DOW JONES NEWSWIRES XL Capital Ltd.'s (XL) second-quarter earnings more than doubled as a decline in expenses outpaced that for revenue, with the property-and-casualty insurer's core profit beating analysts' views. The company, which also provides reinsurance, has been improving its results recently. XL has been cutting costs and moving out of riskier investments. But intense competition and the weak economy have made rate increases difficult. XL said the most recent period included $27.2 million in losses stemming from natural disasters as well as its exposure to Transocean Ltd.'s (RIG, RIGN.VX) Deepwater Horizon rig that exploded and sank in the Gulf of Mexico, triggering a massive oil spill. In May, Chief Executive Mike McGavick said its exposure to the rig was approximately $30 million, including $5 million in reinstatement premiums, and much of that was already paid out in claims. A huge earthquake in Chile and windstorms in Europe, as well as damaging weather on the U.S. East Coast, hurt many catastrophe-exposed insurers in the previous period. The insurance industry had enjoyed a respite last year after 2008, which was a big year for disasters in terms of both financial markets and weather, with Hurricanes Gustav and Ike. XL posted a profit of $194 million, or 56 cents a share, from $85.5 million, or 23 cents a share, a year earlier. Operating income, which strips out investment gains and losses, fell to 71 cents from 85 cents. Net premiums earned in the property-and-casualty operations fell 5.1% to $1.22 billion. Analysts surveyed by Thomson Reuters predicted operating earnings of 64 cents on earned P&C premiums of $1.22 billion. Combined ratio, or the percentage of premiums paid out on losses and expenses, improved to 92.2% from 93% in the P&C business. Net unrealized losses narrowed to $61.4 million from $80.4 million. XL shares were up 0.2% at $17.80 after hours. The stock has declined 2.7% so far this year through the close, while the broader market has turned positive. -By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com
