XL Group Ltd’s (NYSE:XL) first-quarter 2017 operating net income of 50 cents per share outpaced the Zacks Consensus Estimate by 8.7%. Moreover, earnings improved 42.9% year over year, primarily due to the company’s solid performance and continued lower operating expenses.
Including non-recurring items, net income skyrocketed 714.3% year over year to 57 cents per share.
Behind the Headlines
Total revenue of XL Group grew 6.5% year over year to $2.74 billion due to higher net premiums earned. However, revenues narrowly missed the Zacks Consensus Estimate.
Net premiums earned grew 7.1% year over year to $2.5 billion.
Net investment income declined 2.6% year over year to $200.5 million.
Pre-tax cat losses, net of reinsurance and reinstatement premiums, were $96.1 million. The reported figure was significantly wider than a loss of $52.8 million in the year-ago quarter.
Total expenses of XL Group rose 9.4% year over year to $2.5 billion owing to higher net losses and loss expenses incurred, claims and policy benefits, as well as acquisition costs.
With respect to Property and Casualty operations, gross premiums written in the quarter grew 6% year over year to $4.6 billion.
The insurance segment witnessed an improvement in premiums, primarily owing to growth in North America Construction as well as International Casualty and International Property business lines.
Also, the reinsurance segment displayed premium growth in the reported quarter. Increased global client management efforts, which resulted in improved retention of existing business and better growth opportunities, drove the upside.
XL Group’s underwriting profit decreased 18% year over year to approximately $144 million. Combined ratio deteriorated 180 basis points to 94.3% in the reported quarter.
Financial Update
XL Group exited the first quarter with cash and cash equivalents of $3.35 billion, down 2.2% from $3.43 billion at the end of 2016.
Notes payable and debt at the end of the quarter was $2.65 billion, flat with the 2016-end level.
As of Mar 31, 2017, diluted book value of XL Group was $41.10 per share, up 1.9% from Dec 31, 2016.
Share Repurchase Update
In the first quarter, XL Group bought back approximately 5.1 million shares worth $200.5 million. As of Mar 31, 2017, XL Group had shares worth $900 million remaining under its authorization.
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 other players from the same space that have reported their first-quarter earnings so far, the bottom line at The Progressive Corporation (NYSE:PGR) , The Travelers Companies, Inc. (NYSE:TRV) and RLI Corp. (NYSE:RLI) missed their respective Zacks Consensus Estimate.
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RLI Corp. (RLI): Free Stock Analysis Report
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