The level of candour from XL's management and the depth of the review process seemed to sit well with analysts yesterday, and investors reacted favourably by pushing the share price up.

Paul Newsome, an analyst with A.G. Edwards & Sons, Inc. told The Royal Gazette: "To the extent that anybody that is on the outside can tell, it looks like XL have put the issue behind them.

"There was nothing that raised a red flag but I have been covering insurance long enough to know that this is a risk business. The probability of a (future) reserve charge may have been reduced but it never goes to zero. The industry has done a good job in demonstrating that in recent years.

"It looks like they were looking for every reserve charge they could find. But I always view this sort of thing with a level of scepticism."

Mr. Newsome added that the company's firing of top executives at XL Re America ? with the CEO, COO and General Counsel having been replaced ? could also have served to calm investor fears.

On the call, Mr. O'Hara added that a further review of the group's management would take place at the company's upcoming board meeting later this month.

Mr. Newsome said: "I think that the management changes at XL Re America helped XL's credibility. Insurers are not known for taking responsibility for their mistakes. Insurance is clubby; people keep their jobs regardless of what they do."

The company's reserve boost was also given the thumbs up by Deutsche Bank Securities analyst Alain Karaoghan.

"It seems that XL has been quite conservative in setting their reserves and I believe they have put this behind them."

He said the company had been so prudent that it might actually find itself having over-compensated ? management said they had reserved to the maximum degree possible in some cases ? and could get back some of the money it had set aside in the next few years.

Although Mr. Karaoghan said he was comfortable with the company's current reserve levels, he said it was impossible to rule out future reserve increases.

"On this particular book of business, I have no more concerns. But property and casualty is always a risk because they are estimating the cost of goods sold. And when you are estimating, you can be wrong. The industry, by its very nature, is one where you can never be sure."

Investors yesterday reacted favourably to the company's increase of its reserves, pushing the share price up 3.4 percent to $80.50.

Mr. Newsome said: "Certainly the market is behaving as if it believes it has done the right thing."

XL's fourth-quarter and year-end results are scheduled for release on February 10.