XL posts Q4 growth; benefits from low cat losses
XL, the re/insurer formerly headquartered on Bermuda, posted a strong set of results for 2014, as it enjoyed solid growth, particularly in the fourth quarter, and benefitted from low cat losses.
Its operating profits grew to $999.2 million for the year, compared with $943 million in 2013. XL also recorded its best combined ratio in 15 years; it fell 4.3 percentage points to 88.2 percent for 2014, compared with 92.5 percent in 2013.
The company’s net income fell significantly for the year but this was largely due to the impact of life retrocession arrangements put in place in May 2014 when it completed the sale and retrocession of XL Life Reinsurance to GreyCastle Holdings.
Such is the impact, XL is now showing its net income with and without the impact of this included. Taking these agreements into account, its net income fell to $188.3 million compared with $1 billion a year earlier. Excluding their impact, its net income was $1.2 billion
The company’s property/casualty gross written premiums for the year increased slightly to $7.7 billion compared with $7.4 billion a year earlier. Its GWP for the quarter increased to $1.6 billion compared with $1.4 billion the year before – an increase of 11.2 percent.
Much of this growth was in its insurance segment, which increased by 13.1 percent as a result of strong new business particularly in international financial lines, construction, North America primary casualty, marine, and political risk.
Its reinsurance segment GPW decreased 3.9 percent from the prior year quarter, primarily driven by non-renewal activity in its US casualty treaty book and foreign exchange impacts partially offset by growth in international casualty treaty, property facultative, US property treaty and crop.
Mike McGavick, chief executive officer, said: "XL delivered a very strong 2014 including continued progress in insurance and an extraordinary year in reinsurance. Many of our results were the best we have achieved in over 15 years, including our property and casualty combined ratio of 88.2 percent.
“Insurance results included a 2014 combined ratio of 94.4 percent, the best performance since 2007, and a loss ratio of 63.2 percent. And our reinsurance segment achieved a stellar 73.3 percent combined ratio, one of its best performances as well.
“Of course, these results were helped, in part, by one of the lowest catastrophe years we have seen in years. To build on our success, we intend to continue developing and delivering outstanding products and services to our current and new markets, continuing to move this progress forward."