XL Group witnesses 3% decrease in p&c net premiums in Q1 2015

XL Group plc, a global insurer that offers property, liability, professional, surety, aviation and marine coverage from offices in Toronto, Vancouver, Calgary and Montreal, saw a p&c combined ratio of 88.9% for Q1 2015, compared to 89.7% in the prior year quarter.

The first quarter results for the three-month period ending March 31, announced by XL Group on Wednesday, included a 2.1% increase in the first quarter p&c gross premiums written (GPW) compared to the prior year quarter. “The insurance segment GPW increased 5.3% from the prior year quarter as a result of increased new business, particularly in International Property and Casualty lines, North America Surplus Lines and Construction, International Financial Lines and Specialty Marine and a higher renewing premium base in International Middle Market, Global Risk Management and North America Construction business lines,” XL Group said in a press release.

“These increases were offset in part by unfavorable foreign exchange movement of US$85.0 million as compared to the prior year quarter,” the release said. “The Reinsurance segment GPW decreased 3.7% from the prior year quarter, primarily driven by the impact of foreign exchange on the International operations, partially offset by growth in North America Crop premiums.”

P&C net premiums earned (“NPE”) in the first quarter of US$1.3 billion were comprised of US$962.3 million from the Insurance segment and US$357.2 million from the Reinsurance segment. “Compared to the prior year quarter, Insurance NPE decreased by 3.0%, largely attributable to utilization of proportional reinsurance in International Primary Casualty as well as an increase in cessions in several North America business lines,” the release said.

“Insurance results included a combined ratio of 94.1%, 1.3 points better than a year ago, and Reinsurance was 74.7%, a 1.6 point improvement from the same period a year ago,” said XL Group plc CEO Mike McGavick in the release.

Other Q1 results include the following:

• The P&C loss ratio in the current quarter was 0.6 percentage points lower than in the prior year quarter. Included in the P&C loss ratio was favorable development of $48.5 million compared to $38.8 million in the prior year quarter;

• The P&C combined ratio excluding prior year development and the impact of natural catastrophe losses for the quarter was 91.4%, compared to 91.3% for the prior year quarter. The Insurance segment combined ratio on this basis was 93.2% for the quarter compared to 94.6% for the prior year quarter, while the Reinsurance segment combined ratio on this basis was 86.6% for the quarter compared to 83.5% for the prior year quarter; and

• Operating expenses in the quarter were 4.9% higher than in the prior year quarter, primarily due to the impact of the proposed acquisition of Catlin. Excluding the Catlin-related transaction costs of approximately $10.5 million, operating expenses were up 1.6% compared to the prior year quarter.