Bermuda’s XL Capital Ltd. intends to raise approximately $1.0 billion from an offering of Fixed/Floating Series E Perpetual Non-Cumulative Preference Ordinary Shares (Series E Preference Shares) pursuant to its currently effective shelf registration statement.
“The Series E Preference Shares offered will not be exchangeable for or convertible into ordinary shares of XL,” said the bulletin.
XL said it “intends to use the net proceeds from the sale of the Series E Preference Shares for the purchase of approximately $830 million of XL’s Class A ordinary shares from time to time and for general corporate purposes, in particular, to refinance its indebtedness and other components of its capital structure.”
A.M. Best Co. has assigned a debt rating of “bbb” to the Series E Preference Shares and has assigned them a stable outlook.
Best noted that as of “December 31, 2006, XL Capital’s debt to capital leverage ratio (including preferred securities) stood at approximately 30 percent. The company’s financial leverage has trended lower since 2005 in line with A.M. Best’s expectations, driven by strong earnings in 2006, with debt-to-capital leverage ratios remaining commensurate with its current debt ratings. Despite this improvement, however, leverage has remained above similarly rated peers.”
Best said it “expects XL Capital’s coverage and leverage ratios to further improve barring any extraordinary catastrophes as projected earnings increase shareholders’ equity and the holding company’s liquidity.”
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