Steady as it goes for XL’s Q1 2018 profits

03-05-2018

XL Group made a profit of $152.6 million in the first quarter of 2018, a very slight fall on the $152.8 million it reported for the same period of 2017.

The company, which is in the process of being taken over by AXA, reported operating net income of $214.4 million for the quarter, a substantial increase on the $136.1 million in the same three months of 2017. XL said that this was mostly down to improved investment returns and lower financing costs associated with its preferred shares, partially offset by marginally lower overall underwriting profit.

“We are pleased with our solid start to 2018, in-line with our expectations,” said chief executive officer Mike McGavick. “During the first quarter our performance reflected benefits of our market leadership, focus on underwriting discipline, strong culture of innovation, continuous improvement, and efficiency.

“In the quarter we grew gross premiums written more than 6 percent compared with the first quarter of 2017 and we continued to improve the Insurance loss ratio excluding PYD and the impact of catastrophe losses. We did see a lower Reinsurance margin in the quarter, largely driven by our strategic initiatives including a shift in portfolio mix towards lower volatility and an increase in outward reinsurance protections. With respect to pricing, we are pleased to have achieved broad rate increases throughout our Insurance and Reinsurance portfolio, which will earn into our results over the rest of the year. Also during the quarter we had strong contributions from the investment portfolio, and we continued managing our expenses.

“As we look forward to the next phase in XL’s journey, with the proposed combination with AXA, we believe there is substantial opportunity to continue realising the potential of what we have built.”

P&C gross premiums written (GPW) in the first quarter increased 6.6 percent compared to the prior year quarter. Excluding the impact of foreign exchange, GPW increased by 3.8 percent.

XL’s insurance segment GPW increased 6.4 percent from the prior year quarter, driven primarily by favourable rate changes across business groups as well as stronger renewals. Excluding the impact of foreign exchange, insurance GPW increased 4.1 percent.

The company’s reinsurance segment GPW increased by 6.9 percent from the prior year quarter primarily due to rate improvements. Excluding the impact of foreign exchange, reinsurance GPW increased 3.5 percent. According to the company new business written in the quarter from its Bermuda and London businesses was largely offset by cancelled business, adding that this was a reflection of disciplined underwriting.

XL Group, Q1 results, AXA, M&A, 2018

Bermuda Re