XL insurance swings to underwriting loss in Q2

XL Group’s insurance segment produced an underwriting loss in the second quarter of 2017 due to higher large loss activity.

The primary insurance segment incurred an underwriting loss of $20.7 million in the second quarter compared to an underwriting profit of $54.6 million in the same period of 2017.

The loss ratio in the segment deteriorated to 70.1 percent from 65.2 percent over the period due to large loss activity. Net losses and loss expenses incurred increased to $1.22 billion after $1.08 billion in the second quarter of 2017. The combined ratio in the primary insurance segment deteriorated to 101.2 percent from 96.7 percent.

The insurance segment gross premiums written increased 11.8 percent year on year to $5.75 billion from the prior year quarter, driven primarily by rate increases and new business in global lines, property and financial lines in international and property and construction in North America.

In the reinsurance segment the underwriting profit remained broadly unchanged with at $134.9 million in the second quarter after $140.0 million in the same period a year ago. The combined ratio went up slightly to 85.7 percent from 83.8 percent over the period.

Overall, gross premiums written in P&C grew to $3.93 billion in the second quarter of 2018 from $3.55 billion. The underwriting profit declined to $114.2 million from $194.6 million over the period. The combined ratio deteriorated to 95.8 percent from 92.3 percent.

"In the second quarter we have continued our progress toward a strong and diversified book, particularly as rate conditions improved across most lines,” said XL CEO Mike McGavick.

“We grew top line by 10.6 percent, maintained underwriting discipline and continued our shift of our book toward lower volatility business. Partially offsetting these positive trends was non-catastrophe large loss activity from the current quarter as well as prior year development from short tail lines in insurance,” McGavick noted.

AXA is in the process of acquiring XL Group for $15.3 billion, to be fully paid in cash.

XL Group’s net income attributable to common shareholders for the second quarter of 2018 was $319.0 million compared to $301.6 million in the prior year quarter

“Overall, we are pleased with the results and look forward to continuing to realize the full potential of what we have built when we become part of AXA Group," McGavick said.

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