XL Capital Ltd. is a global company that offers insurance and reinsurance services primarily to industrial, commercial and professional service firms.

The original Complaint alleges that XL Capital and some of its executives violated Sections 10(b)and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Specifically, the Complaint alleges that Defendants failed to disclose and indicate (1) that XL Capital maintained inadequate loss reserves for its NAC Re subsidiary; (2) that the Company did not, contrary to its express representations, establish adequate loss reserves to cover claims by NAC Re policy holders; (3) that reserve increases for NAC Re announced during the Class Period were materially insufficient; and (4) as a consequence of the understatement of loss reserves, XL Capital's earnings and assets were materially overstated at all relevant times.

On October 17, 2003, XL Capital announced that third quarter results would be lower than anticipated due to higher than expected losses in its North American reinsurance operations primarily from new casualty claims for the 1997 to 2000 underwriting years. As a result of these losses, the Company expected its third quarter 2003 net income to be reduced by approximately $184 million pre-tax or $160 million after-tax, or approximately $1.16 per ordinary share, compared to analysts' current expectations. On news of this, shares of XL Capital plunged 7.5% or $6.03 per share to close at $73.37 per share on October 17, 2003.

As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2007, on June 21, 2004, a consolidated and amended class action Complaint (the “Amended Complaint”) was served on the Company and certain of its present and former directors and officers were named as Defendants in a putative class action (Malin et al. v. XL Capital Ltd et al.) filed in United States District Court, District of Connecticut (the “Malin Action”). The Malin Action purports to be on behalf of purchasers of the Company’s common stock between November 1, 2001 and October 16, 2003, and alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (the “Securities Laws”). The Amended Complaint alleged that the Defendants violated the Securities Laws by, among other things, failing to disclose in various public and shareholder and investor reports and other communications the alleged inadequacy of the Company’s loss reserves for its NAC Re subsidiary (now known as XL Reinsurance America, Inc.) and that, as a consequence, the Company’s earnings and assets were materially overstated.

On August 26, 2005, the Court dismissed the Amended Complaint owing to its failure adequately to allege “loss causation,” but provided leave for the Plaintiffs to file a further amended Complaint. The plaintiffs thereafter filed a second amended Complaint (the “Second Amended Complaint”), which is similar to the Amended Complaint in its substantive allegations. On December 31, 2005, the Defendants filed a motion to dismiss the Second Amended Complaint. The Plaintiffs opposed the motion. In addition, the Plaintiffs filed a motion to strike certain documents and exhibits that the XL Defendants had proffered in support of the motion to dismiss. By Order dated December 15, 2006, the Judge granted in part and denied in part Plaintiffs’ motion to strike and allowed limited discovery through March 2, 2007. The Judge denied Defendants’ motion to dismiss without prejudice to its renewal at the conclusion of such discovery. On March 23, 2007, the Company filed a renewed motion to dismiss the Amended Complaint.

On July 26, 2007, the Court issued an Order granting Defendants' Motion to Dismiss. On August 30, the Plaintiffs filed a Notice of Appeal from the Order and Judgment in favor of the Defendants’ motion to dismiss. The Court of Appeals affirmed the District Court's ruling on March 23, 2009.