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

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

"The natural catastrophes that mark the third quarter bring a unique devastation to those impacted and we continue the important work of helping our clients rebuild in these times of need.

The financial impact of these events was, of course, significant to our financial results in the quarter. At the same time, excluding these events, our underlying results show continued progress as demonstrated by improvement in the ex-cat P&C combined ratio, insurance combined ratio and insurance loss ratio versus the prior year quarter.

As we look at the global re/insurance markets today, with a view that we will see new levels of appropriate sustainable pricing, we believe we are well positioned by  virtue of our diverse portfolio, global relevance and disciplined underwriting.“

Third Quarter Summary                              
(U.S. dollars in thousands, except per share amounts)                              
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  (Unaudited)   (Unaudited)
  2017   2016   $ Change   % Change   2017   2016   $ Change   % Change
Net income (loss) attributable to common shareholders $(1,043,689)   $70,601     $(1,114,290)   N/M   $(589,226)   $136,268     $(725,494)   N/M
Per average common share outstanding-basic $(4.06)   $0.26     $(4.32)   N/M   $(2.26)   $0.48     $(2.74)   N/M
Per average common share outstanding-fully diluted $(4.06)   $0.25     $(4.31)   N/M   $(2.26)   $0.48     $(2.74)   N/M
Operating net income (loss)   $(1,028,862)   $122,454     $(1,151,316)   N/M   $(637,639)   $332,289     $(969,928)   N/M
Per average common share outstanding-fully diluted $(4.00)   $0.44     $(4.44)   N/M   $(2.44)   $1.16     $(3.60)   N/M
  • Net loss attributable to common shareholders of $1,043.7 million, or $4.06 per fully diluted share, and operating net loss of $1,028.9 million, or $4.00 per fully diluted share, for the quarter, compared to net income attributable to common shareholders of $70.6 million, or $0.25 per fully diluted share, and net operating income of $122.5 million, or $0.44 per fully diluted share in the prior year quarter, respectively, both primarily driven by significant catastrophe losses during the quarter.
  • Net investment income for the quarter was $202.8 million, compared to $209.8 million in the prior year quarter. Net investment income for the quarter, excluding the Life Funds Withheld Assets was $172.0 million, compared to $170.8 million in the prior year quarter. This increase was primarily due to higher reinvestment rates in the quarter from active sector rotation and portfolio management activities, slightly offset by negative foreign exchange movements.
  • Net income from affiliates was $62.5 million for the quarter, compared to $24.6 million in the prior year quarter, primarily due to the rebalancing of the investment portfolio, better individual fund results and more benign markets for hedge fund strategies in the current quarter.
  • Operating expenses were 19.5% or $99.1 million favorable compared to the prior year quarter primarily driven by the absence of integration costs during the current quarter compared to $54.5 million in the prior year quarter, a reduction to variable compensation costs resulting from the catastrophe loss impact on Group results and a $7.9 million favorable impact resulting from foreign exchange movement.
  • Income tax benefit of $60.1 million was recognized during the quarter.Effective tax rate on net income of 5.4% for the quarter, compared to 20.1% the prior year quarter. The decrease from the prior year quarter is primarily driven by the impact of the current quarter’s catastrophe losses.
  • Fully diluted book value per common share decreased by $3.88 from the end of the prior quarter to $38.27, driven by significant catastrophe losses. Fully diluted tangible book value per common share also decreased by $4.01 from the end of the prior quarter to $29.70.
  • Share buybacks4 totaled approximately 2.7 million shares at an average price of $44.00 per share or $120.9 million during the quarter, compared to 6.6 million shares or $221.8 million in the prior year quarter.During the nine months ended September 30th, 2017, share buybacks totaled approximately 13.8 million shares at an average price of $41.36 per share or $571.5 million. At September 30, 2017, $529.1 million of common shares remained available for purchase under our share buyback program.
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P&C Operations                      
(U.S. dollars in thousands)                
  Three Months Ended
  September 30, 2017   September 30, 2016
  (Unaudited)   (Unaudited)
  Insurance   Reinsurance   Total P&C   Insurance   Reinsurance   Total P&C
Gross premiums written $2,311,090     $704,641     $3,015,731     $2,153,379     $565,541     $2,718,920  
Net premiums written $1,660,304     $665,917     $2,326,221     $1,615,132     $518,166     $2,133,298  
Net premiums earned $1,677,189     $940,567     $2,617,756     $1,653,461     $778,216     $2,431,677  
                       
Underwriting profit (loss) $(545,481)   $(681,495)   $(1,226,976)   $61,683     $105,168     $166,851  
                       
Loss ratio 102.8%   142.7%   117.2%   64.6%   54.4%   61.3%
Underwriting expense ratio 29.7%   29.8%   29.7%   31.7%   32.1%   31.8%
Combined ratio 132.5%   172.5%   146.9%   96.3%   86.5%   93.1%
                       
  Nine Months Ended
  September 30, 2017   September 30, 2016
  (Unaudited)   (Unaudited)
  Insurance   Reinsurance   Total P&C   Insurance   Reinsurance   Total P&C
Gross premiums written $7,582,060     $3,609,707