Endurance net income fell to $64 million compared with $110 million in the second quarter of 2005.

Morgan Stanley analyst William Wilt said XL's reinsurance segment provided the largest upside surprise with net premiums up 26 percent. "Overall, the portfolio at XL is shifting materially, with professional lines casualty and property premiums up noticeably, largely at the expense of marine-energy premiums."

Bear Stearns analyst David Small said the XL figures had something for both bulls and bears. "The bulls will likely be satisfied that XL's results are beginning to show increased consistency, and are free of reserve surprises," he wrote.

But bears, he said, will note XL's underlying profitability did not match peers such as ACE, Chubb and Everest Re.

"Additionally, the underlying insurance book saw net premium written drop 6.3 percent, which suggests the company may be having problems finding profitable new business opportunities," Mr. Small wrote.

Mr. Wilt noted that Aspen's portfolio shuffling continued with property reinsurance growing more than expected and casualty reinsurance contracting. "Margins in both segments were solid, with casualty reinsurance benefiting from a nice reserve release," he wrote.

Endurance said its profit drop was due in part to an increase in reserves from the 2005 storm losses.