XL Group Ltd posted improved net income of $319 million for the second quarter, but earnings fell short of Wall Street’s expectations.

The Bermudian-based insurer and reinsurer, which is in the process of being taken over by French insurance giant Axa Group, achieved top-line growth of more than 10 per cent in April through June period.

The company reported rate improvement in its main businesses, with insurance rates up by 3.8 per cent for the first six months of the year and reinsurance rates for the year to date through July, up 3.7 per cent.

XL made an underwriting profit, recording a combined ratio of 95.8 per cent for the quarter, compared to 92.3 per cent for the corresponding period of 2017.

Mike McGavick, XL’s chief executive officer, said: “In the second quarter we have continued our progress towards a strong and diversified book, particularly as rate conditions improved across most lines.

“We grew top line by 10.6 per cent, maintained underwriting discipline and continued our shift of our book towards lower volatility business.

“Partially offsetting these positive trends was non-catastrophe large loss activity from the current quarter as well as prior-year development from short tail lines in insurance.

“Our investment results continue to improve as active portfolio rotation allows us to take advantage of rising interest rates.

“Overall, we are pleased with the results and look forward to continuing to realise the full potential of what we have built when we become part of Axa Group.”

Net income of $319 million, or $1.21 per share, compared to $301.6 million, or $1.14 per share, in the second quarter of 2017.

Operating net income of $220.3 million, or 84 cents per share, fell short of the 93 cents per share consensus forecast of analysts tracked by Yahoo Finance.

P&C gross premiums written grew 10.6 per cent year over year and 7.8 per cent when the impact of currency exchange rates is stripped out.

Natural catastrophe pre-tax losses net of reinsurance, reinstatement and premium adjustments for the quarter totalled $76.8 million, down from $92.1 million in the prior-year quarter.

Net favourable prior-year development was $8.9 million during the quarter, compared to $86.7 million in last year’s second quarter.

Investment returns positively impacted by ongoing portfolio rotations capitalising on rising interest rates and a gain on the sale of one operating affiliate. Net investment income was $231.8 million, compared to $208.7 million in the second quarter of 2017.

US tax reform has kicked in this year but there was no obvious negative impact evident in XL’s results. In its earnings report, XL said income tax expense was $27 million, down from $29 million in the second quarter of last year.

The company said the decrease “is primarily attributable to the mix of profit by jurisdiction”.

Axa’s $15.3 billion deal to acquire XL is expected to close in the second half of this year.