XL Group “Delivered Solid Results” In 2013 Q/1
XL Group PLC — which maintains its executive offices in Bermuda along with a major local platform — yesterday [May 2] reported first-quarter profit had nearly doubled.
Domiciled in Ireland, the property-and-casualty insurer and reinsuerer cited more premiums earned and a lack of catastrophes for its improved financial performance.
“In the first quarter, XL once again delivered solid results–the kind of results we seek to routinely produce,” said Chief Executive Mike McGavick, who acknowledged “the benefit of a quiet catastrophe and large-loss quarter” in the latest period.
“While none of us are ready to declare victory … such results make us all the more driven to deliver consistent, quality performance, even as catastrophes and losses normalise. We are pleased with our progress and are maintaining our diligent, grinding work.”
Like other insurers and reinsurers, XL Group has been helped by a relative lack of natural disasters–though superstorm Sandy’s impact in late October generated costs. The company has also reported increases in premiums earned in its property-and-casualty operations.
For the latest period, XL reported a profit of $350.8 million, or $1.17 a share, up from $176.6 million, or 56 cents a share, a year earlier.
Operating income, which strips out investment gains and losses, rose to 93 cents from 52 cents.
Net premiums written in the property-and-casualty operations increased 4% to $2.04 billion. Premiums earned in the property-and-casualty operations climbed 7.8% to $1.46 billion.
Operating net income for the quarter of $279.9 million, compared to operating net income of $165.2 million in the prior year quarter, primarily due to improved underwriting results in the current quarter, including lower levels of catastrophe and large risk losses, combined with higher affiliate earnings than in the prior year quarter.
Net income for the quarter of $350.8 million, compared to net income of $176.6 million in the prior year quarter, primarily due to operating income improvements combined with higher net realised gains on investments and derivatives, than in the prior year quarter.
Net investment income for the quarter was $246.5 million, compared to $265.2 million in the prior year quarter and $245.0 million in the fourth 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 $50.7 million in the quarter, compared to income of $30.0 million in the prior year quarter. Strong alternative portfolio returns were driven by excellent returns from our managers supported by positive markets over the past six months.
Net realised investment gains for the quarter of $36.5 million, compared to gains of $20.8 million in the prior year quarter.
Fully diluted tangible book value per ordinary share increased by $0.70 from the prior quarter driven by net income growth combined with the benefit of share buybacks, partially offset by net unrealised losses on investments.
During the quarter, the company purchased 8.0 million shares for $223.3 million at an average price of $27.89 per share, which was accretive to fully diluted tangible book value per ordinary share by $0.20. At March 31, 2013, $725.0 million of shares remained available for purchase under the company’s previously announced $850 million share buyback programme.
Analysts polled by Thomson Reuters had projected operating income of 65 cents a share on $1.51 billion in premiums earned on property-and-casualty operations.
The combined ratio — the percentage of premiums paid out on losses and expenses– improved to 87.7% from 95.3% in the property-and-casualty business. Catastrophe losses, net of reinsurance and reinstatement premiums, reached $4 million in the latest period, compared with $20 million a year earlier.
Total expenses decreased 4.6%.
