurance and reinsurance markets is sustainable for the foreseeable future, I and believe that the need for higher prices is reinforced by the adverse development of recent losses and declines in the investment markets."

The company said it intends to announce its full second-quarter results after the July 30 market close and will host a Webcast investor conference call at 10:00 a.m. Eastern Time July 31.

The company said the Webcast will be accessible via the company's Web site at www.xlcapital.com.

XL Capital Ltd. provides insurance and reinsurance coverage and financial products for industrial, commercial and professional service firms, insurance companies, and other enterprises. The firm reported consolidated assets of approximately $30.7 billion and consolidated shareholders' equity of approximately $5.5 billion as of March 31.