Montpelier Re Holdings Ltd
. (
MRH
) reported first quarter 2012 operating income of $1.23 per share,
breezed past the Zacks Consensus of 65 cents and thus, reversed the
loss of $1.90 incurred in the prior-year quarter. Operating income
of $75.7 million, compared favorably with the loss of $118.9
million in first quarter 2011.
Including net realized investment gains of $28.2 million, net
unrealized investment gains of $4.2 million, net gains from
investment-related derivative instruments of $1.7 million, net
foreign exchange losses of $2.6 million and net losses from foreign
exchange-related derivative instruments of $0.1 million, the
company reported a net income of $107.1 million or $1.74 per share,
compared with the loss of $104.3 million or $1.67 per share in the
first quarter of 2011.
Operational Update
Net insurance and reinsurance premiums earned declined 3.4% year
over year to $160.5 million in the quarter.
Montpelier booked underwriting profit of $66.0 million in the
quarter, reversing the loss of $131 million in the year-ago
quarter.
Net investment income in the quarter came in at $17.6 million,
inching up from $17.5 million in the year ago-quarter.
The loss ratio in the quarter was 27.4% compared with 149.5% in
the year-ago quarter. Reported quarter loss ratio includes $29
million of favorable prior-year loss reserve movements.
The combined ratio in the quarter was 58.9%, a huge improvement
from 178.8% reported in the year-ago quarter.
Financial Update
Montpelier exited the quarter with cash and cash equivalents of
$521.8 million, up 11% from 2011-end.
At quarter end, the debt level slightly increased to $327.9
million from $327.8 million at end 2011.
Book value per share as of March 31, 2012, was $24.30, 7.5%
higher than $22.71 as of December 31, 2011.
Share Repurchase
Montpelier spent $37 million to buyback 1.95 million shares in
the first quarter of 2012. To date, in the second quarter, the
company already spent $20 million to repurchase 1.03 million
shares.
Our Take
We believe that vending MUSIC, acquisition of a property
catastrophe reinsurance portfolio, expansion of capital partnership
relationships and acquisition of renewal rights of Torus will help
the company to remain focused on underwriting operations, augment
capital flexibility, and strengthen its competitive position going
forward.
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.
Headquartered in Pembroke, Bermuda, Montpelier, through its
subsidiaries in the U.S., the UK and Switzerland, provides
customized and innovative reinsurance and insurance solutions to
the global market.
RenaissanceRe Holdings Ltd
. (
RNR
), a close competitor of Montpelier, is scheduled to release its
first quarter results on May 2 after the bell.
MONTPELIER RE (
MRH
): Free Stock Analysis Report
RENAISSANCERE (
RNR
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research