XL Capital's chief operating officer Henry Keeling has expressed his disappointment at being edged out for the CEO's role and added he was keeping an open mind on what to do next.

Mr. Keeling applied for the job and many expected the Briton to succeed outgoing CEO Brian O'Hara.

But the global business insurer announced on Monday that former Safeco Corporation CEO Mike McGavick had been selected to guide the company out of its recent troubled times.

"Of course, I'm very disappointed," Mr. Keeling said in an interview with The Royal Gazette yesterday. "I've been with XL and before that, Mid Ocean, for 15 years and it's been an incredible experience.

"I very much wanted to be CEO. I'd have been honoured and privileged to become CEO. So yes, I am disappointed, but I'm keeping an open mind.

"I haven't had a chance to actually sit down with Mike McGavick yet. We've spoken a couple of times. He wants to talk to me and I want to talk to him. I haven't made any decision yet. We'll see how it works out."

Because Mr. Keeling is in the Middle East attending the World Insurance Forum, he has yet to meet personally with Mr. McGavick.

Mr. O'Hara, whose 13-year stint in the top job will end on May 1, made it clear that he hoped Mr. Keeling would stay and work with the incoming boss.

"Mike very much wants Henry to stay and to be his partner," Mr. O'Hara said. "We think it would be great for the company if that could be achieved. "They haven't had a chance to meet yet, but that's forthcoming."

Mr. McGavick's desire to keep Mr. Keeling on board was "testimony to the fact that he's really not looking to change things", Mr. O'Hara added.

"If he can improve things, we're all for it."

Mr. O'Hara explained why the company's directors had plumped for an external candidate. "It's adding new strength to senior management, a different experience and a fresh pair of eyes. We believe diversity will be a strength.

"Mike understands what's working very well and he understands what our issue is. He'll roll up his sleeves to help us find a solution."

That issue is XL's relationship with Security Capital Assurance (SCA), the financial guarantor, in which XL has a 46-percent stake that it has written down to a value of zero.

Like some other financial guarantors, SCA has suffered crippling downgrades from the ratings agencies, because of its exposure to sub-prime mortgage-related financial instruments.

XL announced a loss of more than $1 billion for the last quarter of 2007, largely because of it's SCA-related problems.

Mr. Keeling said he felt Mr. McGavick would fit well with XL.

"He's not an underwriter, but he recognises the importance of strong underwriting," Mr. Keeling said. "Also he advocates working in a very ethical environment which we emphasise very strongly.

"We aim to deliver intelligent risk solutions, but deliver them with integrity. I think he understands that and will fit very well with it."

Mr. O'Hara, who has been with XL since its formation in the mid-1980s, will continue to serve as non-executive chairman until April 2009.

He is looking forward to more free time, as he passes on the responsibility of being the CEO of a top global insurance company.

"It's been 13 years and it's time for a change, both for the company and for me," Mr. O'Hara said.

He intends to restrict his business activity to serving on the boards of industry bodies such as the CPCU, the School of Risk Management and the US Chamber of Commerce.

"That's a lot of activity and I'm not really going to look for any more," Mr. O'Hara said. "I'm actually going to try to get a swing in my golf game."

"There are a lot of things I've been putting off. It's a tough job, you don't have time for much else. You have to make a lot of sacrifices. It's almost 24-7 - you never get away from it. It'll be fun to do things when I'm not fully engaged."