XL Capital Assurance Inc. (XLCA), a unit of Bermuda’s XL Capital Ltd., announced the formation of a financial guarantee subsidiary in London, XL Capital Assurance (U.K.) Limited (XLCA-UK), specializing in credit enhancement products for the European market.
The new XLCA >unit was immediately rated triple-A by Moody’s Investors Service, Standard & Poor’s Ratings Services, and Fitch Ratings. It has been fully authorized as an insurer by the U.K.’s Financial Services Authority in London, and plans call for the establishment of a branch office in Madrid later this year.
The London office of will be headed by Michael Rego as Managing Director, who stated that,”XLCA-UK offers a full range of triple-A rated credit enhancement solutions to our clients. We provide expertise across a full range of asset classes. Our London-based group will focus on PFI (Private Finance Initiative), whole business and European asset-backed transactions. Our Madrid team will specialize in essential infrastructure project financings and debt obligations of sovereign and sub-sovereign borrowers throughout Europe.”
S&Ps announcement on the ‘Aaa’ ratings indicated they were based on the implicit support of XLCA-UK’s parent company, and ultimately the XL group. It indicated that the new unit “will leverage the existing relationships of its parent, developing a core group of clients by marketing through its two representative offices as well as XL Financial Products, an affiliated business unit.”
It cautioned, however that “XLCA-UK faces market-entrance hurdles and competition from the larger, more-established, monoline financial guarantors and European multinational insurers that specialize in the same types of products.”
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