XL Capital announced yesterday that it would issue new shares to pay for notes it said it would redeem on September 9.

On Monday, the company said it would pay up to $295.8 million to buy back all of its zero-coupon convertible senior bonds 19 years before they mature. The share offering is being underwritten by Merrill Lych, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. XL Shares traded up $1.18 on the New York Stock Exchange yesterday, closing at $70.36.