XL Group reported its fourth quarter and full year 2016 results. Net income attributable to common shareholders of $304.7 million for the quarter increased compared to $228.6 million in the prior year quarter.
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In addition to a large variance driven from company's Life derivative as a result of interest rate changes, the current quarter includes approximately $58.8 million in integration costs as well as $246.1 million in natural catastrophe losses compared to $73.3 million in integration costs and $107.8 million in natural catastrophe losses in the prior year quarter.
Operating net income of $128.4 million for the quarter decreased compared to operating net income of $195.0 million in the prior year quarter due largely to greater catastrophe losses incurred in 2016 as compared to 2015, most significantly Hurricane Matthew and the recent earthquake activity in New Zealand.
Net income from affiliates was $47.9 million for the quarter, compared to net income of $14.7 million in the prior year quarter.
XL Group had solid hedge fund performance compared to the prior year quarter.
Also included this quarter was a net $14.0 million benefit resulting from the rebalancing of the investment portfolio, as the company changed concentrations in certain individual positions in the normal course of business, partially offset by a decline in value within company's Operating Affiliate portfolio.
Net investment income for the quarter was $196.1 million, compared to $215.5 million in the prior year quarter and $209.8 million in the third quarter of 2016. Net investment income excluding the Life Funds Withheld Assets for the quarter was $161.0 million, compared to $171.9 million in the prior year quarter and $170.8 million in the third quarter of 2016.
Operating expenses were 8.3% favorable versus the prior year quarter, reflecting the continuing efficiency efforts as well as benefits from foreign exchange, particularly from the weakening of the British Pound compared to the U.S. Dollar.
Income tax benefit of $0.4 million was recognized in the quarter, primarily due to a greater proportion of total quarterly net income being earned in low-tax jurisdictions than previously anticipated, and the recognition of a net tax benefit resulting from the release of tax risk provisions due to the closure of the applicable statutory assessment periods and other tax return adjustments.
Fully diluted book value per common share decreased by $2.04 from the prior quarter to $40.33 and fully diluted tangible book value per common share decreased by $2.01 from the prior quarter to $32.21, driven by the decrease in company's accumulated unrealized gains on investments and payment of dividends, partially offset by net income.
Share buybacks totaled approximately 4.0 million shares or $144.9 million during the quarter, compared to 4.7 million shares or $176.7 million in the prior year quarter.
Share buybacks for the full year ended December 31, 2016, totaled approximately 30.2 million shares or $1.1 billion, compared to 12.4 million shares or $466.7 million during the same period in the prior year.
At December 31, 2016, $449.3 million of common shares remained available for purchase under company's share buyback program. ■