XL reported a strong set of results for the second quarter of 2015 as its profits jumped and its P&C segment delivered solid growth.
In its first set of results since its merger with Catlin, XL posted profits $915 million for the quarter, compared with a loss of $279.3 million in the second quarter of 2014.
The current year includes a $340.4 million gain on the sale of XL’s interest in an operating affiliate as well as a $239.2 million favourable impact from the life retrocession derivative. This was offset by a decrease in accumulated comprehensive income and therefore does not impact book value.
XL’s P&C segment report a jump in GWP 42.2 percent to $3 billion in the second quarter of 2015, compared with $2.1 billion in the prior year quarter.
Its insurance segment GWP soared 37.1 percent, mainly driven by its amalgamation with Catlin, while its reinsurance segment posted GWP growth of 58.6 percent. Excluding the impact of the acquired Catlin business, the segment experienced a decrease of 2.9 percent due to a competitive pricing environment with respect to property treaty business.
Its operating income fell to $245.8 million for the second quarter of 2015, compared with $279.6 million in the second quarter of 2014.
The decrease was driven by $27.8 million in integration costs as well as $59.9 million in catastrophe losses compared with $34.6 million in catastrophe losses in the prior year quarter. Additionally, the prior year quarter benefited from the recognition of $28.7 million of profit associated with the commutation of a structured product transaction.
Its combined ratio deteriorated slightly to 89.9 percent for the quarter, compared with 88.3 percent in the same period of the prior year.
Mike McGavick, chief executive officer (CEO), said: "I’m pleased to announce the first quarterly financial results for the combined XL Catlin. We reported 84 cents of operating earnings per share and delivered an annualised operating ROE excluding unrealised gains and losses on investments of 10 percent.
“We are pleased with our progress in the major areas that we view as key to unlocking the value created by XL's combination with Catlin notwithstanding continued market headwinds.
“First, our top line results demonstrated the strong support our clients and brokers have shown for the new XL Catlin. Second, we are on target with respect to synergies and expenses and will continue to manage those with discipline; third, we delivered on our capital management commitment through resumed share buybacks; and finally, XL Catlin’s culture continues to take on the best parts of what each of our companies brought to the transaction.
“We were one company for only two months of the second quarter and in that short time my belief that we can meet and exceed the expectations we set for this company has only grown. We are very excited about where we are and what lies ahead for XL Catlin.”
XL, Catlin, Mike McGavick, Second Quarter 2015 results, Europe