Quantcast

XL Group (XL) Q2 Earnings Miss Estimates, Revenues Beat


Shutterstock photo

XL Group Ltd XL reported second-quarter 2018 operating net income of 84 cents per share, which missed the Zacks Consensus Estimate by 6.7%. Moreover, the bottom line declined 12.5% from the prior-year quarter. Higher level of non-catastrophe loss, increase in expenses along with prior-year development from short tail lines in Insurance, were mainly responsible for the downside.

XL Group Ltd. Price, Consensus and EPS Surprise

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

Nonetheless, the quarter witnessed top-line growth, favorable underwriting performance and better investment results.

Including non-recurring items, the company delivered net income of $1.21 per share, which grew 6.1% from the year-ago period.

Behind Second-Quarter Headlines

Total revenues of XL Group improved 7.3% year over year to $2.9 billion owing to higher net premiums earned as well as net investment income. Also, the top line beat the Zacks Consensus Estimate by 1.2%.

Net premiums earned rose 7.1% year over year to $2.7 billion.

Net investment income improved 11.1% year over year to $231.8 million.

Pretax cat loss, net of reinsurance and reinstatement premiums were $76.8 million. The reported figure was noticeably narrower than $92.1 million incurred in the prior-year period.

Total expenses of XL Group increased 8.8% year over year to $2.7 billion due to substantially higher net loss and loss expenses incurred, claims and policy benefits as well as acquisition costs.

With respect to Property and Casualty operations, gross premiums written in the second quarter improved 10.6% year over year to $3.9 billion.

The insurance segment witnessed improvement in premiums, attributable to increase in rates and new business in Global Lines, Property and Financial Lines in International and Property and Construction in North America.

The reinsurance segment experienced growth in premiums in the quarter under consideration on the back of improved rates as well as new business.

XL Group reported underwriting profit of $114.2 million, which plunged nearly 41.3% from the year-earlier quarter. Combined ratio deteriorated 350 basis points to 95.8% in the quarter under review.

Financial Update

XL Group exited the second quarter with cash and cash equivalents of $2.9 billion, down 15.5% from $3.4 billion at the end of 2017.

Notes payable and debt at the end of the quarter were $3.2 billion, down 0.1% from the year-end 2017.

As of Jun 30, 2018, book value of XL Group was $36.56 per share, down 3.9% from the level as of Dec 31, 2017.

Share Repurchase Update 

In the second quarter, the company did not participate in any share buyback program under its current share repurchase authorization. As of Jun 30, 2018, XL Group had shares worth $529.1 million left under its authorized program.

Zacks Rank

XL Group carries a Zacks Rank #3 (Hold). 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 insurance industry, which have already reported second-quarter earnings, the bottom line of The Progressive Corporation PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc.'s TRV earnings missed the same.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

RLI Corp. (RLI): Free Stock Analysis Report

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

The Travelers Companies, Inc. (TRV): Free Stock Analysis Report

The Progressive Corporation (PGR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?