Tuesday, insurer XL Capital Ltd. (XL), reported a 66% plunge in second-quarter profit, reflecting unfavorable foreign currency translations, lower premium income, and a drop in net investment income amid the difficult economic conditions.
Michael McGavick, Chief Executive Officer, XL Capital said, "Finally! We are pleased to report a quarter in which the strength of the XL franchise shines through clearly, despite challenging market conditions in the sector."
The Hamilton, Bermuda-based company's net income available to ordinary shareholders for the second quarter plunged 66% to $80.00 million from $237.85 million in the prior-year quarter. On a per share basis, earnings plummeted 83% to $0.23 from $1.33 last year.
Results for the second quarter included a foreign exchange loss of $145.22 million, resulting from the weakening of the US dollar against other major currencies, primarily Sterling.
Income, excluding net realized gains and losses on investments for the quarter dropped 39% to $162.65 million from $266.21 million in the year-ago quarter. On a per share basis, earnings decreased 68% to $0.47 from $1.49 in the same quarter last year.
On average, 15 analysts polled by Thomson Reuters expected the company to earn $0.62 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the first quarter, XL Capital had reported a net income available to ordinary shareholders of $178.4 million or $0.53 per share, compared to $211.9 million or $1.19 per share in the prior year quarter.
Total revenues for the second quarter dropped to $1.73 billion from $2.12 billion in the same quarter last year. Analysts had a consensus revenue estimate of $1.71 billion for the second quarter.
For the sequentially preceding quarter, total revenues dropped 30% to $1.53 billion from $2.17 billion in the same quarter last year.
Net investment income for the second quarter decreased to $328.3 million from $440.4 million in the prior year quarter. Gross premiums written for the company's property and casualty operations for the quarter decreased to $1.50 billion from $1.79 billion a year ago, while net premiums written slid to $1.08 billion from $1.36 billion last year.
Net premium earned from the company's property and casualty operations for the quarter dropped to $1.30 billion from $1.51 billion in the year-ago quarter. Underwriting income for the quarter decreased to $89.44 million from $126.36 million in the corresponding quarter last year.
The property and casualty combined ratio for the quarter was 93.0%, compared to 91.6% for the prior year. Excluding the charges for the cost reduction measures, the current quarter combined ratio would have been 92.4%.
Net realized losses on investments for the quarter was $80.43 million, compared to net realized gains on investments of $2.04 million in the previous-year quarter.
XL's annualized return on ordinary shareholders' equity, based on operating income for the quarter was 11.2% compared to 13.3% in the prior year quarter.
Amongst others in the sector, Zurich, Switzerland-based insurer ACE Ltd. (ACE) on July 27, reported a 28% decline in second-quarter profit, hurt by lower premium income and a drop in net investment income. The company posted net income available to common shareholders of $535 million or $1.58 per share for the second quarter, down from $746 million or $2.18 per share in the prior year quarter. Income excluding net realized gains and losses dropped to $706 million or $2.09 per share from $738 million or $2.16 per share in the year-ago quarter.
For the six-month period, net income available to ordinary shareholders decreased to $258.33 million or $0.76 per share from $449.72 million or $2.52 per share in the same period last year. Income, excluding net realized gains and losses on investments declined to $375.10 million or $1.11 per share from $543.10 million or $3.04 per share in the year-ago period. Total revenues for six-month period dropped to $3.26 billion from $4.30 billion last year.
XL closed Tuesday's regular trading at $13.59, down $0.23 or 1.66%, on a volume of 5.27 million shares on the NYSE. In after hours, XL traded at $13.84, up $0.25 or 1.84%. In the past 52 weeks, the stock trended in a broad range of $2.56- $21.20, with a three-month average volume of 7.52 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.