XL Capital Posts $128 Million Q1 Net Income; $150 Million Operating

May 5, 2010

XL Capital’s first quarter, 2010 net income decreased to $127.996 million, from $178.379 million in Q1, 2009. Operating income, which excludes capital gains/losses, was also lower at $149.612 million, compared to $190.863 million last year.

XL’s bulletin explained that the “results of our P&C operations were impacted by the current quarter’s catastrophe activity which contributed to a decrease in underwriting profit of $110.5 million compared to the prior year quarter. This decrease was partially offset by an increase in net income from operating and investment affiliates of $57.0 million.” The group’s combined ration ballooned to 100.5 percent during the period.

CEO Mike McGavick commented: “We are pleased to report solid results for XL’s first quarter of 2010, even as our industry incurred one of the heaviest levels of first quarter catastrophe activity in history. Our P&C combined ratio of 100.5 percent included a 14.3 point impact from the Chilean earthquake and Windstorm Xynthia, partially offset by 6.9 points of positive prior year development.

“We believe these results demonstrate our continued commitment to disciplined underwriting and vigorous risk management. We grew our top line by 2.3 percent over the prior year quarter, and did so in a manner we believe is consistent with that commitment. In fact, when we strip out all the changes from the prior year quarter, our underlying growth is stronger than it first appears.

“Our operating income was $149.6 million in the first quarter, compared to $190.9 million in the same quarter last year. While these results benefited from some favorable premium adjustments and the commutation of some further treaties in the Life book, the impact of these items only improved our already strong underlying earnings.

“We grew our book value for the fourth consecutive quarter, recording a 7 percent increase in book value per ordinary share to $26.38 and an 8 percent increase in tangible book value per ordinary share to $23.92. Total shareholders’ equity increased from $9.4 billion to $10.0 billion in the first quarter.

“Our annualized operating return on ordinary shareholders’ equity was 6.9 percent compared to 14.9 percent in the prior year quarter. Without the impact of the Chilean Earthquake and Windstorm Xynthia, the annualized operating return on ordinary shareholders’ equity on this basis would have been 14.2 percent.”

He concluded that “XL’s first quarter 2010 results continue trending in the right direction. While the entire industry faces challenges in deploying capital and pricing discipline, we believe we can build on our success by providing XL’s brokers and customers the coverage they value.”

The full report and details on accessing the Group’s earnings conference call may be obtained on XL’s web site at www.xlcapital.com

Source: XL Capital

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