XL Group Back in the Black With Drop in Catastrophes

NU Online News Service, May 9, 12:27 p.m. EDT

A reduction in catastrophe losses allowed XL Group to swing to a first-quarter profit after suffering a loss in 2011's first quarter.

The Dublin-based global insurer and reinsurer says first-quarter natural-catastrophe losses were $20 million, net of reinsurance and reinstatement premiums, compared to natural-catastrophe losses of $387.4 million during last year's first quarter.

Net income after the first three months of 2012 was $176.6 million, compared to a net loss of $227.3 million a year ago, says XL.

First-quarter operating income improved to a net gain of $165.2 million, compared to an operating loss of $163 million during 2011's first quarter.

The property and casualty loss ratio was 32.2 percentage points lower than the prior year quarter. The ratio includes favorable prior-year development of $80.3 million, compared to $71.0 million last year.

XL reports a first-quarter combined ratio of 95.3, down from 125.8 a year ago. The insurance segment combined ratio improved to 101.2 from 121 last year and the reinsurance segment's combined ratio for the quarter was 82.4.

Underwriting income was $63.2 million during the first quarter compared to a loss of $328.1 million.

During a conference call, Chief Executive Officer Michael S. McGavick says P&C gross premiums written increased more than 10 percent from 2011's first quarter—with gross premiums written in the insurance segment up 9.3 percent “as a result of new-business initiatives in North American property and casualty lines, higher retention levels in our profitable professional lines, and improved pricing.”

He adds, “Pricing improved in each month of the first quarter. North American property and casualty rate growth was 5 percent in the first quarter and rate achievement was accelerating throughout the quarter.”