XL Rises Most Among Financials on Improved Profit Margins

XL Group Plc, (XL) jumped the most since January after second-quarter profit beat analysts’ estimates as margins improved.

The insurer rose 2.9 percent to $33.98 at 10:11 a.m. in New York, the largest gain in the 84-company Standard & Poor’s 500 Financials Index.

Operating income, which excludes a loss tied to the sale of a business, was $1.02 a share, beating the 86-cent average estimate of analysts surveyed by Bloomberg. The insurer made an underwriting profit of 11.7 cents of profit on every premium dollar it collected in the quarter, compared with 6.2 cents a year earlier, the Dublin-based insurer said late yesterday in a statement.

“XL’s improved underwriting capabilities, reflecting both upgraded talent and improved technology,” are helping results, Meyer Shields, an analyst with Keefe Bruyette & Woods, said in a note to investors yesterday. “Looking forward, XL’s earnings should become even less volatile.”

Chief Executive Officer Mike McGavick last month completed the sale of the reinsurance business to GreyCastle Holdings Ltd. for $570 million as part of his plan to simplify XL and free up capital for share buybacks.

XL reported a net loss in the second quarter of $279.3 million, or $1.03 a share, tied to the sale of a life reinsurance unit. That compares with net income of $272.7 million, or 93 cents, in the same period last year.

To contact the reporter on this story: Kelly Gilblom in New York at kgilblom@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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