Best Affirms XL’s ‘A’ Ratings

September 10, 2009

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of the Bermuda-based XL Capital Group and its members.

Best also affirmed the ICR of “bbb” and all debt ratings of the holding company, the Cayman Islands-based XL Capital Ltd. The outlook for all of the ratings is stable. (See link below for a detailed listing of the companies and ratings.)

“These rating actions reflect the early achievements of XL Capital’s recovery plan following last year’s settlement with Syncora Holdings Ltd., which included de-risking of the investment portfolio, reduction of corporate expenses, implementation of a more robust risk management program and retention of key senior underwriting management,” Best explained.

“The group’s core operating results remain strong in both primary and reinsurance segments. XL Capital’s property/casualty combined ratio for the six months ended June 30, 2009 was 92.6 percent, reflective of the group’s established market profile and worldwide presence, while risk-based capitalization remains solid and fully supportive of the group’s rating level.

“XL Capital’s enhanced risk management program is responsible for ensuring the efficient identification, assessment and monitoring of key risks across all facets of the group’s operations.” Best added that it is “encouraged by this program, which should enable the group to operate more efficiently and detect unfavorable trends earlier.

“The debt-to-capital ratio for XL Capital Ltd is expected to remain in the mid 20 percent range going forward. Fixed charge coverage ratios over the past several years fell below expectations as earnings were reduced due to capital market volatility and settlement with Syncora Holdings Ltd. However, this concern was reduced by the substantial level of cash held at XL Capital Ltd. On a going forward basis, the fixed charge coverage ratio is expected to stabilize and remain in the 3 times to 5 times range.”

A.s far as XL’s future prospects are concerned, Best said it anticipates that XL “will continue its solid operating performance, despite a soft pricing market. As XL Capital continues to de-risk its investment portfolio, the group will remain exposed to any volatility in equity markets and credit spreads on corporate investments. Accordingly, A.M. Best will continue to monitor the effect of capital market activity on the group’s earnings.”

For a complete listing of XL Capital Ltd and XL Capital Group’s FSRs, ICRs and debt ratings, please visit

Source: A.M. Best –

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