Despite its problems with Security Capital and the charges it expects to incur (See related article), Bermuda’s XL Capital managed to post net income available to ordinary shareholders of $237.9 million for the second quarter of 2008, compared to $544.5 million for the quarter ended June 30, 2007. Operating net, which excludes realized gains and losses, was $266.2 million as compared to $526.3 million in the prior year quarter.
For the first six months of 2008 XL reported net income before minority interest, income tax and net income from operating affiliates of $612.479 million,compared to $1.176 billion for the first six months of 2007.
The report also cited the following “key elements:”
— A solid underwriting performance with gross written premiums for the quarter of $1,947.5 million, a reduction of 12.7 percent from the prior year quarter which included gross written premiums of $52.0 million from SCA.
— Gross written premiums for the current quarter included $1,388.8 million from the Insurance segment and $397.5 million from the Reinsurance segment compared with $1,417.9 million and $526.3 million, respectively, in the prior year quarter.
— The loss ratio for the quarter was 62.2 percent with a combined ratio of 92.3 percent as compared to 56.9 percent and 86.3 percent, respectively, in the prior year quarter.
— The results for the current quarter benefited from favorable prior year development of $182.6 million but were adversely affected by $98.1 million of natural catastrophe losses. In the prior year quarter there was favorable prior year development of $124.1 million offset in part by $30.0 million of natural property catastrophe losses.
— A charge of $82.4 million arising from guarantee and reinsurance agreements with SCA. This was comprised of $22.7 million in respect of the XLRA Master Facultative Agreement, $3.7 million for the unwinding of the discounted loss reserves in respect of the Excess of Loss Agreement and $56.0 million in respect of the XLFA.
In a separate bulletin XL described plans to “offer approximately $2.5 billion of securities in a combination of ordinary shares and equity security units pursuant to the Company’s existing shelf registration statement.”
XL said: “Each Equity Security Unit will consist of (i) a forward purchase contract requiring the holder to purchase, and XL to issue, a variable number of ordinary shares of XL and (ii) an ownership interest in a debt security of XL. The Company has not yet determined the exact breakdown between Ordinary Shares and Equity Security Units, but currently expects that the Ordinary Shares will constitute approximately $1.75 to $2.0 billion of the total.”
The full earnings report, additional information on the share offering, as well as a replay of the earnings conference call are available on the Company’s web site at: www.xlcapital.com.
Source: XL Capital
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