Montpelier Re profits surge on better pricing

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Montpelier Re Holdings said second quarter profit jumped to $65.5 million from $23.6 million in the same period last year as pricing improved.

The Bermuda-headquartered reinsurer said gross premiums written increased by 17 percent in the quarter, to $253.5 million, but were up 28 percent when adjusting for reinstatement premiums ($3 million) and the sale of Montpelier US Insurance Company (MUSIC) ($15 million).

This increase reflects “improved pricing conditions and additional capital deployment in property catastrophe lines”, the company said.

Net investment income was $17 million, and the total return on the company’s investment portfolio was 1.1 percent for the quarter.

The loss ratio for the quarter was 39 percent, which it said includes $17 million of net favourable prior-year loss reserve movements, while the combined ratio was 76.5 percent for the quarter.

Montpelier said operating income for the quarter was $0.74 per common share ($44 million) and net income available to common shareholders was $1.06 per common share ($62 million), each expressed after preferred share dividends.

The net impact of realised and unrealised gains from investments and foreign exchange, which is included in net income, was $18 million for the quarter.

Montpelier president and CEO Christopher Harris said: “I am pleased with our first half underwriting and investment results, which have yielded 12.6 percent growth in our fully converted book value per share. In response to improved market conditions, we have increased our exposure in property catastrophe lines, positioning us well for the remainder of the year and into 2013.”

As of June 30, 2012, shareholders’ equity was $1.62 billion and total capital was $1.95 billion.

The company noted that during the quarter AM Best upgraded the financial strength rating of Montpelier Reinsurance to “A” (Excellent).

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