Arch Profits Down In First Quarter
Bermuda re/insurer Arch Capital Group Ltd. yesterday [Apr. 25] reported first quarter net income available to common shareholders of $19.3 million or $0.41 per share, compared to $210.5 million or $3.79 per share in the prior year period.
After-tax operating income available to common shareholders was $7.9 million or $0.17 per share, compared to $98.7 million or $1.78 per share in the year-ago period.
The company said its 2011 first quarter results included losses for current year catastrophic events of $178.7 million, net of reinsurance and reinstatement premiums.
Net investment income for the 2011 first quarter was $88.3 million or $1.89 per share, compared to $93.0 million or $1.67 per share last year.
Total revenues for the quarter were $775.1 million, compared to $844.9 million in the same period a year-ago.
The company said it incurred heavy first quarter losses stemming from floods in Australia and devastation caused by Cyclone Yasi, the New Zealand earthquake and the Japanese quake and tsunami.
“The company’s estimates for these catastrophic events are based on currently available information derived from modeling techniques, industry assessments of exposure, preliminary claims information obtained from the company’s clients and brokers to date and a review of in-force contracts,” Arch said in a statement.
“The company’s actual losses from these events may vary materially from the estimates due to the inherent uncertainties in making such determinations resulting from several factors, including the preliminary nature of available information, the unprecedented nature and scale of the Japanese earthquake and tsunami event, the potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques, the contingent nature of business interruption exposures, the effects of any resultant demand surge on claims activity and attendant coverage issues. In particular, the models used for risks affecting Japan are relatively untested by actual experience and may be subject to even greater variability.
“In addition, actual losses may increase if the company’s reinsurers fail to meet their obligations to the company or the reinsurance protections purchased by the company are exhausted or are otherwise unavailable.”
Industry analysts Keefe, Bruyette & Woods said in a recent report that a spree of natural disasters in early 2011 would likely result in the worst first quarter results ever for Bermuda firms.
