Fitch Assigns `A+' Rtg To XL Finance -UK- plc $500MM Sr Nts

Business Wire, Sept 10, 2001

Business Editors

CHICAGO--(BUSINESS WIRE)--Sept. 10, 2001

Fitch has assigned an `A ' rating to XL Finance (UK) plc's (XL Finance) offering of $500 million of 6 3/8% senior notes due in 2011. XL Finance is a special finance subsidiary of XL Capital Ltd. (XL). XL Capital guarantees the senior notes of XL Finance. XL Capital has a Fitch senior debt rating of `A '.

Proceeds from the offering will be used to repay outstanding debt, and for general corporate purposes including funding potential acquisitions and share repurchases. The rating reflects XL's position within the global insurance and reinsurance markets, history of favorable underwriting and earnings performance, strong interest coverage and operating cash flow, and adequate capital position.

XL's financial leverage has increased significantly in 2001 due to previous financing activity. Following the completion of the $500 million senior notes offering, the company's consolidated debt to total capital ratio will increase to approximately 27%, up from 7.4% at year-end 2000. The ratio is expected to decline to between 20-22% in the near term due to repayment of existing debt and growth in retained earnings.

The company has strong debt servicing capability. Operating cash flow and dividend capacity of insurance subsidiaries is sufficient to meet interest and principal obligations on outstanding debt obligations. Interest coverage remains favorable, with a coverage ratio of 12.5 times (x) for the first half of 2001 and 11.0x for the full year 2000.

XL is a Cayman Islands-based holding company with subsidiaries providing insurance, reinsurance and specialty financial products and services on a worldwide basis. The company reported consolidated GAAP assets of $18.7 billion and shareholders equity of $5.7 billion at June 30, 2001.

Entity/Issue/Type/            Action       Rating/Outlook

XL Finance (UK) plc
--Senior notes               Assigned        `A '.