XL Group Ltd has been given approval to use a full internal model to calculate the company’s and its wholly owned subsidiary, XL Bermuda Ltd’s, respective enhanced capital requirements in substitution of the Bermuda Solvency Capital Requirement standard formula.

The approval has been given by XL’s group supervisor, the Bermuda Monetary Authority.

XL’s 2017 ECR ratio using the ICM is 205 per cent. XL’s 2017 ECR ratio prepared using the BSCR was 196 per cent, as disclosed in the company’s financial condition report at the end of 2016.

Mike McGavick, chief executive officer, said: “We are pleased to receive approval of our full internal model in that it speaks to the fact that the model has been robustly researched and tested, and its assumptions and outputs have been challenged and validated.

“We have used internal models extensively over the last decade to manage capital allocation, risk budgeting, reinsurance purchasing and financial reporting.

“Our commitment to the approved model and the model approval process represents our dedication to continuous improvement and to leading-edge analytics, high-quality governance practices as well as our enterprise risk management culture and environment.

“We believe that our model represents a valuable asset which synthesises insights from across our organisation, improving the quality of our returns.”