XL Group Q3 Profit Beats View

(RTTNews) - Reinsurer XL Group plc (XL) on Monday reported a 47 percent decline in profit for the third quarter from last year, reflecting lower revenues and the impact of a life retrocession derivative.

However, operating earnings per share for the quarter beat analysts' estimates, reflecting higher underwriting profit and narrower catastrophe losses compared to last year. Combined ratio improved from last year.

Mike McGavick, Chief Executive Officer of XL Group, said, "While we note the relatively benign catastrophe activity so far this year, XL has produced solid across the board results with P&C underwriting profit and combined ratio well ahead of the prior year quarter. On a year to date basis as well, the third quarter continued a solid 2014, with both Insurance and Reinsurance underwriting profit exceeding last year's results."

The Dublin, Ireland-based company's net income for the third quarter was $72.38 million or $0.27 per share, down from $135.65 million or $0.47 per share in the year-ago quarter.

The latest quarter's results were negatively impacted by the life retrocession derivative, which was offset by a movement in accumulated comprehensive income and therefore does not impact overall book value.

Natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums in the quarter was $29.8 million, down from $85.0 million in the prior-year quarter.

Operating net income for the quarter was $187.09 million or $0.70 per share, compare d to $154.63 million or $0.53 per share in the prior year quarter. On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

The increase in operating income was mainly due to higher underwriting profit in the latest quarter.

Total revenue for the quarter declined 10 percent to $1.69 billion from $1.88 billion in the same period last year. Analysts had a consensus revenue estimate of $1.43 billion for quarter.

However, total expenses for the quarter declined 17 percent to $1.43 billion from $1.73 billion in the year-ago period.

P&C net premiums written in the quarter decreased 9 percent from last year to $1.21 billion, primarily as a result of increased ceded written premiums. This mainly due to the increase of proportional reinsurance in the company's Insurance Professional, Excess Casualty and International Casualty businesses.

The P&C combined ratio for the quarter was 90.1 percent, down 4.9 percentage points from 95.0 percent in the same period last year.

XL closed Monday's trading at $33.12, up $0.37 or 1.13 percent on a volume of 4.25 million shares.