Odyssey Re restates financial earnings

Odyssey Re Holdings Corp. (NYSE: ORH) has filed its Annual Report on Form 10-K/A for the year ended December 31, 2005 with the Securities and Exchange Commission (SEC), restating its consolidated financial statements as of and for the years ended December 31, 2005, 2004 and 2003.
Odyssey Re also filed with the SEC, its affected Selected Consolidated Financial Data for 2002 and 2001 and quarterly financial information for 2005 and 2004.
The restatement corrects the accounting treatment for investments containing embedded derivatives and certain equity method investments, according to the reinsurer.
“The corrections relating to these investments, which include the impact of changes in other comprehensive income, resulted in a cumulative increase in shareholders’ equity of $16.0 million, to $1.64 billion, as of December 31, 2005,” according to a press release from the Company. “The aggregate net effect of the restatement for each period is to increase 2005 net loss by $12.2 million, increase 2004 net income by $6.9 million, increase 2003 net income by $12.4 million, increase 2002 net income by $11.2 million and increase 2001 net loss by $3.4 million.”
The financial information contained in the Company’s Form 10-K/A for the year ended December 31, 2005 reflects the impact of this restatement, Odyssey Re reports in the release.
The effect of this restatement was reported in the Company’s Quarterly Report on Form 10-Q for the second quarter of 2006.
In connection with the restatement, Odyssey Re’s management says it has determined that the Company did not maintain effective controls, review procedures and communications related to investment accounting to ensure conformity with generally accepted accounting principles, which constitutes a material weakness. To address the material weakness, management says it will implement a remediation plan that will supplement the existing controls of the Company.