XL Group PLC (XL) swung to a surprise fourth-quarter loss as the property-and-casualty insurer reported sharply higher catastrophe losses and an impairment charge.
The insurance sector recently has faced some of the worst quarters in years for catastrophe losses because of devastating disasters in Thailand, Japan, New Zealand and the U.S. Despite year-over-year increases in losses from disasters, XL had reported higher premiums in recent quarters.
XL's combined ratio-- the percentage of premiums paid out on losses and expenses-- rose to 108.2% from 91.4% in the P&C business. A ratio more than 100% means the company paid out more than it brought in. Catastrophe losses were $194.9, up from $30.3 million a year ago.
Last month, the company estimated fourth-quarter losses of $135 million to $185 million from the flooding in Thailand and additional losses of about $35 million related to catastrophes that occurred during the first three quarters of 2011.
Overall, XL posted a loss of $515.5 million, or $1.62 a share, compared with year-earlier profit of $188.2 million, or 57 cents a share, a year earlier. The most recent period included a $429 million impairment of goodwill charge. The company reported an operating loss, which strips out investment gains and losses, of 25 cents a share from a year-ago net income of 74 cents.
In the most recent period, net premiums written slipped 0.2% to $1.12 billion. Premiums earned in the property-and-casualty operations rose 8.1% to $1.39 billion.
Analysts surveyed by Thomson Reuters predicted operating earnings of 16 cents a share on earned P&C premiums of $1.52 billion.