Moody’s Investors Services has affirmed its A2 insurance financial strength ratings on XL Group’s insurance subsidiaries.

It says the property and casualty insurance and reinsurance businesses have strong market positions and XL enjoys diversity of earnings by geography and business line.

“The ratings also reflect the strong capitalisation of the company’s Bermuda operating subsidiaries, strong holding company liquidity, its moderate financial leverage [and] its improving core underwriting performance and moderate catastrophe risk profile.”

Moody’s says XL has reduced its investment risk and cut debt since the global financial crisis, but higher interest rates could provide “a significant tailwind” for profitability in the long term.

The outlook for the ratings is stable.