8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 26, 2006

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XL CAPITAL LTD

(Exact name of registrant as specified in its charter)

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Cayman Islands	1-10809	98-0191089
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

XL House, One Bermudiana Road, Hamilton, Bermuda HM 11

(Address of principal executive offices)

Registrant’s telephone number, including area code: (441) 292 8515

Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Credit Facilities

On May 26, 2006, XL Capital Ltd, a Cayman Islands exempted limited company (the “Company”), together with its wholly-owned subsidiaries X.L. America, Inc., a Delaware corporation (“XLA”), XL Insurance (Bermuda) Ltd, a Bermuda exempted company (“XLI”), and XL Re Ltd, a Bermuda exempted company (“XLRe” and, together with the Company, XLA and XLI, the “Account Parties”), entered into Amendment No. 2 (the “Amendment”) to the Master Standby Letter of Credit and Reimbursement Agreement, dated as of September 30, 2005, as amended (the “Agreement”), between the Account Parties and National Australia Bank Limited, New York Branch, as the Bank.

The Agreement provides for letters of credit in aggregate principal amount not exceeding $150,000,000 at any one time outstanding. The Amendment conforms the terms of the Agreement to the terms of that certain Credit Agreement, dated as of June 22, 2005, among the Account Parties and JPMorgan Chase Bank, N.A., as administrative agent, as amended by that certain Amendment No. 1 dated as of May 5, 2006. The foregoing description of the Amendment is qualified in its entirety by reference to the Amendment, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

The Bank party to the Agreement and/or its affiliates have, from time to time, performed various investment or commercial banking and financial advisory services for the Account Parties in the ordinary course of business.

Item 9.01. Financial Statements and Exhibits.

(d)Exhibits. The following exhibits are filed herewith:

Exhibit No.	Description
10.1	Amendment No. 2, dated as of May 26, 2006, to the Master Standby Letter of Credit and Reimbursement Agreement, dated as of September 30, 2005, between XL Capital Ltd, X.L. America, Inc., XL Insurance (Bermuda) Ltd and XL Re Ltd, as Account Parties and Guarantors, and National Australia Bank Limited, New York Branch, as the Bank.

SIGNATURES

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

Date:May 30, 2006

XL CAPITAL LTD

(Registrant)

By: /s/ Kirstin Gould

        Name:  Kirstin Gould

        Title:    Senior Vice President,

                     Chief  Corporate Legal Officer &

                     Secretary

EX-10.1

THIS SECOND AMENDMENT AGREEMENT, dated as of May 26, 2006 (this “Second Amendment”) is by and between, National Australia Bank Limited, New York Branch (the ”Bank”), XL Capital Ltd, a company incorporated under the laws of the Cayman Islands, X.L. America, Inc., a Delaware corporation, XL Insurance (Bermuda) Ltd, a Bermuda limited company, and XL Re Ltd, a Bermuda limited liability company (collectively, the “Account Parties” and each an “ Account Party”).

W I T N E S S E T H ;

WHEREAS, the Account Parties each have requested that the Bank amend that certain Master Standby Letter of Credit and Reimbursement Agreement dated as of September 30, 2005 (as amended by that certain amendment agreement dated as of December 30, 2005, the “Agreement”), effective as of the date hereof (the “Amendment Effective Date”) in order to conform the terms of the Agreement to the terms of the Syndicated Credit Agreement as amended by that certain Amendment No. 1 dated as of May 5, 2006; and

WHEREAS, the Bank is willing, on the terms and conditions set forth below, to amend the Agreement as set forth below;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Capitalized terms used herein and not defined herein shall have the meanings specified in the Agreement.

SECTION 2. Amendments to the Agreement.Section 5 of the Agreement is hereby amended by adding the phrase “, as amended by that certain Amendment No. 1 dated as of May 5, 2006” following the words “that certain Credit Agreement dated as of June 22, 2005 among the Account Parties hereunder, as account parties and guarantors thereunder, various lenders parties thereto and JPMorgan Chase Bank, N.A., as administrative agent”.

SECTION 3. Conditions to Effectiveness. This Second Amendment shall become effective as of the Amendment Effective Date upon the due execution and delivery thereof by the parties hereto.

SECTION 4.Representations and Warranties. In order to induce the Bank to enter into this Second Amendment, each Account Party hereby represents and warrants to the Bank on behalf of itself: (i) the representations and warranties contained in the Agreement are true and correct on and as of the Amendment Effective Date as though made on and as of such date, except for changes which have occurred and which were not prohibited by the terms of the Agreement; (ii) no Event of Default or other event or condition which, with notice or the lapse of time or both, would give rise to an Event of Default has occurred and is continuing, or would result from the execution,

delivery and performance by such Account Party of this Second Amendment or the Agreement (as amended by this Second Amendment); (iii) that such Account Party has full power, right and legal authority to execute, deliver and perform its obligations under this Second Amendment; and (iv) that each of this Second Amendment and the Agreement as amended hereby constitutes a legal, valid and binding obligation of such Account Party enforceable against such Account Party in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium, or similar laws affecting the enforcement of rights of creditors generally, and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

SECTION 5. Reference to and Effect on the Documents. Each reference in the Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference to the Agreement in documents related to the Agreement, shall mean and be a reference to the Agreement as amended hereby. Except as specifically amended hereby, the Agreement and all such related documents, and all other documents, agreements, instruments or writings entered into in connection therewith, shall remain in full force and effect and are hereby ratified, confirmed and acknowledged by each Account Party, severally on behalf of itself.

SECTION 6. Governing Law. This Second Amendment and the rights and obligations of the parties hereunder shall be governed by and construed and interpreted in accordance with the substantive laws of the State of New York, without regard to its conflict of laws principles.

SECTION 7. Counterparts. This Second Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Second Amendment by signing any such counterpart.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

NATIONAL AUSTRALIA BANK LIMITED

(ABN 12 004 044 937), New York Branch

By:  /s/ D W Mills   

        Name:  D W Mills  

        Title:    Director  

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XL CAPITAL LTD By:  /s/ Roderick Gray  Name:  Roderick Gray  Title:    Vice President	XL INSURANCE (BERMUDA) LTD By:  /s/ Don Baker  Name:  Don Baker  Title:  Executive Vice President
X.L. AMERICA, INC. By:  /s/ Gabriel Carino  Name:  Gabriel Carino  Title:  Senior Vice President and Treasurer (XLGS)	XL RE LTD By:  /s/ Gregory Hendrick  Name: Gregory Hendrick  Title:  President, CEO and COO

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