XL Group plc Earnings Cheat Sheet: Misses Expectations as Profit Falls

S&P 500 (NYSE:SPY) component XL Group plc (NYSE:XL) reported a lower net income in third quarter, missing analysts’ estimates. 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 Third Quarter

Results: Net income for XL Group plc fell to $42.4 million (14 cents per share) vs. $77.5 million (23 cents per share) a year earlier. This is a decline of 61.5% from the year earlier quarter.

Revenue: Rose 2.3% to $1.66 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: XL fell short of the mean analyst estimate of 34 cents per share. It beat the average revenue estimate of $1.34 billion.

Quoting Management: Commenting on the Company’s performance, Chief Executive Officer Mike McGavick said: “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.”

Key Stats:

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 75 cents versus a mean estimate of net income of 48 cents per share.

The company’s revenue has now risen for two straight quarters. In the second quarter, revenue increased 9.2% to $1.7 billion from the year earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 61 cents a share to 63 cents over the last ninety days. The average estimate for the fiscal year is $1.23 per share, a rise from $1.04 ninety days ago.

Competitors to Watch: Arch Capital Group Ltd. (NASDAQ:ACGL), The Travelers Companies, Inc. (NYSE:TRV), PartnerRe Ltd. (NYSE:PRE), Zurich Financial Services (ZFSVY), Axis Capital Holdings Ltd. (NYSE:AXS), Montpelier Re Hldgs. Ltd. (NYSE:MRH), RenaissanceRe Hldgs. Ltd. (NYSE:RNR), Aspen Insurance Hldgs. Ltd. (NYSE:AHL), and XL Group plc (XL3).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Source: Xignite Financials)