Montpelier Re Holdings Ltd. (MRH) guided preliminary losses from the earthquake and tsunami in Japan to $ 126 million, pre-tax and net of retrocessional recoveries and reinstatement premiums.
The company has forecast total industry losses of roughly $ 25 billion resulting from the earthquake and tsunami in Japan.
Earlier, Montpelier guided preliminary net loss to approximately $ 75 million, net of reinstatement premium, attributable to the earthquake in New Zealand in February 2011. The company also expects to incur a loss of $ 15 million from the January floods and Cyclone Yasi in Australia.
During 2010, Montpelier incurred $ 135.9 million in net losses associated with earthquakes in Chile and New Zealand. The combined ratio in 2010 deteriorated substantially to 82% from 62.2% in 2009.
The Zacks Consensus Estimate for first-quarter 2011 is a loss of 46 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $ 1.27 per share and $ 2.38 per share.
RenaissanceRe Holdings Ltd. (RNR), which competes with Montpelier, also estimated that its first quarter 2011 earnings will be reduced by the net negative impact of approximately $ 30 million due to the Australian flooding and $ 190 million due to the New Zealand earthquake.
We expect the current pricing environment in the primary insurance market and the stressed economy to restrict top-line growth. Additionally, there exists execution risk with the newer platforms and we expect investment yields to remain under pressure in the near term.
We maintain our long-term Underperform recommendation on Montpelier. The quantitative Zacks #5 Rank (short-term Strong Sell rating) for the company indicates downward pressure on the stock over the near term.
Headquartered in Pembroke, Bermuda, Montpelier, through its subsidiaries in the U.S., the U.K. and Switzerland, provides customized and innovative reinsurance and insurance solutions to the global market.
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RENAISSANCERE (RNR): Free Stock Analysis Report
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