Montpelier Re Holdings Ltd., a Bermuda-based reinsurer that sells policies to protect global insurers from catastrophic losses, last night reported a loss in both the fourth quarter and for 2005, citing increased claims from third quarter hurricanes and a fourth quarter loss of $68.8 million for Hurricane Wilma. Analysts had been expecting the company to make money in the quarter.

Montpelier lost $61 million for the fourth quarter, or 68 cents a share, compared with a profit of $102.4 million, or $1.53 a share, in the year-ago period, it said in an after-market statement. Losses, excluding a change in the value of investments, was $53.2 million, or 59 cents a share, badly missing on average analyst estimates that the company would earn 20 cents a share in the quarter, according to Bloomberg data.

Policy sales were $8.3 million, compared to $98.9 million a year ago. Montpelier sold $106.8 million in policies, on a gross basis, but in a departure from its normal business pattern bought reinsurance to protect it from losses on $98.5 million of the policies it sold.

Montpelier chief executive Tony Taylor, said in the company's after-market earnings statement that Montpelier, which specialises in short-tail property sales, had had a policy of limiting how much reinsurance protection it bought.

"The losses incurred have inevitably been significant," he said. As a short-tail reinsurer Montpelier can count on having put all claims obligations behind it within a year or two of the loss. This is in contrast to casualty policies that generally carry a 'long tail' or can take years to fully materialise.

On top of the $68.8 million that Montpelier said it would pay out for Hurricane Wilma claims, the company also took a $64.8 million charge in the fourth quarter to add to its losses from third quarter storms, including Katrina and Rita.

The losses over the last two quarters pushed Montpelier's loss for the year to $752.9 million, or $10.49 a share, compared with net income of $240.3 million, or $3.55 a share, during 2004. Income from investments rose to $87.1 million for the year from $69.1 million in 2004.

Montpelier, like many of its peers, late last year tapped capital markets, and sold debt and preferred shares, to shore up capital lost in the storms, and in anticipation of an expected rise in reinsurance rates in 2006.

The company also made agreements with newly formed reinsurers Blue Ocean and Rockridge, both of which are affiliated with Montpelier, to boost its capacity further. The ability to lay off some risks to these entities will increase Montpelier's ability to sell more policies in 2006, when prices are expected to rise.

Mr. Taylor said Montpelier found, as did many other Bermuda reinsurers, that internationally the rates that were being charged "did not meet our expectations" but "US pricing broadly did and overall demand for many of our key products has increased significantly," Mr. Taylor said, in last night's statement. "We expect the market in these products to tighten and pricing to continue to increase as the year rolls out," echoing the views of many in the Bermuda reinsurance market that rates will continue to rise through 2006.

Montpelier's shares rose five cents in composite trading on the New York Stock Exchange yesterday to $18 a share, a 0.28 percent improvement. The company's shares have traded as high as $43.10 in the last year.