Bermuda-based CastlePoint Holdings reported a net loss of $13.2 million and basic and diluted loss per share of $0.34 for the third quarter of 2008 as compared to third quarter 2007 net income of $10.5 million and diluted earnings per share of $0.27.
Net income for the first 9 months of the year was $6.727 million, compared to $28.13 million for the first 9 months of 2007. The bulletin noted that several “extraordinary items” had contributed to the drop in earnings.
— Expenses relating to the merger with Tower Group, Inc. of $9.0 million. The merger with Tower was previously announced on August 5, 2008. In anticipation of the merger we accumulated cash and cash equivalents, which amounted to $218 million as of September 30, 2008. As a result, net investment income was reduced by approximately $2 million in the quarter as compared to a fully invested portfolio.
— Net realized investment losses were $10.5 million, which included the sale of Fannie Mae and Freddie Mac preferred stock at a realized loss of $2.5 million and other-than-temporary-impairment charges of $8.0 million, relating primarily to hybrid securities and bonds of Lehman Brothers Holdings, Inc.
— Deferred tax assets were reduced by $4.7 million as a charge to income since the generation of future capital gains to offset these losses over the next five years is not assured.
CastlePoint said its “portfolio as of September 30, 2008 had a fair value of $783 million including cash and cash equivalents. Our investments are comprised of highly rated securities with an average credit rating of AA+. The overall book yield on the investment portfolio was 4.8 percent as of September 30, 2008 including cash and cash equivalents and was 5.7 percent excluding cash and cash equivalents.”
The bulletin also noted the following items:
— Net premiums written were $100.0 million in the third quarter as compared to $90.6 million in the same period in 2007.
— Net earned premiums were $113.3 million in the third quarter of 2008 which was an increase of 72.6 percent from $65.6 million for the same period in 2007.
— CastlePoint Re, our Bermuda based reinsurance subsidiary, had a net combined ratio of 94.8 percent in the third quarter as compared to 87.8 percent for the same period in 2007.
— CastlePoint Insurance Company, our U.S. based primary insurance company, had a net combined ratio of 92.2 percent in the third quarter as compared to 110.3 percent for the same period in 2007.
The full report is available on the Group’s web site at: http://ir.castlepoint.bm under the “Investment Relations” section.
Source: CastlePoint Holdings
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