XL Group PLC (XL) swung to a first-quarter loss on wide
catastrophe losses from recent natural disasters, and the property
and casualty insurer's core loss was deeper than expected.
The company, which also provides reinsurance, reported natural
catastrophe losses of $387.4 million, net of reinstatement
premiums, in its property and casualty operations. The company last
month estimated its total losses from March's devastating
earthquake and tsunami in Japan would range from $190 million to
$290 million, on top of an estimated $70 million to $85 million in
losses it already anticipated from a New Zealand earthquake. The
period also included severe floods in Australia.
As a result, combined ratio--the percentage of premiums paid out
on losses and expenses--jumped to 126% from 101% in the P&C
business. Excluding the disasters and prior-year development, the
ratio would have risen to 101% from 93.1%.
Despite the disasters' hit to the bottom line in the latest
quarter, analysts have noted that their trauma will likely spur
more demand for insurance and reinsurance. For a long stretch,
relief from massively damaging events and economic pressure
increased the frequency that people skipped coverage.
In prior quarters lately, XL's results have improved thanks to
investment recovery, as well as higher premiums more recently.
Tuesday, XL Group posted a loss of $227.3 million, or 73 cents a
share, compared with a year-earlier profit of $143.9 million, or 37
cents a share. Its operating results, which strip out investment
gains and losses as well as other items like foreign-exchange
effects, swung to a 52-cent loss per share from a 44-cent
profit.
Net premiums written increased 7.4% to $1.71 billion. Premiums
earned in the property-and-casualty operations also rose 0.6% to
$1.27 billion.
Analysts surveyed by Thomson Reuters predicted a 45-cent
operating loss per share on earned P&C premiums of $1.27
billion.
Book value per share, a measure of assets and liabilities,
declined 2.5% from the prior quarter.
XL shares closed Tuesday at $24.20 and weren't active after
hours. The stock has risen 36% in the past year, better than the
broader market.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com