XL Re Ltd. announced yesterday that certain of XL's operating companies have entered into a quota share reinsurance treaty with a newly-formed Bermuda reinsurance company, Cyrus Reinsurance II Ltd.

Greg Hendrick, president and chief underwriting officer at XL Re Ltd., said: "We are very pleased by the successful completion of Cyrus Re II at a time when many sidecars are terminating. While smaller than its predecessor Cyrus Re, the Treaty with Cyrus Re II is an important part of XL Re's catastrophe risk management strategy."

Matthew Botein, managing director at Highfields Capital Management LP, the lead investor in Cyrus Re II's parent, added: "Investors in Cyrus Re Ltd. are pleased by the orderly completion of the 2006 and 2007 collateralised quota share with XL Re and with the strong performance of the book of business underwritten by XL Re over that period.

"We believe that the successful funding of Cyrus Re II during the current difficult credit market is a testament to the vigour of XL Re's underwriting and analytics and to the strength of its global franchise."

Pursuant to the terms of the Treaty, Cyrus Re II will assume a 10 percent cession of certain lines of property catastrophe reinsurance and retrocession business underwritten by the ceding companies for the 2008 underwriting year.

In connection with such cessions, the ceding companies will pay Cyrus Re II reinsurance premium less a ceding commission.

Cyrus Re II has contributed approximately $136 million into a trust for the benefit of the ceding companies to support the 2008 coverage to be ceded by them to Cyrus Re II.