XL Capital Ltd is coping with tough market conditions in the world-wide insurance industry by asset accumulation and cross-selling among companies it has recently merged with, according to the company's president and chief executive officer Brian O'Hara.

In an article in Insurance Day newspaper, an industry paper produced in the USA, Mr. O'Hara explained how it was surviving in the soft market.

The article entitled `Culture of Change and Opportunism' listed problems confronting XL with the globalisation of industry such as pricing, changing customer expectations, shifting regulatory environments and freer flow of capital.

He said: "The Internet, the speed of technological development in an increasingly digital age and the emergence of commoditised insurance products are all contributing to accelerate the pace of change in an industry in which the boundaries between insurance, banking and securities markets continue to blur.'' He said that for publicly-traded entities like XL Capital, the task of operating profitable business units in the areas of insurance, reinsurance and financial products, represents only one set of management issues.

Mr. O'Hara said: "Other challenges arise from the need to create and maintain shareholder value, particularly over the short term, an objective which does not seem to be easily accomplished these days without .com after your company name.

"Like jugglers, today's professional managers have to balance the needs and demands of all stake holders: shareholders, customers, employees and the interests of the communities in which we operate.'' Mr. O'Hara said for many companies, consolidation appears to provide the answers.

"Scale offers companies at least partial protection from the problems of over-capacity, adding shareholder value, providing critical mass, increasing market share and enabling resources to be funded.'' In the in-depth article, published last week Mr. O'Hara said that because scale is currently difficult to achieve through organic growth, increased merger activity has produced record numbers of transactions.

XL completed three mergers last year alone and Mr. O'Hara said he believes that XL's own merger and diversification strategy has helped the group develop from an essentially monoline, excess liability insurance carrier into a multi-line, multi-disciplined organisation.

XL now has a work force of more than 2,000, assets of more than $14 billion and operations in almost 20 countries.

"To achieve long-term success while creating short-term shareholder value, we have been focusing on developing cross-selling opportunities among our newly merged operating units and expanding in under-served markets, such as financial guaranty.

"Asset accumulation is another new focus for us, one that works well with our superior expertise. Our investment team currently oversees approximately $9 billion in assets.'' Mr. O'Hara said the company had been re-defining itself for some time and pointed the name change at the beginning of 1999 from EXEL Ltd to XL Capital as proof.

"Change can be a friend or a foe but it is always a challenge. Fortunately for us, it was fundamental change in the liability insurance market that led to the creation of XL in 1986, successive phases of change that have helped keep us focused on customer needs and it is change that continues to drive the culture of entrepreneurialism within XL.

"XL Capital's success hinges on a corporate culture that is built for transformation, that is opportunistic, smart and agile, that is continually learning and able to reconfigure and refine itself as unknown challenges confront and in turn confound conventional practices.'' Brian O' Hara, CEO of XL: `Our success hinges on a corporate culture that is built for transformation... that is smart and agile.'