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XL Group Ltd (“XL” or the “Company”) (NYSE: XL) today reported its second quarter 2017 results.

Commenting on the Company’s performance, Chief Executive Officer Mike McGavick said:

"In the second quarter we remained focused on disciplined underwriting and are pleased with our overall results. Also in the quarter we generated positive investment returns, continued to capture efficiencies as an organization and actively managed our capital. We remain committed to fully delivering the value of the franchise we have built.”

Second Quarter Summary                              
(U.S. dollars in thousands, except per share amounts)                              
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  (Unaudited)   (Unaudited)
  2017   2016   $ Change   % Change   2017   2016   $ Change   % Change
Net income (loss) attributableto common shareholders $ 301,620     $ 43,782     $ 257,838       588.9%   $ 454,463     $ 65,667     $ 388,796       592.1%
Per average common share outstanding-basic $ 1.16     $ 0.16     $ 1.00       625.0%   $ 1.73     $ 0.23     $ 1.50       652.2%
Per average common share outstanding-fully diluted $ 1.14     $ 0.15     $ 0.99       660.0%   $ 1.70     $ 0.23     $ 1.47       639.1%
Operating net income (loss) $ 255,080     $ 106,447     $ 148,633       139.6%   $ 391,223     $ 209,835     $ 181,388       86.4%
Per average common share outstanding-fully diluted $ 0.96     $ 0.37     $ 0.59       159.5%   $ 1.46     $ 0.72     $ 0.74       102.8%
  • Net income attributable to common shareholders of $301.6 million, or $1.14 per fully diluted share, and Operating net income of $255.1 million, or $0.96 per fully diluted share, for the quarter, compared to $43.8 million, or $0.15 per fully diluted share, and $106.4 million, or $0.37 per fully diluted share in the prior year quarter, respectively, both primarily driven by lower catastrophe losses and by favorable net income from affiliates discussed below. The increase in net income is further driven by lower realized losses related to the Life Funds Withheld Assets4.
  • Net income from affiliates was $73.5 million for the quarter, compared to $34.6 million in the prior year quarter.This increase was driven mainly by the sale of one of our investment manager affiliates as well as strong performance in all categories of our affiliate holdings.
  • Net investment income for the quarter was $208.7 million, compared to $215.4 million in the prior year quarter. Net investment income for the quarter, excluding the Life Funds Withheld Assets was $177.2 million, compared to $176.2 million in the prior year quarter.
  • Operating expenses were 9.5% or $49.7 million favorable compared to the prior year quarter, reflecting our continuing focus on operating efficiency and leveraging our underwriting platform. Included in this decrease was a $17.5 million favorable impact resulting from foreign exchange movement.
  • Income tax expense of $29.0 million was recognized during the quarter.Effective tax rate on net income of 8.8% for the quarter, compared to 5.3% in the prior year quarter.The increase over the prior year quarter is primarily driven by a greater relative proportion of earnings generated in taxable jurisdictions, partially offset by a decrease in the life retrocession embedded derivative loss, for which no tax benefit is provided.
  • Fully diluted book value per common share increased by $1.05 from the end of the prior quarter to $42.15, driven by our net income, the increase in our unrealized gains on investments and share buybacks, partially offset by the payment of dividends. Fully diluted tangible book value per common share also increased by $0.88 from the end of the prior quarter to $33.71.
  • Share buybacks totaled approximately 6.0 million shares at an average price of $41.87 per share or $250.1 million during the quarter, compared to 9.7 million shares or $328.3 million in the prior year quarter.During the first six months of 2017, share buybacks totaled approximately 11.1 million shares at an average price of $40.70 per share or $450.6 million.At June 30, 2017, $650.0 million of common shares remained available for purchase under our share buyback program.
P&C Operations                      
(U.S. dollars in thousands)                
  Three Months Ended
  June 30, 2017   June 30, 2016
  (Unaudited)   (Unaudited)
  Insurance   Reinsurance   Total P&C   Insurance   Reinsurance   Total P&C
Gross premiums written $ 2,576,754     $ 977,676     $ 3,554,430     $ 2,512,012     $ 1,018,766     $ 3,530,778  
Net premiums written $ 1,741,201     $ 905,240     $ 2,646,441     $ 1,780,192     $ 942,419     $ 2,722,611  
Net premiums earned $ 1,652,304     $ 861,789     $ 2,514,093     $ 1,696,720     $ 831,984     $ 2,528,704  
                       
Underwriting profit (loss) $ 54,628     $ 139,964     $ 194,592     $ 61,099     $ 40,794     $ 101,893  
                       
Loss ratio 65.2%   52.4%   60.8%   64.6%   64.5%   64.6%
Underwriting expense ratio 31.5%   31.4%   31.5%   31.8%  
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