Bermuda-based Montpelier Re Holdings Ltd. yesterday announced it had net income of $73.7 million in its fourth quarter and $152 million in its first full year of business.

And the reinsurer, formed in the wake of the 2001 September 11 terrorist attacks, predicted that it will see written premiums increase 50 percent to $900 million in 2003.

Montpelier Re Holdings Ltd. said its fourth quarter income was the equivalent of $1.11 per diluted share for the three months to December 31 $2.74 per diluted share for the year.

"Montpelier Re had a terrific 2002. In our first year of operations, we have achieved everything we set out to do, and more besides," said Montpelier president and chief executive officer Anthony Taylor. "From scratch, we have established a first-rate global specialty property reinsurer, assembled a top team of underwriters, obtained a listing on the NYSE, have written over $600 million in premiums and achieved a return on equity of over 18 percent."

He added: "2002 was a great year for us, but we are confident we can do even better in 2003. Based on the success of our January renewal season, 2003 should see Montpelier Re increase written premiums by about 50 percent over the previous year. The markets in which we specialise remain strong and our capital levels are harmonising nicely with our projected book of business."

Chief financial officer Tom Kemp said the company anticipates writing between $900 million and $925 million of gross premium this year, an increase of approximately 50 percent while net earned premium is expected to come in at $775 to $800 million, an increase of about 135 percent over 2002.

The company said unrealised gains on investments for the quarter were $8.3 million and $33.7 million for the year. Comprehensive income, which includes unrealised gains, was $82 million for the fourth quarter, or $1.23 diluted comprehensive income per share, and $185.7 million for 2002, or $3.35 diluted comprehensive income per share.

Book value per share at December 31, 2002 was $19.39, an increase of $1.17 in the fourth quarter and an increase of $2.98 in the twelve months to December 31, 2002.

Gross premiums written were $73.9 million for the fourth quarter and $607.7 million for the year. Reinsurance premiums ceded were $2 million for the fourth quarter and $41.8 million for the year.

Net premiums earned were $105.4 million for the fourth quarter and $329.9 million for the year.

"Because Montpelier Re only began writing business in December 2001, and premium volumes are continuing to increase, earned premium lags noticeably behind written premium," the company said. "This will continue to be the case until the level of net written premium stabilises at a reasonably constant level, year-on-year."

Net investment income, including net realised gains and losses and net gains in foreign exchange, was $12.1 million for the fourth quarter and $49.1 million for the year.

Losses and loss adjustment expenses were $10.9 million for the fourth quarter and $133.3 million for the year, representing loss ratios of 10.4 percent and 40.4 percent respectively. At December 31, 2002, net loss reserves were $129.5 million of which $91.7 million related to an estimate of losses incurred but not yet reported (IBNR).

The company also said it was able to release $25 million in loss reserves for the year, which reduced the loss ratio to 40.4 percent for the year from 54.5 percent for the nine months to September 30, 2002.

Acquisition costs and general and administrative expenses were $31.6 million for the fourth quarter and $89.2 million for the year to date, representing expense ratios of 30 percent and 27 percent respectively. Included in these numbers were $1.6 million and $5.4 million for the three and twelve months, respectively, relating to the expensing of stock options.

Combined ratios were 40.4 percent for the fourth quarter and 67.4 percent for the twelve months ended December 31, 2002.

Shareholders' equity at December 31, 2002 was $1.25 billion. This included net proceeds of approximately $201.2 million from the company's initial public offering in the fourth quarter.

Montpelier's shares were trading at $26.54 yesterday afternoon and have risen 30 percent since the company's IPO in October.