Blue Capital Reports 2016 4Q Financial Results

February 4, 2017

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 fourth quarter of 2016.

The Company’s net income was $4.0 million [$0.46 per share] for the fourth quarter of 2016 and $14.3 million [$1.63 per share] for the twelve months ended December 31, 2016.

The Company’s fully converted book value per common share was $20.90 at December 31, 2016, reflecting a 2.3% increase for the quarter and a 7.6% increase year-to-date, each inclusive of dividends declared in both periods.

Reinsurance premiums written for the current quarter and full year 2016 were $8.7 million and $43.2 million, increasing by $3.7 million and $4.6 million compared to the same periods in 2015 primarily due to increased participation in quota share contracts, partially offset by a decrease in direct written premiums.

The combined ratio for the current quarter and full year 2016 was 61.1% and 65.0% compared to 42.4% and 45.3% in the same periods in 2015. The increases in the current period combined ratios were driven by higher loss and loss adjustment expense ratios partially offset by lower acquisition and general and administrative expense ratios.

Loss and loss adjustment expenses were $3.4 million for the current quarter and were $13.7 million for the current year compared to $0.3 million and $2.6 million, respectively, in 2015.

The increase in loss and loss adjustment expenses was predominantly driven by a higher level of 2016 global loss activity, including Hurricane Matthew and the New Zealand earthquake in the fourth quarter and the Canadian wildfires, the Japanese earthquake, and U.S. severe weather activity, which occurred earlier in the year.

General and administrative expenses were lower in the current periods compared to a year ago largely due to lower performance fees reflecting the higher catastrophe activity. Acquisition expenses were lower in the current periods compared to a year ago due to lower profit commissions.

The Company’s Board of Directors has declared a special dividend of $0.59 per common share, which is payable on March 15, 2017 to all shareholders of record as of February 28, 2017. This special dividend, together with the regular dividends declared during each of the first three quarters of 2016, represents 90.6% of the Company’s “Distributable Income” with respect to 2016.

Adam Szakmary, President and CEO, commented: “2016 was a solid year for Blue Capital as we generated growth in book value of 7.6% inclusive of dividends and a combined ratio of 65.0% against a backdrop of the costliest year for industry losses within the last five years.

“These results led to our declaring a special dividend for the third year in a row which, when combined with our previous 2016 regular quarterly dividends, represents a return of over 90% of total annual earnings.

“2016 was also the first full year of the Company’s operations since Blue Capital Management Ltd. was purchased by Endurance Specialty Holdings Ltd., resulting in greater access by the Company to a larger more diversified catastrophe portfolio, thereby enhancing our ability to effectively select risks and build a higher quality portfolio designed to generate shareholder value.”

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