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XL Group plc Announces Third Quarter 2012 Results

              XL Group plc Announces Third Quarter 2012 Results

PR Newswire

DUBLIN, Ireland, Nov. 5, 2012

- Operating net income(1) of $188.0 million, or $0.61 per share, for the
quarter

- Net income of $171.9 million, or $0.56 per share, for the quarter

- Annualized operating return on ordinary shareholders' equity(2) of 7.4% for
the quarter and 7.7% for the year to date

- Natural catastrophe losses net of reinsurance and reinstatement premiums of
$32.0 million recorded for the quarter

- Fully diluted tangible book value per ordinary share(3) of $32.82 at
September 30, 2012, an increase of $4.51, or 15.9%, from December 31, 2011

- Share buybacks during the quarter totaled 5.3 million shares for $125.0
million

DUBLIN, Ireland, Nov. 5, 2012 /PRNewswire/ -- XL Group  plc ("XL" or the
"Company") (NYSE: XL) today reported its third quarter 2012 results.

Commenting on the Company's performance, Chief Executive Officer Mike McGavick
said:

"XL's strong third quarter results are another step in the right direction.
Our P&C combined ratio of 92.2 percent was more than nine points better than
the same period last year. This resulted from lower underlying loss ratios, in
part due to a lower number of large losses; fewer catastrophes; and, to a
lesser extent, positive prior year development. We are resolved to maintain
this progress."

Mr. McGavick also added: "Our thoughts are with those still dealing with the
effects of Sandy. As we all witnessed, this was simply a massiveevent by any
measure. We will continue to work with our clients, brokersand partners to
provide any assistance we can."

Highlights - Three and Nine Months Ended September 30
(U.S. dollars in thousands, except per share amounts)
(Unaudited)                         Three Months Ended   Nine Months Ended
                                    September 30,        September 30,
                                    2012      2011     2012      2011
Net income (loss) attributable to
ordinary shareholders               $ 171,902  $ 42,398  $ 569,686  $ 40,777
Per ordinary share - fully diluted  $ 0.56     $ 0.14    $ 1.82     $ 0.13
Operating net income (loss) (Note
1)                                  $ 188,038  $ 88,811  $ 575,214  $ 169,089
Per ordinary share - fully diluted  $ 0.61     $ 0.28    $ 1.84     $ 0.54

  oNet income and operating net income of $171.9 million and $188.0 million,
    respectively, compared to net income and operating net income of $42.4
    million and $88.8 million, respectively, in the prior year quarter,
    primarily due to improved underwriting results and lower net realized
    losses on investments and derivatives.
  oNet investment income for the quarter was $239.5 million compared to
    $290.1 million in the prior year quarter and $262.6 million for the second
    quarter of 2012. The decline against the prior year quarter was primarily
    due to lower yields as a result of lower reinvestment rates.
  oNet income from investment fund and investment manager operating
    affiliates of $8.6 million in the quarter compared to income of $23.2
    million in the prior year quarter primarily due to lower investment
    manager returns.
  oNet realized investment losses for the quarter of $5.5 million compared to
    losses of $62.4 million in the prior year quarter. 
  oFully diluted book value per ordinary share increased by $2.20 from the
    prior quarter driven by net income combined with an increase in net
    unrealized gains on investments and the benefit of share buybacks.
  oDuring the quarter, the Company purchased 5.3  million shares for $125.0 
    million at an average price of $23.44 per share, which was accretive to
    fully diluted book value per ordinary share by $0.18. $400.0 million of
    shares remains available for purchase under the Company's previously
    announced $750 million share buyback program.

P&C Operations - Three and Nine Months Ended September 30
(U.S. dollars in thousands)
(Unaudited)                Three Months Ended        Nine Months Ended
                           September 30,             September 30,
                           2012        2011        2012        2011
Gross premiums written     $ 1,576,231  $ 1,776,161  $ 5,656,666  $ 5,637,724
Net premiums written         1,308,264    1,292,706    4,618,770    4,313,047
Net premiums earned          1,468,553    1,362,532    4,227,423    3,940,353
Underwriting profit (loss)   114,203      (22,200)     306,815      (283,215)
Loss ratio                   60.9%        72.5%        60.9%        76.7%
Underwriting expense ratio   31.3%        29.1%        31.8%        30.5%
Combined ratio               92.2%        101.6%       92.7%        107.2%

  oP&C gross premiums written ("GPW") decreased 11.3% compared to the prior
    year quarter. The Insurance segment GPW increased 0.2% from the prior year
    quarter, as a result of new business initiatives and favorable pricing in
    North America Property and Casualty and improved pricing in Professional,
    partially offset by movements in foreign exchange rates and targeted
    non-renewals in International General Property. The decrease in GPW for
    the Reinsurance segment of 32.6% was primarily from North America Property
    due to the Heartland Crop program, which was renewed as reinsurance rather
    than as primary business. Excluding the impact of foreign exchange and the
    Heartland Crop program, total P&C GPW increased by 2.2% compared to the
    prior year quarter.
  oP&C net premiums earned ("NPE") of $1.5 billion were comprised of $985.6
    million from the Insurance segment and $482.9 million from the Reinsurance
    segment. Compared to the prior year quarter, Insurance NPE increased by
    6.0% and Reinsurance NPE increased by 11.7%.
  oThe P&C loss ratio was 11.6 percentage points lower than the prior year
    quarter. Included in the loss ratio was favorable prior year development
    of $36.5 million compared to $18.4 million in the prior year quarter. The
    loss ratio was also impacted by natural catastrophe losses of $32.0
    million, net of reinsurance and reinstatement premiums. In the prior year
    quarter, natural catastrophe losses totaled $110.6 million, net of
    reinsurance and reinstatement premiums. Excluding prior year development
    and natural catastrophe losses, the third quarter loss ratio was 4.9
    percentage points lower than the prior year quarter.
  oOperating expenses were higher than the prior year quarter largely due to
    performance based compensation costs and the continued build-out of the
    Company's previously announced initiatives.
  oThe P&C combined ratio excluding prior year development and the impact of
    natural catastrophe losses for the quarter was 92.5%, compared to 94.9%
    for the prior year quarter. The Insurance segment combined ratio on this
    basis was 94.7% for the quarter, compared to 101.7% for the prior year
    quarter, while the Reinsurance segment combined ratio on this basis was
    88.0%, compared to 80.0% for the prior year quarter, largely due to crop
    losses in the quarter.

(1) Defined as net income (loss) attributable to ordinary shareholders
excluding (1) net realized gains and losses on investments, net of tax, for
XL, (2) net realized and unrealized gains and losses on derivatives, net of
tax, for XL, (3) its share of items (1) and (2) for the Company's insurance
company affiliates for the periods presented, (4) goodwill impairment charges,
net of tax, (5) the gains recognized on the repurchase of XLIT Ltd.'s
preference ordinary shares and (6) foreign exchange gains or losses, net of
tax. "Operating net income" and "return on ordinary shareholders' equity"
based on operating net income are "non-GAAP financial measures." See the
schedule entitled "Reconciliation" at the end of this release for a
reconciliation of "operating net income" to net income (loss) attributable to
ordinary shareholders and the calculation of "return on ordinary shareholders'
equity" based on operating net income to average ordinary shareholders'
equity.

(2) Ordinary shareholders' equity is defined as total shareholders' equity
less non-controlling interest in equity of consolidated subsidiaries.

(3) Book value per share, fully diluted book value per ordinary share and
fully diluted tangible book value per ordinary share are non-GAAP financial
measures. Fully diluted book value per share represents book value per
ordinary share (total shareholders' equity less non-controlling interest in
equity of consolidated subsidiaries, divided by the number of outstanding
ordinary shares at any period end) combined with the dilutive impact of
potential future share issues at any period end. Fully diluted tangible book
value per ordinary share is calculated in the same manner as fully diluted
book value per ordinary share except that goodwill and intangible assets are
removed from ordinary shareholders' equity. The Company believes that fully
diluted tangible book value per ordinary share is a financial measure
important to investors and other interested parties who benefit from having a
consistent basis for comparison with other companies within the industry.
However, this measure may not be comparable to similarly titled measures used
by companies either outside or inside of the insurance industry.

Further details of the results for the quarter may be found in the Company's
Financial Supplement,  which is dated November 5, 2012 and is available from
the Investor Relations section of XL's website.

A conference call to discuss the Company's results will be held at 5 p.m.
Eastern Time on Monday, November 5, 2012. The conference call can be accessed
through a listen-only dial-in number or through a live webcast. To listen to
the conference call, please dial (210) 795-0624 or (866) 617-1526: Passcode:
"XL GLOBAL". The webcast will be available atwww.xlgroup.com and will be
archived on XL's website from approximately 9:00 p.m. Eastern Time on November
5, 2012, through midnight Eastern Time on December 5, 2012. A telephone
replay of the conference call will also be available beginning at
approximately 9:00 p.m. Eastern Time on November 5, 2012, until midnight
Eastern Time on December 5, 2012, by dialing (203) 369-1231 or (866) 454-1408.

About XL Group plc

XL Group plc, through its subsidiaries, is a global insurance and reinsurance
company providing property, casualty and specialty products to industrial,
commercial and professional firms, insurance companies and other enterprises
throughout the world. XL is the company clients look to for answers to their
most complex risks and to help move their world forward. Its principal offices
are located at No.1 Hatch Street Upper, 4th Floor, Dublin 2, Ireland. To learn
more, visit www.xlgroup.com.

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, all of which involve risk and
uncertainty. Statements that include the words "expect," "intend," "plan,"
"believe," "project," "anticipate," "will," "may" or similar statements of a
future or forward-looking nature identify forward-looking statements. 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)
changes in the size of XL's claims relating to natural or man-made catastrophe
losses due to the preliminary nature of some reports and estimates of loss and
damage to date; (b) trends in rates for property and casualty insurance and
reinsurance; (c) the timely and full recoverability of reinsurance placed by
XL with third parties, or other amounts due to XL; (d) changes in ratings,
rating agency policies or practices; (e) changes in the projected amount of
ceded reinsurance recoverables; (f) XL's ability to successfully implement its
business strategy especially during a "soft" market cycle; (g) 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; (h) changes in general economic conditions, including the
effects of inflation and changes in interest rates, credit spreads, foreign
currency exchange rates and future volatility in the world's credit, financial
and capital markets that adversely affect the performance and valuation of
XL's investments or access to such markets; (i) developments, including
uncertainties related to: the future of the Euro-zone, the ability of
Euro-zone countries to service existing debt obligations and the strength of
the Euro as a currency; and to the financial condition of counterparties,
reinsurers and other companies that are at risk of bankruptcy; (j) the impact
of downgrades of U.S. securities by credit rating agencies or the European
sovereign debt crisis, and the resulting effect on the value of securities (x)
in our investment portfolio and (y) posted as collateral by and to us; (k) the
potential for changes to methodologies, estimations and assumptions that
underlie the valuation of XL's financial instruments that could result in
changes to investment valuations; (l) changes to XL's assessment as to whether
it is more likely than not that it will be required to sell, or has the intent
to sell, available-for-sale debt securities before their anticipated recovery;
(m) the ability of XL's subsidiaries to pay dividends to XL Group plc and XLIT
Ltd.; (n) the potential effect of regulatory developments in the jurisdictions
in which XL operates, including those that could impact the financial markets
or increase XL's business costs and required capital levels; (o) changes in
applicable tax laws, tax treaties or tax regulations or the interpretation or
enforcement thereof; and (p) the other factors set forth in XL's reports on
Form 10-K, Form 10-Q and other documents on file with the Securities and
Exchange Commission. XL undertakes no obligation to update publicly or revise
any forward-looking statement, whether as a result of new information, future
developments or otherwise.

XL intends to use its website as a means of disclosing material non-public
information and for complying with its disclosure obligations under Regulation
FD. Such disclosures will be included on the website in the Investor Relations
section. Accordingly, investors should monitor such portions of XL's website,
in addition to following its press releases, SEC filings and public conference
calls and webcasts.

XL Group plc
SUMMARY CONSOLIDATED FINANCIAL DATA
Income statement data:
(U.S. dollars in
thousands)                 Three Months Ended        Nine Months Ended
(Unaudited)                September 30,             September 30,
                           2012        2011        2012        2011
Revenues:
Gross premiums written:
      - P&C operations     $ 1,576,231  $ 1,776,161  $ 5,656,666  $ 5,637,724
      - Life operations      87,413       100,564      267,000      298,504
Net premiums written:
      - P&C operations     $ 1,308,264  $ 1,292,706  $ 4,618,770  $ 4,313,047
      - Life operations      79,487       90,769       243,606      272,635
Net premiums earned:
      - P&C operations     $ 1,468,553  $ 1,362,532  $ 4,227,423  $ 3,940,353
      - Life operations      79,487       90,794       243,630      272,695
Net investment income      $ 239,480    $ 290,106    $ 767,353    $ 866,874
Net realized (losses)
gains on investments         (5,493)      (62,354)     2,917        (138,335)
Net realized and
unrealized (losses) gains
on derivative instruments    6,254        (26,916)     2,656        (34,299)
Net income (loss) from
investment fund affiliates   16,050       (7,123)      38,555       30,277
Fee income and other         13,153       10,980       34,121       30,494
Total revenues             $ 1,817,484  $ 1,658,019  $ 5,316,655  $ 4,968,059
Expenses:
Net losses and loss
expenses incurred - P&C
operations                 $ 894,076    $ 988,059    $ 2,574,496  $ 3,020,508
Claims and policy benefits
- Life operations            119,439      139,549      371,896      410,196
Acquisition costs            236,347      207,553      679,435      611,142
Operating expenses           305,746      247,815      887,209      774,949
Foreign exchange (gains)
losses                       18,690       (39,425)     13,432       (38,409)
Interest expense             37,906       48,911       134,564      158,157
Total expenses             $ 1,612,204  $ 1,592,462  $ 4,661,032  $ 4,936,543
Income (loss) before
income tax and income
(loss) from operating
affiliates                 $ 205,280    $ 65,557     $ 655,623    $ 31,516
Income (loss) from
operating affiliates         2,917        35,552       41,731       95,439
Provision (benefit) for
income tax                   451          24,718       51,813       16,747
Net income (loss)          $ 207,746    $ 76,391     $ 645,541    $ 110,208
Non-controlling interests    (35,844)     (33,993)     (75,855)     (69,431)
Net income (loss)
attributable to XL Group
plc and ordinary
shareholders               $ 171,902    $ 42,398     $ 569,686    $ 40,777

XL Group plc
SUMMARY CONSOLIDATED FINANCIAL DATA
Selected balance sheet data:         At                       At
(U.S. dollars in thousands,
except per share amounts)            September 30,            December 31,
(Unaudited)                          2012                    2011 (Note 1)
Total investments available for
sale                            $    28,315,925           $   27,017,285
Total fixed maturities, held to
maturity                             2,805,796                2,668,978
Cash and cash equivalents            3,197,305                3,825,125
Investments in affiliates            1,027,122                1,052,729
Unpaid losses and loss expenses
recoverable                          3,319,266                3,654,948
Goodwill and other intangible
assets                               407,221                  407,321
Total assets (Note 2)                45,980,328               44,665,265
Unpaid losses and loss expenses      20,074,668               20,613,901
Deposit liabilities                  1,561,076                1,608,108
Future policy benefit reserves       4,848,734                4,845,394
Unearned premiums                    4,081,557                3,555,310
Notes payable and debt               1,673,350                2,275,327
Total shareholders' equity
(Note 2)                             11,757,419               10,756,130
Ordinary shareholders' equity
(Note 2)                             10,411,037               9,411,658
Ordinary shares outstanding
(Note 3)                             300,631,593              315,710,253
Basic book value per ordinary
share (Notes 2 and 4)           $    34.63                $   29.81
Fully diluted book value per
ordinary share (Notes 2 and 4)  $    34.16                $   29.59
Fully diluted tangible book
value per ordinary share (Notes
2 and 4)                        $    32.82                $   28.31
Note 1: Certain items have been reclassified to conform to the current period
presentation.
Note 2: On January 1, 2012, for all fiscal years and interim periods
presented, the Company adopted a FASB accounting standards update to address
disparities in practice regarding the interpretation of which costs relating
to the acquisition of new and renewal insurance contracts qualify for
deferral. This guidance was adopted on a retrospective basis. The impact of
adoption of this guidance was a reduction in deferred acquisition costs of
approximately $21 million, a reduction in deferred tax liabilities of
approximately $7 million, and a corresponding reduction in opening retained
earnings of approximately $14 million from the amounts presented in the
Company's December 31, 2011 balance sheet. The adoption of this guidance did
not have an impact on the Company's consolidated statements of income or
comprehensive income.
Note 3: Ordinary shares outstanding include all ordinary shares legally
issued and outstanding (as disclosed on the face of the balance sheet) as
well as all director share units outstanding.
Note 4: Book value per share, fully diluted book value per ordinary share and
fully diluted tangible book value per ordinary share are non-GAAP financial
measures. Fully diluted book value per share represents book value per
ordinary share (total shareholders' equity less non-controlling interest in
equity of consolidated subsidiaries, divided by the number of outstanding
ordinary shares at any period end) combined with the dilutive impact of
potential future share issues at any period end. Fully diluted tangible book
value per ordinary share is calculated in the same manner as fully diluted
book value per ordinary share except that goodwill and intangible assets are
removed from ordinary shareholders' equity.

XL Group plc
RECONCILIATION

The following is a reconciliation of the Company's net income (loss)
attributable to ordinary shareholders to operating net income (loss) (Note 2)
and also includes the calculation of annualized return on ordinary
shareholders' equity (based on operating net income (loss)) for the three and
nine months ended September 30, 2012 and 2011.

(U.S. dollars in
thousands except
per share amounts) Three Months Ended            Nine Months Ended
(Unaudited)        September 30,                 September 30,
                   2012          2011 (Note 1)  2012          2011 (Note 1)
Net income (loss)
attributable to
ordinary
shareholders       $ 171,902      $ 42,398       $ 569,686      $ 40,777
Net realized
losses (gains) on
investments, net
of tax               5,733          59,642         (3,309)        132,355
Net realized and
unrealized losses
(gains) on
derivatives, net
of tax               (6,253)        23,095         (2,651)        30,478
Net realized and
unrealized losses
(gains) on
investments and
derivatives
related to the
Company's
insurance company
affiliates           (6)            (107)          (42)           (43)
Foreign exchange
(gains) losses,
net of tax           16,662         (36,217)       11,530         (34,478)
Operating net
income (loss):
(Note 2)           $ 188,038      $ 88,811       $ 575,214      $ 169,089
Per ordinary share
results: (Note 3)
Net income (loss)
attributable to
ordinary
shareholders       $ 0.56         $ 0.14         $ 1.82         $ 0.13
Operating net
income (loss)
(Note 2)           $ 0.61         $ 0.28         $ 1.84         $ 0.54
Weighted average
ordinary shares
outstanding:
Basic                304,198,602    311,714,446    309,674,698    310,793,263
Diluted - Net
income               307,764,352    313,847,749    312,601,640    314,842,063
Diluted -
Operating net
income               307,764,352    313,847,749    312,601,640    314,842,063
Return on ordinary
shareholders'
equity:
Closing ordinary
shareholders'
equity (Notes 4
and 5)             $ 10,411,037   $ 9,926,922    $ 10,411,037   $ 9,926,922
Average ordinary
shareholders'
equity (Notes 4
and 5)             $ 10,139,423   $ 9,769,796    $ 9,911,348    $ 9,762,197
Operating net
income (loss)
(Note 2)           $ 188,038      $ 88,811       $ 575,214      $ 169,089
Annualized
operating net
income (Note 2)    $ 752,152      $ 355,244      $ 766,952      $ 225,452
Annualized return
on ordinary
shareholders'
equity - operating
net income (loss)
(Notes 2, 4 and 5)   7.4%           3.6%           7.7%           2.3%
Note 1: Certain amounts have been reclassified to conform to the current
period presentation.
Note 2: Defined as net income (loss) attributable to ordinary shareholders
excluding (1) net realized gains and losses on investments, net of tax, for
XL, (2) net realized and unrealized gains and losses on derivatives, net of
tax, for XL, (3) its share of items (1) and (2) for the Company's insurance
company affiliates for the periods presented, (4) goodwill impairment
charges, net of tax, (5) the gains recognized on the repurchase of XLIT
Ltd.'s preference ordinary shares and (6) foreign exchange gains or losses,
net of tax. "Operating net income" and "return on ordinary shareholders'
equity" based on operating net income are "non-GAAP financial measures."
Note 3: Diluted weighted average number of ordinary shares outstanding is
used to calculate per share data except where it is anti-dilutive to earnings
per share or where there is a net loss. When it is anti-dilutive or when a
net loss occurs, basic weighted average ordinary shares outstanding is
utilized in the calculation of net loss per share and net operating loss per
share.
Note 4: Ordinary shareholders' equity is defined as total shareholders'
equity less non-controlling interest in equity of consolidated subsidiaries.
Note 5: On January 1, 2012, for all fiscal years and interim periods
presented, the Company adopted a FASB accounting standards update to address
disparities in practice regarding the interpretation of which costs relating
to the acquisition of new and renewal insurance contracts qualify for
deferral. This guidance was adopted on a retrospective basis. The impact of
adoption of this guidance was a reduction in deferred acquisition costs of
approximately $21 million, a reduction in deferred tax liabilities of
approximately $7 million, and a corresponding reduction in opening retained
earnings of approximately $14 million from the amounts presented in the
Company's December 31, 2011 balance sheet. The adoption of this guidance did
not have an impact on the Company's consolidated statements of income or
comprehensive income.

Comment on Regulation G

XL presents its operations in the way it believes will be most meaningful and
useful to investors, analysts, rating agencies and others who use XL's
financial information in evaluating XL's performance. This press release
contains the presentation of (i) operating net income (loss) ("Operating Net
Income"), which is defined as net income (loss) attributable to ordinary
shareholders excluding: (1) net realized gains and losses on investments, net
of tax, for XL, (2) net realized and unrealized gains and losses on
derivatives, net of tax, for XL, (3) its share of items (1) and (2) for the
Company's insurance company affiliates for the periods presented, (4) goodwill
impairment charges, net of tax, (5) the gains recognized on the repurchase of
XLIT Ltd.'s preference ordinary shares and (6) foreign exchange gains or
losses, net of tax; (ii) annualized return on ordinary shareholders' equity
("ROE") based on operating net income (loss) ("Operating ROE"); and (iii)
book value per ordinary share (ordinary shareholders' equity divided by the
number of shares outstanding at the period end date), fully diluted book value
per ordinary share (book value per share combined with the dilutive impact of
potential future share issues at any period end), and fully diluted tangible
book value per ordinary share (calculated in the same manner as fully diluted
book value per ordinary share except that goodwill and intangible assets are
removed from ordinary shareholders' equity). These items are "non-GAAP
financial measures" as defined in Regulation G. The reconciliation of such
measures to the most directly comparable GAAP financial measures in accordance
with Regulation G is included in this press release.

Although the investment of premiums to generate income (or loss) and realized
capital gains (or losses) is an integral part of XL's operations, the
determination to realize capital gains (or losses) is independent of the
underwriting process. In addition, under applicable GAAP accounting
requirements, losses can be created as the result of other than temporary
declines in value and from goodwill impairment charges without actual
realization. In this regard, certain users of XL's financial information,
including certain rating agencies, evaluate earnings before tax and capital
gains to understand the profitability of the recurring sources of income
without the effects of these two variables. Furthermore, these users believe
that, for many companies, the timing of the realization of capital gains and
the recognition of goodwill impairment charges are largely a function of
economic and interest rate conditions.

Net realized and unrealized (gains) losses on derivatives, net of tax include
all derivatives entered into by XL other than certain credit derivatives.
With respect to credit derivatives, because XL and its insurance company
operating affiliates generally hold financial guaranty contracts written in
credit default derivative form to maturity, the net effects of the changes in
fair value of these credit derivatives are excluded (similar with other
companies' treatment of such contracts) as the changes in fair value each
quarter are not indicative of underlying business performance.

The gains recognized on the repurchase of XLIT Ltd.'s preference ordinary
shares are excluded as these transactions were capital in nature and outside
the scope of the Company's underlying business.

Foreign exchange gains and losses in the income statement are only one element
of the overall impact of foreign exchange fluctuations on the Company's
financial position and are not representative of any economic gain or loss
made by the Company. Accordingly, it is not a relevant indicator of financial
performance and it is excluded.

In summary, XL evaluates the performance of and manages its business to
produce an underwriting profit. In addition to presenting net income (loss),
XL believes that showing operating net income (loss) enables investors and
other users of XL's financial information to analyze XL's performance in a
manner similar to how management of XL analyzes performance. In this regard,
XL believes that providing only a GAAP presentation of net income (loss) makes
it much more difficult for users of XL's financial information to evaluate
XL's underlying business. Also, as stated above, XL believes that the equity
analysts and certain rating agencies that follow XL (and the insurance
industry as a whole) exclude these items from their analyses for the same
reasons and they request that XL provide this non-GAAP financial information
on a regular basis.

Operating ROE is a widely used measure of any company's profitability that is
calculated by dividing annualized Operating Net Income for any period by the
average of the opening and closing ordinary shareholders' equity. The Company
establishes target Operating ROEs for its total operations, segments and lines
of business. If the Company's Operating ROE targets are not met with respect
to any line of business over time, the Company seeks to re-evaluate these
lines.

Contact:  David Radulski     Carol Parker Trott
           Investor Relations Media Relations
           (203) 964-3470     (441) 294-7290

SOURCE XL Group plc

Website: http://www.xlgroup.com
 
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