Share price falls by a third as reinsurer reported to be looking for buyer
There are reports that reinsurer XL Capital has hired Goldman Sachs as an adviser to explore the sale of the company.
The report was on the Bloomberg financial news service, and cited unnamed sources. It is not the first time that there have been rumours that XL is for sale.
On the New York Stock Exchange, XL shares fell by a half before closing down a third at $3.90 on Wednesday.
If a sale is contemplated, it will not be simple to find buyers. "The buyer list has shrunk considerably," in recent months, said Cliff Gallant, an insurance analyst with Keefe, Bruyette & Woods in New York. "Stock prices are weaker, and investment portfolios have taken large hits. There are not that many bidders anymore, and for that reason I think XL is a hard sell," he said.
"We do not think there are any liquidity problems. It seems XL can pay their claims, but there is clearly some panic in the markets," Gallant added.