Claims and write-downs push XL into $475m loss

Global (re)insurance group XL made an after tax loss of $747.8m (£300m) in 2011 compared with a 2010 profit of $585.5m.

The company’s profit was hit by natural catastrophe losses of $761.1m during the year. It also took a $429m goodwill impairment charge in the fourth quarter as a result of eliminating the goodwill value of its insurance segment.

XL chief executive Mike McGavick said the goodwill write-off reflected the  persistent low valuations of companies in the insurance sector.

XL’s full-year non-life combined ratio was 107.5% (2010: 94.8%).

XL made $515.5m loss in the fourth quarter alone thanks to the write-off and a quarterly catastrophe bill of $194.9m. The non-life combined ratio for the quarter was 108.2% (Q4 2010: 91.4%).

McGavick said the events of 2011 had highlighted both strengths and weaknesses at XL and prompted changes. “While we believe XL’s catastrophe loss profile, relative to our peers, showed the effectiveness of our risk management process, we also again experienced an unacceptable level of non-catastrophe insurance losses in isolated underwriting areas,” he said. “We have added new leaders and talented teams to these areas, and are sharply focused on delivering improved results.”

He added: “In 2011, XL made significant progress executing our strategy and – although our actions have not yet taken hold in our financial performance – we are confident in the path we are on.”