NU Online News Service, Aug. 2, 3:17 p.m. EDT

While catastrophes took a toll on Flagstone Reinsurance Holdings' second-quarter earnings, the company's chief executive says the carrier is seeing signs of premium increases sticking as this year's renewal rates averaged 9 percent across the board.

During a conference call with financial analysts today, David Brown, Flagstone Re's CEO, calls the second quarter a “very active” period for catastrophes, but says the company's balance sheet remains strong “and the outlook for Flagstone remains positive.”

He says that the losses in the United States along with the revised Risk Management Services V.11 model change “aided in pushing rates up.”

North America catastrophe pricing rose 8-15 percent while Florida pricing rose anywhere from 8-15 percent in catastrophe wind risks.

“We believe that the future rate environment will be dependent upon the upcoming wind season in North America,” says Brown.

He explains if this hurricane season remains benign, then rates will remain stable, but if there is “a severe wind event or the occurrence of a single large event,” rates are expected to increase “significantly” come Jan. 1 renewals.

For the second quarter, the company reports a net loss of $20 million compared to net income of $13 million for the same period the previous year. Total revenues dropped 17 percent, or $39 million, to $193 million. Gross premiums written were down 6 percent, or $23 million, to $346 million as the company exited some business.

For the 2011 first half, Flagstone reports a net loss of $181 million compared to net income of $45 million for the same period last year.

The second-quarter combined ratio stood at 107.1, up 3.7 points from a year before. For the six months, the combined ratio jumped 44 points to 144.6.

Special Reports /

Flagstone Re: Rates on the Upswing

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