Odyssey Re reported fourth quarter net income rose 185 percent, fueled by investment gains–but soft market conditions are expected to challenge future results, the company's chief executive said.
"On the underwriting side, it is not a time for high ambitions," Andrew A Barnard, president and CEO, said during an analyst's call today, noting that there would not be much growth in reinsurance, while intense competition would continue through 2008–affecting premiums negatively.
He indicated that the company's ability to generate significant returns on investments as its premium book shrinks would continue to differentiate the company from other insurers.
The Stamford, Conn.-based company reported net income in the fourth quarter rose $159 million to $245 million, or $3.48 a share (up $2.32 a share). Revenue rose 34 percent, up $224 million to $878 million.
Gross written premiums fell 3 percent to $525 million in the quarter, while the combined ratio dropped 1.1 points to 93.7.
For the year, net income rose 17 percent, up $88 million to $596 million ($8.23 a share–an increase of $1.30).
Revenues rose 3 percent on the year to $2.99 billion. Gross written premium dropped 2 percent to $2.28 billion, while the combined ratio for the year stood at 95.5, up 1.1 points.
Competition, increased client retentions on its reinsurance business, the impact of foreign exchange and disciplined underwriting led to declines in premium written, said R. Scott Donovan, executive vice president and chief financial officer.
These same factors will lead to greater declines through 2008, he noted.
The company suffered $13 million in catastrophe losses related to floods in Mexico and California wildfires. There is an additional $10 million in directors and officers sub-prime losses in excess related to investors' class-action suits.
The company also announced that it would pay a quarterly cash dividend of 6.25-cents-a-share on March 28 to shareholders of record as of March 14.
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