UK floods, European storm, Australian floods and US wildfires cost Class of 2005 reinsurer $192.9m
Flagstone Reinsurance has announced net income for the fourth quarter of 2007 was $51.4m, compared to $63.6m for the fourth quarter of 2006.
Net income for the year was $167.9m, compared to $152.3m for 2006.
Gross premiums written for the fourth quarter of 2007 were $65.1m, compared to $26.5m for the same quarter of 2006, an increase of 145.5% from the prior quarter.
Gross premiums written for the year were $577.2m compared to $302.5m for 2006, an increase of 90.8% from the prior year.
According to Flagstone, the increase in gross premiums written for both periods was due primarily to (i) increased participations on programmes from existing clients and the addition of new clients; and, (ii) the acquisition of the controlling interest in Island Heritage in July 2007 which resulted in the inclusion of $11m in gross premiums for the quarter and $32.9m in gross premiums for the year.
Chairman, Mark Byrne commented: “Since our reinsurance book is exposed to catastrophes, our results will not be smooth from quarter to quarter. However, as our diversifying business lines become more significant to our overall book, our earnings variability should decrease.”
CEO David Brown noted: “We are very happy with the full year result, especially considering the level of catastrophes internationally and our focus on building a globally diversified book of business.
“Our share of international catastrophic losses serves to demonstrate that we have successfully developed a diversified portfolio of risks and, as a consequence, our results are not disproportionately dependant on the absence of catastrophes in North America.
“This diversification has been achieved thanks to our significant investment in growing our platform internationally with over 250 staff now working in nine offices in seven countries.”
He added: “As rates soften, the large flow of business generated by our global reach allows us to be selective in where we allocate our underwriting capacity which is currently deployed in what we consider the best priced segments of the reinsurance market.”
Net investment income for the year was $73.8m, compared to $34.2m for 2006, an increase of 115.7% from the prior year.
Losses and loss adjustment expenses were $30.4m for the fourth quarter of 2007, representing a loss ratio of 24.3% compared to $7.1m and a loss ratio of 9.8% for the same quarter last year.
The fourth quarter of 2007 includes $7m with respect to California Wildfire event that started on October 20, 2007, $11.4m with respect to the Sydney (Australia) hailstorm that occurred on December 9, 2007, and $7.8m relating to two satellite losses that occurred in November and December 2007.
Losses and loss adjustment expenses were $192.9m for the year, representing a loss ratio of 40.4% compared to $26.7m and a loss ratio of 13.9% for 2006.
Flagstone incurred gross losses of $32.4m from Windstorm Kyrill which swept across Northern Europe in January 2007, $9.3m for United Kingdom flood losses in Southern and Central England and Wales in July 2007, $28.8m for United Kingdom flood losses in Northern England in June 2007, $18.5m for New South Wales (Australia) flood losses.