HAMILTON, BERMUDA - October 23, 2002
Net Operating Income $221.0 million, per share $1.61 Net Income$184.0 million, per share $1.34HAMILTON, BERMUDA, October30, 2002 -- XL Capital Ltd ("XL" or the "Company") (NYSE: XL) todayreported net income available to ordinary shareholders for the quarterended September 30, 2002 of $184.0 million, or income of $1.34 pershare, compared with a net loss of $840.0 million, or a loss of $6.70per share, in the third quarter of 2001. Net operating income for thethird quarter of 2002 was $221.0 million, or $1.61 per share, comparedwith a net operating loss of $761.8 million, or a loss of $6.07 pershare, for the quarter ended September 30, 2001. The Company's resultsin 2001 were severely impacted by losses related to the events ofSeptember 11, 2001.
Commenting on the third quarter 2002 results, Brian M.O'Hara, President and Chief Executive Officer of XL, stated: "Ourinsurance and reinsurance businesses have enjoyed a robust thirdquarter, with significant rate increases and new business contributingto strong underwriting results in the quarter. I am particularlypleased with our general operations combined ratio of 91.0% in thequarter."
"However, while the managers of our investment affiliatesgenerally outperformed their benchmarks and the overall investmentmarkets in the third quarter, their absolute performance resulted in asmall loss when compared to their strong performance a year ago," Mr.O'Hara added.
Mr. O'Hara further stated: "As we look ahead, I am confidentthat the property and casualty markets will remain hard for some time.XL is well positioned to capitalize on the long overdue priceincreases and improvements in terms and conditions currently beingachieved in virtually all lines of business."
For the nine months ended September 30, 2002, net incomeavailable to ordinary shareholders was $181.8 million, or income of$1.32 per share, compared with a net loss of $492.5 million, or a lossof $3.93 per share, during the same period in 2001. Net operatingincome for the first nine months of 2002 was $456.4 million, or $3.32per share, compared with a net operating loss of $445.0 million, or$3.55 per share, for the nine months ended September 30, 2001.
Summary unaudited consolidated financial data for the three and nine months ended September 30, for each of 2002 and 2001, respectively, is set forth below (in millions except per share amounts): Three months ended Nine months ended September 30 September 30 (Unaudited) (Unaudited) 2002 2001 2002 2001Gross premiums written $2,655.5 $1,193.3 $7,052.6 $3,350.0Net premiums written 2,123.9 537.0 5,475.6 2,098.4Net premiums earned 2,162.3 751.5 4,313.1 1,934.7 Net income (loss) 186.4 (840.0) 184.2 (492.5)Preference dividend 2.4 -- 2.4 --Net income (loss) available to ordinary shareholders. 184.0 (840.0) 181.8 (492.5) Net operating income (loss) (a) 221.0 (761.8) 456.4 (445.0) Per share results: Net income (loss) availableto ordinary shareholders (b). $1.34 $ (6.70) $1.32 $(3.93) Net operating income (loss) (a) (b) 1.61 (6.07) 3.32 (3.55) Weighted average ordinary shares outstanding : Basic 135.8 125.4 135.6 125.4Diluted 137.3 127.8 137.3 127.4Notes: (a) Net operating income is net income available to ordinary shareholders, excluding net realized gains and losses on investments, net realized and unrealized gains and losses on derivatives, net of tax, and one-time charges related to the integration of Winterthur International in 2001.(b) Average stock options outstanding have been excluded where anti-dilutive to earnings per share. Consequently, where there is a net loss, basic weighted average ordinary shares outstanding represents diluted weighted average ordinary shares outstanding.
Results for all periods subsequent to July 1, 2001 includethe results of Winterthur International, which was acquired witheffect from July 1, 2001. The results also include the consolidationof Le Mans Ré, which is accounted for as a subsidiary with effect fromJanuary 1, 2002. In the quarter and nine months ended September 30,2001, the Company's share of the net income of Le Mans Ré was includedin equity in net income of insurance and operating affiliates.
Total assets as of September 30, 2002 were $34.1 billioncompared with $28.0 billion as of December 31, 2001. Fully dilutedbook value per ordinary share as at September 30, 2002 increased to$42.10 compared with $40.35 as at December 31, 2001.
Gross premiums written for general and life operations inthe third quarter of 2002 were $2.7 billion compared with $1.2 billionin the third quarter of 2001. Net premiums written increased to $2.1billion from $537.0 million and net earned premiums rose to $2.2billion from $751.5 million in the respective quarters of 2002 and2001.
For the nine months ended September 30, 2002, gross premiumswritten were $7.1 billion compared with $3.4 billion in the year agoperiod. Net premiums written for the first nine months of 2002 were$5.5 billion compared with $2.1 billion a year ago. Net earnedpremiums were $4.3 billion for the first nine months of 2002 comparedwith $1.9 billion in the first nine months of 2001.
Net investment income from general operations was $161.1million in the third quarter of 2002, compared with $152.2 million in2001's third quarter. Net investment income from general operationswas $474.6 million in the first nine months of 2002, compared with$446.5 million in 2001's first nine months.
Net investment income from life operations was $26.2 millionin the third quarter of 2002 and $58.6 million for the nine months of2002. In 2001, there was no investment income from life operations.
The Company's equity in the net losses of its investmentaffiliates for the third quarter of 2002 was $2.0 million versusincome of $20.8 million in the third quarter of 2001. The Company'sequity in the net income of its investment affiliates for the firstnine months of 2002 was $38.1 million versus $64.3 million in thefirst nine months of 2001.
The Company's equity in net losses of its insurance andoperating affiliates was $0.4 million in the third quarter of 2002versus net losses of $13.5 million in the third quarter of 2001. TheCompany's equity in the net income of its insurance and otheroperating affiliates was $0.04 million for the first nine months of2002 versus $0.8 million in the first nine months of 2001.
The combined ratio for the Company's general operations was91.0% in the third quarter of 2002 compared with 233.3% in the thirdquarter of 2001. The loss ratios were 61.8% and 195.4% in the thirdquarters of 2002 and 2001, respectively, with corresponding expenseratios of 29.2% and 37.9% for the same quarters, respectively. Thecombined ratio for the Company's general operations was 97.1% in thefirst nine months of 2002 compared with 145.2% in the first ninemonths of 2001. The loss ratios were 67.9% and 111.0% in the firstnine months of 2002 and 2001, respectively, with corresponding expenseratios of 29.2% and 34.2% for the same periods.
A live on-line webcast of XL's call with analysts andinvestors to review the third quarter 2002 results will be held at10:00 a.m. Eastern Time on Thursday, October 31, 2002 atwww.xlgroup.com. An unaudited financial information supplementrelating to the Company's 2002 and 2001 quarterly and year-to-dateresults is available on its website: www.xlgroup.com.
XL Capital Ltd, through its operating subsidiaries, is aleading provider of insurance and reinsurance coverages and financialproducts and services to industrial, commercial and professionalservice firms, insurance companies and other enterprises on aworldwide basis.
This press release contains forward-looking statementsthat involve inherent risks and uncertainties. Statements that are nothistorical facts, including statements about XL's beliefs, plans orexpectations, are forward-looking statements. These statements arebased on current plans, estimates, and expectations. Actual resultsmay differ materially from those projected in such forward-lookingstatements and therefore you should not place undue reliance on them.A non-exclusive list of the important factors that could cause actualresults to differ materially from those in such forward-lookingstatements includes the following: (a) rate increases and improvementsin terms and conditions may not be as large or sustainable as XL iscurrently projecting; (b) greater frequency or severity of claims andloss activity, including as a result of natural or man-madecatastrophic events, than XL's underwriting, reserving or investmentpractices anticipate based on historical experience or industry data;(c) developments in the world's financial and capital markets whichadversely affect the performance of XL's investments and XL's accessto such markets; (d) changes in general economic conditions, includingforeign currency exchange rates, inflation and other factors; and (e)the other factors set forth in XL's most recent report on Form 10-K,Form 10-Q and XL's other documents on file with the Securities andExchange Commission. XL undertakes no obligation to update publicly orrevise any forward-looking statement, whether as a result of newinformation, future developments or otherwise.
XL Capital Ltd SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30 September 30 (Unaudited) (Unaudited) 2002 2001 2002 2001 Income Statement Data: Revenues: Gross premiums written $ 2,655,474 $ 1,193,317 $ 7,052,621 $ 3,350,009 Net premiums written 2,123,875 536,972 5,475,602 2,098,378 Net premiums earned - general operations $ 1,375,935 $ 705,277 $ 3,477,048 $ 1,888,415 Net premiums earned - life operations 786,383 46,247 836,073 46,247 Net investment income - general operations 161,052 152,231 474,579 446,495 Net investment income - life operations 26,263 -- 58,606 -- Net realized (losses) gains on investments (23,086) (56,081) (239,108) (29,644) Net realized and unrealized losses on derivative instruments (8,898) (8,554) (28,811) (5,892) Equity in net (loss) income of investment affiliates (1,976) 20,776 38,140 64,346 Fee and other income 24,104 7,990 56,424 26,552 $ 2,339,777 $ 867,886 $ 4,672,951 $ 2,436,519 Expenses: Net losses and loss expenses incurred - general operations $ 844,182 $ 1,356,572 $ 2,335,733 $ 2,073,727 Claims and policy benefit reserves - life operations 803,741 46,473 870,320 46,473 Acquisition costs, operating expenses, and exchange gains and losses 425,547 316,268 1,080,020 746,736 Interest expense 51,815 28,339 133,576 75,764 Amortization of intangible assets 875 15,045 1,500 44,216 $ 2,126,160 $ 1,762,697 $ 4,421,149 $ 2,986,916 Income (loss) before minority interest, income tax expense and equity in net income of insurance and operating affiliates $ 213,617 $ (894,811) $ 251,802 $ (550,397) Net income $ 186,436 $ (840,032) $ 184,181 $ (492,497) Preference dividend 2,369 -- 2,369 -- Net income (loss) available to ordinary shareholders $ 184,067 $ (840,032) $ 181,812 $ (492,497) Weighted average number of ordinary shares and ordinary share equivalents: : Basic 135,790 125,431 135,551 125,358 : Diluted 137,349 127,845 137,291 127,418 Per Share Data: Net income (loss) available to ordinary shareholders $ 1.34 $ (6.70) $ 1.32 $ (3.93) Net losses on investments, derivative instruments and one time charges, after tax 0.27 0.63 2.00 0.38 Net operating income (loss) $ 1.61 $ (6.07) $ 3.32 $ (3.55)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 September 30, As at December 31, 2002 2001 Balance Sheet Data: Total investments available for sale $15,208,627 $12,429,845 Net payable for investments purchased 1,778,303 1,247,027 Cash and cash equivalents 2,737,445 1,863,861 Investments in insurance and operating affiliates 1,684,713 1,037,344 Intangible assets 1,646,333 1,616,943 Total assets 34,090,827 27,963,075 Unpaid losses and loss expenses 12,690,974 11,825,680 Deposit liabilities and policy benefit reserves 3,946,471 2,374,164 Notes payable and debt 1,870,210 1,604,877 Shareholders' equity 5,948,676 5,437,184 Fully diluted book value per ordinary share $42.10 $40.35
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