Bermuda-based XL Capital Ltd. is leading the pack, taking a reserve charge of US$694 million on its fourth quarter results to deal with prior year claims. After an extensive claims review, the company says it must take the charge, which amounts to US$647 after tax, largely as a result of adverse development on losses from casualty business at XL Reinsurance America Inc. for the years 1997-2001. The audit was prompted by unusually high claims in the third quarter related to prior year losses, says XL CEO Brian O’Hara. “This trend continued in the fourth quarter, in response to which we have changed the actuarial development patterns that would normally have applied to the expected loss development of the business.” A small number of cedents accounted for 78% of the additional case reserves, which totaled US$124 million, in problematic lines such as medical malpractice and directors’ and officers’, notes an XL press release. “Incurred but not reported” (IBNR) reserves were increased by US$539 million. Additional reserve charges related to the normal 2003 yearend reserve review totaled the remaining US$31 million. The company plans to raise an additional US$750 million in capital in the first half of 2004, adds O’Hara.