XL Catlin Ends 2015 on Firmer, Post-Merger Solid Ground

The creation of XL Catlin in mid-2015 through a $4 billion deal put in place significant new scale and market reach for the combined insurer and reinsurer. With that in mind, parent XL Group’s Q4 and 2015 full-year earnings reflect progress made, and challenges to come.

XL Group said it generated $228.6 million in net income during the quarter, or $0.76 per fully-diluted share. Over the same period last year, that number was $139.5 million, or $0.53 per share.

For the year, XL Group’s net income surpassed $1.2 billion, versus $188.3 million in 2014. XL Group said its results for 2015 include Catlin numbers from May 1, 2015.

“Through 2015, XL produced solid results in a tough [insurance/reinsurance] market while closing a transformative acquisition and successfully launching XL Catlin,” CEO Mike McGavick said in prepared remarks.

McGavick said he expected continued pressure on both the company’s insurance and reinsurance investment markets in 2016, but said the combined company is “well positioned to capitalize on our increased market relevance and to find new areas of innovation and opportunity.”

Here are Q4 and year-end highlights from XL Group’s P/C operations:

• Gross premiums written in Q4 surpassed $2.5 billion, net premiums written hovered close to $1.88 billion, and net premiums earned landed at $2.38 billion. In 2014, they were at $1.6 billion, $1.2 billion and $1.4 billion, respectively.
• Execs booked $183.5 million in underwriting profit in Q4 2015, versus $218.85 million over the same period last year.
• The Q4 2015 combined ratio came in at 92.3, up from 84.5 in Q4 2014.
• For the year, XL Group produced $10.67 billion in gross premiums written, $7.8 billion in net premiums written and $8.2 billion in net premiums earned. In 2014, those numbers were at $7.8 billion, $5.77 billion and $5.7 billion, respectively.
• In 2015, XL Group’s underwriting profit came in at $693.2 million, versus $676 million in 2014.
• XL Group’s combined ratio for 2015 was 92, compared to 88.2 in 2014.

Other highlights:

• XL Group said its merger with Catlin cost $73.3 million in Q4, and $156.4 million for the year.
• XL Group’s results reflect the decision to have subsidiary XL Life Ltd. cede a block of U.S. term life reinsurance treaties – 290,000 policies – to a subsidiary of Reinsurance Group of America. The deal included all of XL Group’s U.S. term life reinsurance policy reserves, and also cedes 80 percent of the remaining life reinsurance premiums not included in its 2014 sale of life reinsurance subsidiary XL Life Reinsurance (SAC) Ltd. to GreyCastle Holdings Ltd. for $570 million.

Source: XL Group/XL Catlin