Montpelier Re To Book $30-$40M Net Loss In 1Q

Montpelier Re Holdings Ltd. said it expects to book between $30 million and $40 million in net losses for large individual risks in the first quarter of 2008, reflecting an industry loss of about $2 billion in that sector for the period.

The news came during the Hamilton, Bermuda-based company's fourth quarter financial results for 2007, in which it reported its net income for the fourth quarter dropped 26 percent, or $32 million, to $91 million compared to the same period in 2006. Earnings per share dropped 29 cents to 97 cents a share compared to the prior year.

The company reported its fourth quarter combined ratio rose 17.2 points to 52.9, while the quarter's gross written premiums fell 11 percent, down $9 million to $76 million.

During an analyst's conference call, Anthony Taylor, the company's chairman and chief executive officer, said it was a good fourth quarter and end of a good year despite the frequency of loss events.

The company's performance in the quarter was significantly affected by California wildfires, amounting to $10 million in losses.

Mr. Taylor pointed to the company's year-end performance and improvement in its book value per share--which rose $2.55 to $18.09.

For the year, net income increased 4 percent compared to 2006, up $13 million to $316 million. Earnings per share increased 9 cents to $3.31 a share. The combined ratio rose one point to 61.3 on gross premiums written of $654 million, down 10 percent, or $74 million from the prior year.

Mr. Taylor and other executives--Christopher L. Harris, president and chief underwriting and risk officer, and Kernan Oberting, chief financial officer--would not reveal the exact nature of the first quarter losses or exactly where they were coming from.

However, in response to analysts' questions, they did say these were large accounts in the United States and Europe, a couple in Australia and one in South America. Mr. Taylor appeared to indicate that the nature of the losses were related to the energy and materials sectors, "supplying good stock for China."

Mr. Harris noted that the company's results are being impacted by the soft market. He said renewals are down anywhere from 9-to-10 percent, depending upon location and lines of business. It is expected the company will see improvements from its strategy to expand its underwriting offices, Mr. Taylor said.

Montpelier said it spent $12 million for the 2007 opening of new offices in Lloyd's, Europe and the United States.