On Feb. 14, Montpelier Re
- 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 |
|
---|---|---|---|
$149 |
$160 |
(6.6%) |
|
Investment Income |
$34 |
$26 |
28.8% |
Net Income |
$122 |
($61) |
N/A |
EPS |
$1.26 |
($0.68) |
N/A |
Get back to basics with a look at an insurer's income statement.
Ratio Checkup
Q4 2006 |
Q4 2005 |
Change |
|
---|---|---|---|
Loss Ratio |
8.8% |
119.2% |
(110.40%) |
Expense Ratio |
26.9% |
28.0% |
(1.10%) |
35.7% |
147.2% |
(111.50%) |
What do these ratios mean?
Balance Sheet Highlights
Assets |
Q4 2006 |
Q4 2005 |
% Change |
---|---|---|---|
Investments |
$3,086 |
$2,902 |
6.3% |
Cash and Equivalent |
$349 |
$450 |
(22.6%) |
Liabilities |
|||
---|---|---|---|
$1,089 |
$1,782 |
(38.9%) |
|
Unearned Premiums |
$219 |
$263 |
(16.6%) |
Long Term Debt |
$427 |
$249 |
71.5% |
Learn your way around an insurer's balance sheet.
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PartnerRe
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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.