XL Group plc
) fourth-quarter 2012 operating income of 13 cents per share
outpaced the Zacks Consensus Estimate of a loss of 35 cents.
Earnings rebounded from a loss of 25 cents incurred in the
Better underwriting results more than offset the adverse impact
from catastrophe losses and higher tax expenses, aiding the
company to post better numbers.
Including net realized gains on investments of $34.9 million, net
realized and unrealized gains on derivatives of $2.6 million, net
realized and unrealized gains on investments and derivatives
related to the insurance company affiliates of $0.3 million and
foreign exchange gains of $4.8 million, XL Group reported net
income of 27 cents, reversing the loss of $1.62 per share in the
Quarterly Operational Performance
Total revenue in the quarter was $1.9 billion, up 11.8% year over
year. Revenue was higher than the Zacks Consensus Estimate of
Net premiums earned in the quarter increased 9.5% year over year
to $1.6 billion.
Net investment income of $245 million in the quarter was down
9.6% year over year, largely due to lower investment rates
inducing lower yields.
XL Group's underwriting loss narrowed to $90.7 million, from the
loss of $114.1 million incurred in the year-ago quarter.
The combined ratio in the fourth quarter improved 230 basis
points year over year to 105.9% in the quarter.
Operating expenses declined 14.8% year over year to $1.86
million, primarily attributable to lower claims and policy
benefits and lower operating expenses.
: Gross premiums written in the quarter was $1.51 billion,
improving 20.5% year over year. A 50.1% increase in reinsurance
premium coupled with 17.8% higher insurance premium aided the
Net premiums earned improved 7% year over year in the quarter
Combined ratio (excluding prior-year development and the impact
of natural catastrophe losses) improved 980 basis points to
105.9% in the quarter.
: Gross premiums written declined 7.6% year over year to $88.7
million in the fourth quarter.
Net premiums earned of $79.5 million in the quarter waned 10.5%.
Full Year Highlights
Operating income was $1.98 per share, which breezed past the
Zacks Consensus Estimate of $1.51 and the year-ago earnings of 28
cents per share.
Net income came in at $2.10 per share, reversing the loss of
$1.52 incurred in 2011.
Revenue improved 7.4% over 2011 to $7.2 billion and also exceeded
the Zacks Consensus Estimate of $6.8 billion.
XL Group exited 2012 with cash and cash equivalents of $2.6
billion, down from $3.8 billion at the end of 2011.
Notes payable and debt at the end of 2012 were $1.67 billion,
down from $2.27 billion at 2011 end.
Book value as of Dec 31, 2012 was $33.38 per share, up 17.8% year
over year. The improvement was driven by higher net income,
unrealized gains on investments and the benefit of share
Share Repurchase Update
In the fourth quarter, XL Group spent $51.7 million to buy back
2.1 million shares taking the full year tally to 18.3 million
share repurchased for $41.7 million. Subsequently through Feb 7,
XL Group bought back 3.8 million shares for $98.3 million.
The company, as on Feb 7, was left with $250 million under its
Performance of Other Property and Casualty
The Travelers Companies
) reported earnings of 72 cents per share in the fourth quarter
of 2012, surpassing the Zacks Consensus Estimate of 4 cents per
share. However, results plunged 51% on a year-over-year basis.
) reported fourth-quarter 2012 operating earnings of 89 cents per
share. The result surpassed the Zacks Consensus Estimate of 44
cents by 102% but missed the year-ago level of $1.13 by 32.1%.
) reported the fourth-quarter operating earnings of 16 cents per
share, significantly ahead of the Zacks Consensus Estimate of a
loss of 46 cents per share. Earnings were down substantially by
90% year over year.
Based on the company's conservative underwriting practices and
repositioned P&C portfolio, we expect XL Group to fare well
going forward. The company is also taking initiatives to expand
its operations and is aiming to tap the opportunities in the
The company continues to enhance shareholders' value through
share buybacks and dividends. Also, the company scores strongly
with the credit rating agencies.
However, significant exposure to catastrophe losses and continued
low interest rate environment continues to weigh on the results
of the company.
XL Group carries a Zacks Rank #3 (Hold).
CHUBB CORP (CB): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
To read this article on Zacks.com click here.