Montpelier Re Holdings Ltd
) reported second-quarter 2013 operating net income of 93 cents
per share, beating the Zacks Consensus Estimate of 59 cents by
almost 58%. Earnings surged 27% from 74 cents per share earned in
the year-ago quarter.
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The quarter experienced solid underwriting results. Both the
Bermuda and London platforms delivered strong profitability.
Including net realized investment gains of $6.9 million, net
unrealized investment losses of $68.1 million, net losses from
investment-related derivative instruments of $7.9 million, net
foreign exchange losses of $5.3 million and net losses from
foreign exchange-related derivative instruments of $2.5 million,
Montpelier reported net loss of $27 million or 52 cents per share
in the second quarter. It compared unfavorably with net income of
$62.1 million or $1.06 per share in the prior-year quarter.
Quarterly Operational Update
Montpelier's gross premiums written decreased 4.3% year over year
to $242.7 million. Net insurance and reinsurance premiums earned
declined 6.2% year over year to $197.8 million.
Underwriting income improved 24.6% year over year to $43.1
Montpelier's net investment income came in at $16.7 million, down
2.9% from $17.2 million in the year-ago quarter.
The loss ratio was 34% in the reported quarter, improving 550
basis points year over year. Combined ratio improved 750 basis
points from the year-ago quarter to 69%.
Montpelier exited the second quarter of 2013 with cash and
investments of $3.26 million, down 1.8% from the end of 2012.
At the end of the quarter, total debt was $399.1 million, flat
with the 2012 end level.
Book value per share as of Jun 30, 2013, came in at $27.03, down
1.7% year over year.
Share Repurchase Update
Montpelier spent $77 million to buyback 3.034 million common
shares in the second quarter. Following the end of the reported
quarter, to date, the company already spent $7 million to
repurchase 0.3 million shares.
Performance of Other Property and Casualty
) reported second-quarter 2013 operating earnings of $1.27 per
share. The results surpassed both the Zacks Consensus Estimate of
$1.18 by 7.6% as well as the year-ago level of $1.17 by 8.5%. The
year-over-year improvement came on the back of better
underwriting results at the Property and Casualty segments.
The Travelers Companies Inc.
) reported earnings of $2.13 per share in the second quarter of
2013, surpassing the Zacks Consensus Estimate of $1.58 per share.
Moreover, results surged 69% from $1.23 per share in the year-ago
quarter. The outperformance was driven by lower catastrophe
losses along with sustained improvement in underlying
underwriting margins across all segments. However, the upside was
partially offset by lower net investment income and lower net
favorable prior-year reserve development.
) second-quarter 2013 operating net income of $2.29 per share
were up 19.3% from the Zacks Consensus Estimate of $1.92. Results
improved 5.5% from $2.17 earned in the year-ago quarter.
Solid underwriting performances aided the better-than-expected
results. Both the U.S. and international business operations
experienced growth and better margins. ACE Limited also benefited
from improved commercial property & casualty pricing
Montpelier continued the trend of outperforming expectations
despite cat occurrences and competitive market riding on the
strength of underwriting results.
Montpelier is well positioned to deliver robust numbers going
forward, given its increased exposure in the property catastrophe
lines of business. In addition, focusing on underwriting
operations, augmenting capital flexibility and strengthening its
competitive position augur well going forward. Moreover,
Montpelier benefits from tax exemptions in Bermuda.
Montpelier currently carries a Zacks Rank #4 (Sell).