Fitch Rates XL’s Shares ‘BB+’
Fitch Ratings has assigned a ‘BB+’ rating to XL Group Ltd.’s (XL) recently announced $350 million issue of series D preference ordinary shares. Fitch has also affirmed its existing ratings on XL and its property/casualty (re)insurance subsidiaries. The Rating Outlook is Stable.
The preference ordinary shares are being issued as part of the Stoneheath Re contingent capital facility. XL expects to use the funds received in connection with the issuance to partially repay existing senior notes maturing in January 2012, with the balance available for general corporate purposes. The rating assigned to the newly issued preferred securities is equivalent to Fitch’s rating on the company’s currently outstanding series E preference ordinary shares.
Fitch’s rationale for the affirmation of XL’s ratings reflects the company’s solid capitalization, reasonable financial leverage and stable competitive position. The ratings also reflect anticipated challenges in a competitive property/casualty market and soft rate environment, poor underwriting results in the first half of 2011 and the potential drag from the remaining run-off life business.
