XL Capital Estimates Quarter Loss of $1.65B, Chairman Sells Stocks to Meet Margin Call
Bermuda-based insurer XL Capital Ltd announced on Tuesday a quarterly net loss of $1.65 billion to $1.67 billion, and said that its chairman involuntarily sold about 80 percent of his common shares last week to meet a margin loan call.
In announcing its preliminary results for the third quarter, XL said the loss was caused partly by a $1.4 billion charge related to the Aug. 5 deal with Syncora Holdings Ltd., formerly Security Capital Assurance Ltd.
The company also said it had net losses of $27.4 million and $195.4 million from Hurricanes Gustav and Ike, a charge of $41.7 million related to a streamlining of corporate functions, and a charge of $22.5 million arriving from the redemption of XL America Inc.’s $255.0 million guaranteed senior notes.
However, the company's estimate of profit excluding one-time items was above analysts' forecast, sending shares up more than 43 percent to $10.65 in early morning trading.
In a separate announcement, XL said that Brian O’Hara, chairman of its board of directors, had involuntarily sold approximately 80% of his XL common shares in order to meet a margin loan call.
“I regret that last Thursday I was forced to sell approximately 80% of my XL shares. I have pledged those shares as collateral to secure a personal loan used to fund purchases of XL shares in order to avoid the expiration of certain options,” Mr. O’Hara said in a statement.
“The forced sale was due to the precipitous drop in XL’s share price last week. The sale in no way reflects a lack of confidence in XL’s current and future prospects,” he added.
Published on October 14, 2008
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