Fitch Rates XL Capital Finance -Europe- PLC $600MM Sr Nts `A+'.Business Editors CHICAGO--(BUSINESS WIRE)--Jan. 8, 2002 Fitch has assigned an `A+' rating to XL Capital Finance (Europe) PLC's (XL Finance) offering of $600 million of 6.5% senior notes due in 2012. XL Finance is a special finance subsidiary of XL Capital Ltd. (XL). XL Capital guarantees the senior notes of XL Finance. XL Capital has a Fitch senior debt rating of `A+'. The Rating Outlook is Stable. Proceeds from the offering will be used to repay outstanding revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility debt, and for general corporate purposes. The rating reflects XL's position within the global 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. markets, history of favorable underwriting and earnings performance, strong interest coverage and 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. XL's financial leverage increased significantly in the last year due to previous financing activity. Following the completion of the $500 million senior notes offering, the company's consolidated pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma debt-to-total capital ratio will increase to approximately 24.5%, up from 7.4% at year-end 2000. The ratio is expected to decline to between 20%-22% in the near term due to growth in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . While XL has historically produced underwriting results and operating profits that exceed industry norms, results for 2001 have deteriorated significantly due mainly to losses related to the events of September 11. XL reported consolidated GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). pretax insured losses from the September 11 event of $1.8 billion gross and $750 million net of reinsurance. XL reported a net loss of $492.5 million in the first nine months of 2001, compared with net income of $505.7 million in the same period for 2000. To offset losses related to the events of September 11 and replenish capital, XL completed an issuance of 9.2 million shares of common stock at $89 per share in November 2001 that raised net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $788 million. Fitch believes that in the aftermath of the events of September 11, the property/casualty insurance market will be characterized by rapidly rising prices, diminished capacity This doctrine recognizes that although, at the time the offense was committed, an accused was not suffering from a mental disease or defect sufficient to exonerate him or her from all criminal responsibility, the accused's mental capacity may have been diminished by intoxication, and a flight to quality. Fitch further believes that XL's capital position, underwriting franchise and financial strength, positions the company to significantly benefit from improving insurance market conditions. Operating results are expected to return to previous historical levels in 2002, barring any other unusual large catastrophic events. 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 assets of $25.7 billion and shareholders equity of $4.8 billion at Sept. 30, 2001. Entity/Issue/Type Action Rating/Outlook XL Capital Finance (Europe) PLC -- $600MM senior notes Assigned `A+'/Stable. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion