2005 was a good year for platinum (the metal) as prices rose about 10% on fairly steady demand throughout the year. Not so for reinsurance company Platinum Underwriters (NYSE:PTP). It was a rocky year as the stock weathered two significant plunges and then coasted to a flat finish for 2005.

Although Platinum was generally expected to have a bad fourth quarter, it came in worse than even the low end of expectations. The company saw a net loss of $1.94 per share (versus a year-ago profit of $1.03).

As you might suspect, worse-than-expected hurricane damages were a big part of the story. Wilma cost more than $153 million (after tax), and further adverse developments from the "Kat-Rita" hurricanes amounted to nearly $31 million. All in all, the combined ratio came in at 131.9 (versus 89.7 last year) with a loss ratio of 104.4.

That's history, though, and as the reinsurance industry looks to put a very bad catastrophe year behind them, it's time to look at what might be ahead.

As expected, rates have gotten firmer. On the conference call, Platinum's management mentioned that rate increases on some U.S. property renewals averaged nearly 50% and that marine catastrophe reinsurance rate increases were on the order of 70%.

On the down side, the company apparently renewed only about 10% of its year-ago finite reinsurance business. Finite reinsurance used to be a big part of Platinum's operations; until, that is, others in the industry abused the system and prompted legal inquiries into the likes of AIG (NYSE:AIG) and Berkshire Hathaway (NYSE:BRK-A). And though there are legitimate and legal uses of these products, many would-be buyers have been scared off for the time being.

If you're looking for a pure reinsurance play, here you go. What's more, it's worth noting that the company is cutting its exposure to natural disasters and looking to write more business on an excess-of-loss basis. But while these shares strike me as potentially undervalued, I'd probably look at the likes of Endurance Specialty (NYSE:ENH) or Everest Re (NYSE:RE) first, or maybe consider paying up for Arch Capital (NASDAQ:ACGL).

Push for more Foolish thoughts on insurance:

Endurance Specialty is a Motley Fool Inside Value recommendation.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).