Canadian Underwriter

Montpelier Re reports US$875.1 million loss in third quarter

November 4, 2005   by Canadian Underwriter

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Montpelier Re Holdings Ltd. (NYSE – MRH) has reported a net third-quarter loss of US$875.1 million, as well as a net loss of US$691.9 million for the first nine months of 2005.
The company says the net impact of natural catastrophes on third quarter financial results will be US$972 million — including US$809 million for Hurricane Katrina, US$141 million for Hurricane Rita, and US$22 million for Hurricanes Dennis and Emily and the European floods.
Previously, on Sept. 12, the company announced Katrina’s estimated net impact on its financial results would be in the range of US$450 million and US$675 million, based on an estimated industry loss for Hurricane Katrina of between US$30 billion and US$40 billion. Now, however, the company estimates industry losses attributable to Katrina will be approximately US$50 billion, exclusive of losses in the National Flood Insurance Plan.
Anthony Taylor, Montpelier Re president and CEO, commented: “The third quarter of 2005 was the most costly quarter ever for catastrophe losses to the insurance and reinsurance industry.
“For Montpelier, with a short tail property concentration and a declared policy of purchasing limited amounts of reinsurance protection, the losses incurred have inevitably been significant. We are nonetheless very disappointed by this outcome. We are taking appropriate steps to reduce the potential impact of very large events by managing both our gross and net exposures so as to respond to the post-Katrina environment.”
Taylor says total industry losses in the quarter from the major natural catastrophes is now estimated to be in excess of US$60 billion.
“We believe that the fallout from Hurricane Katrina, coupled with the other events in the quarter and the latter half of 2004, will result in changes in the way certain classes of business will be structured and priced,” he says. “We expect both the demand for our products and their pricing to increase significantly. This should lead to new opportunities as we move into the 2006 renewal season.”

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