Montpelier Re Holdings Ltd. (MRH) reported operating net earnings of $1.34 per share in the fourth quarter, beating the Zacks Consensus Estimate by 27.6%. However, operating earnings declined 35% year over year due to lower underwriting profit.
The quarter, nonetheless, witnessed solid contribution from Lloyd’s and Collateralized Re segments.
Including net realized investment losses of $9.5 million, net unrealized investment losses of $10 million, net losses from investment-related derivative instruments of $3.1 million, net foreign currency losses of $10.1 million and net losses from foreign exchange-related derivative instruments of $1 million, Montpelier Re reported net income of $1.09 per share, down 24% year over year.
Operating net earnings of $4.44 per share in 2014 declined 15.3% over 2013. Including one-time items, net income improved 24% year over year to $4.48 per share.
Quarterly Operational Update
Montpelier Re’s net premiums improved 20% year over year on higher premiums at Lloyd’s and Collateralized Reinsurance segments, partially offset by lower premiums at Montpelier Bermuda.
Net investment income came in at $9.4 million, down 32.4% year over year.
Underwriting income of $63.2 million was down 29.6% from the prior-year quarter.
Loss ratio was 20.6%, 1,900 basis points (bps) higher than 1.6% in the year-ago quarter. Combined ratio deteriorated 2,130 bps year over year to 60.7%.
Financial Update
Montpelier Re exited 2014 with cash and investments of $3.2 billion, down 1.2% from the end of 2013.
At year end, debt was $407.3 million, 2% higher than the 2013-end level.
Book value per share as of Dec 31, 2014 came in at $32.27, up 15% year over year.
Share Repurchase Update
Montpelier Re spent $31.9 million to buy back 1 million common shares in the fourth quarter.
Looking Ahead
Management expects net written premiums in the first quarter of 2015 to be flat with year-ago level since targeted reductions in Property Catastrophe will be offset by planned growth in Individual Risk and Other Specialty lines.
Zacks Rank
Montpelier Re currently carries a Zacks Rank #3 (Hold).
Performance by Other P&C Insurers
The bottom lines at RLI Corporation (RLI), ACE Limited (ACE) and The Travelers Companies Inc. (TRV) outperformed their respective Zacks Consensus Estimate in the fourth quarter.
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