Fitch Ratings today downgraded XL Capital Assurance (XLCA) to 'CCC' from 'BB' one day after the bond insurer’s parent, Security Capital Assurance (SCA), announced agreements with XL Capital and Merrill Lynch to enhance its solvency thanks to a capital infusion and the termination of credit default swaps and other policies. Fitch placed the rating on evolving watch.

Fitch said its decision hinges on the uncertainty of the execution of the agreements, and that a separate set of “post-settlement” ratings of XLCA and XL Financial Assurance Inc. could improve significantly once the deals are closed.

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