Monty Cuts Combined Ratio: Fool by Numbers
By Emil Lee
April 26, 2007
Recommended (19)
On April 25, Montpelier Re (Nasdaq: MRH) released first-quarter earnings for the period ended March 31.
- Net income skyrocketed to $73.3 million from $39.8 million, helped by a nearly 10% improvement in the combined ratio.
- The first-quarter loss ratio included $35 million in losses from the windstorm Kyrill, which accounted for 24.5 points of the combined ratio.
- Other big drivers of income improvement were a big drop in acquisition costs and a swing from a net realized loss in the investment portfolio in last year's first quarter to a $15 million net realized gain this year.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2007
|
Q1 2006
|
% Change*
|
|
Premiums Earned
|
$143
|
$131
|
8.6%
|
|
Investment Income
|
$33
|
$29
|
14.9%
|
|
Net Income
|
$73
|
$40
|
84.2%
|
|
EPS
|
$0.76
|
$0.44
|
72.7%
|
Get back to basics with the income statement.
Margin Checkup
|
Q1 2007
|
Q1 2006
|
Change
|
|
Loss Ratio
|
41.8%
|
38.7%
|
3.10%
|
|
Expense Ratio
|
23.8%
|
37.0%
|
(13.20%)
|
|
Combined Ratio
|
65.6%
|
75.7%
|
(10.10%)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q1 2007
|
Q1 2006
|
% Change
|
|
Investments
|
$2,709
|
$2,791
|
(2.9%)
|
|
Cash and Equivalent
|
$408
|
$230
|
77.3%
|
|
Liabilities
|
|
|
|
|
Loss Reserve
|
$1,006
|
$1,685
|
(40.3%)
|
|
Unearned Premiums
|
$305
|
$291
|
5.1%
|
|
Long-Term Debt
|
$427
|
$352
|
21.3%
|
The balance sheet reflects the company's health.
Related Foolishness:
Montpelier Re is a Motley Fool Hidden Gems recommendation and a Stock Advisor pick. Try any of our investing services free for 30 days.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
Fool contributor Emil Lee is an analyst and a disciple of value investing. He owns shares in Montpelier Re. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.
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