On Feb. 14, Montpelier Re (NYSE:MRH) released fourth-quarter earnings for the period ended Dec. 31, 2006.

  • Montpelier Re, a property and casualty reinsurer, took a major hit in 2005 from hurricanes, which resulted in a huge hit to book value.
  • The fourth-quarter and full-year combined ratios for 2005 were a stunning 147.2% and 200.7%. This year, fourth-quarter and full-year 2006 combined ratios were 35.7% and 60.3%.
  • The low combined ratios helped the company repair its hurricane-torn balance sheet and grow book value per share 33%, to $15.46 per share.
  • Montpelier Re was able to increase its total investments to $184 million despite the fact that its loss reserves fell nearly $700 million (and float fell roughly $600 million) as a large chunk of hurricane-related claims were paid. The ability to increase investments should help maintain earnings next year.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

% Change

Premiums Earned




Investment Income




Net Income








Get back to basics with a look at an insurer's income statement.

Ratio Checkup

Q4 2006

Q4 2005


Loss Ratio




Expense Ratio




Combined Ratio




*Expressed in percentage points.

What do these ratios mean?

Balance Sheet Highlights


Q4 2006

Q4 2005

% Change





Cash and Equivalent





Loss Reserve




Unearned Premiums




Long Term Debt




Learn your way around an insurer's balance sheet.

Related Companies:

  • AXIS Capital (NYSE:AXS)
  • XL Capital (NYSE:XL)
  • RenaissanceRe Holdings (NYSE:RNR)
  • WR Berkley (NYSE:BER)
  • PartnerRe (NYSE:PRE)

Related Foolishness:

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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.