Bermuda-headquartered XL Capital Ltd today announced that its third quarter results will be lower than anticipated due to higher than expected losses in its North American reinsurance operations, primarily from new casualty claims for the 1997 to 2000 underwriting years. As a result of these losses, the XL expects its third quarter 2003 net income to be reduced by approximately $184m pre-tax or $160m after-tax, or approximately $1.16 per ordinary share, compared to analysts' current expectations.
Brian M O'Hara, President and Chief Executive Officer of XL, stated: "As we have previously noted, the underwriting years in the late 1990s were among the worst in the industry's history for North American casualty business. Many primary insurers are continuing to see loss development beyond historical patterns due to the marked expansion of liability in the US tort system. The claims stem from the former NAC Re book, primarily from general liability, medical malpractice, professional lines and surety."Mr O'Hara continued: "I am personally leading a review of this book of business, which will include an intensive claims audit and review of the ceding company claims files that will be completed by year end. I intend to fully address our exposure to the 1997 through 2000 North American casualty reinsurance book written by the former NAC Re so that it will not adversely affect our financial results in 2004 and beyond."
