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XL Group (XL) Q2 Earnings Beat, Revenues Miss Estimates

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XL Group Ltd’s (XL - Free Report) second-quarter 2017 operating net income of 96 cents per share outpaced the Zacks Consensus Estimate by 7.9%. Earnings soared 159.5% year over year, primarily owing to the company’s solid performance and continued lower operating expenses.

Including non-recurring items, the net income skyrocketed 660% year over year to $1.14 per share.

XL Group Ltd. Price, Consensus and EPS Surprise

 

XL Group Ltd. Price, Consensus and EPS Surprise | XL Group Ltd. Quote

Behind the Headlines

Total revenue of XL Group dipped 0.8% year over year to $2.74 billion due to lower net premiums earned. Also, revenues missed the Zacks Consensus Estimate by 1.7%.

Net premiums earned slipped 0.6% year over year to $2.5 billion.

Net investment income declined 3.1% year over year to $208.7 million.

Pre-tax cat losses, net of reinsurance and reinstatement premiums were $92.1 million. The reported figure was significantly narrower than a loss of $240.1 million in the year-ago quarter.

Total expenses of XL Group decreased 4.8% year over year to $2.5 billion owing to lower net losses and loss expenses incurred, operating expenses as well as interest expenses.

With respect to Property and Casualty operations, gross premiums written in the quarter inched up 0.7% year over year to $3.6 billion.

The insurance segment witnessed an improvement in premiums, primarily owing to growth in Political Risk, International Financial Lines and Global Risk Management. However, decreases in Global lines and International property and casualty lines partially offset this upside.

However, the reinsurance segment experienced deterioration in its premiums in the reported quarter due to a non-recurring treaty signed in the prior-year quarter. New business in this second quarter also offset cancellations within the said segment.

XL Group’s underwriting profit soared about 91% year over year to approximately $194.6 million. Combined ratio improved 370 basis points to 92.3% in the reported quarter.

Financial Update

XL Group exited the second quarter with cash and cash equivalents of $3.13 billion, down 8.6% from $3.43 billion at the end of 2016.

Notes payable and debt at the end of the quarter were $3.2 billion, up 21.1% from the year-end 2016.

As of Jun 30, 2017, diluted book value of XL Group was $42.15 per share, up 4.5% from Dec 31, 2016.

Share Repurchase Update    

In the second quarter, XL Group bought back approximately 6.0 million shares worth $250.1 million. As of Jun 30, 2017, XL Group had shares worth $650.0 million remaining under its authorization.

Zacks Rank

XL Group currently carries a Zacks Rank #4 (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 their second-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) missed their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) beat the same.

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