XL Capital’s shares plunged up to 51 percent today after reports that the Bermuda-based insurance giant is seeking a buyer.

A story on the Bloomberg wire said XL had hired New York bank Goldman Sachs to gauge interest from potential buyers, according to four people with knowledge of the matter that Bloomberg said it had spoken to.

XL’s market capitalisation has fallen from $20bn less than a year ago to $1.05bn this afternoon, making it a more affordable takeover target.

“It’s not XL’s policy to comment on market rumors and speculation,” XL spokeswoman Carol Parker Trott said.

Bermuda rivals Axis Capital and Arch Capital have been widely rumoured to be potential buyers.

In New York Stock Exchange trading, at 2.12 p.m. Bermuda time, XL was trading at $3.09, down $2.70, or 47 percent.

The scale of the sell-off was evident from the fact that the volume of XL shares traded was 48.5 million, compared to average of eight million over the past ten days.

* Full story in tomorrow's Royal Gazette.