Fitch Downgrades XL Capital Ltd. Debt Ratings to 'A'; Rating Outlook Stable.Business Editors CHICAGO--(BUSINESS WIRE)--Oct. 20, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has downgraded XL Capital Ltd.'s (XL) long-term issuer and senior debt rating to 'A' from 'A+', and the preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. rating to 'A-' from 'A'. The 'AA' insurer financial strength rating (IFS) of XL's property/casualty insurance subsidiaries, led by XL Insurance Ltd and XL Re Ltd are affirmed. The Rating Outlook is Stable. All ratings are listed below. XL recently announced that it would report approximately a $160 million after-tax reduction in third quarter 2003 earnings due to adverse reserve development in its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. casualty 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. operations for the 1997-2000 underwriting period. XL is conducting a complete claims review and audit of this business, which Fitch believes will likely lead to additional charges in the fourth quarter of 2003. Fitch believes that the earnings impact of these actions will move fixed charge coverage to levels below Fitch's current guidelines for XL's debt ratings. Earnings and coverage were below this threshold in 2001 and 2002 as well. XL's financial leverage, with a debt-to-total capital ratio of 20% currently is also somewhat high for the previous debt ratings. The ratings continue to reflect XL's position within the global insurance and reinsurance markets, history of favorable underwriting and earnings performance, strong operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , and adequate capital position at the parent and subsidiary level. Besides this adverse reserve development experience, XL is experiencing favorable results on current business as demonstrated by reported net income of $588 million and a combined ratio of 89.2% in the first half of 2003. The company is likely to benefit from continued favorable property/casualty market conditions going forward. XL is a Bermuda-based holding company with subsidiaries providing insurance, reinsurance and specialty financial products and services on a worldwide basis. The company reported consolidated GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). assets of $39.2 billion and shareholders equity of $7.6 billion at June 30, 2003. Entity/Issue/Type Action Rating Outlook XL Capital Ltd -- Senior debt Downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. 'A'/Stable; -- Long-Term issuer Downgrade 'A'/Stable; -- Preferred stock Downgrade 'A-'/Stable. XL Insurance (Bermuda) Ltd -- IFS Affirm 'AA'/Stable. XL Re Ltd -- IFS Affirm 'AA'/Stable. XL Insurance Company Limited -- IFS Affirm 'AA'/Stable. XL Insurance Switzerland -- IFS Affirm 'AA'/Stable. XL Re Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. Ltd -- IFS Affirm 'AA'/Stable. XL Europe Limited -- IFS Affirm 'AA'/Stable. XL America Pool XL Reinsurance America Inc. -- IFS Affirm 'AA'/Stable. XL Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Inc. -- IFS Affirm 'AA'/Stable. XL Specialty Insurance Company -- IFS Affirm 'AA'/Stable. Indian Harbor Insurance Company -- IFS Affirm 'AA'/Stable. Greenwich Insurance Co. -- IFS Affirm 'AA'/Stable. XL Insurance Company Limited -- IFS Affirm 'AA'/Stable. XL Select Insurance Company -- IFS Affirm 'AA'/Stable. XL Capital Assurance Inc. -- IFS No Action 'AAA'/Stable. XL Financial Assurance Ltd. -- IFS No Action 'AAA'/Stable. |
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