In the wake of rumors that Bermuda-based insurance giant XL Capital Ltd. is up for sale, the company said it is exploring "value-enhancing opportunities available to it."
The vaguely worded announcement, said the company typically does not respond to rumors, but under "the current circumstances" it felt it was appropriate to make a statement.
An outright denial of any sale was not part of the statement. The company said it is looking at opportunities and that it is being assisted in this effort by the financial advisor Goldman, Sachs & Company.
XL said it "remains focused on operating its business and meeting the needs of its customers" while taking action to maximize shareholder value.
According to one report, the company is looking for a buyer because it reported investment losses larger than its market value.
But, XL said it expects to report fourth quarter mark-to-market declines in its investment portfolio to largely be in line with its third quarter report.
In a filing with the Securities and Exchange Commission yesterday, XL reported a net loss of more than $1.6 billion for the third quarter (compared to net income of $372 million for the third quarter of 2007), in line with what it reported in a preliminary announcement in mid-October.
For the nine months, the company reported a net loss of more than $1.13 billion, compared to net income of $1.5 billion for the previous year.
The loss was primarily the result of $1.4 billion charge related to the Aug. 5 payment to Syncora Holdings Ltd. to terminate, commutate or restructure financial guarantee and reinsurance arrangements with Syncora.
Syncora was a former subsidiary of XL dealing in guaranty insurance.
The company also reported losses from Hurricanes Gustav and Ike totaling $221.8 million, net of reinsurance recoveries and reinstatement premiums.
XL reported in the same filing that as of Sept. 30 it had cash and cash equivalents of approximately $5.6 billion, and that it "maintains credit facilities which provide additional liquidity."
Noting that the financial markets are in-flux, XL said these movements will affect the ultimate worth of its investment portfolio. It added that it estimates that it will report approximately $200 to $220 million in net investment fund affiliate losses from its alternative investment portfolio for the fourth quarter.
During a conference call in October, Michael S. McGavick, XL's chief executive officer, condemned rumors at the time that painted a bleak financial picture of the company.
He also said during that conference call that the company was undertaking a strategic review of its life reinsurance operations.
(This story was updated at 4:33 p.m.)
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