XL soars after keeping A rating from AM Best
By Jonathan Kent
XL Capital shares soared 27 percent yesterday as the company announced that rating agency AM Best is to maintain its A (excellent) rating on the Bermuda-based insurer's operating companies.
The stock, which rose 78 cents to close on $3.68, recovered some of the ground it has lost since last Wednesday, when Bloomberg reported XL was "seeking a buyer".
On Monday, XL lost its A+ financial strength rating with S&P, as the New York-based rating agency downgraded the company to A (strong), with a negative outlook, and said XL's "prospective realised investment losses will largely offset operating income through 2009".
AM Best did not put out any statement on XL yesterday. But XL chief executive officer Michael McGavick was keen to make public that Best would not be changing its ratings.
"In order to provide further information regarding our ratings, we felt it appropriate to comment on our AM Best financial strength rating," Mr. McGavick said.
"Based on very recent discussions with AM Best in which we reviewed our business and financial condition, AM Best is leaving our A (excellent) / stable outlook rating on our core operating subsidiaries unchanged.
"As we indicated yesterday, XL has no need or intent to seek additional capital at this time. We are pleased with the results of our discussions with AM Best and believe it is indicative of our financial strength and the power of our franchise."
