Bermuda insurance giant company XL Capital Ltd. said yesterday it had privately sold about $250 million of 20-year zero-coupon convertible senior bonds, as part of a plan to raise up to $750 million from debt sales.

The company said it plans to use the convertible sale's net proceeds, which it said may increase by $37.5 million if there is enough demand, to buy back about $66.4 million of its shares.

XL said it expects to use remaining proceeds, as well as proceeds from a sale of $500 million of long-term debt, for general corporate purposes, possibly including the paying down of debt, acquisitions and more share purchases.

The convertible bonds carried a 2.875 percent yield to maturity and are convertible into XL common shares at $107.07, a 29 percent premium over the stock's Friday closing price of $83 on the New York Stock Exchange.

On May 18, XL said it sold $500 million of 20-year zero-coupon convertible senior bonds with a 2.625 percent yield to maturity and a 28 percent premium.

A convertible bond is a stock-bond hybrid that usually offers current income - zero-coupon bonds do not - and can be converted into company stock. Its fortune is closely tied to the underlying stock price.