XL Group's third-quarter operating net income was higher than the
Zacks Consensus Estimate and year-ago quarter figure on the back of
solid underwriting results. Both Insurance and Reinsurance segments
wrote higher premiums owing to a favorable catastrophic
environment, despite pricing and renewal pressure. The company
witnessed lower expenses in the quarter but expects operating
expenses in 2014 to be higher than 2013 by mid single digits. Net
investment income continues to decline. XL Insurance (Bermuda)
divested its wholly owned subsidiary, XL Life Reinsurance. XL Group
believes that the divestiture will improve the risk profile and
cushion it with additional flexibility to pursue capital management
initiatives. This includes buying back of an additional $300
million of shares in 2014. XL Group remains focused on enhancing
its shareholders' value via dividend increase as well as share
buybacks. We retain our Neutral recommendation on XL Group.
Upon its redomestication to Ireland from the Cayman Islands, on
Jul 1, 2010, the company changed its name to XL Group Plc. (XL)
from XL Capital Ltd. Founded in 1986, the company has grown through
several mergers and acquisitions to become a leading global
provider of insurance, reinsurance and financial risk solutions for
enterprises and insurance companies. The Bermuda-based company's
insurance products provide customized coverage for corporate risks
and are divided into two categories: risk management products
(global property and casualty programs for large multinational
corporations) and specialty lines products (a wide variety of
liability products, including professional, workers comp,
environmental, and property coverage for marine, aviation and
satellite equipment). Much of the company's casualty business is
written on an umbrella or high-layer excess-of-loss basis. The
excess nature of many of the company's insurance products, coupled
with historically large policy, limits creates a sizeable book of
business that can be classified as low frequency and high
The company is organized into three operating segments:
Insurance, Reinsurance and Life Operations:
The Insurance segment (accounted for 71% of gross premium
written in 2013) provides commercial property, casualty and
specialty insurance products on a global basis.
The Reinsurance segment (25%) provides casualty, property risk
(including energy and engineering), property catastrophe, marine,
aviation and other specialty reinsurance on a global basis.
The Life Operations segment (4%) provides life reinsurance on
business written by life insurance companies, principally to help
them manage mortality, morbidity, survivorship, investment and
As of Sep 30, 2014, XL Group's shareholders' equity was $11.2
billion (down 1.1% from 2013 end level). Total assets were $45.9
billion (up 0.6% year over year).
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