Bermuda’s XL Capital Ltd. unveiled the second phase of its restructuring plan on Thursday, announcing a refocusing on more profitable underwriting lines and a consolidation of management functions, which will lead to a drop in gross premiums and some job losses.
As outlined in an announcement by CEO Brian O’Hara, the move comes in response to the generally depressed state of the insurance industry and the company’s desire to “concentrate on those things that we do well and continuously look for ways to improve our productivity and reduce our operating expenses.”
The announcement noted that Intercargo, Lloyd’s and NAC Re operations were the areas most affected.”Business lines that will be exited include Schaumberg, Illinois-based transportation and marine cargo and onshore energy at Lloyd’s. NAC Re will exit the pooled aviation and medical stop loss reinsurance business.”
“More than $200 million of annual gross premium written is associated with all of the exited businesses,” said the announcement. “In addition, XL is combining the management of its Lloyd’s operations to achieve greater operational efficiency. Worldwide, approximately 120 employees, or 7 percent of XL’s workforce, will be made redundant as a result of these actions,” it concluded.
XL will incur a one time charge of between $100 and $125 million in the 4th quarter, but expects to save an estimated $35 million annually when the restructuring is completed.
XL will also incorporate its brand name in more units and is realigning its insurance operations “along major product lines.” Prominently mentioned is the Brockbank Group, which will become XL Brockbank, while “Brockbank Insurance Services, based in California, will operate as XL Aerospace.”
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