NU Online News Service, July 31, 2:20 p.m. EDT
Hamilton, Bermuda-based XL Capital Ltd. has reported 2009 second-quarter net income of $79.9 million, a 66 percent decline from the $237.9 million reported in the 2008 second quarter.
The decrease reflects a foreign exchange loss of $145.2 million as well as a decline in net investment income, the company said.
The company, however, hailed the results as a return to positive growth in shareholder value. "XL is back to competing from the front foot," said chief executive officer Michael S. McGavick.
He noted, "Finally, we are pleased to report a quarter in which the strength of the XL franchise shines through clearly, despite challenging market conditions in the sector."
For the first half of 2009, XL reported net income of $258.3 million compared to $449.7 million in 2008.
In the second quarter, gross premiums written fell to $1.5 billion from $1.8 billion in 2008, and net premiums written fell to $1.1 billion from $1.4 billion.
"P&C gross and net premiums written declined from the prior year quarter primarily due to planned reductions in long-term agreements, strengthening of the U.S. dollar compared to the second quarter of 2008 and planned reductions in our financial lines business units," the company said. "Also impacting the decline is continued competitive pricing in certain lines."
The combined ratio climbed to 93 in the quarter compared to 91.6 in the 2008 second quarter.
Net unrealized losses on investments were $3.2 billion for the quarter, compared to first-quarter 2009 losses of $4 billion. "The decrease in net unrealized losses for the quarter in the company's p&c operations was substantially due to the tightening of credit spreads on both corporate and structured credit assets, offset by the impact of increases in U.S. government interest rates," the company said.
Net investment income for the quarter was $328.3 million, compared to $440.4 million in the second quarter of 2008.
In a conference call, Mr. McGavick praised XL's solid operating performance and return to growth in shareholder value. "We at XL feel that the strength of our franchise is finally shining through the clouds of the market conditions that have challenged both us and the entire sector," he said.
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