CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Be Registered |
Maximum Aggregate Offering Price |
Amount of Registration Fee(1) | |
| XLIT Ltd. 2.30% Senior Notes due 2018 |
$300,000,000 | $38,640.00 | |
| XLIT Ltd. 5.25% Senior Notes due 2043 |
$300,000,000 | $38,640.00 | |
| XL Group plc Guarantee(2) | N/A | – | |
| (1) | Calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended. This “Calculation of Registration Fee” table shall be deemed to update the “Calculation of Registration Fee” table in the registrants’ registration statement on Form S-3ASR (File No. 333-177869 and 333-177869-01). |
| (2) | Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate fee for the guarantee is payable. |
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-177869 and 333-177869-01
Prospectus Supplement (To prospectus dated November 9, 2011)
$600,000,000
XLIT Ltd.
2.30% Senior Notes due 2018
5.25% Senior Notes due 2043
Guaranteed by
XL Group plc
We are offering $300,000,000 aggregate principal amount of our 2.30% Senior Notes due 2018 (the “2018 Notes”) and $300,000,000 aggregate principal amount of our 5.25% Senior Notes due 2043 (the “2043 Notes”). The 2018 Notes and the 2043 Notes are referred to collectively as the “senior notes.” The 2018 Notes offered hereby will mature on December 15, 2018, and the 2043 Notes offered hereby will mature on December 15, 2043. Interest on the senior notes will be payable on June 15 and December 15 of each year, beginning June 15, 2014. The senior notes will be issued only in minimum denominations of $2,000 and increments of $1,000 in excess thereof. The senior notes will be obligations of XLIT Ltd. and will be fully and unconditionally guaranteed on a senior unsecured basis by XL Group plc, which we refer to as the “guarantees.”
We will be entitled to redeem the senior notes in whole at any time, or in part from time to time, at the make-whole redemption prices described in this prospectus supplement. We will be entitled to redeem the senior notes in whole, but not in part, at any time upon the occurrence of certain tax events as described in this prospectus supplement.
The senior notes will be unsecured and rank equal with all our existing and future unsubordinated debt. The senior notes will be effectively junior to our existing and future secured debt to the extent of the value of the collateral securing such debt, and will rank senior to our future subordinated debt. The guarantees will be unsecured and rank equal with all of the guarantor’s existing and future unsubordinated debt.
See “Risk Factors” beginning on page S-4 of this prospectus supplement to read about important factors you should consider before buying the senior notes.
Neither the U.S. Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
|
|
|
|
|
|
|
|||||||||||||||
|
|
Public Offering |
Underwriting |
Proceeds to Us |
||||||||||||||||||
|
Per 2018 Senior Note |
|
|
99.690 |
% |
|
|
|
0.600 |
% |
|
|
|
99.090 |
% |
|
||||||
|
Total |
|
|
$ |
|
299,070,000 |
|
|
$ |
|
1,800,000 |
|
|
$ |
|
297,270,000 |
||||||
|
Per 2043 Senior Note |
|
|
99.770 |
% |
|
|
|
0.875 |
% |
|
|
|
98.895 |
% |
|
||||||
|
Total |
|
|
$ |
|
299,310,000 |
|
|
$ |
|
2,625,000 |
|
|
$ |
|
296,685,000 |
||||||
|
||||||||||||||||||||
(1) |
|
|
The public offering prices set forth above do not include accrued interest, if any. Interest on the senior notes will accrue from November 21, 2013 and must be paid by the underwriters if the senior notes are delivered after November 21, 2013. |
|||||||||||||||||
We have applied to list the 2018 Notes and the 2043 Notes on the New York Stock Exchange under the symbols “XL18” and “XL43”, respectively. We expect trading in the senior notes to begin within 30 days of the original issue date.
The underwriters expect to deliver the senior notes through the facilities of The Depository Trust Company against payment in New York, New York on or about November 21, 2013.
Joint Book-Running Managers
|
|
|
Barclays |
Deutsche Bank Securities |
|
J.P. Morgan |
||
Senior Co-Managers
|
|
|
|
|
|
Citigroup |
Goldman, Sachs & Co. |
HSBC |
||
Lloyds Securities |
Morgan Stanley |
RBS |
Co-Managers
|
|
|
|
|
BNY Mellon Capital Markets, LLC |
Credit Agricole CIB |
ING |
Junior Co-Managers
|
|
|
|
|
|
BNP PARIBAS |
COMMERZBANK |
Wells Fargo Securities |
The date of this prospectus supplement is November 18, 2013.
Prospectus Supplement
ii
ii
S-1
S-4
S-6
S-8
S-9
S-10
S-11
S-13
S-20
S-23
S-27
S-31
S-32
S-33 Prospectus
1
1
2
4
5
6
8
9
10
11
12
15
19 DESCRIPTION OF XL GROUP ORDINARY SHARE PURCHASE CONTRACTS AND ORDINARY SHARE PURCHASE UNITS
21
22
37
40
41 ENFORCEMENT OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES LAWS
42 i
On July 1, 2010, XL Group plc (which we refer to in this prospectus supplement as “XL Group”) and XL Capital Ltd (now known as XLIT Ltd., which we refer to in this prospectus supplement as “XL-Cayman”), completed a redomestication transaction in which all of the ordinary shares of XL-
Cayman were exchanged for all of the ordinary shares of XL Group (the “Redomestication”). As a result, XL-Cayman became a wholly-owned subsidiary of XL Group. In this prospectus supplement and in the accompanying prospectus, unless the context requires otherwise and except as otherwise
indicated:
•
in the sections of this prospectus supplement that describe the business of XL-Cayman and XL Group for periods on and subsequent to July 1, 2010, “we,” “us” and “our” refer to XL Group plc and its subsidiaries; • “XL Group” or the “guarantor” refers to XL Group plc and not any of its subsidiaries; and • “XL-Cayman” refers to XLIT Ltd. and not any of its subsidiaries. In referring to the parties providing this prospectus supplement and the accompanying prospectus and making the statements set forth herein, “we,” “us” and “our” refer to both XL-Cayman and XL Group. The senior notes are obligations of XL-Cayman and are guaranteed by XL Group. Accordingly, other than in the sections of this prospectus supplement that describe the business of XL-Cayman and XL Group, unless the context otherwise requires, “we,” “us” and “our” refer to XL-Cayman. We are responsible for the information contained and incorporated by reference in this prospectus supplement, the accompanying prospectus and in any related free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to give you any other
information, and we and the underwriters take no responsibility for any other information that others may give you. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the senior notes offered by this document are unlawful, or if you are a person to whom it is unlawful
to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this prospectus supplement and the accompanying prospectus and any document incorporated by reference herein speaks only as of the date of the document that contains it,
unless another date is specifically indicated to apply. ii
This summary highlights information contained elsewhere, or incorporated by reference, in this prospectus supplement and the accompanying prospectus. This summary does not contain all of the information that you should consider before investing in the senior notes. You should read carefully this entire
prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and therein. XLIT Ltd. and XL Group plc XL Group, through its subsidiaries, including XL-Cayman (XLIT Ltd.), is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis. XL Group is
organized into three operating segments: Insurance, Reinsurance and Life Operations. XL Group is incorporated in Ireland. XL Group’s principal executive offices are located at XL House, 8 St. Stephen’s Green, Dublin 2, Ireland. XL Group’s telephone number is +353 (1) 400-5500. XL Group’s website address is www.xlgroup.com. The information contained on XL Group’s website is
not incorporated by reference into this prospectus supplement or the accompanying prospectus. XL-Cayman is incorporated in the Cayman Islands and is a wholly-owned subsidiary of XL Group. XL-Cayman’s principal executive offices are located at XL House, 8 St. Stephen’s Green, Dublin 2, Ireland. XL-Cayman’s telephone number is +353 (1) 400-5500. You can obtain additional information about us in the reports and other documents incorporated by reference in this prospectus supplement and the accompanying prospectus. See “Incorporation of Documents by Reference” in this prospectus supplement and “Where You Can Find More
Information” and “Incorporation of Certain Information by Reference” in the accompanying prospectus. S-1
The Offering Issuer
XLIT Ltd. Notes Offered
$300,000,000 aggregate principal amount of 2.30% Senior Notes due 2018.
$300,000,000 aggregate principal amount of 5.25% Senior Notes due 2043. Maturity Date
December 15, 2018 for the 2018 Notes.
December 15, 2043 for the 2043 Notes. Interest Payment Dates
June 15 and December 15 of each year, commencing on June 15, 2014. Guarantees
The senior notes will be fully and unconditionally guaranteed on a senior unsecured basis by XL Group plc. Ranking
The senior notes will be XL-Cayman’s (XLIT Ltd.’s) unsecured and unsubordinated obligations and will rank equal in right of payment with all of its existing and future unsubordinated debt. The senior notes will be effectively junior to XL-Cayman’s secured
debt to the extent of the value of the collateral securing such debt, and will rank senior to any debt of XL-Cayman that is subordinated by its terms to the senior notes.
The guarantees will be XL Group’s unsecured and unsubordinated obligations and will rank equal with all of the guarantor’s future unsubordinated debt. The guarantees will be effectively junior to the guarantor’s future secured debt to the extent of the value of
the collateral securing such debt, and will rank senior to any debt of the guarantor that is subordinated by its terms to the guarantees.
As of September 30, 2013, XL Group had no outstanding unconsolidated indebtedness for money borrowed (excluding its guarantees of subsidiary indebtedness) and XL-Cayman had $1.667 billion of outstanding unconsolidated indebtedness for money borrowed
(excluding its guarantees of subsidiary indebtedness). The senior notes will be structurally subordinated to obligations of XL-Cayman’s subsidiaries. As of September 30, 2013, XL-Cayman’s subsidiaries do not have any outstanding indebtedness for money
borrowed from unrelated entities. Optional Redemption
We will be entitled to redeem the senior notes, in whole at any time, or in part from time to time, at our option on not less than 30 nor more than 60 days’ notice, at the make-whole redemption prices described in “Description of the Senior Notes and
Guarantees—Optional Redemption” in this prospectus supplement. S-2
Tax Event Redemption
We will be entitled to redeem the senior notes, in whole, but not in part, at any time upon the occurrence of certain tax events as described in “Description of the Senior Notes and Guarantees—Tax Event Redemption” in this prospectus supplement. Covenants
The indenture governing the senior notes contains a covenant, which will apply to the senior notes, that limits our ability to create liens on the capital stock of certain of our subsidiaries. This covenant is subject to a number of important qualifications and
limitations. See “Description of the Senior Notes and Guarantees—Limitation on Liens on Capital Stock” in this prospectus supplement. Trustee, Registrar and Principal Paying
and Transfer Agent Use of Proceeds
We intend to use the net proceeds from this offering for the repayment at maturity of the outstanding $600 million principal amount of our 5.25% Senior Notes due September 2014. See “Use of Proceeds” in this prospectus supplement. Listing
We have applied to list the 2018 Notes and the 2043 Notes on the New York Stock Exchange under the symbols “XL18” and “XL43”, respectively. We expect trading in the senior notes to begin within 30 days of the original issue date. S-3
Wells Fargo Bank, National Association.
Form of the Senior Notes; Governing
Law
When issued, the senior notes will be issued as global notes in registered form and governed by the laws of the State of New York.
You should carefully consider the information set forth or incorporated by reference in this prospectus supplement, including the risks set forth in XL Group’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”) and Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013, which are incorporated by reference in this prospectus supplement and the accompanying prospectus. In addition, you should evaluate the following risks in connection with an investment in the senior notes. Each of XL Group and XL-Cayman is a holding company and substantially all of XL Group’s and XL-Cayman’s operations are conducted by XL-Cayman’s subsidiaries. XL-Cayman’s obligations under the senior notes are structurally subordinated to the obligations of its subsidiaries, and XL Group’s
obligations under the guarantees are effectively subordinated to the obligations of XL-Cayman’s subsidiaries. XL Group and XL-Cayman conduct substantially all of their operations through XL-Cayman’s subsidiaries, and XL-Cayman’s subsidiaries generate substantially all of XL Group’s and XL-Cayman’s operating income and cash flow. XL-Cayman’s ability to pay its obligations under the senior notes
depends on its ability to obtain cash dividends or other cash payments or obtain loans from its subsidiaries, which are separate and distinct legal entities that will have no obligations to pay any dividends or to lend or advance funds to XL-Cayman. XL Group’s ability to pay its obligations under the
guarantees depends on its ability to obtain cash dividends or other cash payments or obtain loans from XL-Cayman. XL-Cayman’s subsidiaries may be restricted from paying dividends by contract, including other financing arrangements, charter provisions or applicable legal or regulatory requirements, and
their ability to do so may depend on their financial condition and regulatory requirements. For a description of certain regulatory restrictions on the payments of dividends by XL-Cayman’s subsidiaries, see Item 8, Note 23 to the consolidated financial statements in the 2012 Form 10-K. In addition, except to the extent that XL Group or XL-Cayman has priority or equal claims against XL-Cayman’s subsidiaries as a creditor, XL-Cayman’s obligations under the senior notes and XL Group’s obligations under the guarantees will be structurally subordinated to the obligations of XL-
Cayman’s subsidiaries. XL-Cayman’s right to receive any assets of any of its subsidiaries upon their bankruptcy, liquidation or reorganization, and therefore the right of the holders of the senior notes to participate in those assets, will be structurally subordinated to the claims of that subsidiary’s creditors,
including trade creditors, and holders of preferred stock, if any. As of September 30, 2013, XL Group had no outstanding unconsolidated indebtedness for money borrowed (excluding its guarantees of subsidiary indebtedness), XL-Cayman had $1.667 billion of outstanding unconsolidated indebtedness for money borrowed (excluding its guarantees of subsidiary
indebtedness) and XL-Cayman’s subsidiaries did not have any outstanding indebtedness for money borrowed from unrelated entities. The terms of the indenture and the senior notes do not prohibit us from taking actions that could adversely impact your investment in the senior notes. The indenture for the senior notes does not:
•
require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity; • limit our ability to incur additional indebtedness, including debt that is secured or equal in right of payment to the senior notes, or to engage in sale/leaseback transactions, other than as described under “Description of the Senior Notes and Guarantees—Limitation on Liens on Capital Stock”; • restrict our subsidiaries’ ability to issue securities or otherwise incur indebtedness that would be structurally senior to the senior notes; • restrict our ability to repurchase or prepay any of our other securities or other indebtedness; S-4
• restrict our ability to make investments or to repurchase, pay dividends or make other payments in respect of our common stock or other securities ranking junior to the senior notes; • restrict our ability to enter into transactions with affiliates; • restrict our ability to enter into highly leveraged transactions; or • require us to repurchase the senior notes in the event of a change in control. As a result of the foregoing, when evaluating the terms of the senior notes, you should be aware that the terms of the indenture and the senior notes do not restrict our ability to engage in, or to otherwise be a party to, a variety of corporate transactions, circumstances and events that could have an
adverse impact on your investment in the senior notes. Our credit ratings may not reflect all risks of your investments in the senior notes. Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the senior notes. These credit ratings may not reflect the potential impact of risks relating to the
structure or marketing of the senior notes. Agency ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization. Each agency’s rating should be evaluated independently of any other agency’s rating. If an active trading market does not develop for the senior notes, you may be unable to sell your senior notes or to sell your senior notes at a price that you deem sufficient. The senior notes are new issues of securities for which there currently is no established trading market. Although we have applied to list the 2018 Notes and the 2043 Notes on the New York Stock Exchange under the symbols “XL18” and “XL43”, respectively, we cannot assure you that the senior
notes will be approved for listing. The senior notes have not been approved for listing as of the date of this prospectus supplement. Although certain of the underwriters have informed us that they currently intend to make a market in the senior notes after we complete this offering, they have no
obligation to do so and may discontinue making a market at any time without notice. No assurance can be given:
•
that a market for the senior notes will develop or continue; • as to the liquidity of any market that does develop; or • as to your ability to sell any senior notes you may own or the prices at which you may be able to sell your senior notes. Redemption may adversely affect your return on the senior notes. We have the right to redeem some or all of the senior notes prior to maturity. We may redeem the senior notes at times when prevailing interest rates may be relatively low. Accordingly, you may not be able to reinvest the amount received upon a redemption in a comparable security at an effective
interest rate as high as that of the senior notes. S-5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides a “safe harbor” for forward-looking statements. This prospectus supplement and the accompanying prospectus, the documents incorporated by reference and any other written or oral statements made by or on behalf of us may
include forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements include forward-looking statements both with respect to us in general, and the insurance and reinsurance sectors in particular (both as to underwriting and investment
matters). Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “may” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the PSLRA or otherwise. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
•
changes in the size of our claims relating to natural or man-made catastrophe losses due to the preliminary nature of some reports and estimates of loss and damage to date; • trends in rates for property and casualty insurance and reinsurance; • the timely and full recoverability of reinsurance placed by us with third parties, or other amounts due to us; • changes in ratings or rating agency policies or practices; • changes in the projected amount of ceded reinsurance recoverables and the ratings and creditworthiness of reinsurers; • the timing of claims payments being faster or the receipt of reinsurance recoverables being slower than we anticipated; • our ability to successfully implement our business strategy; • increased competition on the basis of pricing, capacity, coverage terms or other factors, which could harm our ability to maintain or increase our business volumes or profitability; • greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data; • changes in general economic conditions, including the effects of inflation on our business, including on pricing and reserving, and changes in interest rates, credit spreads, foreign currency exchange rates and future volatility in the world’s credit, financial and capital markets that adversely affect the
performance and valuation of our investments or access to such markets; • developments, including uncertainties related to the future of the Euro-zone, the ability of Euro-zone countries to service existing debt obligations and the strength of the Euro as a currency and to the financial condition of counterparties, reinsurers and other companies that are at risk of
bankruptcy; • the potential impact on us from government-mandated insurance coverage for acts of terrorism; • the potential for changes to methodologies, estimations and assumptions that underlie the valuation of our financial instruments that could result in changes to investment valuations; • changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale debt securities before their anticipated recovery; • the availability of borrowings and letters of credit under our credit facilities; • the ability of our subsidiaries to pay dividends to XL Group and XL-Cayman; S-6
• the potential effect of regulatory developments in the jurisdictions in which we operate, including those which could impact the financial markets or increase our business costs and required capital levels; • changes in regulations or laws applicable to XL Group or our subsidiaries, brokers or customers; • acceptance of our products and services, including new products and services; • changes in the availability, cost or quality of reinsurance; • changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers; • loss of key personnel; • changes in accounting standards, policies or practices or the application thereof; • legislative or regulatory developments including, but not limited to, changes in regulatory capital balances that must be maintained by our operating subsidiaries and governmental actions for the purpose of stabilizing the financial markets; • the effects of mergers, acquisitions and divestitures; • developments related to bankruptcies of companies insofar as they affect property and casualty insurance and reinsurance coverages or claims that we may have as a counterparty; • changes in applicable tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof; • the effects of business disruption or economic contraction due to war, terrorism or other hostilities; and • the other factors set forth in the documents incorporated by reference, which are on file with the SEC. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated herein or elsewhere. We undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future developments or otherwise, except as required by the federal securities laws. S-7
We estimate that our aggregate net proceeds from our sale of $600,000,000 aggregate principal amount of senior notes in this offering, after deducting the underwriting discounts and estimated offering expenses, will be approximately $592,955,000. We intend to use the net proceeds from this offering
for the repayment at maturity of the outstanding $600,000,000 principal amount of our 5.25% Senior Notes due September 2014. Pending application as described above, we intend to invest the net proceeds of this offering in short-term instruments or interest-bearing accounts. S-8
The following table shows the ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preference dividends of XL Group and its subsidiaries for each of the periods indicated:
(Unaudited)
Year Ended December 31,
2012(1)
2011(1)
2010(1)
2009(1)
2008(1) Ratio of earnings to fixed charges
8.1x
5.0x
—(2
)
4.6x
2.3x
—(2
) Ratio of earnings to combined fixed charges and preference dividends
5.0x
3.5x
—(2
)
3.5x
1.7x
—(2
)
(1)
We computed the foregoing ratios by dividing (a) income from continuing operations before income taxes, non-controlling interest and income or loss from equity investees plus the sum of fixed charges, amortization of capitalized interest and distributed income of equity investees, less non-controlling
interest in pre-tax income of subsidiaries that have not incurred fixed charges, by (b) the sum of fixed charges and, where indicated, preference dividends. Fixed charges consist of interest expense on all indebtedness (including amortization of deferred financing costs), an estimate of the interest within
rental expense and accretion of deposit liability transactions. (2) For the year ended December 31, 2011, earnings were insufficient to cover fixed charges by $295.3 million and combined fixed charges and preference dividends by $367.5 million. For the year ended December 31, 2008, earnings were insufficient to cover fixed charges by $259.9 million and combined
fixed charges and preference dividends by $338.5 million. S-9
Nine Months Ended
September 30, 2013(1)
The following table sets forth the consolidated capitalization of XL Group and its subsidiaries as of September 30, 2013 on (1) an actual basis, (2) as adjusted to give effect to the issuance of the senior notes in this offering and (3) as further adjusted to give effect to application of the net proceeds of
this offering as set forth under “Use of Proceeds,” as if it had taken place on September 30, 2013. You should read the following information in conjunction with XL Group’s consolidated financial statements and the notes to those financial statements and the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2012 Form
10-K and XL Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, which are incorporated by reference in this prospectus supplement and the accompanying prospectus.
Notes payable and debt
(Unaudited)
Actual
As Adjusted(1)
As Further 4-year revolver expiring 2015
$
—
$
—
$
— 5.25% Senior Notes due 2014
599,116
599,116
6,161 5.75% Senior Notes due 2021
396,553
396,553
396,553 6.375% Senior Notes due 2024
348,783
348,783
348,783 6.25% Senior Notes due 2027
322,866
322,866
322,866 2.30% Senior Notes due 2018 offered hereby
—
297,270
297,270 5.25% Senior Notes due 2043 offered hereby
—
296,685
296,685 Total notes payable and debt
$
1,667,318
$
2,261,273
$
1,668,318 Shareholders’ Equity: Ordinary shares, 999,990,000 authorized, par value $0.01; 282,810,509 issued and outstanding
$
2,828
$
2,828
$
2,828 Additional paid in capital
8,129,923
8,129,923
8,129,923 Accumulated other comprehensive income
762,316
762,316
762,316 Retained earnings
1,012,829
1,012,829
1,012,829 Shareholders’ equity attributable to XL Group plc
$
9,907,896
$
9,907,896
$
9,907,896 Non-controlling interest in equity of consolidated subsidiaries
1,344,618
1,344,618
1,344,618 Total shareholders’ equity
$
11,252,514
$
11,252,514
$
11,252,514 Total capitalization
$
12,919,832
$
13,513,787
$
12,920,832
(1)
As adjusted to give effect to the issuance of the senior notes in this offering. (2) As further adjusted (in addition to the adjustments described in note 1 above) to give effect to the application of the net proceeds of this offering as set forth under “Use of Proceeds,” as if it had taken place on September 30, 2013. S-10
(U.S. dollars in thousands)
September 30, 2013
Adjusted(2)
SELECTED CONSOLIDATED FINANCIAL DATA Our selected consolidated financial, operating and supplemental data presented below as at and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 are derived from our audited consolidated financial statements, which have been audited by PricewaterhouseCoopers LLP, an
independent registered public auditing firm. The selected consolidated financial, operating and supplemental data presented below at and for the nine months ended September 30, 2013 and 2012 have been derived from our unaudited consolidated financial data and reflect all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation of our financial position and results of operations as at the end of and for the periods presented. The selected consolidated financial, operating and supplemental data at and for the first nine months of 2013 are not necessarily
indicative of the results that may be expected for the full year. You should read the following selected consolidated financial, operating and supplemental data in conjunction with our consolidated financial statements and the notes to those financial statements and the information under the heading “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in the 2012 Form 10-K and XL Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, which are incorporated by reference in this prospectus supplement and the accompanying prospectus. Certain reclassifications to prior period information have
been made to conform to current year presentation.
(Unaudited)
Year Ended December 31,
2013
2012(1)
2012(1)
2011(1)
2010(1)
2009(1)
2008(1)
(U.S. dollars in thousands) Income Statement Data: Net premiums earned—insurance and reinsurance operations
$
4,503,372
$
4,227,421
$
5,765,982
$
5,327,112
$
5,031,137
$
5,151,739
$
5,990,251 Net premiums earned—life operations
214,024
243,630
324,459
363,018
382,924
555,101
649,851 Net investment income
716,935
767,354
1,012,348
1,137,769
1,198,038
1,319,823
1,768,977 Net realized gains (losses) on investments
75,519
2,916
14,098
(188,359
)
(270,803
)
(921,437
)
(962,054
) Net realized and unrealized gains (losses) on derivative instruments
3,660
2,656
5,221
(10,738
)
(33,843
)
(33,647
)
(73,368
) Net income (loss) from investment fund affiliates
83,843
38,555
58,504
26,253
51,102
78,867
(277,696
) Fee income and other
31,378
36,378
49,868
41,748
40,027
43,201
52,158 Net losses and loss expenses incurred—insurance and reinsurance operations(2)
2,787,210
2,574,497
3,765,482
4,078,391
3,211,800
3,168,837
3,962,898 Claims and policy benefits—life operations
344,269
371,893
486,198
535,074
513,833
677,562
769,004 Acquisition costs, operating expenses and foreign exchange gains and losses
1,564,507
1,580,076
2,097,989
1,869,688
1,751,060
1,996,052
1,924,908 Interest expense
114,830
134,564
172,205
205,592
213,643
216,504
351,800 Loss on settlement of guarantee
—
—
—
—
23,500
—
— Extinguishment of debt
—
—
—
—
—
—
22,527 Impairment of goodwill
—
—
—
429,020
—
—
989,971 Income (loss) before non-controlling interests, net income from operating affiliates and income tax expense
817,915
657,880
708,606
(420,962
)
684,746
134,714
(872,989
) Income (loss) from operating affiliates(2)
88,413
39,473
55,810
76,786
121,372
60,480
(1,458,246
) Preference share dividends(3)
74,244
75,918
79,087
72,278
74,521
80,200
78,645 Net income (loss) available to ordinary shareholders
$
759,136
$
569,684
$
651,134
$
(474,760
)
$
585,472
$
206,607
$
(2,632,458
) Operating Ratios: Loss and loss expense ratio(4)
61.9
%
60.9
%
65.3
%
76.6
%
63.8
%
61.5
%
66.2
% Underwriting expense ratio(5)
30.3
%
31.8
%
31.0
%
30.9
%
31.0
%
32.1
%
28.7
% Combined ratio(6)
92.2
%
92.7
%
96.3
%
107.5
%
94.8
%
93.6
%
94.9
% S-11
Nine Months
Ended
September 30,
(Unaudited)
As of Year Ended December 31,
2013
2012(1)
2012(1)
2011(1)
2010(1)
2009(1)
2008(1) Balance Sheet Data: Total investments—available for sale
$
28,529,880
$
28,315,925
$
28,818,982
$
27,017,285
$
27,677,553
$
29,307,171
$
27,464,510 Total investments—held to maturity
2,802,111
2,805,796
2,814,447
2,668,978
2,728,335
546,067
— Cash and cash equivalents
2,130,893
3,197,305
2,618,378
3,825,125
3,022,868
3,643,697
4,353,826 Investments in affiliates
1,362,484
1,027,122
1,126,875
1,052,729
1,127,181
1,185,604
1,552,789 Unpaid losses and loss expenses recoverable
3,352,667
3,319,266
3,382,102
3,654,948
3,671,887
3,584,028
3,997,722 Premiums receivable
2,911,880
2,791,807
2,568,862
2,411,611
2,414,912
2,597,602
3,135,985 Goodwill and other intangible assets
410,933
407,221
408,527
407,321
839,508
845,129
853,550 Total assets
45,626,383
45,980,328
45,386,895
44,665,265
44,995,040
45,663,894
45,702,786 Unpaid losses and loss expenses
20,407,428
20,074,668
20,484,121
20,613,901
20,531,607
20,823,524
21,650,315 Future policy benefit reserves
4,762,044
4,848,735
4,812,046
4,845,394
5,075,127
5,490,119
5,452,865 Unearned premiums
4,254,939
4,081,557
3,755,086
3,555,310
3,484,830
3,651,310
4,217,931 Notes payable and debt
1,671,062
1,673,350
1,672,778
2,275,327
2,457,003
2,451,417
3,189,734 Shareholders’ equity attributable to XL Group plc
9,907,896
10,411,037
10,510,077
9,411,658
9,610,753
9,430,112
6,115,223 Total shareholders’ equity
11,252,514
11,757,419
11,856,402
10,756,130
10,599,769
9,432,417
6,116,831 Fully diluted tangible book value per ordinary share(7)
$
32.96
$
32.82
$
33.35
$
28.31
$
27.14
$
22.13
$
12.88
(1)
Certain reclassifications have been made to conform to current segment management responsibilities. (2) In 2008, net loss from operating affiliates includes losses totaling approximately $1.4 billion related to the closing of an agreement on August 5, 2008 (the “Master Agreement”) with Syncora Holdings Ltd., as well as losses recorded throughout 2008 and up until the closing of the Master Agreement that were associated with previous reinsurance and guarantee agreements with
Syncora Holdings Ltd. (3) Preference dividends represent dividends on the Redeemable Series C preference ordinary shares and the Series D and E preference ordinary shares. Following our Redomestication, subsequent to July 1, 2010, the Redeemable Series C preference ordinary shares and the Series E preference ordinary shares represent non-controlling interests in our consolidated financial
statements. For additional information see Item 8, Note 1, “General,” to the Consolidated Financial Statements in the 2012 Form 10-K. (4) The loss and loss expense ratio related to the property and casualty operations is calculated by dividing the losses and loss expenses incurred by the net premiums earned for the Insurance and Reinsurance segments. (5) The underwriting expense ratio related to the property and casualty operations is the sum of acquisition expenses and operating expenses for the Insurance and Reinsurance segments divided by net premiums earned for the Insurance and Reinsurance segments. See Item 8, Note 4 to the consolidated financial statements, “Segment Information,” in the 2012 Form 10-K. (6) The combined ratio related to the property and casualty operations is the sum of the loss and loss expense ratio and the underwriting expense ratio. A combined ratio under 100% represents an underwriting profit and over 100% represents an underwriting loss. In the P&C industry, the combined ratio is a widely used measure of underwriting profitability. (7) Fully diluted tangible book value per ordinary share is calculated by dividing shareholders’ equity attributable to XL Group plc excluding goodwill and other intangible assets by the number of outstanding ordinary shares at any period end combined with the impact from dilution of share-based compensation and certain conversion features where dilutive. S-12
As of
September 30,
DESCRIPTION OF THE SENIOR NOTES AND GUARANTEES We will issue the senior notes under a base indenture (the “base indenture”) that we and XL Group entered into with Wells Fargo Bank, National Association, as trustee (the “trustee”) on September 30, 2011 and the second supplemental indenture thereto (together, with the base indenture, the “indenture”)
that we and XL Group will enter into with the trustee. The indenture will be subject to and governed by the Trust Indenture Act of 1939, as amended. The following description is not complete, and is qualified in all respects by reference to the base indenture, which was filed as an exhibit to a Current Report
on Form 8-K of XL Group filed on September 30, 2011, and the second supplemental indenture thereto, which will be filed as an exhibit to a Current Report on Form 8-K of XL Group. Those documents may be obtained by accessing the website address provided or contacting us as described under “Where
You Can Find More Information” in the accompanying prospectus. You should read the indenture carefully to fully understand the terms of the senior notes. The senior notes are separate series of “debt securities” as described in the accompanying prospectus. This description supplements, and should be read together with, the description of the general terms and provisions of the debt securities and guarantees set forth in the accompanying prospectus under the
caption “Description of Debt Securities and Guarantees.” The description that follows, however, supersedes the information set forth in the accompanying prospectus to the extent inconsistent with that information. Maturity and Interest The 2.30% Senior Notes due 2018 will mature on December 15, 2018, and the 5.25% Senior Notes due 2043 will mature on December 15, 2043. Unless previously redeemed in full as provided herein, we will repay the 2.30% Senior Notes due 2018 at their principal amount plus accrued and unpaid
interest on December 15, 2018 and the 5.25% Senior Notes due 2043 at their principal amount plus accrued and unpaid interest on December 15, 2043. Each 2018 Note will bear interest at the rate of 2.30% per annum, and each 2043 Note will bear interest at the rate of 5.25% per annum, from November 21, 2013 to maturity or early redemption. Interest on the senior notes will be payable semi-annually on June 15 and December 15 of each year,
commencing on June 15, 2014, to the persons in whose names such senior notes were registered at the close of business on the preceding June 1 and December 1, respectively. Interest on the senior notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal and interest will be payable, and the senior notes will be transferable or exchangeable, at the office or offices or agency maintained by us for this purpose. General Terms of the Senior Notes The senior notes will be XL-Cayman’s unsecured and unsubordinated obligations and will rank equal in right of payment with all of its existing and future unsubordinated debt. The senior notes will be effectively junior to XL-Cayman’s secured debt to the extent of the value of the collateral securing
such debt, and will rank senior to any debt of XL-Cayman that is subordinated by its terms to the senior notes. As of September 30, 2013, XL Group had no outstanding unconsolidated indebtedness for money borrowed (excluding its guarantees of subsidiary indebtedness) and XL-Cayman had $1.667 billion of outstanding unconsolidated indebtedness for money borrowed (excluding its guarantees of subsidiary
indebtedness). The senior notes will be structurally subordinated to obligations of XL-Cayman’s subsidiaries. As of September 30, 2013, XL-Cayman’s subsidiaries had no outstanding indebtedness for money borrowed from unrelated entities. The senior notes offered hereby constitute separate series of debt securities for all purposes under the indenture. We may issue from time to time, without giving notice to or seeking the consent of the holders of the senior notes, additional senior notes having the same ranking and the same interest rate, maturity and other terms as the senior notes of such series being offered by this prospectus S-13
supplement, except for the initial public offering price and the issue date. Any additional senior notes of a series having such similar terms, together with the senior notes of such series being offered by this prospectus supplement, will constitute a single series of debt securities for all purposes under the
indenture. Any payment otherwise required to be made in respect of the senior notes on a date that is not a business day for the senior notes may be made on the next succeeding business day with the same force and effect as if made on the originally scheduled payment date. No additional interest shall
accrue as a result of such delayed payment. A business day is defined in the indenture as any day other than a Saturday, Sunday or other day on which banking institutions in New York City or any place of payment are authorized by law or regulation to close. If a holder has given wire transfer instructions to us at least ten business days prior to the applicable payment date, we will make all payments on such holder’s senior notes by wire transfer of immediately available funds to the account specified in those instructions. Otherwise, payments on the
senior notes will be made at the office or agency of the trustee for the senior notes, currently located at 150 East 42nd Street, 40th Floor, New York, New York 10017, unless we elect to make interest payments by check mailed on the relevant interest payment date to the holders at their addresses set
forth in the register of holders. Senior notes may be surrendered for registration of transfer or exchange at the office of the registrar. In addition, all notices or demands to or upon us in respect of the senior notes and the indenture may be served on us at the office of the registrar. There are no provisions in either the indenture or the senior notes that protect the holders in the event that we incur substantial additional indebtedness, whether or not in connection with a change in control. The senior notes will not be entitled to the benefit of any mandatory redemption or sinking fund. Our ability to pay interest on the senior notes depends on our ability to obtain cash dividends or obtain loans from our subsidiaries. See “Risk Factors—Each of XL Group and XL-Cayman is a holding company and substantially all of XL Group’s and XL-Cayman’s operations are conducted by XL-
Cayman’s subsidiaries. XL-Cayman’s obligations under the senior notes are effectively subordinated to the obligations of its subsidiaries, and XL Group’s obligations under the guarantees are effectively subordinated to the obligations of XL-Cayman’s subsidiaries.” The senior notes will be issued only in fully registered form without coupons in minimum denominations of $2,000 and increments of $1,000 in excess thereof. No service charge will be made for any transfer or exchange of the senior notes, but we may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with a transfer or exchange. Holders may transfer or exchange the senior notes in accordance with the provisions of the indenture. The senior notes will be represented by one or more permanent global notes registered in the name of The Depository Trust Company (“DTC”) or a nominee thereof. While the senior notes will be
represented by global notes, ownership of beneficial interests in any global security with respect to which DTC is the depository will be shown on, and the transfer of that ownership will be effected only through, records maintained by such depository or its respective nominee (with respect to beneficial
interests of participants) and records of participants (with respect to beneficial interests of persons who hold through participants). See “Book-Entry; Delivery and Form” in this prospectus supplement. Except as described under “Book-Entry; Delivery and Form,” the senior notes will not be issuable in
certificated form. Upon the issuance of certificated notes, holders will be able to transfer certificated notes at the specified office of the registrar or any paying or transfer agent upon the surrender of such certificated notes, together with the form of transfer endorsed thereon duly completed and executed,
and otherwise in accordance with the provisions of the indenture. In the case of a transfer of only a part of a certificated note, a new certificated note will be issued to the transferee at such specified office in respect of the part transferred and a further new certificated note in respect of the balance of
the holding not transferred will be issued to the transferor. S-14
The Guarantees Payment of principal, premium, if any, and interest on the senior notes will be fully and unconditionally guaranteed on an unsecured and unsubordinated basis by XL Group. The guarantees will be the guarantor’s unsecured and unsubordinated obligations and will rank equal with all of the
guarantor’s future unsubordinated debt and other guarantees. As of September 30, 2013, the guarantor has guaranteed all of XL-Cayman’s outstanding debt. The guarantees will be effectively junior to the guarantor’s future secured debt to the extent of the value of the collateral securing such debt, and
will rank senior to any debt of the guarantor that is subordinated by its terms to the guarantees. XL Group’s obligations under the guarantees are irrespective of:
•
any lack of validity or enforceability of any agreement or instrument relating to the senior notes; • any change in the time, manner or place of payment under, or in any other term in respect of, all or any senior notes, or any other amendment or waiver of or consent to any departure from any other agreement relating the senior notes; • any other circumstance that might otherwise constitute a defense available to, or a discharge of, XL-Cayman with respect to the senior notes; • the absence of any action on the part of the trustee to obtain payment under the senior notes or the indenture from XL-Cayman; • any insolvency, bankruptcy, reorganization or dissolution, or any similar proceeding of or in respect of XL-Cayman, including, without limitation, rejection of the senior notes in such bankruptcy; or • the absence of notice or any delay in any action to enforce any provision of the senior notes or the indenture or to exercise any right or remedy against the guarantor or XL-Cayman, whether under the indenture, the senior notes or any agreement or any indulgence, compromise or extension
granted. Notwithstanding the above, the guarantor will not waive any defense that would be available to XL-Cayman based on a breach, default or misrepresentation by the trustee, or failure of any condition to XL-Cayman’s obligations under the indenture or the illegality of any provision of the indenture. Optional Redemption The senior notes will be redeemable, in whole at any time or in part from time to time, at our option, at a redemption price equal to accrued and unpaid interest on the principal amount being redeemed to the redemption date plus the greater of:
•
100% of the principal amount of the senior notes to be redeemed, and • the
sum of the present values of the remaining scheduled payments of principal
and interest on the senior notes to be redeemed (not including any portion
of such payments of interest accrued to the date of redemption) discounted
to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate, plus 20
basis points with respect to the 2018 Notes and 25 basis points with
respect to the 2043 Notes. “Treasury Rate” means, with respect to any date of redemption, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such date of redemption. The Treasury Rate shall be calculated on the third business day preceding the date of redemption. “Comparable Treasury Issue” means the United States Treasury security selected as having a maturity comparable to the remaining term of the senior notes to be redeemed that would be used, at the time of selection and under customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the senior notes. S-15
“Comparable Treasury Price” means, with respect to any date of redemption, the average of the Reference Treasury Dealer Quotations for the date of redemption, after excluding the highest and lowest Reference Treasury Dealer Quotations, or if the trustee obtains fewer than four Reference
Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations. “Reference Treasury Dealer” means (i) each of Deutsche Bank Securities Inc. and Barclays Capital Inc.; and (ii) two other primary U.S. government securities dealers in New York City (a “Primary Treasury Dealer”) we select. If any of the foregoing ceases to be a Primary Treasury Dealer, we will
substitute another Primary Treasury Dealer. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any date of redemption, the average, as determined by XL-Cayman, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to XL-Cayman by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day before the date of redemption. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the date of redemption to each holder of the senior notes to be redeemed. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the
senior notes or portions of senior notes called for redemption. If less than all of the senior notes are to be redeemed, the senior notes to be redeemed shall be selected by the trustee, by a method the trustee deems to be fair and appropriate, subject to the customary procedures of DTC. We will not be required to (1) register the transfer of or exchange the senior notes during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any senior notes and ending at the close of business on the day of such mailing or (2) register the
transfer of or exchange any senior note selected for redemption in whole or in part, except the unredeemed portion of any senior note being redeemed in part. Tax Event Redemption If a tax event occurs and is continuing, we may, at our option, redeem the 2018 Notes, the 2043 Notes, or both series of notes in whole, but not in part, at any time at a redemption price equal to 100% of the principal amount of the 2018 Notes, the 2043 Notes, or both series of notes, plus accrued
and unpaid interest, if any, to the date fixed for redemption and additional amounts (as defined below), if any, then due or that will become due on the date fixed for redemption as a result of the redemption. Installments of interest on senior notes which are due and payable on or prior to a redemption
date will be payable to holders of the senior notes registered as such at the close of business on the relevant record dates. A “tax event” means if XL-Cayman or the guarantor determines that, as a result of (1) any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder), including the enactment of any legislation or the publication of any regulatory determination, of the
Cayman Islands, Ireland, Bermuda, or any political subdivision thereof or any authority or agency therein having power to tax, or any other jurisdiction from or through which we or the guarantor make a payment on the senior notes or guarantees or in which we or the guarantor generally become subject
to taxation (each such jurisdiction, a “taxing jurisdiction”); or (2) any change in, or amendment to, a position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) (each of the
foregoing in clauses (1) and (2), a “change in tax law”), (A) XL-Cayman or the guarantor is required, or on the next interest payment date in respect of the senior notes would be required to pay additional amounts with respect to the senior notes, as described under “—Payment of Additional Amounts”
(assuming, in the case of the guarantor, the guarantor would be unable, for reasons outside its control, to procure payment by XL-Cayman), determined without reference to any interest, fees, penalties, or other additions to tax and (B) such requirement cannot be avoided by taking commercially
reasonable measures available to XL-Cayman or the guarantor; provided that the change in tax law becomes effective on or after the S-16
date of this prospectus supplement, or in the case of a successor entity to XL-Cayman or the guarantor, the change in tax law becomes effective after the date that such successor entity first becomes an obligor on the senior notes (unless the change in tax law had already occurred prior to such date, but
on or after the date of this prospectus supplement, with respect to the applicable original entity). Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of senior notes to be redeemed at its registered address (which notice will be irrevocable). Unless we default in payment of the redemption price, on and after the
redemption date, interest shall cease to accrue on the senior notes. In the event any senior notes are called for redemption, neither we nor the trustee will be required to register the transfer of or exchange the senior notes to be redeemed during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption and ending at the close of business on the day of such mailing. Notwithstanding the foregoing, in the case of a tax event redemption, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the
applicable payor would be obliged to make such payment or withholding if a payment in respect of senior notes by it were then due and (b) unless at the time such notice is given, such requirement to pay such additional amounts remains in effect. Prior to the publication or mailing of any notice of
redemption of senior notes pursuant to the foregoing, we will deliver to the paying agent and trustee (a) an officers’ certificate stating that we are entitled to effect such redemption and setting forth a statement of facts showing that any factual conditions precedent to our right to so redeem have been
satisfied and (b) a legal opinion of an outside nationally recognized tax counsel, or of a tax counsel that is otherwise reasonably acceptable to the paying agent and trustee, to the effect that the applicable tax event has occurred (which, for the avoidance of doubt, shall not be required to include an
opinion as to whether “commercially reasonable efforts” could be undertaken to avoid the otherwise applicable requirement, as referenced in clause (B) of the definition of “tax event”). Limitation on Liens on Capital Stock Under the indenture, XL Group will covenant that, so long as any of the senior notes are outstanding, XL Group will not, nor will XL Group permit any designated subsidiary to, create, assume, incur, guarantee or otherwise permit to exist any indebtedness evidenced by notes, debentures, bonds or
similar instruments, which is secured by any mortgage, pledge, lien, security interest or other encumbrance upon any capital stock of any designated subsidiary (whether such capital stock is now owned or hereafter acquired), without effectively providing concurrently that the senior notes will be secured
equally and ratably with such indebtedness for at least the time period such other indebtedness is so secured. The term “capital stock” of any person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) equity of such person, including preferred stock, but excluding any debt securities convertible into such equity. The term “designated subsidiary” means any present or future consolidated subsidiary of XL Group that is a regulated insurance company, the assets of which constitute at least 20% of XL Group’s consolidated assets. As of September 30, 2013, XL Group’s designated subsidiary was XL Insurance
(Bermuda) Ltd. Additional Events of Default The Events of Default described in the accompanying prospectus under “Description of Debt Securities and Guarantees—Events of Default and Notice Thereof” will apply to the senior notes; however, (i) with respect to the senior notes, the reference to 60 days in clause (1) of that subsection is 30
days; and (ii) the following shall constitute additional Events of Default with respect to the senior notes:
•
default by us under any instrument or instruments under which there is or may be secured or evidenced any of our indebtedness (other than the senior notes) having an outstanding S-17
principal amount of $50,000,000 (or its equivalent in any other currency or currencies) or more, individually or in the aggregate, that has caused the holders thereof to declare such indebtedness to be due and payable prior to its stated maturity, unless such declaration has been rescinded within 30
days; • default by us in the payment when due of the principal or premium, if any, of any bond, debenture, note or other evidence of our indebtedness, in each case for money borrowed, or in the payment of principal or premium, if any, under any mortgage, indenture, agreement or instrument under
which there may be issued or by which there may be secured or evidenced any of our indebtedness for money borrowed, which default for payment of principal or premium, if any, is in an aggregate principal amount exceeding $50,000,000 (or its equivalent in any other currency or currencies), if
such default shall continue unremedied or unwaived for more than 30 days after the expiration of any grace period or extension of the time for payment applicable thereto; and • default in the payment of any additional amounts with respect to interest on any senior notes (as described below under “—Payments of Additional Amounts”), when such amounts become due and payable, and continuance of such default for a period of 30 days, and default in the payment of
additional amounts payable with respect to any principal of or premium, if any, on any senior notes, when such additional amounts become due and payable either at maturity, upon any redemption, by declaration of acceleration or otherwise. Payment of Additional Amounts All amounts payable (whether in respect of principal, interest or otherwise) in respect of the senior notes (including, for the avoidance of doubt, payments under the guarantees) will be made free and clear of and without withholding or deduction for or on account of any present or future taxes,
duties, levies, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any taxing jurisdiction unless the withholding or deduction of such taxes, duties, levies, assessments or governmental charges is required by law. In that event, XL-Cayman or the guarantor will pay,
or cause to be paid, such additional amounts as may be necessary in order that the net amounts receivable by a holder after such withholding or deduction (including any withholding or deduction from such additional amounts) shall equal the respective amounts that would have been receivable by such
holder had no such withholding or deduction been required (“additional amounts”), except that no such additional amounts shall be payable in relation to any payment (including a payment made in connection with a redemption) in respect of any of the senior notes:
•
to, or to a third party on behalf of, a person who would be able to avoid such withholding or deduction by complying with applicable statutory requirements or by making a declaration of non-residence or similar claim for exemption (including a claim under an applicable double taxation treaty)
but, in either case, fails to do so, or is liable for such taxes, duties, levies, assessments or governmental charges in respect of such senior note by reason of such person (or such third party) having some connection with (including, without limitation, being a citizen of, being incorporated or engaged
in a trade or business in, or having a residence or principal place of business or other presence in) the taxing jurisdiction, other than (a) the mere holding of such senior note, (b) the receipt of principal, interest, or other amount in respect of such senior note or (c) the mere enforcement of rights
with respect to such senior note; • presented for payment more than 30 days after the relevant date (as defined below), except to the extent that the relevant holder would have been entitled to such additional amounts on presenting the same for payment on or before the expiration of such period of 30 days; • to a fiduciary, a partnership or person who is not the beneficial owner of a senior note, if and to the extent that, as a result of an applicable tax treaty, no additional amounts would have been payable had the beneficiary, partner or beneficial owner owned the senior note directly; S-18
• on account of any inheritance, gift, estate, personal property, stamp, sales or transfer or similar taxes, duties, levies, assessments or similar governmental charges; or • on account of any taxes, duties, levies, assessments or governmental charges that are payable otherwise than by withholding from payments in respect of such senior note. The “relevant date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the trustee on or prior to such due date, it means the first date on which, the full amount of such moneys
having been so received and being available for payment to holders, notice to that effect shall have been duly given to the holders of the senior notes. Defeasance The senior notes will be subject to defeasance under the conditions described in the accompanying prospectus. Listing We have applied to list the 2018 Notes and the 2043 Notes on the New York Stock Exchange under the symbols “XL18” and “XL43”, respectively. We expect trading in the senior notes to begin within 30 days of the original issue date. S-19
Except as set forth below, the senior notes will be issued in the form of one or more fully registered notes in global form without coupons (each, a “global note”). The global notes will be deposited with, or on behalf of, DTC and registered in the name of DTC or a nominee thereof. Global Notes Pursuant to procedures established by DTC, interests in the global notes will be shown on, and the transfer of such interest will be effected only through, records maintained by DTC or its nominee with respect to interests of persons who have accounts with DTC (“participants”) and the records of
participants with respect to interests of persons other than participants. Such accounts initially were designated by or on behalf of the underwriters and ownership of beneficial interests in the global notes will be limited to persons who have accounts with DTC, or participants, or persons who hold interests
through participants. Holders may hold their interests in the global notes directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. So long as DTC or its nominee is the registered owner or holder of the senior notes, DTC or such nominee will be considered the sole owner or holder of the senior notes represented by such global notes for all purposes under the indenture. No beneficial owner of an interest in the global notes will
be able to transfer such interest except in accordance with DTC’s procedures, in addition to those provided for under the indenture with respect to the senior notes. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, your ability to transfer your beneficial interests in a global note to such persons may be limited to that extent. Because DTC can act only on behalf of its
participants, which in turn act on behalf of indirect participants and certain banks, your ability to pledge your interests in a global note to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests. We will make payments of the principal of, premium, if any, and interest on global notes to DTC or its nominee as the registered owner thereof. Neither we nor the trustee nor any of their respective agents will have any responsibility or liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in the global notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We expect that DTC or its nominee, on receipt of any payment of principal or interest in respect of a global note representing any notes held by it or its nominee, will immediately credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the
principal amount of such global note as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such global note held through such participants will be governed by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in “street name.” Such payment will be the responsibility of such participants. Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. Notes that are issued as described below under “—Certificated Notes” will be issued in registered definitive form without coupons (each, a “certificated note”). Upon transfer of certificated notes, such certificated notes may, unless the global note has previously been exchanged for certificated notes, be
exchanged for an interest in the global note representing the principal amount of notes being transferred. DTC has advised us that it will take any action permitted to be taken by a holder of notes, including the presentation of notes for exchange as described below and the conversion of notes, only at the direction of one or more participants to whose account with DTC interests in the global notes are
credited and only in respect of such portion of the aggregate principal amount of the senior notes as to which such participant or participants has or have given such direction. However, S-20
if there is an Event of Default under the senior notes, the global notes will be exchanged for legended notes in certificated form, and distributed to DTC’s participants. Unless and until they are exchanged in whole or in part for certificated notes, the global notes may not be transferred except as a whole by DTC or its nominee or to a successor of DTC or its nominee. DTC has advised us that it is:
(1)
a limited purpose trust company organized under the New York Banking Law; (2) a “banking organization” within the meaning of the New York Banking Law; (3) a member of the Federal Reserve System; (4) a “clearing corporation” within the meaning of the Uniform Commercial Code; and (5) a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). (6) Redemption notices shall be sent to DTC. If less than all of the senior notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participant in the senior notes to be redeemed. (7) Redemption proceeds, distributions and dividend payments on the senior notes will be made to DTC or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts upon DTC’s receipt of funds and corresponding detail
information from the issuer or the agent on payable date in accordance with their respective holdings shown on DTC’s records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in “street name,” and will be the responsibility of the participant and not of DTC nor its nominee, agent or the issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions
and dividend payments to DTC (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the issuer or agent, disbursement of the payments to direct participants will be the responsibility of DTC, and disbursement of such payments to the
beneficial owners will be the responsibility of direct and indirect participants. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates.
Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is owned by the users of its regulated subsidiaries. Indirect access to
the DTC system is available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (“indirect participants”). The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of beneficial ownership interests in the global notes among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time.
Neither we, nor the trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership interests in global notes. S-21
Certificated Notes You may not exchange your beneficial interest in a global note for a note in certificated form unless:
(1)
DTC notifies us that it is unwilling or unable to continue as depositary for the global note, or DTC ceases to be a “clearing agency” registered under the Exchange Act, and in either case, we thereupon fail to appoint a successor depositary within 90 days; or (2) an Event of Default shall have occurred and be continuing with respect to the senior notes. In all cases, certificated notes delivered in exchange for any global note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary in accordance with its customary procedures. S-22
Cayman Islands There are currently no taxes imposed in the Cayman Islands on income, profits, capital gains or appreciations of the holders of the senior notes nor any taxes on the holders of the senior notes in the nature of estate duty or capital transfer tax. Further, XL-Cayman has obtained an undertaking from
the Cayman Islands Government authorities that, as an exempted company, until June 3, 2018, no taxes on profit, income, capital gains or appreciations and no tax in the nature of estate duty or inheritance tax will be payable in respect of the senior notes or other obligations of XL-Cayman. The
Cayman Islands impose stamp duties on certain categories of documents; however, the stamp duties, if any, applicable to the offering, execution, authentication, allotment, issue, delivery and enforcement of the senior notes and the performance by XL-Cayman of its obligations under the senior notes, the
indenture and the underwriting agreement for the senior notes and by the guarantor under the guarantees will not involve the payment of any material amount. Ireland The following is a summary of certain Irish tax consequences of the purchase, ownership and disposition of the senior notes. The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of the senior notes.
The summary relates only to the position of persons who are the absolute beneficial owners of the senior notes and may not apply to certain other classes of persons such as dealers in securities. The summary is based upon Irish tax laws and the practice of the Irish Revenue Commissioners as in effect on the date of this offering memorandum, which are subject to prospective or retroactive change. The summary does not constitute tax or legal advice and the comments below are of a general
nature only. Prospective investors in the senior notes should consult their own advisors as to the Irish or other tax consequences of the purchase, beneficial ownership and disposition of the senior notes. Withholding Tax. Interest payments on the senior notes No Irish interest withholding tax will be deducted from interest payments made by XL-Cayman to holders of the senior notes, provided the senior notes remain quoted on the New York Stock Exchange and are held in the Depository Trust Company of New York. If a holder of senior notes appoints a person in Ireland to collect interest payments on the senior notes on the holder’s behalf, Irish encashment tax (currently 20%) may be deducted by the Irish collection agent from the interest payments. An exemption from this withholding tax may be claimed if
the beneficial owner of the interest is not tax resident in Ireland and makes a written declaration to this effect to the collecting agent. Guarantee payments by XL Group The tax treatment of guarantee payments under Irish law is unclear. Some judicial decisions having persuasive authority in Ireland suggest that a guarantee payment could be treated as an interest payment if the underlying guaranteed obligation was an interest payment. While these decisions have
been criticized, there is a risk that a guarantee payment by XL Group could be treated as an interest payment and, thus, subject to interest withholding tax at the rate of 20% unless an exemption applied. In limited circumstances, a guarantee payment by XL Group could alternatively be treated as an “annual payment.” An annual payment is, broadly, a payment which is “pure profit of an income nature” in the hands of the recipient (for example a periodic annuity payment). If a guarantee payment
made by XL Group was an “annual payment,” XL Group would be obliged to deduct 20% withholding tax from such payment. A double taxation treaty may offer relief for any such tax imposed. S-23
Income Tax. Generally, holders of senior notes who are tax resident in Ireland will be subject to Irish tax on their worldwide income (including interest earned on the senior notes). Such holders will be obliged to account for any Irish tax on a self-assessment basis; there is no requirement for the
Irish Revenue Commissioners to issue or raise an assessment. Holders of senior notes who are not tax resident (or ordinarily resident) in Ireland will generally only be subject to Irish tax on their Irish source income (again, on a self-assessment basis). Interest payable on the senior notes may be regarded as Irish source income on the basis that the senior notes
may be treated as located in Ireland because XL-Cayman resides in Ireland. However, provided the senior notes remain quoted on the New York Stock Exchange and are held in the Depository Trust Company of New York, such holders of senior notes will be exempt from Irish income tax on interest
paid in respect of the senior notes if they are regarded, for the purposes of section 198 of the Taxes Consolidation Act 1997 of Ireland, as being a resident of a “relevant territory” (and are not tax resident in Ireland). A “relevant territory” means a member state of the European Union (other than Ireland) or a territory with which Ireland has a double tax treaty (containing an article dealing with interest or income from debt claims) that either (a) has the force of law or (b) will have, on completion of the
necessary procedures, the force of law. A list of the territories with which Ireland has entered into a double tax treaty is available on www.revenue.ie. Ireland currently has double tax treaties with virtually all OECD countries and many other countries; you should consult your tax advisor about whether
your country of residence is a “relevant territory.” If the above exemption does not apply, it is understood that there is a long standing unpublished practice of the Irish Revenue Commissioners that no action will be taken to pursue any liability to such Irish tax if the recipient of an interest payment is not resident in Ireland, unless the person:
(a)
has, broadly, appointed or arranged for an Irish person (such as an agent, trustee or Irish branch) to have the management or control of the interest on its behalf; (b) seeks to claim relief or repayment of tax deducted at source in respect of taxed income from Irish sources; or (c) is chargeable to Irish corporation tax on the income of an Irish branch or agency or to income tax on the profits of a trade carried on in Ireland to which the interest is attributable. There is no assurance that this practice will continue to apply. Guarantee payments by XL Group may also be regarded as Irish source income because XL Group resides in Ireland. If guarantee payments were deemed to be interest payments (as discussed above) arising from an Irish source, the recipients of such guarantee payments would be exempt from Irish
income tax if the recipients were companies which were regarded, for the purposes of section 198 of the Taxes Consolidation Act 1997 of Ireland, as being a resident of a “relevant territory” (and not tax resident in Ireland) and that “relevant territory” imposed a tax that generally applied to interest
receivable in that territory by companies from sources outside that territory. Other domestic exemptions may also apply. If these exemptions did not apply or if the guarantee payments were treated as a form of income other than an interest payment (e.g., an annual payment) arising from an Irish source,
a double taxation treaty may offer relief for any such income tax imposed. If no exemption or relief applied, it is anticipated that the long standing unpublished practice of the Irish Revenue Commissioners discussed above would apply to any guarantee payment received from XL Group (though there is
no assurance that this practice will continue to apply). Capital Gains Tax. If a holder of senior notes is not tax resident (or ordinarily resident) in Ireland, such holder will not be subject to Irish tax on capital gains arising on a disposal of the senior notes, provided the senior notes are not held for the use of or for the purposes of an Irish branch or
agency. If a holder of senior notes is tax resident (or ordinarily resident) in Ireland, such holder may be subject to Irish tax on capital gains arising on a disposal of the senior notes if the senior notes constitute a “debt on a security.” Broadly, the senior notes would generally be treated as a “debt on S-24
a security” if their value can vary in accordance with market conditions so that a holder could make a profit on their disposal. Capital Acquisitions Tax. If the senior notes are comprised in a gift or inheritance, Irish capital acquisitions tax (currently 33%) may apply to the donee (or successor) if:
(a)
the donor is, or the deceased was, Irish domiciled, resident or ordinarily resident; (b) the recipient of the gift or inheritance is resident or ordinarily resident in Ireland; or (c) the senior notes are regarded as property located in Ireland. Because the senior notes could be regarded as property located in Ireland, a recipient of a gift or inheritance of the senior notes may be liable to Irish capital acquisitions tax (even though neither the disponer nor the recipient may be domiciled, resident or ordinarily resident in Ireland at the relevant
time). Stamp Duty. No charge to Irish stamp duty or similar Irish tax will arise upon the issue or delivery of the senior notes. Any transfer of senior notes pursuant to a written instrument should be exempt from stamp duty, provided the transfer does not relate to (a) any immoveable property situate in
Ireland (or any right over or interest in such property), or (b) any stocks or marketable securities of a company which is registered in Ireland. United States The following discussion summarizes the U.S. federal income tax considerations that may be relevant to you if you invest in senior notes and are a U.S. holder (as defined below). This summary deals only with U.S. holders that purchase senior notes for cash at their respective offering prices as part
of this offering and that will hold senior notes as capital assets (generally, property held for investment). It does not address considerations that may be relevant to you if you are an investor that is subject to special tax rules such as a bank, thrift, real estate investment trust, partnership or other pass-
through entity (or person that will hold senior notes through such an entity), regulated investment company, insurance company, dealer in securities or currencies, trader in securities or commodities that elects mark-to-market treatment, person that will hold senior notes as a hedge against currency risk or
as a position in a “straddle” or conversion transaction, tax-exempt organization, person whose “functional currency” is not the U.S. dollar, or person liable for alternative minimum tax or Medicare taxes on net investment income. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below, possibly with
retroactive effect. If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of senior notes, the treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership.
A holder of senior notes that is a partnership and partners in such a partnership are urged to consult their tax advisors about the U.S. federal income tax consequences of holding and disposing of senior notes. In general, you will be a U.S. holder if you are a purchaser of a senior note who is a beneficial owner of the senior note and who is for U.S. federal income tax purposes:
•
a citizen or individual resident of the U.S.; • a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia; • an estate all the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; • a trust: S-25
–
if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or – that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. You should consult your tax advisor about the tax consequences of holding senior notes, including the relevance to your particular situation of the considerations discussed below, as well as the relevance to your particular situation of state, local or other tax laws. Interest. We expect that interest (including any additional amounts as described above in “Payment of Additional Amounts”) on a senior note will be taxable to a U.S. holder as ordinary income at the time it is paid or accrued in accordance with your method of accounting for U.S. federal income
tax purposes. However, if the senior notes are issued at a discount from their principal amount, and the discount is equal to, or more than, the product of one-fourth of one percent (0.25%) of the principal amount of the senior notes multiplied by the number of full years to their maturity, the senior
notes will be “Original Issue Discount Notes.” A U.S. holder of Original Issue Discount Notes generally will be subject to the special tax accounting rules for original issue discount obligations provided by the Code and certain U.S. Treasury regulations. Such a holder should be aware that, if it invests in
an Original Issue Discount Note, it generally will be required to include original issue discount in ordinary gross income for U.S. federal income tax purposes as it accrues, although it may not yet have received the cash attributable to that income. A U.S. holder of Original Issue Discount Notes should
consult its tax advisor regarding the tax consequences of acquiring, holding and disposing of such a debt instrument. Foreign Tax Credit. A U.S. holder may, subject to certain limitations, be eligible to claim a credit or deduction in respect of non-U.S. taxes, if any, that are withheld from payments on the senior notes (including, for the avoidance of doubt, payments under the guarantees) for purposes of computing
its U.S. federal income tax liability. Interest received or accrued on the senior notes and additional amounts generally will constitute foreign source income to U.S. holders and will generally be characterized as “passive category income” for U.S. foreign tax credit purposes. U.S. holders should consult
their own tax advisors concerning the U.S. federal income tax consequences of the imposition of such taxes. The rules relating to foreign tax credits are complex and U.S. holders should consult their own tax advisors with regard to the availability of foreign tax credits and the application of the foreign
tax credit rules to their particular situation. Sales, Exchanges or Other Taxable Dispositions of Senior Notes. A U.S. holder will recognize gain or loss on the disposition of ownership interests in the senior notes (including upon a redemption of the senior notes) in an amount equal to the difference between the amount realized by such U.S.
holder on the disposition of the senior notes (less any accrued interest, which, if not previously included in income, will be subject to taxation in the manner described above under “—Interest”) and such U.S. holder’s adjusted tax basis in such senior notes. The tax basis in a senior note generally will equal
its cost. Such gain or loss will generally be U.S. source capital gain or loss and will be long-term capital gain or loss if a U.S. holder has held its senior notes for more than a year. Long-term capital gains of non-corporate holders are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations. Backup Withholding Tax and Information Reporting. Unless a U.S. holder is an exempt recipient, such as a corporation, payments under the senior notes and the proceeds received from the sale of senior notes will generally be subject to information reporting and may also be subject to U.S. federal
backup withholding tax if such U.S. holder fails to supply an accurate taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Any amounts so withheld generally will be allowed as a credit against the U.S. holder’s U.S. federal
income tax liability (and may entitle such holder to a refund), provided that the required information is timely furnished to the Internal Revenue Service. S-26
XL-Cayman and XL Group have entered into an underwriting agreement with Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as joint book-running managers and representatives of the underwriters named below, with respect to the senior notes. Subject to
certain conditions, each of the underwriters has severally agreed to purchase the aggregate principal amount of senior notes set forth opposite its name below: Underwriters
Principal
Principal Barclays Capital Inc.
$
90,000,000
$
90,000,000 Deutsche Bank Securities Inc.
90,000,000
90,000,000 J.P. Morgan Securities LLC
30,000,000
30,000,000 Citigroup Global Markets Inc.
9,750,000
9,750,000 Goldman, Sachs & Co.
9,750,000
9,750,000 HSBC Securities (USA) Inc.
9,750,000
9,750,000 Lloyds Securities Inc.
9,750,000
9,750,000 Morgan Stanley & Co. LLC
9,750,000
9,750,000 RBS Securities Inc.
9,750,000
9,750,000 BNY Mellon Capital Markets, LLC
6,500,000
6,500,000 Credit Agricole Securities (USA) Inc.
6,500,000
6,500,000 ING Financial Markets LLC
6,500,000
6,500,000 BNP Paribas Securities Corp.
4,000,000
4,000,000 Commerz Markets LLC
4,000,000
4,000,000 Wells Fargo Securities, LLC
4,000,000
4,000,000 Total
$
300,000,000
$
300,000,000 Under the underwriting agreement, if the underwriters take any of the senior notes, then the underwriters are committed to take and pay for all of the senior notes. Senior notes sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus supplement. Any senior note sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price of up to
0.40% of the principal amount of the 2018 Notes and up to 0.50% of the principal amount of the 2043 Notes. Any such securities dealers may resell any senior note purchased from the underwriters to certain other brokers or dealers at a discount from the initial public offering price of up to 0.20% of
the principal amount of the 2018 Notes and up to 0.35% of the principal amount of the 2043 Notes. If all the senior notes are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. XL-Cayman and XL Group have agreed with the underwriters not to offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any debt securities of XL-Cayman or XL Group that mature more than one year after the original issue date of the senior notes and are substantially similar to the senior notes, other than the senior notes offered hereby, during the period from the date of this prospectus supplement
continuing through the date 30 days after the date of this prospectus supplement, except with the prior written consent of the representatives of the underwriters. The senior notes are new issues of securities with no established trading market. We have applied to list the 2018 Notes and the 2043 Notes on the New York Stock Exchange under the symbols “XL18” and “XL43”, respectively. We expect trading in the senior notes to begin within 30 days of the
original issue date. We have been advised by the underwriters that they intend to make a market in the senior notes but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the senior notes. S-27
Amount of 2018
Notes
Amount of 2043
Notes
In connection with this offering, the underwriters may purchase and sell senior notes in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater principal
amount of senior notes than they are required to purchase in this offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of the senior notes while this offering is in progress. These activities by the underwriters, as well as other purchases by the underwriters for their own accounts, may stabilize, maintain or otherwise affect the market price of the senior notes. As a result, the price of the senior notes may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the underwriters at any time. These transactions may be effected in the over-the-counter market or otherwise. The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and
brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for XL Group and its subsidiaries, including XL-Cayman, for which they received or may in
the future receive customary fees and expenses. In the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account
and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of XL Group and its subsidiaries, including XL-Cayman. If the underwriters or their affiliates have a lending relationship with XL Group and its subsidiaries, including XL-
Cayman, certain other of those underwriters or their affiliates may hedge their credit exposure to XL Group and its subsidiaries, including XL-Cayman, consistent with their customary risk management policies. Typically, the underwriters and their affiliates would hedge such exposure by entering into
transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the senior notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of
the senior notes offered hereby. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or
recommend to clients that they acquire, long and/or short positions in such securities and instruments. In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that
Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of the senior notes to the public in that Relevant Member State other than:
(a)
to any legal entity which is a qualified investor as defined in the Prospectus Directive; (b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining
the prior consent of the representatives for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of notes to the public” in relation to any senior notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the senior notes to be offered so as to S-28
enable an investor to decide to purchase or subscribe for the senior notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including
the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. Each underwriter has represented and agreed that:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in
connection with the issue or sale of the senior notes in circumstances in which Section 21(1) of the FSMA does not apply to XL-Cayman; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the senior notes in, from or otherwise involving the United Kingdom. The senior notes may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or
document relating to the senior notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to
do so under the laws of Hong Kong) other than with respect to senior notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules
made thereunder. The senior notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the “Financial Instruments and Exchange Law”) and each underwriter has represented and agreed that it will not offer or sell any senior notes, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to
an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. This prospectus supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the senior notes may not be
circulated or distributed, nor may the senior notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of
Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the senior notes are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an
accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and S-29
interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the senior notes under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with
the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law. We estimate that our share of the total expenses of this offering, excluding the underwriting discounts, will be approximately $1 million. XL-Cayman and XL Group have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Certain of the underwriters and their affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. S-30
Certain U.S. legal matters with respect to the senior notes will be passed upon by Morgan, Lewis & Bockius LLP. Certain legal matters with respect to the senior notes under the laws of Ireland will be passed upon for XL Group by A&L Goodbody. Certain legal matters with respect to the senior notes
under the laws of the Cayman Islands will be passed upon for XL-Cayman by Maples and Calder, Grand Cayman, Cayman Islands. Certain U.S. legal matters with respect to the senior notes will be passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Skadden, Arps, Slate, Meagher & Flom LLP has in the past performed, and continues to perform, certain legal services for XL Group and its affiliates. S-31
The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus supplement and the accompanying prospectus by reference
to XL Group’s Annual Report on Form 10-K for the year ended December 31, 2012 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. S-32
INCORPORATION OF DOCUMENTS BY REFERENCE The SEC allows us to “incorporate by reference” into this prospectus supplement the information XL Group files with the SEC, which means that we can disclose important information to you by referring to another document filed separately with the SEC. The information that XL Group files after
the date of this prospectus supplement with the SEC will automatically be deemed to be incorporated by reference and will update and supersede this information. We incorporate by reference into this prospectus supplement the documents listed below and under “Incorporation of Documents by
Reference” in the accompanying prospectus and any future filings made with the SEC (SEC file number 1-10804) pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
•
Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013; • Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on May 7, 2013; • Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on August 5, 2013; • Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed on October 31, 2013; • Proxy Statement on Schedule 14A for the Annual General Meeting of Holders of Ordinary Shares of XL Group plc held on April 26, 2013, filed on March 11, 2013; and • Current Reports on Form 8-K filed on September 30, 2011, April 29, 2013, May 7, 2013, May 13, 2013, May 15, 2013, July 10, 2013, August 6, 2013, September 12, 2013, September 27, 2013 and November 4, 2013. Any statement contained in a document incorporated or considered to be incorporated by reference in this prospectus supplement shall be considered to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in
any subsequently filed document that is or is considered to be incorporated by reference modifies or supersedes such statement. Any statement that is modified or superseded shall not, except as so modified or superseded, constitute a part of this prospectus supplement. You may request, at no cost to you, a copy of any of the documents that are incorporated by reference in this prospectus supplement or the accompanying prospectus, other than exhibits to such documents that are not specifically incorporated by reference into such documents, and XL Group’s and
XL-Cayman’s constitutional documents. You may request such documents by contacting us at: Investor Relations Department You can also obtain the documents incorporated by reference in this prospectus supplement and the accompanying prospectus as described under “Where You Can Find More Information” in the accompanying prospectus. S-33
XL Group plc
Harbor Point
100 Washington Boulevard
Stamford, CT 06902
United States of America
Telephone: (203) 964-3470
Fax: (203) 964-4056
Email: investorinfo@xlgroup.com
PROSPECTUS
XL
Group plc Ordinary
Shares XLIT
Ltd. Debt
Securities
The
following are types of securities that may be offered and sold from time
to time under this prospectus: • XL
Group plc Ordinary Shares • XL
Group plc Preference Shares • XL
Group plc Debt Securities • XL
Group plc Ordinary Share Warrants • XL
Group plc Ordinary Share Purchase Contracts • XL
Group plc Ordinary Share Purchase Units • XLIT
Ltd. Debt Securities Guaranteed by XL Group plc XL
Group plc Ordinary Shares are traded on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol “XL.” Investing
in our securities involves risks. See “Risk Factors” on page
4. A
prospectus supplement, which must accompany this prospectus, will describe
the securities XL Group plc and/or XLIT Ltd. are offering and selling, as
well as the specific terms of the securities and tax considerations pertaining
to an investment in the securities. Those terms may include, among others,
as applicable: • Maturity • Interest
rate • Dividend
rate • Sinking
fund terms • Ranking • Redemption
terms • Conversion
terms • Listing
on a securities exchange • Amount
payable at maturity Neither
the Securities and Exchange Commission nor any state or other jurisdiction’s
securities commission or regulatory body has approved or disapproved of
these securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense. The
securities may be offered in amounts, at prices and on terms determined at
the time of offering. The securities may be sold directly to you, through
agents that XL Group plc and/or XLIT Ltd. may elect, or through underwriters
and dealers that XL Group plc and/or XLIT Ltd. may select, in each case on
a continuous or delayed basis. If XL Group plc and/or XLIT Ltd. uses agents,
underwriters or dealers to sell the securities, XL Group plc and/or XLIT
Ltd., as applicable, will name them and describe their compensation in a
prospectus supplement. The
date of this prospectus is November 9, 2011.
Preference Shares
Debt Securities
Ordinary Share Warrants
Ordinary Share Purchase Contracts
Ordinary Share Purchase Units
Guarantees of XLIT Ltd. Debt Securities
Fully and Unconditionally Guaranteed by XL Group plc
TABLE
OF CONTENTS Prospectus 1 1 2 4 5 6 8 9 10 11 12 15 19 DESCRIPTION
OF XL GROUP ORDINARY SHARE PURCHASE CONTRACTS AND ORDINARY SHARE
PURCHASE UNITS 21 22 37 40 41 ENFORCEMENT
OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES LAWS 42 This
document is important and requires your immediate attention. If you are in
any doubt as to what action you should take, you are recommended to immediately
consult your stockbroker, bank manager, solicitor, fund manager or other
appropriate financial adviser being, if you are resident in Ireland, an organization
or firm authorized or exempted pursuant to the European Communities (Markets
in Financial Instruments) Regulations 2007 (as amended), or the Investments
Intermediaries Act 1995 (as amended) or, if you are in a territory outside
Ireland, another appropriately authorized adviser. This
document does not constitute a prospectus within the meaning of Part 5 of
the Investment Funds, Companies and Miscellaneous Provisions Act 2005 of
Ireland or an offer to sell or an invitation to purchase or the solicitation
of an offer to purchase securities. No offer of any securities of XL Group
plc to the public is being made that requires the publication of a prospectus
pursuant to Irish prospectus law (within the meaning of Part 5 of the Investment
Funds, Companies and Miscellaneous Provisions Act 2005 of Ireland) in general
or in particular pursuant to the Prospectus (Directive 2003/71/EC) Regulations
2005 of Ireland. This document has not been approved or reviewed by or registered
with the Central Bank of Ireland. No invitation, whether direct or indirect,
may be made to the public in the Cayman Islands for any securities issued
by XLIT Ltd. unless such securities are listed on the Cayman Islands Stock
Exchange. This
document does not constitute investment advice or the provision of investment
services within the meaning of the European Communities (Markets in Financial
Instruments) Regulations 2007 of Ireland (as amended) or otherwise. XL Group
plc is not an authorized investment firm within the meaning of the European
Communities (Markets in Financial Instruments) Regulations 2007 of Ireland
(as amended), and the recipients of this document should seek independent
legal and financial advice in determining their actions in respect of or
pursuant to this document. i
This
prospectus is part of a registration statement that XL Group plc and XLIT
Ltd. filed with the Securities and Exchange Commission (the “SEC”)
utilizing a “shelf” registration process, relating to: (1) XL
Group plc’s ordinary shares, preference shares, debt securities
(which may include medium term notes), ordinary share warrants, ordinary
share purchase contracts, ordinary share purchase units and guarantees
of XLIT Ltd.’s debt securities; and (2) XLIT
Ltd.’s debt securities, which will be fully and unconditionally
guaranteed by XL Group plc. Under
this shelf process, XL Group plc and XLIT Ltd. may sell the securities described
in this prospectus in one or more offerings in an unlimited dollar amount.
This prospectus provides you with a general description of the securities
that XL Group plc and XLIT Ltd. may offer. This prospectus does not contain
all of the information set forth in the registration statement as permitted
by the rules and regulations of the SEC. For additional information regarding
XL Group plc or XLIT Ltd. and the offered securities, please refer to the
registration statement. Each time XL Group plc or XLIT Ltd. sells securities
it will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also supplement
or update information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with additional information
described under the heading “Where You Can Find More Information.” On
July 1, 2010, XL Group plc (referred to in this prospectus as “XL Group”)
and XLIT Ltd. (previously known as XL Group Ltd. and, prior to July 1, 2010,
known as XL Capital Ltd, and referred to in this prospectus as “XL-Cayman”),
completed a redomestication transaction in which all of the ordinary shares
of XL-Cayman were exchanged for all of the ordinary shares of XL Group. As
a result, XL-Cayman became a wholly owned subsidiary of XL Group. On November
8, 2011, XL Group Ltd. (formerly XL Capital Ltd) changed its name to XLIT
Ltd. In this prospectus, and in the accompanying prospectus supplement, unless
the context requires otherwise and except as otherwise indicated: • for
periods on and subsequent to July 1, 2010, “we,” “us” and “our” refer
to XL Group plc and its subsidiaries; • for
periods prior to July 1, 2010, “we,” “us” and “our” refer
to XL Capital Ltd (subsequently known as XL Group Ltd., and now known
as XLIT Ltd.) and its subsidiaries; • “XL
Group” refers to XL Group plc and not any of its subsidiaries;
and • “XL-Cayman” refers
to XLIT Ltd. and not any of its subsidiaries. WHERE
YOU CAN FIND MORE INFORMATION XL
Group and XL-Cayman have filed with the SEC under the Securities Act of 1933,
as amended (the “Securities Act”), a combined registration statement
on Form S-3 (herein, together with all amendments and exhibits, referred
to as the “registration statement”) relating to the offered securities. XL
Group XL
Group is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and in accordance
therewith files annual, quarterly and current reports, proxy statements and
other information with the SEC. The public may read and copy any materials
that XL Group files with the SEC at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers, including
XL Group, that file electronically with the SEC. The address of the SEC’s
Internet site is www.sec.gov. 1
XL-Cayman XL-Cayman
is a wholly-owned subsidiary of XL Group. To comply with its obligations
under the Exchange Act, XL-Cayman relies upon XL Group’s filings. Any
debt securities of XL-Cayman offered and sold pursuant to this prospectus
will be fully and unconditionally guaranteed by XL Group but not by any subsidiary
of XL Group. See “Description of Debt Securities and Guarantees.” INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE The
SEC allows XL Group and XL-Cayman to “incorporate by reference” into
this prospectus the information XL Group files with the SEC, which means
that we can disclose important information to you by referring to another
document filed separately with the SEC. The information that XL Group files
after the date of the initial registration statement and prior to the termination
of this offering shall be deemed to be incorporated by reference into this
prospectus. The information that XL Group files after the date of this prospectus
with the SEC will automatically update and supersede this information. XL
Group and XL-Cayman incorporate by reference into this prospectus the documents
listed below, which have been filed by XL Group with the SEC (SEC file number
1- 10804), and any future filings made by XL Group pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the securities described in this prospectus (other than, unless otherwise
indicated, any document or information that is, or is deemed to be, furnished
and not filed in accordance with applicable SEC rules): • Annual
Report on Form 10-K for the year ended December 31, 2010, filed on
February 25, 2011; • Quarterly
Report on Form 10-Q for the quarter ended March 31, 2011, filed on
May 9, 2011; • Quarterly
Report on Form 10-Q for the quarter ended June 30, 2011 filed on August
4, 2011; • Quarterly
Report on Form 10-Q for the quarter ended September 30, 2011 filed
on November 3, 2011; • Proxy
Statement on Schedule 14A for the Annual General Meeting of Holders
of Ordinary Shares of XL Group plc held on May 6, 2011, filed on March
7, 2011; • Current
Reports on Form 8-K filed on March 1, 2011, March 10, 2011, March 28,
2011, April 5, 2011, May 11, 2011, May 26, 2011, June 14, 2011,
June 21, 2011, July 19, 2011, July 25, 2011, August 16, 2011,
September 28, 2011, September 30, 2011, October 17, 2011 and October
31, 2011; and • the
description of XL Group’s ordinary shares included in the Definitive
Proxy Statement on Schedule 14A filed by XL Capital Ltd (XL Group’s
predecessor registrant, which is now known as XLIT Ltd.) on March 10,
2010, set forth in section “Description of XL Group plc Share
Capital”, including any amendment or report filed for the purposes
of updating such description. Any
statement contained in a document incorporated or considered to be incorporated
by reference in this prospectus shall be considered to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
in this prospectus or in any subsequently filed document that is or is considered
to be incorporated by reference modifies or supersedes such statement. Any
statement that is modified or superseded shall not, except as so modified
or superseded, constitute a part of this prospectus. We
will provide to each person, including any beneficial owner, to whom this
prospectus is delivered, at no cost upon his or her written or oral request,
a copy of any of the documents that are incorporated by reference in this
prospectus, other than exhibits to such documents that are not specifically
incorporated by reference into such documents, and XL Group’s and XL-Cayman’s
constitutional documents. You may request such documents by contacting us
at: 2
Investor
Relations Neither
XL Group nor XL-Cayman has authorized anyone to give any information or to
represent anything not contained in this prospectus or in any of the materials
that they have incorporated by reference in this prospectus. You must not
rely on any unauthorized information or representations. This prospectus
is an offer to sell only the securities offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained
in this prospectus is current only as of the date of this prospectus. 3
XL Group plc
XL House
One Bermudiana Road
Hamilton HM 08, Bermuda
Telephone: (441) 292-8515
Fax: (441) 292-5280
Email: investorinfo@xlgroup.com
Investment
in our securities involves various risks. In making an investment decision,
you should carefully consider the risks and uncertainties described under
the heading “Risk Factors” in the Annual Report on Form 10-K for
the year ended December 31, 2010 filed by XL Group, the Quarterly Report
on Form 10-Q for the quarter ended June 30, 2011 filed by XL Group and any
future filings made by XL Group pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the termination of this offering. 4
XL
Group, through its subsidiaries, including XL-Cayman, is a global insurance
and reinsurance company providing property, casualty and specialty products
to industrial, commercial and professional firms, insurance companies and
other enterprises on a worldwide basis. XL
Group is incorporated in Ireland as a public limited company. XL Group’s
principal executive offices are located at No. 1 Hatch Street Upper, 4th
Floor, Dublin 2, Ireland. XL Group’s telephone number is +353 (1) 405-2033.
XL Group’s website address is www.xlgroup.com. The information
contained on XL Group’s website is not incorporated by reference into
this prospectus. XL-Cayman
is incorporated in the Cayman Islands as an exempted company and is a wholly-owned
subsidiary of XL Group. XL-Cayman’s principal executive offices are
located at No. 1 Hatch Street Upper, 4th Floor, Dublin 2, Ireland. XL-Cayman’s
telephone number is +353 (1) 405-2033. You
can obtain additional information about us in the reports and other documents
incorporated by reference in this prospectus. See “Where You Can Find
More Information” and “Incorporation of Certain Information by
Reference.” 5
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS The
Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides
a “safe harbor” for forward-looking statements. This prospectus
and any prospectus supplement, the documents incorporated by reference or
any other written or oral statements made by or on behalf of us may include
forward-looking statements that reflect our current views with respect to
future events and financial performance. Such statements include forward-looking
statements both with respect to us in general, and the insurance and reinsurance
sectors in particular (both as to underwriting and investment matters). Statements
that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may” and
similar statements of a future or forward-looking nature identify forward-looking
statements for purposes of the PSLRA or otherwise. All
forward-looking statements address matters that involve risks and uncertainties.
Accordingly, there are or will be important factors that could cause actual
results to differ materially from those indicated in such statements. We
believe that these factors include, but are not limited to, the following: • changes
in the size of our claims relating to natural or man-made catastrophe
losses due to the preliminary nature of some reports and estimates
of loss and damage to date; • trends
in rates for property and casualty insurance and reinsurance; • the
timely and full recoverability of reinsurance placed by us with third
parties, or other amounts due to us; • changes
in ratings, rating agency policies or practices; • changes
in the projected amount of ceded reinsurance recoverables and the ratings
and creditworthiness of reinsurers; • the
timing of claims payments being faster or the receipt of reinsurance
recoverables being slower than anticipated by us; • our
ability to successfully implement our business strategy especially
during the “soft” market cycle; • increased
competition on the basis of pricing, capacity, coverage terms or other
factors, which could harm our ability to maintain or increase our business
volumes or profitability; • greater
frequency or severity of claims and loss activity than our underwriting,
reserving or investment practices anticipate based on historical experience
or industry data; • the
effects of inflation on our business, including on pricing and reserving; • developments,
including uncertainties related to the depth and duration of the current
recession, and future volatility, in the world’s credit, financial
and capital markets that adversely affect the performance and valuation
of our investments or access to such markets; • the
impact of the downgrade, or a possible future downgrade, of U.S. securities
by credit rating agencies, and the resulting effect on the value of
securities (x) in our investment portfolio and (y) posted as collateral
by and to us; • the
potential impact on us from government-mandated insurance coverage
for acts of terrorism; • the
potential for changes to methodologies, estimations and assumptions
that underlie the valuation of our financial instruments that could
result in changes to investment valuations; • changes
to our assessment as to whether it is more likely than not that we
will be required to sell, or have the intent to sell, available for
sale debt securities before their anticipated recovery; • availability
of borrowings and letters of credit under our credit facilities; • the
ability of our subsidiaries to pay dividends to us; 6
• the
potential effect of regulatory developments in the jurisdictions in
which we operate, including those which could impact the financial
markets or increase our business costs and required capital levels; • changes
in regulation or laws applicable to us or our subsidiaries, brokers
or customers; • acceptance
of our products and services, including new products and services; • changes
in the availability, cost or quality of reinsurance; • changes
in the distribution or placement of risks due to increased consolidation
of insurance and reinsurance brokers; • loss
of key personnel; • changes
in accounting policies or practices or the application thereof; • legislative
or regulatory developments including, but not limited to, changes in
regulatory capital balances that must be maintained by our operating
subsidiaries and governmental actions for the purpose of stabilizing
the financial markets; • the
effects of mergers, acquisitions and divestitures; • developments
related to bankruptcies of companies insofar as they affect property
and casualty insurance and reinsurance coverages or claims that we
may have as a counterparty; • changes
in general economic conditions, including changes in interest rates,
credit spreads, foreign currency exchange rates and other factors; • changes
in applicable tax laws, tax treaties or tax regulations or the interpretation
or enforcement thereof; • the
effects of business disruption or economic contraction due to war,
terrorism or other hostilities; and • the
other factors set forth in the documents incorporated by reference,
which are on file with the SEC. The
foregoing review of important factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements that
are included or incorporated herein or elsewhere. We undertake no obligation
to publicly update or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise. 7
Except
as may otherwise be described in the prospectus supplement relating to an
offering of securities, the net proceeds from the sale of the securities
included in this prospectus will be used for general corporate purposes.
Any specific allocation of the net proceeds of an offering of securities
to a specific purpose will be determined at the time of such offering and
will be described in the related prospectus supplement. 8
The
following table shows the ratio of earnings to fixed charges and ratio of
earnings to combined fixed charges and preference dividends of XL Group and
its subsidiaries for each of the periods indicated: (Unaudited) Fiscal
Year Ended December 31, 2010(1) 2009 2008(1) 2007(1) 2006(1) Ratio
of earnings to fixed charges 1.9 4.6 x 2.3 x —(2 ) 3.1 x 4.0 x Ratio
of earnings to combined fixed charges and preference dividends 1.3 3.5 x 1.7 x —(2 ) 2.8 x 3.7 x
(1) We
computed the foregoing ratios by dividing (a) income from continuing
operations before income taxes, non-controlling interest and income
or loss from equity investees plus the sum of fixed charges, amortization
of capitalized interest and distributed income of equity investees,
less non-controlling interest in pre-tax income of subsidiaries that
have not incurred fixed charges, by (b) the sum of fixed charges and,
where indicated, preference dividends. Fixed charges consist of interest
expense on all indebtedness (including amortization of deferred financing
costs), an estimate of the interest within rental expense and accretion
of deposit liability transactions. (2) For
the year ended December 31, 2008, earnings were insufficient to cover
fixed charges by $259.9 million and combined fixed charges and preference
dividends by $338.5 million. 9
Nine Months Ended
September 30, 2011(1)
GENERAL
DESCRIPTION OF THE OFFERED SECURITIES XL
Group may offer from time to time under this prospectus, separately or together: • ordinary
shares; • preference
shares; • unsecured
senior or subordinated debt securities; • warrants
to purchase ordinary shares of XL Group; • ordinary
share purchase contracts; and • ordinary
share purchase units, each representing ownership of one or more ordinary
share purchase contracts and, as security for the holder’s obligation
to purchase ordinary shares under the share purchase contract, any
one or more of (1) debt securities of XL Group (which may be senior
or subordinated), (2) debt or equity obligations of third parties,
including U.S. Treasury securities or (3) preference shares of XL Group. XL-Cayman
may offer from time to time under this prospectus unsecured senior or subordinated
debt securities guaranteed by XL Group. References
to “XL Group,” “we,” “our” or “us” in “Description
of XL Group Preference Shares,” “Description of XL Group Ordinary
Shares,” “Description of XL Group Ordinary Share Warrants” and “Description
of Debt Securities and Guarantees” refer solely to XL Group plc and
not its subsidiaries. References to “XL-Cayman” in “Description
of Debt Securities and Guarantees” refer solely to XLIT Ltd. and not
its subsidiaries. 10
DESCRIPTION
OF XL GROUP SHARE CAPITAL Our
authorized share capital is US$9,999,900 divided into 500,000,000 ordinary
shares with a nominal value of $0.01 per share, and 499,990,000 undesignated
shares with a nominal value of $0.01 per share. As of November 1, 2011, we
had 320,517,493 issued and outstanding ordinary shares and no other issued
and outstanding shares. All issued and outstanding shares are fully paid
and nonassessable. Our
authorized share capital also includes an additional €40,000
divided into 40,000 subscriber shares with a nominal value of €1
per share; these shares were issued in connection with our formation and
are no longer outstanding. We
have the authority, pursuant to our articles of association, to increase
our authorized but unissued share capital by ordinary resolution by creating
additional XL Group shares of any class or series. An “ordinary resolution” of
XL Group requires more than 50% of the votes cast in person or by proxy at
a shareholders’ meeting by shareholders entitled to vote at that meeting. As
a matter of Irish law, the board of directors of a company may issue authorized
but unissued new shares without shareholder approval once authorized to do
so by the articles of association of the company or by an ordinary resolution
adopted by the shareholders at a general meeting. The authority conferred
can be granted for a maximum period of five years, at which point it must
be renewed by the shareholders by an ordinary resolution. Because of this
requirement of Irish law, our articles of association authorize the board
of directors to issue new shares up to the amount of our authorized but unissued
share capital without shareholder approval through June 30, 2015. We expect
to seek to renew such general authority at an annual general meeting before
that date. Our
articles of association authorize our board of directors, without shareholder
approval, to determine the terms of the undesignated shares issued by us.
Our board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided
by the terms of that class or series of shares, to provide from time to time
for the issuance of ordinary shares or other classes or series of shares
and to establish the characteristics of each such other class or series,
including the number of shares and their preferred, deferred or other special
rights and privileges or limitations, conditions and restrictions, whether
in regard to dividend, voting, return of capital, conversion, redemption
or otherwise. 11
DESCRIPTION
OF XL GROUP PREFERENCE SHARES General We
are authorized to issue up to 999,990,000 shares, consisting of 500,000,000
ordinary shares with a nominal value of $0.01 per share and 499,990,000 undesignated
shares with a nominal value of $0.01 per share. Without prejudice to any
special rights previously conferred on the holders of existing shares, the
board of directors has the power to issue shares with such preferred, deferred
or other special rights and privileges or such limitations, conditions and
restrictions, whether in regard to dividend, voting, return of capital, conversion,
redemption or otherwise as the board of directors may from time to time determine. The
following is a description of certain general terms and provisions of the
shares that, following appropriate resolutions of the board of directors,
we may issue with preferred rights (“preference shares”). The particular
terms of any class or series of preference shares will be described in the
applicable prospectus supplement. The applicable prospectus supplement may
also state that any of the terms set forth herein are inapplicable to such
series of preference shares; provided, that the information set forth
in such prospectus supplement does not constitute material changes to the
information herein such that it alters the nature of the offering or the
securities offered. The
following description of our preference shares is a summary. You should refer
to the provisions of our memorandum of association, our articles of association
and the terms of each class or series of the preference shares that will
be filed with the SEC at or prior to the time of issuance of such class or
series of the preference shares and described in the applicable prospectus
supplement. Rights under the preference shares are subject to the Irish Companies
Act (the “ICA”), as described in this prospectus. Terms The
terms of each series of preference shares will be described in any prospectus
supplement related to such class or series of preference shares. The
board of directors in approving the issuance of a class or series of preference
shares shall determine, and the applicable prospectus supplement will set
forth with respect to such class or series, the following: • whether
dividends on that class or series of preference shares will be cumulative
or non-cumulative; • the
dividend rate and rights in respect of dividends on the preference
shares of that class or series and whether the dividend rate is subject
to reset (up to a specified maximum) under certain circumstances described,
if applicable, in such prospectus supplement; • the
liquidation preference per share of that class or series of preference
shares, if any; • the
voting powers, if any, of the preference shares of that class or series; • any
redemption and sinking fund provisions applicable to that class or
series of preference shares; • any
conversion provisions applicable to that class or series of preference
shares; and • the
terms of any other preferences or other rights and limitations, if
any, applicable to that class or series of preference shares. Dividends Holders
of preference shares will be entitled to receive out of distributable profits
of XL Group, when, as and if declared by the board of directors, cash dividends
at the rates and on the dates as set forth in the applicable prospectus supplement.
Except as set forth below, no dividends will be declared or paid on any class
or series of preference shares unless full dividends for all classes or series
of preference shares which have the same rank as, or rank senior to, such
class or 12
series of preference
shares (including cumulative dividends still owing, if any) have been or
contemporaneously are declared and paid. When those dividends are not paid
in full, dividends will be declared pro rata so that the amount of
dividends declared per share on that class or series of preference shares
and on each other class or series of preference shares having the same rank
as, or ranking senior to, that class or series of preference shares will
in all cases bear to each other the same ratio that accrued dividends per
share on that class or series of preference shares and the other preference
shares bear to each other. In addition, generally, unless all dividends on
the preference shares have been paid, no dividends will be declared or paid
on the ordinary shares and generally we may not redeem or purchase any ordinary
shares. For
a discussion of limitations on funds available to us for the payment of dividends,
see “Description of XL Group Ordinary Shares—Dividend Rights.” Voting
Rights The
holders of the preference shares shall not, except as required by law or
as set forth in the applicable prospectus supplement, have any right or power
to vote on any question or in any proceeding or to be represented at, or
to receive notice of, any meeting of shareholders. On any matters on which
the holders of the preference shares shall be entitled to vote, they shall
be entitled to one vote for each share held. Unless
otherwise stated in the applicable prospectus supplement, if six or more
full quarterly dividends (whether consecutive or not) on any series of preference
shares shall be in arrears, then during such period, which we refer to herein
as the “voting period,” the holders of a majority of the outstanding
preference shares of all series so in arrears and having such right represented
in person or by proxy at any meeting of our shareholders held for the election
of directors during such voting period shall be entitled, as a class, to
the exclusion of the holders of all other classes of our shares, to elect
two of our directors, each preference share entitling the holder thereof
to one vote. Any
director who shall have been elected by holders of preference shares, or
by any director so elected as herein contemplated, may be removed at any
time during a voting period, either for or without cause, by, and only by,
the affirmative votes of the holders of record of a majority of the outstanding
preference shares of all series given at a special meeting of such shareholders
called for the purpose. Any vacancy thereby created may be filled during
such voting period by the holders of preference shares of all series, present
in person or represented by proxy at such meeting. Any director elected by
holders of preference shares, or by any director so elected as herein contemplated,
who dies, resigns or otherwise ceases to be a director shall, except as otherwise
provided in the preceding sentence, be replaced by the remaining director
theretofore elected by the holders of preference shares. At the end of the
voting period, the holders of preference shares of all series shall be automatically
divested of all voting power vested in them under this provision but subject
always to the subsequent vesting of voting power in the holders of preference
shares in the event of any similar cumulated arrearage in payment of quarterly
dividends occurring thereafter. The term of all directors elected pursuant
to this provision shall in all events expire at the end of the voting period. In
addition, certain transactions that would vary the rights of the holders
of any series of outstanding preference shares cannot be made without the
approval of a special resolution in writing by the holders of 100% of such
series or the sanction of a special resolution passed by two-thirds of the
votes cast at a separate meeting of the holders of such series, subject to
any requirements of Irish law. Ranking The
preference shares will rank senior to our ordinary shares with respect to
payment of dividends and amounts upon liquidation, dissolution or winding-up
of XL Group. Without the requisite vote of holders of the preference shares,
as described above under “—Voting Rights,” no class or series
of capital shares can be created ranking senior to the preference shares
as to dividend rights or liquidation preference. 13
Liquidation
Rights In
the event of our liquidation, dissolution or winding-up, the holders of preference
shares of each series are entitled to receive out of our assets available
for distribution to shareholders, before any distribution of assets is made
to holders of ordinary shares or any other class or series of our capital
shares (including any preferred shares) which is junior as to liquidation
rights to our preference shares of such series, liquidating distributions
in the amount set forth in the applicable prospectus supplement, plus dividends
accrued and accumulated but unpaid to the date of such distribution. If,
upon our liquidation, dissolution or winding-up, the amounts payable with
respect to our preference shares of such series and any of our other preference
shares ranking as to any such distribution on a parity with our preference
shares of such series are not paid in full, the holders of our preference
shares of such series and of such of our other preference shares will share
ratably in any such distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of preference shares will not be entitled to any further participation in
any distribution of assets by us. Neither our consolidation or merger with
another corporation nor a sale or transfer of all or part of our assets for
cash or securities shall be considered a liquidation, dissolution or winding-up
of XL Group. Redemption
Provisions The
preference shares of each series will have such optional or mandatory redemption
terms, if any, as shall be set forth in the applicable prospectus supplement. Conversion
and Exchange Rights The
preference shares, if convertible, will only be convertible into our ordinary
shares, and will not be convertible into or exchangeable for securities of
a third party. The terms and conditions, if any, upon which any series of
our preference shares is convertible into ordinary shares or exchangeable
into debt securities will be set forth in the applicable prospectus supplement
relating to such series of preference shares. Such terms will include: (1) in
the case of any series of preference shares that is convertible into
ordinary shares:
the
number of ordinary shares into which preference shares of such series
are convertible; (b) the
conversion price (or manner of calculation thereof); (c) the
conversion period; (d) provisions
as to whether conversion will be at the option of the holders of such
series of preference shares, at our option or automatic (upon a specified
date or upon the occurrence of a specified event); (e) the
events requiring an adjustment of the conversion price; and (f) provisions
affecting conversion in the event of the redemption of such series
of preference shares; and (2) in
the case of any series of preference shares that is exchangeable into
debt securities:
the
principal amount of debt securities into which preference shares of
such series are exchangeable; (b) the
exchange period; and (c) provisions
as to whether the exchange will be at the option of the holders of
such series of preference shares, at our option or automatic (upon
a specified date or upon the occurrence of a specified event). Any
exchange of preference shares into debt securities will be carried out in
a manner described in the applicable prospectus supplement and may be accomplished
through a redemption of the preference shares and issuance of new debt securities
if so specified. 14
(a)
(a)
Miscellaneous Our
preference shares will have no preemptive rights. All of our preference shares,
upon payment in full therefor, will be fully paid and nonassessable. DESCRIPTION
OF XL GROUP ORDINARY SHARES General The
following description of our ordinary shares is a summary. You should refer
to the provisions of our memorandum of association and our articles of association.
Rights under the ordinary shares are subject to the ICA, as described in
this prospectus. Voting Holders
of ordinary shares vote on all matters submitted to a vote of shareholders
and are entitled to one vote per share, except that if, and for so long as,
the votes conferred by the XL Group Controlled Shares (as defined below)
of any person constitute 10% or more of the votes conferred by the issued
shares of XL Group, the voting rights with respect to the XL Group Controlled
Shares of such person will be limited, in the aggregate, to a voting power
equal to approximately (but slightly less than) 10%, pursuant to a formula
set forth in our articles of association. “XL Group Controlled Shares” of
a person (as defined in our articles of association) include (1) all our
shares owned directly, indirectly or constructively by that person (within
the meaning of Section 958 of the U.S. Internal Revenue Code of 1986, as
amended) and (2) all our shares owned directly, indirectly or constructively
by that person or any “group” of which that person is a part, within
the meaning of Section 13(d)(3) of the Exchange Act. All
votes at a general meeting will be decided by way of a poll. Voting rights
on a poll may be exercised by shareholders registered in XL Group’s
share register as of the record date for the meeting or by a duly appointed
proxy of such a registered shareholder, which proxy need not be a shareholder.
All proxies must be appointed in accordance with our articles of association.
Our articles of association provide that the board of directors may permit
the appointment of proxies by the shareholders to be notified to XL Group
electronically. In
accordance with our articles of association, the board of directors may from
time to time cause XL Group to issue preference or any other class or series
of shares. These shares may have such voting rights, if any, as may be specified
in the terms of such shares (e.g., they may carry more votes per share than
ordinary shares or may entitle their holders to a class vote on such matters
as may be specified in the terms of the shares). Treasury
shares and shares of XL Group held by subsidiaries of XL Group will not entitle
their holders to vote at general meetings of shareholders. Except
where a greater majority is required by Irish law or our articles of association,
any question proposed for consideration at any general meeting of XL Group
or of any class of shareholders will be decided by an ordinary resolution
passed by a simple majority of the votes cast by shareholders entitled to
vote at such meeting. Irish law requires “special resolutions” of
the shareholders at a general meeting to approve certain matters. A “special
resolution” of XL Group requires not less than 75% of the votes cast
by shareholders at a meeting of shareholders. Examples of matters requiring
special resolutions include: • Amending
the objects of XL Group set forth in our memorandum of association; • Amending
our articles of association; • Approving
a change of name of XL Group; • Authorizing
the entering into of a guarantee or provision of security in connection
with a loan, quasi-loan or credit transaction to a director or connected
person of a director (which generally includes a family member or business
partner of the director and any entity controlled by the director); • Opting
out of preemption rights on the issuance of new shares; 15
• Re-registration
of XL Group from a public limited company to a private company; • Purchase
of our own shares off-market; • Reduction
of issued share capital; • Resolving
that XL Group be wound up by the Irish courts; • Resolving
in favor of a shareholders’ voluntary winding-up; • Re-designation
of shares into different share classes; • Setting
the re-issue price of treasury shares; and • Mergers
with companies incorporated in the European Economic Area. Variation
of any special rights attached to any class or series of our issued shares
(including ordinary shares) must, in accordance with our articles of association,
be approved by (1) a resolution of the shareholders of the class or series
affected, passed by the affirmative vote of the holders of two- thirds of
the shares of that class or series voted at a meeting of that class or series
or (2) the written consent of all the shareholders of that class or series
(subject to Irish law). In the case of a meeting to vary the rights of any
class or series of shares, Irish law provides that the necessary quorum is
the presence, in person or by proxy, of at least two shareholders representing
one-third in nominal value (or, at an adjourned meeting, at least one shareholder
representing any amount of nominal value) of the relevant class. Every shareholder
of the affected class or series will have one vote for each share of such
class or series that he or she holds as of the record date for the meeting
except that if, and for so long as, the votes conferred by the XL Group Controlled
Shares (as defined above under “—Voting”) of any person constitute
10% or more of the votes conferred by the issued shares of the relevant class
or series, the voting rights with respect to the XL Group Controlled Shares
of such person will be limited, in the aggregate, to a voting power equal
to approximately (but slightly less than) 10%, pursuant to a formula set
forth in our articles of association. Dividend
Rights Subject
to the ICA and any rights and restrictions of any other class or series of
shares, including our preference shares, the board of directors may from
time to time declare dividends on the shares issued and authorize payment
of the dividends out of our distributable reserves (as described below) in
accordance with the ICA. The board of directors may, subject to applicable
provisions of the ICA, declare that any dividend be paid wholly or partly
by the distribution of our shares and/or specific assets. No
dividends on the shares issued will be declared by our board of directors,
or paid or set apart for payment by us, at any time during which the terms
and provisions of any of our agreements, including any agreement relating
to our indebtedness, or Irish law prohibit a declaration, payment or setting
apart for payment of a dividend or provide that such a declaration, payment
or setting apart for payment would constitute a breach or a default or not
be permitted thereunder. No dividends on the shares issued will be declared
or paid or set apart for payment if prohibited by law or regulation. Irish
law provides that no dividend shall be payable except out of our distributable
reserves and in accordance with Irish law. In addition, our directors are,
as a matter of prudence, required to ensure that any dividend declared or
paid is not of an amount that reduces our reserves to a level that is not
sufficient to meet the reserve requirements of our business. Under
Irish law, distributable reserves, broadly, means the accumulated realized
profits of XL Group less accumulated realized losses of XL Group on a standalone
basis. In addition, no dividend or distribution may be made unless the net
assets of XL Group are not less than the aggregate of XL Group’s share
capital, plus undistributable reserves, and the distribution does not reduce
XL Group’s net assets below such aggregate. Undistributable reserves
include the share premium account, the capital redemption reserve fund and
the amount by which XL Group’s accumulated unrealized profits, so far
as not previously utilized by any capitalization, exceed XL Group’s 16
accumulated unrealized
losses, so far as not previously written off in a reduction or reorganization
of capital. The
determination as to whether or not we have sufficient distributable reserves
to fund a dividend must be made by reference to “relevant accounts” of
XL Group. The “relevant accounts” are either the last set of unconsolidated
annual audited financial statements or unaudited financial statements prepared
in accordance with the ICA, which give a “true and fair view” of
XL Group’s unconsolidated financial position in accordance with accepted
accounting practice in Ireland. These “relevant accounts” must
be filed in the Companies Registration Office (the official public registry
for companies in Ireland). Our
articles of association authorize our board of directors to declare such
dividends as appear justified from the profits of XL Group without the approval
of the shareholders. The dividends can be declared and paid in the form of
cash or non-cash assets, subject to applicable law. XL Group may pay dividends
in any currency but intends to do so in U.S. dollars. Our board of directors
may deduct from any dividend or other moneys payable to any shareholder all
sums of money, if any, due from the shareholder to XL Group in respect of
shares of the company. Rights
upon Liquidation Upon
our liquidation, after the payments to be made in accordance with the ICA
and the full amounts that holders of any issued shares ranking senior to
the ordinary shares, including our preference shares, as to distribution
on liquidation or winding-up are entitled to receive have been paid or set
aside for payment, our articles of association provide that the method by
which any remaining assets available for distribution to the holders of ordinary
shares will be distributed shall be determined by the liquidator, subject
to a special resolution by the shareholders. The liquidator may deduct from
the amount payable in respect of those ordinary shares any liabilities the
holder has to or with us. The assets received by the holders of ordinary
shares in a liquidation may consist in whole or in part of property. That
property is not required to be of the same kind for all shareholders. Incentive
Equity Plans We
maintain the 1991 Performance Incentive Program (the “1991 Program”),
which provides for grants of non-qualified or incentive stock options, restricted
stock awards, restricted stock units, performance shares, performance units
and stock appreciation rights (“SARs”) to our employees and directors.
The plan is administered by the compensation committee of our board of directors
or another committee designated by the board of directors (the “Compensation
Committee”). Options may be granted with or without SARs. No SARs have
been granted to date. Grant prices are established at the fair market value
of our ordinary shares at the date of grant. Options and SARs have a life
of not longer than 10 years and vest as set forth at the time of grant. Restricted
stock awards issued under the 1991 Program vest over such period as the Compensation
Committee may approve. These awards contain certain restrictions, prior to
vesting, relating to, among other things, forfeiture in the event of termination
of employment and transferability. The award recipients generally have the
rights and privileges of a shareholder as to the restricted stock, including
the right to receive dividends and the right to vote such restricted stock. In
addition, we maintain the Performance Incentive Program for Employees (the “1999
Program”), which provides for grants of non-qualified options, restricted
stock, performance shares and performance units to our employees who are
not subject to the reporting requirements of Section 16(a) of the Exchange
Act. The Compensation Committee administers the 1999 Program. We
also maintain the Directors Stock & Option Plan (the “Directors’ Plan”),
which provides for grants of non-qualified options, restricted stock and
restricted stock units to non-employee directors. The Directors’ Plan
provides for automatic grants of options to purchase 5,000 shares to each
non- employee director when he or she is first elected to our board of directors
and annual automatic grants of options to purchase an amount of shares, as
determined by our board of directors, to each 17
non-employee director
in office immediately following our annual meeting. The exercise price per
share of each of the options is equal to the fair market value of our ordinary
shares at the date of grant. All options vest immediately on the grant date,
and they expire ten years after the date of grant. Discretionary option grants
and discretionary grants of restricted stock and restricted stock units to
non-employee directors also may be made under the Director’s Plan. Prior
to January 1, 2009, share units were credited to the account of each non-employee
director (collectively, “Retainer Share Units”) in an amount equal
to the non-employee director’s retainer fee divided by the fair market
value of our ordinary shares on the date such Retainer Share Units were to
have been credited. Benefits under the Directors’ Plan are distributed
in the form of our ordinary shares for each Retainer Share Unit awarded following
retirement or termination of a non-employee director’s service on our
board of directors. Such shares are received either in a lump sum on the
date of a non-employee director’s retirement or termination or over
a period not to exceed five years, as elected in advance by each non- employee
director. Subsequent to January 1, 2009, non-employee directors did not receive
such Retainer Share Units as a result of the addition of Section 457A to
the U.S. Internal Revenue Code of 1986, as amended. During
the years ended December 31, 2010, 2009 and 2008, we granted 1,022,686, 1,269,500
and 5,889,000 options, respectively, to purchase our ordinary shares to our
directors and employees related to our incentive equity plans. During the
years ended December 31, 2010, 2009 and 2008, we granted 62,577, 146,895
and 1,349,620 shares, respectively, of our restricted stock to our directors
and employees related to incentive equity plans. Classified
Board Our
board of directors is divided into three classes that are elected for staggered
three-year terms (starting from the date of their last appointment as directors
and, in some cases, as directors of our predecessor registrant, XL Capital
Ltd, which is now known as XLIT Ltd.). A director may be removed without
cause by the shareholders by ordinary resolution (representing a majority
of the total voting power) subject to compliance with specific provisions
of the ICA, including in relation to notice and the relevant director having
audience at the relevant shareholder meeting. Preemptive
Rights Under
Irish law, in the absence of the contrary provisions in our articles of association,
certain statutory preemption rights would apply automatically in favor of
XL Group ordinary shareholders when XL Group shares are issued for cash.
However, we have opted out of these preemption rights in our articles of
association as permitted under Irish law. Irish law requires this opt-out
to be renewed at least every five years by a special resolution of the shareholders.
A “special resolution” requires not less than 75% of the votes
cast by XL Group shareholders at a meeting of shareholders. We expect that
we will seek renewal of the opt-out at an annual general meeting prior to
the expiration of the current opt-out on June 30, 2015. If the opt-out expires
and is not renewed, shares issued for cash must be offered to pre-existing
ordinary shareholders of XL Group pro rata to their existing shareholding
before the shares can be issued to any new shareholders or pre-existing shareholders
in an amount greater than their pro rata entitlements. The statutory
preemption rights: • generally
do not apply where shares are issued for non-cash consideration; • do
not apply to the issuance of non-equity shares (that is, shares that
have the right to participate only up to a specified amount in any
dividend and capital distribution, which are sometimes referred to
as non-participating shares); and • do
not apply to the issuance of shares pursuant to certain employee compensation
plans (but the 1991 Program and the Directors’ Plan, both of which
permit (or, in the case of the 1991 Program, permitted until April
2005) grants to non-employee directors, do not fit within this exception). 18
Fractional
Shares Irish
law does not recognize fractional shares held of record. Accordingly, our
articles of association do not provide for the issuance of fractional XL
Group shares and the official register of XL Group will not reflect any fractional
shares. Whenever as a result of an alteration or reorganization of the share
capital of XL Group any shareholder would become entitled to fractions of
a share, the board of directors may, on behalf of those shareholders, sell
the shares representing the fractions and distribute the proceeds of sale
among those shareholders (or, if those proceeds are less than an amount fixed
by the board of directors, retain them for the benefit of the company). This
ability of our board of directors to dispose of fractional shares is required
in order to comply with the Irish law prohibition on fractional shares held
of record. DESCRIPTION
OF XL GROUP ORDINARY SHARE WARRANTS General XL
Group may issue ordinary share warrants independently or together with any
securities offered by any prospectus supplement and such ordinary share warrants
may be attached to or separate from such securities. Each series of ordinary
share warrants will be issued under a separate warrant agreement to be entered
into between XL Group and a bank or trust company, as warrant agent, all
as set forth in the applicable prospectus supplement. The warrant agent will
act solely as our agent in connection with the certificates representing
the ordinary share warrants and will not assume any obligation or relationship
of agency or trust for or with any holders of ordinary share warrant certificates
or beneficial owners of ordinary share warrants. The
following summaries of certain provisions of the warrant agreement and ordinary
share warrant certificate are not complete. You should look at the warrant
agreement relating to, and the ordinary share warrant certificate representing,
a series of ordinary share warrants. The
applicable prospectus supplement may also state that any of the terms set
forth herein are inapplicable to such series; provided, that the information
set forth in such prospectus supplement does not constitute material changes
to the information herein such that it alters the nature of the offering
or the securities offered. Ordinary share warrants for the purchase of ordinary
shares will be offered and exercisable for U.S. dollars only and will be
in registered form only. Terms An
applicable prospectus supplement will set forth and describe other specific
terms regarding each series of ordinary share warrants offered hereby, including: (1) the
offering price; (2) the
number of ordinary shares purchasable upon exercise of each such ordinary
share warrant and the price at which such number of ordinary shares
may be purchased upon such exercise; (3) the
date on which the right to exercise such ordinary share warrants shall
commence and the date on which such right shall expire; and (4) any
other terms of such ordinary share warrants. Exercise
of Ordinary Share Warrants Each
ordinary share warrant will entitle the holder thereof to purchase such ordinary
shares at such exercise price as shall in each case be set forth in, or calculable
from, the prospectus supplement relating to the offered ordinary share warrants.
After the close of business on the expiration date of each ordinary share
warrant or such later date to which such expiration date may be extended
by us, unexercised ordinary share warrants will become void. Ordinary
share warrants may be exercised by delivering to the warrant agent payment
as provided in the applicable prospectus supplement of the amount required
to purchase the ordinary shares purchasable upon such exercise, together
with certain information set forth on the reverse 19
side of the ordinary
share warrant certificate. Upon receipt of such payment and the ordinary
share warrant certificate properly completed and duly executed at the corporate
trust office of the warrant agent or any other office indicated in the applicable
prospectus supplement, we will, as soon as practicable, issue and deliver
the ordinary shares purchasable upon such exercise. If fewer than all of
the ordinary share warrants represented by such ordinary share certificate
are exercised, a new ordinary share warrant certificate will be issued for
the remaining amount of ordinary share warrants. Amendments
and Supplements to Warrant Agreement The
warrant agreement for a series of ordinary share warrants may be amended
or supplemented without the consent of the holders of the ordinary share
warrants issued thereunder to effect changes that are not inconsistent with
the provisions of the ordinary share warrants and that do not adversely affect
the interests of the holders of the ordinary share warrants. Ordinary
Share Warrant Adjustments Unless
otherwise indicated in the applicable prospectus supplement, the exercise
price of, and the number of ordinary shares covered by, an ordinary share
warrant are subject to adjustment in certain events, including: (1) the
issuance of ordinary shares as a dividend or distribution on the ordinary
shares; (2) certain
subdivisions and combinations of the ordinary shares; (3) the
issuance to all holders of ordinary shares of certain rights or warrants
entitling them to subscribe for or purchase ordinary shares at less
than the current market value, as defined in the applicable warrant
agreement for such series of ordinary share warrants; and (4) the
distribution to all holders of ordinary shares of certain evidences
of our indebtedness or assets, other than certain cash dividends and
distributions described below. No
adjustment in the exercise price of, and the number of ordinary shares covered
by, an ordinary share warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends
or distributions to the extent paid from retained earnings. No adjustment
will be required unless such adjustment would require a change of at least
one percent in the exercise price and exercise rate then in effect; provided, however,
that any such adjustment not so made will be carried forward and taken into
account in any subsequent adjustment; provided, further, that
any such adjustment not so made shall be made no later than three years after
the occurrence of the event requiring such adjustment to be made or carried
forward. Except as stated above, the exercise price of, and the number of
ordinary shares covered by, an ordinary share warrant will not be adjusted
for the issuance of ordinary shares or any securities convertible into or
exchangeable for ordinary shares, or securities carrying the right to purchase
any of the foregoing. In
the case of: (1) a
redesignation of the ordinary shares; (2) certain
consolidation or merger events involving us; or (3) a
sale or conveyance to another corporation of our property and assets
as an entirety or substantially as an entirety; in
each case as a result of which holders of our ordinary shares shall be entitled
to receive stock, securities, other property or assets (including cash) with
respect to or in exchange for such ordinary shares, the holders of the ordinary
share warrants then outstanding will be entitled thereafter to convert such
ordinary share warrants into the kind and amount of ordinary shares and other
securities or property which they would have received upon such redesignation,
consolidation, merger, sale or conveyance had such ordinary share warrants
been exercised immediately prior to such redesignation, consolidation, merger,
sale or conveyance. 20
DESCRIPTION
OF XL GROUP ORDINARY SHARE PURCHASE CONTRACTS AND XL
Group may issue ordinary share purchase contracts, representing contracts
obligating holders to purchase from XL Group and obligating XL Group to sell
to the holders, or holders to sell to XL Group and XL Group to purchase from
the holders, to the extent permitted by the ICA, a fixed or varying number
of ordinary shares at a future date or dates. The price per ordinary share
may be fixed at the time the ordinary share purchase contracts are entered
into or may be determined by reference to a specific formula set forth in
the ordinary share purchase contracts. Any ordinary share purchase contract
may include anti-dilution provisions to adjust the number of ordinary shares
to be delivered pursuant to such ordinary share purchase contract upon the
occurrence of certain events. The ordinary share purchase contracts may be
entered into separately or as a part of ordinary share purchase units consisting
of one or more ordinary share purchase contracts and any one or more of: (1) debt
securities of XL Group (which may be senior or subordinated); (2) preference
shares of XL Group; or (3) debt
or equity obligations of third parties, including U.S. Treasury securities. The
ordinary share purchase contracts may require holders to secure their obligations
in a specified manner and in certain circumstances we may deliver newly issued
prepaid ordinary share purchase contracts upon release to a holder of any
collateral securing such holder’s obligations under the original ordinary
share purchase contract. Any one or more of the above securities, ordinary
shares or the ordinary share purchase contracts or other collateral may be
pledged as security for the holders’ obligations to purchase or sell,
as the case may be, the ordinary shares under the ordinary share purchase
contracts. The ordinary share purchase contracts may also allow the holders,
under certain circumstances, to obtain the release of the security for their
obligations under such contracts by depositing with the collateral agent,
as substitute collateral, treasury securities with a principal amount at
maturity equal to the collateral so released or the maximum number of ordinary
shares deliverable by such holders under ordinary share purchase contracts
requiring the holders to sell ordinary shares to XL Group. The terms of any
payments provided for under the ordinary share purchase units will be described
in the applicable prospectus supplement. The
applicable prospectus supplement will describe the terms of any ordinary
share purchase contracts or ordinary share purchase units and, if applicable,
prepaid ordinary share purchase contracts. The description in the prospectus
supplement will be qualified in its entirety by reference to (1) the ordinary
share purchase contracts, (2) the collateral arrangements and depositary
arrangements, if applicable, relating to such ordinary share purchase contracts
or ordinary share purchase units and (3) if applicable, the prepaid ordinary
share purchase contracts and the document pursuant to which such prepaid
ordinary share purchase contracts will be issued. 21
ORDINARY SHARE PURCHASE UNITS
DESCRIPTION
OF DEBT SECURITIES AND GUARANTEES General XL
Group and/or XL-Cayman each, for purposes of this section, an “Issuer” may
issue debt securities from time to time in one or more series, under one
or more indentures, each dated as of a date on or prior to the issuance of
the debt securities to which it relates. Any senior debt securities or subordinated
debt securities issued by XL Group will be issued pursuant to a senior indenture
or a subordinated indenture, respectively, in each case between XL Group
and a trustee qualified under the Trust Indenture Act of 1939, as amended
(the “Trust Indenture Act”). Any senior debt securities or subordinated
debt securities issued by XL-Cayman will be issued pursuant to a senior indenture
or a subordinated indenture, respectively, in each case, among XL-Cayman,
XL Group and a trustee qualified under the Trust Indenture Act. Such indentures
are subject to such amendments or supplements as may be adopted from time
to time. The senior indenture and the subordinated indenture, as amended
or supplemented from time to time, are sometimes referred to individually
as an “indenture” and collectively as the “indentures.” The
trustee under any indenture is referred to as the “trustee.” Each
indenture is subject to and governed by the Trust Indenture Act. The aggregate
principal amount of debt securities which may be issued under each indenture
is unlimited and each indenture provides that the specific terms of any series
of debt securities will be set forth in, or determined pursuant to, an authorizing
resolution, as defined in the applicable prospectus supplement, and/or a
supplemental indenture, if any, relating to such series, and executed by
the same parties that are parties to the relevant indenture. All senior debt
securities issued by XL-Cayman will be fully and unconditionally guaranteed
by XL Group. See “Description of Debt Securities and Guarantees—Guarantees.” The
statements made below relating to the debt securities and the indentures
are summaries of the material provisions thereof and are subject to, and
are qualified by reference to, the provisions of the applicable indenture
(including the guarantee provisions contained therein in the case of the
XL- Cayman indenture) and any applicable U.S. federal income tax and Irish
law considerations as well as any applicable supplements to the terms described
below in the applicable prospectus supplement. The applicable prospectus
supplement may also state that any of the terms set forth herein are inapplicable
to such series of debt securities; provided, that the information
set forth in such prospectus supplement does not constitute material changes
to the information herein such that it alters the nature of the offering
or the securities offered. Terms The
debt securities will be unsecured obligations of the applicable Issuer. The
senior debt securities will rank equal in right of payment with all other
unsecured and unsubordinated indebtedness of the applicable Issuer. The
subordinated debt securities will be subordinated in right of payment to
the prior payment in full of all senior indebtedness, which is defined in
the section called “—Ranking of Debt Securities” below of
the applicable Issuer. The
specific terms of each series of debt securities will be set forth in the
applicable prospectus supplement relating thereto, including the following,
as applicable: (1) the
Issuer of such debt securities, the title of such debt securities,
whether such debt securities are offered pursuant to a medium term
notes program, and whether such debt securities are senior debt securities
or subordinated debt securities and, if subordinated debt securities,
the specific subordination provisions applicable thereto; (2) the
aggregate principal amount of such debt securities and any limit on
such aggregate principal amount; (3) the
price (expressed as a percentage of the principal amount thereof) at
which such debt securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof payable
upon declaration of acceleration of the maturity thereof, 22
or,
if applicable, the portion of the principal amount of such debt securities
that is convertible or exchangeable or the method by which any such
portion shall be determined; (4) if
convertible or exchangeable for other securities, the terms on which
such debt securities are convertible or exchangeable, including the
initial conversion or exchange price, the conversion or exchange period,
any events requiring an adjustment of the applicable conversion or
exchange price and any requirements relating to the reservation of
securities for purposes of conversion in the case of convertible securities; (5) the
date(s), or the method for determining such date or dates, on which
the principal of such debt securities will be payable and, if applicable,
the terms on which such maturity may be extended; (6) the
rate(s) (which may be fixed or floating), or the method by which such
rate or rates shall be determined, at which such debt securities will
bear interest, if any, including, if applicable, that such debt securities
will bear interest at an increased rate (up to a specified maximum)
upon the occurrence of an event of default and/or under certain circumstances
described in the applicable prospectus supplement (which may include,
among other things, a reduction in the trading price of ordinary shares
below certain levels for a minimum period of time); (7) the
date(s), or the method for determining such date or dates, from which
any such interest will accrue, the dates on which any such interest
will be payable, the record dates for such interest payment dates,
or the method by which such dates shall be determined, the persons
to whom such interest shall be payable, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve
30-day months; (8) the
place(s) where the principal of and interest, if any, on such debt
securities will be payable, where such debt securities may be surrendered
for registration of transfer or exchange and where notices or demands
to or upon the applicable Issuer in respect of such debt securities
and the applicable indenture may be served; (9) the
period(s), if any, within which, the price or prices at which and the
other terms and conditions upon which such debt securities may, pursuant
to any optional or mandatory redemption provisions, be redeemed, as
a whole or in part, at the Issuer’s option; (10) the
Issuer’s obligation, if any, to redeem, repay or repurchase such
debt securities pursuant to any sinking fund (as defined in the applicable
supplemental indenture) or analogous provision or at the option of
a holder thereof, and the period or periods within which, the price
or prices at which and the other terms and conditions upon which such
debt securities will be redeemed, repaid or purchased, as a whole or
in part, pursuant to such obligations; (11) if
other than U.S. dollars, the currency or currencies in which the principal
of and interest, if any, on such debt securities are denominated and
payable, which may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the terms and
conditions relating thereto; (12) whether
the amount of payments of principal of or interest, if any, on such
debt securities may be determined with reference to an index, formula
or other method (which index, formula or method may, but need not,
be based on the yield on or trading price of other securities, including
United States Treasury securities, or on a currency, currencies, currency
unit or units, or composite currency or currencies) and the manner
in which such amounts shall be determined; (13) whether
the principal of or interest, if any, on the debt securities of the
series is to be payable, at the Issuer’s election or the election
of a holder thereof, in a currency or currencies, currency unit or
units or composite currency or currencies other than that in which
such debt securities are denominated or stated to be payable and the
period or periods within which, and the terms and conditions upon which,
such election may be made; 23
(14) provisions,
if any, granting special rights to the holders of debt securities of
the series upon the occurrence of such events as may be specified; (15) any
deletions from, modifications of or additions to the events of default
or covenants with respect to debt securities of the series, whether
or not such events of default or covenants are consistent with the
events of default or covenants described herein; (16) whether
debt securities of the series are to be issuable initially in temporary
global form and whether any debt securities of the series are to be
issuable in permanent global form and, if so, whether beneficial owners
of interests in any such security in permanent global form may exchange
such interests for debt securities of such series and of like tenor
of any authorized form and denomination and the circumstances under
which any such exchanges may occur, if other than in the manner provided
in the applicable indenture, and, if debt securities of the series
are to be issuable as a global security, the identity of the depository
for such series; (17) the
applicability, if any, of the defeasance and covenant defeasance provisions
of the applicable indenture to the debt securities of the series; (18) if
exchangeable into another series of debt securities of XL Group or
XL-Cayman, the terms on which such debt securities are exchangeable;
and (19) any
other terms of the series of debt securities and any additions to the
applicable indenture. If
the applicable prospectus supplement provides, the debt securities may be
issued at a discount below their principal amount and provide for less than
the entire principal amount thereof to be payable upon declaration of acceleration
of the maturity thereof. In such cases, all U.S. federal income tax considerations
will be described in the applicable prospectus supplement. Except
as may be set forth in the applicable prospectus supplement, the debt securities
will not contain any provisions that would limit either Issuer’s ability
to incur indebtedness or that would afford holders of debt securities protection
from transactions involving either Issuer, including a highly leveraged transaction
involving either Issuer or a change in control. The applicable prospectus
supplement will contain information with respect to any additions to the
events of default or covenants described below, including any addition of
a covenant or other provision providing event risk or similar protection. Guarantees Payment
of principal, premium, if any, and interest on any senior debt securities
issued by XL-Cayman will be fully and unconditionally guaranteed by XL Group
and each such guarantee will be an unsecured and unsubordinated obligation
of XL Group and will rank equal with all of the XL Group’s future
unsubordinated debt. Payment of principal, premium, if any, and interest
on any subordinated debt securities issued by XL-Cayman will be fully and
unconditionally guaranteed by XL Group and each such guarantee will rank
subordinate in right of payment to the senior indebtedness of XL Group. XL
Group’s obligations under the guarantees will be irrespective of: • any
lack of validity or enforceability of any agreement or instrument relating
to the debt securities; • any
change in the time, manner or place of payment under, or in any other
term in respect of, all or any debt securities, or any other amendment
or waiver of or consent to any departure from any other agreement relating
the debt securities; • any
increase in, addition to, exchange or release of, or nonperfection
of any lien on or security interest in, any collateral, or any release
or amendment or waiver of or consent to any departure from or failure
to enforce any other guarantee, for all or any debt securities; • any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, XL-Cayman in respect of the debt securities; 24
• the
absence of any action on the part of the trustee to obtain payment
under the debt securities or the indenture from XL-Cayman; • any
insolvency, bankruptcy, reorganization or dissolution, or any similar
proceeding of or in respect of XL-Cayman, including, without limitation,
rejection of the debt securities in such bankruptcy; or • the
absence of notice or any delay in any action to enforce any provision
of the debt securities or the indenture or to exercise any right or
remedy against the guarantor or XL-Cayman, whether under the indenture,
the debt securities or any agreement or any indulgence, compromise
or extension granted. Notwithstanding
the above, XL Group will not waive any defense that would be available to
XL-Cayman based on a breach, default or misrepresentation by the trustee,
or failure of any condition to XL-Cayman’s obligations under the indenture
or the illegality of any provision of the indenture. Each
guarantee by XL Group will remain in full force and effect and will be binding
on XL Group until the entire principal amount, all interest and any
premium on the related debt securities have been paid in full or otherwise
discharged in accordance with the terms of the applicable governing indenture.
The trustee has the right to proceed first and directly against XL Group,
without first proceeding against XL-Cayman or exhausting any other remedies
it may have, in the event of default of performance by XL-Cayman under the
applicable indenture. Denomination,
Interest, Registration and Transfer The
applicable Issuer will issue the debt securities of each series only in registered
form, without coupons, in minimum denominations of $2,000 and increments
of $1,000 in excess thereof, or in such other currencies or denominations
as may be set forth in the applicable supplemental indenture or specified
in, or pursuant to, an authorizing resolution, if any, relating to such series
of debt securities. The
principal of and interest, if any, on any series of debt securities will
be payable at the corporate trust office of the trustee, the address of which
will be stated in the applicable prospectus supplement. However, at the applicable
Issuer’s option, interest payment may be made by check mailed to the
address of the person entitled thereto as it appears in the applicable register
for such debt securities. Subject
to certain limitations imposed upon debt securities issued in book-entry
form, the debt securities of any series: • will
be exchangeable for any authorized denomination of other debt securities
of the same series and of a like aggregate principal amount and tenor
upon surrender of such debt securities at the trustee’s corporate
trust office or at the office of any registrar designated by the Issuer
for such purpose; and • may
be surrendered for registration of transfer or exchange thereof at
the corporate trust office of the trustee or at the office of any registrar
designated by the Issuer for such purpose. No
service charge will be made for any registration of transfer or exchange,
but the Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with certain transfers and
exchanges. XL Group or XL-Cayman may act as registrar and may change any
registrar without notice. Certain
Covenants The
applicable prospectus supplement will describe any material covenants in
respect of a series of debt securities that are not described in this prospectus. 25
Provisions
Applicable to All Debt Securities Unless
otherwise indicated in the applicable prospectus supplement, all debt securities
will include the provisions described below. XL
Group may not (1) consolidate with or merge with or into any other person
(other than XL-Cayman) or convey, transfer, sell or lease its properties
and assets substantially as an entirety to any person (other than XL-Cayman),
(2) permit any person (other than XL-Cayman) to consolidate with or merge
into it or (3) permit any person to convey, transfer, sell or lease that
person’s properties and assets substantially as an entirety to it unless: • in
the case of (1) and (2) above, if XL Group is not the surviving person,
such surviving person is an entity organized and existing under the
laws of the United States of America (including any State thereof or
the District of Columbia), the United Kingdom, Ireland, the Cayman
Islands, Bermuda or any country which is a member of the Organization
for Economic Co-operation and Development or the European Union and
(a) in the case of debt securities issued by XL Group, the surviving
person assumes the payment of the principal of, premium, if any, and
interest on the debt securities and the performance of its other covenants
under the applicable indenture or (b) in the case of debt securities
issued by XL-Cayman, the surviving person assumes XL Group’s obligations
under the related guarantee; and • immediately
after giving effect to the transaction, no event of default under the
applicable indenture, and no event that, after notice or lapse of time
or both, would become an event of default under the applicable indenture,
will have occurred and be continuing. Additional
Provisions Applicable to XL-Cayman Debt Securities Only Unless
otherwise indicated in the applicable prospectus supplement, senior debt
securities and subordinated debt securities issued by XL-Cayman will include
the provisions described below. XL-Cayman
may not (1) consolidate with or merge with or into any other person (other
than XL Group) or convey, transfer, sell or lease its properties and assets
substantially as an entirety to any person (other than XL Group), (2) permit
any person (other than XL Group) to consolidate with or merge into it or
(3) permit any person (other than XL Group) to convey, transfer, sell or
lease that person’s properties and assets substantially as an entirety
to it, unless: • in
the case of (1) and (2) above, if XL-Cayman is not the surviving person,
such surviving person is a corporation organized and existing under
the laws of the United States of America (including any State thereof
or the District of Columbia), the United Kingdom, Ireland, the Cayman
Islands, Bermuda or any country which is a member of the Organization
for Economic Co-operation and Development or the European Union and
the surviving person assumes the due and punctual payment pursuant
to the debt securities and the applicable indenture and the performance
of its other covenants and obligations under the applicable indenture
and the debt securities; and • immediately
after giving effect to the transaction, no event of default under the
applicable indenture, and no event that, after notice or lapse of time
or both, would become an event of default under the applicable indenture,
shall have occurred and be continuing. Reporting
by the Issuer Under
the applicable indenture, the applicable Issuer will be required to file
with the trustee, within 15 days after it is required to file the same with
the SEC, copies of the annual reports and of the information, documents and
other reports which such Issuer may be required to file with the SEC pursuant
to Section 13 or Section 15(d) of the Exchange Act, provided that
availability of such reports on a website maintained by the SEC shall be
deemed to fulfill this requirement. If the applicable Issuer is not required
to file information, documents or reports pursuant to either of said sections
of the Exchange Act, then it shall file with the trustee and the SEC, in
accordance with the rules and regulations prescribed from time to time by
the SEC, such of the supplementary and 26
periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange. The applicable Issuer will be also required to file
with the trustee and the SEC such additional information, documents and reports
with respect to compliance by such Issuer (in the case of debt securities
issued by XL-Cayman, by XL-Cayman and XL Group) with the conditions and covenants
of the applicable indenture as may be required from time to time under the
rules and regulations of the SEC. Notwithstanding the foregoing, in the case
of debt securities issued by XL-Cayman, for so long as XL Group remains a
guarantor under the applicable indenture, or if at any time any other direct
or indirect parent company of XL-Cayman is a guarantor of its debt securities,
the reports, information and other documents required to be filed and furnished
may, at the option of XL-Cayman, be filed by and be those of XL Group or
such other parent, as applicable, rather than XL-Cayman. Ranking
of Debt Securities General Each
Issuer is a holding company with no direct operations or significant assets
other than the capital stock of its subsidiaries. The subsidiaries of XL-Cayman
generate substantially all of the Issuers’ operating income and cash
flow. As a result, distributions and advances from XL-Cayman’s subsidiaries
are the principal source of funds necessary to meet each Issuer’s debt
service obligations. Contractual provisions or laws, as well as the financial
condition and operating and regulatory requirements of XL-Cayman’s subsidiaries,
may limit the relevant Issuer’s ability to obtain cash from XL- Cayman
or XL-Cayman’s subsidiaries, as the case may be, that it requires to
pay its debt service obligations. For a description of certain regulatory
restrictions on the payment of dividends by each Issuer’s subsidiaries,
see Item 1 “Business—Regulation” included in XL Group’s
Annual Report on Form 10- K for the year ended December 31, 2010, which is
incorporated by reference in this prospectus. In addition, because each Issuer
is a holding company, the debt securities and, in the case of debt securities
issued by XL-Cayman, the related XL Group guarantees, will be structurally
subordinated to the claims of creditors of the relevant Issuer’s subsidiaries
on their assets and earnings. Senior
debt securities The
senior debt securities will be unsecured unsubordinated obligations of the
applicable Issuer and will: • rank
equal in right of payment with all other unsecured and unsubordinated
indebtedness of the applicable Issuer; • be
effectively subordinated in right of payment to all secured indebtedness
of the applicable Issuer to the extent of the value of the assets securing
such indebtedness; and • be
effectively subordinated to all indebtedness and mandatorily redeemable
preferred stock of the applicable Issuer’s subsidiaries (because
each Issuer is a holding company). Except
as otherwise set forth in the applicable senior indenture or specified in
an authorizing resolution and/or supplemental indenture, if any, relating
to a series of senior debt securities to be issued, there are no limitations
in the senior indenture on the amount of additional indebtedness which may
rank equal with the senior debt securities or on the amount of indebtedness,
secured or otherwise, which may be incurred or preference shares which may
be issued by either Issuer or their subsidiaries. Subordinated
debt securities The
subordinated debt securities will be the applicable Issuer’s unsecured
subordinated obligations. Unless otherwise provided in the applicable prospectus
supplement, the payment of principal of, interest on and all other amounts
owing in respect of the subordinated debt securities will be subordinated
in right of payment to the prior payment in full in cash of principal of,
interest 27
on and all other
amounts owing in respect of all of the applicable Issuer’s senior indebtedness.
Upon any payment or distribution of assets of any kind or character, whether
in cash, property or securities, to creditors upon any total or partial liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets or in a bankruptcy, reorganization, insolvency, receivership
or other similar proceeding relating to the applicable Issuer or its property,
whether voluntary or involuntary, all principal of, interest on and all other
amounts due or to become due shall be paid, first, to all senior indebtedness
in full in cash, or such payment duly provided for to the satisfaction of
the holders of senior indebtedness, before any payment or distribution of
any kind or character is made on account of any principal of, interest on
or other amounts owing in respect of the subordinated debt securities, or
for the acquisition of any of the subordinated debt securities for cash,
property or otherwise. If
any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect
of, or regularly accruing fees with respect to, any senior indebtedness,
no payment of any kind or character shall be made by the applicable Issuer
or any other person on the applicable Issuer’s behalf with respect to
any principal of, interest on or other amounts owing in respect of the subordinated
debt securities or to acquire any of the subordinated debt securities for
cash, property or otherwise. If
any other event of default occurs and is continuing with respect to any senior
indebtedness, as such event of default is defined in the instrument creating
or evidencing such senior indebtedness, permitting the holders of such senior
indebtedness then outstanding to accelerate the maturity thereof and if the
representative (as defined in the applicable indenture) for the respective
issue of senior indebtedness gives written notice of the event of default
to the trustee (a “default notice”), then, unless and until all
events of default have been cured or waived or have ceased to exist or the
trustee receives notice from the representative for the respective issue
of senior indebtedness terminating the blockage period (as defined below),
during the 179 days after the delivery of such default notice (the “blockage
period”), neither the applicable Issuer nor any other person on the
applicable Issuer’s behalf shall: (1) make
any payment of any kind or character with respect to any principal
of, interest on or other amounts owing in respect of the subordinated
debt securities; or (2) acquire
any of the subordinated debt securities for cash, property or otherwise. Notwithstanding
anything herein to the contrary, in no event will a blockage period extend
beyond 179 days from the date the payment on the subordinated debt securities
was due and only one such blockage period may be commenced within any 360
consecutive days. No event of default which existed or was continuing on
the date of the commencement of any blockage period with respect to the senior
indebtedness shall be, or be made, the basis for commencement of a second
blockage period by the representative of such senior indebtedness whether
or not within a period of 360 consecutive days unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action, or any breach of
any financial covenants for a period commencing after the date of commencement
of such blockage period that, in either case, would give rise to an event
of default pursuant to any provisions under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose). The
subordinated indentures do not, and any supplemental subordinated indenture
will not, restrict the amount of the applicable Issuer’s or the applicable
Issuer’s subsidiaries’ senior indebtedness or other indebtedness.
As a result of the foregoing provisions, in the event of the applicable Issuer’s
insolvency, holders of the subordinated debt securities may recover ratably
less than the applicable Issuer’s general creditors. “senior
indebtedness,” unless otherwise specified in one or more applicable
supplemental indentures or approved pursuant to a board resolution in accordance
with the applicable indenture, means, with respect to the applicable Issuer, 28
(1) the
principal (including redemption payments), premium, if any, interest
and other payment obligations in respect of (A) the applicable Issuer’s
indebtedness for money borrowed and (B) the applicable Issuer’s
indebtedness evidenced by securities, debentures, bonds, notes or other
similar instruments issued by the applicable Issuer, including any
such securities issued under any deed, indenture or other instrument
to which the applicable Issuer is a party (including, for the avoidance
of doubt, indentures pursuant to which senior debt securities have
been or may be issued); (2) all
of the applicable Issuer’s capital lease obligations; (3) all
of the applicable Issuer’s obligations issued or assumed as the
deferred purchase price of property, all of the applicable Issuer’s
conditional sale obligations, all of the applicable Issuer’s hedging
agreements and agreements of a similar nature thereto and all of the
applicable Issuer’s agreements relating to any such agreements,
and all obligations under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business); (4) all
of the applicable Issuer’s obligations for reimbursement on any
letter of credit, banker’s acceptance, security purchase facility
or similar credit transaction; (5) all
obligations of the type referred to in clauses (1) through (4) above
of other persons for the payment of which the applicable Issuer is
responsible or liable as obligor, guarantor or otherwise; (6) all
obligations of the type referred to in clauses (1) through (5) above
of other persons secured by any lien on any of the applicable Issuer’s
property or assets (whether or not such obligation is assumed by the
applicable Issuer); and (7) any
deferrals, amendments, renewals, extensions, modifications and refundings
of all obligations of the type referred to in clauses (1) through (6)
above, in each case whether or not contingent and whether outstanding
at the date of effectiveness of the applicable supplemental indenture
or thereafter incurred; except,
in each case, for the subordinated debt securities and any such other indebtedness
or deferral, amendment, renewal, extension, modification or refunding that
contains express terms, or is issued under a deed, indenture or other instrument
that contains express terms, providing that it is subordinate to or ranks
equal with the subordinated debt securities. Such
senior indebtedness shall continue to be senior indebtedness and be entitled
to the benefits of the subordination provisions of the applicable indenture
irrespective of any amendment, modification or waiver of any term of such
senior indebtedness and notwithstanding that no express written subordination
agreement may have been entered into between the holders of such senior indebtedness
and the trustee or any of the holders. Discharge
and Defeasance Under
the terms of the indentures, the applicable Issuer will be discharged from
any and all obligations in respect of the debt securities of any series and
the applicable indenture (except in each case for certain obligations to
register the transfer or exchange of debt securities, replace stolen, lost
or mutilated debt security certificates or other title documents, maintain
paying agencies and hold moneys for payment in trust) and, in the case of
debt securities issued by XL-Cayman, XL Group will be discharged from
any and all obligations in respect of the related guarantee and applicable
indenture if: (1) the
applicable Issuer delivers all outstanding debt securities of such
series to the trustee for cancellation and pays all sums payable by
the applicable Issuer under such debt securities and the indenture
with respect to such series; or (2) such
debt securities either have become due and payable or will become due
and payable within one year (or are scheduled for redemption within
one year) and the applicable Issuer deposits with the debt securities
trustee, in trust: 29
a. in
the case of any debt securities of any series denominated in U.S. dollars,
cash or U.S. government obligations sufficient to pay all principal
of and interest and premium, if any, on such debt securities; and b. in
the case of any debt securities of any series denominated in any currency
other than U.S. dollars, an amount of the applicable currency in which
such debt securities are denominated sufficient to pay all principal
of and interest and premium, if any, on such debt securities. In
addition, unless the applicable prospectus supplement and supplemental indenture
provide otherwise, the applicable Issuer may elect either (1) to defease
and be discharged from any and all obligations with respect to such debt
securities (“defeasance”) or (2) to be released from its obligations
with respect to such debt securities under certain covenants in the applicable
indenture (and in the case of securities issued by XL-Cayman, to release
XL Group from its obligations under equivalent covenants), and any omission
to comply with such obligations will not constitute a default or an event
of default with respect to such debt securities (“covenant defeasance”): (1) by
delivering all outstanding debt securities of such series to the trustee
for cancellation and paying all sums payable by the applicable Issuer
under such debt securities and the indenture with respect to such series; (2) by
delivering to the trustee an officers’ certificate as to solvency
and the absence of intent of preferring holders of the debt securities
over the applicable Issuer’s other creditors; and (3) after
giving notice to the trustee of the applicable Issuer’s intention
to defease all of the debt securities of such series, by irrevocably
depositing with the trustee or a paying agent: a. in
the case of any debt securities of any series denominated in U.S. dollars,
cash or U.S. government obligations sufficient to pay all principal
of and interest on such debt securities; and b. in
the case of any debt securities of any series denominated in any currency
other than U.S. dollars, an amount of the applicable currency in which
the debt securities are denominated sufficient to pay all principal
of and interest on such debt securities. Such
a trust may only be established if, among other things: (1) the
applicable defeasance or covenant defeasance does not result in a breach
or violation of, or constitute a default under, any material agreement
or instrument to which the applicable Issuer is a party or by which
the applicable Issuer is bound; (2) no
event of default or event which with notice or lapse of time or both
would become an event of default with respect to the debt securities
to be defeased will have occurred and be continuing on the date of
establishment of such a trust after giving effect to such establishment
and, with respect to defeasance only, no bankruptcy proceeding with
respect to the applicable Issuer will have occurred and be continuing
at any time during the period ending on the 91st day after such date;
and (3) the
applicable Issuer has delivered to the trustee an opinion of counsel
(as specified in the applicable supplemental indenture) to the effect
that the holders will not recognize income, gain or loss for United
States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance
had not occurred, and such opinion of counsel, in the case of defeasance,
must refer to and be based upon a letter ruling of the Internal Revenue
Service received by the applicable Issuer, a Revenue Ruling published
by the Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the applicable supplemental
indenture. In
the event the applicable Issuer effects covenant defeasance with respect
to any debt securities and such debt securities are declared due and payable
because of the occurrence of any event of default, other than an event of
default with respect to any covenant as to which there has been covenant
defeasance, the U.S. government obligations on deposit with the trustee will
be sufficient 30
to pay amounts due
on such debt securities at the time of the stated maturity but may not be
sufficient to pay amounts due on such debt securities at the time of the
acceleration resulting from such event of default. Modification
and Waiver The
applicable Issuer (and, in the case of debt securities issued by XL-Cayman,
XL Group), when authorized by a board resolution, and the trustee may modify,
amend and/or supplement the applicable indenture and the applicable debt
securities with the consent of the holders of not less than a majority in
principal amount of the outstanding debt securities of all series affected
thereby (voting as a single class); provided, however, that such modification,
amendment or supplement may not, without the consent of each holder of the
debt securities affected thereby: (1) change
the stated maturity of the principal of or any premium or any installment
of interest with respect to the debt securities; (2) reduce
the principal amount of, or the rate of interest on or any premium
payable upon the redemption of, the debt securities; (3) change
the currency of payment of principal of or interest on the debt securities; (4) change
the redemption provisions, if any, of any debt securities in any manner
adverse to the holders of such series of debt securities; (5) impair
the right to institute suit for the enforcement of any payment on or
with respect to the debt securities; (6) reduce
the above-stated percentage of holders of the debt securities of any
series necessary to modify or amend the indenture relating to such
series; (7) in
the case of any subordinated indenture, modify the subordination provisions
thereof in a manner adverse to the holders of such subordinated debt
securities then outstanding; (8) in
the case of any convertible or exchangeable debt securities, adversely
affect the right to convert or exchange such debt securities in accordance
with the provisions of the applicable indenture; (9) in
the case of debt securities issued by XL-Cayman, release the guarantor
from any of its obligations under the related guarantee, except in
accordance with the terms of the applicable indenture; (10) modify
or change any provision of the applicable indenture or the related
definitions affecting the ranking of the applicable series of senior
debt securities or, in the case of debt securities issued by XL-Cayman,
affecting the related guarantee, in each case in a manner which adversely
affects the holders of such senior debt securities; or (11) modify
the foregoing requirements or reduce the percentage of outstanding
debt securities necessary to waive any covenant or past default. Holders
of not less than a majority in principal amount of the outstanding debt securities
of all series affected thereby (voting as a single class) may waive certain
past defaults and may waive compliance by the applicable Issuer with any
provision of the indenture relating to such debt securities (subject to the
immediately preceding sentence); provided, however, that: (1) without
the consent of each holder of debt securities affected thereby, no
waiver may be made of a default in the payment of the principal of
or interest on any debt security or in respect of a covenant or provision
of the indenture that expressly states that it cannot be modified or
amended without the consent of each holder affected; and (2) only
the holders of a majority in principal amount of debt securities of
a particular series may waive compliance with a provision of the indenture
relating to such series or the debt securities of such series having
applicability solely to such series. The
applicable Issuer (and, in the case of debt securities issued by XL-Cayman,
XL Group), when authorized by a board resolution, and the trustee may amend
or supplement the indentures or 31
waive any provision
of such indentures and the debt securities without the consent of any holders
of debt securities in some circumstances, including: • to
cure any ambiguity, omission, defect or inconsistency; • to
make any change that does not, in the good faith opinion of the board
of directors and the trustee, adversely affect the interests of holders
of such debt securities in any material respect, provided that
any amendment or supplement conforming the indenture, as applied to
a series of debt securities, to the terms described in the prospectus
(including any prospectus supplement) pursuant to which they were initially
sold shall be deemed not to adversely affect the interests of holders
of such debt securities; • to
provide for the assumption of the Issuer’s (or, in the case of
debt securities issued by XL-Cayman, XL-Cayman’s or XL Group’s)
obligations under the applicable indenture by a successor upon any
merger, consolidation or asset transfer permitted under the applicable
indenture; • to
provide any security for or guarantees of such debt securities; • to
add events of default with respect to such debt securities; • to
add covenants that would benefit the holders of such debt securities
or to surrender any rights or powers the Issuer (or, in the case of
debt securities issued by XL-Cayman, XL-Cayman or XL Group) has under
the applicable indenture; • to
make any change necessary to comply with the Trust Indenture Act, or
any amendment thereto, or to comply with any requirement of the SEC
in connection with the qualification of the applicable indenture under
the Trust Indenture Act; • to
provide for uncertificated debt securities in addition to or in place
of certificated debt securities or to provide for bearer debt securities; • to
add to or change any of the provisions of the applicable indenture
to such extent as shall be necessary to permit or facilitate the issuance
of the debt securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons; • to
change or eliminate any of the provisions of the applicable indenture, provided,
however, that any such change or elimination shall become effective
only when there is no debt security outstanding of any series created
prior to the execution of such supplemental indenture which is entitled
to the benefit of such provision; • to
establish the form or terms of debt securities of any series as permitted
by the applicable indenture; or • to
evidence and provide for the acceptance of appointment by a successor
trustee with respect to the debt securities of one or more series and
to add to or change any of the provisions of the applicable indenture
as shall be necessary to provide for or facilitate the administration
of the trusts under the applicable indenture by more than one trustee,
pursuant to the requirements of the applicable indenture. Events
of Default and Notice Thereof The
following events are “events of default” with respect to any series
of debt securities issued hereunder: (1) the
applicable Issuer’s failure to pay interest on any debt securities
of such series within 60 days of when due or principal of any debt
securities of such series when due (including any sinking fund installment); (2) the
applicable Issuer’s failure to perform, or breach of, any material
covenant, warranty or agreement contained in the debt securities of
such series or the indenture relating to such series (other than those
relating solely to another series of debt securities) for 60 days after
a notice of default; 32
(3) certain
events of bankruptcy, insolvency or reorganization with respect to
XL Group or XL-Cayman; and (4) in
the case of XL-Cayman debt securities, the related guarantee by XL
Group being declared null and void in a judicial proceeding or ceasing
to be in full force and effect, or XL Group denying or disaffirming
its guarantee other than by reason of the termination of the indenture
or the release of such guarantee in accordance with the indenture. Additional
or different events of default, if any, applicable to the series of debt
securities in respect of which this prospectus is being delivered will be
specified in the applicable prospectus supplement. The
trustee under such indenture shall, within 90 days after the occurrence of
any default (the term “default” to include the events specified
above without grace or notice) with respect to any series of debt securities
actually known to it, give to the holders of such debt securities notice
of such default; provided, however, that, except in the case of a
default in the payment of principal of or interest on any of the debt securities
of such series or in the payment of a sinking fund installment, the trustee
for such series shall be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interest of
the holders of such debt securities; and provided, further, that in
the case of any default of the character specified in clause (2) above with
respect to debt securities of such series, no such notice to holders of such
debt securities will be given until at least 30 days after the occurrence
thereof. The applicable Issuer shall certify to the trustee quarterly as
to whether any default exists. In
the case that an event of default, other than an event of default resulting
from bankruptcy, insolvency or reorganization, with respect to any series
of debt securities shall occur and be continuing, the trustee for such series
or the holders of at least 25% in aggregate principal amount of the debt
securities of such series then outstanding, by notice in writing to the applicable
Issuer (and to the trustee for such series if given by the holders of the
debt securities of such series), will be entitled to declare all unpaid principal
of and accrued interest on such debt securities then outstanding to be due
and payable immediately. In
the case of an event of default resulting from certain events of bankruptcy,
insolvency or reorganization, all unpaid principal of and accrued interest
on all debt securities of such series then outstanding shall be due and payable
immediately without any declaration or other act on the part of the trustee
for such series or the holders of any debt securities of such series. Such
acceleration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal of or interest on the debt securities
of such series) may be waived by the holders of a majority in principal amount
of the debt securities of such series then outstanding upon the conditions
provided in the applicable indenture. No
holder of the debt securities of any series issued thereunder may pursue
any remedy under such indenture unless the trustee for such series shall
have failed to act after, among other things, notice of an event of default
and request by holders of at least 25% in principal amount of the debt securities
of such series in respect of which the event of default has occurred and
the offer to the trustee for such series of indemnity satisfactory to it; provided, however,
that such provision does not affect the right to sue for enforcement of any
overdue payment on such debt securities. Conversion
and Exchange Rights The
terms and conditions, if any, upon which the debt securities of any series
will be convertible or exchangeable for other securities will be set forth
in the prospectus supplement relating thereto. Such terms will include the
conversion or exchange price (or manner of calculation thereof), the conversion
or exchange period, provisions as to whether conversion or exchange will
be at the option of the holders of such series of debt securities, at the
applicable Issuer’s option or automatic (upon a specified date or upon
the occurrence of a specified event), the events requiring an adjustment
of the conversion or exchange price and provisions affecting conversion or
exchange in the event of the redemption of such series of debt securities.
The debt securities, if convertible or exchangeable, will not be convertible
into or exchangeable for securities of a third party. 33
The
Trustee The
trustee for each series of debt securities will be specified in the prospectus
supplement relating to such series. Each indenture contains certain limitations
on the right of the trustee, as creditor, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The trustee is permitted to engage in
other transactions; provided, however, that if it acquires
any conflicting interest, it must eliminate such conflict or resign. The
trustee may resign at any time with respect to each series of debt securities
by giving written notice thereof to the applicable Issuer. The trustee may
be removed at any time, upon a 30 day’s notice, with respect to each
series of debt securities by the holders of a majority in principal amount
of the outstanding securities of such series delivered to the trustee and
to the applicable Issuer. In addition, the applicable Issuer may also remove
the trustee with or without cause if the applicable Issuer so notifies the
trustee 30 days in advance and if no default occurs or is continuing during
the 30-day period. Subject
to the terms of the applicable indenture, the holders of a majority in principal
amount of all outstanding debt securities of a series (or if more than one
series is affected thereby, of all series so affected, voting as a single
class) have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy or power available to the trustee
for such series or all such series so affected. In
case an event of default shall occur (and shall not be cured) under any indenture
relating to a series of debt securities and is actually known to a responsible
officer of the trustee for such series, such trustee shall exercise such
of the rights and powers vested in it by such indenture and use the same
degree of care and skill in such exercise as a prudent person would exercise
or use under the circumstances in the conduct of his own affairs. Subject
to such provisions, the trustee will not be under any obligation to exercise
any of its rights or powers under the applicable indenture at the request
of any of the holders of debt securities unless they shall have offered to
the trustee security and indemnity satisfactory to it. Governing
Law The
indentures and the debt securities are governed by the laws of the State
of New York, without giving effect to principles of conflicts of laws of
such State. Global
Securities; Book-Entry System XL
Group or XL-Cayman, as the case may be, may issue the debt securities of
any series in whole or in part in the form of one or more global securities
to be deposited with, or on behalf of, a depositary (the “depositary”)
identified in the prospectus supplement relating to such series. “Global
securities” represent in the aggregate the total principal or face amount
of the securities and, once on deposit with a depositary, allow trading of
the securities through the depositary’s book-entry system (as further
described below). Global securities, if any, issued in the United States
are expected to be deposited with The Depository Trust Company (“DTC”),
as depositary. Global securities will be issued in fully registered form
and may be issued in either temporary or permanent form. Unless and until
it is exchanged in whole or in part for the individual debt securities represented
thereby, a global security may not be transferred except as a whole by the
depositary for such global security to a nominee of such depositary or by
a nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any nominee of such depositary to a successor
depositary or any nominee of such successor. The
specific terms of the depositary arrangement with respect to any series of
debt securities will be described in the prospectus supplement relating to
such series. We expect that unless otherwise indicated in the applicable
prospectus supplement, the following provisions will apply to depositary
arrangements. Upon
the issuance of a global security, the depositary for such global security
or its nominee will credit on its book-entry registration and transfer system
the respective principal amounts of the 34
individual debt
securities represented by such global security to the accounts of persons
that have accounts with such depositary (“participants”). Such
accounts will be designated by the underwriters, dealers or agents with respect
to such debt securities or by us if such debt securities are offered directly
by us. Ownership of beneficial interests in such global security will be
limited to participants or persons that may hold interests through participants. We
expect that, pursuant to procedures established by DTC, ownership of beneficial
interests in any global security with respect to which DTC is the depositary
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to beneficial
interests of participants) and records of participants (with respect to beneficial
interests of persons who hold through participants). Neither the applicable
Issuer nor the trustee will have any responsibility or liability for any
aspect of the records of DTC or for maintaining, supervising or reviewing
any records of DTC or any of its participants relating to beneficial ownership
interests in the debt securities. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to own, pledge
or transfer beneficial interests in a global security. So
long as the depositary for a global security or its nominee is the registered
owner of such global security, such depositary or such nominee, as the case
may be, will be considered the sole owner or holder of the debt securities
represented by such global security for all purposes under the applicable
indenture. Except as described below or in the applicable prospectus supplement,
owners of beneficial interests in a global security will not be entitled
to have any of the individual debt securities represented by such global
security registered in their names, will not receive or be entitled to receive
physical delivery of any such debt securities in definitive form and will
not be considered the owners or holders thereof under the applicable indenture
for any purpose, including with respect to the giving of any directions,
instructions or approvals to the trustee thereunder. Accordingly,
each person owning a beneficial interest in a global security with respect
to which DTC is the depositary must rely on the procedures of DTC and, if
such person is not a participant, on the procedures of the participant through
which such person owns its interests, to exercise any rights of a holder
under the applicable indenture. We understand that, under existing industry
practice, if it requests any action of holders or if an owner of a beneficial
interest in a global security desires to take any action which a holder is
entitled to take under the applicable indenture, DTC would authorize the
participants holding the relevant beneficial interest to take such action,
and such participants would authorize beneficial owners through such participants
to take such actions or would otherwise act upon the instructions of beneficial
owners holding through them. Payments
of principal of, and any interest on, individual debt securities represented
by a global security registered in the name of a depositary or its nominee
will be made to or at the direction of the depositary or its nominee, as
the case may be, as the registered owner of the global security under the
applicable indenture. Under the terms of the applicable indenture, the applicable
Issuer and the trustee may treat the persons in whose name debt securities,
including a global security, are registered as the owners thereof for the
purpose of receiving such payments. Consequently,
neither the applicable Issuer nor the trustee has or will have any responsibility
or liability for the payment of such amounts to beneficial owners of debt
securities (including principal and interest). We believe, however, that
it is currently the policy of DTC to immediately credit the accounts of relevant
participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant global security as shown
on the records of DTC or its nominee. We also expect that payments by participants
to owners of beneficial interests in such global security held through such
participants will be governed by standing instructions and customary practices,
as is the case with securities held for the account of customers in bearer
form or registered in street name, and will be the responsibility of such
participants. Redemption notices with respect to any debt securities represented
by a global security will be sent to the depositary or its nominee. If less
than all of the debt securities of any series are to be redeemed, we expect
the depositary to determine the amount of the interest of each participant
in such debt securities to be redeemed by lot. None of the applicable Issuer,
the trustee, any paying agent or the registrar for such debt securities will
have any responsibility or liability for any aspect of the records relating
to 35
or payments made
on account of beneficial ownership interests in the global security for such
debt securities or for maintaining any records with respect thereto. Neither
the applicable Issuer nor the trustee will be liable for any delay by the
holders of a global security or the depositary in identifying the beneficial
owners of debt securities and we and the trustee may conclusively rely on,
and will be protected in relying on, instructions from the holder of a global
security or the depositary for all purposes. The rules applicable to DTC
and its participants are on file with the SEC. If
a depositary for any debt securities is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not appointed
by the applicable Issuer within 90 days, the applicable Issuer will issue
individual debt securities in exchange for the global security representing
such debt securities. All
moneys paid by the applicable Issuer to a paying agent or a trustee for the
payment of the principal of or interest on any debt security which remain
unclaimed at the end of two years after such payment has become due and payable
will be repaid to the applicable Issuer and the holder of such debt security
thereafter may look only to the applicable Issuer for payment thereof. 36
XL
Group and XL-Cayman may sell the securities in any of the following ways:
(1) through underwriters or dealers; (2) directly to a limited number of
institutional purchasers or to a single purchaser; (3) through agents; or
(4) through any other method permitted by applicable law. Any such dealer
or agent, in addition to any underwriter, may be deemed to be an underwriter
within the meaning of the Securities Act. To
the extent that we make sales to or through one or more underwriters or agents
in at-the-market offerings, we will do so pursuant to the terms of a distribution
agreement between us and the underwriters or agents. If we engage in at-the-market
sales pursuant to a distribution agreement, we will issue and sell our ordinary
shares to or through one or more underwriters or agents, which may act on
an agency basis or on a principal basis. During the term of any such agreement,
we may sell ordinary shares on a daily basis in exchange transactions or
otherwise as we agree with the underwriters or agents. The distribution agreement
will provide that any ordinary shares sold will be sold at prices related
to the then prevailing market prices for our ordinary shares. Therefore,
exact figures regarding proceeds that will be raised or commissions to be
paid cannot be determined at this time and will be described in a prospectus
supplement. Pursuant to the terms of the distribution agreement, we also
may agree to sell, and the relevant underwriters or agents may agree to solicit
offers to purchase, blocks of our ordinary shares or other securities. The
terms of each such distribution agreement will be set forth in more detail
in a prospectus supplement to this prospectus. Underwriters
or agents in any distribution relating to an at-the-market offering of the
securities will be named in the relevant prospectus supplement. In
the event that an underwriter or agent acts as principal, or a broker-dealer
acts as underwriter, it may engage in certain transactions that stabilize,
maintain or otherwise affect the price of our securities. We will describe
any such activities in the prospectus supplement relating to the transaction. Offers
to purchase the securities offered by this prospectus may be solicited, and
sales of those securities may be made, directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resales of the securities. The terms of
any offer made in this manner will be included in the prospectus supplement
relating to the offer. In
connection with offerings made through underwriters or agents, to the extent
permitted by law we may enter into agreements with such underwriters or agents
pursuant to which we receive our outstanding securities in consideration
for the securities being offered to the public for cash. In connection with
these arrangements, the underwriters or agents may also sell securities covered
by this prospectus to hedge their positions in these outstanding securities,
including in short sale transactions. If so, the underwriters or agents may
use the securities received from us under these arrangements to close out
any related open borrowings of securities. In
addition, to the extent permitted by law we may enter into derivative or
other hedging transactions with financial institutions or other third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. These financial institutions or third parties may
in turn engage in sales of the securities covered by this prospectus to hedge
their position, deliver this prospectus in connection with some or all of
those sales and use the securities covered by this prospectus to close out
any short position created in connection with those sales. If the applicable
prospectus supplement indicates, in connection with such a transaction the
third parties may, pursuant to this prospectus and the applicable prospectus
supplement, sell securities covered by this prospectus and the applicable
prospectus supplement, including in short sale transactions. If so, the third
party may use securities pledged by or borrowed from us or others to settle
such sales or to close out any related open borrowings of securities and
may use securities received from us in settlement of those derivatives to
close out any related borrowings of shares and to close out any related short
positions. The third party in such sale transactions will be an underwriter
and, if not identified in this prospectus, will be identified in the applicable
prospectus supplement (or a post-effective amendment). We may also loan,
pledge or grant a security interest in some or all of the securities covered
by this prospectus and the applicable prospectus supplement 37
to third parties
to support a derivative or hedging position or other obligation, who may
sell the loaned securities or, in an event of default in the case of a pledge,
sell the pledged securities pursuant to this prospectus and the applicable
prospectus supplement. We
may loan or pledge securities to a financial institution or other third party
that in turn may sell the securities using this prospectus. Such financial
institution or third party may transfer its short position to investors in
our securities or in connection with a simultaneous offering of other securities
offered by this prospectus. The
terms of the offering of the securities with respect to which this prospectus
is being delivered will be set forth in the applicable prospectus supplement
and will include: • the
name or names of any underwriters, dealers or agents; • the
purchase price of such securities and the proceeds to XL Group or XL-Cayman
from such sale; • any
underwriting discounts and other items constituting underwriters’ compensation; • the
public offering price; and • any
discounts or concessions which may be allowed or reallowed or paid
to dealers and any securities exchanges on which the securities may
be listed. If
underwriters are used in the sale of securities, such securities will be
acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. The securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable prospectus
supplement, the obligations of the underwriters to purchase the securities
described in the applicable prospectus supplement will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase
all such securities if any are so purchased by them. Any public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time. The
securities may be sold directly by XL Group and/or XL-Cayman or through agents
designated by XL Group and/or XL-Cayman from time to time. Any agents involved
in the offer or sale of the securities in respect of which this prospectus
is being delivered, and any commissions payable by XL Group and/or XL-Cayman
to such agents, will be set forth in the applicable prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, any such
agent will be acting on a best efforts basis for the period of its appointment. If
dealers are utilized in the sale of any securities, XL Group and/or XL-Cayman
will sell the securities to the dealers, as principals. Any dealer may resell
the securities to the public at varying prices to be determined by the dealer
at the time of resale. The name of any dealer and the terms of the transaction
will be set forth in the prospectus supplement with respect to the securities
being offered. Securities
may also be offered and sold, if so indicated in the applicable prospectus
supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by
one or more firms, which we refer to herein as the
“remarketing firms,” acting as principals for their own accounts
or as XL Group’s or XL-Cayman’s agents, as applicable. Any remarketing
firm will be identified and the terms of its agreement, if any, with XL Group
or XL-Cayman and its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters, as that term
is defined in the Securities Act in connection with the securities remarketed
thereby. If
so indicated in the applicable prospectus supplement, XL Group or XL-Cayman
will authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase the securities to which this prospectus
and the applicable prospectus supplement relates from XL Group or XL-
Cayman at the public offering price set forth in the applicable prospectus
supplement, plus, if applicable, accrued interest, pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those 38
conditions set forth
in the applicable prospectus supplement, and the applicable prospectus supplement
will set forth the commission payable for solicitation of such contracts.
Institutional investors with which these contracts may be made include, among
others: • commercial
and savings banks; • insurance
companies; • pension
funds; • investment
companies; and • educational
and charitable institutions. Underwriters
will not be obligated to make a market in any securities. No assurance can
be given regarding the activity of trading in, or liquidity of, any securities. Agents,
dealers, underwriters and remarketing firms may be entitled, under agreements
entered into with XL Group or XL-Cayman, to indemnification by XL Group or
XL-Cayman against certain civil liabilities, including liabilities under
the Securities Act or to contribution to payments they may be required to
make in respect thereof. Agents, dealers, underwriters and remarketing firms
may be customers of, engage in transactions with, or perform services for,
XL Group and/or XL-Cayman in the ordinary course of business. Each
series of securities will be a new issue and, other than the ordinary shares,
which are listed on the New York Stock Exchange and the Bermuda Stock Exchange,
will have no established trading market. We may elect to list any series
of securities on an exchange, and in the case of the ordinary shares, on
any additional exchange, but, unless otherwise specified in the applicable
prospectus supplement, we shall not be obligated to do so. No assurance can
be given as to the liquidity of the trading market for any of the securities. 39
Certain
legal matters with respect to the securities will be passed upon for us by
Cleary Gottlieb Steen & Hamilton LLP, New York, New York. Certain legal
matters with respect to the securities under the laws of Ireland will be
passed upon for XL Group by A&L Goodbody, Dublin, Ireland. Certain legal
matters with respect to the securities under the laws of the Cayman Islands
will be passed upon for XL-Cayman by Maples and Calder, Grand Cayman, Cayman
Islands. 40
The
financial statements and management’s assessment of the effectiveness
of internal control over financial reporting (which is included in Management’s
Report on Internal Control over Financial Reporting) incorporated in this
prospectus by reference to XL Group’s Annual Report on Form 10-K for
the year ended December 31, 2010 have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing
and accounting. 41
ENFORCEMENT
OF CIVIL LIABILITIES UNDER UNITED STATES XL
Group is an Irish public limited company. XL-Cayman is a Cayman Islands exempted
company. In addition, some of their respective officers and directors, as
well as some of the experts named in this prospectus, reside outside the
United States, and all or much of their assets are or may be located in jurisdictions
outside of the United States. Therefore, investors may have difficulty effecting
service of process within the United States upon those persons or recovering
against XL Group, XL-Cayman or them on judgments of United States courts,
including judgments based upon the civil liability provisions of the United
States federal securities laws. However, investors may serve XL Group or
XL-Cayman with process in the United States with respect to actions against
it arising out of or in connection with violations of United States federal
securities laws relating to offers and sales of the securities covered by
this prospectus by serving Puglisi & Associates, 850 Library Avenue,
Suite 204, Newark, Delaware 19711, its United States agent appointed for
that purpose. XL
Group has been advised by A&L Goodbody, its Irish counsel, that a judgment
for the payment of money rendered by a court in the United States based on
civil liability would not be automatically enforceable in Ireland. There
is no treaty between Ireland and the United States providing for the reciprocal
enforcement of foreign judgments. The following requirements must be met
before the foreign judgment will be deemed to be enforceable in Ireland: • the
judgment must be for a definite sum; • the
judgment must be final and conclusive; and • the
judgment must be provided by a court of competent jurisdiction. An
Irish court will also exercise its right to refuse judgment if the procedural
rules of the court issuing the foreign judgment have not been observed, if
the foreign judgment was obtained by fraud, if the judgment violated Irish
public policy, if the judgment is in breach of natural justice or if it is
irreconcilable with an earlier foreign judgment. An
Irish court may stay proceedings if concurrent proceedings are being brought
elsewhere. There is doubt as to the enforceability in Ireland, in original
actions or in actions for enforcement of judgments of United States courts,
of liabilities predicated upon United States federal securities laws. Certain
remedies available under the United States federal securities laws may not
be enforced by Irish Courts if deemed to be contrary to public policy in
Ireland. XL-Cayman
has been advised by Maples and Calder, its Cayman Islands counsel, that although
there is no statutory enforcement in the Cayman Islands of judgments obtained
in the courts of the United States (or any political subdivision thereof),
a judgment obtained in such jurisdiction will be recognized and enforced
in the courts of the Cayman Islands at common law, without any re-examination
of the merits of the underlying dispute, by an action commenced on the foreign
judgment debt in the Grand Court of the Cayman Islands, provided such judgment
(a) is given by a foreign court of competent jurisdiction; (b) imposes on
the judgment debtor a liability to pay a liquidated sum for which the judgment
has been given; (c) is final; (d) is not in respect of taxes, a fine or a
penalty; and (e) was not obtained in a manner and is not of a kind the enforcement
of which is contrary to natural justice or the public policy of the Cayman
Islands. A Cayman Islands court may stay proceedings if concurrent proceedings
are being brought elsewhere. There is doubt as to the enforceability in the
Cayman Islands, in original actions or in actions for enforcement of judgments
of United States courts, of liabilities predicated upon United States federal
securities laws. There is no treaty in effect between the United States and
the Cayman Islands providing for such enforcement and there are grounds upon
which the Cayman Islands courts may choose not to enforce judgments of United
States courts. Certain remedies available under the United States federal
securities laws would not be allowed in Cayman Islands courts as contrary
to public policy of the Cayman Islands. 42
FEDERAL SECURITIES LAWS
XL
Group plc Ordinary
Shares XLIT
Ltd. Debt
Securities November
9, 2011
Preference Shares
Debt Securities
Ordinary Share Warrants
Ordinary Share Purchase Contracts
Ordinary Share Purchase Units
Guarantees of XLIT Ltd. Debt Securities
Fully and Unconditionally Guaranteed by XL Group plc
$600,000,000 2.30% Senior Notes due 2018 Prospectus Supplement Joint Book-Running Managers Senior Co-Managers Co-Managers Junior Co-Managers
5.25% Senior Notes due 2043
November 18, 2013
Barclays
Deutsche Bank Securities
J.P. Morgan
Citigroup
Goldman, Sachs & Co.
HSBC
Lloyds Securities
Morgan Stanley
RBS
BNY Mellon Capital Markets, LLC
Credit Agricole CIB
ING
BNP PARIBAS
COMMERZBANK
Wells Fargo Securities