HURRICANES SEND XL TO $1BN LOSS FOR THIRD QUARTER

Bermudian p/c insurer/reinsurer XL Capital has posted a net loss of $1bn for the third quarter, against a year-earlier gain of $22.5m, after absorbing nearly $1.16bn in pre-tax net losses from hurricane Katrina, $263.6m in losses from hurricane Rita and another $89.7m in losses from other natural disasters. CEO Brian O’Hara said that the insurance market’s Q3 catastrophe losses of $60bn to $72bn “were greater than our industry has seen in any previous calendar year”. The group’s Q3 loss was generated on earned premiums of $1.66bn, down 11%, leading to a combined ratio of 182.2%, against the year-earlier 110.7%. For the nine months, XL posted a net loss of $470.4m against a year-earlier gain of $838.2m, on earned premiums of $5.15bn, down 2.5%. Its combined ratio for the three quarters was 122.9%, up from 95.9%. Mr O’Hara also announced that XL has augmented its underwriting capacity by entering into a quota-share reinsurance treaty with a newly formed reinsurance company that will have $500m to $1bn in initial capital. The new company’s holding company is to be owned by a group of institutional investors led by a group of funds managed by an alternative asset manager long associated with XL. XL plans to cede portions of its property catastrophe and retrocessional lines to the new reinsurer.