XL Capital Ltd. plans to sell as much as $300 million in preferred shares to support a new reinsurance vehicle.

Separately, the company said chief financial officer Jerry de St. Paer will retire next year.

XL plans to sell $200 million to $300 million of the undated securities. The company will have the right to buy back the securities after five years. Otherwise the coupon will increase by 100 basis points.

XL will have the right to cancel coupon payments in some circumstances, and the missed payments won’t accumulate until it starts paying them again, the statement said. The securities will be sold through a unit called Stoneheath Re, the company said.

Ratings agency Fitch said Stoneheath is a Cayman Islands exempted company set up purely to issue the securities and to enter into reinsurance agreements with certain operating subsidiaries of XL.

Proceeds from the non-cumulative perpetual preferred issuance will be deposited in a trust account and will collateralise Stoneheath Re’s obligations under the reinsurance agreement. After an initial three-month period, XL has sole discretion to change the scope of the covered perils, attachment points and aggregate retentions of the reinsurance agreement every six months, Fitch said.

Moody’s Investors Service will likely rate the bonds Baa2, the ninth-highest of 10 investment-grade ratings. Standard & Poor’s will probably rate them an equivalent BBB, the statement said. Fitch rated the shares A-.

Preferred shares generally pay a fixed dividend and don’t give the owner voting rights. Goldman Sachs will manage the sale of dollar-denominated shares, the statement said.

XL said Mr. de St. Paer will retire from the company in 2007. No departure date has been set and he will assist the company with transition matters, according to a regulatory filing.

Mr. de St. Paer, who also serves as XL’s executive vice president, treasurer and assistant secretary, has worked for the company since 2001.

XL has also invested around $14.8 million in British hedge fund Polar Capital, according to business website Financial News Online.

The investment, which gives the insurance giant 14 percent of the company, is aimed at providing Polar with seed financing for new funds launched over the next few years.

Polar, founded by technology fund managers Brian Ashford-Russell and Tim Woolley, hopes to hold an initial public offering next year.

XL’s stake gives a valuation to Polar of almost $56 million ($108 million). The story said Polar hopes to impove that before it floats.

XL has invested in other hedge fund companies, including Artemis Advisors. It had a stake in FrontPoint Partners before it was sold to Morgan Stanley earlier this year.

Parts of this story were taken from a Bloomberg News report.

XL to raise $300m in capital