The insolvency of a bond insurer that has guaranteed $155bn of bonds has been averted after XL Capital, the Bermuda-based insurance company, agreed to pay $1.78bn to Security Capital Assurance.

Shares in XL, which in February had written off its equity investment in SCA, have fallen sharply amid concerns about its exposure to SCA. The deal allows XL to “put the SCA overhang firmly behind us”, said Michael McGavick, XL chief executive. He said the company could now refocus on its insurance and reinsurance business.