Despite Chile XL Records $128 Million Net Income
Despite suffering what CEO Mike McGavick termed the “heaviest levels of first quarter catastrophe activity in history” one of Bermuda’s largest reinsurers XL Capital Ltd today reported net income of $128 million, or $0.37 per ordinary share for the period ended March 31, 2010.
The 2010 first quarter results are a drop from 2009, which saw XL report $178.4 million, or $0.53 per ordinary share.
Mr McGavick stated that XL’s annualized operating return on ordinary shareholders’ equity was 6.9%, and that 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%.
Chief Executive Officer Mike McGavick said:
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% 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% 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% increase in book value per ordinary share to $26.38 and an 8% 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% compared to 14.9% 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%.
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.
Further first quarter results for Bermuda based [re]insurers are here.
