Brian O ‘Hara, XL Capital’s president and chief executive officer comments: “Sovereign has been a consistently profitable part of XL’s insurance operations since its formation in 1997 and I would like to commend the team at Sovereign for a job well done. Our exit stems from a change in our strategy for assuming risk in emerging markets, and we believe this restructuring is a win for all parties.”

Sovereign is a leading provider of political risk insurance and reinsurance. Sovereign’s portfolio exceeds US$6.5bn of exposure spread over 75 emerging markets.

All policies issued by Sovereign after February 1 will be 100% Ace security, rather than 50:50 Ace and XL. The security on all outstanding policies will remain unchanged, and Sovereign will continue to manage these policies as before.