The disagreement involved a credit default swap in which protection was purchased in 2000 by SRFP on a number of reference entities, a term applying to companies whose bankruptcy or credit deterioration can trigger payments by the seller of protection in a credit default swap. Both SRFP and XL Insurance (Bermuda) Ltd stressed that such a contractual dispute may occasionally arise as the industry fine tunes processes and definitions associated with credit derivative contracts. At no time was XL Insurance (Bermuda) Ltd under any obligation to make payments under the swap and the suit did not involve any such allegations.
As part of the settlement agreement, SRFP and XL Insurance (Bermuda) Ltd will keep the swap in place as well as amend and restate a written confirmation that they originally executed. They agreed to keep all other details of the agreement confidential.
XL Insurance (Bermuda) Ltd is a wholly-owned subsidiary of XL Capital Ltd in Bermuda. SRFP is a New York-based unit of Swiss Reinsurance Co., Zurich.
XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis. As at December 31, 2001, XL had consolidated assets of approximately $28 billion and consolidated shareholders' equity of approximately $5.4 billion. More information about XL is available at www.xlgroup.com.