XL Capital Ltd., a Bermuda-based property and casualty insurer, raised reserves for reinsurance claims, cutting second-quarter profit by $183 million, or $1.31 a share.

The increase stems from recently reported claims on professional liability and corporate board coverage that clients sold between 1997 and 2001, among other policies, XL said today in a statement. It would erase more than half of the $2.43 a share XL was expected to earn before investment gains and losses, according to a Thomson Financial poll of analysts.

XL said almost a third of the reserve increase stems from a single insurance client?s workers compensation claims, and other clients are recognizing losses in a more timely fashion. Two earlier increases since 2003 have cut profit by more than $800 million, and the company today said it?s still reviewing whether there are shortfalls in its reserves for life reinsurance.

?It?s extremely disappointing given it has been an ongoing issue,? said Mark Lane, an analyst at William Blair & Co. who has an ?outperform? rating on the stock. XL said the reserve study should be completed by July 27, when it releases second- quarter results.

Policies sold in the late 1990s have been particularly damaging to insurers. The policies, sold when investment returns were soaring, proved too cheap amid a surge in lawsuits following accounting scandals such as Enron Corp. Reinsurance helps insurers limit their losses.

The reserve boost may hurt chief executive Brian O?Hara?s credibility, said Morgan Stanley analyst William Wilt, who has an ?underweight? rating on XL shares.

?He had previously been adamant that the company?s reserves were adequate following a series of charges stretching back? to the second half of 2003, Wilt wrote in a note to clients. XL spokesman Roger Scotton didn?t return phone calls seeking comment.

The company?s shares fell 30 cents to $73.88 in New York Stock Exchange composite trading. The announcement was made after the close or regular trading. The stock has fallen 2.1 percent in the past year compared with a 10 percent rise in the KBW Insurance Index.