Summary consolidated financial data for the first quarter is set forth below (U.S. dollars in millions except per share amounts):
Three months ended March 31
(unaudited)
2000 1999
Net Premiums Earned $494.5 $386.8
Net Income 223.8 209.8
Economic Operating Incom 164.9 154.6
Operating Income (b) 150.8 144.1
Per Share Results:
Net Income $1.77 $1.58
Economic Operating Income (a)1.30 1.17
Operating Income (b) 1.19 1.09
Average shares outstanding (c) 126.8 132.4
Notes: (a) Excludes net realized investment gains (net of tax) and amortization of intangible assets.
(b) Excludes net realized investment gains (net of tax).
(c) Diluted weighted average number of shares.
Total revenues were $714.2 million and $593.2 million for the quarters ended March 31, 2000 and 1999, respectively. Total assets as of March 31, 2000 were $16.2 billion, compared with $15.1 billion as of December 31, 1999. Shareholders' equity remained unchanged from December 31, 1999 at $5.6 billion. Fully diluted book value per share as of March 31, 2000 was $44.47 compared with $43.13 as of December 31, 1999.
For the first quarter, gross premiums written were $918.9 million in 2000 compared with $732.0 million in 1999. Net earned premiums were $494.5 million in the first quarter of 2000 versus $386.8 million in 1999.
Net investment income, excluding net realized investment gains, was $128.5 million in the first quarter of 2000, compared with $135.7 million in 1999's first quarter. Net realized gains on investments were $68.7 million in the first quarter of 2000 as against $67.5 million in 1999's first quarter.
The Company's equity in the net earnings of its affiliates for the first quarter was $17.5 million in 2000, versus a loss of $7.3 million in 1999.
The combined ratio for the Company was 93.3% in the first quarter of 2000 compared with 89.3% in the first quarter of 1999. The loss ratios were 61.2% and 55.4% in 2000 and 1999, respectively, with the corresponding expense ratios being 32.1% and 33.9%.
During the first quarter of 2000, the Company repurchased 3.71 million of its shares at an average price of $44.76 per share. XL has approximately $335 million remaining in its current share repurchase authorization.
Commenting on the first quarter results, Brian M. O'Hara, President and Chief Executive Officer of XL, stated: "The Company is experiencing strong overall premium growth, reflecting our acquisitions, new business formations and cross selling initiatives over the last two years. In addition, we are seeing rate increases in property and other short tail lines of business."
"Although we are pleased with this growth, rates for casualty insurance and reinsurance and a number of lines underwritten by our Lloyd's operations, which together represent the majority of XL's premiums, while no longer declining, have yet to improve significantly," noted Mr. O'Hara. "Our original expectations were for more immediate increases in all lines, however in the absence of such liability rate increases, our results this year are now anticipated to be approximately 5 percent below the annualized first quarter earnings. During this transition year, we are committed to maintaining our strong balance sheet as the key to the Company's long term success. By maintaining our underwriting and balance sheet integrity today, XL is well positioned to benefit from expected market improvements in the future without having to rebuild reserves. We are continuing to exert leadership by declining to write inadequately priced business and being realistic about our near term results."
"We are confident that our selective underwriting, expense control and the contribution from our recent business diversification will provide us with the growth in earnings in 2001 and beyond that our shareholders expect from XL," Mr. O'Hara concluded.
Insurance Operations
Gross premium written by the Company's insurance segment in the first quarter of 2000 was $211.6 million compared with $158.1 million in the first quarter of 1999. Net premium earned was $146.3 million and $102.3 million in the respective 2000 and 1999 periods. The combined ratio for insurance operations was 84.7% and 75.0% in the first quarters of 2000 and 1999, respectively. The loss ratios for the first quarters of 2000 and 1999 were 58.4% and 46.0%, respectively, and the expense ratios for the respective 2000 and 1999 periods were 26.3% and 29.0%.
Reinsurance Operations
The reinsurance segment had gross premium written of $535.9 million in the first quarter of 2000 compared with $378.7 million a year ago. Net premium earned was $239.0 million versus $198.6 million in 1999's first quarter. The combined ratio for this segment was 91.1% in the first quarter of 2000 and 88.5% for the first quarter of 1999. The loss ratios for reinsurance in the first quarter were 56.5% and 54.5% in 2000 and 1999, with the respective expense ratios being 34.6% and 34.0%.
Lloyd's Operations
Gross premium written by the Company's Lloyd's segment was $163.7 million in the first quarter of 2000 versus $183.8 million in the first quarter of 1999. Net premium earned was $103.1 million in the first quarter of 2000 versus $81.3 million in the same period of 1999. The combined ratio was 109.4% compared with 109.3%. The Lloyd's segment had loss ratios of 78.3% and 72.0% and expense ratios of 31.1% and 37.3% in the first quarters of 2000 and 1999, respectively.
Financial Services
The financial services segment had gross premium written of $7.7 million in the first quarter of 2000 compared with $11.4 million in 1999's first quarter. Net earned premium was $6.1 million in 2000 compared with $4.5 million in 1999. The combined ratio was 115.0% versus 94.1%, with the loss ratios for the respective first quarters of 2000 and 1999 being 23.5% and 17.1% and related expense ratios of 91.5% and 77.0%.
XL Capital Ltd, through its principal operating subsidiaries, XL Insurance Ltd, XL Mid Ocean Reinsurance Ltd, The Brockbank Group plc, XL Capital Products, XL Capital Assurance Inc., NAC Re Corp., ECS, Inc. and XL Specialty Insurance (formerly Intercargo Corporation) 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 information on XL is available from our web site: www.xl-capital.com.
This press release contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Forward-looking statements concerning prospects for rate or price increases, premium growth, future earnings and reserves are particularly sensitive to factors such as the levels of competition in the industry, the frequency and severity of claims and losses, conditions in the world's financial and capital markets affecting the Company's investment performance, changes in the economic, regulatory or tax environment in which the Company operates, and other factors identified in the Company's most recent annual report on Form 10-K and other documents on file with the Securities and Exchange Commission that could cause actual results to differ materially from those contained in forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.