A remarkable recovery for Montpelier Re, one of the worst-hit Bermuda insurers and reinsurers from the 2005 hurricane season, has been underlined by a $43 million improvement in its first quarter net profits year-on-year to $73.3m.

The lessons from the 2005 catastrophe season were learnt quickly and late last year Montpelier improved its rating agency standing as a result of more prudent underwriting in relation to exposure to single, large catastrophic events.

Montpelier has reported fully converted book value per share of $16.08 for the first quarter of 2007, an increase of 4.4 percent inclusive of dividends.

Gross premiums written have improved from $224.9m to $261m, while the combined ratio has dropped more than 10 percent compared to the opening three months of 2006 to stand at 65.5, and that includes a $35m (24.5 points) element relating to the European windstorm Kyrill.

The impact of Kyrill was offset in part by an $8m favourable prior period reserve development.

Anthony Taylor, chairman and CEO, said: "This was another solid quarter. We produced a quarterly return of 4.4 percent despite the impact of Kyrill.

"Gross premiums written increased by 16 percent during the quarter as we allocated more capacity to January renewals. This is the reverse of the pattern experienced in 2006 when we held back capacity at the January renewal period and deployed more capacity on mid-year renewals.

"Although current rate levels remain healthy, we expect premium volume to decline for the remainder of the year."

Comprehensive income, which includes loss income items, for the quarter was $72.6 million, or $0.75 per diluted common share. Operating income, which excludes foreign exchange and investment gains and losses, was $60.3 million, or $0.62 per diluted common share.