The move is a response to a "shift in business conditions'' -- and marks the beginning of a decision by the board of directors to institute share repurchases over dividend increases.

The company said that certain segments of XL's business could potentially face reduced rating agency capital charges.

According to a release from the company, the share repurchases will be financed through a combination of internal resources and debt.

Meanwhile XL's board of directors announced a one cent increase per share to be paid in the next dividend.

The quarterly dividend payable on March 2, 2000 will now see shareholders receive 45 cents per share.

XL president and CEO, Brian O'Hara, said: "Although we are pleased to be able to increase the dividend paid to shareholders at this time, XL intends in the future to emphasise share repurchases rather than significant dividend increases, to return capital to its shareholders.''