XL Group’s first-quarter earnings missed Wall Street estimates as increases in catastrophe losses and integration costs hit results.

The business insurer’s operating earnings were $103.4 million, or 35 cents per share, down from the $194.4 million XL made in the first quarter of 2015 and well short of the 50 cents per share consensus forecast of analysts tracked by Yahoo Finance.

Natural-catastrophe pre-tax losses in the quarter amounted to $52.8 million, up from $14.7 million in the same period of last year.

The combined ratio for property-and-casualty operations — reflecting the proportion of premium dollars spent on claims and expenses — was 92.5 per cent compared to 88.9 per cent a year earlier.

Last year, XL acquired Bermudian-based insurer and reinsurer Catlin Group in a $4.1 billion deal. The company said that integration costs related to the merger totalled about $55 million in the first three months of the year.

Also weighing on earnings were hedge fund investments. XL said net income from affiliates fell by nearly $50 million to $8 million. “This decrease was driven primarily by our hedge fund affiliates where equity and credit market volatility fed through to returns,” XL stated.

Annualised operating return on equity excluding investment gains and losses was 3.9 per cent, or 5.9 per cent when integration costs were stripped out the company said.

Mike McGavick, chief executive officer of XL Group, said the combination with Catlin was working out well.

“While we see difficult market conditions continuing in the near term, we firmly believe our focus on the bottom line is the right long-term strategy and that we remain very well positioned,” Mr McGavick said.

“Near the one-year anniversary of XL Catlin, we continue to exceed all of our integration targets and are seeing new opportunities aligned with our global reach and market relevance.”

Gross premiums written in the first quarter were $4.36 billion, up by nearly $1.9 billion, or 75.7 per cent, from a year before. The increase was chiefly due to the acquisition of Catlin.

Underwriting profit was $175.5 million compared to to $146.8 million in 2015.

XL said ongoing operating expenses, excluding integration costs, were 46 per cent higher, due to the company’s larger scale since the Catlin combination.

“However, overall run-rate expenses for the quarter continue to indicate that synergy savings are being achieved in line with or ahead of expectations,” XL stated.

XL’s book value per share rose by $1.10, or 3.5 per cent during the quarter, to $32.62 at March 31. The increase was aided by the repurchase of around 10 million shares at a cost of $355.1 million. At the end of the quarter, XL’s buyback programme allowed for the repurchase of a further $348.2 million worth of common shares.

XL’s share price fell six cents, or 0.2 per cent, to close on $35.86 in New York trading yesterday.