Fitch Rates XL Capital Ltd's $250MM Conv Debentures `A+'.Business Editors CHICAGO--(BUSINESS WIRE)--Sept. 4, 2001 Fitch has assigned an `A+' rating to XL Capital Ltd.'s (XL) offering of $250 million of zero coupon convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. due 2021. The convertible debentures rank equal in right of payment to all other senior debt outstanding of XL. Proceeds from the offering will be used to repay outstanding debt and for general corporate purposes including funding potential acquisitions and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . 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, good 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 strong capital position. XL's financial leverage has increased significantly in 2001 due to previous financing activity, and will increase further with the debt offering and an additional proposed $500 million senior debt offering that will be completed shortly. The debt-to-total capital ratio will increase to approximately 27% following the completion of the two offerings, but should decline to between 20%-22% in the near term due to repayment of existing debt and 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. . The company has strong debt servicing capability. Operating cash flow and dividend capacity of insurance subsidiaries is sufficient to meet interest and principal obligations on outstanding debt obligations. Interest coverage remains favorable, with a coverage ratio of 12.5 times (x) for the first half of 2001 and 11x for the full-year 2000. XL is a Cayman Islands-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 $18.7 billion and shareholders equity of $5.7 billion at June 30, 2001. |
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