Third Quarter Earnings Reports: Alterra Capital, AXIS Capital, XL Group

Alterra Capital:
Q3 2011 Q3 2010
Gross premiums written $386.33 mn $325.21 mn
9 months — 2011 2010
$1.578 bn $1.095 bn
Net premiums earned —- $347.04 mn $342.43 mn
9 months – 2011 2010
$1.0758 bn $829.93 mn
Net income* ——————- $48.386 mn $82.837 mn
9 months 2011 2010
$34.334 mn $222.665 mn
Net operating income ——- $50.1 mn $76.0 mn
9 months 2011 2010
$64.9 mn $175.5 mn
Q3 2011 Q3 2010
Investment net gain/loss** – ($7.972 mn) $15.411 mn
9 months 2011 2010
($32.964 mn) $7.047 mn
Net investment income —— $60.335 mn $59.711 mn
9 months 2011 2010
$177.766 mn $161.378 mn

Q3 Combined ratio for P/C: 87.7 percent (86.0 percent in Q3 2010);
Nine months for P/C: 98.4 percent (2010 86.1 percent)

*includes the results of Harbor Point Limited from May 12, 2010
** realized and unrealized

The earnings statement noted: ” Alterra’s 2010 results include the results of operations for the former Harbor Point Limited companies from May 12, 2010. Accordingly, a comparison of Alterra’s gross premiums written and other results of operations for the current and prior nine month periods are not meaningful.”

President and CEO W. Marston (Marty) Becker commented: “Alterra’s reported results reflect a balanced quarter, with solid operating earnings across our segments and nearly 5 percent growth in diluted book value per share. Earnings are down compared to the prior year, pressured by higher catastrophe losses and lower investment yields.

“However, we remain pleased with the consistency of our underwriting results in the face of a very challenging year for property catastrophe business. The relatively limited impact of this year’s property catastrophe events on our results and the absence of negative development of our aggregated loss estimates beyond initially stated ranges continue to reflect favorably on the quality of Alterra’s diversified underwriting, risk management and reserving capabilities.

“As we near the end of the Atlantic hurricane season and approach the January renewal season, we believe that we have the capital and operational breadth and flexibility to take advantage of what appear to be more favorable market opportunities.”

The full report, as well as additional and supplemental information and instructions for accessing the earnings conference call may be obtained on the company’s website at: www.alterracap.com.

AXIS Capital Holdings:
Q3 2011 Q3 2010
Gross premiums written—– $835.056 mn $750.687 mn
9 months – 2011 — 2010
$1.60 bn $3.1157 bn
Net premiums earned — $839.992 mn $758.873 mn
9 months – 2011 2010
$2.468 bn $2.190 bn
Net Income ——– $212.058 mn $238.842 mn
9 months (loss) 2011 2010
($70.634 mn) $555.505 mn
Operating income ——– $95.0 mn $189.0 mn
9 months (loss) 2011 2010
($221.0 mn) $429 mn
Q3 2011 Q3 2010
Net realized investment gains — $57.557 mn $76.531 mn
9 months 2011 2010
$125.177 mn $117.325 mn
Net investment income ——- $49.396 mn $111.8 mn
9 months 2011 2010
$260.07 mn $299.004 mn

Q3 Combined ratio: 91.5 percent (85.6 percent in Q3 2010);
Nine months: 116.3 percent (2010 89.8 percent)

Chairman and CEO John Charman commented: “In the quarter, we achieved a modest increase in diluted book value per share and generated operating income of $95 million, driven by strong underwriting results producing a combined ratio of 91.5 percent. Our net written premiums increased by more than 8 percent in the quarter, as our underwriting units fought hard to find opportunities to grow profitably. Our results were, however, adversely impacted by a reduction in the valuation of our alternative investments due to the extreme volatility in the financial markets as well as continued pressure on new money yields.

“In the short-tail and specialty lines, we are seeing the market momentum moving away from price reductions toward gradual and deliberate price increases. As the market factors in investment yields, which are at all-time lows, we expect this positive momentum to accelerate as well as to spread more broadly into the professional and casualty lines.

“We have the capital and the embedded experience, as well as the organizational breadth and depth, to strongly and nimbly address opportunities that present themselves if market pricing meets or exceeds levels commensurate with our view of risk. Because conditions in the various business lines we write are mixed and are likely to evolve at various speeds, we expect to balance deployment of capital in underwriting opportunities with share repurchase through organic earnings.”

The full report, as well as additional and supplemental information and instructions for accessing the earnings conference call may be obtained on the company’s website at: www.axiscapital.com.

XL Group:
Q3 2011 Q3 2010
Gross premiums written– $1.7761 bn $1.5255 bn
9 months – 2011 — 2010
$5.6377 bn $4.955 bn
Net Premiums earned — $1.3625 bn $1.2687 bn
9 months – 2011 2010
$3.940 bn $3.7486 bn
Net Income ———— $42.398 mn $77.543 mn
9 months 2011 2010
$40.777 mn $397.35 mn
Operating income —— $65.557 $125.824 mn
9 months 2011 2010
$31.516 mn $503.82 mn
Q3 2011 Q3 2010
Net realized investment gain/loss ($62.354 mn) ($68.775 mn)
9 months 2011 2010
($138.335 mn) ($66.317 mn)
Net investment income ———– $290.106 mn $296.73 mn
9 months 2011 2010
$866.874mn $907.648 mn

Q3 Combined ratio: 101.6 percent (94.9 percent in Q3 2010)
107.2 percent for 9 months (95.9 percent in 2010)

CEO Chief Executive Officer Mike McGavick commented: “Progress continued at XL in the quarter, and our own efforts were joined by a new factor – an improving rate environment. Our top line growth continued, our enterprise risk management quality continued to show through, and our growing attractiveness as the employer of choice for great complex risk underwriting was demonstrated by a number of important hires.

“But by far the most important of these externally is rate. 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.

“Taken together, I believe XL is exceptionally positioned for this phase, given our broadened and deepened team of first tier, experienced underwriters and other insurance and reinsurance professionals.”

The full report, as well as additional and supplemental information and instructions for accessing the earnings conference call may be obtained on the company’s web site – website at: www.xlgroup.com