) kick started 2012 with first-quarter 2012 operating income of 52
cents per share, outpacing the Zacks Consensus Estimate of 40
cents. The company reversed the loss of 52 cents incurred in
the year-ago quarter. Operating income was $165.2 million, compared
with a loss of $163.0 million in the prior-year quarter.
The company fared well largely on account of lower catastrophe
Adjusting for net realized gains on investments of $20.5
million, net realized and unrealized gains on derivatives of $0.7
million, net realized and unrealized gain on investments and
derivatives related to XL's insurance company affiliates of $0.04
million and foreign exchange loss of $9.8 million, net income
attributable to shareholders was $176.6 million in the quarter,
compared with a net loss of $227.3 million in the prior-year
Net income was 56 cents per share in the quarter under review,
reversing the loss of 73 cents in the first quarter of 2011.
The year-earlier quarter included net realized losses on
investments of $63.3 million, net realized and unrealized gains on
derivatives of $5.2 million, net realized and unrealized gain on
investments and derivatives related to XL's insurance company
affiliates of $0.9 million and foreign exchange gain of $7.2
Total revenue in the quarter was $1.75 billion, up 8.5% year
over year. Revenue was ahead of the Zacks Consensus Estimate of
Net premiums earned in the quarter increased 6.8% year over year
to $1.34 billion.
Net investment income of $265.2 million in the quarter was down
5.4% year over year largely due to lower investment rates and lower
cash flows from the investment portfolio.
XL Group's underwriting profit was $63.2 million, reversing the
loss of $328.1 million in the year-ago quarter.
The combined ratio in the first quarter improved substantially
to 95.3% from 125.8% recorded in the earlier-year quarter. A lower
level of catastrophe losses aided the improvement.
Operating expenses increased 8.2% year over year to $282.4
million, primarily attributable to the build-out of previously
: Gross premiums written in the quarter improved 10.4%, driven by
primarily driven by new business lines, higher retention levels and
Net premiums earned improved 6.8% year over year in the quarter
Combined ratio (excluding prior year development and the impact
of natural catastrophe losses) improved 110 basis points to 99.8%
in the quarter.
: Gross premiums written declined 11.2% year over year in the first
Net premiums earned written in the quarter decreased 12.5%.
XL Group exited the quarter with cash and cash equivalents of
$2.5 billion down from 2011 level end of $3.8 billion.
Notes payable and debt at quarter end were $1.67 billion down
from $2.27 billion at 2011 end.
Book value per ordinary share as of March 31, 2012, was $30.88,
up 4.3% from $29.59 as of December 31, 2011. The improvement was
driven by net income, unrealized gains on investments and the
benefit of share buybacks.
In the first quarter, XL Group spent $100 million to buy back
4.7 million shares at an average price of $21.14.
The company is left with $650 million under its
), which competes with XL Group, reported first-quarter 2012
operating income of $2.05 per share, breezing past the Zacks
Consensus Estimate by 15 cents. Earnings exhibited a massive
improvement of 170% from 76 cents earned in the year-ago quarter.
Operating income was $701 million, which was nearly a fourfold
increase from the year-ago quarter.
The quarter largely benefited from lower catastrophe activities
and higher premiums. Pre-tax catastrophe losses, including
reinstatement premiums, were $19 million, narrowing from $489
million in the prior year.
We maintain our Neutral recommendation on XL Group. The
quantitative Zacks #3 Rank (short term Hold rating) for the company
indicates no clear directional pressure on the stock over the near
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