Montpelier Re Holdings Ltd. saw its profits drop by more than $40 million for the first quarter of 2010 after suffering a loss of just under $100 million from the Chilean earthquake.

The reinsurer reported a net income of $10 million for the first quarter compared to $52 million during the same period last year.

The company posted a fully converted book value per share of $21.36 at March 31, 2010, an increase of 1.5 percent for the quarter, including dividends.

It also recorded an operating loss of $23 million or minus 31 cents per share.

Realised and unrealised gains on investments and foreign exchange, which are included in net income, were $33 million for the quarter.

The loss ratio for the quarter was 91 percent, which includes 15 points ($24 million) in favourable releases from prior years' loss reserves.

The combined ratio - the percentage of premium dollars outlaid on claims and expenses - was 123 percent for the quarter versus 74 percent in the first quarter of 2009.

Meanwhile, Montpelier Re's gross premiums written rose to $274.8 million in the first quarter from $250.6 million in the same period last year.

The Chilean earthquake resulted in a loss of $94 million, net of $10 million of reinstatement premiums, with the loss from Windstorm Xynthia in Europe standing at $3 million. Net written premiums grew by 10 percent for the quarter compared to the first quarter of 2009, or five percent excluding the impact of reinstatement premiums. Christopher Harris, president and CEO of Montpelier Re, said: "In a quarter marked by high levels of catastrophe activity, most notably the Chilean earthquake, we were pleased to report a small profit and growth in book value per share of 1.5 percent.

"We remain one of the leading players in the property catastrophe reinsurance industry, and the losses we experienced in Chile this quarter were well within our expectations for an event of this magnitude.

"The overall positive result for the quarter highlights both the balance in our global catastrophe portfolio and the growing importance of our other portfolio segments."

Montpelier bought back 9,195,400 shares during the first quarter at an average price of $18.65, consistent with the company's focus on improving its capital and operating efficiency.

The company said its total capital of $1.9 billion at March 31, 2010 was also strong relative to its underwriting plans for 2010.