• Operating net income1 of $165.2 million, or $0.52 per share, for the quarter.• Net income of $176.6 million, or $0.56 per share, for the quarter.• Annualized operating return on ordinary shareholders' equity2 of 6.9%.• Natural catastrophe losses net of reinsurance and reinstatement premiums of $20.0 million recorded for the quarter. • Gross P&C premiums written for the year increased by 10.4% compared to the prior year quarter, primarily driven by new business lines, higher retention levels and certain pricing increases.• Fully diluted tangible book value per ordinary share3 of $29.58 at March 31, 2012, an increase of $1.27 from December 31, 2011 and an increase of $3.23 from March 31, 2011.• Share buybacks during the quarter totaled 4.7 million shares for $100.0 million.
DUBLIN, Ireland, May 8, 2012- XL Group plc (“XL” or the “Company”) (NYSE: XL) today reported its first quarter 2012 results.
Commenting on the Company’s performance, Chief Executive Officer Mike McGavick said: “We believe XL’s first quarter 2012 financial results are a solid step forward. In the quarter, we showed improvement in many of our most important metrics. We delivered both lower loss ratios and combined ratios in insurance and reinsurance. Our investment portfolio performed well, and we grew book value as we continued to buy back shares. We are pleased with our progress and we are resolved to continue this trend as demand for solutions to complex risks grows and pricing improves. The world-class talent we have assembled at XL is fully energized and focused.”
Highlights - Three months ended March 31
(U.S. Dollars in thousands except per share amounts)
Three months ended
Net income (loss) attributable to ordinary shareholders
Per ordinary share-fully diluted
Operating net income (loss) (1)
Per ordinary share-fully diluted
• Operating net income of $165.2 million compared to operating net loss of $163.0 million in the prior year quarter due primarily to significantly lower natural catastrophe losses.• Net income in the quarter of $176.6 million compared to net loss of $227.3 million in the prior year quarter due primarily to operating losses and realized investment losses in the prior year quarter.• Net investment income for the quarter was $265.2 million compared to $280.3 million in the prior year quarter and $270.9 million for the fourth quarter of 2011. The decline against the prior year quarter was primarily due to lower yields as a result of lower reinvestment rates and cash flows from the investment portfolio.• Net income from investment fund and investment manager operating affiliates of $30.0 million in the quarter compared to income of $32.3 million in the prior year quarter.• Net realized investment gains for the quarter of $20.8 million compared to losses of $66.4 million in the prior year quarter. • Fully diluted book value per ordinary share increased by $1.29 from the prior quarter driven primarily by net income, unrealized gains on investments and the benefit of share buybacks. • During the quarter, the Company purchased 4.7 million shares for $100.0 million at an average price of $21.14 per share, which was accretive to fully diluted book value per ordinary share by $0.14. $650.0 million of shares remains available for purchase under the Company’s previously announced $750 million share buyback program.
P&C operations - Three months ended March 31
(U.S. Dollars in thousands)
Three months ended
Gross premiums written
Net premiums written
Net premiums earned
Underwriting profit (loss)
Underwriting expense ratio
• P&C gross premiums written (“GPW”) increased 10.4% from the prior year quarter. The Insurance segment saw an increase of 9.3% from the prior year quarter, as a result of new business initiatives in North America Property and Casualty lines, higher retention levels in Professional lines and improved pricing. The increase in GPW for the Reinsurance segment of 11.8% was primarily from the International Casualty line. • P&C net premiums earned (“NPE”) of $1.4 billion was comprised of $934.1 million from the Insurance segment and $423.8 million from the Reinsurance segment. Compared to the prior year quarter, Insurance NPE increased by 6.6% and Reinsurance NPE increased by 7.1%.• The P&C loss ratio was 32.2 percentage points lower than the prior year quarter. Included in the loss ratio was favorable prior year development of $80.3 million compared to $71.0 million in the prior year quarter. The loss ratio was also impacted by natural catastrophe lossesof $20.0 million, net of reinsurance and reinstatement premiums. In the prior year quarter, natural catastrophe lossestotaled $387.4 million, including reinstatement premiums. Excluding prior year development and natural catastrophe losses, the first quarter loss ratio was 2.5 percentage points lower than the prior year quarter largely due to large marine and energy losses in the prior year quarter partially offset by a large marine loss in 2012.• Operating expenses were higher than in the first three quarters of 2011 but lower than the fourth quarter of 2011. Increased expenses versus the prior year quarter related largely to the build-out of the Company’s previously announced initiatives.• The P&C combined ratio excluding prior year development and the impact of natural catastrophe lossesfor the quarter was 99.8%, compared to 100.9% for the prior year quarter. The Insurance segment combined ratio on this basis was 104.8% for the quarter compared to 106.6% for the prior year quarter, while the Reinsurance segment combined ratio on this basis was 88.7% compared to 87.7% for the prior year quarter.
(1) Defined as net income (loss) attributable to ordinary shareholders excluding (1) net realized gains and losses on investments, net of tax for XL, (2) net realized and unrealized gains and losses on derivatives, net of tax, for XL, (3) its share of items (1) and (2) for the Company’s insurance company affiliates for the periods presented, (4) goodwill impairment charges, net of tax, (5) the gains recognized on the repurchase of XLIT Ltd.’s preference ordinary shares and (6) foreign exchange gains or losses, net of tax. “Operating net income” and “return on ordinary shareholders’ equity” based on operating net income are “non-GAAP financial measures.” See the schedule entitled “Reconciliation” at the end of this release for a reconciliation of “operating net income” to net income (loss) attributable to ordinary shareholders and the calculation of “return on ordinary shareholders’ equity” based on operating net income to average ordinary shareholders’ equity.
(2) Ordinary shareholders’ equity is defined as total shareholders’ equity less non-controlling interest in equity of consolidated subsidiaries.
(3) Book value per share, fully diluted book value per ordinary share and fully diluted tangible book value per ordinary share are non-GAAP financial measures. Fully diluted book value per share represents book value per ordinary share (total shareholders’ equity less non-controlling interest in equity of consolidated subsidiaries, divided by the number of outstanding ordinary shares at any period end) combined with the dilutive impact of potential future share issues at any period end. Fully diluted tangible book value per ordinary share is calculated in the same manner as fully diluted book value per ordinary share except that goodwill and intangible assets are removed from ordinary shareholders’ equity. The Company believes that fully diluted tangible book value per ordinary share is a financial measure important to investors and other interested parties who benefit from having a consistent basis for comparison with other companies within the industry. However, this measure may not be comparable to similarly titled measures used by companies either outside or inside of the insurance industry.
Further details of the results for the quarter may be found in the Company’s Financial Supplement, which is dated May 8, 2012 and is available from the Investor Relations section of the XL Group website.
A conference call to discuss the Company’s results will be held at 5 p.m. Eastern Time on Tuesday, May 8, 2012. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen to the conference call, please dial (210) 795-0624 or (866) 617-1526: Passcode: “XL GLOBAL”. The webcast will be available at
Share This Article: