XL Group plc's chief executive officer said the market isn't hard yet, but rates have begun to firm.
"Broadly speaking, nearly every line of business — with a notable exception of U.S. D&O — is now showing either flat or positive rate change for the second straight quarter," Mike McGavick , XL Group's chief executive officer, said in a conference call to discuss the company's third-quarter earnings, which fell to $42.4 million.
"Overall this quarter, we saw two points of rate when you take away the negative pricing in professional lines, and this is the continuation of a trend for the second straight quarter with positive rate. ...Now I'm not here to call it hard market yet. But clearly, managements in our industry are becoming frustrated by reality," McGavick said.
Those realities include the prolonged low interest rate environment, reserves running dry and "the reality that the sector has been underpricing most of these products for an extended period of time," McGavick said.
XL Group's third-quarter net income fell to $42.4 million from $77.5 million as it posted $110.6 million in natural catastrophe losses. The combined ratio widened to 101.6 from 94.9.
In October, the company unveiled a new logo and advertising campaign to give the company "a fresh look that really communicates all the things that are going on at XL," McGavick said.
In September, A.M. Best Co. affirmed the Best's Financial Strength Rating of A (Excellent) for the property/casualty subsidiaries of the holding company, XL Group plc.
"The rating affirmations reflect the organization's excellent risk-based capitalization, strong worldwide market presence and the completed de-risking of the group's investment portfolio. Although XL subsidiaries' property/casualty operating results are unprofitable through the first six months of 2011 (with a combined ratio of 110 due to the worldwide catastrophes), the group averaged a favorable combined ratio of 92.3 for the previous five years".