XL CEO McGavick: Q4 and Year Helped By Record Low Catastrophe Results

As XL Group PLC gears up to buy Catlin Group Ltd. for $4.2 billion later this year, it can celebrate a 2014 fourth quarter and year with healthy results generated on its own.

XL’s insurance arm produced a 2014 combined ratio of 94.4. Its reinsurance arm achieved a 73.3 combined ratio for the year, according to the company. Both count as stellar performances compared to recent years, CEO Mike McGavick said.

“Those results were helped, in part, by one of the lowest catastrophe years we have seen in years,” McGavick noted in prepared remarks. “To build on our success we intend to continue developing and delivering outstanding products and services to our current and new markets.”

One blip: Net income for Q4 came in at $139.5 million, or $1.12 per fully diluted share. That’s less than half of the more than $300 million in net income, or $1 per fully diluted share, produced in the 2013 fourth quarter. XL Group said this number was attributable to losses tied to investments supporting a life retrocession arrangement.

Here are XL Group’s earnings highlights:

• The property/casualty combined ratio for Q4 came in at 84.5, versus 93.3 over the same period last year.
• Net investment income hit $226.2 million, down slightly from $240.8 million in the 2013 fourth quarter, again due to the Life Retrocession arrangements.
• For the property/casualty division, gross premiums written were booked at more than $1.6 billion, with net premiums written at $1.2 billion and net premiums earned at $1.4 billion. That compares with 2013 gross premiums written of nearly $1.46 billion, net premiums written of $1 billion and net premiums earned surpassing $1.5 billion.
• Natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums in Q4 came in at $31.7 million, down from $94.3 million in the 2013 fourth quarter.

Source: XL Group