Montpelier Re Holdings Ltd.
) reported second quarter 2012 operating income of 74 cents per
share, surpassing the Zacks Consensus Estimate by 4 cents. Results
exhibited a massive improvement from 8 cents earned in the
prior-year quarter. Operating income of $43.6 million, compared
favorably with $5.2 million in second quarter 2011.
Including net realized investment gains of $7.4 million, net
unrealized investment gains of $5.9 million, net losses from
investment-related derivative instruments of $0.8 million, net
foreign exchange gain of $2.9 million and net gains from foreign
exchange-related derivative instruments of $1.5 million, the
company reported a net income of $62.1 million or $1.06 per share,
compared with $21.2 million or 33 cents per share in the second
quarter of 2011.
Gross premiums written improved 17% year over year, reflecting
improved pricing conditions and additional capital deployment in
property catastrophe lines.
Net insurance and reinsurance premiums earned declined 3.9% year
over year to $160.5 million in the quarter.
Montpelier booked underwriting profit of $34.6 million in the
quarter, reversing the loss of $3.8 million in the year-ago
Net investment income in the quarter came in at $17.2 million,
inching up from $17.1 million in the year ago-quarter.
The loss ratio in the quarter was 39.2% compared with 68.8% in the
year-ago quarter. Reported quarter loss ratio includes $17 million
of favorable prior-year loss reserve movements.
The combined ratio in the quarter was 76.5%, a stark improvement
from 102.6% reported in the year-ago quarter.
Montpelier exited the quarter with cash and cash equivalents of
$652.3 million, up 39% from 2011-end.
At quarter end, the debt level slightly increased to $327.9 million
from $327.8 million at the end of 2011.
Book value per share as of June 30, 2012, was $25.36, 8.3% higher
than $23.36 as of June 30, 2011.
Montpelier spent $48 million to buyback approximately 2.4 million
shares in the second quarter of 2012. To date, in the third
quarter, the company already spent $12 million to repurchase
approximately 0.6 million shares.
Montpelier is well positioned to deliver solid numbers going
forward, given its increased exposure in the property catastrophe
lines of business. Also, focusing on underwriting operations,
augmenting capital flexibility, and strengthening its competitive
position augur well going forward. It scores strongly with the
The company also benefits from tax exemptions in Bermuda as no
income taxes are levied there. Additionally, Bermuda Ministry of
Finance has assured exemption of Bermuda-imposed income,
withholding and capital gains taxes until 2035 on all Bermuda-based
We maintain a 'Neutral' recommendation on Montpelier. The
quantitative Zacks #2 Rank (short-term Buy rating) for the company
indicates a slight boost on the stock over the near term.
RenaissanceRe Holdings Ltd.
), a close competitor of Montpelier, is scheduled to release its
second quarter results on July 31 after the bell. It also carries a
Zacks #2 Rank.
MONTPELIER RE (MRH): Free Stock Analysis Report
RENAISSANCERE (RNR): Free Stock Analysis Report
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