XL slashes third quarter net loss

Bermudian (re)insurer XL Capital reported a third quarter loss of $11.4m, markedly better than this time last year, when the group reported a net loss of $1.65bn.

The significant improvement in the net loss available to ordinary shareholders from the prior year quarter is primarily due to a charge of $1.4bn in third quarter of 2008 related to the transaction closed on August 5, 2008 with Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd) and certain of its subsidiaries.

Also contributing to the improvement was an increase in operating income of $198.6m primarily due to an increase of $183.7m from the underwriting contribution of XL’s P&C operations and an increase of $97.2m in the net income from investment affiliates. These were partially offset by a decrease in investment income of $109.1m compared to the third quarter of 2008.

Pre-tax net realized investment losses for the quarter were $325.5m compared to a loss of $292.9m in the third quarter of 2008. The loss for the third quarter of 2009 included other than temporary impairments, net of non-credit impairments, totaling $321.7m, and realized losses on securities sales of $3.8m.

On the underwriting side, net earned premiums for the quarter was in line with the rest of XL's competitors, falling to $1.29bn from $1.52bn in the third quarter of 2008. The group's combined ratio improved to 93.2% from 106.3%.

Michael McGavick, XL's chief executive said: “Overall we are pleased with the third quarter. Our operating results indicate what our clients and brokers have already clearly concluded – XL is delivering for our customers and, on an operating basis, for shareholders. As we approach the January renewal season, XL is fully focused on serving the needs of our customers, delivering value to our shareholders and emerging as the best P&C (re)insurer wherever we choose to compete.”