Michael McGavick said he is relishing the challenge of taking over the XL Capital hotseat after being named as the successor to long-serving CEO Brian O'Hara.

Mr. McGavick, who ran as a Republican for a seat in the US Senate in 2006, will join XL on May 1, replacing Mr. O'Hara, who has been CEO for the past 13 years and who, in October last year, announced his retirement as CEO by mid-2008.

Mr. O'Hara, who is currently serving as acting chairman of XL's board of directors, will fulfill the role of chairman during the final year of his current term on the board which expires in April 2009.

But, the appointment will come as a big blow to Henry Keeling, who had long been spoken of as a likely successor to Mr. O'Hara, having revealed exclusively to The Royal Gazette only last month that he would love to take on the top job, if it were offered to him. XL's share price has fluctuated in recent weeks as uncertainty surrounded the identity of the new CEO.

Mr. McGavick will be charged with turning around the re/insurance giant's fortunes after it reported a fourth-quarter loss of $1.06 billion as it suffered from the effects of its exposure to the US sub-prime mortgage crisis. Despite posting a full-year profit of $360.4 million for 2007, charges "related to credit market conditions" totalled $1.5 billion, more than $900 million of which was related to XL's investment in and reinsurance of bond insurer Security Capital Assurance (SCA).

At it is a task Mr. McGavick is ready to get stuck into, with a couple of key objectives he is aiming to achieve.

"First there are the short-term challenges mainly presented to the company by businesses that are not part of the franchise, such as SCA," he said.

"Clearly an early focus is on how we get that behind us in a way that enables investors to see the real power of this firm."

He said that despite it being a tough time for the re/insurance sector in general, there are a lot of opportunities out there the company can make the most of.

"It is about creating confidence in the market place - the company decided to write down investments in SCA to zero and it is about the running guarantee of the business," he said.

"I am looking forward to working with the management team to come to the right answers."

Mr. McGavick was president and CEO of Seattle-based Safeco Corp. from January 2001 to December 2005 and spent six years with the Chicago-based CNA Financial Corp., which last month reported net investment losses of $61million resulting from "exposures to sub-prime collateral in our fixed income securities".

He was CEO of Safeco from 2001 to 2005 and named CEO of the Year by the Puget Sound Business Journal in 2002 for his work at the Seattle insurer before running for the Washington state US Senate seat in 2006, when he lost to incumbent Maria Cantwell.

Prior to joining Safeco, Mr. McGavick held various senior executive positions before becoming president and chief operating officer of CNA Financial Corp.'s largest commercial insurance operating unit.

Mr. McGavick's insurance industry experience also includes two years as director of the American Insurance Association's Superfund Improvement Project in Washington DC, where he became the Association's lead strategist in working to transform US Superfund environmental laws. Most recently Mr. McGavick ran for a seat in the US Senate in the state of Washington.

And he reckons each of the positions he held will stand him in good stead for challenges that lie ahead, from dealing with industry-wide issues, including the risks facing the sector, at the American Insurance Association, to being exposed to all of the same lines of business XL writes at CNA Financial, and even restoring client confidence at Safeco.

"It is an extraordinary challenge to even contemplate stepping into Brian's shoes, but he will be working alongside me as chairman and that is a big deal, having the opportunity to work with and learn from Brian and that is a really positive part of taking this job," said Mr. McGavick.

"XL is known for its underwriting excellence and a values-based culture of integrity, both of which have been developed under Brian's leadership. These are the very differentiating characteristics with which I closely identify and I am proud to have been chosen as the company's next CEO.

" XL is a world class brand with very successful insurance, reinsurance and life reinsurance businesses and I look forward to helping it realise its full potential."

Mr. O'Hara said: "Like our board of directors, I am very excited to have Mike McGavick joining us. I have known Mike for many years, both as a colleague and as a customer and I am very pleased that we have selected a candidate of his calibre.

"He is a leader who fully understands the challenges of a complex organisation and the importance of a strategy which plays to your strengths. I'm looking forward to working with him."

XL lead director Robert Glauber, who chaired the company's CEO succession committee, said: "Mike is an extremely talented insurance executive with experience leading Safeco and, before that, the commercial lines business at CNA. The succession committee believes he is not only capable of meeting the high standards set by Brian O'Hara, but will be successful in transforming XL to meet the challenges of our next decade."

Commenting on the selection of an external candidate, Mr. Glauber added: "While the company has extremely talented and capable internal candidates, the committee decided that XL, having been led by one of its founding executives for 13 years, would benefit most from an external perspective at the top level of leadership."