Hamilton, Bermuda-based insurer OneBeacon Insurance Group said it expects the book value per share will drop more than $2 due to after tax losses on its investments.
The company said it expects the book value per share to be reduced from $16.85 as of June 30 to between $14.10 and $14.40 as of Sept. 30.
Results, said OneBeacon, have not been reviewed by the company's independent auditors and are subject to change.
The reduction, the company explained, comes from after-tax loss of $200 million on investments, for a total return on investments during the quarter roughly between minus seven and eight percent.
The total return on fixed maturity investments, including short-term investments, was estimated at minus two percent for the quarter, compared to a return of minus 0.5 percent for the Lehman Aggregate Index.
The total return on equity securities (including common stock, convertible bonds and other investments) was estimated to be between minus 17 and 19 percent.
Mike Miller, chief executive officer of OneBeacon said in a statement, "Clearly, this was a challenging quarter driven primarily by our investment results. Our equities performed worse than the S&P 500 for the quarter, although they outperformed the benchmark through nine months.
"Our fixed income securities were down in the quarter, resulting in a slight decline for the year. The portion of our fixed income portfolio that is invested in mortgage-backed and asset-backed securities has performed well, being up 2 percent for the first three quarters."
He said OneBeacon estimates catastrophe losses, primarily from Hurricanes Ike and Gustav, at roughly $28 million, amounting to a six point increase in its combined ratio for the third quarter to come in at 100. The nine month combined ratio is expected to come in at 98.
The company plans to release and review the third quarter results on Oct. 31.
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