A.M. Best Affirms Ratings of XL Capital.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--June 2, 2003 A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) for the core operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of XL Capital Ltd (NYSE NYSE See: New York Stock Exchange : XL) (Bermuda). Concurrently, A.M. Best has affirmed the existing debt ratings on "a+" senior debt, "a" subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and "a-" preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . The outlook for all the ratings is stable. These ratings reflect XL Capital's strong and diverse earnings base, solid capitalization and well-recognized position as a leading provider of specialized insurance and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. coverage. These strengths are derived from the group's focused operating strategy, disciplined underwriting approach, strong risk management capabilities and experienced management team. Furthermore, XL Capital maintains a distinct competitive advantage as a Bermuda-domiciled organization given its favorable regulatory environment. A.M. Best expects XL Capital will continue to judiciously manage its capital base while maintaining financial leverage--debt plus preferred securities to total adjusted capital--in the low 20% range. Fixed charge coverage is expected to be restored to the mid to upper single digits. Partially offsetting these strengths are the risks associated with catastrophe and specialized books, particularly those imposed by financial products, which could cause earnings variability earnings variability Fluctuations in a corporation's net income or earnings per share during a given period. Past earnings variability is generally considered undesirable because it makes investors less certain of future earnings per share and dividends. . The group continues to experience adverse loss development in U.S. casualty lines for accident years 1997 to 2000 stemming from its acquisition of NAC See network access control. Re, and XL Capital maintains a significant level of goodwill associated with its acquisitions. These concerns are mitigated, however, by its solid level of tangible capitalization, favorable market rates and management's demonstrated ability to optimally manage risk. For a complete listing of the financial strength and debt ratings of XL Capital Ltd, please visit http://www.ambest.com/press/060203xlcapital.pdf. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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