XL Group plc reported robust results for both the fourth quarter of 2012, and for the full year.
The earnings highlights were listed as follows:
• Operating net income of $38.9 million, or $0.13 per share, for the quarter and $614.1 million, or $1.98 per share, for the full year, largely impacted by significant catastrophe losses in the quarter
• Net income of $81.4 million, or $0.27 per share, for the quarter and $651.1 million, or $2.10 income per share, for the full year
• Annualized operating return on ordinary shareholders’ equity of 1.5 percent for the quarter and 6.2 percent for the full year
• Natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums of $351.8 million recorded for the quarter and $464.3 million for the full year
• Fully diluted tangible book value per ordinary share3 of $33.35 at December 31, 2012, an increase of $5.04, or 17.8 percent, from December 31, 2011
• Share buybacks totaled 2.1 million shares for $51.7 million during the quarter and 18.3 million shares for $401.7 million for the full year. An additional $98.3 million was purchased in early 2013
CEO Mike McGavick said: “We are pleased to announce fourth quarter and full year results that clearly demonstrate XL’s progress, particularly in our delivery of solid earnings and growth in book value. Despite the meaningful impact of Storm Sandy, the broad and painful effects of which we are all aware, XL produced both net and operating income in the quarter and once again demonstrated our dedication to disciplined underwriting and enterprise risk management.
“The full year results also illustrated the steady improvement of our Insurance segment and the continuing solid performance of our Reinsurance segment. We are committed to maintaining this progress.”
The earnings report also gave the following additional details for the quarter and the full year:
•Operating net income for the quarter of $38.9 million, compared to operating net loss of $79.6 million in the prior year quarter, primarily due to improved underwriting results in the current quarter, notwithstanding higher levels of catastrophe losses, combined with higher than normal tax expenses in the prior year quarter.
• Net income for the quarter of $81.4 million, compared to net loss of $515.5 million in the prior year quarter, primarily due to a non-cash charge for the partial impairment of goodwill in the prior year quarter, combined with improved underwriting results in the current quarter and net realized gains on investments and derivatives in the current quarter compared to losses during the prior year quarter.
• Net investment income for the quarter was $245.0 million, compared to $270.9 million in the prior year quarter and $239.5 million for the third quarter of 2012. The decline against the prior year quarter was primarily due to lower yields as a result of lower reinvestment rates.
• Net income from investment fund and investment manager operating affiliates was $31.5 million in the quarter, compared to losses of $23.9 million in the prior year quarter due to more benign markets this quarter compared to a challenging market downturn in the prior year quarter.
• Net realized investment gains for the quarter of $11.2 million, compared to losses of $50.0 million in the prior year quarter.
• Fully diluted book value per ordinary share increased by $0.54 from the prior quarter driven by net income combined with an increase in net unrealized gains on investments and the benefit of share buybacks.
• During the quarter, the Company purchased 2.1 million shares for $51.7 million at an average price of $24.78 per share, which was accretive to fully diluted book value per ordinary share by $0.07. During the year, the Company purchased 18.3 million shares for $401.7 million at an average price of $21.99 per share, which was accretive to fully diluted book value per ordinary share by $0.70. At December 31, 2012, $348.4 million of shares remained available for purchase under the Company’s previously announced $750 million share buyback program. Between January 1, 2013 and February 7, 2013, the Company purchased 3.8 million shares for $98.3 million at an average price of $25.94 per share. At February 7, 2013, $250.0 million of shares remained available for purchase under the Company’s previously announced $750 million share buyback program.
Source: XL Group plc
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