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XL Group (XL) Posts Wider-than-Expected Q3 Loss, Sales Beat
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XL Group Ltd reported third-quarter 2017 operating net loss of $4.00 per share, wider than the Zacks Consensus Estimate loss of $3.89. Also, the operating net loss in the reported quarter compared unfavorably with the operating earnings of 44 cents in the year-ago quarter. The massive catastrophe losses incurred in the reported quarter were mainly responsible for such a dismal earnings performance.
Including non-recurring items, the company reported net loss of $4.06 per share, as against the net income of 25 cents in the year-ago quarter.
Behind the Headlines
Total revenue of XL Group improved 6.9% year over year to $2.8 billion owing to higher net premiums earned as well as fee income and other. Also, revenues outperformed the Zacks Consensus Estimate by 6.1%.
Net premiums earned rose 7.7% year over year to $2.6 billion.
Net investment income declined 3.3% year over year to $202.8 million.
Pre-tax cat losses, net of reinsurance and reinstatement premiums were $1.5 billion. The reported figure was significantly wider than a loss of $97.4 million in the year-ago quarter. The losses incurred in the reported quarter are primarily attributable to hurricanes Harvey, Irma and Maria.
Total expenses of XL Group shot up 63.9% year over year to $4.0 billion due to substantially higher net losses and loss expenses incurred, claims and policy benefits, acquisition costs and foreign exchange losses.
With respect to Property and Casualty operations, gross premiums written in the quarter improved 10.9% year over year to $3.0 billion.
The insurance segment witnessed an improvement in premiums, primarily owing to growth in International and North America Property lines, Accident & Health, North America Construction and Fine Art & Specie. However, decreases in North America programs and Excess & Surplus lines partially offset this upside.
The reinsurance segment experienced improvement in its premiums in the reported quarter on the back of higher level of new business written and reinstatement premiums from the recent catastrophic activity. The rise in new business can be attributable to the Casualty line of business, mainly within the Bermuda and EMEA regions. Plus, significant new business was written within the Property Treaty line of business from both the North America and Latin America regions.
XL Group reported underwriting loss of $1.2 billion in contrast to an underwriting profit of $0.2 billion in the prior-year quarter. Combined ratio deteriorated 5380 basis points to 146.9% in the reported quarter.
Financial Update
XL Group exited the third quarter with cash and cash equivalents of $3.0 billion, down 11.6% from $3.4 billion at the end of 2016.
Notes payable and debt at the end of the quarter were $3.2 billion, up 21.2% from the year-end 2016.
As of Sep 30, 2017, diluted book value of XL Group was $38.27 per share, down 5.1% from Dec 31, 2016.
Share Repurchase Update
In the third quarter, XL Group bought back approximately 2.7 million shares worth $120.9 million. As of Sep 30, 2017, XL Group had shares worth $529.1 million remaining under its authorization.
Among other players from the same space that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed their respective Zacks Consensus Estimate.
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XL Group (XL) Posts Wider-than-Expected Q3 Loss, Sales Beat
XL Group Ltd reported third-quarter 2017 operating net loss of $4.00 per share, wider than the Zacks Consensus Estimate loss of $3.89. Also, the operating net loss in the reported quarter compared unfavorably with the operating earnings of 44 cents in the year-ago quarter. The massive catastrophe losses incurred in the reported quarter were mainly responsible for such a dismal earnings performance.
XL Group Ltd. Price, Consensus and EPS Surprise
XL Group Ltd. Price, Consensus and EPS Surprise | XL Group Ltd. Quote
Including non-recurring items, the company reported net loss of $4.06 per share, as against the net income of 25 cents in the year-ago quarter.
Behind the Headlines
Total revenue of XL Group improved 6.9% year over year to $2.8 billion owing to higher net premiums earned as well as fee income and other. Also, revenues outperformed the Zacks Consensus Estimate by 6.1%.
Net premiums earned rose 7.7% year over year to $2.6 billion.
Net investment income declined 3.3% year over year to $202.8 million.
Pre-tax cat losses, net of reinsurance and reinstatement premiums were $1.5 billion. The reported figure was significantly wider than a loss of $97.4 million in the year-ago quarter. The losses incurred in the reported quarter are primarily attributable to hurricanes Harvey, Irma and Maria.
Total expenses of XL Group shot up 63.9% year over year to $4.0 billion due to substantially higher net losses and loss expenses incurred, claims and policy benefits, acquisition costs and foreign exchange losses.
With respect to Property and Casualty operations, gross premiums written in the quarter improved 10.9% year over year to $3.0 billion.
The insurance segment witnessed an improvement in premiums, primarily owing to growth in International and North America Property lines, Accident & Health, North America Construction and Fine Art & Specie. However, decreases in North America programs and Excess & Surplus lines partially offset this upside.
The reinsurance segment experienced improvement in its premiums in the reported quarter on the back of higher level of new business written and reinstatement premiums from the recent catastrophic activity. The rise in new business can be attributable to the Casualty line of business, mainly within the Bermuda and EMEA regions. Plus, significant new business was written within the Property Treaty line of business from both the North America and Latin America regions.
XL Group reported underwriting loss of $1.2 billion in contrast to an underwriting profit of $0.2 billion in the prior-year quarter. Combined ratio deteriorated 5380 basis points to 146.9% in the reported quarter.
Financial Update
XL Group exited the third quarter with cash and cash equivalents of $3.0 billion, down 11.6% from $3.4 billion at the end of 2016.
Notes payable and debt at the end of the quarter were $3.2 billion, up 21.2% from the year-end 2016.
As of Sep 30, 2017, diluted book value of XL Group was $38.27 per share, down 5.1% from Dec 31, 2016.
Share Repurchase Update
In the third quarter, XL Group bought back approximately 2.7 million shares worth $120.9 million. As of Sep 30, 2017, XL Group had shares worth $529.1 million remaining under its authorization.
Zacks Rank
XL Group carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the same space that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed their respective Zacks Consensus Estimate.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>