XL Capital Ltd’s (XL Capital) total net premiums earned were in line with our expectations, while bottom-line was better than forecast. However, the company reported a significant decline in gross written premiums, below our expectations, which does not bode well for the future. Moreover, before the preference share dividend, reported net income only just managed to reach positive territory....

Despite an improvement in premium rates following the massive losses triggered by hurricane activities and large investment losses, we believe that the impact of losses from investment and affiliates, economic recession and a 38.5% y-o-y reduction in the company’s capital in FY 2008 will impose restrictions on its ability to write new business. The company reported a strong decline in premiums…

XL Capital Ltd.’s (XL Capital) common stock price increased significantly on 18 March 2009 reflecting improvement in global financial markets on the day. However, we remain concerned regarding the impact of the company’s ongoing massive losses from investments and affiliates, which are expected to continue. Given our outlook for the company and the current price level we downgrade the NYSE common stock rating from a HOLD…