XL Group (XL) Q1 Earnings & Revenues Miss Estimates, Up Y/Y

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XL Group Ltd XL reported first-quarter 2018 operating net income of 82 cents per share, which missed the Zacks Consensus by 13.7%. However, the bottom line soared 64% from the prior-year quarter. Lower catastrophe loss and premium growth were primarily responsible for this upside.

XL Group Ltd. Price, Consensus and EPS Surprise

XL Group Ltd. Price, Consensus and EPS Surprise | XL Group Ltd. Quote

Including non-recurring items, the company reported net income of 58 cents per share, which nudged up 1.8% from the year-ago quarter.

Behind the Headlines

Total revenues of XL Group improved 3.2% year over year to $2.8 billion owing to higher net premiums earned as well as net investment income. However, the top line missed the Zacks Consensus Estimate by 1.5%.

Net premiums earned rose 3.1% year over year to $2.6 billion.

Net investment income improved 8.9% year over year to $218.5 million.

Pre-tax cat loss, net of reinsurance and reinstatement premiums were $73.2 million. The reported figure was noticeably narrower than a loss of $96.1 million in the year-ago quarter.

Total expenses of XL Group increased 3.5% year over year to $2.6 billion due to substantially higher net losses and loss expenses incurred, claims and policy benefits, acquisition costs, operating expenses, interest expense as well as foreign exchange loss.

With respect to Property and Casualty operations, gross premiums written in the first quarter improved 6.6% year over year to $4.9 billion.

The insurance segment witnessed improvement in premiums, attributable to positive rate changes across business groups and strong renewals.

The reinsurance segment experienced growth in premiums in the reported quarter on the back of improved rates.

XL Group reported underwriting profit of $122.4 million, which declined nearly 15% from the year-ago quarter. Combined ratio deteriorated 100 basis points to 95.3% in the quarter under review.

Financial Update

XL Group exited the first quarter with cash and cash equivalents of $3.5 billion, up 1.4% from $3.4 billion at the end of 2017.

Notes payable and debt at the end of the quarter were $3.2 billion, up 0.6% from the year-end 2017.

As of Mar 31, 2018, diluted book value of XL Group was $36.53 per share, down 3.9% from Dec 31, 2017.

Share Repurchase Update    

In the first quarter, the company did not participate in any share buyback under its current share repurchase authorization. As of Mar 31, 2018, XL Group had shares worth $529.1 million remaining under its authorized program.

Zacks Rank

XL Group carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other P&C Insurers

Among other players from the same space, which have already reported first-quarter earnings, the bottom line of The Progressive Corporation PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while that of The Travelers Companies, Inc. TRV missed the same.

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XL Group Ltd. (XL): Free Stock Analysis Report

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The Progressive Corporation (PGR): Free Stock Analysis Report

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: RLI , TRV , PGR

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