XL Group plc yesterday announced a second-quarter net loss attributable to ordinary shareholders of $279.3 million compared to net income of $272.7 million in the prior year quarter, primarily due to a $621.3 million after-tax loss on the sale of their life reinsurance subsidiary.

The company’s operating profit of $279.6 million for the quarter increased, compared to operating profit of $221.6 million in the prior year quarter, primarily due to higher underwriting profit in the current quarter.

The property and casualty combined ratio for the quarter of 88.3 percent was 5.5 percentage points lower than in 2013, when it was 93.8 percent.

Net investment income for the quarter was $232.8 million, compared to $232.5 million in the prior year quarter and $233.2 million in the first quarter of 2014.

Included in investment income in the current quarter is $19.2 million of income related to designated investments that support life retrocession agreements written on a funds withheld basis related to the life reinsurance transaction subsequent to May 30, 2014.

Commenting on the company’s performance, chief executive officer Mike McGavick said: “Through the first half of 2014, XL continued to demonstrate solid financial results and strong positioning.

“In the second quarter of the year, XL produced a total P&C combined ratio of 88.3 percent, total underwriting profit of $168 million, and a loss ratio of 57.6 percent. This performance also included Insurance segment underwriting profit of $62.6 million and a combined ratio of 93.8 percent in the quarter.

“And with the well-publicised turmoil in the reinsurance market, our Reinsurance segment’s 75.7 percent combined ratio and modest growth demonstrated our deep market relationships and the resiliency of our franchise. This quarter also included the completion of our previously announced life transaction, covering the vast majority of our life reinsurance business.

“All in all, we like the way the year is developing and believe we will continue to harvest the benefits of our work.”

P&C gross premiums written in the second quarter increased 8.6 percent compared to the prior year quarter. The Insurance segment gross premiums written (GPW) increased 9.9 percent from the prior year quarter, as a result of new business in International Primary Casualty, Political Risk and Crisis Management lines and higher renewed premiums in International Financial Lines and North American Excess Casualty and Construction lines. The Reinsurance segment GPW increased 4.5 percent from the prior year quarter, predominantly driven by new aviation business in Europe, growth in agricultural premiums and timing of casualty treaty renewals in North America.

P&C net premiums written in the second quarter decreased 1.8 percent compared to the prior year quarter, primarily as a result of increased use of proportional reinsurance in the Insurance Professional business.

P&C net premiums earned (NPE) in the second quarter of $1.4 billion were comprised of $1.0 billion from the Insurance segment and $434 million from the Reinsurance segment.

Compared to the prior year quarter, Insurance NPE decreased by 5.2 percent, primarily due to the earn through of increased proportional reinsurance in the Professional business. Reinsurance NPE increased by 1.0 percent, driven by the overall earn through of higher current quarter premium and reduced ceded whole account premiums.

The P&C loss ratio in the current quarter was 5.4 percentage points lower than in the prior year quarter. Included in the P&C loss ratio was favourable development of $84.4 million compared to $118.6 million in the prior year quarter. The P&C loss ratio variance was impacted by natural catastrophe pre-tax losses of $34.6 million net of reinsurance and restatement premiums, with approximately $19.7 million related to the Reinsurance segment and $14.9 million related to the Insurance segment, as compared to $134.1 million in the prior year quarter. Excluding prior year development and natural catastrophe losses net of reinsurance and reinstatement premiums, the second quarter P&C loss ratio was 0.7 percentage points lower than the prior year quarter.

The P&C combined ratio excluding prior year development and the impact of natural catastrophe losses for the quarter was 91.8 percent, compared to 92.7 percent for the prior year quarter. The Insurance segment combined ratio on this basis was 96.0 percent for the quarter compared to 97.0 percent for the prior year quarter, while the Reinsurance segment combined ratio on this basis was 82.0 percent for both this quarter as well as the prior year quarter.

Operating expenses in the quarter were 9.9 percent higher than in prior year quarter primarily due to underlying expense growth as well as the impact of improved performance on variable compensation and the impact of foreign exchange.