Net Income $239.9 million, or $1.74 per ordinary share
Net Operating Income $250.1 million, or $1.82 per ordinary share
HAMILTON, BERMUDA, April 28, 2003 -- XL Capital Ltd (“XL” or the “Company”) (NYSE: XL) today reported net income available to ordinary shareholders for the quarter ended March 31, 2003 of $239.9 million, or net income of $1.74 per ordinary share, compared with net income of $89.5 million, or a net income of $0.65 per ordinary share, in the first quarter of 2002. Net operating income for the first quarter of 2003 was $250.1 million, or $1.82 per ordinary share, compared with net operating income of $207.6 million, or $1.51 per ordinary share, for the quarter ended March 31, 2002 (see below for a reconciliation to net income).
Commenting on the first quarter 2003 results, Brian M. O’Hara, President and Chief Executive Officer of XL, stated: “We had a very strong first quarter with excellent underwriting results reflected in our combined ratio of 86.1% and net earned premium growth of 42% in our general insurance and reinsurance operations. Our net operating income return on ordinary shareholders’ equity exceeded 16% and book value per ordinary share increased to $46.09, a record level for XL.”
“Our general insurance and reinsurance businesses continue to see very strong pricing, most notably in casualty, professional lines and marine worldwide,” said Mr. O'Hara.
Mr. O’Hara further stated, “Despite our very robust underwriting results and strong cash flow during the quarter, the investment environment continues to be challenging with reinvestment rates at extremely low levels. This will continue to put pressure on industry results and underscores the need to maintain underwriting discipline in the market.”
The first quarter 2003 net operating results include a write down of the Company’s investment in Annuity and Life Re Holdings Ltd of $40.9 million.
Total assets as of March 31, 2003 were $37.5 billion compared with $35.6 billion as of December 31, 2002. Book value per ordinary share as at March 31, 2003 increased to $46.09 compared with $44.48 as at December 31, 2002.
Summary unaudited consolidated financial data for the quarters ended March 31, 2003 and 2002, respectively, are set forth below (in millions, except per share and share amounts):
Three months ended March 31 (Unaudited) 2003 2002 Gross premiums written $ 3,147 $ 2,805 Net premiums written 2,489 2,159 Net premiums earned 1,552 1,065 Net income $ 250.0 $ 89.5 Preference dividend (10.1) -- Net income available to ordinary shareholders $ 239.9 $ 89.5 Per ordinary share results: Net income available to ordinary shareholders $ 1.74 $0.65 Weighted average ordinary shares outstanding (in thousands): Basic 136,216 135,119 Diluted 137,631 137,843
Gross premiums written for general operations in the first quarter of 2003 were $3.0 billion compared with $2.8 billion in the first quarter of 2002. Net premiums written increased to $2.4 billion from $2.1 billion and net earned premiums rose to $1.5 billion from $1.0 billion in the respective quarters of 2003 and 2002.
Gross premiums written for life operations in the first quarter of 2003 were $111.3 million compared with $38.5 million in the first quarter of 2002. Net premiums written for life operations in the first quarter of 2003 were $97.3 million compared with $37.0 million in the first quarter of 2002 and net earned premiums were $92.8 million in the first quarter of 2003 compared with $39.2 million in the first quarter of 2002.
Net investment income from general operations was $156.6 million in the first quarter of 2003, compared with $155.6 million in 2002's first quarter. Net investment income from life operations was $35.3 million in the first quarter of 2003 compared with $15.5 million for the quarter ended March 31, 2002.
The Company's equity in the net income of its investment affiliates for the first quarter of 2003 was $26.8 million versus $32.2 million in the first quarter of 2002. The Company's equity in net losses of its insurance and operating affiliates was $41.1 million in the first quarter of 2003 versus net income of $0.03 million in the first quarter of 2002.
The combined ratio for the Company's general insurance and reinsurance operations was 86.1% in the first quarter of 2003, versus 92.1% in the first quarter of 2002. The loss ratios were 60.9% and 63.2% in the quarters ended March 31, 2003 and 2002, with corresponding expense ratios of 25.2% and 28.9% for the same quarters, respectively.
A live on-line web cast of XL's call with analysts and investors to review the first quarter 2003 results will be held at 10:00 a.m. Eastern Time on April 29, 2003 at www.xlgroup.com. An unaudited financial information supplement relating to the Company's 2003 and 2002 quarterly and full year results is available on its website: www.xlgroup.com.
XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products and services to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis.
This press release contains forward-looking statements that involve inherent risks and uncertainties. Statements that are not historical facts, including statements about XL's beliefs, plans or expectations, are forward- looking statements. These statements are based on current plans, estimates, and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: (a) rate increases and improvements in terms and conditions may not be as large or sustainable as XL is currently projecting; (b) greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than XL's underwriting, reserving or investment practices anticipate based on historical experience or industry data; (c) developments in the world's financial and capital markets which adversely affect the performance of XL's investments and XL's access to such markets; (d) changes in general economic conditions, including foreign currency exchange rates, inflation and other factors; and (e) the other factors set forth in XL's most recent reports on Form 10-K and Form 10-Q as well as XL's other documents on file with the Securities and Exchange Commission. XL undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
XL Capital Ltd SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands of U.S. dollars, except per share and share amounts) (Unaudited) Three Months Ended March 31 2003 2002 (a) Income Statement Data: Revenues: Gross premiums written - general and life operations $3,147,139 $2,804,676 Net premiums written - general and life operations 2,489,084 2,158,853 Net premiums earned - general operations 1,458,860 1,025,522 Net premiums earned - life operations 92,771 39,193 Net investment income - general operations 156,581 155,609 Net investment income - life operations 35,323 15,518 Net realized losses on investments (4,663) (106,020) Net realized and unrealized gains (losses) on derivative instruments 14,493 (9,476) Equity in net income of investment affiliates 26,798 32,185 Fee and other income 12,277 7,949 $1,792,440 $1,160,480 Expenses: Net losses and loss expenses incurred - general operations $885,254 $642,298 Claims and policy benefit reserves - life operations 119,558 47,763 Acquisition costs And operating expenses 430,831 330,877 Exchange gains (2,702) (8,364) Interest expense 46,140 41,622 Amortization of intangible assets 375 614 $1,479,456 $1,054,810 Income before minority interest, income tax expense and equity in net loss (income) of insurance and operating affiliates $312,984 $105,670 Minority interest 1,862 2,255 Income tax charge 20,030 13,954 Equity in net loss (income) of insurance and operating affiliates 41,087 (32) Net income $250,005 $89,493 Preference dividend (10,148) - Net income available to ordinary shareholders $239,857 $89,493 Weighted average number of ordinary shares and ordinary share equivalents (in thousands) : Basic 136,216 135,119 : Diluted 137,631 137,843 Per Share Data: Net income available to ordinary shareholders (diluted) $ 1.74 $0.65
Certain reclassifications, which have no effect on net income, have been made to prior period results to conform to current presentation.
XL Capital Ltd SUPPLEMENTAL FINANCIAL DATA (in millions of U.S. Dollars, except per share and share amounts) (Unaudited)
The following is a reconciliation of the Company's net operating income to net income, for the three months ended March 31, 2003 and 2002:
Three months ended March 31 (Unaudited) 2003 2002 Net income available to ordinary shareholders $ 239.9 $ 89.5 Net realized losses on investments 4.6 106.0 Net realized and unrealized (gains) losses on derivatives (14.5) 9.5 Net gains on weather & energy risk management derivatives 10.4 0.9 Tax effect on net realized losses on investments and realized and unrealized (gains) losses on derivative instruments 9.7 1.7 Net operating income $250.1 $207.6 Per ordinary share results: Net income available to ordinary shareholders (diluted) $1.74 $0.65 Net operating income (diluted) $1.82 $1.51 Weighted average ordinary shares outstanding (in millions): Basic 136.2 135.1 Diluted 137.6 137.8
Net operating income is a non-GAAP measure. As calculated by the Company, net operating income is net income available to ordinary shareholders, excluding net realized gains and losses on investments and net realized and unrealized gains and losses on all derivatives (except for gains and losses on weather and energy risk management derivatives). These items are excluded because they are not considered by management to be relevant indicators of the performance of or trends in XL's core business operations, but rather of the investment and credit markets in general. Management believes that the presentation of net operating income provides useful information regarding XL's results of operations because it follows industry practice, is followed closely by securities analysts and rating agencies, and enables investors and securities analysts to make performance comparisons with XL's peers in the insurance industry. This measure may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on net operating income as a non-GAAP measure in assessing XL's overall financial performance.
XL Capital Ltd SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands of U.S. dollars, except per share and share amounts) (Unaudited) As at March 31, As at December 31, 2003 2002 Balance Sheet Data: Total investments available for sale $17,207,273 $16,059,733 Net payable for investments purchased 1,668,469 1,546,276 Cash and cash equivalents 3,152,328 3,557,815 Investments in affiliates 1,729,593 1,750,005 Intangible assets 1,652,998 1,653,700 Total assets 37,461,625 35,647,369 Unpaid losses and loss expenses 13,496,875 13,202,736 Deposit liabilities and future policy benefit reserves 4,980,912 4,889,996 Notes payable and debt 1,884,158 1,877,957 Total shareholders' equity 6,812,245 6,569,589 Total ordinary shareholders' equity (1) 6,294,745 6,052,089 Ordinary shares outstanding 136,560,490 136,063,184 Book value per ordinary share $46.09 $44.48 Note: (1) Excluding preference share capital of $517,500.