XL’s nine-month profit drops 90%

Bermuda-based (re)insurance group XL saw its nine-month 2011 net profit slide 90% as third-quarter catastrophe losses added to those from the first half.

XL’s nine month 2011 net profit fell to $40.8m from $397.3m in the same period of 2010. The company’s non-life combined ratio was 107.2% (First nine months of 2010: 95.9%). The underwriting loss was $283.2m (first nine months of 2010: profit of $152.7m).

In the third quarter of 2011 alone, XL’s net profit dropped 45% to $42.4m (Q3 2010: $77.5m) as $110.6m of natural catastrophe losses dragged the non-life  combined ratio up to 101.6% (Q3 2010: 94.9%).

Despite the profit reduction, XL chief executive hailed the company’s top line growth. Non-life gross written premiums increased 14% to $5.6bn in the first nine months of 2011 and 16% to $1.8bn in the third quarter.

McGavick was also upbeat about pricing trends.“Progress continued at XL in the quarter, and our own efforts were joined by a new factor - an improving rate environment,” he said. “The quarter saw accelerating rate achievement in most lines. In far more parts of the market the long overdue response to unrealistic risk pricing is underway.”