XL Reports Q1 Operating Net Income of $194.4M, Combined Ratio at 88.9%

April 30, 2015

Dublin-based XL Group plc reported first quarter operating net income of $194.4 million, or $0.75 per share, for the first quarter on a fully diluted basis, down from $238.6 million, or $0.85 per share, for the same period in 2014.

“In the first quarter of 2015 we kept our eye firmly on the ball and produced strong underwriting results while the ongoing integration planning for our combination with Catlin proceeds,” according to Chief Executive Officer Mike McGavick.

“Our property and casualty combined ratio for the first quarter was a very solid 88.9 percent. Insurance results included a combined ratio of 94.1 percent, 1.3 points better than a year ago, and reinsurance was 74.7 percent, a 1.6 point improvement from the same period a year ago,” he said. “While nearing what we hope will be a successful close to the transaction, we continue to focus on delivering our 2015 plan while being incredibly excited about what XL Catlin will achieve together.”

Other highlights for the first quarter included:

  • P&C combined ratio of 88.9 percent for the quarter, 0.8 percentage points lower than the 89.7 percent reported in the prior year quarter.
  • Natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums in the quarter was $14.7 million, compared to $17.2 million in the prior year quarter.
  • Operating return on average ordinary shareholders’ equity excluding unrealized gains and losses on investments was 9.1 percent and including unrealized gains and losses on investments was 7.7 percent, annualized for the quarter.
  • Net income attributable to ordinary shareholders was $36.3 million during the quarter, down from $255.7 million reported in the prior year quarter. (XL explained that net income for the current quarter was negatively impacted by a life retrocession derivative, although it is offset by an increase in accumulated comprehensive income and therefore does not impact overall book value.)
  • Net investment income for the quarter was $208.5 million, compared to $233.2 million in the prior year quarter and $226.2 million in the fourth quarter of 2014. The overall decline is primarily due to the normal turnover of the portfolio combined with foreign exchange impacts.
  • There were no share buybacks during the quarter.
  • P&C gross premiums written (GPW) in the first quarter increased 2.1 percent compared to the prior year quarter. The GPW in the insurance segment increased 5.3 percent from the prior year quarter as a result of increased new business particularlyin international property and casualty lines, North America surplus lines and construction, international financial lines and specialty marine and a higher renewing premium base in international middle market, global risk management and North America construction business lines.
  • Increases in GPW were offset in part by unfavorable foreign exchange movement of $85.0 million as compared to the prior year quarter.
  • GPW in the reinsurance segment decreased 3.7 percent from the prior year quarter, primarily driven by the impact of foreign exchange on international operations, partially offset by growth in North America crop premiums.

Source: XL Group

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