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XL Capital backs up operating units

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HAMILTON, Bermuda—XL Capital Ltd. has set up a Cayman Islands-based vehicle to provide reinsurance for certain XL operating entities.

Fitch Ratings last week said it has assigned an A+ issuer default rating to Stoneheath Re, which received its license in October, according to the Cayman Islands Monetary Authority.

Stoneheath Re is an exempted company formed to issue noncumulative perpetual preferred securities, according to Fitch.

Fitch said it has assigned an A- underlying rating to Stoneheath Re's issuance of the securities. Proceeds from the securities will be deposited in a trust account to collateralize Stoneheath Re's reinsurance obligations.

After three months, XL can change the perils covered under the reinsurance agreement, attachment points and aggregate retentions. XL can make such changes every six months, according to Fitch.

XL declined to comment on the arrangement.

Separately, New York-based Standard & Poor's Corp. assigned a BBB preferred stock rating to Stoneheath Re's proposed noncumulative perpetual preferred securities, while Moody's Investor Services Inc. assigned them a Baa2 rating.