Background
XL Capital, through its operating subsidiaries, provides insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis.
           
XL is Bermuda’s second largest company, formed in 1986 as EXEL Limited, in the vanguard of the development of Bermuda’s insurance sector. XL’s formation came in response to severe shortages of excess liability coverage. In response to this problem, brokers Marsh & McLennan, led by Robert Clements and Robert Newhouse, Jr., persuaded several dozen major US companies to invest in two ventures, ACE (q.v.) and XL, that would underwrite the excess liability needs of its shareholders.
           
The founders’ fears that companies with dozens of shareholders apiece would prove unwieldy to operate were quickly dissipated. In Bermuda’s greenhouse atmosphere, XL Capital has grown solidly for almost 20 years.
           
In that time, the phrase “ACE and XL” has come to act as shorthand, in the Bermuda context, for the burgeoning insurance and reinsurance industry on the Island.
           
Headquartered on Bermudiana Road, in its own XL House, the company is now numbered among the largest insurance companies in the world. XL Re, on its own, is one of the largest reinsurance companies.
           
The company has grown though a mix of acquisition and organic development. Most recently it purchased the XL Winterthur International companies, which were rebranded as XL Insurance Global Risk, and acquired renewal rights for professional liability policies from Royal & Sun Alliance USA’s DPIC unit.
           
Today XL has more than 90 operating subsidiaries in 30 countries, with approximately 3,300 employees. XL’s existence has become intimately interwoven with that of Bermuda. In the future, the company will stand as the example for some of the Bermuda companies that have been formed in the waves of capital since XL, which will use its development as a template.

Spotlight – XL Re
XL Re is the global brand used by XL Capital Ltd’s reinsurance companies. XL Re writes all lines of property and casualty and life reinsurance.
XL Re underwrites on a worldwide basis across many lines of business, focusing on short-tail lines, particularly in the property catastrophe market;
XL Re Ltd (London branch) consists of six distinct underwriting teams, including marine, aviation, property treaty, property facultative, casualty and life, generally focusing on non-US cedants;
XL Re Latin America predominantly provides traditional and some non-traditional multi-line reinsurance and alternative risk management products to Latin American cedants
XL Re Europe SA (formerly known as Le Mans Ré) writes medium-size to large risk, on proportional and excess of loss basis, for both short and long tail risks; and
XL Reinsurance America provides property and casualty treaty, facultative and automatic facultative reinsurance, surety and marine products to North American cedants.

Analysis
The XL Capital group is composed of three main operating segments: insurance, reinsurance, and financial products and services.
The insurance segment encompasses the company’s property and casualty insurance business globally. Branded as XL Insurance, the segment offers commercial property and casualty insurance products, primarily in Bermuda, Europe, and North America.

The reinsurance segment, branded as XL Re, is organised on a geographical basis, reflecting the locations of the insurance and reinsurance companies that purchase property, casualty and life reinsurance coverage from the company.
The financial products and services segment, branded as XL Financial, comprises financial guarantee insurance and reinsurance, institutional life and annuity products, and weather and risk management.

The company’s alternative risk transfer business, XL Financial Solutions, also uses the combined resources of all three of XL’s main operating segments.
On a global level, the XL companies enjoy strong relationships with the world's leading brokers, and, at a local level, with the best regional and independent brokers. Depending upon the type of product they seek and their geographical location, customers may access the XL Capital companies through retail and wholesale brokers. In certain jurisdictions they may also access the XL companies directly.

For the first half of 2005, XL derived 27 percent of its gross premiums written from its life and annuity operations. The Bermuda market has traditionally been focused on property/casualty operations, but life and annuity began to be written on the Island in earnest a few years ago. The development has broadened the Bermuda market and added depth to its intellectual pool. XL’s life and annuity business almost doubled in the first half of 2005, bringing to XL much the same effect.

As of June 30, 2005, XL Capital had consolidated assets of approximately $53.3 billion.

Senior management
Chairman: Michael P. Esposito
President and CEO: Brian O’Hara
CFO: Jerry de St. Paer

Financial data
(half-year to June 30, 2005)
Gross premiums written: $7.490 billion, up 10 percent
Net premiums earned: $5.612 billion, up 22 percent
Net income: $599.0 million, down 00 percent
Shareholders’ equity: $8.372 billion, down 28 percent

Website
www.xlcapital.com