XL Takes $694 Million Reserve Charge
|NU Online News Service, Jan. 13, 8:16 p.m.EST?XL Capital Ltd. in Hamilton, Bermuda said that as theresult of an audit it would take a pretax reserve charge of $694million to cover reinsurance losses mostly from liability businessinvolving directors and officers and medical malpracticebusiness.
|The charge of $647 million after taxes will amount to $4.73 pershare in the fourth quarter of 2003, the company said.
|XL said the majority of the charge, amounting to $663 millionpre-tax, resulted from adverse developments from its North Americanreinsurance operations for casualty business written during the1997 through 2001 underwriting years.
|Brian M. O'Hara, XL president and chief executive officer saidthe extraordinary audit was undertaken after an acceleration inthird quarter claims related to business the company underwrotefrom 1997 to 2001 years.
|Because of the continuing claims spurt through the fourthquarter, Mr. O'Hara said the company has changed the actuarialdevelopment patterns it normally would have used.
|Mr. O'Hara said that as a result of the charge the companyplanned to issue convertible securities to raise at least $750million in the first half of this year "to sustain appropriatelevels of capital for our business.
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