And so on to the third item. Tax. Now this item would not be obvious just from reading the materials you have in front of you. At XL, we typically have an effective global operating tax rate in the mid-teens. And this was true through the first few quarters of 2011. But in the fourth quarter, an unfortunate phenomena took place. Pete will get more granular about this, but it has a simple idea behind it. The heavy losses we experienced, such as the Thailand floods, ultimately were written in low tax jurisdictions. While our positive earnings, such as the reserve releases in our London markets operation, came in a high tax jurisdiction. As a result, the effective tax rates for the year, instead of being in the mid-teens, was in the mid-30s. And in the fourth quarter, this tax item added fully $59 million to our operating loss. This rare phenomenon of tax adding insult to injury has happened at XL before, in cases of high volatility, low earnings quarters like we just experienced. In general, however, and over time, our tax strategies have proven to be very effective. And while we will always work to make sure our global structure is tax efficient, there are no obvious changes suggested by our studies of this fluke pattern. I should add that the move of the holding company last year to Ireland, has nothing to do with this result.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV