Flagstone Re Q2 Net Drops 53% on Flood, Wind Losses

August 10, 2007

Bermuda-based Flagstone Reinsurance Holdings Limited had a rough second quarter of 2007 with net earnings down by 53 percent to $14.694 million, compared to $26.905 million in the second quarter of 2006. The Company’s combined ratio for the period rose to 94.6 percent, compared to 46.3 percent last year.

However, Flagstone’s net income for the year is still significantly above last year’s figures at $50.034 million, compared to $31.846 million. Shareholder diluted book value has also increased to $12.46 per share, up 1.2 percent for the quarter

Chairman, Mark Byrne noted: “Organizationally, we had a productive quarter, and many seasoned executives joined Flagstone around the world. Progress on our many systems and technology initiatives continues apace. Furthermore, we have launched new offices covering the MENA region from Dubai, and the Latin American region from San Juan Puerto Rico.”

He also explained that the Company’s “globally diversified book of business means that when there are significant losses in non peak zones, our portfolio will experience losses which a peak-zone strategy might avoid. Naturally we would have preferred to have a stronger Q2 2007 from a returns perspective, but we view the moderate size of the losses relative to our exposures in the UK Wind and Australian zones, to be a satisfactory demonstration of our risk management.”

CEO David Brown added: “We continue to be pleased with the quality of business we are seeing and increased our volumes significantly over the same period last year. Our gross premiums written are up 81 percent for the first half of the year as we mature our relationships and deploy the capital raised in our IPO and through our recent debt offering.”

He also pointed out that “the UK is one of our largest exposure zones and consequently we were impacted by the floods in the UK at the end of this quarter. “This, together with flood losses in Australia, produced a disappointing result viewed on a quarterly basis. However, this is in the nature of the volatile business we underwrite and we continue to be pleased with the franchise we are building for the long term.”

The full report and a replay of the conference call is available on the Company’s web site at: www.flagstonere.bm.

Source: Flagstone Re

Topics Profit Loss Flood

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