A.M. Best Revises Issuer Credit Rating Outlook To Positive For XL Group Plc And Its Property/Casualty Subsidiaries

A.M. Best Co. has revised the outlook for the issuer credit rating (ICR) to positive from stable as well as affirmed the financial strength rating (FSR) of A (Excellent) and ICRs of “a” of the property/casualty subsidiaries of XL Group plc (XL) (Ireland) [NYSE:XL], led by XL Insurance (Bermuda) Ltd (Hamilton, Bermuda). The outlook for the FSR is stable. Concurrently, A.M. Best has revised the outlook to positive from stable and affirmed the ICRs of “bbb” of XL and XLIT Ltd. (Cayman Islands) as well as all debt ratings of XLIT Ltd. (See below for a detailed listing of the companies and ratings.)

The rating affirmations reflect the organization’s excellent risk-based capitalization, strong worldwide market presence and stabilization of the group’s overall earnings profile. XL subsidiaries’ property/casualty operating results have been profitable through the first six months of 2013 with a combined ratio of 90.8%.

The positive outlook reflects the organization’s improved trend in operating performance and overall profitability in recent quarters. XL’s management team has implemented strategies that support and promote an enhanced risk management program as well as a continued focus on underwriting as the key component of the group’s business approach. Management’s focus on its core underwriting strengths has been exhibited by the additions of a substantial number of new experienced senior underwriting managers over the past few years in its global insurance operations.

XL’s debt-to-capital ratio is expected to remain in the 15%-25% range as capital is anticipated to be enhanced by strong earnings. The fixed charge coverage has stabilized and is expected to remain comparable with the current level over the near term.

Positive rating actions could occur if over the next several years XL exhibits consistency in underwriting and net earnings in line with other comparably rated peers along with retained earnings growth. Negative rating actions could occur if the organization’s operating performance is consistently below the market by a significant margin for several years or capital erosion due to operating performance or investment volatility exceeds A.M. Best’s expectations.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for the following subsidiaries of XL Group plc:

  • XL Re Ltd
  • Indian Harbor Insurance Company
  • Greenwich Insurance Company
  • XL Insurance Company of New York, Inc.
  • XL Insurance America, Inc.
  • XL Select Insurance Company
  • XL Reinsurance America Inc.
  • XL Specialty Insurance Company
  • XL Insurance (Bermuda) Ltd
  • XL Re Latin America Ltd
  • XL Insurance Company PLC
  • XL Re Europe Plc
  • XL Insurance Switzerland Ltd

The following debt ratings have been affirmed:

XLIT Ltd.—-- “bbb” on $600 million 5.25% senior unsecured notes, due 2014-- “bbb” on $350 million 6.375% senior unsecured bonds, due 2024-- “bbb” on $325 million 6.25% senior unsecured notes, due 2027-- “bb+” on $999.5 million Series E non-cumulative preferred Securities, redeemable 2017-- “bbb” on $400 million 5.75% senior unsecured bonds, due 2021-- “bb+” on $345 million non-cumulative preferred stock

The following indicative ratings on shelf securities have been affirmed:

XLIT Ltd.—-- “bbb” on senior unsecured-- “bbb-” on subordinated-- “bb+” on preferred stock

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Copyright Business Wire 2010

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