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Montepelier Re and Everest Re See Q2 Earnings Drop Due to Cat Losses

Source: Dow Jones

Posted on 28 Jul 2011

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As reinsurers struggled with high payouts, Montpelier Re Holdings Ltd.'s (MRH) second-quarter core earnings plunged more than expected, while Everest Re Group Ltd.'s (RE) also dropped, though at a more moderate rate.

The insurance sector has faced some of the worst quarters in years for catastrophe losses, due to devastating natural disasters in Japan, New Zealand and Australia, as well as in the U.S. this spring because of a particularly destructive tornado season.

In the latest period, Montpelier's combined ratio, the percentage of premiums the company paid out in claims and expenses, deteriorated to 102.6% from 59.8%. Everest Re's catastrophe losses jumped 75% from a year earlier.

Montpelier Re, which also provides specialty-lines insurance, posted a profit of $23.6 million, or 33 cents a share, from $69.9 million, or 96 cents a share, a year earlier. Operating earnings, which exclude investment gains and losses as well as interest from equity investments, dropped to 8 cents a share from $1. Analysts surveyed by Thomson Reuters had expected operating earnings of 45 cents a share.

Montpelier's net written premiums decreased 0.9% to $194.3.

Meanwhile, Everest Re posted a profit of $131.3 million, or $2.41 a share, in the second quarter from $156.7 million, or $2.70 a share, a year earlier.

Operating earnings fell to $2.46 a share from $3.18. Analysts polled by Thomson Reuters most recently predicted an operating loss of $2.42 a share.

Total revenue increased 7% to $1.18 billion, as premiums earned rose 5% to $1.04 billion, although net investment income fell 4.3% to $158.6 million.