Blue Capital Reports 2016 3Q Financial Results
Blue Capital Reinsurance Holdings Ltd., a Bermuda holding company that, through its operating subsidiaries, offers collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities, reported its financial results for the third quarter of 2016.
The Company’s net income and operating income was $3.3 million [$0.38 per share] for the third quarter of 2016 and $10.3 million [$1.17 per share] for the nine months ended September 30, 2016. The Company’s fully converted book value per common share was $20.44 at September 30, 2016, reflecting a 1.9% increase for the quarter and a 5.5% increase year-to-date, each inclusive of dividends declared in such periods.
Reinsurance premiums written for the current quarter were $7.8 million increasing $1.9 million compared to the same period in 2015. The current quarter’s reinsurance premium growth resulted from a greater level of quota share premium in the current period which is recognized more evenly throughout the year compared to a year ago when a greater percentage of premiums related to excess of loss contracts which were recognized at contract inception. On a year to date basis, the current period’s reinsurance premiums written of $34.5 million were 2.6% or $0.9 million higher than the prior year.
The combined ratio for the current quarter was 63.5% compared to 50.8% in the same period a year ago. The increase in the combined ratio was driven by higher loss and loss adjustment expenses and higher reinsurance acquisition costs partially offset by lower general and administrative expenses. Loss and loss adjustment expenses for the current quarter were $2.6 million compared to $1.4 million in the same period a year ago as a result of a higher frequency of losses from smaller events.
Reinsurance acquisition costs were $2.9 million in the current period compared to $2.0 million a year ago due to the larger concentration of quota share business which maintains a higher acquisition cost. General and administrative expenses for the current quarter were $1.1 million, or $0.2 million lower than a year ago due to lower performance fees based on reduced profitability. On a year to date basis, the combined ratio was 66.4% in the current period compared to 46.1% in the prior period.
The deterioration in the current period’s year to date combined ratio was largely driven by a significantly higher level of industry global catastrophe losses compared to a year ago, partially offset by reduced general and administrative expenses, reflecting lower performance fees.
During the third quarter of 2016, the Company declared a regular dividend of $0.30 per common share, which was paid on October 14, 2016.
Adam Szakmary, President and CEO, commented: “Our third quarter and year to date results reflect our effective underwriting and risk management capabilities as we generated strong profitability despite a greater frequency of global loss events in 2016. Our strategy of exclusively focusing on catastrophe exposures to create a portfolio of risks diversified across global geographies, products and insurers continues to generate attractive shareholder returns.”
