DOW JONES NEWSWIRES XL Capital Ltd.'s (XL) first-quarter earnings surged from their slim profit a year earlier on much narrower realized investment losses. The property and casualty insurer well exceeded analysts' operating profit expectations, and shares rose 3.2% to $17.71 after hours. The stock through the close was up 58% in the last year, better than the market at large. Catastrophe losses net of reinsurance and reinstatement premiums jumped more than sixfold to $181.1 million because of a huge earthquake in Chile and windstorms in Europe, in line with the estimated losses it disclosed last month. Those events, as well as damaging weather on the U.S. East Coast, hurt many catastrophe-exposed insurers in the first quarter. The insurance industry had enjoyed a respite last year after 2008 was a big year for disasters, both in financial markets and in weather with Hurricanes Gustav and Ike. The company, which also provides reinsurance, has been improving its results recently, but its bottom line hasn't been able to rid lingering investment losses. The company has been cutting costs and moving out of riskier investments. Also, intense competition has made rate increases difficult. XL Capital posted a profit of $143.9 million, or 37 cents a share, from $3.1 million, or 53 cents a share, a year earlier. Operating income, which strips out investment gains and losses, fell to 44 cents from 63 cents. Net premiums written increased 6.1% to $1.6 billion. Premiums earned in the property and casualty, or P&C, operations fell 4.4% to $1.26 billion. Analysts surveyed by Thomson Reuters predicted operating earnings of 19 cents on earned P&C premiums of $1.23 billion. Combined ratio, or the percentage of premiums paid out on losses and expenses, deteriorated sharply to 100.5% from 92.1% in the P&C business, with 14.3 percentage points stemming from the quake and windstorms. Net realized losses tumbled to $36.2 million from $251.9 million. -By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com
