XL Issues Statement on Merrill Lynch, Security Capital Summary Judgment

Bermuda’s XL Capital Ltd. has issued a statement, indicating that it is “not involved in a summary judgment handed down by the U.S. District Court for the Southern District of New York in favor of Merrill Lynch International.”

XL explained that “Merrill Lynch International filed a complaint against Security Capital Assurance Ltd.’s (SCA) subsidiary, XL Capital Assurance Inc. (XLCA), relating to certain credit default swap transactions entered into by trusts and insured by XLCA following SCA’s IPO in August 2006.”

XL stated “XLCA is not a subsidiary of XL Capital Ltd. The swaps at issue in the lawsuit were entered into by XLCA after SCA’s IPO. XL Insurance (Bermuda) Ltd’s reinsurance guarantee to a subsidiary of SCA applies only to pre-IPO exposures.”

The statement added: “Pursuant to a transition agreement entered into at the time of SCA’s IPO, SCA is permitted to use the ‘XL’ name until August 2008. XL owns approximately 46 percent of the common equity interest of SCA. As the above dispute is between Merrill Lynch International and XLCA, any queries regarding the lawsuit should be referred directly to the parties involved in the lawsuit.

Further information regarding XL’s relationship with SCA may be found in XL’s filings with the Securities and Exchange Commission.”

Source: XL Capital Ltd. – www.xlcapital.com