Bermuda-based XL Capital Ltd last night reported first quarter earnings of $442.9 million, or $3.18 per share, down 2 percent from $452.2 million, or $3.25 a share for the quarter ended March 31, 2004.

First-quarter operating income, which excludes net realised gains and losses was a record $346.5 million, or $2.49 per share, up from $332.5 million, or $2.39 a share, a year ago.

President and chief executive officer Brian M. O'Hara said: "XL delivered one of its highest levels of net income ever this quarter and record net income excluding net realised gains and losses.

"These results are a testament to the strength of our diversified growth strategy, with solid underwriting profitability in our insurance and reinsurance general operations, complimented by strong performances in our financial products and investment affiliates businesses.

"Annualised return on shareholders' equity, based on net income excluding net realised gains and losses, was a very satisfactory 19.1% and book value per ordinary share increased to $52.13, despite the increase in interest rates during the quarter."

Mr. O'Hara also said in the earnings statement yesterday that XL had recently met with the independent actuary and Winterthur Swiss Insurance Company with respect to the post-closing seasoning process relating to XL's acquisition of Winterthur International from Winterthur Swiss in 2001. Based on these discussions, XL expects that the independent actuary's report will be issued in the fourth quarter of this year.

He said that XL's submission would result in a net payable to XL of approximately $1.45 billion in aggregate and Winterthur Swiss' submission would result in a net payable to XL of approximately $541 million in aggregate. The independent valuation process is a "baseball-type" process, whereby either XL's submitted number or Winterthur Swiss' submitted number will be the actual final seasoned amount, depending upon which number is closest to the number developed by the independent actuary