Watford Reports 2020 Third Quarter Results
Watford Holdings Ltd. reported net income of $78.1 million, after $1.1 million of preference dividends, for the three months ended September 30, 2020, compared to net income of $0.2 million, after payment of $2.6 million of preference dividends and $4.2 million of accelerated amortization costs related to the redemption of preference shares, for the same period in 2019.
Book value per diluted common share was $43.36 at September 30, 2020, an increase of 11.7% from June 30, 2020.
The quarterly results include:
- Net income available to common shareholders of $78.1 million, or $3.92 per diluted common share, or a 9.5% return on average equity, compared to net income of $0.2 million, or $0.01 per diluted common share, for the 2019 third quarter;
- Combined ratio of 105.6%, comprised of a 79.3% loss ratio, a 21.3% acquisition expense ratio and a 5.0% general and administrative expense ratio, compared to a combined ratio of 104.0% for the prior year third quarter, comprised of a 76.5% loss ratio, a 21.9% acquisition expense ratio and a 5.6% general and administrative expense ratio;
- Net interest income of $26.5 million, a 1.2% yield on average net assets, for the 2020 third quarter, compared to net interest income of $29.5 million and a 1.4% yield on average net assets for the 2019 third quarter; and
- Net investment income of $92.8 million, a 4.3% return on average net assets for the 2020 third quarter, compared to net investment income of $14.0 million and a 0.6% return on average net assets for the 2019 third quarter.
Commenting on the 2020 third quarter financial results, Jon Levy, CEO of Watford, said: “We again express our gratitude to all individuals and their families who provide support to those affected by both the COVID-19 global pandemic as well as the natural catastrophe events which have occurred this year.
“Watford continues to demonstrate our durability in the current economic environment, and we delivered strong financial results for the quarter. Our net income was $78.1 million, driven by net investment income of $92.8 million.
“We are pleased to report that our net investment income is positive for the year, reversing the deficit driven by March’s COVID-19 market turmoil. The recovery over the last two quarters demonstrates the resilience of our strategy. This was achieved as we simultaneously upgraded the asset quality and made significant withdrawals from our non-investment grade portfolio.
“Our combined ratio for the quarter was 105.6%, and 103.5% when adjusted for other underwriting income and certain corporate expenses. This was an active property catastrophe quarter for the industry, and our current year property catastrophe losses added $6.4 million or 4.4 points to our quarterly combined ratio.
“Market conditions improved further in the quarter, with rates moving positively particularly in our insurance platforms.”
