XL Capital Reports $288M Quarterly Profit
NU Online News Service, Feb. 10, 1:30 p.m. EST?Bermuda-based XL Capital Ltd. reported fourth-quarter net income hit $288 million, a turnaround from a loss of $318.4 million one year ago.[@@]
The full-year net income also rose for XL. The company reported a record $1.13 billion in profit for 2004, significantly higher than $371.7 million reported for 2003.
XL mentioned as one financial uncertainty an independent valuation process it has entered into with Winterthur Swiss Insurance over settlement of a reserve seasoning agreement for XL's 2001 purchase of Winterthur International.
According to Fitch Ratings in New York, if XL is unsuccessful in this valuation process, the company could eventually face a $900 million net pre-tax charge from a reduced recoverable from Winterthur.
Fitch said it has placed several XL ratings on "Rating Watch Negative" pending the resolution of this issue. The XL ratings affected by Fitch's ratings action include the "A" long-term issuer rating and the "double-A" insurer financial strength rating of XL Insurance and XL Re.
The company said its bottom line benefited from reinsurance business, which avoided the huge losses seen one year ago.
XL said its reinsurance units posted fourth-quarter underwriting profit of $48.7 million, in contrast to the comparable quarter one year ago when they had an underwriting loss of $483.6 million after posting a $694.1 million pre-tax charge to cover North America reinsurance losses.
The reinsurance fourth-quarter results included a $39.5 million pre-tax charge related to the impact of the Indian Ocean tsunami and an increase in expected losses from the third-quarter 2004 hurricanes.
XL's fourth-quarter underwriting profit from insurance operations was $51.4 million, compared with an underwriting loss of $1.9 million for the prior-year quarter.
Overall for the 2004 fourth quarter, net premiums written from general operations rose 6 percent to $1.3 billion, while the combined ratio came in at 95.8. Net investment income rose 35 percent to $278.4 million.
For the full-year 2004, net premiums written from general operations rose 11 percent to $7.3 billion, with combined ratio coming in at 96. Net investment income rose 28 percent to $995 million.
XL Capital offers liability insurance and reinsurance worldwide, specializing in low-frequency, high-severity risks from riots to natural disasters. The company also manages five Lloyd's of London syndicates. XL coverage includes general/executive liability, property and political risk insurance, while its reinsurance covers property, aviation, energy, nuclear accident and professional indemnity.
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