XL ends tough year with strong quarter
A challenging start to the year, and catastrophe losses from Hurricane Matthew and earthquakes in New Zealand, dragged down XL Group Ltd's earnings for 2016.
Net income for the year dropped from $1.2 billion, or $4.15 per share, to $441 million, or $1.56 per share.
However, a strong final quarter saw profits for the period improve year-on-year from $228.5 million to $304.7 million — despite natural catastrophe losses of more than $246 million.
Operating income for the quarter was $128.4 million, or 47 cents per share, beating the 35 cents consensus forecast of market analysts.
The quarter and full-year figures both exclude the contribution from GreyCastle Life Retro arrangements.
Mike McGavick, chief executive officer of the Bermudian-based company, said the year had been “undoubtedly” challenging.
“At the same time, as the year developed, our underlying strengths continued to emerge. For example, our grinding focus on efficiency and underwriting quality produced a lower expense ratio and an improved loss ratio excluding catastrophes. We were even able to grow a bit — bolstered by our new market presence. Our fourth-quarter P&C net premium earned, for example, was up 3.3 per cent over the prior year quarter,” he said in a statement.
“We are enormously proud that our colleagues' hard work and focus on client service was recognised as we claimed the number one spot for product innovation from Advisen, topped the London market's Gracechurch survey across nearly all categories, and earned Highest in Customer Satisfaction among Large Commercial Insurers by the JD Power North America 2016 study.
“All in, we feel we took important steps in the year and, despite challenging market conditions, are very much looking forward to 2017.”
The fourth-quarter profit included a large variance from the group's life derivative as a result of interest-rate changes, and included $58.8 million of integration costs related to the combining of XL and Catlin Group in 2015. The integration costs for the full year were $220.4 million.
XL Group's property and casualty combined ratio for the year was 94.2 per cent, up from 92 per cent in 2015.
Excluding prior-year development and the impact of natural catastrophe losses, the P&C combined ratio for the quarter was 89.1 per cent compared with 92.8 per cent in the corresponding period in 2015.