Edgar Filing: XL CAPITAL LTD

================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 11-K

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from_______________ to _____________

Commission file number 1-10804

X.L. AMERICA, INC. EMPLOYEE SAVINGS PLAN
(Full title of the plan)

Seaview House, 70 Seaview Avenue
Stamford, Connecticut 06902
(Address of the plan)

XL Capital Ltd

XL House, One Bermudiana Road, Hamilton HM11, Bermuda
(Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office)

================================================================================

X.L. America, Inc. Employee Savings Plan

TABLE OF CONTENTS

Financial Statements and Schedule: Page No.

Report of Independent Registered Public Accounting Firm.......... 3

Statements of Net Assets Available for Benefits--................ 4
As of December 31, 2003 and 2002

Statement of Changes in Net Assets Available for Benefits--...... 5
For the Year Ended December 31, 2003

Notes to Financial Statements.................................... 6

Schedule of Assets (Held at Year End) as of December 31, 2003.... 13

Signatures................................................................ 14

Exhibit Index............................................................. 15

Other schedules required by the Department of Labor regulations for reporting
and disclosure under the Employee Retirement Income Security Act of 1974
("ERISA") have been omitted because they are not applicable.

[PricewaterhouseCoopers LLP Letterhead]

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York NY 10036
Telephone (646) 471 4000
Facsimile (813) 286-6000

Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of X.L. America, Inc. Employee Savings
Plan:

In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of X.L. America, Inc. Employee Savings Plan (the "Plan") at December 31, 2003
and 2002, and the changes in net assets available for benefits for the year
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets
(Held at End of Year) is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.

/s/ PricewaterhouseCoopers LLP

June 25, 2004

X.L. America, Inc. Employee Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 2003 and 2002

2003 2002
------------- -------------
ASSETS:
Investments (see Note 4):

Collective Trusts............................... $29,895,939 $15,207,063
Mutual Funds.................................... 56,751,936 18,889,289
XL Capital Ltd Class A Ordinary Shares.......... 4,751,420 5,079,715
Cash............................................ 436,182 461,775
Participant loans............................... 1,445,783 715,554
------------- -------------
Total investments........................... 93,281,260 40,353,396

Receivables:

Employer contribution........................... 539,744 104,723
Participant contributions....................... - 96,158
------------- -------------
Total receivables........................... 539,744 200,881
------------- -------------
Net assets available for benefits.................... $93,821,004 $40,554,277
============= =============

The accompanying notes are an integral part of these financial statements.

X.L. America, Inc. Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2003

Additions to net assets attributed to:
Investment income:

Dividends................................................................... $1,174,613
Interest.................................................................... 79,200
Net appreciation in fair value of investments (see Note 4).................. 14,667,142
----------
15,920,955
Contributions:
Participants................................................................ 9,337,319
Employer.................................................................... 9,517,050
Transfers in to Plan (see Note 1).......................................... 24,586,483
----------
43,440,852
----------
Total additions............................................................. 59,361,807

Deductions from net assets attributed to:
Benefits paid to Participants............................................... (6,095,080)
----------

Total deductions............................................................ (6,095,080)
----------

Net increase in assets available for benefits 53,266,727

Net assets available for plan benefits:
Beginning of year........................................................... 40,554,277
----------

End of year................................................................. $93,821,004
===========

The accompanying notes are an integral part of these financial statements.

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

1. DESCRIPTION OF PLAN

The following description of the X.L. America, Inc. Employee Savings Plan
(the "Plan") provides general information. Participants should refer to the
Summary Plan Description for a more complete description of the Plan's
provisions.

General

The Plan is a defined contribution plan covering employees of X.L. America,
Inc., its subsidiaries and affiliates (collectively referred to as the
"Company"), who are scheduled to work a minimum of 20 hours per week.

INVESCO Retirement, Inc. is the Plan record keeper. AMVESCAP National Trust
Company ("AMVESCAP", formerly Institutional Trust Company) is the Trustee
of the Plan. The Plan is subject to the provision of the Employee
Retirement Income Security Act of 1974 ("ERISA").

Eligibility

All employees as defined in the Plan document are eligible to participate
in the Plan on the first day of employment. Employees participating in the
Plan ("Participants") must select investment choices on the basis of their
individual goals and objectives. Participants may invest in one or more
investments, each offering different opportunities and elements of risk.

As of January 1, 2002, new contributions are no longer permitted to be
invested in XL Capital Ltd Class A Ordinary Shares.

Plan Mergers

Effective January 1, 2002, the Plan was amended to allow the following
subsidiaries of the Company to become participating employers:

Brockbank Insurance Services, Inc., XL Financial Administrative Services,
Inc., and XL Insurance America, Inc. (formerly Winterthur International
America Insurance Company).

The above amendment resulted in the Plan receiving assets of $5,706,651
from the following plans:

Brockbank Insurance Services, Inc. Profit Sharing Plan...... $ 472,993
Brockbank Insurance Services, Inc. Money Purchase Plan...... 372,882
X.L. America, Inc. 401(k) Savings and Profit Sharing Plan... 2,450,358
General Casualty 401(k) Plan................................ 2,410,418
----------
Total............................ $5,706,651
==========

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

Effective April 1, 2003, the Plan was amended to include XL Specialty
Insurance Company as a participating employer in the Plan. It was further
resolved that upon receipt of a favorable determination letter from the
Internal Revenue Service under the Employee Plans Compliance Resolution
System, the XL Specialty Insurance Company 401(k) Plan shall be merged with
and into the Plan. As of December 31, 2003, the XL Specialty plan has not
yet been merged into the Plan.

Effective April 1, 2003, the Plan was amended to include XL Capital Ltd as
a participating employer in the Plan and merge the assets of the XL Capital
Ltd US Qualified (401(k)) Plan of $3,913,354 into the Plan.

Effective April 1, 2003, the Plan was amended to include ECS, Inc. as a
participating employer in the Plan and merge the assets of the ECS, Inc.
Retirement Savings Plan of $20,673,129 into the Plan.

All of the assets merged and transferred became assets of the Plan and are
in compliance with the requirements of Section 414(l) of the Internal
Revenue Code ("IRC").

Contributions

Contributions are deposited directly into the investment funds as
designated by the Participants. Contributions to the Plan consist of
employee and Company ("Employer") contributions as described below:

Participant Contributions

Each year, Participants may contribute up to 15% of pre-tax annual
compensation, as defined in the Plan, subject to certain limitations. A
Participant may also elect to make supplemental contributions of up to 10%
of after-tax annual compensation. The combination of pre-tax and after-tax
Participant contributions to the Plan may not exceed 15% of the
Participants' annual compensation.

Employer Contributions

The Company contributes 140% of the first 5% of pre-tax Participant
contributions to the Plan. After-tax contributions are not eligible for
Employer matching contributions. Employer matching contributions are funded
to the Plan semi-monthly. At the discretion of the Company, an additional
discretionary matching contribution may be made up to 100% of the first 3%
of the annual compensation to match contributions made by the Participants
in the Plan. (See Note 9, Subsequent Events).

Participant Accounts

Each Participant's account is credited with the Participant's contribution
and allocations of the Company's contribution and earnings thereon.
Investment options chosen by each Participant govern the allocation and
distribution of investment income and realized gains or losses. Any
dividends and capital gains are deposited to the Trust and reinvested in
the appropriate Participant accounts. The benefit to which a Participant is
entitled is the benefit that can be provided from the Participant's vested
account.

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

Vesting

Participants are fully vested immediately in their contributions plus
actual earnings thereon. Vesting in the Employer contribution portion of
their accounts is based on years of service with the Company. Participants
vest 25% per year of service and are 100% vested after four years of
service. Participants become 100% vested in the Employer contributions upon
disability, death or retirement.

The Employer contributions and investment returns thereon are not taxed to
the Participant until the Participant receives a distribution from the
Plan.

Participant Loans

Participants may borrow from their vested account a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50% of their account balance.
The $50,000 maximum will be reduced, however, by the highest outstanding
loan balance during the prior 12 months. General-purpose loans must be
repaid within 5 years. Loans used to acquire a primary residence must be
repaid within 15 years. Participants may have only one loan outstanding at
a time.

Loan balances outstanding are recorded as an asset in a separate loan
account. Payments of principal and interest are made by payroll deductions
of an amount sufficient to amortize the loan over the repayment period.
Assets in the loan account are evidenced by promissory notes secured by a
security interest in the Participant's account. Loan interest rates are
established based on the prime rate plus one percentage point on the first
day of the month in which the loan is made. Principal and interest received
on Participants' loans is reinvested in accordance with Participant
investment instructions.

Upon termination of employment, the Participant has 3 months to pay off the
unpaid balance on the loan; otherwise it is offset from the distribution to
the Participant, as required by ERISA, and is taxable to the Participant.

Payment of Benefits

Withdrawals

Participants may withdraw supplemental after-tax contributions and related
investment earnings prior to the age of 59 1/2. Participants are limited to
2 withdrawals in a calendar year. After the age of 59 1/2, all vested
accounts may be withdrawn at any time upon request. Participants are able
to withdraw after-tax, pre-tax and rollover contributions for financial
hardship withdrawals. Participants' pre-tax contributions will be suspended
for 6 months following a financial hardship withdrawal. Any amounts
withdrawn will be made in cash.

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

Terminations

A Participant whose employment has terminated with a vested account balance
that does not exceed $5,000 receives a lump sum distribution of their
vested balance. If the vested account balance exceeds $5,000 the terminated
Participant may elect to either remain in the Plan or receive a lump sum.

Forfeitures

A Participant whose employment terminates forfeits the amount of his or her
unvested account balance. The Plan administrator allocates forfeitures in
the Plan year in which the forfeiture occurs and reduces the Plan's
ordinary and necessary administrative expenses that would ordinarily be
paid by the Company. During the year ended December 31, 2003, forfeitures
of $108,110 were recorded by the Plan.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared on an accrual
basis.

Use of Estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires
Company management to make estimates and assumptions that affect the
reported amounts in the financial statements and the accompanying notes.
Actual results could differ from those estimates.

Valuation of Investments and Income Recognition

The Plan's investments are stated at fair value. The XL Capital Ltd Class A
Ordinary Shares are valued at fair value at year-end as determined by
quoted market prices. Shares of registered investment companies (mutual
funds) are valued at net asset value ("NAV"). Shares of collective trust
funds are valued at NAV as determined by annual audited financial
statements of the trusts. Participants' outstanding loans are recorded at
their unpaid principal amount.

The net appreciation/depreciation in the fair value of investments consists
of the net realized gains and losses on the disposal of investments and the
unrealized appreciation/depreciation of the market value for the
investments remaining in the Plan. Realized gains and losses are calculated
using the historical cost of the asset. Historical cost is the original
cost of an asset.

Purchases and sales of securities are recorded on a trade-date basis.
Investment earnings are allocated upon receipt to each Participant's
account. Dividends are recognized and accrued on the ex-dividend date.

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

Contributions

Participant and Employer contributions are recorded in the period in which
the payroll deductions are made from Plan Participants. Any discretionary
matching contributions are recorded by the Plan in the year in which the
discretionary match is declared. (See Note 9, Subsequent Events.)

Payment of Benefits

Benefit payments comprise termination or hardship distributions, in-service
distributions and retirement benefit payments. Benefits are recorded when
paid.

Fees and Expenses

All administrative fees and expenses are paid by the Company except for
investment, management and fund level operating expenses, which are paid by
the Plan.

3. RISK AND UNCERTAINTIES

The Plan provides for various investment options, including the option to
invest in any combination of equity securities, fixed income securities,
mutual funds and other investment securities. Investment securities are
exposed to various risks, such as interest rate, market and credit. Due to
the level of risk associated with certain investment securities and the
level of uncertainty related to changes in the value of investment
securities, it is possible that changes in risks in the near term would
materially affect Participants' account balances and the amounts reported
in the Statement of Net Assets Available for Plan Benefits and the
Statement of Changes in Net Assets Available for Plan Benefits.

During 2004, certain operational defects in plan administration were noted
by the Company. The Plan has since been amended to correct the operational
defects and the Company is in the process of resolving the matter within
the guidelines of the IRC's voluntary correction procedures. It is
anticipated that retroactive adjustments will be made to certain
participant accounts and that such adjustments will not be significant.

4. INVESTMENTS

The following investments represent 5 percent or more of the fair value of
the Plan's net assets as of December 31:

2003 2002
----------- -----------

Invesco Stable Value Fund.................. $14,562,773 $11,079,221
Invesco Dynamics Fund...................... - 4,064,655
Invesco Balanced Fund...................... - 3,752,290
IRT 500 Index Fund......................... 15,333,165 4,127,842
AIM Small Cap Growth Fund.................. 5,421,189 2,414,722
AIM Basic Value Fund....................... 11,231,827 4,629,005
XL Capital Ltd Class A Ordinary Shares..... 5,187,602 5,079,715
American Balanced ......................... 10,583,699 -

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

American Growth Fund of America............ 4,442,952 -
Dreyfus Appreciation....................... 5,572,975 -
Pimco Total Return ........................ 6,090,251 -
One Group Mid-Cap Growth................... 6,976,687 -

During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value in the aggregate by $14,667,142 as follows:

Mutual Funds ............................. $11,038,342
Collective Trusts......................... 3,471,539
Employer Stock............................ 157,261
-----------
$14,667,142
===========

5. RELATED-PARTY TRANSACTIONS

Certain Plan investments are collective trusts managed by INVESCO Funds
Group, Inc., a subsidiary of AMVESCAP. AMVESCAP is the Trustee as defined
by the Plan and therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Company for the investment management
services related to the Invesco Collective Trusts amounted to $5,865 for
the year ended December 31, 2003. XL Capital Ltd Class A Ordinary Shares
are considered a party-in-interest.

6. PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, Participants would become 100% vested in their Employer
contributions.

7. TAX STATUS

The Internal Revenue Service ("IRS") has determined and informed the
Company by a letter dated August 30, 2001, that the prototype plan document
used by the Plan and related trust are designed in accordance with
applicable sections of the IRC and therefore is exempt from taxation. The
Plan has been amended since receiving this determination letter. However,
Company management believes that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC
and is tax exempt.

8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per
the financial statements at December 31, 2003 to Form 5500.

Net assets available for benefits per the
financial statements............................ $93,821,004
Less: Amounts allocated to withdrawing
participants....................... 545,565
-----------
Net assets available for benefits per the
Form 5500....................................... $93,275,439
===========

X.L. America, Inc. Employee Savings Plan
Notes to Financial Statements
As of and for the year ended December 31, 2003

The following is a reconciliation of benefits paid to Participants per the
financial statements for the year ended December 31, 2003, to Form 5500.

Benefits paid to Participants per the financial statements... $6,095,080
Add: Amounts allocated to withdrawing Participants
at December 31, 2003.......................... 545,565
----------
Benefits paid to Participants per Form 5500.................. $6,640,645
==========

Amounts allocated to withdrawing Participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31, 2003, but not yet paid as of that date.

9. SUBSEQUENT EVENTS

On January 29, 2004, the Company's Board of Directors approved a
discretionary Company match equal to 100% of the first 3% of the annual
compensation to match contributions made by the Participants as of December
31, 2003, resulting in additional Employer contributions to the Plan of
$3,704,430 paid in 2004.

X.L. America, Inc. Employee Savings Plan
Schedule H, Line 4(i)
Schedule of Assets (Held at End of Year)
As of December 31, 2003

Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Par
Lessor or Similar Party or Maturity Value Cost Fair Value
--------------------------------------------- ------------------------------ ---------- -----------

Lord Abbett Small Value Mutual Fund $1,408,859 $1,648,591

Janus Mid Cap Value Investors Share Mutual Fund 933,451 1,066,211

America Balanced Mutual Fund 8,840,071 10,583,698

American European Growth Mutual Fund 2,758,189 3,717,555

American Growth Fund of America Mutual Fund 3,583,640 4,442,952

IRT 500 Index Trust Collective Trust 13,066,684 15,333,166

* Invesco Stable Value Collective Trust 14,560,858 14,562,773

Dreyfus Appreciation Mutual Fund 4,680,433 5,572,975

AIM Basic Value Mutual Fund 9,590,089 11,231,827

* XL Capital Ltd Class "A" Ordinary Shares Ordinary Shares 3,812,628 4,751,420

Pimco Total return - Class Admin Mutual Fund 6,143,653 6,090,251

One Group Mid Cap Growth Mutual Fund 5,534,284 6,976,687

AIM Small Cap Growth Mutual Fund 4,826,607 5,421,189

Cash Money Market Fund 436,182

* Participant Loans Participant Loan Fund 1,445,783
Maturing in or during
2003 - 2017
5.00% - 10.5%
-----------------
Total Assets Held for Investment $93,281,260
=================

______________

* Party-in-interest

X.L. America, Inc. Employee Savings Plan
December 31, 2003

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan Administrator has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.

X.L. America, Inc. EMPLOYEE SAVINGS PLAN
(Name of Plan)

X.L. America, Inc., Plan Administrator

DATE: June 28, 2004 By: /s/ Celia Brown
-------------------------------------
Celia Brown
Executive Vice President
(Name and title of signing official)

XL CAPITAL LTD
Annual Report on Form 11-K
For the Fiscal Year Ended
December 31, 2003

EXHIBIT INDEX

Exhibit No. Description
----------- -----------

23.1 Consent of Independent Registered
Public Accounting Firm