S&P rates XL Capital converts A

Standard & Poor's said it assigned its A senior unsecured debt rating to XL Capital Ltd.'s $750 million equity security units issue and revised its outlook on XL Capital and the group's other core holding companies - Nac Re Corp. and XL America Inc. - to negative from stable.

In addition, S&P affirmed its A counterparty credit ratings on these three companies.

All other ratings assigned to members of the XL Capital Group, including the AAA financial strength ratings on XL Capital Assurance Inc. and XL Financial Assurance Ltd., are unchanged.

"The negative outlook on XL Capital reflects the potential for a move from narrowed notching to standard notching if operating performance does not improve to a level to support interest coverage of 5x-8x in 2004," said S&P credit analyst Karole Dill Barkley. "Current expectations are for very strong financial performance from the group during the next year."

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