For full-year 2003, the Bermuda-based XL reported $371.7 million in net profit, down a bit from net income of $396 million reported for 2002.

Last month, XL announced it was taking a $694.1 million pre-tax, $647 million after-tax, charge for its 2003 fourth quarter. The company said the charge, which follows previously announced claims-audit and regularly scheduled year-end reserve reviews, will largely cover reinsurance losses in its North American operations involving contracts sold by NAC Re Corp., a reinsurer that XL bought in 1999.

XL had already added some $160 million after tax to its North American operations' reserves during the 2003 third quarter to account for higher-than-expected losses, mostly from new casualty claims for 1997-to-2000 underwriting years. Since then, the company has been examining further whether it has fully adequate reserves to address these losses.

However, in this week's fourth-quarter earnings release, XL noted that it achieved several operational improvements for its full-year 2003. The company pointed out that net premiums earned from its general operations rose by 24 percent compared to 2002, while investment income jumped 6 percent to $780 million. Additionally, cash flow from operations was a record $3.4 billion, and total assets increased 14 percent to $41 billion, the company said.

XL Chief Executive Brian O'Hara said "the positive underlying dynamics" in its latest financial figures reflect the favorable underwriting market conditions as well as XL's strong position in its chosen markets. "We are producing solid growth and strong underlying profitability," Mr. O'Hara said.

XL Capital, through its subsidiaries, offers liability insurance and reinsurance worldwide, specializing in low-frequency, high-severity risks from riots to natural disasters. The company also manages five Lloyd's of London syndicates. XL coverage includes general/executive liability, property and political risk insurance, while its reinsurance covers property, aviation, energy, nuclear accident and professional indemnity.