‘Satisfying’ Year For Montpelier Re
Montpelier Re Holdings Ltd., a leading Bermuda provider of short-tail reinsurance and other specialty lines, yesterday [Feb. 10] today reported financial results for the fourth quarter and full year ended December 31, 2010.
Fully converted book value per share was $24.61, an increase of 4.0% for the 2010 fourth quarter and 18.1% for the full year, including dividends.
Operating income for the quarter was $0.81 per share ($54 million) and comprehensive income was $0.62 per share ($42 million). The net impact of realized and unrealized losses from investments and foreign exchange, which is included in comprehensive income, was $12 million.
The loss ratio for the quarter was 38.6% which includes 11 points ($18 million) of increase in net losses from the September New Zealand earthquake. The quarter benefited from 15 points ($25 million) of favorable prior year loss reserve movements. The loss ratio for the full year was 48.3% including a 17 point ($109 million) benefit from prior year loss reserve releases. The combined ratio was 74.1% for the quarter and 82.0% for the full year.
Net investment income for the fourth quarter of 2010 was $17 million, down from $21 million reported a year ago and $19 million last quarter. The total return on the investment portfolio was flat for the quarter and 4.4% for the year.
Christopher Harris, president and CEO of the company which is headquartered in Montpelier House on Pitts Bay Road, said, “We grew fully converted book value per share by 18% in 2010. This result was satisfying considering the challenging market conditions we faced and the large number of earthquakes and other catastrophe losses experienced around the globe. A combination of solid underwriting results, steady investment performance and active capital management all contributed to our strong performance.
He continued, “Over the last five years, we have grown book value per share at an annualized rate of 17.2%, an excellent performance over a period in which we were also developing our U.S. and Lloyd’s operating platforms.”
He added, “We expect difficult trading conditions for the remainder of 2011, but we remain very pleased with the quality of our in-force portfolio. We further reduced our net catastrophe risk profile in the January renewal season in response to softening rates, and share repurchases remain a compelling option as part of our ongoing cycle management strategy.”
During 2010 the Company repurchased a total of 16,123,261 shares at an average price of $18.22 per share of which 4,043,861 shares were repurchased during the fourth quarter at an average price of $18.95 per share. The Company has repurchased a further 2.2 million shares thus far in 2011 at an average price of $20.10.
Montpelier, through its operating subsidiaries, is a premier provider of global property and casualty reinsurance and insurance products. Additional information can be found in Montpelier’s public filings with the Securities and Exchange Commission.
| MONTPELIER RE HOLDINGS LTD. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in millions of U.S. dollars, except share and per share amounts) | ||||||||
| unaudited | ||||||||
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Assets | ||||||||
| Fixed maturity investments, at fair value | $ | 2,289.3 | $ | 2,207.5 | ||||
| Equity securities, at fair value | 152.9 | 167.2 | ||||||
| Other investments | 90.1 | 91.0 | ||||||
| Cash and cash equivalents | 232.3 | 202.1 | ||||||
| Restricted cash | 27.1 | 40.9 | ||||||
| Total investments and cash | 2,791.7 | 2,708.7 | ||||||
| Reinsurance recoverable on unpaid losses | 62.4 | 69.6 | ||||||
| Reinsurance recoverable on paid losses | 12.9 | 44.5 | ||||||
| Insurance and reinsurance premiums receivable | 201.6 | 161.5 | ||||||
| Unearned reinsurance premiums ceded | 22.9 | 14.7 | ||||||
| Deferred insurance and reinsurance acquisition costs | 45.0 | 38.2 | ||||||
| Accrued investment income | 16.2 | 14.9 | ||||||
| Unsettled sales of investments | 32.5 | 1.5 | ||||||
| Other assets | 34.2 | 45.6 | ||||||
| Total Assets | $ | 3,219.4 | $ | 3,099.2 | ||||
| Liabilities | ||||||||
| Loss and loss adjustment expense reserves | $ | 784.6 | $ | 680.8 | ||||
| Debt | 327.7 | 328.6 | ||||||
| Unearned insurance and reinsurance premiums | 264.0 | 215.4 | ||||||
| Insurance and reinsurance balances payable | 33.8 | 35.2 | ||||||
| Unsettled purchases of investments | 108.9 | 8.6 | ||||||
| Accounts payable, accrued expenses and other liabilities | 71.6 | 102.1 | ||||||
| Total Liabilities | 1,590.6 | 1,370.7 | ||||||
| Common Shareholders’ Equity | ||||||||
| Common shares and additional paid-in capital | 1,258.8 | 1,541.3 | ||||||
| Treasury shares, at cost | (32.7) | (32.3) | ||||||
| Retained earnings | 408.9 | 222.4 | ||||||
| Accumulated other comprehensive loss | (6.2) | (2.9) | ||||||
| Total Common Shareholders’ Equity | 1,628.8 | 1,728.5 | ||||||
| Total Liabilities and Common Shareholders’ Equity | $ | 3,219.4 | $ | 3,099.2 | ||||
| Common shares outstanding (000s) | 64,557 | sh | 79,999 | sh | ||||
| Common and common equivalent shares outstanding (000s) | 66,195 | 81,768 | ||||||
| Book value per share: | ||||||||
| Book value per share | $ | 25.23 | $ | 21.61 | ||||
| Fully converted book value per share | 24.61 | 21.14 | ||||||
| Fully converted tangible book value per share | 24.53 | 21.08 | ||||||
| MONTPELIER RE HOLDINGS LTD. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||||
| (in millions of U.S. dollars, except per share amounts) | ||||||||||||
| unaudited | ||||||||||||
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
| Underwriting revenues | ||||||||||||
| Gross insurance and reinsurance premiums written | $ | 102.3 | $ | 79.1 | $ | 720.0 | $ | 634.9 | ||||
| Reinsurance premiums ceded | (11.1) | (4.9) | (51.2) | (32.7) | ||||||||
| Net insurance and reinsurance premiums written | $ | 91.2 | $ | 74.2 | $ | 668.8 | $ | 602.2 | ||||
| Gross insurance and reinsurance premiums earned | $ | 176.7 | $ | 163.1 | $ | 668.0 | $ | 613.5 | ||||
| Earned reinsurance premiums ceded | (14.5) | (8.3) | (42.6) | (40.3) | ||||||||
| Net insurance and reinsurance premiums earned | 162.2 | 154.8 | 625.4 | 573.2 | ||||||||
| Underwriting expenses | ||||||||||||
| Loss and loss adjustment expenses – current year | (87.0) | (42.0) | (411.6) | (214.4) | ||||||||
| Loss and loss adjustment expenses – prior year | 24.5 | 24.3 | 109.3 | 75.7 | ||||||||
| Insurance and reinsurance acquisition costs | (28.1) | (19.7) | (98.7) | (80.5) | ||||||||
| General and administrative expenses | (29.5) | (38.0) | (112.1) | (137.1) | ||||||||
| Underwriting income | 42.1 | 79.4 | 112.3 | 216.9 | ||||||||
| Net investment income | 16.6 | 21.3 | 74.1 | 81.0 | ||||||||
| Other revenue | 0.5 | - | 0.8 | 0.5 | ||||||||
| Interest and other financing expenses | (6.0) | (6.5) | (24.6) | (26.3) | ||||||||
| Other non-underwriting income (expense) | (0.1) | - | 0.1 | (0.2) | ||||||||
| Income tax benefit (expense) | 0.8 | (0.1) | 1.3 | (1.1) | ||||||||
| Operating income 1 | 53.9 | 94.1 | 164.0 | 270.8 | ||||||||
| Net realized investment gains (losses) 2 | (3.6) | 23.9 | 25.7 | 30.8 | ||||||||
| Net unrealized investment gains (losses) 2 | (13.1) | (11.9) | 18.0 | 159.1 | ||||||||
| Net foreign exchange gains (losses) 2 | 5.0 | (1.4) | 4.3 | (3.1) | ||||||||
| Gain on early extinguishment of debt | - | - | - | 5.9 | ||||||||
| Net income | 42.2 | 104.7 | 212.0 | 463.5 | ||||||||
| Other comprehensive income (loss) items | (0.4) | (1.7) | (3.3) | 0.3 | ||||||||
| Comprehensive income | $ | 41.8 | $ | 103.0 | $ | 208.7 | $ | 463.8 | ||||
| Earnings per share: | ||||||||||||
| Operating income per share 1 | $ | 0.81 | $ | 1.12 | $ | 2.30 | $ | 3.13 | ||||
| Net income per share | 0.63 | 1.25 | 2.97 | 5.36 | ||||||||
| Comprehensive income per share | 0.62 | 1.23 | 2.92 | 5.36 | ||||||||
| Insurance ratios: | ||||||||||||
| Loss and loss adjustment expense ratio: | ||||||||||||
| Current year | 53.7% | 27.1% | 65.8% | 37.4% | ||||||||
| Prior year | -15.1% | -15.7% | -17.5% | -13.2% | ||||||||
| Loss and loss adjustment expense ratio | 38.6% | 11.4% | 48.3% | 24.2% | ||||||||
| Acquisition costs ratio | 17.3% | 12.7% | 15.8% | 14.0% | ||||||||
| General and administrative expense ratio | 18.2% | 24.6% | 17.9% | 24.0% | ||||||||
| Combined ratio | 74.1% | 48.7% | 82.0% | 62.2% | ||||||||
| 1 Excludes net investment and foreign exchange gains and losses and early extinguishment of debt. | ||||||||||||
| 2 Includes net gains and losses on related derivative instruments. | ||||||||||||
