Fitch Rates XL Capital Ltd. Securities 'A'; Removes Rating Watch.Business Editors CHICAGO--(BUSINESS WIRE)--March 18, 2004 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. assigns a rating of 'A' to XL Capital Ltd's (XL) offering of $750 million of equity security units. The rating corresponds with XL's existing senior debt rating. Fitch also affirms and removes the ratings for XL's senior debt and the insurer financial strength ratings of XL's property/casualty (re)insurance subsidiaries from Rating Watch Negative and assigns a Stable Rating Outlook. All ratings are listed below. Following a fourth quarter 2003 $694 million pre tax charge related to reserve actions, mainly within its XL Re America unit, XL announced plans to raise at least $750 million of new capital to offset the impact of these charges through the issuance mainly of mandatory convertible securities mandatory convertible security A debt security that automatically converts to another security, generally shares of common stock, on a specified date. during the first half of 2004. The ratings were placed on Rating Watch following this announcement reflecting some potential uncertainty regarding the capital raising process. The terms of the current offering of securities are within Fitch's expectations for the offering, leading to the change in Rating Watch status. The newly offered securities receive considerable equity credit from Fitch due to the provision for mandatory conversion into ordinary shares in 2007. On a 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 basis, XL's debt-to-total capital ratio is approximately 21% following this issuance and adjusted for equity credit. The ratings continue to reflect 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, historical 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. XL has reported earnings below expectations for the last three years due mainly to losses from the September 11 event in 2001, and unfavorable prior period reserve development in 2002 and 2003, primarily relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its XL Re America unit. While current underwriting period performance is likely to remain favorable, the recent reserve development trends create some uncertainty regarding future earnings potential. Fitch believes that it is imperative for XL to return to historical profit performance levels in order to maintain its current ratings over the longer term. 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 $40.8 billion and shareholders equity of $6.9 billion at December 31, 2003. EntityIssue/Type Action Rating Outlook XL Capital Ltd -- Senior Debt Affirm 'A'/Stable; -- Long-Term Issuer Affirm 'A'/Stable; -- 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. Affirm 'A-'/Stable. XL Capital Finance (Europe) plc -- Senior Debt Affirm '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. -- IFS Affirm 'AA'/Stable. XL Europe Ltd -- 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 Company -- IFS Affirm 'AA'/Stable. XL Insurance Company Limited -- IFS Affirm 'AA'/Stable. XL Select Insurance Company -- IFS Affirm 'AA'/Stable. |
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