MONTE CARLO (Reuters) - XL Capital Ltd.'s reinsurance business has emerged relatively unscathed from the problems caused by XL's large stake in a troubled bond insurer, its CEO said, but he refused to comment on whether the group may be up for sale.

XL warned in its second-quarter results that some clients of its reinsurance business had limited the amount of business they did with XL due to concerns over its exposure to Security Capital Assurance Ltd. (SCA), which was pushed to the brink of insolvency by the credit crunch.

In July, XL announced a deal to essentially sever its ties with SCA, which has been renamed Syncora Holdings Ltd.

XL agreed to pay $1.8 billion to SCA as part of a deal to shed its 46 percent stake in the bond insurer, which it spun off several years ago, and end its liabilities to the firm.

It funded the deal, and bolstered its capital, through raising around $2.9 billion through the sale of new common shares and convertible securities.

The move prompted credit rating agency AM Best to remove XL's ratings from being under review and place them on a stable outlook, which has helped reassure customers in an industry where strong financial ratings are crucial to keep clients or woo new ones.

"The damage to our franchise was minimal," Jamie Veghte, CEO of XL Re's global operations, told Reuters on the fringes of an industry meeting in Monte Carlo.

"We lost no people and only a small amount of business. Some companies took some action against us, but the vast majority have now put us back on their 'fully approved' list."

Mr. Veghte said: "I'm buoyant about XL Re and our prospects, even though we're in a competitive environment."

But he refused to comment on remarks by the CEO of another Bermuda-based insurer that the entire XL group may be on the block.

John Charman, chief executive of Axis Capital Holdings Ltd. told an insurance conference last week that rivals were poring over XL as a potentially attractive takeover target, because it is the first global property-casualty insurer to come on the market since Cigna Corp's property-casualty unit was sold to Ace Ltd. nearly a decade ago.

"I've read the report, but I've got no comment on that," said Mr. Veghte.

XL's new group chief executive, Mike McGavick, has said he is to review whether XL's life reinsurance business should remain part of the group, but XL's recent woes, when it posted large losses as a result of SCA, has sparked speculation that he may decide to sell off other parts of the business.