REG-XL Group plc Final Results <Origin Href="QuoteRef">CGL.L</Origin> - Part 2

CastelnauAnnouncement

03/02/2015 07:00

- Part 2: For the preceding part double click  ID:nBw9ZnvWva 

excluded because, as a
result of the Life Retrocession Arrangement, XL no longer shares in the risks
and rewards of the underlying performance of the Life Funds Withheld Assets that
support these retrocession arrangements. The returns on the Life Funds Withheld
Assets are passed directly to the reinsurer pursuant to a contractual
arrangement that is accounted for as a derivative. Therefore, net investment
income from the Life Funds Withheld Assets and changes in the fair value of the
embedded derivative associated with these life retrocession arrangements are not
relevant to XL`s underlying business performance. In addition, the loss on the
sale of life reinsurance subsidiary, net of tax, has been excluded due to the
one-time, non-operating nature of this loss. 

Foreign exchange (gains) losses in the income statement are only one element of
the overall impact of foreign exchange fluctuations on XL`s financial position
and are not representative of any economic gain or loss made by XL. Accordingly,
it is not a relevant indicator of financial performance and it is excluded. 

In summary, XL evaluates the performance of and manages its business to produce
an underwriting profit. In addition to presenting net income (loss), XL believes
that showing operating net income (loss) enables investors and other users of
XL`s financial information to analyze XL`s performance in a manner similar to
how management of XL analyzes performance. In this regard, XL believes that
providing only a GAAP presentation of net income (loss) would make it much more
difficult for users of XL`s financial information to evaluate XL`s underlying
business. Also, as stated above, XL believes that the equity analysts and
certain rating agencies that follow XL (and the insurance industry as a whole)
exclude these items from their analyses for the same reasons and they request
that XL provide this non-GAAP financial information on a regular basis. 

Operating ROE is a widely used measure of any company`s profitability that is
calculated by dividing annualized operating net income for any period other than
a fiscal year when actual operating income is used by the average of the opening
and closing ordinary shareholders` equity. XL establishes target Operating ROEs
for its total operations, segments and lines of business. If XL`s Operating ROE
targets are not met with respect to any line of business over time, XL seeks to
re-evaluate these lines. Operating ROE excluding unrealized gains and losses on
investments is an additional measure of a company's profitability that
eliminates the impacts of mark to market fluctuations on a company's investment
portfolio that have not been realized through sales, which XL believes provides
a more consistent measure of company performance. 

XL Group plc
Investor Relations
David Radulski, (203) 964-3470
or
Media Relations
Carol Parker Trott, (441) 294-7290 
 
XL Group plc 

Copyright Business Wire 2015