Fitch Rates XL’s Convertible Debentures

September 24, 2001

Fitch has assigned an “A+” rating to XL Capital Ltd.’s (XL) offering of $250 million of zero coupon convertible debentures due 2021. The convertible debentures rank equal in right of payment to all other senior debt outstanding of XL.

Proceeds from the offering will be used to repay outstanding debt and for general corporate purposes including funding potential acquisitions and share repurchases. The rating reflects XL’s position within the global insurance and reinsurance markets, history of favorable underwriting and earnings performance, good interest coverage and operating cash flow, and strong capital position.

XL’s financial leverage has increased significantly in 2001 due to previous financing activity, and will increase further with the debt offering and an additional proposed $500 million senior debt offering that will be completed shortly. The debt-to-total capital ration will increase to approximately 27 percent following the completion of the two offerings, but should decline to between 20-22 percent in the near term due to repayment of existing debt and growth in retained earnings. The company has strong debt servicing capability.

Operating cash flow and dividend capacity of insurance subsidiaries is sufficient to meet interest and principal obligations on outstanding debt obligations. Interest coverage remains favorable, with a coverage ratio of 12.5 times (x) for the first half of 2001 and 11x for the full-year 2000.

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal West September 24, 2001
September 24, 2001
Insurance Journal West Magazine

2001 Program Directory, Vol. I