The Company's third quarter results reflect net incurred losses of $750.0 million pre tax, or $680.0 million after tax, due to the attack on the World Trade Center and other related events (collectively "WTC") on September 11, 2001. In addition, the effect of other previously announced loss events, including the Sri Lanka airport attack, Toulouse plant explosion, satellite losses and adverse development in the Company's Lloyd's operations, were $103.7 million after taxes. The Company's results also reflect the inclusion of the acquired Winterthur International operations in XL's results in the insurance segment for the first time from July 1, 2001.
For the nine months ended September 30, 2001, the net loss was $492.5 million, or a loss of $3.87 per share, compared with net income of $505.7 million, or income of $4.02 per share, during the same period in 2000. The economic operating loss was $400.8 million, or a loss of $3.15 per share, during the first nine months of 2001 compared with income of $466.0 million, or income of $3.71 per share, for the first nine months of 2000. The GAAP operating loss for the first nine months of 2001 was $445.0 million, or a loss of $3.49 per share, compared with operating income of $424.6 million, or income of $3.38 per share, for the nine months ended September 30, 2000.
Commenting on the third quarter results, Brian M. O'Hara, President and Chief Executive Officer of XL, stated, "This has been an unprecedented time for our industry. The losses sustained on September 11, 2001 are the largest in history."
"Our loss estimate for the World Trade Center and related September 11, 2001 events increased slightly from our previously reported loss estimate of $700.0 million, reflecting modestly higher than originally anticipated losses," stated Mr. O'Hara.
"We are presently faced with an unprecedented change in both our insurance and reinsurance markets. The perception of risk has changed dramatically and the terms and conditions of insurance and reinsurance will be significantly impacted for years," noted Mr. O'Hara. "The market dynamics we are facing present an environment in which XL will demonstrate its strength. XL has the resources and market position leadership to move forward and we are well-positioned to achieve our future growth and earnings goals."
"We will be committing our capacity where the highest and most enduring returns are and remain fully committed to our strategic insurance, reinsurance and financial products businesses," Mr. O'Hara concluded.
Total revenues were $845.0 million and $694.6 million for the quarters ended September 30, 2001 and 2000, respectively. For the first nine months of 2001 and 2000, revenues were $2.4 billion and $2.1 billion, respectively.
Gross premiums written were $1.2 billion for the third quarter of 2001, compared with $736.6 million for the third quarter of 2000. Net premiums earned were $751.5 million in the third quarter of 2001 versus $540.0 million in the third quarter of 2000.
For the nine months ended September 30, 2001, gross premiums written were $3.4 billion compared with $2.4 billion in 2000's first nine months. Net premiums earned were $1.9 billion in the first nine months of 2001 versus $1.5 billion in the first nine months of 2000.
Net investment income, excluding net realized investment gains and losses, was $142.8 million in the third quarter of 2001 compared with $134.6 million in 2000's third quarter. Net realized losses on investments were $64.6 million in the third quarter of 2001 compared with net realized gains of $1.0 million in 2000's third quarter.
Net investment income, excluding net realized investment gains and losses, was $413.0 million during the first nine months of 2001, compared with $399.6 million in 2000's first nine months. Net realized losses on investments were $35.5 million during the first nine months of 2001 compared with net realized gains of $74.8 million in 2000's first nine months.
The Company's equity in the net earnings of its affiliates for the third quarter was $7.3 million in 2001 compared to $18.4 million in the third quarter of 2000, primarily reflecting the impact of WTC related losses at the Company's affiliate, Le Mans Ré. The Company's equity in the net earnings of its affiliates during the first nine months was $65.2 million in 2001 compared to $61.7 million in the first nine months of 2000.
Total assets as at September 30, 2001 were $25.7 billion compared with $16.9 billion as at December 31, 2000. Shareholders' equity as at September 30, 2001 was $4.8 billion compared with $5.6 billion as at December 31, 2000. Fully diluted book value per share as at September 30, 2001 was $38.86 compared with $44.78 as at December 31, 2000.
In the third quarter of 2001, the combined ratio was 223.2% compared with 96.4% in the third quarter of 2000. The loss ratios were 186.7% and 62.6% in the third quarters of 2001 and 2000, respectively, and the corresponding expense ratios were 36.5% and 33.8%, respectively.
The combined ratio for the Company was 144.1% for the first nine months of 2001 compared with 96.4% during the first nine months of 2000. The loss ratios were 109.6% and 63.1% in the first nine months of 2001 and 2000, respectively, with the corresponding expense ratios being 34.5% and 33.3%, respectively.
In the third quarter of 2001, the Company repurchased 800,000 shares prior to September 11. Subsequent to September 11, an additional 500,000 shares were repurchased. During the first nine months of 2001, the Company repurchased 1.5 million of its shares at an average price of $76.40 per share. XL has approximately $135.4 million remaining in its current share repurchase authorization.
A live on-line webcast of a call with analysts and investors will be held at 8:30 a.m. Eastern Time on Wednesday, October 24, 2001 to review the third quarter results at www.xlcapital.com. XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. Additional unaudited supplemental financial information relating to the Company's 2001, 2000 and 1999 results is available on its web site: www.xlcapital.com.