Security Capital Assurance Ltd., a newly formed Bermuda holding company for the financial guaranty units of XL Capital, on Friday filed a registration statement to list its shares on the New York Stock Exchange.

The company will use the proceeds of the initial public offering to fund expansion within its insurance and reinsurance units in US and international financial guaranty markets.

Bloomberg News reported that the move may help preserve the units' AAA ratings.

XL will own about 65 percent of the new company's stock following the offering, a statement said.

Bloomberg said in November, Standard & Poor's lowered its financial strength ratings on two XL units that held the bond insurance businesses. At the time, S&P warned XL management that "steps would need to be taken by midyear 2006 to improve" the bond insurers' "operating independence and ownership structure" for them to retain their AAA ratings, according to an S&P statement.

"In the principal market for financial guaranty insurance, typically there is either a requirement or strong commercial preference for triple-A-rated insurance policies," XL said in its filing.

XL Capital chief executive Brian O'Hara said on Friday: "The IPO of SCA will enable XL to build on its strengths in insurance and reinsurance while enabling SCA to continue to capitalise on growth opportunities."

Financial guaranty companies sell insurance to cover bonds and other investments from the risk of default by the borrower. The market, a competitive one, is currently dominated by companies larger than XL's financial guaranty division, including Ambac Financial, FGIC Corp., Financial Security Assurance Inc. and MBIA Inc., it said in the filing.

The Security Capital offering is being handled by Goldman Sachs, Co. It isn't clear how much is likely to be raised in the IPO.

XL's announcement marks the second IPO registration from a Bermuda-based financial guaranty company this year. Earlier, Ram Re Holdings, which sells financial guaranty reinsurance, filed its intention to go public.

XL competitor ACE Ltd. floated its financial guaranty business under the name Assured Guaranty several years ago.

XL Capital's shares gained 46 cents, or 0.73 percent, in Friday composite trading on the New York Stock Exchange. The company's share price is trading at the low end of its 52 week range between $60.03 and $76.05, seeing its share price slump after large losses from last year's hurricanes. It also late last year was forced to take a large charge to shore up reserves after a costly arbitration decision related to liabilities within insurance units it acquired from Swiss-based Credit Suisse in 2001, went against it.