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XL Group (XL) Q4 Earnings and Revenues Beat Estimates
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XL Group Ltd’s fourth-quarter 2016 operating net income of 47 cents per share surpassed the Zacks Consensus Estimate by 38.2%. However, earnings deteriorated approximately 27.7% year over year due to higher expenses and lower underwriting profit.
Including non-recurring items, net income surged 47.4% year over year to $1.12 per share.
Full-Year 2016 Highlights
XL Group’s full-year operating earnings came in at $1.63 per share, down about 33% year over year.
In 2016, total revenue increased 16.5% year over year to $10.6 billion.
Behind the Headlines
Total revenue of XL Group inched up 1.9% year over year to $2.66 billion due to higher net premiums earned. Also, the top line beat the Zacks Consensus Estimate of $2.59 billion.
Net premiums earned grew 3.3% year over year to $2.5 billion.
Net investment income was $196.1 million, down 9% year over year.
Pre-tax cat losses, net of reinsurance and reinstatement premiums, were $246.1 million. The reported figure was significantly wider than a loss of $107.8 million in the year-ago quarter.
Total expenses of XL Group rose 5.8% year over year to $2.6 billion owing to higher net losses and loss expenses incurred, interest expenses, and exchange losses.
With respect to Property and Casualty operations, gross premiums written in the quarter climbed 19.3% year over year to $3 billion.
The insurance segment witnessed an improvement in premiums, primarily owing to new business in Political Risk and Trade Credit, Property International Open Market, Professional, US, Construction North America and North America programs along with stronger renewals in International Financial Lines and Casualty Global Risk Management.
Also, the reinsurance segment displayed premium growth in the reported quarter. Significant new proportional business in the Property Treaty line of business in Bermuda led to the improvement. However, cancellations in Bermuda and London in the Casualty line of business partially offset the upside.
XL Group’s underwriting profit plunged 31.1% year over year to $126.4 million. Combined ratio deteriorated 250 basis points to 94.8% in the reported quarter.
Financial Update
XL Group exited the quarter with cash and cash equivalents of $3.42 billion, up 5.2% from $3.26 billion at the end of 2015.
Notes payable and debt at the end of the quarter inched up 0.1% to $2.65 billion from the 2015-end level of $2.64 billion.
As of Dec 31, 2016, diluted book value of XL Group was $40.33 per share, up 3.8% from Dec 31, 2015.
Share Repurchase Update
In the year ended Dec 31, 2016, XL Group bought back approximately 30.2 million shares worth $1.1 billion. As of Dec 31, 2016, XL Group had shares worth $449.3 million remaining under its authorization.
Among the other players from the same space that have reported their fourth-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) beat their respective Zacks Consensus Estimate.
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XL Group (XL) Q4 Earnings and Revenues Beat Estimates
XL Group Ltd’s fourth-quarter 2016 operating net income of 47 cents per share surpassed the Zacks Consensus Estimate by 38.2%. However, earnings deteriorated approximately 27.7% year over year due to higher expenses and lower underwriting profit.
Including non-recurring items, net income surged 47.4% year over year to $1.12 per share.
Full-Year 2016 Highlights
XL Group’s full-year operating earnings came in at $1.63 per share, down about 33% year over year.
In 2016, total revenue increased 16.5% year over year to $10.6 billion.
Behind the Headlines
Total revenue of XL Group inched up 1.9% year over year to $2.66 billion due to higher net premiums earned. Also, the top line beat the Zacks Consensus Estimate of $2.59 billion.
Net premiums earned grew 3.3% year over year to $2.5 billion.
Net investment income was $196.1 million, down 9% year over year.
Pre-tax cat losses, net of reinsurance and reinstatement premiums, were $246.1 million. The reported figure was significantly wider than a loss of $107.8 million in the year-ago quarter.
Total expenses of XL Group rose 5.8% year over year to $2.6 billion owing to higher net losses and loss expenses incurred, interest expenses, and exchange losses.
With respect to Property and Casualty operations, gross premiums written in the quarter climbed 19.3% year over year to $3 billion.
The insurance segment witnessed an improvement in premiums, primarily owing to new business in Political Risk and Trade Credit, Property International Open Market, Professional, US, Construction North America and North America programs along with stronger renewals in International Financial Lines and Casualty Global Risk Management.
Also, the reinsurance segment displayed premium growth in the reported quarter. Significant new proportional business in the Property Treaty line of business in Bermuda led to the improvement. However, cancellations in Bermuda and London in the Casualty line of business partially offset the upside.
XL Group’s underwriting profit plunged 31.1% year over year to $126.4 million. Combined ratio deteriorated 250 basis points to 94.8% in the reported quarter.
Financial Update
XL Group exited the quarter with cash and cash equivalents of $3.42 billion, up 5.2% from $3.26 billion at the end of 2015.
Notes payable and debt at the end of the quarter inched up 0.1% to $2.65 billion from the 2015-end level of $2.64 billion.
As of Dec 31, 2016, diluted book value of XL Group was $40.33 per share, up 3.8% from Dec 31, 2015.
Share Repurchase Update
In the year ended Dec 31, 2016, XL Group bought back approximately 30.2 million shares worth $1.1 billion. As of Dec 31, 2016, XL Group had shares worth $449.3 million remaining under its authorization.
XL Group Ltd. Price, Consensus and EPS Surprise
XL Group Ltd. Price, Consensus and EPS Surprise | XL Group Ltd. Quote
Zacks Rank
XL Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among the other players from the same space that have reported their fourth-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) beat their respective Zacks Consensus Estimate.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>