Catastrophes Hit Montpelier Re Results
Montpelier Re Holdings Ltd., a leading Bermuda provider of short-tail reinsurance and other specialty lines, today [Oct. 27] reported financial results for the third quarter ended September 30, 2011.
Fully converted book value per common share was $22.26, a decrease of 4.3% from June 30, 2011, after taking into account common share dividends declared during the quarter.
The operating loss for the quarter was $0.40 per common share [$25 million] and the net loss was $1.07 per common share [$66 million], each expressed after preferred share dividends. The net loss includes $41 million of investment and foreign exchange losses, the majority of which were unrealized.
The 89 percent loss ratio for the third quarter includes $60 million of net catastrophe losses, including $30 million from US events including Hurricane Irene and the Texas wildfires,$20 million from US regional aggregate covers and $10 million from the July Danish floods.
In addition, the company has provided for $10 million of net losses from the June 2011 New Zealand earthquake. These losses were partially offset by $18 million of favorable prior year loss development. The combined ratio was 121% for the quarter.
Net investment income was $17 million for the quarter and the total return on the investment portfolio was -0.8%.
Christopher Harris, President and Chief Executive Officer, said, “While it’s disappointing to report an operating loss, the third quarter was a dynamic period for Montpelier.
“We agreed to sell our US operation, acquired a property catastrophe reinsurance portfolio from a competitor, and expanded our capital partnership relationships. We believe these recent actions sharpen our underwriting focus, enhance our capital flexibility, and improve our competitive positioning as we head into 2012.”
As of September 30, 2011, shareholders’ equity was $1.55 billion and total capital was$1.88 billion.
On September 20, 2011 Montpelier announced that it had entered into a definitive agreement with Selective Insurance Group, Inc. for the sale of Montpelier US Insurance Company, its US excess and surplus lines insurance business. It expects to close that transaction in the fourth quarter resulting in a gain in tangible book value per share of approximately $0.25.
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