Montpelier Re Reports Second Quarter Income
Montpelier Re Holdings Ltd reported financial results for the second quarter ended June 30, 2010. Fully converted book value per share was $22.31 at June 30, 2010, an increase of 4.9% for the quarter and 6.4% for the year to date, including dividends.
The Company reported net income of $0.96 per share ($70 million) for the second quarter of 2010, and operating income of $1.00 per share ($73 million), an increase of 28% on a per share basis from the second quarter of 2009. The net impact of realized and unrealized losses from investments and foreign exchange, which is included in net income, was $3 million for the quarter.
Net written premiums grew by 7% compared to the second quarter of 2009 with growth in the Company’s Lloyd’s and US operations more than offsetting a decrease in the Bermuda property catastrophe book.
The loss ratio for the quarter was 29%, which includes 13 points ($20 million) of loss resulting from the explosion and fire at the Deepwater Horizon oil rig. The quarter benefited from 26 points ($39 million) in favorable releases from prior years’ loss reserves. There was no change in the first quarter estimated net loss for the Chilean earthquake.
The combined ratio was 60% for the second quarter of 2010 versus 62% a year ago. General and administrative expenses include a $5 million (3 points) benefit resulting from the settlement of a reinsurance dispute.
Net investment income for the quarter was unchanged from a year ago at $20 million. The total return on the investment portfolio for the quarter was 0.9%.
Christopher Harris, President and Chief Executive Officer, said, “We produced a strong quarter with solid underwriting results and steady investment performance resulting in 4.9% growth in book value per share. The mid-year renewal season was challenging, and we reduced some catastrophe exposures accordingly. However, we also identified some attractive growth opportunities in our US and UK platforms, most notably within our Marine book.”
He continued, “We have grown shareholders equity over the last year while repurchasing 20% of outstanding shares at a discount to book value per share. We enter the US hurricane season in a strong capital position, and we continue to consider share repurchases an integral part of our cycle management strategy.”
Montpelier initiated a fresh $100 million share repurchase program in late June and repurchased 250,000 shares during the second quarter at an average price of $15.01. The Company has repurchased a further 743,700 shares in July at an average price of $15.12. Montpelier’s total capital is $1.95 billion as of June 30, 2010.
