XL Group plc (XL): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
XL Group's second quarter earnings per share surpassed the Zacks Consensus Estimate and year ago results on the back of solid underwriting results. Both Insurance and Reinsurance segment wrote higher premiums while the Reinsurance segment lower premiums. The company witnessed decreased expenses in the quarter and expects operating expenses in 2014 to be higher than 2013 by mid single digits. Net investment income continues to witness a decline. XL Insurance (Bermuda) divested its wholly owned subsidiary, XL Life Reinsurance. XL Group believes the divestiture to improve the risk profile, cushioning 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 to enhance its shareholders value via dividend increase as well as share buybacks. We retain our Neutral recommendation on XL Group.

Overview:

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 severity.

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 lapse risks.

Source: Compnay

As of Mar 31, 2014, XL Group's shareholders' equity stood at $11.6 billion (down 1.7% from year over year). Total assets were $46.7 billion (up 2.6% year over year).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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