HAMILTON, Bermuda—XL Capital Ltd. is looking for a new chief executive officer for the first time in 13 years.

The Bermuda-based insurance giant announced last week that Brian O'Hara, who joined XL when it was founded in 1986 and became CEO in 1994, will retire next year. Chairman Michael P. Esposito Jr. also will retire once Mr. O'Hara's successor is named, and Mr. O'Hara will take over as chairman for the final year of his current term as an XL director, expiring in 2009.

XL's board of directors has formed a succession committee to find Mr. O'Hara's replacement, a process that could take six months, Mr. O'Hara said in a conference call with stock analysts last week.

While Mr. O'Hara stressed that XL will look at candidates both inside and outside the company, some analysts say they expect an insider to be named and one said the likely choice will be Henry C.V. Keeling, currently chief operating officer and Mr. O'Hara's second in command.

An XL spokesman acknowledged that Mr. Keeling "is a very strong internal candidate," but said the search process will go "well beyond" current XL officers.

In the conference call with analysts, Mr. O'Hara, who is 59, said he had "mixed emotions" about retiring but that XL's strong prospects deserved "the energy of a new generation of leadership."

"I have been privileged to spend the last 20 years of my career working with extraordinary talent to build a unique and highly successful global enterprise," he said separately in a statement.

Mr. O'Hara has helped guide XL through two decades of extraordinary growth, though the road hasn't always been smooth.

Conceived by Marsh Inc. and JP Morgan & Co., XL was capitalized by 68 Fortune 500 companies to write excess liability coverage amid a capacity crisis in the existing market. Mr. O'Hara was there at its 1986 inception, moving from Trenwick Group Inc. to become XL's president and chief operating officer. Eight years later, he succeeded Michael Kevany as CEO.

After going public in 1991, XL invested in, and later took over, property catastrophe reinsurer Mid Ocean Ltd. and its Lloyd's of London operation, Brockbank Group P.L.C.; acquired Folksamerica General Insurance Co. and NAC Re Corp., which became U.S.-based insurance and reinsurance units; and launched operations in Latin America, Europe and Asia.

In 1986, XL wrote $206 million in U.S. excess liability premiums from a small office in Bridgetown, Barbados. By 2006, it recorded total revenues of $9.8 billion from an array of property/casualty and life products written through 72 offices around the world; it reported total assets of $59.3 billion and shareholders equity of $10.1 billion.

2005 brought trouble to Mr. O'Hara and XL's top managers, though. After reporting $1.47 billion in catastrophe losses for that year's third quarter and a $182.9 million increase in reserves for NAC Re losses, XL was forced to take an $830 million fourth-quarter charge against earnings after losing an arbitration case with Winterthur Swiss Insurance Co. over reserves for a Winterthur unit that XL had acquired in 2001.

The cat losses and Winterthur charge damaged XL management's credibility, some analysts said at the time, and Standard & Poor's Corp. downgraded the insurer's financial strength rating to A+ from AA-.

XL responded quickly with a risk management initiative, reducing its property cat exposure, exiting unprofitable lines and shoring up its balance sheet.

In June 2006, the company also restructured its top management, creating an Office of the CEO and reducing the number of XL executives reporting directly to Mr. O'Hara. The OCEO comprises the company's chief financial officer, chief investment officer, chief operating officer, chief executive for business services and chief of staff, all of whom report to Mr. O'Hara.

Since its rocky 2005 performance, XL has posted seven straight quarters of solid results—including last week's announcement of $328 million in net income for 2007's third quarter and a combined ratio of 87.4% for insurance operations—and criticism of its management has abated.

"I don't think that same pressure is on the organization today," said Jeff Berg, senior vp with Moody's Investors Service in New York.

Asked about the timing of Mr. O'Hara's retirement, an XL spokesman said, "The company is in great shape. If you were going to do this at any time, why not do it now?"

Analysts were generally positive not only about XL's performance this year but of its succession planning, including its intent to look outside the company for a new CEO.

"We believe this is a good time for a leadership change," Bear Stearns & Co. Inc. Analyst David Small wrote in a research note. "Mr. O'Hara appears to have stabilized the company following a shaky run earlier in the decade and at this point a new leader will not be walking into a crisis situation."

Regarding XL's consideration of outside candidates, Mr. Berg added, "It's the smart thing and the disciplined thing for the board to look at all their options before making a decision."

"They have a duty to shareholders to find the best candidate possible," agreed Tana Higman, a director with Fitch Ratings Ltd. in Chicago.

Analysts with Goldman Sachs & Co. and Lehman Bros., meanwhile, predicted that an insider will ultimately be the XL board's choice. Jay Gelb, a Lehman analyst based in New York, suggested who that is likely to be.

"We anticipate XL's chief operating officer Henry Keeling will take on the CEO role in a smooth transition after current CEO Brian O'Hara retires," Mr. Gelb wrote last week.

Mr. O'Hara could not be reached for comment.

Timeline: Brian O'Hara

1975-1979: Worked at General Re Corp., ultimately managing its captive reinsurance business.

1979-1986: Senior vp and chief underwriting officer at Trenwick Group Inc.

1986-present: Joined XL at its inception as president and chief operating officer; appointed chief executive officer in 1994. Guided XL's expansion from a Fortune 500 excess liability insurer with $206 million in gross premiums in 1986 to a global property/casualty insurer and reinsurer with total revenues of $9.8 billion in 2006.

June 2006: XL creates an Office of the Chief Executive Officer, comprising five top XL officials reporting to Mr. O'Hara and assuming direct responsibility for five broad areas of the insurer's operations.

October 2007: XL announces that Mr. O'Hara will retire as CEO in mid-2008 and that he will serve as chairman for a year after his retirement.