XL Group combined ratio up nearly 8 points in Q4 2015 to 92.3% from 84.5% in Q4 2014

Dublin, Ireland-based XL Group plc has reported a P&C combined ratio of 92.3% for the fourth quarter of 2015 ending Dec. 31, up from 84.5% in the prior year quarter, and a full-year 2015 P&C combined ratio of 92%, compared to 88.2% in 2014.

XL Group, through its subsidiaries and under the XL Catlin brand, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. [click image below to enlarge]

P&C net premiums earned (NPE) in the fourth quarter of 2015 of US$2.4 billion were comprised of US$1.64 billion from the Insurance segment and US$734.9 million from the Reinsurance segment, XL Group said in a statement last week. The P&C loss ratio in the current quarter was 5.8 percentage points higher than in the prior year quarter. Included in the P&C loss ratio was favourable development of US$121.2 million compared to US$96.7 million in the prior year quarter, the company said.

The Group reported that the P&C loss ratio variance was impacted by natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums of US$107.8 million, compared to US$31.7 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 92.8%, compared to 89.1% for the prior year quarter. The Insurance segment combined ratio on this basis was 95.7% for the quarter compared to 95.4% for the prior year quarter, while the Reinsurance segment combined ratio on this basis was 86.3% for the quarter compared to 73.0% for the prior year quarter, driven by the large losses previously mentioned and loss activity in the company’s worldwide agriculture line of business.

The company also reported an operating net income of US$195 million for the quarter, which decreased compared to operating net income of US$293.9 million in the prior year quarter.

The current quarter includes approximately US$73.3 million in integration costs as well as US$107.8 million in natural catastrophe losses, compared to US$31.7 million in natural catastrophe losses in the prior year quarter.

Net investment income for the quarter was US$215.5 million, compared to US$226.2 million in the prior year quarter and US$225.1 million in the third quarter of 2015, the statement said.

Gross premiums written (GPW) in the fourth quarter of 2015 increased 56% compared to the prior year quarter following the combination with Catlin, XL Group reported. The Insurance segment GPW increased 58.8% from the prior year quarter primarily due to the combination with Catlin. The Reinsurance segment GPW also increased 30.3% from the prior year quarter, albeit on a light renewal quarter, primarily due to the combination with Catlin. This was partially offset by the timing of renewals, particularly a large quota share which was extended and renewed at Jan. 1, 2016.

“Through 2015, XL produced solid results in a tough (re)insurance market while closing a transformative acquisition and successfully launching XL Catlin,” said XL Group CEO Mike McGavick in the statement. “Looking to 2016, taking into account the continued pressure from both the (re)insurance and investment markets, we feel we are well positioned to capitalize on our increased market relevance and to find new areas of innovation and opportunity.”