Exhibit 10.6 


XL Capital Ltd 2009 Cash Long-Term Program


Section 1. Purposes of the
Plan 


                    The
purpose of the 2009 Cash Long-Term Program is to advance the interests of XL
Capital Ltd and its shareholders by creating a transitional long-term incentive
compensation vehicle for calendar year 2009 that is designed to be aligned with
the delivery of underwriting results. The Plan is intended to foster a culture
of performance, teamwork, accountability and retention for individuals who are
selected to participate in the Plan in accordance with these guidelines. The
Plan is designed to pay out in cash in annual installments over three years, as
set forth below. There are no deferral provisions with respect to the Award
Amounts. 


Section 2. Definitions 


                    “Award
Amount” means the amount of a Participant’s award under the Plan that is
determined based on the Participant’s Face Value Award and the 2009 Combined
Ratio, as set forth in Section 5 below, subject to the other Plan terms set
forth herein. 


                    “Board”
means the Board of Directors of the Company, or in the case of determinations
hereunder pertaining to the Chief Executive Officer of the Company, the
independent directors of the Board. 


                    “Cause”
shall mean (i) Participant’s conviction of a felony involving moral turpitude,
dishonesty or laws to which the Company or its Subsidiaries are subject in
connection with the conduct of its or their business; (ii) Participant’s
willful misconduct that is materially injurious to the financial condition of
the Company or a Subsidiary; (iii) the Participant’s willful refusal to obey
any lawful policy or requirement duly adopted by the Company or a Subsidiary,
(iv) Participant’s willful violation of the policies or Code of Conduct of the
Company or a Subsidiary, (v) Participant’s willful violation of the
underwriting guidelines applicable to the Participant or the underwriting
authority of the Participant, or (vi) as defined in an employment agreement
between the Participant, the Company and/or Subsidiary. 


                    “Code”
means the United States Internal Revenue Code of 1986, as amended. 


                    “2009
Combined Ratio” means the combined ratio of the Company and its Subsidiaries
for the 2009 calendar year as reported by the Company, with the following
adjustments determined as of the end of calendar year 2009: (i) net prior year
development will be limited to $150 million in aggregate impact (favorable or
adverse); and (ii) the impact of the restructuring charges contemplated in the
Company’s 2009 planning process will be excluded. 


                    “Committee”
means the Compensation Committee of the Board, or any successor Committee
approved by the Board of Directors. 


                    “Company”
means XL Capital Ltd. 





                    “Disability”
means permanent and total disability as determined under the Company’s
long-term disability plan covering the Participant. 


                    “Face
Value Award” is the amount of an award granted under this Plan (expressed in
US$) that the Participant would earn for a 2009 Combined Ratio of 99.5%. 


                    “Maximum
Award” is the maximum Award Amount for any Participant, which shall be 175% of
the Participant’s Face Value Award. 


                    “Minimum
Award” is the minimum Award Amount for any Participant, which shall be 75% of
the Participant’s Face Value Award; provided, however, that payments under any
Award Amount shall be made only to the extent vested in accordance with the
provisions of the Plan.  


                    “Named
Executive” shall mean the Chief Executive Officer of the Company and any senior
executive of the Company whose compensation was disclosed in the last preceding
proxy statement pursuant to the federal securities laws and regulations of the
United States. 


                    “Participant”
shall be as defined in Section 3. 


                    “Plan”
means the XL Capital Ltd 2009 Cash Long-term Program (2009 LTP). 


                    “Subsidiary”
means any corporation at least fifty percent (50%) percent of the outstanding
voting stock of which is owned by the Company. 


Section 3. Eligibility 


                    Employees
of the Company and its Subsidiaries are eligible to participate in the Plan.
Except as otherwise set forth in Section 4.F. below, the Committee (or the
Board with respect to a Named Executive) shall have the authority to select
which of such employees shall participate in the Plan, and each of those so
selected shall become a Participant. 


Section 4. Administration 


                    A. Committee. The Plan shall be
administered by the Committee. Subject to Section 4.F. below, the Committee
shall have full discretionary power, consistent with the Compensation Committee
Charter, to:  


	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 interpret
 the Plan; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 determine
 those employees of the Company and its Subsidiaries who are eligible to
 participate in the Plan (except with respect to Named Executives, in which
 case the Board shall make such determination); 

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 approve the
 determination of the 2009 Combined Ratio and the adjustments thereto (except
 with respect to Named Executives, in which case the Board shall have such
 approval authority); 

 


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 (iv)

 	
 establish
 the Face Value Award for each Participant (except with respect to Named
 Executives, in which case the Board shall make such determination); and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 adopt such
 rules, regulations, and guidelines for administering the Plan as the
 Committee may deem necessary or proper. 

 



                    B. Adjustment to Payments. The
Committee (or the Board in the case of a Named Executive) will have the
discretion to adjust the payout result in the event of a catastrophic event (or
a series of such events) above the normal budgeted catastrophe load, based on
the quality of the Company’s underwriting results compared to industry results.
The Company retains the right to withhold any payment amounts determined
hereunder from any Participant who materially violates the policies or Code of
Conduct of the Company or its Subsidiaries or who materially violates the
underwriting guidelines applicable to the Participant or the underwriting
authority of the Participant. 


                    C. Third-party Advisors. The
Committee may employ attorneys, consultants, accountants, and other persons.
The Board, Committee, the Company, and its officers shall be entitled to rely
upon the advice or opinion of such persons. 


                    D. Binding Effect of Committee
Actions. All actions taken and all interpretations and determinations made
by the Committee, the Board or the Chief Executive Officer of the Company (the
“CEO”) shall be final and binding upon the Participants, the Company, and all
other interested persons. No member of the Committee or the Board or the CEO
shall be personally liable for any action, determination, or interpretation
made in good faith with respect to the Plan. All members of the Committee and
the Board and the CEO shall be protected and indemnified by the Company, to the
fullest extent permitted by applicable law and the Company’s bylaws, in respect
of any such action, determination, or interpretation of the Plan. 


                    E. Foreign Jurisdictions. The
Committee shall have the discretion to modify or amend the Plan, or adopt
additional terms and or conditions, as may be deemed necessary or advisable in
order to comply with the local laws and regulations of any jurisdiction. 


                    F. CEO Authority For Non-Executives.
Notwithstanding any provision of this Plan to the contrary, solely in the case
of Participants who are not executive officers of the Company (within the
meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended),
(i) the CEO shall have the authority to determine which of such nonexecutive
officer employees will be Participants in the Plan, (ii) the Committee shall
establish the maximum aggregate amount of the Face Value Awards for all such
Participants, and (iii) the CEO will have the authority to establish,
consistent with the terms hereof, the Face Value Awards for each such
Participant. 


Section 5. Determination of
Awards 


                    A. Face Value Award Determinations.
Except as otherwise set forth in Section 4.F. above, the Committee (or in the
case of any Named Executive, the Board) shall establish the Face Value Award
level for each Participant and, in connection therewith, the recommendations of
the CEO shall be obtained and taken into account. 


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                    B. Award Amount Payment. The
Award Amount for each Participant shall be the Participant’s Face Value Award,
adjusted upward or downward, as set forth in Appendix A hereto, based on the
2009 Combined Ratio. The Award Amount shall not be greater than the Maximum
Award nor less than the Minimum Award. So long as the Participant remains
continuously employed by the Company or a Subsidiary through the applicable
payment date and has not given notice of termination of employment prior to the
applicable payment date, (i) one third of the resulting Award Amount will be
paid to the Participant on or after January 1, 2010 and on or prior to March
15, 2010, and (ii) an additional one third of such Award Amount shall be paid
to the Participant on or after January 1, 2011 and on or prior to March 15,
2011. The remaining one third of the Award Amount shall be subject to further
adjustment as described in Section 5.C below, and the resulting remaining
adjusted amount, if any, shall be paid to the Participant on or after January
1, 2012 and on or prior to March 15, 2012, so long as the Participant remains
continuously employed by the Company or a Subsidiary through the payment date
and has not given notice of termination of employment prior to the payment
date. For the avoidance of doubt, the third installment of the Award Amount, as
adjusted and determined pursuant to Section 5.C below, cannot be less than zero
(i.e., prior installment payments of the Award Amount will not be subject to
claw-back) and it is subject to the cumulative maximum and minimum set forth in
Appendix A. 


                    C. Year Three Award Amount Payment.
After the end of calendar year 2011 the adjusted Award Amount payable during
calendar year 2012 shall be determined by recalculating the 2009 Combined Ratio
to take into account subsequent reserve development (based on the methodology
below) through calendar years 2010 and 2011, and the third Award Amount
installment will be scaled up or down to reflect the revised calculation,
applied on a cumulative basis. The 2009 Combined Ratio, as previously computed
as of December 31, 2009, will be adjusted for this purpose as follows: (i) 50%
of the 2009 accident year net prior year development and 50% of the 2010
accident year net prior year development (as reported on a cumulative basis
through year end 2011) will be determined; (ii) that reserve development will
be divided by the 2009 calendar year net earned premium and the resulting ratio
will then be added or subtracted to/from the 2009 Combined Ratio to derive an
adjusted 2009 Combined Ratio; and (iii) the adjusted 2009 Combined Ratio will
be measured against the performance grid attached as Appendix A hereto, and the
amount payable in 2012 will be adjusted to reflect the aggregate revised
payout. 


                    D. Cash Payments and No Deferral.
All payments under this Plan will be made in cash, and there will be no right
of further deferral with respect to any payments under the Plan. 


Section 6. Termination of
Employment 


                    A. Payment Upon Death or Disability.
In the event of a Participant’s termination of employment due to his or her
death or Disability, the Participant (or his/her estate) shall receive payment,
if any, with respect an award as approved by the Committee (or the Board with
respect to Named Executives), and any such payment shall be made within sixty
(60) days after the Participant’s termination of employment. 


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                    B. Payment Upon Retirement. In
the event of a Participant’s termination of employment due to retirement, the
Committee reserves the right to make any or no payment to the Participant in
light of all relevant facts and circumstances. The Participant shall have no
right to a payment. In the event a payment is made, such payment shall be made
within sixty (60) days following the Participant’s termination of employment
due to retirement. 


                    C. Termination by the Company
Without Cause. In the event the Participant’s employment is terminated by
the Company not for Cause (including, in the case of a Participant who has an
employment agreement with the Company, a termination by the Participant that is
deemed to be a termination by the Company without Cause under the provisions of
Section 8(d)(iv) of the employment agreement or a termination by the
Participant for Good Reason under Section 8(d)(iii) of the employment
agreement), the Participant will receive an amount as follows: (i) if such
termination of employment occurs during calendar year 2009, the amount paid to
the Participant will be the lesser of the Face Value Award or the Award Amount
computed based on the 2009 Combined Ratio, and such amount shall be paid to the
Participant on or after January 1, 2010 and on or prior to March 15, 2010; (ii)
if such termination of employment occurs during calendar year 2010, the amount
paid to the Participant will be the lesser of the Face Value Award or the Award
Amount computed based on the 2009 Combined Ratio, reduced by any amount
previously paid to the Participant in respect of the award, and such amount
shall be paid to the Participant on or after January 1, 2011 and on or prior to
March 15, 2011; and (iii) if such termination of employment occurs after
calendar year 2010 and before the payment date for the third installment of the
Award Amount, the amount paid to the Participant will be the lesser of the Face
Value Award or the Award Amount computed based on the 2009 Combined Ratio (as
adjusted as provided in Section 5.C. above), reduced by any amount previously
paid to the Participant in respect of the award, and such amount, if any, shall
be paid to the Participant on or after January 1, 2012 and on or prior to March
15, 2012. 


                    D. Voluntary Termination of
Employment by Participant. In the event of a Participant’s voluntary
termination of employment (not including, in the case of a Participant who has
an employment agreement with the Company, a termination by the Participant that
is deemed to be a termination by the Company without Cause under the provisions
of Section 8(d)(iv) of the employment agreement or a termination by the
Participant for Good Reason under Section 8(d)(iii) of the employment
agreement) or the Participant’s giving of notice of termination of employment,
the Participant shall not be entitled to any further payment under the Plan and
shall have no rights or interests in the Plan. 


                    E. Termination by the Company for
Cause. In the event the Participant’s employment is terminated by the
Company for Cause or notice of such termination has been given to the
Participant, the Participant shall not be entitled to any further payment under
the Plan and shall have no rights or interests in the Plan. 


Section 7. General Provisions 


                    A. No Right to Employment or
Participation. No Participant or other person shall have any claim or right
to be retained in the employment of the Company or a Subsidiary by reason of
the Plan or to any award made as part of the Plan nor will the Plan be
construed as having created an employment contract for any term. 


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                    B. Not Compensation Under Other
Plans. An award made under this Plan shall not be considered “compensation”
under any qualified or non-qualified, registered or non-registered employee
benefit plan, program or arrangement of the Company and shall not have any
effect on the level of benefits provided to or received by a Participant or
his/her estate or designated beneficiary, as part of any employee benefit plan
of the Company or its Subsidiaries. 


                    C. Plan Expenses. The expenses
of the Plan and its administration shall be borne by the Company. 


                    D. Plan Not Funded. The Plan
shall be unfunded and the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the payment of any award made under the Plan. 


                    E. Other Long-Term Incentive
Arrangements. This Plan is not intended to be the sole and exclusive long
term incentive program of the Company in which Participants may be entitled to
participate in the ordinary course. 


                    F. Reports. The appropriate
officers of the Company shall cause to be filed any reports, returns, or other
information regarding the Plan, as may be required by any applicable statute,
rule, or regulation. 


                    G. Withholding. The Company may
deduct from any payment to a Participant under this Plan any Federal, state, or
local withholding or other tax or charge which the Company is then required to
deduct under applicable law with respect thereto. 


                    H. No Transfers. No award or
rights under this Plan may be transferred or assigned by a Participant other
than by will or by the laws of descent and distribution. 


                    I. Governing Law. The validity,
construction, and effect of the Plan, and any actions relating to the Plan,
shall be determined in accordance with the laws of the state of New York and
applicable federal law, without regard to the conflict of laws provisions of
any state or country. 


                    J. Section 409A. It is intended
that the Plan will comply with Section 409A of the Code and any regulations and
guidelines issued thereunder, and the Plan shall be interpreted on a basis
consistent with such intent. The Plan may be amended in any respect deemed necessary
(including retroactively) by the Board in order to preserve compliance with
Section 409A of the Code. It is intended that amounts payable under this Plan
will not be considered to be deferred compensation for purposes of Section 409A
of the Code by virtue of Treas. Reg. Section 1.409A-1(b)(4). However, if any
amount payable hereunder is considered to be deferred compensation for such
purposes, notwithstanding any provision to the contrary in this Plan, if a
Participant is deemed on the date of his or her “separation from service”
(within the meaning of Treas. Reg. Section 1.409A-1(h)) to be a “specified
employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with
regard to any payment that is required to be delayed pursuant to Section
409A(a)(2)(B) of the Code (after taking into account the applicable provisions
of Treas. Reg. Section 1.409A-1(b)(4)), the portion, if any, of such payment so
required to be delayed shall not be made prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of his
“separation from service” or (ii) the date of his or her death (the “Delay 


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Period”). Upon
the expiration of the Delay Period, all payments delayed pursuant to this
Section 7.J shall be paid to the Participant in a lump sum. No action or
failure to act, pursuant to this Section 7.J shall subject the Company to any
claim, liability, or expense, and the Company shall not have any obligation to
indemnify or otherwise protect any Participant from the obligation to pay any
tax, interest or penalty pursuant to Section 409A of the Code. 


Section 8. Amendment /
Termination of the Plan 


                    The
Board may, from time to time, amend the Plan in any respect, or may discontinue
or terminate the Plan at any time; provided, however, that no amendment,
discontinuance or termination of the Plan shall, without the consent of the
affected Participant, have a material adverse effect on any Plan award which
has been approved by the Committee (or the Board with respect to Named
Executives) or the CEO with respect to nonexecutive officer Participants.  


APPENDIX A


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2009 Combined Ratio*:

 	
  

 	
 Payout Percentage:

 	
  

 
	

 


 	
  

 	

 


 	
  

 
	
 93 (or lower)

 	
  

 	
 175.0

 	
 %

 	
  

 
	
 94

 	
  

 	
 162.5

 	
 %

 	
  

 
	
 95

 	
  

 	
 150.0

 	
 %

 	
  

 
	
 96

 	
  

 	
 137.5

 	
 %

 	
  

 
	
 97

 	
  

 	
 125.0

 	
 %

 	
  

 
	
 98

 	
  

 	
 115.0

 	
 %

 	
  

 
	
 99

 	
  

 	
 105.0

 	
 %

 	
  

 
	
 99.5

 	
  

 	
 100.0

 	
 %

 	
  

 
	
 100

 	
  

 	
 95.0

 	
 %

 	
  

 
	
 101

 	
  

 	
 85.0

 	
 %

 	
  

 
	
 102 (or higher)

 	
  

 	
 75.0

 	
 %

 	
  

 



* In the case
of a 2009 Combined Ratio which includes a fraction, the associated payout
percentage will be interpolated from this table, rounded to the nearest tenth
of one percent (0.1%). 


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