(Bloomberg) ? XL Capital Ltd., a Bermuda-based property and casualty insurer, had its credit and financial strength ratings cut by Moody?s Investors Service after hurricane claims triggered a third-quarter net loss of $1.04 billion.

Moody?s lowered the senior debt rating on XL one notch to A3, the rating company said in a statement yesterday. The financial strength ratings on its main insurance units, which measure the company?s ability to pay claims, were cut to Aa3.

XL said it would drop riskier clients unwilling to pay higher prices after Hurricane Katrina and other natural catastrophes cost $1.47 billion. Moody?s, which had been reviewing XL for potential downgrades since September 13, said the hurricane losses added to concerns about the company?s ?risk- taking appetite.?

Roger Scotton, a spokesman for XL, didn?t immediately return phone calls seeking comment. Moody?s now rates XL?s senior debt one notch below the comparable rating at Standard & Poor?s. S&P has been reviewing the rating for a possible downgrade since September 20.

Katrina, which hit Louisiana, Mississippi and Alabama on August 29, may have been the industry?s most expensive US disaster, costing insurers an estimated $40 billion to $60 billion, according to storm modeller Risk Management Solutions Inc. On October 25, XL forecast an operating loss for the year.

Shares of XL fell 14 cents to $72.20 in New York Stock Exchange composite trading. The stock has risen 1.7 percent since Katrina?s landfall, compared with an 11 percent gain in the KBW Insurance Index.