DUBLIN, Ireland, Feb. 3,
2016 /PRNewswire/ --
- Operating net income1 of $195.0 million, or $0.65 per share, for the quarter and $706.0 million, or $2.43 per share, for the full year on a fully
diluted basis
- Net income attributable to ordinary shareholders, and net
income attributable to ordinary shareholders excluding the impact
of the GreyCastle Life Retro Arrangements,2 of
$228.6 million and $173.0 million, respectively, for the quarter and
$1.2 billion and $982.1 million, respectively, for the full
year
- P&C combined ratio of 92.3% for the quarter compared to
84.5% in the prior year quarter, and a full year P&C combined
ratio of 92.0% compared to 88.2% in the prior year
- Operating return on average ordinary shareholders'
equity3 excluding and including average unrealized gains
and losses on investments for the full year was 7.3% and 6.5%
respectively. Excluding integration costs these return rates would
be 8.9% and 7.9%, respectively.
- Natural catastrophe pre-tax losses net of reinsurance and
reinstatement premiums in the quarter of $107.8 million, compared to $31.7 million in the prior year quarter, and
$213.2 million for the full
year compared to $113.3 million
in the prior year
- Integration costs related to the combination with Catlin
Group Limited ("Catlin") totaled $73.3 million in the quarter and
$156.4 million in the full
year
- Earnings in the quarter from affiliates were $14.7 million, compared to $33.5 million in the prior year quarter, due
primarily to the impact of continuing market volatility on the
portfolio
- Fully diluted tangible book value per ordinary
share4 of $31.52 at
December 31, 2015, a decrease of $0.43, or 1.3%, from September 30, 2015
- Share buybacks totaled 4.7 million shares and
$176.7 million during the quarter and
12.4 million shares and $466.7
million for the full year
XL Group plc ("XL" or the "Company") (NYSE: XL) today
reported its fourth quarter and full year 2015 results.
Commenting on the Company's performance, Chief Executive Officer
Mike McGavick said:
"Through 2015 XL produced solid results in a tough (re)insurance
market while closing a transformative acquisition and successfully
launching XL Catlin. Our colleagues focused on executing a superior
integration process that has thus far exceeded our expectations for
both business and talent retention as well as synergy savings.
Looking to 2016, taking into account the continued pressure from
both the (re)insurance and investment markets, we feel we are well
positioned to capitalize on our increased market relevance and to
find new areas of innovation and opportunity."
Highlights
|
|
|
|
|
|
|
|
Year Ended
December 31
|
|
|
|
|
|
|
|
(U.S. dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
(Unaudited)
|
|
(Unaudited)
(Note
1)
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating net income
(loss)
|
$
|
195,029
|
|
|
$
|
293,927
|
|
|
$
|
705,994
|
|
|
$
|
999,241
|
|
Per ordinary
share-fully diluted
|
$
|
0.65
|
|
|
$
|
1.12
|
|
|
$
|
2.43
|
|
|
$
|
3.68
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ordinary shareholders
|
$
|
228,550
|
|
|
$
|
139,499
|
|
|
$
|
1,207,152
|
|
|
$
|
188,340
|
|
Per ordinary
share-fully diluted
|
$
|
0.76
|
|
|
$
|
0.53
|
|
|
$
|
4.15
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
Note 1: The
Company's results for the twelve months ended December 31, 2015
include those of Catlin from May 1, 2015
|
- Operating net income of $195.0
million for the quarter decreased compared to operating net
income of $293.9 million in the prior
year quarter. The current quarter includes approximately
$73.3 million in integration costs as
well as $107.8 million in natural
catastrophe losses compared to $31.7
million in natural catastrophe losses in the prior year
quarter.
- Operating income excludes the $35.0
million loss associated with the retrocession of the
Company's US term life reinsurance business in the fourth
quarter.
- Net income (loss) attributable to ordinary shareholders of
$228.6 million for the quarter
increased compared to $139.5 million
in the prior year quarter.
- Net investment income for the quarter was $215.5 million, compared to $226.2 million in the prior year quarter and
$225.1 million in the third quarter
of 2015. Net investment income excluding the Life Funds
Withheld Assets for the quarter was $171.9
million, compared to $172.3
million in the prior year quarter and $178.6 million in the third quarter of 2015.
- Net income from affiliates was $14.7
million for the quarter, compared to net income of
$33.5 million in the prior year
quarter. This decrease was driven primarily by our hedge fund and
investment manager affiliates resulting from the impact of market
volatility.
- An income tax benefit of $39.3
million in the quarter and $19.2
million for the full year was driven by the combination of
the jurisdictions in which the profits and losses have occurred
across the Company's global operations, and the tax benefit
recognized as a result of the restructuring of legacy Catlin's U.S.
operations.
- Fully diluted tangible book value per ordinary share decreased
by $0.43 from the prior quarter to
$31.52, driven by the decrease in our
unrealized gains on investments and our payment of dividends,
partially offset by net income.
- Share buybacks totaled 4.7 million shares and $176.7 million during the quarter. At
December 31, 2015, $703.3
million of ordinary shares remained available for purchase
under our share buyback program.
1Defined as net income (loss) attributable to
ordinary shareholders excluding: (1) our net investment income -
Life Funds Withheld Assets (defined below), net of tax, (2) our net
realized (gains) losses on investments sold - excluding Life Funds
Withheld Assets, net of tax, (3) our net realized (gains) losses on
investments sold (including OTTI) and net unrealized (gains) losses
on investments, Trading - Life Funds Withheld Assets, (4) our net
realized and unrealized (gains) losses on derivatives, net of tax,
(5) our net realized and unrealized (gains) losses on life
retrocession embedded derivative and derivative instruments - Life
Funds Withheld Assets, (6) our share of items (2) and (4) for XL
Group plc ("XL")'s insurance company affiliates for the periods
presented, (7) our foreign exchange (gains) losses, net of
tax, (8) our expenses related to the Catlin acquisition, net
of tax, (9) our gain on the sale of our interest in our
former operating affiliate, ARX Holding Corp. ("ARX"), (10) our
loss on the GreyCastle Life Retro Arrangement, net of tax,
(11) our loss on the Other Life Retro Arrangements5 and
(12) our loss on the early extinguishment of the notes assumed in
conjunction with the Catlin acquisition. "Operating net income",
"operating return on average ordinary shareholders' equity" and
"operating return on average ordinary shareholders' equity
excluding average unrealized gains and losses on investments" are
non-GAAP financial measures. See the schedule entitled
"Reconciliation" on page 8 of this press release for a
reconciliation of "operating net income" to net income (loss)
attributable to ordinary shareholders and the calculation of
"operating return on average ordinary shareholders' equity" and
"operating return on average ordinary shareholders' equity
excluding average unrealized gains and losses on investments", both
of which are based on operating net income.
2On May 1, 2014, our
wholly-owned subsidiary, XL Insurance (Bermuda) Ltd ("XLIB"), entered into a sale and
purchase agreement with GreyCastle Holdings Ltd. ("GreyCastle")
providing for the sale of 100% of the common shares of XLIB's
wholly-owned subsidiary, XLLR, for $570
million in cash. This transaction was completed on
May 30, 2014. As a result of the
transaction, we have ceded the majority of our life reinsurance
business to XLLR via 100% quota share reinsurance (the "GreyCastle
Life Retro Arrangements"). The designated investments that support
the GreyCastle Life Retro Arrangements, which are written on
a funds withheld basis ("Life Funds Withheld Assets"), are included
within "Total investments available for sale" and "Fixed
maturities, trading at fair value" on our balance sheet.
Investment results for these assets - including interest income,
unrealized gains and losses, and gains and losses from sales - are
passed directly to the reinsurer pursuant to a contractual
arrangement that is accounted for as a derivative. Changes in the
fair value of the embedded derivative associated with these
GreyCastle Life Retro Arrangements are grouped within "Contribution
from GreyCastle Life RetroArrangements" in the schedule entitled
"Reconciliation" on page 8 of this press release. Net income
attributable to ordinary shareholders excluding the impact of the
GreyCastle Life Retro Arrangements is a non-GAAP financial
measure.
3Ordinary shareholders' equity is defined as total
shareholders' equity less non-controlling interest in equity of
consolidated subsidiaries.
4 Book value per ordinary share, fully diluted book
value per ordinary share and fully diluted tangible book value per
ordinary share are non-GAAP financial measures. Fully diluted book
value per ordinary share represents book value per ordinary share
(total shareholders' equity less non-controlling interest in equity
of consolidated subsidiaries, divided by the number of outstanding
ordinary shares at any period end) combined with the dilutive
impact of potential future share issuances at any period end. Fully
diluted tangible book value per ordinary share is calculated in the
same manner as fully diluted book value per ordinary share except
that goodwill and intangible assets are excluded from ordinary
shareholders' equity. XL believes that fully diluted tangible book
value per ordinary share is a financial measure important to
investors and other interested parties who benefit from having a
consistent basis for comparison with other companies within the
industry. However, this measure may not be comparable to similarly
titled measures used by companies either outside or inside of the
insurance industry.
5During 2015, we entered into a large reinsurance
agreement ceding approximately 80% of the remaining life
reinsurance premiums that were not included in the GreyCastle Retro
Arrangements ("Other Life Retro Arrangements").
P&C
Operations
|
|
|
|
|
|
|
|
Year Ended
December 31
|
|
|
|
|
|
|
|
(U.S. dollars in
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
(Unaudited)
|
|
(Unaudited)
(Note
1)
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Gross premiums
written
|
$
|
2,527,766
|
|
|
$
|
1,620,620
|
|
|
$
|
10,669,009
|
|
|
$
|
7,761,490
|
|
Net premiums
written
|
$
|
1,878,792
|
|
|
$
|
1,200,097
|
|
|
$
|
7,888,824
|
|
|
$
|
5,767,209
|
|
Net premiums
earned
|
$
|
2,375,155
|
|
|
$
|
1,413,161
|
|
|
$
|
8,164,184
|
|
|
$
|
5,717,438
|
|
|
|
|
|
|
|
|
|
Underwriting profit
(loss)
|
$
|
183,458
|
|
|
$
|
218,850
|
|
|
$
|
653,191
|
|
|
$
|
676,046
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
58.1%
|
|
|
52.3%
|
|
|
58.4%
|
|
|
57.0%
|
|
Underwriting expense
ratio
|
34.2%
|
|
|
32.2%
|
|
|
33.6%
|
|
|
31.2%
|
|
Combined
ratio
|
92.3%
|
|
|
84.5%
|
|
|
92.0%
|
|
|
88.2%
|
|
|
|
|
|
|
|
|
|
Note 1: The
Company's results for the twelve months ended December 31, 2015
include those of Catlin from May 1, 2015
|
- P&C gross premiums written ("GPW") in the fourth quarter
increased 56.0% compared to the prior year quarter following the
combination with Catlin.
- The Insurance segment GPW increased 58.8% from the prior year
quarter primarily due to the combination with Catlin.
Excluding the impacts of the additional Catlin business and foreign
exchange, the segment experienced an increase of 3.2%. Renewed
premium was higher than in prior year quarter driven by our Global
Risk Management, Cyber and Marine lines. In those lines where
premium rates did not support our target returns, new and renewal
premiums were reduced.
- The Reinsurance segment GPW also increased 30.3% from the prior
year quarter, albeit on a light renewal quarter, primarily due to
the combination with Catlin. This was partially offset by the
timing of renewals, particularly a large quota share which was
extended and renewed at January 1,
2016.
- P&C net premiums earned ("NPE") in the fourth quarter of
$2.4 billion were comprised of
$1.64 billion from the Insurance
segment and $734.9 million from the
Reinsurance segment.
- The P&C loss ratio in the current quarter was 5.8
percentage points higher than in the prior year quarter. Included
in the P&C loss ratio was favorable development of $121.2 million compared to $96.7 million in the prior year quarter. The
P&C loss ratio variance was impacted by natural catastrophe
pre-tax losses net of reinsurance and reinstatement premiums
of $107.8 million, compared to $31.7
million in the prior year quarter. Excluding prior year
development and natural catastrophe losses the fourth quarter
P&C loss ratio was 1.7% higher than the prior year quarter
driven in part by several large losses.
- The P&C combined ratio excluding prior year development and
the impact of natural catastrophe losses for the quarter was 92.8%,
compared to 89.1% for the prior year quarter. The Insurance
segment combined ratio on this basis was 95.7% for the quarter
compared to 95.4% for the prior year quarter, while the Reinsurance
segment combined ratio on this basis was 86.3% for the quarter
compared to 73.0% for the prior year quarter, driven by the large
losses mentioned above and loss activity in our worldwide
agriculture line of business
- Excluding Catlin related transaction and integration costs,
ongoing operating expenses were 37.1% higher than the prior year
quarter primarily due to the impact of the combination with Catlin.
However, overall run rate expenses for the quarter continue
to indicate that synergy savings are being achieved in line
or ahead of expectations. The operating expense ratio decreased by
3.3% to 16.9% in the current quarter, compared to 20.2% in the
prior year quarter.
Further details of the results for the quarter may be found in
the Company's Financial Supplement, which is dated
February 3, 2016 and is available on the Investor Relations
section of XL's website.
A conference call to discuss the Company's results will be held
at 8:00 a.m. Eastern Time on
Thursday, February 4, 2016. The conference call can be
accessed through a listen-only dial-in number or through a live
webcast. To listen to the conference call, please dial (210)
795-0624 or (866) 617-1526: Passcode: "XL GLOBAL". The webcast will
be available at www.xlcatlin.com and will be archived on the
website from approximately 10:00 am Eastern
Time on February 4, 2016, until approximately
midnight Eastern Time on March 4, 2016. A telephone replay of the
conference call will also be available beginning at approximately
10:00 a.m. Eastern Time on
February 4, 2016, until approximately midnight Eastern Time on March 4, 2016, by dialing (402) 220-4745 or (800)
879-6405. The following password will be required: 6617.
About XL Group plc
XL Group plc (NYSE: XL), through its subsidiaries and under the
"XL Catlin" brand, is a global insurance and reinsurance company
providing property, casualty and specialty products to industrial,
commercial and professional firms, insurance companies and other
enterprises throughout the world. Clients look to XL Catlin
for answers to their most complex risks and to help move their
world forward. To learn more, visit www.xlcatlin.com.
This press release contains forward-looking statements.
Statements that are not historical facts, including statements
about XL's beliefs, plans or expectations, are forward-looking
statements. These statements are based on current plans, estimates
and expectations, all of which involve risk and uncertainty.
Statements that include the words "expect," "intend," "plan,"
"believe," "project," "anticipate," "may," "could," or "would" and
similar statements of a future or forward-looking nature identify
forward-looking statements. Actual results may differ materially
from those included in such forward-looking statements and
therefore you should not place undue reliance on them. A
non-exclusive list of the important factors that could cause actual
results to differ materially from those in such forward-looking
statements includes (a) changes in the size of XL's claims relating
to natural or man-made catastrophe losses due to the preliminary
nature of some reports and estimates of loss and damage to date;
(b) trends in rates for property and casualty insurance and
reinsurance; (c) the timely and full recoverability of
reinsurance placed by XL with third parties, or other amounts due
to XL; (d) changes in the projected amount of ceded reinsurance
recoverables and the credit ratings and credit worthiness of
reinsurers; (e) actual loss experience from insured or reinsured
events and the timing of claims payments being faster or the
receipt of reinsurance recoverables being slower than anticipated;
(f) increased competition on the basis of pricing, capacity,
coverage terms or other factors such as the increased inflow of
third party capital into reinsurance markets, which could harm XL's
ability to maintain or increase its business volumes or
profitability; (g) greater frequency or severity of claims and loss
activity than XL's underwriting, reserving or investment practices
anticipate based on historical experience or industry data; (h) the
impact of changes in the global financial markets, such as the
effects of inflation on XL's business, including on pricing and
reserving, increased government involvement or intervention in the
financial services industry and changes in interest rates, credit
spreads, foreign currency exchange rates and future volatility in
the world's credit, financial and capital markets that adversely
affect the performance and valuation of XL's investments, future
financing activities and access to such markets or general
financial condition; (i) XL's ability to successfully implement its
business strategy, including the integration of Catlin; (j) XL's
ability to successfully attract and raise additional third party
capital for existing or new investment vehicles; (k) the potential
impact on XL of government-mandated insurance coverage for acts of
terrorism; (l) changes in ratings and rating agency policies or
practices; (m) the potential for changes to methodologies,
estimations and assumptions that underlie the valuation of XL's
financial instruments that could result in changes to investment
valuations; (n) changes to XL's assessment as to whether it is more
likely than not that it will be required to sell, or has the intent
to sell, available-for-sale debt securities before their
anticipated recovery; (o) the availability of borrowings and
letters of credit under credit facilities; (p) the ability of XL's
subsidiaries to pay dividends to XL Group plc and XLIT Ltd.; (q)
the potential effect of legislative or regulatory developments in
the jurisdictions in which XL operates, such as those that could
impact the financial markets or increase XL's business costs and
required capital levels, including but not limited to changes in
regulatory capital balances that must be maintained by our
operating subsidiaries and governmental actions for the purpose of
stabilizing the financial markets; (r) the effects of
business disruption, economic contraction or economic sanctions due
to global political and social conditions such as war, terrorism or
other hostilities, or pandemics; (s) changes in regulators or laws
applicable to us or our subsidiaries, brokers or customers; (t) the
actual amount of new and renewal business and acceptance of XL's
products and services, including new products and services and the
materialization of risks related to such products and services; (u)
changes in the availability, cost or quality of reinsurance; (v)
changes in the distribution or placement of risks due to increased
consolidation of insurance and reinsurance brokers; (w) the loss of
key personnel and changes in accounting standards, policies or
practices or the application thereof; (x) changes in applicable tax
laws, tax treaties or tax regulations or the interpretation or
enforcement thereof; (y) the effects of mergers, acquisitions and
divestitures, including XL's ability to modify its internal
controls over financial reporting, changes to its risk appetite and
its ability realize the value or benefits expected, in each case,
as a result of such transactions, including the GreyCastle Life
Retro Arrangements, the Other Life Retro Arrangements and XL's
acquisition of Catlin; (z) changes in general economic conditions,
including new or continued sovereign debt concerns in Euro-Zone
countries or downgrades of US securities by credit rating agencies,
which could affect XL's financial condition, results of operations,
liquidity or cash flows; (aa) developments related to bankruptcies
or other financial concerns of companies insofar as they affect
property and casualty insurance and reinsurance coverage or claims
that XL may have as a counterparty; (bb) judicial decisions and
rulings, new theories of liability or emerging claims coverage
issues, legal tactics and settlement terms; and (cc) the other
factors set forth in XL's reports on Form 10-K and Form 10-Q and
other documents on file with the Securities and Exchange
Commission. XL undertakes no obligation to update publicly or
revise any forward looking statement, whether as a result of new
information, future developments or otherwise, except as required
by the federal securities laws.
XL intends to use its website as a means of disclosing
material non-public information and for complying with its
disclosure obligations under Regulation FD. Such disclosures will
be included on the website in the Investor Relations section.
Accordingly, investors should monitor such portions of XL's
website, in addition to following its press releases, SEC filings
and public conference calls and webcasts.
XL Group
plc
|
SUMMARY
CONSOLIDATED FINANCIAL DATA
|
(U.S. dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
Adjusted Income
statement and other data (Note 1):
|
December
31,
|
|
December
31,
|
|
(Unaudited)
|
|
(Unaudited)
(Note
2)
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Adjusted Revenues
(Note 1):
|
|
|
|
|
|
|
|
Net premiums
written
|
$
|
1,890,455
|
|
|
$
|
1,223,161
|
|
|
$
|
7,951,063
|
|
|
$
|
5,944,841
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
2,386,820
|
|
|
$
|
1,436,225
|
|
|
$
|
8,226,425
|
|
|
$
|
5,895,070
|
|
|
|
|
|
|
|
|
|
|
Net investment income
- excluding Life Funds Withheld Assets (Note 1)
|
171,887
|
|
|
172,297
|
|
|
684,881
|
|
|
789,050
|
|
Net realized gains
(losses) on investments sold - excluding Life Funds Withheld Assets
(Note 1)
|
11,245
|
|
|
13,105
|
|
|
19,997
|
|
|
122,991
|
|
Net realized and
unrealized (losses) gains on derivative instruments
|
(4,004)
|
|
|
11,346
|
|
|
53,123
|
|
|
29,886
|
|
Income (loss) from
investment fund affiliates
|
10,329
|
|
|
20,330
|
|
|
73,320
|
|
|
95,816
|
|
Fee income and
other
|
10,106
|
|
|
11,688
|
|
|
33,201
|
|
|
43,630
|
|
Total adjusted
revenues
|
$
|
2,586,383
|
|
|
$
|
1,664,991
|
|
|
$
|
9,090,947
|
|
|
$
|
6,976,443
|
|
|
|
|
|
|
|
|
|
Adjusted Expenses
(Note 1):
|
|
|
|
|
|
|
|
Net losses and loss
expenses incurred - P&C operations
|
$
|
1,380,893
|
|
|
$
|
739,420
|
|
|
$
|
4,766,200
|
|
|
$
|
3,258,393
|
|
Claims and policy
benefits - run-off Life operations
|
51,950
|
|
|
23,976
|
|
|
115,997
|
|
|
242,963
|
|
Acquisition
costs
|
412,962
|
|
|
171,203
|
|
|
1,317,448
|
|
|
738,118
|
|
Operating
expenses
|
563,713
|
|
|
354,892
|
|
|
1,969,219
|
|
|
1,339,705
|
|
Exchange (gains)
losses
|
(16,201)
|
|
|
(37,765)
|
|
|
27,292
|
|
|
(27,469)
|
|
Extinguishment of
debt
|
5,592
|
|
|
—
|
|
|
5,592
|
|
|
—
|
|
Interest
expense
|
52,181
|
|
|
34,229
|
|
|
205,215
|
|
|
134,106
|
|
Total adjusted
expenses
|
$
|
2,451,090
|
|
|
$
|
1,285,955
|
|
|
$
|
8,406,963
|
|
|
$
|
5,685,816
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income tax, income (loss) from operating
affiliates,
and GreyCastle Life Retro Arrangements (Note 1)
|
$
|
135,293
|
|
|
$
|
379,036
|
|
|
$
|
683,984
|
|
|
$
|
1,290,627
|
|
|
|
|
|
|
|
|
|
Net income (loss)
from operating affiliates
|
4,414
|
|
|
13,174
|
|
|
44,740
|
|
|
107,218
|
|
Provision (benefit)
for income tax, excluding amount related to loss on sale of life
reinsurance subsidiary (Note 1)
|
(39,296)
|
|
|
38,173
|
|
|
(19,161)
|
|
|
141,997
|
|
Gain on sale of
operating affiliate
|
—
|
|
|
—
|
|
|
340,407
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net income (loss)
before GreyCastle Life Retro Arrangements (Notes 1 and
3)
|
179,003
|
|
|
354,037
|
|
|
1,088,292
|
|
|
1,255,848
|
|
|
|
|
|
|
|
|
|
Contribution from
GreyCastle Life Retro Arrangements (Note 1)
|
55,576
|
|
|
(211,064)
|
|
|
225,047
|
|
|
(365,687)
|
|
Loss on sale of life
reinsurance subsidiary, net of tax (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
621,323
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
234,579
|
|
|
142,973
|
|
|
1,313,339
|
|
|
268,838
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
6,029
|
|
|
3,474
|
|
|
106,187
|
|
|
80,498
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ordinary shareholders
|
228,550
|
|
|
139,499
|
|
|
1,207,152
|
|
|
188,340
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income - Contribution from GreyCastle Life Retro Arrangements (Note
1)
|
(55,576)
|
|
|
211,064
|
|
|
(225,047)
|
|
|
365,687
|
|
Other comprehensive
income - P&C, Corporate and Other
|
(212,890)
|
|
|
41,465
|
|
|
(572,795)
|
|
|
382,114
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income
|
$
|
(39,916)
|
|
|
$
|
392,028
|
|
|
$
|
409,310
|
|
|
$
|
936,141
|
|
|
|
|
|
|
|
|
|
|
Note 1: This
presentation includes non-GAAP financial measures, as income and
expense items related to the GreyCastle Life Retro
Arrangements are excluded from revenues and expenses and shown
above in "Contribution from GreyCastle Life Retro Arrangements".
Investment results for the Life Funds Withheld Assets - including
interest income, unrealized gains and losses, and gains and losses
from sales - are passed directly to the reinsurer pursuant to a
contractual arrangement which is accounted for as a derivative.
Changes in the fair value of the embedded derivative associated
with these GreyCastle Life Retro Arrangements are also grouped
above within "Contribution from GreyCastle Life Retro
Arrangements".
|
Note 2: The
Company's results for the year ended December 31, 2015 include
those of Catlin from May 1, 2015
|
|
Note 3: "Net income
(loss) before GreyCastle Life Retro Arrangements" less
"Non-controlling interests" is equal to "Net income (loss)
attributable to ordinary shareholders excluding Contribution from
GreyCastle Life Retro Arrangements" reported on page
8.
|
XL Group
plc
|
SUMMARY
CONSOLIDATED FINANCIAL DATA
|
|
|
|
|
|
Selected balance
sheet data:
|
|
|
|
(U.S. dollars in
thousands except share and per share amounts)
|
At
|
|
At
|
|
December 31,
2015
|
|
December 31,
2014
|
|
(Unaudited)
|
|
(Note
1)
|
Total investments
available for sale
|
$
|
33,753,898
|
|
|
$
|
30,484,053
|
|
Cash and cash
equivalents
|
3,256,236
|
|
|
2,521,814
|
|
Investments in
affiliates
|
1,708,899
|
|
|
1,637,620
|
|
Unpaid losses and
loss expenses recoverable
|
5,547,187
|
|
|
3,429,368
|
|
Goodwill and other
intangible assets
|
2,210,266
|
|
|
447,952
|
|
Total
assets
|
58,967,419
|
|
|
45,046,819
|
|
|
|
|
|
Unpaid losses and
loss expenses
|
25,439,744
|
|
|
19,353,243
|
|
Deposit
liabilities
|
1,168,376
|
|
|
1,245,367
|
|
Future policy benefit
reserves
|
4,163,500
|
|
|
4,707,199
|
|
Funds withheld
liability on GreyCastle Life Retro Arrangements, net of future
policy benefit reserves recoverable
|
914,629
|
|
|
1,155,016
|
|
Unearned
premiums
|
7,043,358
|
|
|
3,973,132
|
|
Notes payable and
debt
|
2,644,970
|
|
|
1,662,580
|
|
|
|
|
|
Total shareholders'
equity
|
13,654,463
|
|
|
11,435,766
|
|
Ordinary
shareholders' equity
|
11,677,079
|
|
|
10,033,751
|
|
Ordinary shares
outstanding (Note 2)
|
294,783,992
|
|
|
255,222,835
|
|
|
|
|
|
Basic book value per
ordinary share (Note 3)
|
$
|
39.61
|
|
|
$
|
39.31
|
|
Fully diluted book
value per ordinary share (Note 3)
|
$
|
38.87
|
|
|
$
|
38.51
|
|
Fully diluted
tangible book value per ordinary share (Note 3)
|
$
|
31.52
|
|
|
$
|
36.79
|
|
|
|
|
|
Note 1: Certain items
have been reclassified to conform to the current period
presentation.
|
|
|
|
|
Note 2: Ordinary
shares outstanding include all ordinary shares issued and
outstanding (as disclosed on the face of the balance sheet) as well
as all director share units outstanding.
|
|
|
|
|
Note 3: Book value
per ordinary share, fully diluted book value per ordinary share and
fully diluted tangible book value per ordinary share are non-GAAP
financial measures. Fully diluted book value per ordinary share
represents book value per ordinary share (total shareholders'
equity less non-controlling interest in equity of consolidated
subsidiaries, divided by the number of outstanding ordinary shares
at any period end) combined with the dilutive impact of potential
future share issuances at any period end. Fully diluted tangible
book value per ordinary share is calculated in the same manner as
fully diluted book value per ordinary share except that goodwill
and intangible assets are excluded from ordinary shareholders'
equity.
|
XL Group plc
RECONCILIATION
The following is a reconciliation of XL's net income (loss)
attributable to ordinary shareholders to operating net income
(loss) (Note 3) and also includes the calculation of return on
average ordinary shareholders' equity and return on average
ordinary shareholders' equity excluding average unrealized gains
and losses on investments, in each case based on operating net
income (loss) for the years ended December
31, 2015 and 2014.
(U.S. dollars in
thousands except share and per share amounts)
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
(Unaudited)
|
|
(Unaudited)
(Note
2)
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(Note 1)
|
|
|
|
(Note 1)
|
Net income (loss)
attributable to ordinary shareholders
|
$
|
228,550
|
|
|
$
|
139,499
|
|
|
$
|
1,207,152
|
|
|
$
|
188,340
|
|
Net realized and
unrealized (gains) losses on life retrocession embedded
derivative
and derivative instruments - Life Funds Withheld Assets
|
35,358
|
|
|
269,412
|
|
|
151,691
|
|
|
488,222
|
|
Net realized (gains)
losses on investments and net unrealized (gains) losses on
investments, Trading - Life Funds Withheld Assets
|
(36,668)
|
|
|
1,910
|
|
|
(182,181)
|
|
|
15,529
|
|
Net investment income
- Life Funds Withheld Assets
|
(43,620)
|
|
|
(53,936)
|
|
|
(187,489)
|
|
|
(129,575)
|
|
Foreign exchange
revaluation (gains) losses on and other income and expense
items
related to Life Funds Withheld Assets
|
(10,646)
|
|
|
(6,322)
|
|
|
(7,068)
|
|
|
(8,489)
|
|
Loss on sale of life
reinsurance subsidiary, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
621,323
|
|
Net income (loss)
attributable to ordinary shareholders excluding Contribution from
GreyCastle Life Retro Arrangements (Note 3)
|
$
|
172,974
|
|
|
$
|
350,563
|
|
|
$
|
982,105
|
|
|
$
|
1,175,350
|
|
Net realized (gains)
losses on investments sold - excluding Life Funds Withheld Assets,
net of tax
|
(8,689)
|
|
|
(19,861)
|
|
|
(12,432)
|
|
|
(124,759)
|
|
Net realized and
unrealized (gains) losses on derivatives, net of tax
|
3,453
|
|
|
(11,347)
|
|
|
(53,577)
|
|
|
(29,884)
|
|
Net realized and
unrealized (gains) losses on investments and derivatives related to
the Company's insurance company affiliates, net of tax
|
1,493
|
|
|
1,743
|
|
|
2,732
|
|
|
(985)
|
|
Exchange (gains)
losses, net of tax
|
(15,380)
|
|
|
(27,171)
|
|
|
23,347
|
|
|
(20,481)
|
|
Expenses related to
Catlin acquisition
|
1,700
|
|
|
—
|
|
|
64,748
|
|
|
—
|
|
Gain on sale of
operating affiliate
|
—
|
|
|
—
|
|
|
(340,407)
|
|
|
—
|
|
Loss on Other Life
Retro Arrangements, net of tax
|
34,986
|
|
|
—
|
|
|
34,986
|
|
|
—
|
|
Extinguishment of
Debt
|
4,492
|
|
|
—
|
|
|
4,492
|
|
|
—
|
|
Operating net income
(loss) (Note 4)
|
$
|
195,029
|
|
|
$
|
293,927
|
|
|
$
|
705,994
|
|
|
$
|
999,241
|
|
Per ordinary share
results: (Note 5)
|
|
|
|
|
|
|
|
Net income (loss)
attributable to ordinary shareholders
|
$
|
0.76
|
|
|
$
|
0.53
|
|
|
$
|
4.15
|
|
|
$
|
0.69
|
|
Operating net income
(loss) (Note 4)
|
$
|
0.65
|
|
|
$
|
1.12
|
|
|
$
|
2.43
|
|
|
$
|
3.68
|
|
Weighted average
ordinary shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
297,138,797
|
|
|
257,040,133
|
|
|
286,194,248
|
|
|
267,103,032
|
|
Diluted - Net
income
|
302,298,268
|
|
|
262,146,892
|
|
|
290,998,857
|
|
|
271,526,525
|
|
Diluted - Operating
net income
|
302,298,268
|
|
|
262,146,892
|
|
|
290,998,857
|
|
|
271,526,525
|
|
Return on ordinary
shareholders' equity:
|
|
|
|
|
|
|
|
Closing ordinary
shareholders' equity (Note 6)
|
11,677,079
|
|
|
10,033,751
|
|
|
11,677,079
|
|
|
10,033,751
|
|
Closing unrealized
(gain) loss on investments, net of tax (Note 7)
|
$
|
(745,592)
|
|
|
$
|
(1,514,067)
|
|
|
$
|
(745,592)
|
|
|
$
|
(1,514,067)
|
|
Average ordinary
shareholders' equity excluding average unrealized gains (losses) on
investments, net of tax (Note 5)
|
$
|
10,932,084
|
|
|
$
|
8,553,806
|
|
|
$
|
9,725,585
|
|
|
$
|
8,892,037
|
|
Average ordinary
shareholders' equity (Note 6)
|
$
|
11,807,654
|
|
|
$
|
9,937,403
|
|
|
$
|
10,855,415
|
|
|
$
|
10,015,692
|
|
Operating net income
(loss) (Note 4)
|
$
|
195,029
|
|
|
$
|
293,927
|
|
|
$
|
705,994
|
|
|
$
|
999,241
|
|
Annualized operating
net income (loss) (Note 4)
|
$
|
780,116
|
|
|
$
|
1,175,708
|
|
|
$
|
705,994
|
|
|
$
|
999,241
|
|
Annualized operating
return on average ordinary shareholders' equity (Notes 4 and
6)
|
6.6 %
|
|
|
11.8 %
|
|
|
6.5 %
|
|
|
10.0 %
|
|
Annualized operating
return on average ordinary shareholders' equity excluding average
unrealized gains and losses on investments (Notes 4 and
6)
|
7.1 %
|
|
|
13.7 %
|
|
|
7.3 %
|
|
|
11.2 %
|
|
|
|
|
|
|
|
|
|
|
Note 1: Certain
amounts have been reclassified to conform to the current period
presentation.
|
|
Note 2: The
Company's results for the year ended December 31, 2015 include
those of Catlin from May 1, 2015
|
|
Note 3: Investment
results for the Life Funds Withheld Assets - including interest
income, unrealized gains and losses, and gains and losses from
sales - are passed directly to the reinsurer pursuant to a
contractual arrangement which is accounted for as a derivative.
Changes in the fair value of the embedded derivative associated
with these GreyCastle Life Retro Arrangements are grouped within
"Net realized and unrealized (gains) losses on life retrocession
embedded derivative and derivative instruments - Life Funds
Withheld Assets" in the reconciliation above.
|
|
Note 4: Defined as
net income (loss) attributable to ordinary shareholders excluding:
(1) our net investment income - Life Funds Withheld Assets, net of
tax, (2) our net realized (gains) losses on investments sold -
excluding Life Funds Withheld Assets, net of tax, (3) our net
realized (gains) losses on investments sold (including OTTI) and
net unrealized (gains) losses on investments, Trading - Life Funds
Withheld Assets, (4) our net realized and unrealized (gains) losses
on derivatives, net of tax, (5) our net realized and unrealized
(gains) losses on life retrocession embedded derivative and
derivative instruments - Life Funds Withheld Assets, (6) our share
of items (2) and (4) for XL's insurance company affiliates for the
periods presented, (7) our foreign exchange (gains) losses, net of
tax, (8) our expenses related to the Catlin acquisition, net of
tax, (9) our gain on sale of our interest in our operating
affiliate, ARX, and (10) our loss on sale of GreyCastle Life Retro
Arrangement, net of tax, (11) our loss on the Other Life
Retro Arrangements and (12) our loss on the early extinguishment of
the notes assumed in conjunction with the Catlin acquisition. In
addition to presenting net income (loss), we believe that showing
"operating net income (loss)", "operating return on average
ordinary shareholders' equity" and "operating return on average
ordinary shareholders' equity excluding average unrealized gains
and losses on investments" enables investors and other users of our
financial information to analyze our performance in a manner
similar to how we analyze our performance. In this regard, we
believe that providing only a GAAP presentation of net income
(loss) would make it more difficult for users of our financial
information to evaluate our underlying business. We also believe
that equity analysts and certain rating agencies that follow us
(and the insurance industry as a whole) exclude these items from
their analyses for the same reasons, and they request that we
provide this non-GAAP financial information on a regular basis. A
reconciliation of our net income (loss) attributable to ordinary
shareholders to operating net income (loss) is provided
above.
|
|
Note 5: Diluted
weighted average number of ordinary shares outstanding is used to
calculate per share data except where it is anti-dilutive to
earnings per share or where there is a net loss. When it is
anti-dilutive or when a net loss occurs, basic weighted average
ordinary shares outstanding is utilized in the calculation of net
loss per share and net operating loss per share.
|
|
Note 6: Ordinary
shareholders' equity is defined as total shareholders' equity less
non-controlling interest in equity of consolidated
subsidiaries.
|
|
Note 7: Unrealized
(gain) loss on investments, net of tax is the cumulative impact of
mark to market fluctuations on our investment portfolio that have
not been realized through sales.
|
Comment on Regulation G
XL presents its operations in the way it believes will be most
meaningful and useful to investors, analysts, rating agencies and
others who use XL's financial information in evaluating XL's
performance. This press release contains the presentation of
(i) operating net income (loss) ("Operating Net Income"), which is
defined as net income (loss) attributable to ordinary shareholders
excluding: (1) net investment income - Life Funds Withheld Assets,
net of tax, (2) net realized (gains) losses on investments sold -
excluding Life Funds Withheld Assets, net of tax,(3) net realized
(gains) losses on investments sold (including OTTI) and net
unrealized (gains) losses on investments, Trading - Life Funds
Withheld Assets, (4) net realized and unrealized (gains) losses on
derivatives, net of tax, (5) net realized and unrealized (gains)
losses on life retrocession embedded derivative and derivative
instruments - Life Funds Withheld Assets, (6) share of items (2)
and (4) for XL's insurance company affiliates for the periods
presented, (7) foreign exchange (gains) losses, net of tax,
(8) expenses related to the Catlin acquisition, net of tax, (9)
gain on the sale of our interest in our operating affiliate, ARX,
and (10) the loss on the sale of life reinsurance subsidiary, XLLR,
net of tax; (11) our loss on the Other Life Retro
Arrangements and (12) our loss on the early
extinguishment of the notes assumed in conjunction with the Catlin
acquisition; (ii) return on average ordinary shareholders' equity
("ROE") based on operating net income (loss) ("Operating ROE");
(iii) Operating ROE excluding average unrealized gains and losses
on investments; (iv) net income (loss) attributable to ordinary
shareholders excluding the Contribution from the GreyCastle Life
Retro Arrangements and (v) book value per ordinary share
(ordinary shareholders' equity divided by the number of shares
outstanding at the period end date), fully diluted book value per
ordinary share (book value per share combined with the dilutive
impact of potential future share issues at any period end), and
fully diluted tangible book value per ordinary share (calculated in
the same manner as fully diluted book value per ordinary share
except that goodwill and intangible assets are excluded from
ordinary shareholders' equity). These items are "non-GAAP financial
measures" as defined in Regulation G. The reconciliation of such
measures to the most directly comparable GAAP financial measures in
accordance with Regulation G is included in this press release on
page 8.
Although the investment of premiums to generate income (or loss)
and realize capital gains (or losses) is an integral part of XL's
operations, the determination to realize capital gains (or losses)
is independent of the underwriting process. In addition,
under applicable GAAP accounting requirements, losses can be
created as the result of other than temporary declines in value and
from goodwill impairment charges without actual realization.
In this regard, certain users of XL's financial information,
including certain rating agencies, evaluate earnings before tax and
capital gains to understand the profitability of the operational
sources of income without the effects of these two variables.
Furthermore, these users believe that, for many companies, the
timing of the realization of capital gains and the recognition of
goodwill impairment charges are largely a function of economic and
interest rate conditions.
Net realized and unrealized (gains) losses on derivatives, net
of tax, include all derivatives entered into by XL other than
certain credit derivatives and the life retrocession embedded
derivative. With respect to credit derivatives, because XL and its
insurance company operating affiliates generally hold financial
guaranty contracts written in credit default derivative form to
maturity, the net effects of the changes in fair value of these
credit derivatives are excluded (similar with other companies'
treatment of such contracts) as the changes in fair value each
quarter are not indicative of underlying business performance.
Net investment income - Life Funds Withheld Assets, net of tax,
and net realized (gains) losses on the life retrocession embedded
derivative and derivative instruments - Life Funds Withheld
Assets, have been excluded because, as a result of the
GreyCastle Life Retro Arrangement, XL no longer shares in the
risks and rewards of the underlying performance of the Life Funds
Withheld Assets that support these retrocession arrangements.
The returns on the Life Funds Withheld Assets are passed directly
to the reinsurer pursuant to a contractual arrangement that is
accounted for as a derivative. Therefore, net investment
income from the Life Funds Withheld Assets and changes in the fair
value of the embedded derivative associated with these GreyCastle
Life Retro Arrangements are not relevant to XL's underlying
business performance. In addition, the loss on the sale of life
reinsurance subsidiary, net of tax, has been excluded due to the
one-time, non-operating nature of this loss.
Foreign exchange (gains) losses in the income statement are only
one element of the overall impact of foreign exchange fluctuations
on XL's financial position and are not representative of any
economic gain or loss made by XL. Accordingly, it is not a
relevant indicator of financial performance and it is excluded.
In summary, XL evaluates the performance of and manages its
business to produce an underwriting profit. In addition to
presenting net income (loss), XL believes that showing operating
net income (loss) enables investors and other users of XL's
financial information to analyze XL's performance in a manner
similar to how management of XL analyzes performance. In this
regard, XL believes that providing only a GAAP presentation of net
income (loss) would make it much more difficult for users of XL's
financial information to evaluate XL's underlying business. Also,
as stated above, XL believes that the equity analysts and certain
rating agencies that follow XL (and the insurance industry as a
whole) exclude these items from their analyses for the same reasons
and they request that XL provide this non-GAAP financial
information on a regular basis.
Operating ROE is a widely used measure of any company's
profitability that is calculated by dividing operating net income
for any period other than a fiscal year when actual operating
income is used by the average of the opening and closing ordinary
shareholders' equity. XL establishes target Operating ROEs for its
total operations, segments and lines of business. If XL's Operating
ROE targets are not met with respect to any line of business over
time, XL seeks to re-evaluate these lines. Operating ROE excluding
net unrealized gains and losses on investments is an additional
measure of a company's profitability that eliminates the impacts of
mark to market fluctuations on a company's investment portfolio
that have not been realized through sales, which XL believes
provides a more consistent measure of company performance.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/xl-group-fourth-quarter--full-year-2015-financial-tables-300214911.html
SOURCE XL Group plc