Attached files
| file | filename |
|---|---|
| 8-K - 8-K - MONTPELIER RE HOLDINGS LTD | a14-17862_18k.htm |
| EX-99.2 - EX-99.2 - MONTPELIER RE HOLDINGS LTD | a14-17862_1ex99d2.htm |
Exhibit 99.1
Montpelier Reports Second Quarter Financial Results
· Operating EPS of $0.76, highlighted by a 41% loss ratio and 77% combined ratio.
· Fully converted book value per share of $31.74, a 2.8% increase from March 31, 2014.
HAMILTON, Bermuda, July 28, 2014 — Montpelier Re Holdings Ltd. (NYSE: MRH), (“Montpelier” or the “Company”), a leading provider of short-tail reinsurance and other specialty lines, today reported its financial results for the quarter ended June 30, 2014.
Fully converted book value per common share was $31.74, an increase of 2.8% from March 31, 2014 and an increase of 8.7% from December 31, 2013, each after taking into account common share dividends declared during the period.
Operating income for the quarter was $36 million, or $0.76 per common share. Net income was $37 million, or $0.78 per common share. Net income for the quarter included $12 million of realized and unrealized investment gains and $11 million of net foreign exchange losses.
Net premiums written in the second quarter were flat year-over-year, when adjusting for reinstatements, with increased writings within the Company’s Montpelier at Lloyd’s and Collateralized Reinsurance segments offsetting a decrease in writings at Montpelier Bermuda.
The loss ratio for the quarter was 41%, which includes $24 million of net losses from known catastrophe events in the quarter, offset by $38 million of favorable prior year loss reserve movements. The combined ratio was 77% for the quarter.
Net investment income was $12 million for the quarter and the total return on the investment portfolio was 0.9%.
Christopher Harris, President and Chief Executive Officer, said, “Despite a high frequency of smaller industry loss events, we produced solid underwriting profitability with a 77% combined ratio reflecting strong contributions from our growing Montpelier at Lloyd’s and Collateralized Re segments, as well as the benefit of prior period development. We believe our nimble underwriting approach, flexible capital base, and excellent client relationships continue to position us well in the current environment.”
During the second quarter of 2014, the Company repurchased a total of 863,911 common shares at an average price of $30.18 per share. During the third quarter of 2014, the Company has thus far repurchased an additional 343,800 shares, at an average price per share of $31.85.
As of June 30, 2014, the Company’s shareholders’ equity was $1,668 million, and its total capital was $2,067 million.
Please refer to Montpelier’s June 30, 2014 Financial Supplement for more detailed financial information, which is posted on the Company’s website at www.montpelierre.bm.
Montpelier, through its operating subsidiaries, is a global provider of global property and casualty reinsurance and insurance products. Additional information can be found in Montpelier’s public filings with the U.S. Securities and Exchange Commission.
Earnings Conference Call:
The Company will conduct a conference call, including a question and answer period, on Tuesday, July 29, 2014 at 8:00 a.m. Eastern Time.
The call will be available via a live audio webcast accessible on the Company’s website at www.montpelierre.bm or by dialing 1-877-444-2208 (toll free) or 1-412-317-0779 (international) or 1-855-669-9657 (Canada toll free). The archived webcast will be available at www.montpelierre.bm approximately one hour after the call. The telephone replay will be available by dialing 1-877-344-7529 (toll-free) or 1-412-317-0088 (international) and entering the conference ID number 10048023.
Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the United States federal securities laws, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that are not historical facts, including statements about our beliefs and expectations. These statements are based upon current plans, estimates and projections. Forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and various risk factors, many of which are outside the Company’s control. See “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as filed with the Securities and Exchange Commission, for specific important factors that could cause actual results to differ materially from those contained in forward- looking statements. In particular, statements using words such as “may,” “should,” “estimate,” “expect,” “anticipate,” “intend,” “believe,” “predict,” “potential,” or words of similar meaning generally involve forward-looking statements.
Important events and uncertainties that could cause our actual results, future dividends on, or repurchases of, common shares or preferred shares to differ include, but are not limited to: market conditions affecting the prices of our common shares or preferred shares; the possibility of severe or unanticipated losses from natural or man-made catastrophes, including those that may result from changes in climate conditions, including, but not limited to, global temperatures and expected sea levels; the effectiveness of our loss limitation methods; our dependence on principal employees; our ability to effectively execute the business plans of the Company, its subsidiaries and any new ventures that it may enter into; the cyclical nature of the insurance and reinsurance business; the levels of new and renewal business achieved; opportunities to increase writings in our core property and specialty insurance and reinsurance lines of business and in specific areas of the casualty reinsurance market and our ability to capitalize on those opportunities; the sensitivity of our business to financial strength ratings established by independent rating agencies; the inherent uncertainty of our risk management process, which is subject to, among other things, industry loss estimates and estimates generated by modeling techniques; the accuracy of written premium estimates reported by cedants and brokers on pro-rata contracts and certain excess-of-loss contracts where a deposit or minimum premium is not specified in the contract; the inherent uncertainties of establishing reserves for loss and loss adjustment expenses, including our dependency on the loss information we receive from cedants and brokers; unanticipated adjustments to premium estimates; changes in the availability, cost or quality of reinsurance or retrocessional coverage; changes in general economic and financial market conditions; changes in and the impact of governmental legislation or regulation, including changes in tax laws in the jurisdictions where we conduct business; the amount and timing of reinsurance recoverables and reimbursements we actually receive from our reinsurers; the overall level of competition, and the related demand and supply dynamics in our markets relating to growing capital levels in our industry; declining demand due to increased retentions by cedants and other factors; the impact of terrorist activities on the economy; rating agency policies and practices; unexpected developments concerning the small number of insurance and reinsurance brokers upon whom we rely for a large portion of revenues; our dependence as a holding company upon dividends or distributions from our operating subsidiaries; and the impact of foreign currency and interest rate fluctuations.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.
Contacts:
Montpelier Re Holdings Ltd.
Investors:
Michael Paquette, 1-441-278-5012
Chief Financial Officer
Media:
Jeannine Menzies, 1-441-299-7570
Corporate Affairs Manager
MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share amounts)
unaudited
|
|
|
June 30, |
|
December 31, |
| ||
|
|
|
2014 |
|
2013 |
| ||
|
Assets |
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Fixed maturity investments, at fair value |
|
$ |
2,289.1 |
|
$ |
2,430.8 |
|
|
Equity securities, at fair value |
|
163.2 |
|
117.3 |
| ||
|
Other investments |
|
381.4 |
|
78.8 |
| ||
|
Cash, restricted cash and cash equivalents |
|
597.3 |
|
602.1 |
| ||
|
|
|
|
|
|
| ||
|
Total Investments and Cash |
|
3,431.0 |
|
3,229.0 |
| ||
|
|
|
|
|
|
| ||
|
Reinsurance recoverable on unpaid losses |
|
57.4 |
|
63.6 |
| ||
|
Reinsurance recoverable on paid losses |
|
6.8 |
|
3.6 |
| ||
|
Insurance and reinsurance premiums receivable |
|
333.6 |
|
203.4 |
| ||
|
Unearned reinsurance premiums ceded |
|
52.0 |
|
22.6 |
| ||
|
Deferred insurance and reinsurance acquisition costs |
|
68.1 |
|
51.5 |
| ||
|
Accrued investment income |
|
14.7 |
|
15.0 |
| ||
|
Amounts receivable under reverse repurchase agreements |
|
56.3 |
|
80.8 |
| ||
|
Unsettled sales of investments |
|
232.7 |
|
58.8 |
| ||
|
Other assets |
|
31.1 |
|
30.2 |
| ||
|
|
|
|
|
|
| ||
|
Total Assets |
|
$ |
4,283.7 |
|
$ |
3,758.5 |
|
|
Liabilities |
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Loss and loss adjustment expense reserves |
|
$ |
861.9 |
|
$ |
881.6 |
|
|
Debt |
|
399.2 |
|
399.2 |
| ||
|
Unearned insurance and reinsurance premiums |
|
433.2 |
|
276.7 |
| ||
|
Insurance and reinsurance balances payable |
|
76.3 |
|
43.3 |
| ||
|
Amounts payable under repurchase agreements |
|
71.5 |
|
— |
| ||
|
Investment securities sold short, at fair value |
|
234.1 |
|
155.6 |
| ||
|
Unsettled purchases of investments |
|
235.4 |
|
58.8 |
| ||
|
Accounts payable, accrued expenses and other liabilities |
|
49.6 |
|
56.3 |
| ||
|
|
|
|
|
|
| ||
|
Total Liabilities |
|
2,361.2 |
|
1,871.5 |
| ||
|
|
|
|
|
|
| ||
|
Shareholders’ Equity |
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Non-cumulative preferred shares |
|
150.0 |
|
150.0 |
| ||
|
Common shares and additional paid-in capital |
|
829.8 |
|
900.6 |
| ||
|
Common shares held in treasury, at cost |
|
(40.0 |
) |
(18.9 |
) | ||
|
Retained earnings |
|
729.0 |
|
612.8 |
| ||
|
Accumulated other comprehensive loss |
|
(1.0 |
) |
(2.4 |
) | ||
|
|
|
|
|
|
| ||
|
Total Shareholders’ Equity available to the Company |
|
1,667.8 |
|
1,642.1 |
| ||
|
|
|
|
|
|
| ||
|
Non-controlling interests |
|
254.7 |
|
244.9 |
| ||
|
|
|
|
|
|
| ||
|
Total Shareholders’ Equity |
|
1,922.5 |
|
1,887.0 |
| ||
|
|
|
|
|
|
| ||
|
Total Liabilities and Shareholders’ Equity |
|
$ |
4,283.7 |
|
$ |
3,758.5 |
|
|
|
|
|
|
|
| ||
|
Common and common equivalent shares outstanding: |
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Common shares outstanding (000s) |
|
46,175 |
sh |
49,274 |
sh | ||
|
Common and common equivalent shares outstanding (000s) |
|
47,819 |
|
50,722 |
| ||
MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions of U.S. dollars, except per share amounts)
unaudited
|
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||
|
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Underwriting revenues |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Gross insurance and reinsurance premiums written |
|
$ |
239.0 |
|
$ |
242.7 |
|
$ |
512.5 |
|
$ |
503.9 |
|
|
Ceded reinsurance premiums |
|
(34.1 |
) |
(44.9 |
) |
(70.5 |
) |
(80.1 |
) | ||||
|
Net insurance and reinsurance premiums written |
|
$ |
204.9 |
|
$ |
197.8 |
|
$ |
442.0 |
|
$ |
423.8 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Gross insurance and reinsurance premiums earned |
|
$ |
183.5 |
|
$ |
171.0 |
|
$ |
361.1 |
|
$ |
351.6 |
|
|
Earned reinsurance premiums ceded |
|
(20.9 |
) |
(32.1 |
) |
(41.7 |
) |
(53.0 |
) | ||||
|
Net insurance and reinsurance premiums earned |
|
162.6 |
|
138.9 |
|
319.4 |
|
298.6 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Underwriting expenses |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Loss and loss adjustment expenses - current year |
|
(104.0 |
) |
(94.5 |
) |
(166.6 |
) |
(163.5 |
) | ||||
|
Loss and loss adjustment expenses - prior year |
|
37.5 |
|
47.7 |
|
72.7 |
|
66.1 |
| ||||
|
Insurance and reinsurance acquisition costs |
|
(29.4 |
) |
(22.6 |
) |
(54.2 |
) |
(44.7 |
) | ||||
|
Operating expenses |
|
(20.1 |
) |
(19.5 |
) |
(41.0 |
) |
(39.9 |
) | ||||
|
Incentive compensation expenses |
|
(8.8 |
) |
(6.9 |
) |
(14.7 |
) |
(13.4 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Underwriting income |
|
37.8 |
|
43.1 |
|
115.6 |
|
103.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net investment income |
|
12.4 |
|
16.7 |
|
25.3 |
|
33.1 |
| ||||
|
Other non-underwriting expenses |
|
(0.3 |
) |
— |
|
— |
|
— |
| ||||
|
Net realized and unrealized investment gains (losses) |
|
19.8 |
|
(61.2 |
) |
42.5 |
|
(61.9 |
) | ||||
|
Net foreign currency gains (losses) |
|
(8.8 |
) |
(5.3 |
) |
(10.6 |
) |
15.8 |
| ||||
|
Net losses from derivative instruments |
|
(11.2 |
) |
(12.2 |
) |
(16.3 |
) |
(7.6 |
) | ||||
|
Interest and other financing expenses |
|
(4.7 |
) |
(4.7 |
) |
(9.4 |
) |
(9.4 |
) | ||||
|
Income tax benefit (provision) |
|
(0.2 |
) |
0.4 |
|
(0.1 |
) |
0.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) |
|
44.8 |
|
(23.2 |
) |
147.0 |
|
73.4 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income attributable to non-controlling interest |
|
(4.3 |
) |
(0.7 |
) |
(13.3 |
) |
(1.9 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) available to the Company |
|
40.5 |
|
(23.9 |
) |
133.7 |
|
71.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Dividends declared on non-cumulative preferred shares |
|
(3.4 |
) |
(3.4 |
) |
(6.7 |
) |
(6.7 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) available to the Company’s common shareholders |
|
$ |
37.1 |
|
$ |
(27.3 |
) |
$ |
127.0 |
|
$ |
64.8 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) |
|
$ |
44.8 |
|
$ |
(23.2 |
) |
$ |
147.0 |
|
$ |
73.4 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net change in foreign currency translation |
|
1.2 |
|
0.3 |
|
1.4 |
|
(3.2 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Comprehensive income (loss) |
|
46.0 |
|
(22.9 |
) |
148.4 |
|
70.2 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income attributable to non-controlling interest |
|
(4.3 |
) |
(0.7 |
) |
(13.3 |
) |
(1.9 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Comprehensive income (loss) available to the Company |
|
$ |
41.7 |
|
$ |
(23.6 |
) |
$ |
135.1 |
|
$ |
68.3 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Basic and diluted earnings (loss) per common share |
|
$ |
0.78 |
|
$ |
(0.52 |
) |
$ |
2.63 |
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Insurance ratios: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Loss and loss adjustment expense ratio: |
|
|
|
|
|
|
|
|
| ||||
|
Current year |
|
63.9 |
% |
68.0 |
% |
52.2 |
% |
54.7 |
% | ||||
|
Prior year |
|
-23.1 |
% |
-34.3 |
% |
-22.8 |
% |
-22.1 |
% | ||||
|
Loss and loss adjustment expense ratio |
|
40.8 |
% |
33.7 |
% |
29.4 |
% |
32.6 |
% | ||||
|
Acquisition costs ratio |
|
18.1 |
% |
16.3 |
% |
17.0 |
% |
15.0 |
% | ||||
|
Operating expense ratio |
|
12.4 |
% |
14.0 |
% |
12.8 |
% |
13.4 |
% | ||||
|
Incentive compensation expense ratio |
|
5.4 |
% |
5.0 |
% |
4.6 |
% |
4.5 |
% | ||||
|
Combined ratio |
|
76.7 |
% |
69.0 |
% |
63.8 |
% |
65.5 |
% | ||||
MONTPELIER RE HOLDINGS LTD.
RECONCILIATION OF NET INCOME AVAILABLE TO THE COMPANY’S COMMON SHAREHOLDERS
TO OPERATING INCOME AVAILABLE TO THE COMPANY’S COMMON SHAREHOLDERS (1)
(in millions of U.S. dollars)
unaudited
|
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||
|
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) available to the Company’s common shareholders |
|
$ |
37.1 |
|
$ |
(27.3 |
) |
$ |
127.0 |
|
$ |
64.8 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Add (subtract): |
|
|
|
|
|
|
|
|
| ||||
|
Net realized investment gains |
|
(5.5 |
) |
(6.9 |
) |
(5.4 |
) |
(16.0 |
) | ||||
|
Net unrealized investment (gains) losses |
|
(14.3 |
) |
68.1 |
|
(37.1 |
) |
77.9 |
| ||||
|
Net losses from investment-related derivative instruments (2) |
|
8.2 |
|
7.9 |
|
7.7 |
|
1.1 |
| ||||
|
Net foreign currency (gains) losses |
|
8.8 |
|
5.3 |
|
10.6 |
|
(15.8 |
) | ||||
|
Net losses from foreign currency-related derivative instruments (2) |
|
1.9 |
|
2.5 |
|
5.6 |
|
3.6 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Operating income available to the Company’s common shareholders |
|
$ |
36.2 |
|
$ |
49.6 |
|
$ |
108.4 |
|
$ |
115.6 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Operating income per common share |
|
$ |
0.76 |
|
$ |
0.93 |
|
$ |
2.24 |
|
$ |
2.12 |
|
MONTPELIER RE HOLDINGS LTD.
BOOK VALUE AND FULLY CONVERTED BOOK VALUE PER COMMON SHARE (1)
unaudited
|
|
|
June 30, |
|
March 31, |
|
Dec. 31, |
|
June 30, |
| ||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2013 |
| ||||
|
Book value per share numerators (in millions of U.S. dollars): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Shareholders’ Equity available to the Company |
|
$ |
1,667.8 |
|
$ |
1,657.2 |
|
$ |
1,642.1 |
|
$ |
1,570.0 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
less: Non-cumulative preferred shares |
|
(150.0 |
) |
(150.0 |
) |
(150.0 |
) |
(150.0 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
[A] Fully converted book value per common share numerator |
|
$ |
1,517.8 |
|
$ |
1,507.2 |
|
$ |
1,492.1 |
|
$ |
1,420.0 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Book value per share denominators (in thousands of common shares): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
[B] Common shares outstanding |
|
46,175 |
|
47,018 |
sh |
49,274 |
sh |
51,020 |
sh | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Restricted share units outstanding |
|
1,644 |
|
1,589 |
|
1,448 |
|
1,521 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
[C] Fully converted book value per common share denominator |
|
47,819 |
sh |
48,607 |
sh |
50,722 |
sh |
52,541 |
sh | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Book value per common share [A] / [B] |
|
$ |
32.87 |
|
$ |
32.05 |
|
$ |
30.28 |
|
$ |
27.83 |
|
|
Fully converted book value per common share [A] / [C] |
|
31.74 |
|
31.01 |
|
29.42 |
|
27.03 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Change in fully converted book value per common share: (3) |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
From March 31, 2014 |
|
2.8 |
% |
|
|
|
|
|
| ||||
|
From December 31, 2013 |
|
8.7 |
% |
|
|
|
|
|
| ||||
|
From June 30, 2013 |
|
19.4 |
% |
|
|
|
|
|
| ||||
|
(1) |
These measures constitute “non-GAAP financial measures” as defined in Regulation G and as further described herein. |
|
(2) |
Represents the portion of our net income or loss from derivative instruments that constitute investment and foreign currency gains and losses. |
|
(3) |
Computed as the change in fully converted book value per common share after taking into account common dividends declared of $0.125, $0.25 and $0.49 during the three, six and twelve month periods ended June 30, 2014, respectively. |