XL reveals Q1 $163m net loss

The result was hit by $387.4m nat-cat losses net of reinsurance reinstatement premiums, including $242.6m from the Japanese earthquake and tsunami, $66.9m from the Australian flood and $75.3m from the Christchurch New Zealand earthquake.

This compared to $181.1m in q1 2010 when the net income was $128.0m. The Q1 2011 operating loss was $162.989m compared to a profit of $149.6m in the same period on 2010.

It s P&C gross written premium increased 9.2% to $2.01bn from the prior year quarter ($1.92bn), driven by an increase in the insurance segment of 8.0% and reinsurance segment of 10.9%.

XL said that increased exposure tied to improving economic conditions, the renewal of certain multi–year accounts and select new business initiatives has improved its insurance GWP result. It said the increase in GWP for reinsurance came specifically from opportunities in Europe, principally the UK motor market, marine and some increases in its continental European catastrophe portfolio.

Its P&C combined ratio was 125% (Q1 2010: 100.5%) and at 95.1%, the loss ratio was 24.5 percentage points worse than the prior year quarter. Included in the loss ratio was favourable prior year development of $71.0m compared to $86.7m in the prior year quarter.

While operating expenses were largely consistent with the fourth quarter, such expenses increased compared to the prior year quarter from $229.1m to $260.5m.

Xl said increased expenses related largely to the build out of the company’s previously announced strategic implementation office and other initiatives, combined with the impact of certain redundancy costs.

The P&C combined ratio excluding prior year development and the impact of natural catastrophe losses for the quarter was 100.9%, compared to 93.1% for the prior year quarter. The insurance segment combined ratio on this basis was 106.6% for the quarter compared to 96.4% for the prior year quarter, while the Rrinsurance segment combined ratio on this basis was 87.7% compared to 84.8% for the prior year quarter.

Chief executive Mike McGavick said: “XL’s first quarter results demonstrate resilience in the face of global catastrophic events. We are proud of the roles our insurance and reinsurance solutions are playing in the recovery of the devastated economies. Our risk management discipline again resulted in estimated losses from the quarter’s three major catastrophes that are well within our expected levels."