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SEC Filings, Earing Reports, Press Releases
XL Capital Ltd Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 3, 2011 06:26PM
XL Capital Ltd (XL) filed Quarterly Report for the period ended 2011-09-30.
Highlight of Business Operations:In addition, for the three and nine months ended September 30, 2011 and 2010, ordinary shares available for issuance under the purchase contracts associated with the 10.75% Units of nil and nil, and 31.0 million and 31.5 million, respectively, were not included in the calculation of diluted earnings per share because the assumed issuance of such shares would be anti-dilutive. For further information on the 10.75% Units see Note 7, Share Capital, and Item 8, Note 15, Notes Payable and Debt Financing Arrangements, to the Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2010.
The combined ratio for P&C operations is used by the Company and many other insurance and reinsurance companies as another measure of underwriting profitability. The combined ratio is calculated from the net losses incurred and underwriting expenses as a percentage of the net premiums earned for the Companys insurance and reinsurance operations. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% reflects an underwriting loss. The Companys combined ratio for the three and nine months ended September 30, 2011 is higher than for the same periods in the previous year, as a result of an increase in the loss and loss expense ratio offset by a marginal decrease in the underwriting expense ratio for the three month period. The loss and loss expense ratio has increased as a result of higher levels of catastrophe losses and other large loss events in both the Insurance and Reinsurance segments. The underwriting expense ratio is lower as a result of a decrease in acquisition expenses in the Reinsurance segment and lower operating expense ratios in both segments.
Net realized losses on investments of $62.4 million in the three months ended September 30, 2011 included net realized losses of approximately $66.8 million related to the write-down of certain of the Companys fixed income investments. Included in the net realized losses noted above are net realized gains of $4.5 million from sales of investments.
Net realized losses on investments of $138.3 million in the nine months ended September 30, 2011 included net realized losses of approximately $131.4 million related to the write-down of certain of the Companys fixed income investments. In addition, included in the net realized losses noted above are net realized losses of $6.9 million due primarily to losses from sales of investments, principally, on European financials and non-Agency RMBS offset partially by gains on Agencies.
At September 30, 2011, the Company had net unrealized gains on available for sale fixed maturities and short-term investments of $253.9 million. Gross unrealized losses on these investments were $888.8 million. The information presented below for the gross unrealized losses on the Companys investments at September 30, 2011 shows the potential effect upon future earnings and financial position should management later conclude that some of the current declines in the fair value of these investments are other-than-temporary. Realized losses or impairments, depending on their magnitude, may have a material adverse effect on the Companys operations. The decrease in net unrealized losses on investments during the three months ended September 30, 2011 was primarily due to losses realized during the quarter offset by marginally unfavorable market movement. See Item 3,