Bermuda’s XL Capital Ltd. has reported a net loss to ordinary shareholders for the quarter ended Dec. 31, 2005 of $821.9 million, or a net loss of $5.51 per ordinary share, compared with net income of $288.0 million, or net income of $2.07 per ordinary share, for the quarter ended Dec. 31, 2004.
Net loss for the quarter ended Dec. 31, 2005 included net losses of $834.2 million, pre and post tax, associated with the Winterthur International independent actuarial decision (“Winterthur Decision”). The quarter ended Dec. 31, 2005 also included pre-tax net losses from Hurricane Wilma of $247.1 million and additional pre-tax net losses of $210.8 million related to the 2005 third quarter natural catastrophes. These additional net losses arose from newly reported claims and increased severity on existing claims.
Taking into account net reinstatement premiums and tax effects, the net income impact of Hurricane Wilma and the third quarter catastrophes in the fourth quarter 2005 was $225.6 million and $165.1 million respectively, for a total of $390.7 million. Net income for the quarter ended Dec. 31, 2004 included net losses of $138.0 million, net of tax, from catastrophes. The company’s loss estimates involve the exercise of considerable judgment and are accordingly subject to revision.
For the 12 months ended Dec. 31, 2005, net loss to ordinary shareholders was $1,292.3 million, or a net loss of $9.14 per ordinary share, compared with net income of $1,126.3 million or net income of $8.13 per ordinary share for the twelve months ended Dec. 31, 2004.
The 12 months ended Dec. 31, 2005 included a net loss of $1,865.1 million for the 2005 third and fourth quarter natural catastrophes, after taking into account net reinstatement premiums and tax effects. In addition, it also included a net loss of $808.9 million, net of interest received, associated with the Winterthur Decision. Net loss for the 12 months ended Dec. 31, 2004 included a net loss of $558.2 million related to the 2004 third and fourth quarter natural catastrophes.
At Dec. 31, 2005, total net invested assets were $41.6 billion, up 28.4% from Dec. 31, 2004, and total assets were $58.4 billion, up 19% from Dec. 31, 2004.
Commenting on these results, President and Chief Executive Officer Brian O’Hara said: “We are extremely disappointed with the impact the third and fourth quarters events had on our financial performance. However, the natural catastrophes of 2005 have led to more attractive markets, and in true XL tradition, we are executing on these opportunities with a focus on maximizing risk-adjusted returns. I believe that XL’s solid balance sheet, geographic breadth and diversification of platforms will serve us well in 2006.”
Underwriting loss for the quarter ended Dec. 31, 2005 was $1,092.8 million compared with an underwriting profit of $49.1 million in the quarter ended Dec. 31, 2004. These results included the pre-tax net impact of natural catastrophes of $285.1 million and $110.5 million in 2005 and 2004, respectively.
The fourth quarter 2005 also included the charge related to the Winterthur Decision of $834.2 million pre and post tax.
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