NU Online News Service, Feb. 14, 9:32 a.m. EST
Bermuda-based reinsurer Montpelier Re Holdings Ltd. reported net income dropped 60 percent in the fourth quarter of 2010 due to a combination of catastrophe losses and declines in investment returns.
The company reported net income decreased $62.5 million to $42 million. Net income per share dropped 62 cents to 63 cents a share. Gross insurance and reinsurance premiums written increased 29 percent, or $23 million, in the quarter to $102 million. The combined ratio jumped 25.4 points to 74.1.
For the year, Montpelier reported net income dropped 54 percent, or $252 million, to $212 million. Net income per share was down $2.39 to $2.97 a share. Gross insurance and reinsurance premiums written rose 13 percent, or $85 million, to $720 million. The combined ratio for the year rose 19.8 points to 82.
During a conference call with financial analysts, Christopher Harris, president and chief executive officer for Montpelier said in terms of an 18 percent increase in book value, the company was successful. However, such performance "will be difficult to replicate given the soft market and reduced returns."
In response to the competitive marketplace, the company will aim to reduce exposures, especially in its catastrophe areas, and redeploy capital elsewhere in better performing business. It will also exert greater underwriting discipline and walk away from business that is deemed to be underpriced.
Mr. Harris said the company will consider repurchasing company shares as "a capital management tool."
Regarding recent flood losses in Australia, he said the company's exposure is minimal, but that its primary exposure arises from "larger industrial clients and some retrocessional accounts."
The company has received no loss reports from clients to date, however the loss adjustment process could take time and 2010 results contain incurred but not reported losses of $5 million, Mr. Harris said. He added that exposure to loss is expected to be minimal.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.