Flagstone Reports $37.3 Million Q3 Net Income; $82 Million for 9 Months

Flagstone Reinsurance Holdings, S.A., which is domiciled in Luxembourg, reported net income attributable to common shareholders for the quarter ended September 30, 2010 of $37.3 million, or $0.48 per diluted share, compared to a net income of $67.1 million, or $0.80 per diluted share, for the quarter ended September 30, 2009.

Net income attributable to Flagstone’s common shareholders for the nine months ended September 30, 2010, was $82.0 million, or $1.02 per diluted share, compared to a net income of $170.7 million, or $2.01 per diluted share, for the nine months ended September 30, 2009.

Flagstone also announced that its basic book value per share of $15.93 and diluted book value per share of $15.10 rose 4.3 percent and 4.4 percent, respectively, for the quarter (percentages inclusive of dividends).

The report also indicated that the company’s combined ratio rose to 100.1 percent in the third quarter, from 77 percent for the same period in 2009. The combined ratio for the first nine months of the year was 100.5 percent, compared to 75.3 percent for the first nine months of 2009.

Q3 operating income, which excludes capital gains/losses, totaled $6.5 million, compared to $46.9 million in Q3 2009, an 86.1 percent drop. Operating income for the first nine months of the year was $38.6 million, compared to $136.1 million in 2009, a 71.6 percent decline.

CEO David Brown commented: “I am pleased to report that our diluted book value per share increased by 4.4 percent for the quarter,” said. “This growth in value occurred despite a material net loss of $52.5 million from the Christchurch earthquake and $14.1 million of one-off charges related to expense reduction.

“In some quarters, and this is one, our diversified strategy will result in us sharing in losses that don’t necessarily impact the broader industry. Despite this, we did manage to grow book value this quarter above our targeted annualized rate and remain convinced that our cumulative underwriting results demonstrate the long-run attractiveness of our focus on highly technical underwriting, risk management, and diversification.

“We continue to optimize our global underwriting platform, and as a result of our efforts, our expense ratios (excluding one-offs), are trending towards mean industry levels resulting in $4.2 million of G&A savings this quarter over last.

The Company will host a conference call on Tuesday, November 2, 2010, at 9:30 a.m. (EST) to discuss this release. Live broadcast of the conference call will be available on the Financial & Investor section of the Company’s web site, as well as the complete earnings report.

Source: Flagstone Reinsurance Holdings