XL Group plc Earnings: Reversing to a Loss Following Two Consecutive Quarters of Profit

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S&P 500 (NYSE:SPY) component XL Group plc (NYSE:XL) swung to a loss in the fourth quarter, missing analysts’ forecast. XL Group, through its subsidiaries, provides global insurance and reinsurance coverages to industrial, commercial and professional service firms and insurance companies.

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XL Group plc Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $515.5 million ($1.62 per diluted share) in the quarter. XL Group plc had a net income of $188.1 million or 57 cents per share in the year earlier quarter.

Revenue: Rose 8.8% to $1.73 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: XL Group reported an adjusted loss of 25 cents per share. By this measure, the company fell short of the mean analyst estimate of 18 cents per share. It beat the average revenue estimate of $1.52 billion.

Quoting Management: Chief Executive Officer Mike McGavick said: “XL was clearly impacted in 2011, like companies throughout the property and casualty industry, by a year that suffered from one of the largest aggregate worldwide catastrophe losses in history, including, most recently, the devastating Thailand floods. 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. We have added new leaders and talented teams to these areas, and are sharply focused on delivering improved results. We will not shy away from our 2011 results, including a frustrating fourth quarter and full year 2011, and a significant non-cash charge to eliminate the Insurance segment’s goodwill reflecting continuing low valuations in our sector. But, we do want to ensure our results are viewed within the broader perspective of our goals and strategy.”

Key Stats:

Revenue has now gone up for three straight quarters. In the third quarter, revenue rose 2.3% to $1.66 billion while the figure rose 9.2% in the second quarter from the year earlier.

The company has now fallen short of estimates in the last two quarters. In the third quarter, it missed expectations by 6 cents with net income of 28 cents versus a mean estimate of net income of 34 cents per share.

Looking Forward: Analysts have a more positive outlook for the company’s next quarter performance. Over the past month, the average estimate for the first quarter of the next fiscal year has gone up from 49 cents per share to 50 cents. At 73 cents per share, the average estimate for the fiscal year has fallen from $1.13 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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