XL enjoys steady growth but profits dip
Profits at XL Group fell in the first quarter largely because of the impact of a life retrocession derivative but the company enjoyed steady growth in both its reinsurance and insurance segments.
The company’s net income fell to $36.3 million for the quarter compared with $255.7 million in the prior year quarter.
The company said net income was negatively impacted by a life retrocession derivative, which is offset by an increase in accumulated comprehensive income and therefore does not impact overall book value. Excluding the impact of the life retrocession arrangements, its net income was $164.6 million for the quarter.
Its operating net income was $194.4 million for the quarter compared with $238.6 million in the prior year quarter. It said this was primarily due to lower levels of affiliate and life reinsurance income.
Operating expenses in the quarter were 4.9 percent higher than in the prior year quarter primarily due to the impact of the proposed acquisition of Catlin. Excluding the Catlin-related transaction costs of approximately $10.5 million, operating expenses were up 1.6 percent compared to the prior year quarter.
Its combined ratio for the quarter was 88.9 percent, an improvement on the 89.7 percent a year earlier.
The company enjoyed steady growth in its property and casualty operations. Its P&C gross premiums written in the first quarter increased by 2.1 percent compared with the prior year quarter.
In its insurance segment, gross premiums written increased by 5.3 percent from the prior year quarter as a result of increased new business particularly in 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.
Mike McGavick, chief executive of XL Group, said: “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. 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.
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.”
