Montpelier Re Reports $27 Million Q4 Net Loss; FY 2012 Net Income of $214 Million

February 11, 2013

Bermuda-based Montpelier Re Holdings Ltd. reported an operating loss for the fourth quarter of 2012 of $0.31 per common share ($17 million) and a net loss of $0.48 per common share ($27 million), each expressed after preferred share dividends.

The bulletin noted that the “net loss for the quarter includes $3 million of realized and unrealized investment gains, $3 million of net foreign exchange losses and a $10 million loss on early extinguishment of debt. Fully converted book value per common share was $26.14, a decrease of 1.3 percent for the fourth quarter and an increase of 17.0 percent for the full year, each computed after taking into account common share dividends declared during each period.”

Despite the loss for the quarter, Montpelier reported that its “operating income for the year was $2.58 per common share ($151 million) and net income was $3.67 per common share ($214 million), each expressed after preferred share dividends. Net income for the year includes $82 million of realized and unrealized investment gains, $9 million of net foreign exchange losses and a $10 million loss on early extinguishment of debt.

“Net premiums written were up 2 percent in the quarter, or 19 percent, when adjusting for reinstatement premiums ($5 million) and the sale of MUSIC ($15 million),” said the bulletin.

“The quarterly result included a $94 million loss (net of reinsurance recoveries and reinstatements) from windstorm Sandy, consistent with our December announcement, which was partially offset by $26 million in prior-year loss reserve development. The combined ratio was 116 percent for the quarter. The loss ratio and the combined ratio for the full year were 46 percent and 81 percent, respectively.

“Net investment income for the quarter was $17 million and $67 million for the full year. The total return on the investment portfolio was 0.6 percent for the quarter and 5.2 percent for the full year.

President and CEO Christopher Harris commented: “I am pleased with our performance for the year. Despite windstorm Sandy, we produced 17 percent growth in fully converted book value per share on the strength of our balanced underwriting portfolio and solid investment results. Both our Bermuda and Lloyd’s underwriting platforms delivered strong profitability.”

“We were also pleased to further expand our underwriting partnerships with the successful launch of the Blue Capital asset management platform in December.”

He also said “our underwriting teams executed well during a competitive January renewal season. We expect a modest increase of 1 percent to 5 percent for net written premiums in the first quarter of 2013 driven by targeted growth in our property catastrophe and marine portfolios offset by reductions within certain other specialty lines.”

During the fourth quarter the Company repurchased 590,000 common shares at an average price of $22.52 per share ($13 million). During 2012, the Company repurchased 5,981,589 shares at an average price of $20.22 per share ($121 million).

As of December 31, 2012, total shareholders’ equity was $1.6 billion and total capital was $2.0 billion. On October 5, 2012, the Company issued $300 million of 10-year senior notes with a 4.7 percent coupon. The proceeds from this issuance were used to redeem, on November 5, 2012, our then outstanding $228 million 6.125 percent senior notes due in 2013, with the balance being used for general corporate purposes.

Source: Montpelier Re

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