XL Group (XL) Q3 Earnings Beat, Revenues Miss Estimates

XL Group Ltd (NYSE:XL) reported third-quarter 2016 operating net income of 44 cents per share that outpaced the Zacks Consensus Estimate by 4.8%. Also, earnings soared approximately 91.3% year over year on lower expenses and higher underwriting profit.

Including non-recurring items, net income skyrocketed 177.8% year over year, to 25 cents per share.

Behind the Headlines

Total revenue of XL Group slipped 0.1% year over year to $2.65 billion on lower net investment income. Also, the top line missed the Zacks Consensus Estimate of $2.67 billion.

Net premiums earned inched up 0.4% year over year to $2.4 billion.

Net investment income was $209.8 million, down 6.8% year over year.

Pre-tax cat losses, net of reinsurance and reinstatement premiums, came in at $97.4 million. The reported figure was significantly wider than a loss of $30.8 million in the year-ago quarter.

Total expenses of XL Group declined 3% year over year to $2.5 billion owing to lower claims and policy benefits, acquisition costs, interest expenses, and operating expenses.

With respect to Property and Casualty operations, gross premiums written in the quarter grew 2.2% year over year to $2.7 billion.

The insurance segment witnessed a decline in premiums, partly owing to adverse foreign exchange impacts resulting from the weakening of the British pound against the U.S. dollar. Nonetheless, higher premiums in Political Risk & Trade Credit, Property International Open Markets and Cyber business lines partially offset the decline.

However, the reinsurance segment displayed premium growth in the reported quarter. Significant new business in Property Treaty and Credit lines of business in the Asia-Pacific region and new business in Casualty and Property Treaty lines of business in the North American region drove the upside.

XL Group’s underwriting profit jumped 46.2% year over year to $166.9 million. Combined ratio improved 220 basis points to 93.1% in the reported quarter.

Financial Update

XL Group exited the quarter with cash and cash equivalents of $3.39 billion, up 4.2% from $3.26 billion at the end of 2015.

Notes payable and debt at the end of the quarter inched up 0.1% to $2.65 billion from the 2015-end level of $2.64 billion.

As of Sep 30, 2016, diluted book value of XL Group was $42.37 per share, up 9% from Dec 31, 2015.

Share Repurchase Update

XL Group bought back approximately 6.6 million shares worth $221.8 million during the reported quarter. As of Sep 30, 2016, XL Group had shares worth $594.1 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 stocks here.

Performance of Other P&C Insurers

Among the other players from the same space that have reported their third-quarter earnings so far, the bottom line at Progressive Corp. (NYSE:PGR) and The Travelers Companies Inc. (NYSE:TRV) beat their respective Zacks Consensus Estimate, while RLI Corp. (NYSE:RLI) missed the same.

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