XL Capital will not be taking part in any further mergers and acquisitions and will instead focus on organic growth and keeping a tight rein on expenses, according to chief executive officer Brian O?Hara.

During a conference call on the company?s fourth quarter earnings yesterday morning, Mr. O?Hara was grilled by analysts on his company?s performance during the year and the final quarter of 2003.

On Tuesday night the Bermuda insurance giant reported a net loss of $314.8 million for the fourth quarter of 2003 after taking an already announced one-off hit for reserve charges of $647.1 million for its XL Reinsurance America operations ? and management were bracing themselves for a difficult session.

The message from management was consolidation, control and focusing on profitability ? and ?steady as she goes?.

And they stayed upbeat during the hour-long conference call which Mr. O?Hara ended the call by saying: ?I am very optimistic about the future of XL Capital.?

During the question and answer session, Mr. O?Hara was asked by David Sheusi of JP Morgan about the company?s consolidation and growth going forward.

?We have no merger and acquisition plans in the future,? he said. ?We are in every market we want to be in. We see organic growth continuing very well.?

He went on to say that he could not see any company out there that would be a good fit at this time for XL.

?We don?t see anything out there that would add anything and would find it difficult to see anyone out there,? he said.

?We are working hard at our efficiencies and to get costs at a lower level.?

To this Mr. Sheusi said: ?Good news.?

The analysts, most from Wall Street, were still tough on XL?s management, grilling them over the finer points of the multi-million dollar reserves.

And XL?s executive vice president and chief financial officer, Jerry de St. Paer, said that while it had not been the explicit intention of XL at the time, the capital lost to the reserves would be replaced.

?It was about $800 million as a real charge and will come out nearly dollar for dollar on an after tax basis,? said St. Paer.

Mark Lane of William Blair & Co asked about the company?s expenses and its expense ratio of 27.3 percent and what was expected for 2004.

?It is pretty much steady as she goes,? said Mr. O?Hara, who explained that insurance had a run rate of 28 percent and would stay at about 29 percent overall.

And Mr. Lane asked about how the business at XL would grow without mergers and acquisitions and a flattening out of prices in the market.

Mr. O?Hara said that there was growth, and that the mix of business was not allowing them to see the full picture, explaining that they were exiting certain lines of business that were not seen as profitable.

?If you back these out, growth is very good,? he said. ?If you look at the lines we are focussing on, we are very strong.?

And he said that D&O (directors and officers liability) was ?great?, showing the highest profit in the business.

?We are growing every line we are in currently ? but not foolishly,? he said. ?And there is great potential in the US.?

And he pointed out that XL had some of the strongest growth in the industry in 2001 and 2002. ?We were actually ahead of the pack,? he said. ?So we are looking at things from a higher base.?

Mr. O?Hara added that they had elected as a company not to go into workers? compensation. ?We think the fundamentals are still a bit insecure,? he said, adding. ?We have very strong growth in the lines we are focusing on.?

Mr. St. Paer added: ?He is interested in profitability, and always has been.?

When asked about return on equity, Mr. O?Hara said: ?Profitability continues to be the name of the game at XL Capital.?