Blue Capital Re warns that Q3 results will be hit by cat losses
Blue Capital Re issues portfolio update
Major cat events cause $57.5m losses for Blue Capital Re in Q3
Blue Capital Reinsurance Holdings has posted a net profit of $2.5 million for the second quarter of 2018, a fall from the $4.6 million profit it posted in the same quarter of 2017.
The results took the company to a $3.0 million profit for the six months ended June 30, 2018, again a fall from the $8.7 million it made in the same period of 2017.
According to Blue Capital Re reinsurance premiums written for the current quarter and year-to-date were $7.4 million and $19.9 million, decreasing by $4.7 million and $9.2 million over the same periods a year ago. The company said that these reduced writings were driven by a smaller capital base and greater cessions to third party reinsurers, partially offset by price increases during the January and June renewals.
The combined ratio for the current quarter was 73.5 percent and 86.2 percent year-to-date compared to 56.1 percent and 56.3 percent in the same periods a year ago. According to the company this increase in the current periods' combined ratios was driven by significantly higher loss and loss adjustment expense ratios. The increase in the current quarter's loss and loss adjustment expenses were driven by an increase in estimated losses related to Hurricane Irma which made landfall in Florida in September 2017. Reinsurance acquisition costs for the current quarter were $2.0 million compared to $2.5 million a year ago, reflecting lower premium levels and reduced profit commissions. General and administrative expenses for the current quarter were $1.0 million compared to $1.4 million a year ago due to lower performance fees in the current quarter.
“While the second quarter and year to date results have been impacted by an increase in estimated losses related to Hurricane Irma, the company generated an attractive combined ratio of 73.5 percent in the quarter and successfully deployed capital during the mid-year renewal period,” said Michael McGuire, chairman and chief executive officer. “During the June 1st renewals this year, Blue Capital was able to achieve an overall rate increase of 4.5 percent on its renewed portfolio. The mid-year renewal period was characterised by an abundance of capital and strong appetite for Florida business. Early renewals achieved higher rate increases than those completed later in the period as there was an increasing urgency from a number of markets to deploy capital as the renewals progressed.
“The market improvements experienced so far during 2018 coupled with our strategic alignment with Sompo International Holdings have enabled us to construct an improved portfolio year over year with increased expected returns and a lower risk profile.”
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