XL Capital’s Q1 profits take a hit

XL Capital Ltd. reported a net income of US$211.9 million for 2008 Q1, a 39% drop from the same period of last year’s profit of US$549.7 million.
The reduction of US$337.8 million in net income is partly due to a decrease in underwriting profit from property and casualty operations. The underwriting profit was US$40.7 million in 2008 Q1, as opposed to US$116.8 million in 2007 Q1.
The combined ratio was 96.7% compared with 89.2% for the prior year quarter. The loss ratio for 2008 Q1 was 69.6% compared to 2007 Q1’s 63.5%.
“The increase in the loss ratio reflects an increase in property risk and catastrophe losses in the current quarter relative to the prior year quarter, as well as the effect of the decline in premium rates,” the company said.
Gross written premiums increased 3.1%, from US$1.58 billion in 2007 Q1 to US$1.63 billion. Net premiums earned decreased 4.1% “mainly as a result of an increase in ceded premiums of US$41 million related to the purchase of an adverse development cover related to our Lloyd’s operations.”
The company also reported net realized losses on investments of US$102.3 million in 2008 Q1, compared to a gain of US$9.3 million in 2007 Q1. Finally, the company saw a decrease in net income from investment affiliates of US$107.1 million, according to a company statement.