Ratings firm AM Best has affirmed the financial strength rating of A (excellent) and issuer credit ratings of “a” of XL Group’s property/casualty subsidiaries.AM Best has also affirmed the ICRs of “bbb” of XL and XLIT Ltd. (Cayman Islands) as well as all debt ratings of XLIT Ltd. The outlook for all ratings is stable.According to AM Best, the rating affirmations reflect the organisation’s excellent risk-based capitalisation, strong worldwide market presence and the completed de-risking of the group’s investment portfolio.“XL subsidiaries’ property/casualty operating results have been profitable through the first six months of 2012, with a combined ratio of 93 percent,” said the company in a statement. “The group averaged a favourable combined ratio of 95.9 percent for the previous five years.“The XL management team has implemented strategies that support and promote an enhanced risk management programme and a continuing focus on underwriting as the key component of the group’s business approach. Management’s focus on its core underwriting strengths has been exhibited by the addition of a substantial number of new senior underwriters. Furthermore, as a result of XL’s completed de-risking of its investment portfolio, the organisation has successfully reduced the level of market volatility in its investment results.”AM Best believes XL’s debt-to-capital ratio is expected to remain in the 15 percent to 25 percent range as capital is anticipated to be enhanced by strong earnings. The fixed charge coverage has stabilised and is expected to remain comparable with the current level over the near term.Positive rating actions could occur, said AM Best, if over the next several years XL exhibits consistency in its underwriting and net earnings in line with other comparably rated peers, along with retained earnings growth.“Negative rating actions could occur if the organisation’s operating performance is consistently below the market by a significant margin for several years, or if capital erosion due to operating performance or investment volatility exceeds AM Best’s expectations.”