XL Capital's share price continued to fall yesterday as the insurance giant's CEO said the company could not give any figures on how much more the company would have to pay to boost reserves for reinsurance claims.

XL Capital said on Friday it would take a $160 million after-tax charge against earnings to pay for potential claims in its North American business for medical malpractice and professional liability.

The company may have to increase this amount further following an analysis of the company's exposure to business written in the late 1990s.

Chief executive officer Brian O'Hara answered analysts questions - many on how much the cost could be in the future. He said that claims were already so “astronomical” he could not say yet what the final figure would be. He told one analyst: “Your question is how long is a piece of string. This is why we are doing an analysis. If we knew what the number was we would be telling you.”

The insurer's share price fell 12 percent on Friday and opened yesterday at $72.60, fell as low as $69.30 before rallying to $70.17, down 4.4 percent on the day.

In a conference call with analysts yesterday, Wall Street analysts grilled the XL Capital executive on the charge and what it meant to the company's business.

Mr. O'Hara on Friday pledged an intensive audit designed to quantify the firm's exposure and said this was “among the worst in the industry's history” given “the marked expansion of liability in the US tort system.”

According to a report on Bloomberg, the reserve study may result in a $400 million charge in the fourth quarter and a share sale to replenish capital.

The report attributed the figure to Jay Cohen, an analyst at Merrill Lynch & Co.

XL Capital has boosted reserves four times for the same book of reinsurance business, leading some investors to question the company's ability to manage, the Bloomberg report added. “There's been a perception until now that their quality of management and level of reserves have been superior to their peers,'' the report quoted Mark Dawson, a money manager at Rainier Investment Management, which owned 240,900 XL shares as of June 30. “That, to say the least, has been tarnished.'' XL Capital's chief financial officer Jerry M. de St. Paer said the company needed more time to look at reserves for each casualty reinsurance policy sold between 1997 and 2000 but XL said it expects to finish a study in the fourth quarter.

“We're booking what we know with certainty at this time,'' Mr. de St. Paer said on the call. “It was not possible for us to estimate with any certainty what additional reserves, if any, were needed.''

In the same call XL Capital's chief executive of reinsurance, Henry Keeling, was “stiffening its resolve” to keep prices high for 2004 in the wake of the multi-million dollar charge.

And he said that the company would be looking again at the January renewals season in light of the one-off charge and wanted to keep the market hard - an industry term for high insurance prices when there is a shortage of insurance.

“Looking at the January, 2004 renewals we are stiffening our resolve to maintain a hard market environment in 2004,” Mr. Keeling.

XL Capital's management said that the hard market in casualty, which started in 2000, was in part due to the tort or malpractice claims that were affecting XL Re. The claims are primarily from general liability, medical malpractice, professional liability and surety accounts written in the late 1990s in North America.

One analyst said that the executive had done a “nice job” in explaining the methodology and he “basically believed everything you say”, but asked why they could not give the analysts the raw data so they could make up their own minds on whether the company was being above board - and they would not be able to convince analysts completely without this data.

In response XL Capital's management said that they took this request very seriously, but it was difficult to gather.

However, they said: “We will try to give you data that will give you comfort.”

However the data was only officially calculated at year end and the after tax charge was based on unaudited figures and estimates.