Bermuda insurance group XL Capital is set to take a charge of $830 million in the fourth quarter after losing an arbitration decision related to a 2001 acquisition, but a leading Swiss newspaper has cast doubt on whether the other side ? Swiss financial services firm Credit Suisse ? really emerged as the winner.

Under the sales agreement, Credit Suisse sold off the property and casualty units of its subsidiary Winterthur, but had responsibility for certain future claims on policies already sold.

XL?s experts had said the remaining liabilities, under a three-year seasoning agreement, were estimated as $1.45 billion, and should be booked as a receivable.

An outside actuary last week ruled that the amount that needed to be added to a reserve fund for liabilities was closer to Credit Suisse?s $540 million estimate (plus interest, for a total of $575 million) than the $1.45 billion XL?s experts said should be paid over for future claims.

This leaves XL to write down $830 million of the $1.45 billion it previously recorded as an unsecured reinsurance recoverable.

Under common procedure, an insurer that doubts it will be able to collect reinsurance it has accounted for as a receivable ? as is now clear in this case ? will write down the uncollectable as a ?bad debt?. And changes in the bad debt provision are then reflected in net income.

The news that XL would take an $830 million charge, on top of a $1 billion plus loss in the third quarter from hurricane claims, sent its stock down, and raised questions over the whether management had failed investors in promising the arbitration would go in XL?s favour.

On the other hand, Credit Suisse said reaching a resolution with XL put the matter behind them ? and was much less than the maximum $1.45 billion it could have been forced to pay.

But an editorial in a major Zurich daily, Tages-Anzeiger, last Wednesday said the actuarial decision was ?another inglorious chapter? under former CS chief executive and chairman Lukas Muhlemann, and questioned how Credit Suisse could call the decision a ?win? when it was more of an escape from the ?worst case?.

On the surface, Credit Suisse might claim the deal was a ?win?: The Winterthur units were sold to XL for a $600 million price tag, it said, and now it has paid out $575 million, leaving $25 million in proceeds.

XL said the final sale?s price was adjusted down to $330 million. Credit Suisse does not dispute the amount was adjusted by nearly half, but said it was because ?certain business areas had been excluded from the transaction?.

That leaves Credit Suisse as having been paid $330 million for Winterthur, but then having to pay all that back, and some. And the Swiss report said it had to put up an initial $1.5 billion, as part of the sale.

XL bought Winterthur, now rebranded as XL Insurance, as part of a plan to expand its global reach.

Like most of the insurance and reinsurance companies that operate out of the Island?s insurance market, XL had predominately counted North American corporations as the customers buying XL insurance and reinsurance contracts to protect against losses.

Winterthur International was added to the XL stable in June 2001, and was, as planned, instrumental in the company?s transformation into a global enterprise.

Now critics are probing whether XL acquired more of a headache with the Winterthur purchase than it counted on. Tages-Anzeiger said it would be ?wrong? to accept that Credit Suisse was the victor. ?First, because the selling price had been halved. Secondly, because Winterthur had to put back previous additional reserves.?

While Tages-Anzeiger said Credit Suisse was refusing to confirm how much it had paid to XL in total, it was clear that XL paid $330 million in the acquisition, but Credit Suisse also at the time paid XL $1.5 billion for certain claims that could arise on the policies already sold by Winterthur. And now it has had to pay a further $575 million.

?Even with ignoring these reserves to the selling price (which Winterthur maintains it would have had to pay into a reserve fund even without the sale), in retrospect, the Winterthur International deal is a gigantic losing bargain,? the Swiss report said.