XL Capital Unveils Q2 Numbers

Bermuda-based XL Capital Ltd reported net income available to ordinary shareholders for the quarter ended June 30, 2003 of $347.7 million, or $2.51 per ordinary share, compared with a net loss of $91.7 million, or $0.68 per ordinary share, in the second quarter of 2002.

‘Net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivative instruments, net of tax’ for the second quarter of 2003 was $268.6 million, or $1.94 per ordinary share, compared with $26.4 million, or $0.19 per ordinary share, for the quarter ended June 30, 2002. ‘Net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivative instruments, net of tax’ is a non-GAAP measure.

Commenting on the second quarter 2003 results, Brian O’Hara, president and CEO of XL, noted, “We had a strong quarter with net income, total assets and shareholders’ equity reaching record levels. Cash flow from operations was a robust $952 million for the second quarter. Adding the $669 million in XL Life and Annuity transactions this quarter increased cash flow to $1.6 billion. Net premiums earned from general operations increased by more than 40 percent compared with the second quarter a year ago and we achieved satisfactory combined ratios of 92.2 percent in the second quarter and 89.2 percent for the six months ended June 30, 2003.”

“We are strategically positioned in all of the business lines and regions where we want to be and continue to capitalize on the current strong market conditions in our areas of focus,” stated O’Hara. “We are particularly well-placed in those lines of business which are still seeing the largest rate increases, notably professional lines and casualty worldwide which currently comprise nearly half of our general operations’ portfolio.”

For the six months ended June 30, 2003, net income available to ordinary shareholders was $587.5 million, or $4.25 per ordinary share, compared with a net loss of $2.3 million, or $0.02 per ordinary share, in the six months ended June 30, 2002. ‘Net income excluding net realized gains and losses on investments and net realized and unrealized gains and losses on credit and investment derivative instruments, net of tax’ for the six months ended June 30, 2003 was $518.7 million, or $3.76 per ordinary share, compared with $234.0 million, or $1.70 per ordinary share, for the six months ended June 30, 2002.

Gross premiums written for general operations in the second quarter of 2003 were $1.9 billion compared with $1.4 billion in the second quarter of 2002. Net premiums written increased to $1.4 billion from $1.0 billion and net premiums earned rose to $1.5 billion from $1.0 billion in the respective quarters of 2003 and 2002.

For the six months ended June 30, 2003, gross premiums written for general operations were $4.8 billion compared with $4.2 billion in the year ago period. Net premiums written for the first six months of 2002 were $3.8 billion compared with $3.2 billion a year- ago. Net premiums earned were $2.9 billion for the first six months of 2003 as compared with $2.0 billion for the first six months of 2002.

Gross premiums written for financial operations in the second quarter of 2003 were $106.3 million compared with $75.8 million in the second quarter of 2002. Net premiums written for financial operations in the second quarter of 2003 were $104.5 million compared with $73.4 million in the second quarter of 2002 and net premiums earned were $35.8 million in the second quarter of 2003 compared with $10.8 million in the second quarter of 2002.

For the first six months of 2003 gross premiums written for financial operations were $151.0 million compared with $102.1 million in the year ago period. Net premiums written for financial operations were $148.5 million in the first six months of 2003 compared with $97.1 million in 2002 and net premiums earned were $62.8 million and $25.4 million in the respective six month periods of 2003 and 2002.

Net investment income from general operations was $145.1 million in the second quarter of 2003, compared with $151.6 million in 2002’s second quarter.

The company’s equity in the net income of its investment affiliates for the second quarter of 2003 was $34.3 million versus $7.9 million in the second quarter of 2002. The company’s equity in net income of its insurance and financial affiliates was $16.5 million in the second quarter of 2003 versus net income of $0.4 million in the second quarter of 2002. The company’s equity in the net income of its investment affiliates for the first six months of 2003 was $61.1 million versus $40.1 million in the first six months of 2002. The company’s equity in net loss of its insurance and financial affiliates was $24.6 million in the first six months of 2003 versus net income of $0.4 million in the first six months of 2002.

The combined ratio for the company’s general insurance and reinsurance operations was 92.2 percent in the second quarter of 2003, versus 109.2 percent in the second quarter of 2002. The loss ratios were 63.2 percent and 79.3 percent in the quarters ended June 30, 2003 and 2002, with corresponding expense ratios of 29.0 percent and 29.9 percent for the same quarters, respectively.

The combined ratio for the company’s general insurance and reinsurance operations was 89.2 percent in the first six months of 2003, versus 100.8 percent in the first six months of 2002. The loss ratios were 62.1 percent and 71.4 percent in the six months ended June 30, 2003 and 2002, with corresponding expense ratios of 27.1 percent and 29.4 percent for the same periods, respectively.

In the second quarter and six months ended June 30, 2002, the company’s results were impacted by increased reserves for the Sept. 11 event.