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XL Capital Ltd reports first quarter 2002 results; net operating income per share $1.53 in 2002 compared with $1.24 in 2001
HAMILTON, BERMUDA - April 29, 2002HAMILTON, BERMUDA, April 29, 2002 -- XL Capital Ltd ("XL" or the "Company") (NYSE: XL) today reported that net income for the first quarter ended March 31, 2002 was $89.5 million, or $0.65 per share, compared with $218.9 million, or $1.73 per share, in the first quarter of 2001. Net operating income for the first quarter of 2002 was $210.4 million, or $1.53 per share, compared with $156.7 million, or $1.24 per share, for the quarter ended March 31, 2001.
Results for the quarter ended March 31, 2002 include the results of Winterthur International, which was acquired with effect from July 1, 2001. They also include the results of Le Mans R, which is accounted for as a consolidated subsidiary with effect from January 1, 2002. In the quarter ended March 31, 2001, the Company's share of the net income of Le Mans R was included in equity in net income of insurance affiliates. Results of the Company's Lloyd's operations are included in the insurance segment, and are no longer shown separately. Summary unaudited consolidated financial data for the three months ended March 31 for each of 2002 and 2001 is set forth below (in millions except per share amounts):
Three months ended March 31 (unaudited) 2002 2001Gross premiums written $2,850.2 $1,150.8Net premiums written 2,204.4 812.3Net premiums earned 1,072.1 542.2Total revenue 1,165.1 772.9Net income 89.5 218.9Net operating income (a) 210.4 156.7Per share results:Net income $0.65 $1.73Net operating income (a) 1.53 1.24Average shares outstanding (b) 137.8 126.8Notes: (a) Net operating income is net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on derivatives, net of tax. (b) Diluted weighted average number of shares.
Total assets as of March 31, 2002 were $30.6 billion, compared with $28.0 billion as of December 31, 2001. Fully diluted book value per share as at March 31, 2002 was $40.94 compared with $40.35 as at December 31, 2001.
Net investment income from general operations was $155.6 million in the first quarter of 2002, compared with $143.1 million in 2001's first quarter. Net realized losses on investments and net realized and unrealized losses on derivatives in the first quarter of 2002 was $119.2 million compared with net realized gains of $60.2 million in 2001's first quarter. The Company's equity in the net income of its investment affiliates for the first quarter of 2002 was $32.2 million in 2002 versus $20.4 million in the first quarter of 2001. The Company's equity in the net income of its insurance affiliates was breakeven in the first quarter of 2002 versus $8.0 million in the first quarter of 2001.
The combined ratio for the Company's general insurance and reinsurance operations was 92.0% in the first quarter of 2002 compared with 93.9% in the first quarter of 2001. The loss ratios were 63.2% and 61.3% in the first quarters of 2002 and 2001, respectively, with corresponding expense ratios of 28.8% and 32.6% for the same quarters, respectively.
Commenting on the first quarter results, Brian M. O'Hara, President and Chief Executive Officer of XL, stated, "Our first quarter results reflect the strong growth and improved market conditions that we continue to see in all segments of the Company. Additionally, we have benefited from a flight to quality and from new premiums from the inclusion of XL Winterthur International and Le Mans R in the first quarter."
A live on-line webcast of a call with analyst and investors will be held at 10:00 a.m. Eastern Time on Tuesday, April 30, 2002 to review the first quarter 2002 results at www.xlgroup.com. XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. Additional unaudited supplemental financial information relating to the Company is available on its web site: www.xlgroup.com.
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) the size of XL's claims may change due to the preliminary nature of reports and estimates of loss and damage; (c) the timely and full recoverability of reinsurance placed by XL with third parties; (d) the timing of claims payments being faster or the receipt of reinsurance recoverables being slower than anticipated by XL; (e) increased competition based on pricing, capacity, coverage terms or other factors; (f) 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; (g) 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; (h) the potential impact of government-sponsored solutions to make available insurance coverage for acts of terrorism; (i) developments in the Enron bankruptcy proceedings or other developments related to Enron; (j) the effects of mergers, acquisitions or divestitures; (k) changes in rating agency policy or practices that could have an adverse effect on the company's ratings; (l) changes in accounting policies or practices that could adversely effect the Company's financial statutory and other statements and reports; (m) legislative, tax or regulatory developments that could adversely effect the company or the ability of customers or brokers to do business with the Company; (n) changes in general economic conditions, including inflation, foreign currency exchange rates and other factors; (o) the effects of business disruption or economic contraction due to terrorism or other hostilities; and (p) the other factors set forth in XL's most recent report on Form 10-K and XL's other documents on file with the Securities and Exchange Commission. XL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
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XL Capital Ltd SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands, except per share amounts) Three Months Ended March 31 (Unaudited) 2002 2001 Income Statement Data: Revenues: Gross premiums written $2,850,199 $1,150,845 Net premiums written $2,204,376 $812,254 Net premiums earned - general operations $1,032,953 $542,154 Net premiums earned - life operations 39,193 -- Net investment income - general operations 155,609 143,096 Net investment income - life operations 15,518 -- Equity in net income of investment affiliates 32,185 20,374 Net realized (losses) gains on investments (106,020) 62,535 Net realized and unrealized losses on derivative instruments (13,200) (2,364) Fee and other income 8,868 7,069 $ 1,165,106 $772,864 Expenses: Net losses and loss expenses incurred - general operations $646,924 $330,204 Claims and policy benefit reserves - life operations 47,763 -- Acquisition costs, operating expenses, and exchange gains and losses 322,513 197,760 Interest expense 41,622 21,257 Amortization of intangible assets 614 14,468 $1,059,436 $563,689 Income before minority interest, income tax expense and equity in net income of insurance affiliates $105,670 $209,175 Net income $89,493 $218,929 Weighted average number of ordinary shares and 137,843 126,782 ordinary share equivalents (diluted) Per Share Data: Net income $0.65 $1.73 Net losses (gains) on investments and derivative instruments, after tax 0.88 (0.49) Net operating income $1.53 $1.24 Note: Certain reclassifications, which have no effect on net income, have been made to prior year results to conform to current presentation. XL Capital Ltd SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands of U.S. dollars, except per share amounts) (Unaudited) As at March 31, As at December 31, 2002 2001 Balance Sheet Data: Total investments available for sale $12,833,601 $12,429,845 Net payable for investments purchased 1,483,177 1,247,027 Cash and cash equivalents 2,066,413 1,863,861 Investments in affiliates 1,162,725 1,037,344 Intangible assets 1,677,597 1,616,943 Total assets 30,665,266 27,963,075 Unpaid losses and loss expenses 12,275,728 11,825,680 Deposit liabilities and policy benefit reserves 2,409,481 2,374,164 Notes payable and debt 1,857,670 1,604,877 Shareholders' equity 5,450,064 5,437,184 Fully diluted book value per share $40.94 $ 40.35 XL Capital Ltd SUPPLEMENTARY SEGMENT INFORMATION (In thousands of U.S. dollars) (Unaudited) FOR THE QUARTER ENDED MARCH 31, 2002 Total Financial Insurance & Products & Insurance Reinsurance Reinsurance Services Total General operations: Net premiums earned $592,656 $421,167 $1,013,823 $19,130 $1,032,953 Fee income and other 6,545 899 7,444 1,422 8,866 Net losses and loss expenses 376,380 264,632 641,012 5,912 646,924 Acquisition costs 91,965 92,214 184,179 958 185,137 Operating expenses 88,973 18,686 107,659 14,990 122,649 Exchange gains (2,112) (6,252) (8,364) -- (8,364) Underwriting profit (loss) $43,995 $52,786 $96,781 $(1,308) $95,473 Life operations: Net premiums earned $-- $39,193 $39,193 $-- $39,193 Fee income and other -- 2 2 -- 2 Claims and policy benefit reserves -- 47,763 47,763 -- 47,763 Acquisition costs and operating expenses -- 1,678 1,678 -- 1,678 Net investment income -- 15,518 15,518 -- 15,518 Net realized losses on investments -- 618 618 -- 618 Net income from life operations $-- $4,654 $4,654 $-- $4,654 Net investment income 155,609 Net realized losses on investments and derivative instruments 118,602 Equity in earnings of insurance and investment affiliates 32,217 Corporate, interest, taxes and other 79,858 Net income $89,493 Loss and loss expense ratio 63.5% 62.8% 63.2% Underwriting expense ratio 30.5% 26.3% 28.8% Combined ratio 94.0% 89.1% 92.0% NOTES: 1. Ratios are calculated for general insurance and reinsurance operations based on net premiums earned, excluding fee income and other. 2. The underwriting expense ratio excludes exchange gains and losses. XL Capital Ltd SUPPLEMENTARY SEGMENT INFORMATION (In thousands of U.S. dollars) (Unaudited) FOR THE QUARTER ENDED MARCH 31, 2001 Total Financial Insurance & Products & Insurance Reinsurance Reinsurance Services Total General operations: Net premiums earned $269,473 $266,860 $536,333 $5,821 $542,154 Fee income and other 2,625 (563) 2,062 5,007 7,069 Net losses and loss expenses 160,131 168,458 328,589 1,615 330,204 Acquisition costs 55,951 69,600 125,551 321 125,872 Operating expenses 32,787 16,706 49,493 11,357 60,850 Exchange (gains) losses (1,382) 212 (1,170) -- (1,170) Underwriting profit (loss) $24,611 $11,321 $35,932 $(2,465) $33,467 Net investment income 143,096 Net realized gains on investments and derivative instruments 60,171 Equity in earnings of insurance and investment affiliates 28,388 Corporate, interest, taxes and other 46,193 Net income $218,929 Loss and loss expense ratio 59.4% 63.1% 61.3% Underwriting expense ratio 32.9% 32.4% 32.6% Combined ratio 92.3% 95.5% 93.9% NOTES: 1. Ratios are calculated for general insurance and reinsurance operations based on net premiums earned, excluding fee income and other. 2. The underwriting expense ratio excludes exchange gains and losses. XL Capital Ltd SUPPLEMENTARY PREMIUM INFORMATION BY LINE OF BUSINESS (In thousands of U.S. dollars) (Unaudited) FOR THE QUARTER ENDED MARCH 31, 2002 Gross Premiums Net Premiums Net Premiums Written Written Earned Casualty insurance $495,236 $365,476 $236,868 Casualty reinsurance 450,329 376,442 159,845 Property catastrophe 197,746 177,402 60,325 Other property 579,257 379,764 229,785 Marine, energy, aviation and satellite 297,870 226,257 103,787 Lloyd's syndicates 333,725 263,814 120,362 Accident and health 127,906 104,977 19,658 Financial products & services 71,796 69,185 19,130 Life 38,528 36,968 39,193 Other insurance 125,599 98,740 57,059 Other reinsurance 132,207 105,351 26,134 Total $2,850,199 $2,204,376 $1,072,146 FOR THE QUARTER ENDED MARCH 31, 2001 Gross Premiums Net Premiums Net Premiums Written Written Earned Casualty insurance $189,187 $111,709 $85,008 Casualty reinsurance 171,390 123,045 71,389 Property catastrophe 102,158 97,842 36,822 Other property 177,546 126,893 94,331 Marine, energy, aviation and satellite 177,577 115,408 61,822 Lloyd's syndicates 216,996 134,540 92,159 Financial products & services 11,989 11,933 5,821 Other insurance 66,687 42,654 33,579 Other reinsurance 37,315 48,230 61,223 Total $1,150,845 $812,254 $542,154 NOTES: 1. The Companies Lloyd's Syndicates write a variety of coverages encompassing most of the above lines of business. 2. Other premiums written and earned includes political risk, surety, bonding, and warranty lines. XL Capital Ltd XL Capital Ltd SUPPLEMENTARY INFORMATION (In thousands of U.S. dollar except % changes) (Unaudited) Consolidated First Quarter First Quarter % Change 2002 2001 Net Income $89.5 $218.9 (59.1%) Operating Income 210.4 156.7 34.3% Net Income per share 0.65 1.73 (62.4%) Operating Income per share 1.53 1.24 23.4% Avg. number of shares outstanding 137.8 126.8 8.7% General Operations First Quarter First Quarter % Change 2002 2001 Gross premiums written $2,811.7 $1,150.8 144.3% Net premiums written 2,167.4 812.3 166.8% Net premiums earned 1,033.0 542.2 90.5% Underwriting profit 95.5 33.5 185.1% Combined ratio 92.0% 93.9% Net investment income 155.6 143.1 8.7% Life Operations Gross premiums written 38.5 $ -- N/A Net premiums written 37.0 -- N/A Net premiums earned 39.2 -- N/A Claims and policy benefit reserves 47.8 -- N/A Net income from life operations 4.6 -- N/A Net investment income 15.5 -- N/A Note: The supplementary information contained herein is being furnished for the convenience of the reader only, and does not purport to be complete. Percentage changes are based upon the rounded numbers shown above. Investors should refer to XL Capital Ltd's Form 10-Q for the quarter ended March 31, 2002 to be filed with the SEC (and XL Capital Ltd's other documents on file with the SEC) for a complete description of XL Capital Group Ltd. XL Capital Ltd XL Capital Ltd SUPPLEMENTARY INFORMATION (In thousands of U.S. dollar except % changes) (Unaudited) GENERAL OPERATIONS Insurance Segment First Quarter First Quarter % Change 2002 2001 Gross premiums written $1,450.4 $571.2 153.9% Net premiums written 1,051.9 342.2 207.4% Net premiums earned 592.7 269.5 119.9% Fee income 6.5 2.6 150.0% Underwriting profit 44.0 24.6 78.9% Loss ratio 63.5% 59.4% Expense ratio 30.5% 32.9% Combined ratio 94.0% 92.3% Reinsurance Segment First Quarter First Quarter % Change 2002 2001 Gross premiums written $1,289.5 $567.6 127.2% Net premiums written 1,046.4 458.1 128.4% Net premiums earned 421.2 266.9 57.8% Fee income 1.0 (0.6) n/m Underwriting profit 52.8 11.3 367.3% Loss ratio 62.8% 63.1% Expense ratio 26.3% 32.4% Combined ratio 89.1% 95.5% Financial Products and Services Segment First Quarter First Quarter % Change 2002 2001 Gross premiums written $71.8 $12.0 498.3% Net premiums written 69.2 11.9 481.5% Net premiums earned 19.1 5.8 229.3% Fee income 1.4 5.0 (72.0%) Underwriting loss (1.3) (2.5) 48.0%
Notes: The supplementary information contained herein is being furnished for the convenience of the reader only, and does not purport to be complete. Percentage changes are based upon the rounded numbers shown above. Investors should refer to XL Capital Ltd's Form 10-Q for the quarter ended March 31, 2002 to be filed with the SEC (and XL Capital Ltd's other documents on file with the SEC) for a complete description of XL Capital Ltd.
n/m = not meaningful