Standard & Poor's Ratings Services yesterday said it had revised its outlook on XL Group plc to stable from negative.

The Dublin-based global business insurer, which has substantial operations in Bermuda, welcomed S&P's actions yesterday.

The move is another sign of the recovery of XL, which suffered from its exposure to bond insurer Syncora Holdings Ltd. and structured-credit investments during the financial crisis.

"The revision of the outlook to stable recognises the group's success in strengthening its capitalisation and financial flexibility," said Standard & Poor's credit analyst Steven Ader. "It has done so by derisking its investment portfolio while sustaining strong operating results and a strong, stable competitive profile."

S&P also affirmed XL's A counterparty credit and financial strength ratings on the firm's core insurance subsidiaries and its BBB+ counterparty credit ratings on the holding companies.

S&P noted that XL has a higher potential for realised investment losses and potential losses from run-off businesses than its property and casualty insurance peers, but added that it had markedly reduced this potential

"We do not anticipate that any such losses would materially detract from the group's continued strong operating performance," S&P commented.

"Furthermore, our revised assessment of the group's enterprise risk management to strong supports our belief that XL has materially reduced the potential for unanticipated material losses, which hurt its historical earnings performance."

S&P changed its assessment of XL's Enterprise Risk Management (ERM) to strong from adequate.

XL chief executive officer Mike McGavick said: "We are extremely pleased with S&P's actions. XL has taken significant steps to concentrate on our core insurance and reinsurance businesses while derisking our investment portfolio and strengthening our ERM. It is gratifying to have these efforts acknowledged by S&P.

"With XL's solid ratings and operating performance, strong capital position, top talent and enhanced ERM, we have demonstrated our competitive resilience and we remain fully focused on providing superior value to clients and investors."