Underwriting profit drops 19.8% at XL Group

XL Group plc reported Thursday its financial results for the quarter ending March 31, reporting a 1.3-point increase in its property & casualty loss ratio and a 19.8% drop in underwriting profit.

The Dublin-based carrier also announced Thursday that its XL Insurance (Bermuda) Ltd. subsidiary entered into an agreement to sell XL Life Reinsurance (SAC) Ltd. — which reinsures “substantially all” of XL’s life reinsurance business in Britain and continental Europe — to Bermuda-based GreyCastle Holdings Ltd. for $570 million in cash. All figures are in U.S. currency.

During the first quarter, XL Group recorded gross written premiums in P&C of $2.429 billion, up nearly 1% from $2.40 billion in the same period in 2013.

“The Insurance segment GPW increased 4.9% from the prior year quarter, as a result of higher renewed premiums in International Professional and North American Casualty and Construction lines,” XL Group stated in a press release. “Reinsurance segment GPW decreased 5.4% from the prior year quarter, predominantly driven by the non-renewal of a large UK Motor treaty and competitive trading conditions in Property.”

In P&C, XL Group’s loss ratio in the most recent quarter was 58.9%, up 1.3 points from 57.6% in 2013. Also in P&C, the first-quarter combined ratio increased 2 points year over year, from 87.7% in 2013 to 89.7% this year. The underwriting profit dropped 19.8%, from $180.588 million in Q1 2013 to $144.87 million this year.

XL Group’s insurance business is divided into four groups: international P&C, North America P&C, global professional lines and global specialty lines. North American P&C includes property, primary and excess casualty, environmental liability, excess and surplus lines, construction, surety and program business.

For the entire company, XL Group’s total revenues dropped 4% year over year, from $1.862 billion in Q1 2013 to $1.788 billion in the most recent quarter. Net investment income was down 5.2%, from $246 million in Q1 2013 to $233 million in Q1 2014.

Net income attributable to ordinary shareholders was $256 million in the most recent quarter, down 27% from $351 million in Q1 2013.

Gross written premiums in life were $84.3 million in the most recent quarter, about 4.7% of total revenues.

After a strategic review of its life reinsurance business in 2009, the company sold renewal rights to some of its businesses, “sold a portion of our U.S. life reinsurance business and announced that we would run-off our existing book of life and annuity business, and not accept new business,” XL Group stated in a filing in February with the United States Securities and Exchange Commission. As of 2013, the life operations still covered “a range of geographic markets, with an emphasis on the U.K., the United States, Ireland and Continental Europe,” XL Group said in its 2013 annual report.

The agreement announced May 1, 2014 to sell XL Life Reinsurance (SAC) Ltd. is expected to be completed this quarter and is “subject to satisfaction of regulatory conditions.”