Bermuda reinsurer Montpelier Re Holdings Ltd.'s second-quarter net income fell 13 percent to $44.1 million, or 51 cents per share, the company announced yesterday.

But Montpelier's operating income climbed to $63.3 million, or 73 cents per share, compared to $54 million in the same three months of 2007, thanks to low catastrophe losses and favourable prior-period reserve development.

Gross premiums written totalled $187.7 million, slipping only $0.5 million from last year's figure.

And investment income was just in positive territory in spite of difficult market conditions.

Fully converted book value per share was $18.24 as of June 30, 2008, an increase of 3.1 percent for the quarter and 15.7 percent for the last 12 months, inclusive of dividends.

The company's loss ratio for the quarter was 20.5 percent versus 38.9 percent for the comparable 2007 period.

The current period includes a $15 million provision for weather-related losses in the US which was more than offset by $28 million of net subrogation collections and favourable releases from prior-year reserves.

The combined ratio improved to 57.7 percent compared to 70.0 percent in the second quarter of 2007.

Montpelier president and chief executive officer Chris Harris said: "We achieved a strong second-quarter operating result, benefiting from low catastrophe losses and favourable prior-period reserve development.

"Notwithstanding the difficult investment markets, the total return on our investment portfolio was a slightly positive 0.1 percent.

"During the second quarter we repurchased 2,341,651 shares at an average price per share of $16.05 and since the quarter-end we have repurchased a further 672,404 shares at an average price of $14.87."