XL Reports Q3 Net Income of $99 Million

Bermuda’s XL Capital Ltd. reported $99 million in net income available to ordinary shareholders for the quarter ended September 30, 2003, or $0.71 per ordinary share, compared with net income of $184.1 million, or $1.34 per ordinary share, in the third quarter of 2002.

The company had warned earlier this month that third quarter earnings would be impacted by a $184 million pre-tax ($160 million after-tax) charge for adverse development, primarily due to newly reported casualty reinsurance claims for the 1997 to 2000 underwriting years. (See IJ Website Oct. 20)

“‘Net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivative instruments, net of tax’ for the third quarter of 2003 was $124.1 million, or $0.90 per ordinary share, compared with $216.6 million, or $1.58 per ordinary share, for the quarter ended September 30, 2002,” said the bulletin.

Commenting on the third quarter 2003 results, President and CEO Brian M. O’Hara stated, “We had strong current underwriting year results in all three of our business segments, despite the previously announced $184 million pre-tax charge we took in our North American casualty reinsurance operations in the quarter. Absent this charge, our combined ratio was 87%, which demonstrates the quality underwriting currently being carried out in today’s favorable market environment.”

XL’s nine-month figures, however, showed strong gains. The company reported that net income available to ordinary shareholders was $686.5 million, or $4.97 per ordinary share, for the period, compared with $181.8 million, or $1.32 per ordinary share, in the nine months ended September 30, 2002. XL explained that the 2002 figures included “$200 million related to the development of September 11th event and $239.1 million in net realized losses on investments.”

“Net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivative instruments, net of tax’ for the nine months ended September 30, 2003, was $642.9 million, or $4.65 per ordinary share,” said the announcement, “compared with $450.6 million, or $3.28 per ordinary share, for the nine months ended September 30, 2002.”