Bermuda’s XL Capital Ltd. posted net operating income of $250.2 million for the fourth quarter, and net income for 2002 of $396 million after the payment of preferred dividends.
In 2001 XL reported a fourth quarter loss of $83.6 million, and a net loss of $576 million for the year. Net income available to ordinary shareholders for the fourth quarter was $214.1 million, or net income of $1.56 per ordinary share. XL reported net operating income for 2002 of $700.8 million, or $5.10 per ordinary share, compared with a net operating loss of $472.6 million, or a loss of $3.73 per ordinary share, for the year ended December 31, 2001.
Commenting on the fourth quarter 2002 results, President and CEO Brian M. O’Hara, stated: “We had a very good quarter with strong underwriting results, delivering an operating return on common equity of 17% and increasing our book value per ordinary share to $44.48. This was achieved while strengthening reserves during the quarter for prior years.”
The strengthening, O’Hara noted, was mainly in “U.S. casualty reinsurance business, reflecting deterioration in the underwriting results for the 1997 to 2000 accident years.” The increase of $215 million pre-tax, including $30 million for pre-1986 asbestos exposures, “was largely offset by overall favorable 1995 and prior years’ loss development in other lines of business,” he indicated. “The increase in the provision for asbestos exposures nearly doubles our reserves in this area, but this remains a minor exposure for XL.”
O’Hara foresees a continuing “robust” market for XL with rising prices in most lines continuing, along with improved terms and conditions. “XL’s fundamental strength represented by our capital and people, position us well in all of our key markets for strong earnings growth in 2003.”
O’Hara also announced that XL would, beginning this year, show stock options granted to employees as expenses. He indicated that the initiative “reflects XL’s commitment to transparency in financial reporting and good corporate governance.”
He also stated that “Our projections for 2003, including stock option expenses, remain in line with prior earnings guidance.”
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