Bermuda-based Flagstone Reinsurance Holdings Limited joined a number of reinsurers with diminished results for the first quarter of 2010. The Company reported net operating income of $12.1 million, compared to $31.3 million in Q1, 2009, a 61.4 percent drop.
However, in other areas Flagstone posted some encouraging numbers. Basic book value per share was $15.04 and diluted book value per share of $14.25, up 3.4 percent and 2.1 percent, respectively.. Net income attributable to Flagstone’s common shareholders for the quarter was $31.5 million, or $0.38 per diluted share, compared to a net income of $35.7 million, or $0.42 per diluted share, for the quarter ended March 31, 2009.
Gross premiums written rose 10.7 percent in the quarter to $400.2 million. Net premiums earned rose by 253.4 percent to $216.8 million. However, the combined ratio also rose from 80.4 percent to 97.6 percent, reflecting the spate of natural catastrophes during the period.
CEO David Brown commented: “We are pleased with our financial results for the first quarter of 2010. From an underwriting perspective, we performed well despite the occurrence of multiple international catastrophes including winter storm Xynthia in France, Australian storms and the earthquake in Chile. The only individually material loss to us was from Chile and we still believe that our initial estimate of $50 million is reasonable. However, we also believe that the overall industry loss from this event will develop towards the higher end of the range of industry estimates and out of caution have recorded a net reserve of $55 million against this event.
“Despite these events, Flagstone’s emphasis on technical underwriting and risk management allowed us to produce a loss ratio of 58.8 percent and underwriting profits of $16.3 million. Again, thanks to the significant amounts of premiums generated by our diversified global platform, we were able to offset losses and produce a superior loss ratio. We believe that our accident year loss ratios over the last 3 years are amongst the best in our industry.
Chairman Mark Byrne noted: “Given the amount and severity of catastrophes in the quarter, our positive results are a confirmation of our diversification and risk management strategy. Flagstone’s investment portfolio remains conservatively positioned and we are comfortable with our high quality portfolio of mainly fixed income securities and cash. This position gives us a stable capital base from which to underwrite and provides us with the advantage of being a high-quality credit to our clients and counterparties. We believe this, along with our technical expertise and leading client service, gives us an added edge, allowing us to see preferential business and terms.”
He also discussed Flagstone’s decision to recommend to shareholders a “plan to change our place of incorporation from Bermuda to Luxembourg. We believe the change in incorporation from Bermuda to Luxembourg will increase our strategic and capital flexibility while maintaining our operating model and long-term strategy. Furthermore, the move more firmly establishes our identity as a truly global company with a strong European footprint.”
The full report, additional information and details on accessing the earnings conference call, held on Wednesday, May 4, may be obtained on the Company’s website at www.flagstonere.com.
Source: Flagstone Re
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