Wednesday, XL Capital Ltd. (XL) reported a net loss for its third quarter that narrowed substantially from last year due to the absence of $1.4 billion charge recorded in the year-ago quarter. Operating income for quarter, however, surged from last year, driven by higher underwriting contribution of XL's P&C operations and increased net income from investment affiliates.
The Hamilton, Bermuda-based company reported a net loss available to ordinary shareholders for the third quarter of $11.40 million or $0.03 per share, compared to a loss of $1.65 billion or $6.04 per share in the year-ago quarter.
The company noted that the absence of a $1.4 billion charge related to the transaction closed on August 5, 2008 with Syncora Holdings Ltd. and certain of its subsidiaries was the primary reason for the narrowed net loss to ordinary shareholders in the third quarter of 2009.
Operating income for the quarter was $306.41 million or $0.89 per share, compared to $107.77 million or $0.39 per share in the second quarter of 2008. The company attributed the higher operating income to an increase of $183.7 million from the underwriting contribution of XL's P&C operations and an increase of $97.2 million in the net income from investment affiliates.
On average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.63 per share for the quarter. Analysts estimates typically exclude special items.
The company also noted that the higher operating income was offset by recognition of $310.8 million in after-tax net realized losses related principally to other than temporary impairments. The charge was the main factor which lead a net loss available to ordinary shareholders of $11.40 million or $0.03 per share for the quarter.
Total revenues for the quarter decreased to $1.49 billion from $1.74 billion in the prior-year quarter.
For the sequentially preceding quarter, XL Capital had reported a net income available to ordinary shareholders of $80.00 million or $0.23 per share, compared to $237.85 million or $1.33 per share in the prior year quarter. Total revenues dropped to $1.73 billion from $2.12 billion in the same quarter last year.
Amongst others in the sector, Zurich, Switzerland-based insurer ACE Ltd. (ACE) on October 27, reported a higher third-quarter profit, driven by higher underwriting income. The company posted net income available to holders of common shares of $494 million or $1.46 per share for the third quarter, compared to $54 million or $0.16 per share in the prior year quarter. Income excluding net realized gains rose to $701 million or $2.07 per share from $504 million or $1.50 per share in the year-ago quarter.
XL's net investment income for the third quarter decreased to $327.05 million from $436.28 million in the prior year quarter.
Gross premiums written for the company's property and casualty operations for the quarter decreased to $1.58 billion from $1.90 billion a year ago, primarily due to lower investment yields, driven by both the impact of lower US LIBOR rates on floating rate structured credit assets, and higher allocations to lower yielding US Treasuries, Agencies and cash as a result of continued de-risking activities.Net premiums written or the company's property and casualty operations slid to $1.20 billion from $1.26 billion last year.
Net premium earned from the company's property and casualty operations for the quarter dropped to $1.29 billion from $1.52 billion in the year-ago quarter. Underwriting income for the quarter totaled $88.28 million, compared to underwriting loss of $95.39 million in the corresponding quarter last year.
The property and casualty combined ratio for the quarter was 93.2%, compared to 106.3% for the prior year. Excluding the charges for the cost reduction measures, the current quarter combined ratio would have been 92.6%.
Net realized losses on investments for the quarter were $310.82 million, compared to $286.42 million in the previous-year quarter. The loss for the third quarter of 2009 included other than temporary impairments, net of non-credit impairments, totaling $321.7 million, and realized losses on securities sales of $3.8 million.
XL's annualized return on ordinary shareholders' equity, based on operating income, was 16.7% for the quarter as compared to 5.8% in the prior year quarter.
Commenting on the results, XL's chief executive officer, Mike McGavick said, "On the positive side, our portfolio marks improved by $1.4 billion during the third quarter, and 54% of the $34.0 billion portfolio was in cash, government, government-related or government-supported securities at the end of the third quarter. Given the increased stability in the capital markets, we have selectively redeployed some of our cash and proceeds from sales and maturities into high quality assets, achieving new money yields of 3.9%."
For the quarter, XL Capital has recorded a 26% increase in book value per ordinary share to $23.84 and a 30% increase in tangible book value per ordinary share to $21.36. Total shareholders' equity increased to $9.2 billion from $7.5 billion in the third quarter of 2009.
For the nine-month period, the company's net income income available to ordinary shareholders was $246.93 million or $0.73 per share, compared to a loss of $1.20 billion or $5.70 per share in the similar period of last year.
Operating income for the nine-month period rose to $681.50 million or $2.00 per share from $650.84 million or $3.09 per share in year-ago period.
Total revenue for the period dropped to $4.74 billion from $6.04 billion in the prior-year period.
XL closed Wednesday's regular trading at $16.23, down $0.40 or 2.14%, on a volume of 10.54 million shares on the NYSE. In after hours, XL traded at $17.10, up $0.87 or 5.36%. In the past 52 weeks, the stock trended in a broad range of $2.56- $18.65, with a three-month average volume of 6.21 million shares.
For comments and feedback contact: editorial@rttnews.com
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.