XL Capital yesterday reported a net loss of $91.7 million for quarter ended June 30 2002 compared to $160.1 million in the same period the year before.

The drop is due to the previously announced reserve increase of $200 million for exposure to the September 11 attacks and $110 million investment losses including $92.5 million on WorldCom and other telecommunications companies.

This translates to a loss of $0.68 per share for the second quarter of this year compared with income of $1.01 per share, in the second quarter of 2001.

Commenting on the second quarter results, Brian M. O'Hara, president and chief executive officer of XL, said:"The company enjoyed strong premium growth in the second quarter with net premiums written, the pipeline of future earnings, increasing by 53 percent. While the need to increase loss reserves caused by the World Trade Center (WTC) tragedy was disappointing, we believe that this addition to reserves should fully address our losses from this unprecedented event.

"I am pleased to note that our underlying net operating income in the second quarter, excluding the WTC reserve charge, was slightly above expectations. Now we look forward to capitalising on the improving property and casualty market through long overdue price increases and improvements in terms currently being achieved in virtually all lines of business," Mr. O'Hara concluded.

XL reported net operating income for the second quarter of 2002 of $25.0 million, or $0.18 per share, compared with $160.1 million, or $1.25 per share, for the quarter ended June 30, 2001.

For the six months ended June 30, 2002, the net loss was $2.3 million, or a loss of $0.02 per share, compared with net income of $347.5 million, or $2.72 per share, during the same period in 2001.

Net operating income for the first six months of 2002 was $235.4 million, or $1.71 per share, compared with $316.8 million, or $2.48 per share, for the six months ended June 30, 2001.

Results for the quarter and six months ended June 30, 2002 include the results of Winterthur International, which was acquired with effect from July 1, 2001. They also include the results of Le Mans R?, which is accounted for as a consolidated subsidiary with effect from January 1, 2002.

In the quarter and six months ended June 30, 2001, the Company's share of the net income of Le Mans R? was included in equity in net income of insurance and other operating affiliates. Results of the company's Lloyd's operations are included in the insurance segment, and are no longer shown separately. Total assets as of June 30, 2002 were $31.2 billion, compared with $28.0 billion as of December 31, 2001. Fully diluted book value per share as at June 30, 2002 was $39.60 compared with $40.35 as at December 31, 2001.

Gross premiums written in the second quarter of 2002 were $1.5 billion up from $1.0 billion in the second quarter of 2001. Net premiums written increased to $1.1 billion from $749.2 million and net earned premiums rose to $1.1 billion from $641.0 million in the respective periods of 2002 and 2001. For six months, gross premiums written were $4.4 billion in the second quarter of 2002 compared with $2.2 billion in the year ago period. Net premiums written for the first six months of 2002 were $3.4 billion compared to $1.6 billion a year ago. Net earned premiums were $2.2 billion for the first six months of 2002 compared with $1.2 billion in the first six months of 2001.

Net investment income from general operations was $157.9 million in the second quarter of 2002, compared with $151.2 million in 2001's second quarter.

Net investment income from general operations was $313.5 million in the first six months of 2002, compared with $294.3 million in 2001's first six months.

The company's equity in the net income of its investment affiliates for the second quarter of 2002 was $7.9 million in 2002 versus $23.2 million in the second quarter of 2001.

The company's equity in the net income of its insurance and other operating affiliates was $0.4 million in the second quarter of 2002 versus $6.3 million in the second quarter of 2001.

The company's equity in the net income of its investment affiliates for the first six months of 2002 was $40.1 million versus $43.6 million in the first half of 2001. The company's equity in the net income of its insurance and other operating affiliates was $0.4 million for the first six months of 2002 versus $14.3 million in the first six months of 2001. The combined ratio for the company's general insurance and reinsurance operations was 109.9 percent in the second quarter of 2002 compared with 92.3 percent in the second quarter of 2001.

The loss ratios were 80.2 percent and 60.9 percent in the second quarters of 2002 and 2001, respectively, with corresponding expense ratios of 29.7 percent and 31.4 percent for the same quarters, respectively. The combined ratio for the company's general insurance and reinsurance operations was 101.0 percent in the first six months of 2002 compared with 93.1 percent in the first six months of 2001. The loss ratios were 71.8 percent and 61.1 percent in the first six months of 2002 and 2001, respectively, with corresponding expense ratios of 29.2 percent and 32.0 percent for the same periods.

A live online webcast of a call with analysts and investors will be held at 10:00 a.m. Eastern Time today to review the second quarter 2002 results at www.xlcapital.com.