Odyssey Re Holdings Corp. reported third-quarter net income increased 7.9 percent, rising from $114 million in the period last year to $123 million.
Diluted earnings per share for the quarter increased to $1.96 from $1.58 in 2007.
Scott Donovan, Odyssey Re executive vice president and chief financial officer, said in a conference call that the company increased its net income due to higher realized gains, despite suffering an operating loss.
The Stamford, Conn.-based reinsurer and specialty insurer saw a $6.4 million operating loss in the quarter compared to a third-quarter 2007 operating income of $55.2 million. The loss, Mr. Donovan said, was due to reduced underwriting income because of increased catastrophe activity and lower investment income.
Odyssey Re reported $571.8 million in third-quarter net written premiums, compared to $575.8 a year ago. Third-quarter net premiums earned was $545.4 million compared to $548 million in 2007.
The combined ratio for the quarter was 113, compared to 97.8 in 2007.
On the investment side, Odyssey Re reported 2008 third-quarter net investment income at $62.5 million, compared to $86.5 million a year ago. Net realized investment gains jumped in the quarter from $87.6 million in 2007 to $196.7 million in 2008.
For the first nine months of 2008, net income was $441.1 million compared to $350.5 million in 2007.
Andy Barnard, Odyssey Re president and chief executive officer, said in the conference call that losses from Hurricane Ike were well within the company's risk tolerance, and at the lower end of the scale compared to competitors.
Hurricanes Ike and Gustav represented a $78 million loss, the company reported.
Mr. Barnard said he expects a gradual tightening of market conditions throughout 2009. But he prefaced that by saying a rational expectation would lead one to conclude the market will harden. "Unfortunately, our industry is not renowned for its rationality."
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