NEW YORK (Bloomberg) — Bermuda-based XL Capital Ltd., the insurer that tripled in New York trading this year, was upgraded by Credit Suisse Group AG to "outperform" because of gains in the company's bond portfolio.

XL's book value per share, a measure of assets minus liabilities, may rebound after six straight declines tied to corporate debt holdings and asset-backed securities, Vinay Misquith and Max Zormelo of Credit Suisse wrote yesterday in a report. Gross unrealised losses on fixed-income holdings widened to $4.6 billion as of March 31 from $2.2 billion a year earlier.

"As fixed income markets improve over the longer term, XL Capital's book value should grow 50 percent due to reversal of unrealised losses, significantly faster than other less leveraged property-casualty insurance companies," the analysts said. Unrealised losses, which don't count against earnings, are monitored by rating firms and investors as a measure of financial strength.

Credit Suisse raised XL's price target to $18 from $13. FBR Capital Markets raised the insurer's price target to $17 from $15 on Tuesday. XL shares rose 12 cents, or 1.1 percent, to $11.13 in New York trading yesterday. The company's shares fell 93 percent last year as investment declines contributed to a $2.55 billion annual loss.