On April 24, insurance and reinsurance provider XL Capital (NYSE:XL) released first-quarter earnings for the period ended March 31.

  • Net income powered ahead by nearly 20%, and operating earnings of $3.03 per share beat analyst estimates by $0.86 per share.
  • The quarter included $55 million of pre-tax catastrophe losses from windstorm Kyrill, lower than the guidance of $60 million to $75 million in losses.
  • The expense ratio for the general insurance and reinsurance segments increased by 260 basis points compared to last year, thanks to higher compensation costs for business development and performance-based programs.
  • The company ended the quarter with $54.95 per share in book value, giving it a 1.3 price-to-book multiple, which is lower than or in line with competitors like Arch Capital Group (NASDAQ:ACGL), RenaissanceRe (NYSE:RNR), and Everest Re (NYSE:RE).

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Premiums Earned

 $1,791

$1,819

(1.5%)

Investment Income

$553

$464

19.3%

Net Income

$550

$459

19.9%

EPS

$3.06

$2.56

19.5%

Get back to basics with the income statement.

Ratio Checkup

Q1 2007

Q1 2006

Change*

Loss Ratio

62.2%

64.1%

 (1.90%)

Expense Ratio

28.2%

25.6%

2.60%

Combined Ratio**

90.4%

89.7%

0.70%

Return on Equity

22.4%

20.4%

2.00%

*Expressed in percentage points.
 **General insurance and reinsurance divisions.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Investments

$39,796

$36,772

8.2%

Cash and Equivalent

$3,371

$2,263

49.0%

Liabilities

Loss Reserve

$22,806

$23,734

(3.9%)

Unearned Premiums

$6,651

$6,392

4.0%

Long-Term Debt

$3,369

$3,368

0.0%

The balance sheet reflects the company's health.

Related Foolishness:

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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.