XL's combined ratio was 182.2 percent, but if the catastrophes in the third quarter are excluded, it would have been 88.7 percent.

"The third quarter's insured market catastrophe losses, which we estimate at $60-to-$72 billion, were greater than our industry has seen in any previous calendar year," said Brian M. O'Hara, president and chief executive officer of XL Capital. "Our loss estimation process has embraced the extraordinary breadth, magnitude and complexity of these events."

With these catastrophes, however, Mr. O'Hara said XL also expects to see "significant opportunities across the board," especially in catastrophe-exposed lines, for the 2006 renewal season.

In an effort to seize those opportunities, XL said it is entering a quota share reinsurance treaty with a new reinsurance company, which it did not identify. Although XL noted that it will not be an equity investor in the newly-formed reinsurer, it acknowledged that the lead investor would likely be investment funds managed by an alternative asset manager with whom the company "has had a long standing relationship."

Under the agreement, XL said it would cede specified portions of its property catastrophe and retrocessional lines of business.

"We believe that this treaty will reinforce XL's leadership position in these lines of business, reduce our volatility, provide incremental earnings and therefore maximize our shareholders' risk adjusted return," Mr. O'Hara said.