Date of Report (Date of earliest event reported): | February 5, 2014 |
Ireland | 1-10804 | 98-0665416 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
XL House, 8 St. Stephen's Green, Dublin, Ireland | 2 | |
(Address of principal executive offices) | (Zip Code) |
Not Applicable |
(Former name or former address, if changed since last report) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description |
99.1 | Press Release ("XL Group plc Announces Fourth Quarter and Full Year 2013 Results“), dated February 5, 2014. |
XL Group plc (Registrant) | ||
By: | /s/ Kirstin Gould | |
Name: Kirstin Gould Title: General Counsel and Secretary |
EXHIBIT 99.1 | ||
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• | Operating net income1 of $286.9 million, or $1.00 per share, and net income of $300.8 million, or $1.05 per share, for the quarter on a fully diluted basis |
• | Operating net income1 of $943.0 million, or $3.23 per share, and net income of $1.1 billion, or $3.63 per share, for the full year on a fully diluted basis |
• | P&C combined ratio of 93.3% for the quarter, compared to 105.9% in the prior year quarter, and a full year P&C combined ratio of 92.5% compared to 96.3% in the prior year |
• | Natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums in the quarter of $94.3 million compared to $351.8 million in the prior year quarter |
• | Operating return on ordinary shareholders' equity2 excluding and including unrealized gains and losses on investments were 12.5% and 11.5%, respectively, annualized for the quarter, and 10.3% and 9.2%, respectively, for the full year |
• | Fully diluted tangible book value per ordinary share3 of $33.86 at December 31, 2013, an increase from September 30, 2013 of $0.90, or 2.7%, and an increase of $0.51, or 1.5%, from December 31, 2012, including a decrease in unrealized investment gains, net of tax, of $695.4 million for the full year |
• | Share buybacks totaled 4.9 million ordinary shares for $150.0 million during the quarter |
Highlights | |||||||||||||||
Three Months and Year Ended December 31 | |||||||||||||||
(U.S. dollars in thousands, except per share amounts) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) attributable to ordinary shareholders | $ | 300,780 | $ | 81,444 | $ | 1,059,916 | $ | 651,128 | |||||||
Per ordinary share-fully diluted | $ | 1.05 | $ | 0.27 | $ | 3.63 | $ | 2.10 | |||||||
Operating net income (loss) | $ | 286,881 | $ | 38,883 | $ | 942,968 | $ | 614,096 | |||||||
Per ordinary share-fully diluted | $ | 1.00 | $ | 0.13 | $ | 3.23 | $ | 1.98 |
• | Net income and operating net income of $300.8 million and $286.9 million, respectively, for the quarter increased compared to net income and operating net income of $81.4 million and $38.9 million, respectively, in the prior year quarter, primarily due to lower natural catastrophe losses in the current quarter and higher net income from investment funds and investment manager operating affiliates as compared to the prior year quarter. The P&C combined ratio for the quarter of 93.3%, was 12.6 percentage points lower than in 2012, when it was 105.9%. For the year ended December 31, 2013, the P&C combined ratio of 92.5% was 3.8 percentage points lower than in 2012, when it was 96.3%. |
• | Net investment income for the quarter was $240.8 million, compared to $245.0 million in the prior year quarter and $237.9 million in the third quarter of 2013. |
• | Net income from investment fund and investment manager operating affiliates was $77.7 million in the quarter, compared to income of $31.5 million in the prior year quarter. The increase was primarily due to strong performance from our alternative funds. |
• | Fully diluted tangible book value per ordinary share increased by $0.90 from the prior quarter, driven by net income growth combined with the benefit of share buybacks, partially offset by $29.9 million of unrealized losses on investments net of deferred tax. |
• | During the quarter, the Company purchased 4.9 million ordinary shares for $150.0 million at an average price of $30.85 per share, which was accretive to fully diluted tangible book value per ordinary share by $0.05. At December 31, 2013, $275.0 million of ordinary shares remained available for purchase under the Company’s previously announced $850.0 million share buyback program. |
P&C Operations | |||||||||||||||
Three Months and Year Ended December 31 | |||||||||||||||
(U.S. dollars in thousands) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross premiums written | $ | 1,457,866 | $ | 1,518,463 | $ | 7,416,792 | $ | 7,175,130 | |||||||
Net premiums written | $ | 1,074,422 | $ | 1,338,249 | $ | 5,903,982 | $ | 5,957,019 | |||||||
Net premiums earned | $ | 1,510,727 | $ | 1,538,557 | $ | 6,014,099 | $ | 5,765,978 | |||||||
Underwriting profit (loss) | $ | 101,450 | $ | (90,681 | ) | $ | 451,062 | $ | 216,132 | ||||||
Loss ratio | 62.5 | % | 77.4 | % | 62.0 | % | 65.3 | % | |||||||
Underwriting expense ratio | 30.8 | % | 28.5 | % | 30.5 | % | 31.0 | % | |||||||
Combined ratio | 93.3 | % | 105.9 | % | 92.5 | % | 96.3 | % |
• | P&C gross premiums written (“GPW”) in the fourth quarter decreased 4.0% compared to the prior year quarter. The Insurance segment GPW decreased 5.0% from the prior year quarter, as a result of the decision not to renew a large International professional program that did not meet our profitability criteria. During the quarter, the Insurance segment continued to experience growth in the North American business group, most notably in Property lines, robust new business in our emerging Political Risk and Crisis Management businesses and favorable pricing and renewals across the majority of the businesses. The Reinsurance segment GPW increased 4.4% from the prior year quarter, predominantly driven by new casualty business in the International business group, partially offset by higher catastrophe related reinstatement premiums in the prior year quarter associated with Storm Sandy. |
• | P&C net premiums written in the fourth quarter decreased by 19.7% compared to the prior year quarter primarily as a result of increased proportional reinsurance on the Insurance Professional book. |
• | P&C net premiums earned (“NPE”) in the fourth quarter of $1.5 billion were comprised of $1.1 billion from the Insurance segment and $445 million from the Reinsurance segment. Compared to the prior year quarter, Insurance NPE increased by 1.9%, which is a reflection of the overall strong growth in GPW primarily across North American Property and Construction businesses over recent quarters, and |
• | The P&C loss ratio in the current quarter was 14.9 percentage points lower than in the prior year quarter. Included in the P&C loss ratio was favorable prior year development of $60.9 million compared to $97.8 million in the prior year quarter. The P&C loss ratio variance was also impacted by natural catastrophe pre-tax losses of $94.3 million net of reinsurance and reinstatement premiums, with approximately $70.6 million related to the Reinsurance segment and the remainder related to the Insurance segment, compared to $351.8 million in the prior year quarter, with approximately $203.8 million related to the Reinsurance segment and $148.0 million related to the Insurance segment. Excluding prior year development and natural catastrophe pre-tax losses net of reinsurance and reinstatement premiums, the fourth quarter P&C loss ratio was 0.3 percentage points lower than the prior year quarter due to a lower level of attritional property losses in the Reinsurance segment partially offset by late 2013 Insurance property losses. |
• | Operating expenses in the quarter were 9.7% higher than in prior year quarter largely because of increases in compensation costs driven by growth initiatives in the Insurance segment and performance-based compensation adjustments, as well as the timing of costs associated with our infrastructure improvements. For the full year 2013, operating expenses were 3.3% higher than the prior year. |
• | The P&C combined ratio excluding prior year development and the impact of natural catastrophe losses for the quarter was 91.0%, compared to 89.3% for the prior year quarter. The Insurance segment combined ratio on this basis was 98.2% for the quarter, compared to 96.5% for the prior year quarter, while the Reinsurance segment combined ratio on this basis was 73.6%, compared to 72.9% for the prior year quarter. The P&C combined ratio on this basis for the year was 92.0%, compared to 93.7% for the prior year. |
XL Group plc | ||||||||||||||||
SUMMARY CONSOLIDATED FINANCIAL DATA | ||||||||||||||||
Income statement data: | ||||||||||||||||
(U.S. Dollars in thousands) | Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: | ||||||||||||||||
Gross premiums written: | ||||||||||||||||
- P&C operations | $ | 1,457,866 | $ | 1,518,463 | $ | 7,416,792 | $ | 7,175,130 | ||||||||
- Life operations | 87,780 | 88,754 | 324,343 | 355,753 | ||||||||||||
Net premiums written: | ||||||||||||||||
- P&C operations | $ | 1,074,422 | $ | 1,338,249 | $ | 5,903,982 | $ | 5,957,019 | ||||||||
- Life operations | 81,398 | 80,826 | 295,422 | 324,432 | ||||||||||||
Net premiums earned: | ||||||||||||||||
- P&C operations | $ | 1,510,727 | $ | 1,538,557 | $ | 6,014,099 | $ | 5,765,978 | ||||||||
- Life operations | 81,398 | 80,829 | 295,422 | 324,459 | ||||||||||||
Net investment income | $ | 240,781 | $ | 244,994 | $ | 957,716 | $ | 1,012,348 | ||||||||
Net realized gains (losses) on investments | 12,258 | 11,182 | 87,777 | 14,098 | ||||||||||||
Net realized and unrealized gains (losses) on derivative instruments | 4,138 | 2,565 | 7,798 | 5,221 | ||||||||||||
Income (loss) from investment fund affiliates | 54,548 | 19,949 | 138,391 | 58,504 | ||||||||||||
Fee income and other | 8,653 | 15,411 | 40,031 | 51,789 | ||||||||||||
Total revenues | $ | 1,912,503 | $ | 1,913,487 | $ | 7,541,234 | $ | 7,232,397 | ||||||||
Expenses: | ||||||||||||||||
Net losses and loss expenses incurred - P&C operations | $ | 944,254 | $ | 1,190,985 | $ | 3,731,464 | $ | 3,765,482 | ||||||||
Claims and policy benefits - Life operations | 121,433 | 114,302 | 465,702 | 486,195 | ||||||||||||
Acquisition costs | 218,850 | 234,058 | 909,323 | 913,492 | ||||||||||||
Operating expenses | 314,681 | 286,745 | 1,213,178 | 1,173,955 | ||||||||||||
Foreign exchange (gains) losses | (3,780 | ) | (2,887 | ) | (28,243 | ) | 10,545 | |||||||||
Interest expense | 40,632 | 37,640 | 155,462 | 172,204 | ||||||||||||
Total expenses | $ | 1,636,070 | $ | 1,860,843 | $ | 6,446,886 | $ | 6,521,873 | ||||||||
Income (loss) before income tax and income (loss) from operating affiliates | $ | 276,433 | $ | 52,644 | $ | 1,094,348 | $ | 710,524 | ||||||||
Net income (loss) from operating affiliates | 31,391 | 14,414 | 119,804 | 53,887 | ||||||||||||
Provision (benefit) for income tax | 4,257 | (17,785 | ) | 77,505 | 34,028 | |||||||||||
Net income (loss) | 303,567 | 84,843 | 1,136,647 | 730,383 | ||||||||||||
Non-controlling interests | (2,787 | ) | (3,399 | ) | (76,731 | ) | (79,255 | ) | ||||||||
Net income (loss) attributable to ordinary shareholders | $ | 300,780 | $ | 81,444 | $ | 1,059,916 | $ | 651,128 |
XL Group plc | |||||||
SUMMARY CONSOLIDATED FINANCIAL DATA | |||||||
Selected balance sheet data: | |||||||
(U.S. Dollars in thousands except share and per share amounts) | At | At | |||||
December 31, 2013 | December 31, 2012 | ||||||
(Unaudited) | (Note 1) | ||||||
Total investments available for sale | $ | 28,996,661 | $ | 28,818,982 | |||
Fixed maturities, held to maturity | 2,858,695 | 2,814,447 | |||||
Cash and cash equivalents | 1,800,832 | 2,618,378 | |||||
Investments in affiliates | 1,370,943 | 1,126,875 | |||||
Unpaid losses and loss expenses recoverable | 3,435,230 | 3,382,102 | |||||
Goodwill and other intangible assets | 411,611 | 408,527 | |||||
Total assets | 45,652,887 | 45,386,895 | |||||
Unpaid losses and loss expenses | 20,481,065 | 20,484,121 | |||||
Deposit liabilities | 1,509,243 | 1,551,398 | |||||
Future policy benefit reserves | 4,803,816 | 4,812,046 | |||||
Unearned premiums | 3,846,526 | 3,755,086 | |||||
Notes payable and debt | 2,263,203 | 1,672,778 | |||||
Total shareholders’ equity | 11,349,298 | 11,856,402 | |||||
Ordinary shareholders' equity | 9,997,633 | 10,510,077 | |||||
Ordinary shares outstanding (Note 2) | 278,297,762 | 298,732,832 | |||||
Basic book value per ordinary share (Note 3) | $ | 35.92 | $ | 35.18 | |||
Fully diluted book value per ordinary share (Note 3) | $ | 35.32 | $ | 34.70 | |||
Fully diluted tangible book value per ordinary share (Note 3) | $ | 33.86 | $ | 33.35 | |||
Note 1: Certain items have been reclassified to conform to the current period presentation. | |||||||
Note 2: Ordinary shares outstanding include all ordinary shares legally issued and outstanding (as disclosed on the face of the balance sheet) as well as all director share units outstanding. | |||||||
Note 3: Book value per share, fully diluted book value per ordinary share and fully diluted tangible book value per ordinary share are non-GAAP financial measures. Fully diluted book value per share represents book value per ordinary share (total shareholders’ equity less non-controlling interest in equity of consolidated subsidiaries, divided by the number of outstanding ordinary shares at any period end) combined with the dilutive impact of potential future share issues at any period end. Fully diluted tangible book value per ordinary share is calculated in the same manner as fully diluted book value per ordinary share except that goodwill and intangible assets are removed from ordinary shareholders’ equity. |
(U.S. Dollars in thousands except share and per share amounts) | Three Months Ended | Year Ended | |||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Note 1) | (Note 1) | ||||||||||||||
Net income (loss) attributable to ordinary shareholders | $ | 300,780 | $ | 81,444 | $ | 1,059,916 | $ | 651,128 | |||||||
Net realized (gains) losses on investments, net of tax | (7,143 | ) | (34,926 | ) | (82,605 | ) | (38,234 | ) | |||||||
Net realized and unrealized (gains) losses on derivatives, net of tax | (4,138 | ) | (2,565 | ) | (7,798 | ) | (5,216 | ) | |||||||
Net realized and unrealized (gains) losses on investments and derivatives related to the Company's insurance company affiliates | 6,919 | (259 | ) | 6,556 | (301 | ) | |||||||||
Exchange (gains) losses, net of tax | (9,537 | ) | (4,811 | ) | (33,101 | ) | 6,719 | ||||||||
Operating net income (loss) (Note 2) | $ | 286,881 | $ | 38,883 | $ | 942,968 | $ | 614,096 | |||||||
Per ordinary share results: (Note 3) | |||||||||||||||
Net income (loss) attributable to ordinary shareholders - diluted | $ | 1.05 | $ | 0.27 | $ | 3.63 | $ | 2.10 | |||||||
Operating net income (loss) - diluted (Note 2) | $ | 1.00 | $ | 0.13 | $ | 3.23 | $ | 1.98 | |||||||
Weighted average ordinary shares outstanding: | |||||||||||||||
Basic | 281,403,151 | 300,512,874 | 287,801,125 | 307,371,726 | |||||||||||
Diluted - Net income | 286,007,396 | 304,490,554 | 292,069,296 | 310,282,466 | |||||||||||
Diluted - Operating net income | 286,007,396 | 304,490,554 | 292,069,296 | 310,282,466 | |||||||||||
Return on ordinary shareholders' equity: | |||||||||||||||
Closing ordinary shareholders' equity (Note 4) | $ | 9,997,633 | $ | 10,510,077 | $ | 9,997,633 | $ | 10,510,077 | |||||||
Unrealized (gain) loss on investments, net of tax | $ | (781,007 | ) | $ | (1,476,453 | ) | $ | (781,007 | ) | $ | (1,476,453 | ) | |||
Average ordinary shareholders' equity excluding unrealized gains (losses) on investments, net of tax (Note 4) | $ | 9,156,787 | $ | 9,030,614 | $ | 9,125,125 | $ | 8,961,743 | |||||||
Average ordinary shareholders' equity (Note 4) | $ | 9,952,767 | $ | 10,460,564 | $ | 10,253,855 | $ | 9,960,868 | |||||||
Operating net income (loss) (Note 2) | $ | 286,881 | $ | 38,883 | $ | 942,968 | $ | 614,096 | |||||||
Annualized operating net income (loss) (Note 2) | $ | 1,147,524 | $ | 155,532 | $ | 942,968 | $ | 614,096 | |||||||
Annualized return on ordinary shareholders' equity - operating net income (loss) (Notes 2 and 4) | 11.5 | % | 1.5 | % | 9.2 | % | 6.2 | % | |||||||
Annualized return on ordinary shareholders' equity excluding unrealized gains (losses) on investments - operating net income (loss) (Notes 2 and 4) | 12.5 | % | 1.7 | % | 10.3 | % | 6.9 | % | |||||||
Note 1: Certain amounts have been reclassified to conform to the current period presentation. | |||||||||||||||
Note 2: Defined as net income (loss) attributable to ordinary shareholders excluding (1) net realized gains and losses on investments, net of tax, (2) net realized and unrealized gains and losses on derivatives, net of tax, (3) XL's share of items (1) and (2) for XL's insurance company affiliates for the periods presented, (4) goodwill impairment charges, net of tax and (5) foreign exchange gains or losses, net of tax. “Operating net income”, “return on ordinary shareholders’ equity” based on operating net income and “return on ordinary shareholders’ equity” based on operating net income excluding unrealized gains and losses on investments are non-GAAP financial measures. | |||||||||||||||
Note 3: Diluted weighted average number of ordinary shares outstanding is used to calculate per share data except where it is anti-dilutive to earnings per share or where there is a net loss. When it is anti-dilutive or when a net loss occurs, basic weighted average ordinary shares outstanding is utilized in the calculation of net loss per share and net operating loss per share. | |||||||||||||||
Note 4: Ordinary shareholders’ equity is defined as total shareholders’ equity less non-controlling interest in equity of consolidated subsidiaries. | |||||||||||||||