XL Capital Posts $1.43 Billion Q4 Loss; $2.63 Billion Full Year

Bermuda-based XL Capital posted a $1.43 billion fourth-quarter net loss Tuesday, and said it will cut its dividend and slash 10 percent of its staff.

The quarterly loss was due to soured investments, hedge fund losses, and a charge to restructure its investment portfolio to reduce risk, it said.

XL, which hopes to reduce expenses by up to $120 million a year by 2010, trimmed its quarterly dividend to 10 cents a share from 19 cents. The company had about 4,000 employees at the end of 2007.

XL hired Goldman Sachs last December to explore its possible sale.

XL’s quarterly net loss was equal to $4.36 a share, and compared with a loss of $6.88 a share, or $1.22 billion, a year earlier. It had a full-year 2008 loss of $2.63 billion.

The latest results included a $400 million investment portfolio restructuring charge, a $900 million noncash charge for impaired goodwill, net realized losses of $568.9 million on investments, and another $214.2 million in losses from hedge fund investments.

“No one is happier to see 2008 behind us,” said Chief Executive Michael McGavick. He added that the company had “ample capital” to keep its ratings.

Operating income, the measure most commonly used by analysts, rose to $189.5 million, or 58 cents a share, compared with $98 million, or 55 cents per share, a year ago. The latest result beat the average analyst target of 54 cents a share, according to Reuters Estimates.

Its shares, down more than 90 percent in the last 12 months, rose about 8.6 percent in late electronic trading after closing down 14.5 percent in the regular session.

XL said it was glad it severed ties with a money-losing bond insurer [SCA] it had partly owned.

“We are becoming again an XL with the simple and defining mission of being a global provider of specialty property and casualty insurance and reinsurance,” McGavick said.

XL was formed in Bermuda, a large insurance and reinsurance market, in 1986 in response to a severe shortage of liability insurance in the United States.

(Reporting by Lilla Zuill; editing by Jeffrey Benkoe)

Topics Profit Loss