Shares of XL Capital Ltd., a Bermuda-based property and casualty insurer, fell as much as eight percent after the company said Hurricanes Katrina and Rita will trigger an operating loss for the year.

The storms and other third-quarter catastrophes will cost the company about $1.47 billion, XL said in a statement after the close of regular trading on Tuesday. The company?s only previous statement was that it would shoulder about 1.75 percent of the industry?s total Katrina losses.

President and CEO Brian M. O?Hara (pictured) said on Tuesday: ?These hurricanes are market changing events for our industry. We believe that we are well-positioned to serve our customers and expect to be an active lead participant in the upcoming renewal season.?

?We are increasingly convinced that equity capital raising will be necessary to offset this loss,? said Bill Yankus, an analyst at Fox-Pitt Kelton Inc. in Hartford, Connecticut, in a report.

XL?s forecast prompted Fitch Ratings to lower its long term issuer rating from 'A' to 'A-' and its financial strength rating from 'AA' to 'AA-'. The ratings of XL's financial guaranty affiliates were not affected and were affirmed at 'AAA' -- the highest possible rating.

The company will probably have to raise at least $1.5 billion in capital to avoid downgrades by other firms, said Cliff Gallant, an analyst at Keefe, Bruyette & Woods Inc. in New York. Katrina, which battered the US Gulf Coast in August, may have been the industry?s most expensive disaster, costing insurers an estimated $40 billion to $60 billion, storm modeler Risk Management Solutions Inc. said.

The shares fell $5.51, or 8.22 percent, to $61.55 in New York Stock Exchange composite trading, after earlier falling to $60.35. The stock is down 14 percent in the past year, compared with a 22 percent gain in the KBW Insurance Index. Yankus has an ?in-line? rating on the shares.

Standard & Poor?s said on September 20 it was considering a reduction in XL?s ratings. In addition to capital raising, the company may have to take on fewer risks, limiting the benefits of price increases that may be triggered by Katrina, Gallant said. He has a ?market perform? rating on XL shares.

The company releases its third quarter results on October 31.