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XL profit surges in 2016 third quarter

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Hamilton, Bermuda-based XL Group Ltd. on Thursday reported third-quarter profit more than doubled from the same period last year to $70.6 million, as it reported expense savings following its merger with Catlin Group Ltd. last year.

Operating expenses were 10.8% favorable versus the prior-year quarter, reflecting the emergence of operational efficiencies and realization of synergy savings resulting from the Catlin transaction as well as benefits from foreign exchange particularly from the weakening of the British pound compared to the U.S. dollar, XL said in its earnings report.

Net written premiums totaled $2.13 billion, up 2.9% from a year ago. The combined ratio totaled 93.1%, an improvement over the year ago figure of 95.3%.

The global insurer and reinsurer said the current quarter includes about $54.5 million in integration costs and $97.4 million in natural catastrophe losses compared with $55.2 million in integration costs and $30.8 million in natural catastrophe losses in the prior-year quarter.

Net investment income for the quarter was $209.8 million, down 6.8% compared with the prior-year quarter.

“XL’s third quarter 2016 financial results demonstrated steady progress in our underlying performance,” CEO Mike McGavick said in a statement. “We generated P&C underwriting profit of $167 million and our P&C accident-year, ex-catastrophe combined ratio of 91.3% was a full 3.8 points better than the same quarter a year ago.”

During a conference call with analysts, Mr. McGavick noted that XL Group's loss ratio has continued to improve and that expenses have continued to decline.