Profits fell almost $7 million at Montpelier Re during the second quarter of the year to $50.7m, with gross written premiums down $108m year-on-year.

The company did however improve its combined ratio from 72.9 to 70 percent.

A massive $65m was spent buying back all remaining shares and founders' warrants from White Mountains and this delivered a $0.52 decrease to the company's fully converted book value per share.

Analysts polled by Thomson Financial expected, on average, a profit of 79 cents per share, while the second-quarter results equate to 53 cents per share compared to 62 cents for the same period a year ago.

The big drop in gross written premiums — some 36 percent lower — was, the company said, impacted by the cessation of Blue Ocean's underwriting, which in the second quarter of 2006 amounted to $61.8m and this past quarter was down to $12.5m, as well as the Florida legislation changes.

Losses incurred as a result of the June floods in England and Australia amounted to $30.5m, although this was offset in part by $19.6m of favourable prior period reserves.

Anthony Taylor, chairman and CEO, said: "This was a very productive quarter. We announced the approval of our new Lloyd's Syndicate 5151 and the addition of Stan Kott as CEO of our US operations.

"We continue to make steady progress in building out our Lloyd's and US platforms, which we believe will contribute significant shareholder value over the long term.

"On the capital front, we repurchased the remaining shares and founders' warrants from White Mountains which resulted in an immediate hit of $0.52 to book value per share but which we think will provide an attractive return to our shareholders over time. Financially, results were solid with a quarterly operating return on equity of 3.5 percent despite the impact of the UK and Australian floods."

Montpelier repurchased 939,039 common shares and 7,172,375.5 warrants with an exercise price of $16.667 per warrant from White Mountains during the second quarter.