XL Group's second-quarter results were up despite the impact of $134 million in pretax catastrophe losses.
The catastrophe losses resulted from flooding in Argentina, Europe and Canada, along with tornadoes and hailstorms in the United States, said Peter Porrino, executive vice president and chief financial officer, chief executive, reinsurance operations, in a conference call. Total combined natural catastrophe pretax losses net of reinsurance and reinstatement premiums were $134.1 million, compared with $60.6 million for the same quarter in 2012.
The company had a second-quarter net income of $272.7 million, up from $221.2 million, it said in a statement. The overall combined ratio for property/casualty was 93.8, up three points from the prior year quarter.
The company increased rates in some areas during mid-year catastrophe insurance renewals in the United States. With abundant capital supplied from both traditional and non-traditional sources chasing the business, particularly the Florida domicile specialist companies, the pricing pressure was significant, said Jamie Veghte, executive vice president and chief executive, reinsurance operations, during the call. On a risk-adjusted basis, pricing was up 15% to 20%. Veghte said the company's book grew slightly because the Florida generated direct catastrophe premium increased by $3 million.
Earlier, XL said it and private equity firm Stone Point Capital LLC will begin the launch of a Bermuda-based company that will act as an investment manager in insurance-linked securities and other reinsurance capital-markets products. The move aligns with XLs goal of offering innovative solutions to clients, said Chief Executive Officer Michael McGavick.
Most XL Group plc units currently have Best's Financial Strength Ratings of A (Excellent). At market close on July 30, shares of XL were trading at $31.41, down 1.87% from the previous close.