Odyssey reports income drop on lower realized gains

Fairfax’s Odyssey Re Holdings Corp. (NYSE, TSX: ORH) is reporting record premiums written, cash flow and operating income, despite a drop in net income, for the third quarter. The company has also announced its intention to de-list its common shares from the Toronto Stock Exchange (TSX) beginning November 17, 2003, citing the fact that most of the trading in its securities has occurred on the New York exchange.
Net income after-tax for third quarter 2003 was $42.3 million, or $0.65 per common share, versus $87.8 million, or $1.35 per common share, for third quarter 2002. Much of this comes from a drop in realized gains over the period to $17.3 million from $104.6 million.
For the first nine months of 2003, net income after tax was $201.6 million, or $3.10 per common share, compared to $176.9 million, or $2.72 per common share, for the same period last year. Over the same period, net after-tax realized capital gains were up to $121.6 million, or $1.87 per common share, from $80.3 million, or $1.23 per common share, a year earlier.
Operating income (which excludes realized gains) was up for the third quarter 2003 to $31.1 million, or $0.48 per common share, versus the $19.8 million, or $0.30 per common share, reported in third quarter 2002. For the first nine months of 2003, operating income is $80.0 million, or $1.23 per common share, up from $59.7 million or $0.92 per common share, for the same period last year.
The company saw is combined ratio drop to 96.3% for third quarter 2003, versus 99.9% a year earlier. And during the nine-month period, it dropped to 97.2% from 99.2% the year prior.
Gross written premiums were up solidly for the third quarter 2003, to $703.0 million, a 40.7% increase over the $499.7 million written in third quarter 2002. Net premiums written for the third quarter 2003 were $582.2 million, an increase of 38.6% over the $420.0 million written in third quarter 2002.
Net investment income and net realized capital gains together in the third quarter amounted to $49.1 million (Q3 2002: $136.8 million and net investment income, excluding net realized capital gains, amounted to $31.8 million in third quarter
2003 (Q3 2002: $32.3 million).
For the three months ended September 30, 2003, net cash flow from operations was $182.0 million compared to $61.8 million in third quarter 2002. For the first nine months of 2003 net cash flow from operations was $395.2 million, more than three times that for the first nine months of 2002.
“I am pleased to report OdysseyRe’s business has continued to progress nicely in the third quarter,” says Andrew A. Barnard, president and CEO. “All of our operating divisions have shown meaningful growth, and each is generating underwriting profits. Our book value continues to expand at a strong rate, as we combine our underwriting profitability with a superlative investment performance.”
The company is paying out a dividend of $0.025 per share based on its third quarter results.
Odyssey also announced it has closed the sale of $150 million of senior notes due 2013.