Zacks_Analysts' Blog : XL Group Estimates Cat Loss - Analyst Blog

XL Group (XL) expects a preliminary net loss from Hurricane Irene, Tropical Storm Lee, the September Texas Wildfires and the July Danish Floods, to range between $90 million and $120 million, net of reinsurance and reinstatement premiums. The company expects the majority of the loss to be attributable to XL's Insurance segment.

XL Group incurred catastrophe losses of $68.3 million, net of reinstatement premiums, in the second quarter.

Underwriting profit of XL Group in the second quarter dipped 29% from the year-ago quarter. Combined ratio deteriorated to 270 basis points.

The results at Insurance segment remained affected in the second quarter of 2011. Underwriting profit at the Insurance segment in the second quarter declined to $18.8 million compared with $21.2 million in the year-ago period.

Other property and casualty insurers who suffered from bad weather during the third quarter include Assurant Inc. (AIZ), The Chubb Corp. (CB), W. R. Berkley Corp. (WRB), Tower Group Inc. (TWGP) and Cincinnati Financial Corp. (CINF).

While Assurant forecasts a pre-tax cat loss of $80 million to $85 million, Chubb sees a significantly higher catastrophe loss of $400 million to $475 million pre-tax. Besides, both Berkley and Tower expect an earnings hit of $50 – $60 million. Cincinnati declared a preliminary pre-tax catastrophe loss estimate of about $88–$98 million.

The Zacks Consensus Estimate for third quarter 2011 is 44 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are $1.33 and $2.25 per share, respectively.

We maintain our long-term Neutral recommendation on XL Group. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Based in Dublin, Ireland, XL Group is a leading global provider of insurance, reinsurance and financial risk solutions to enterprises and insurance companies.