Bermuda
|
98-0481623
|
|
(State or Other Jurisdiction
of
Incorporation or
Organization)
|
(I.R.S.
Employer
Identification
No.)
|
Page
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1
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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2008 and 2007 |
2
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3
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4
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5
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14
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25
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29
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30
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30
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30
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30
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30
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30
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30
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As at March 31,
2008
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As at December 31,
2007
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Investments:
|
|||||||
Fixed maturities, at fair value
(Amortized cost: 2008 - $701,279; 2007 -
$1,099,149)
|
$ | 709,393 | $ | 1,109,105 | |||
Short term investments, at fair
value (Amortized cost: 2008 - $71,098; 2007 -
$23,660)
|
70,956 | 23,616 | |||||
Equity investments, at fair value
(Cost: 2008 - $93,734; 2007 - $73,603)
|
86,854 | 74,357 | |||||
Other
investments
|
322,907 | 293,166 | |||||
Total
Investments
|
1,190,110 | 1,500,244 | |||||
Cash and cash
equivalents
|
710,663 | 362,680 | |||||
Insurance and reinsurance premium
balances receivable
|
205,683 | 136,555 | |||||
Unearned premiums
ceded
|
18,348 | 14,608 | |||||
Accrued interest
receivable
|
6,225 | 9,915 | |||||
Receivable for investments
sold
|
5,660 | - | |||||
Deferred acquisition
costs
|
37,290 | 30,607 | |||||
Funds
withheld
|
10,361 | 6,666 | |||||
Goodwill
|
10,781 | 10,781 | |||||
Other
assets
|
46,764 | 31,717 | |||||
Total
Assets
|
$ | 2,241,885 | $ | 2,103,773 | |||
LIABILITIES
|
|||||||
Loss and loss adjustment expense
reserves
|
$ | 200,602 | $ | 180,978 | |||
Unearned
premiums
|
276,823 | 175,607 | |||||
Insurance and reinsurance balances
payable
|
13,207 | 12,088 | |||||
Payable for investments
purchased
|
23,843 | 41,750 | |||||
Long term
debt
|
266,375 | 264,889 | |||||
Other
liabilities
|
33,375 | 33,198 | |||||
Total
Liabilities
|
814,225 | 708,510 | |||||
Minority
Interest
|
186,098 | 184,778 | |||||
SHAREHOLDERS'
EQUITY
|
|||||||
Common voting shares, 150,000,000
authorized, $0.01 par value, issued and outstanding (2008 - 85,316,924;
2007 - 85,309,107)
|
853 | 853 | |||||
Additional paid-in
capital
|
909,026 | 905,316 | |||||
Accumulated other comprehensive
income
|
5,457 | 7,426 | |||||
Retained
earnings
|
326,226 | 296,890 | |||||
Total
Shareholders' Equity
|
1,241,562 | 1,210,485 | |||||
Total Liabilities, Minority
Interest and Shareholders' Equity
|
$ | 2,241,885 | $ | 2,103,773 |
For the Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
REVENUES
|
||||||||
Gross premiums
written
|
$ | 242,246 | $ | 207,013 | ||||
Premiums
ceded
|
(16,014 | ) | (8,245 | ) | ||||
Net premiums
written
|
226,232 | 198,768 | ||||||
Change in net unearned
premiums
|
(90,975 | ) | (97,542 | ) | ||||
Net premiums
earned
|
135,257 | 101,226 | ||||||
Net investment
income
|
18,696 | 13,631 | ||||||
Net realized and unrealized
(losses) gains - investments
|
(12,412 | ) | 4,508 | |||||
Net realized and unrealized
(losses) gains - other
|
(12,237 | ) | 6 | |||||
Other
income
|
1,724 | 673 | ||||||
Total
revenues
|
131,028 | 120,044 | ||||||
EXPENSES
|
||||||||
Loss and loss adjustment
expenses
|
39,767 | 47,748 | ||||||
Acquisition
costs
|
24,165 | 12,718 | ||||||
General and administrative
expenses
|
26,549 | 14,669 | ||||||
Interest
expense
|
5,340 | 3,264 | ||||||
Net foreign exchange
gains
|
(6,699 | ) | (1,282 | ) | ||||
Total
expenses
|
89,122 | 77,117 | ||||||
Income before income taxes,
minority interest and interest in earnings of equity
investments
|
41,906 | 42,927 | ||||||
Provision for income
tax
|
(865 | ) | (45 | ) | ||||
Minority
interest
|
(8,181 | ) | (7,733 | ) | ||||
Interest in earnings of equity
investments
|
- | 461 | ||||||
NET INCOME
|
$ | 32,860 | $ | 35,610 | ||||
Change in currency translation
adjustment
|
(1,420 | ) | (276 | ) | ||||
COMPREHENSIVE
INCOME
|
$ | 31,440 | $ | 35,334 | ||||
Weighted average common shares
outstanding—Basic
|
85,469,270 | 71,746,162 | ||||||
Weighted average common shares
outstanding—Diluted
|
85,690,742 | 71,839,562 | ||||||
Net income per common share
outstanding—Basic
|
$ | 0.38 | $ | 0.50 | ||||
Net income per common share
outstanding—Diluted
|
$ | 0.38 | $ | 0.50 | ||||
Dividends declared per common
share
|
$ | 0.04 | $ | - |
For the Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
Common voting
shares:
|
||||||||
Balance at beginning of
period
|
85,309,107 | 71,547,891 | ||||||
Issued during the
period
|
7,817 | 13,000,000 | ||||||
Balance at end of
period
|
85,316,924 | 84,547,891 | ||||||
Share
capital:
|
||||||||
Common voting
shares
|
||||||||
Balance at beginning of
period
|
$ | 853 | $ | 715 | ||||
Issued during
period
|
- | 130 | ||||||
Balance at end of
period
|
853 | 845 | ||||||
Additional
paid-in capital
|
||||||||
Balance at beginning of
period
|
905,316 | 728,378 | ||||||
Issue of
shares
|
111 | 175,370 | ||||||
Issuance costs (related party:
2008 - $nil ; 2007 - $400)
|
- | (15,755 | ) | |||||
Share based compensation
expense
|
3,599 | 1,638 | ||||||
Balance at end of
period
|
909,026 | 889,631 | ||||||
Accumulated
other comprehensive income (loss)
|
||||||||
Balance at beginning of
period
|
7,426 | (4,528 | ) | |||||
Change in currency translation
adjustment
|
(1,420 | ) | (276 | ) | ||||
Defined benefit plan -
transitional obligation
|
(549 | ) | - | |||||
Cumulative effect adjustment from
adoption of new accounting principle SFAS 159
|
- | 4,009 | ||||||
Balance at end of
period
|
5,457 | (795 | ) | |||||
Retained
earnings
|
||||||||
Balance at beginning of
period
|
296,890 | 139,954 | ||||||
Cumulative effect adjustment from
adoption of accounting principle
|
- | (4,009 | ) | |||||
Dividend
declared
|
(3,524 | ) | - | |||||
Net income for the
period
|
32,860 | 35,610 | ||||||
Balance at end of
period
|
326,226 | 171,555 | ||||||
Total Shareholders'
Equity
|
$ | 1,241,562 | $ | 1,061,236 |
For the Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
Cash flows
provided by (used in) operating activities:
|
||||||||
Net income
|
$ | 32,860 | $ | 35,610 | ||||
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
||||||||
Net realized and unrealized
gains
|
24,649 | (4,514 | ) | |||||
Minority
interest
|
8,181 | 7,733 | ||||||
Depreciation
expense
|
1,154 | 384 | ||||||
Share based compensation
expense
|
3,599 | 1,638 | ||||||
Interest in earnings of equity
investments
|
- | (461 | ) | |||||
Accretion/amortization on fixed
maturities
|
(4,754 | ) | (449 | ) | ||||
Changes in assets and liabilities,
excluding net assets acquired:
|
||||||||
Reinsurance premium
receivable
|
(66,304 | ) | (76,894 | ) | ||||
Unearned premiums
ceded
|
(3,475 | ) | (6,596 | ) | ||||
Deferred acquisition
costs
|
(6,237 | ) | (10,658 | ) | ||||
Funds
withheld
|
(3,696 | ) | (5,069 | ) | ||||
Loss and loss adjustment expense
reserves
|
18,257 | 44,023 | ||||||
Unearned
premiums
|
98,123 | 104,144 | ||||||
Insurance and reinsurance balances
payable
|
(287 | ) | 6,235 | |||||
Other changes in assets and
liabilities, net
|
3,628 | 1,273 | ||||||
Net cash provided by operating
activities
|
105,698 | 96,399 | ||||||
Cash flows
provided by (used in) investing activities:
|
||||||||
Net cash received in acquisitions
of subsidiaries
|
- | 4,581 | ||||||
Purchases of fixed income
securities
|
(399,242 | ) | (400,673 | ) | ||||
Sales and maturities of fixed
income securities
|
732,348 | 248,350 | ||||||
Purchases of equity
securities
|
(20,131 | ) | (22,682 | ) | ||||
Purchases of other
investments
|
(2,002 | ) | (76,520 | ) | ||||
Sales of other
investments
|
(51,885 | ) | - | |||||
Purchases of fixed
assets
|
(4,830 | ) | (542 | ) | ||||
Net cash provided by (used in)
investing activities
|
254,258 | (247,486 | ) | |||||
Cash flows
(used in) provided by financing activities:
|
||||||||
Issue of common shares, net of
issuance costs paid
|
- | (1,385 | ) | |||||
Contribution of minority
interest
|
(222 | ) | 83,100 | |||||
Repurchase of minority
interest
|
(6,639 | ) | - | |||||
Dividend paid on common
shares
|
(3,413 | ) | - | |||||
Other
|
205 | (424 | ) | |||||
Net cash (used in) provided by
financing activities
|
(10,069 | ) | 81,291 | |||||
Effect of foreign exchange rate on
cash and cash equivalents
|
(1,904 | ) | (365 | ) | ||||
Increase (decrease) in cash and
cash equivalents
|
347,983 | (70,161 | ) | |||||
Cash and cash equivalents -
beginning of period
|
362,680 | 261,352 | ||||||
Cash and cash equivalents - end of
period
|
$ | 710,663 | $ | 191,191 | ||||
Supplemental
cash flow information:
|
||||||||
Payable for investments
purchased
|
$ | 23,843 | $ | 7,246 | ||||
Receivable for investments
sold
|
$ | 5,660 | $ | - | ||||
Interest
paid
|
$ | 5,588 | $ | 3,359 | ||||
Proceeds receivable from initial
public offering
|
$ | - | $ | 164,854 | ||||
Fair
Value Measurement at March 31, 2008,
using:
|
|||||||||||||||
Fair Value
|
Quoted Prices in Active
Markets |
Significant
Other Observable
Inputs |
Significant
Other Unobservable
Inputs |
||||||||||||
Measurements
|
(Level 1)
|
(Level 2)
|
(Level
3)
|
||||||||||||
Description
|
|||||||||||||||
Fixed maturity
investments
|
$ | 709,393 | $ | 249,381 | $ | 460,012 | $ | - | |||||||
Short term
investments
|
70,956 | 64,004 | 6,952 | - | |||||||||||
Equity
investments
|
86,854 | 86,854 | - | - | |||||||||||
867,203 | 400,239 | 466,964 | - | ||||||||||||
Other
Investments
|
|||||||||||||||
Real estate investment
trusts
|
11,079 | - | 11,079 | - | |||||||||||
Investment
funds
|
30,834 | - | 18,620 | 12,214 | |||||||||||
Catastrophe
bonds
|
36,652 | - | - | 36,652 | |||||||||||
Fixed income
fund
|
244,342 | 244,342 | - | - | |||||||||||
322,907 | 244,342 | 29,699 | 48,866 | ||||||||||||
Totals
|
$ | 1,190,110 | $ | 644,581 | $ | 496,663 | $ | 48,866 |
Fair Value Measurement at December
31, 2007, using:
|
|||||||||||||||
Fair Value
|
Quoted
Prices in Active
Markets |
Significant
Other
Observable
Inputs
|
Significant
Other
Unobservable
Inputs
|
||||||||||||
Measurements
|
(Level 1)
|
(Level 2)
|
(Level
3)
|
||||||||||||
Description
|
|||||||||||||||
Fixed maturity
investments
|
$ | 1,109,105 | $ | 471,811 | $ | 637,294 | $ | - | |||||||
Short term
investments
|
23,616 | 4,914 | 18,702 | - | |||||||||||
Equity
investments
|
74,357 | 74,357 | - | - | |||||||||||
1,207,078 | 551,082 | 655,996 | - | ||||||||||||
Other
Investments
|
|||||||||||||||
Real estate investment
trusts
|
12,204 | - | 12,204 | - | |||||||||||
Investment
funds
|
31,249 | - | 20,041 | 11,208 | |||||||||||
Catastrophe
bonds
|
36,619 | - | - | 36,619 | |||||||||||
Fixed income
fund
|
212,982 | 212,982 | - | - | |||||||||||
293,054 | 212,982 | 32,245 | 47,827 | ||||||||||||
Totals
|
$ | 1,500,132 | $ | 764,064 | $ | 688,241 | $ | 47,827 |
Investment
|
Catastrophe
|
||||||
funds
|
bonds
|
||||||
|
|||||||
Beginning balance, December 31,
2007
|
$ | 11,208 | $ | 36,619 | |||
Total realized gains included in
earnings
|
- | - | |||||
Total unrealized gains included in
earnings
|
1,006 | 33 | |||||
Net purchases and
sales
|
- | - | |||||
Closing fair value, March 31,
2008
|
$ | 12,214 | $ | 36,652 |
Fair Value Measurement at March
31, 2008, using:
|
||||||||||||||||
Fair Value
|
Quoted
Prices in Active
Markets |
Significant
Other Observable
Inputs |
Significant
Other Unobservable
Inputs |
|||||||||||||
Measurements
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Derivatives
|
||||||||||||||||
Futures
contracts
|
$ | (735 | ) | $ | (735 | ) | $ | - | $ | - | ||||||
Swaps
|
(1,792 | ) | - | (1,792 | ) | - | ||||||||||
Forward currency
contracts
|
954 | - | 954 | - | ||||||||||||
Mortgage backed securities
TBA
|
603 | - | 603 | - | ||||||||||||
Other reinsurance
derivatives
|
(904 | ) | - | (313 | ) | (591 | ) | |||||||||
Total
derivatives
|
$ | (1,874 | ) | $ | (735 | ) | $ | (548 | ) | $ | (591 | ) |
Fair Value Measurement at December
31, 2007, using:
|
||||||||||||||||
Fair
Value
|
Quoted
Prices in Active
Markets |
Significant
Other Observable
Inputs |
Significant
Other Unobservable
Inputs |
|||||||||||||
Measurements
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Derivatives
|
||||||||||||||||
Futures
contracts
|
$ | (2,228 | ) | $ | (2,228 | ) | $ | - | $ | - | ||||||
Swaps
|
(153 | ) | - | (153 | ) | - | ||||||||||
Forward currency
contracts
|
(7,067 | ) | - | (7,067 | ) | - | ||||||||||
Mortgage backed securities
TBA
|
173 | - | 173 | - | ||||||||||||
Other reinsurance
derivatives
|
(1,305 | ) | - | - | (1,305 | ) | ||||||||||
Total
derivatives
|
$ | (10,580 | ) | $ | (2,228 | ) | $ | (7,047 | ) | $ | (1,305 | ) |
Other reinsurance
derivatives
|
||||
Opening fair value, December 31,
2007
|
$ | (1,305 | ) | |
Total realized gains included in
earnings
|
- | |||
Total unrealized gains included in
earnings
|
714 | |||
Net purchases and
sales
|
- | |||
Closing fair value, March 31,
2008
|
$ | (591 | ) |
Three Months Ended March 31,
2008
|
||||||||||||
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
(years)
|
||||||||||
Outstanding at December 31,
2007
|
1,658,700 | $ | 12.07 | 1.7 | ||||||||
Granted
|
727,958 | 13.90 | ||||||||||
Forfeited
|
(78,000 | ) | 12.54 | |||||||||
Outstanding at March 31,
2008
|
2,308,658 | 12.63 | 1.8 |
Three Months Ended March 31,
2008
|
||||||||||||
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
(years)
|
||||||||||
Outstanding at December 31,
2007
|
326,610 | $ | 12.45 | 0.6 | ||||||||
Granted
|
230,715 | 13.89 | ||||||||||
Forfeited
|
(16,950 | ) | 13.74 | |||||||||
Converted into common
shares
|
(7,817 | ) | 11.51 | |||||||||
Outstanding at March 31,
2008
|
532,558 | 13.04 | 0.8 |
Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
Basic earnings
per common share
|
||||||||
Net income
|
$ | 32,860 | $ | 35,610 | ||||
Weighted average common shares
outstanding
|
85,311,942 | 71,692,335 | ||||||
Weighted average vested restricted
share units
|
157,328 | 53,827 | ||||||
Weighted average common shares
outstanding—Basic
|
85,469,270 | 71,746,162 | ||||||
Basic earnings per common
share
|
$ | 0.38 | $ | 0.50 | ||||
Diluted
earnings per common share
|
||||||||
Net income
|
$ | 32,860 | $ | 35,610 | ||||
Weighted average common shares
outstanding
|
85,311,942 | 71,692,335 | ||||||
Weighted average vested restricted
share units outstanding
|
157,328 | 53,827 | ||||||
85,469,270 | 71,746,162 | |||||||
Share
equivalents:
|
||||||||
Weighted unvested restricted share
units
|
221,472 | 93,400 | ||||||
Weighted average common shares
outstanding—Diluted
|
85,690,742 | 71,839,562 | ||||||
Diluted earnings per common
share
|
$ | 0.38 | $ | 0.50 |
1)
|
Property
Catastrophe Reinsurance. Property catastrophe reinsurance
contracts are typically “all risk” in nature, meaning that they
protect against losses from earthquakes and hurricanes, as well as other
natural and man-made catastrophes such as tornados, wind, fires, winter storms, and floods
(where the contract specifically provides for coverage). Losses on these contracts
typically stem from direct property damage and business interruption. To
date, property catastrophe reinsurance has been our most important
product. We write property catastrophe
reinsurance primarily on an excess of loss basis. In the event of a loss, most
contracts of this type require us to cover a subsequent event and
generally provide for a premium to reinstate the coverage under the
contract, which is referred to as a “reinstatement premium”. These contracts
typically cover only specific regions or geographical areas, but may be on
a worldwide basis.
|
2)
|
Property
Reinsurance. We also
provide reinsurance on a pro rata share basis and per risk excess of loss
basis. Per risk reinsurance protects insurance companies on their primary
insurance risks on a single risk basis, for example, covering a single
large building. All property per risk and pro rata
business is written with loss limitation provisions, such as per
occurrence or per event caps, in place to limit exposure to catastrophic
events.
|
3)
|
Short-tail
Specialty and Casualty Reinsurance. We also provide short-tail
specialty and casualty reinsurance for risks such as aviation, energy,
accident and health, satellite, marine and workers’ compensation
catastrophe. Most short-tail specialty and casualty reinsurance
is written with loss limitation provisions. During 2008, we expect to continue
increasing our specialty writings based on our assessment of the market
environment.
|
Three Months Ended March 31,
2008
|
||||||||||||
Reinsurance
|
Insurance
|
Total
|
||||||||||
Underwriting
Revenues
|
||||||||||||
Gross premiums
written
|
$ | 223,141 | $ | 19,105 | $ | 242,246 | ||||||
Premiums
ceded
|
(5,320 | ) | (10,694 | ) | (16,014 | ) | ||||||
Net written
premiums
|
217,821 | 8,411 | 226,232 | |||||||||
Change in net unearned
premiums
|
(89,700 | ) | (1,275 | ) | (90,975 | ) | ||||||
Net premiums
earned
|
128,121 | 7,136 | 135,257 | |||||||||
Other insurance related
income
|
212 | 829 | 1,041 | |||||||||
Total underwriting
revenues
|
128,333 | 7,965 | 136,298 | |||||||||
Underwriting
Expenses
|
||||||||||||
Loss and loss adjustment expenses
(recoveries)
|
39,802 | (35 | ) | 39,767 | ||||||||
Acquisition
costs
|
20,910 | 3,255 | 24,165 | |||||||||
General and administrative
expenses
|
24,133 | 2,416 | 26,549 | |||||||||
Total underwriting
expenses
|
84,845 | 5,636 | 90,481 | |||||||||
Underwriting
Income
|
$ | 43,488 | $ | 2,329 | $ | 45,817 | ||||||
Total Assets | $ | 2,153,579 | $ | 88,306 | $ | 2,241,885 | ||||||
Net reserves for loss and loss
adjustment expenses
|
$ | 197,874 | $ | 2,728 | $ | 200,602 | ||||||
Ratios
|
||||||||||||
Loss ratio
|
31.1% | -0.5% | 29.4% | |||||||||
Expense
ratio
|
35.1% | 79.5% | 37.5% | |||||||||
Combined
ratio
|
66.2% | 79.0% | 66.9% |
Three Months Ended March 31,
2007
|
||||||||||||
Reinsurance
|
Insurance
|
Total
|
||||||||||
Underwriting
Revenues
|
||||||||||||
Gross premiums
written
|
$ | 207,013 | $ | - | $ | 207,013 | ||||||
Premiums
ceded
|
(8,245 | ) | - | (8,245 | ) | |||||||
Net written
premiums
|
198,768 | - | 198,768 | |||||||||
Change in net unearned
premiums
|
(97,542 | ) | - | (97,542 | ) | |||||||
Net premiums
earned
|
101,226 | - | 101,226 | |||||||||
Other insurance related
income
|
225 | - | 225 | |||||||||
Total underwriting
revenues
|
101,451 | - | 101,451 | |||||||||
Underwriting
Expenses
|
||||||||||||
Loss and loss adjustment
expenses
|
47,748 | - | 47,748 | |||||||||
Acquisition
costs
|
12,718 | - | 12,718 | |||||||||
General and administrative
expenses
|
14,669 | - | 14,669 | |||||||||
Total underwriting
expenses
|
75,135 | - | 75,135 | |||||||||
Underwriting
Income
|
$ | 26,316 | $ | - | $ | 26,316 | ||||||
Total Assets | $ | 1,649,190 | $ | - | $ | 1,649,190 | ||||||
Net reserves for loss and loss
adjustment expenses
|
$ | 66,540 | $ | - | $ | 66,540 | ||||||
Ratios
|
||||||||||||
Loss ratio
|
47.2% | 0.0% | 47.2% | |||||||||
Expense
ratio
|
27.1% | 0.0% | 27.1% | |||||||||
Combined
ratio
|
74.3% | 0.0% | 74.3% |
Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
Underwriting
income
|
$ | 45,817 | $ | 26,316 | ||||
Net investment
income
|
18,696 | 13,631 | ||||||
Net realized and unrealized
(losses) gains - investments
|
(12,412 | ) | 4,508 | |||||
Net realized and unrealized
(losses) gains - other
|
(12,237 | ) | 6 | |||||
Other
income
|
683 | 448 | ||||||
Interest
expense
|
(5,340 | ) | (3,264 | ) | ||||
Net foreign exchange
gains
|
6,699 | 1,282 | ||||||
Income before income taxes,
minority interest and interest in earnings of equity
investments
|
$ | 41,906 | $ | 42,927 |
Three Months Ended March 31,
2008
|
Three Months Ended March 31,
2007
|
|||||||||||||||
Gross premiums
written
|
Percentage of
total
|
Gross premiums
written
|
Percentage of
total
|
|||||||||||||
Line of
business
|
||||||||||||||||
Reinsurance
|
||||||||||||||||
Property
catastrophe
|
$ | 164,616 | 68.0 | % | $ | 158,368 | 76.5 | % | ||||||||
Property
|
18,921 | 7.8 | % | 24,556 | 11.9 | % | ||||||||||
Short-tail specialty
and casualty
|
39,604 | 16.3 | % | 24,089 | 11.6 | % | ||||||||||
Insurance
|
19,105 | 7.9 | % | - | 0.0 | % | ||||||||||
Total
|
$ | 242,246 | 100.0 | % | $ | 207,013 | 100.0 | % |
Three Months Ended March 31,
2008
|
Three Months Ended March 31,
2007
|
|||||||||||||||
Gross premiums
written
|
Percentage of
total
|
Gross premiums
written
|
Percentage of
total
|
|||||||||||||
Geographic area
of risk insured(1)
|
||||||||||||||||
North
America
|
$ | 78,683 | 32.5 | % | $ | 90,751 | 43.8 | % | ||||||||
Europe
|
64,675 | 26.7 | % | 66,968 | 32.3 | % | ||||||||||
Worldwide risks(2)
|
56,864 | 23.5 | % | 25,606 | 12.4 | % | ||||||||||
Caribbean (3)
|
25,720 | 10.6 | % | 7,363 | 3.6 | % | ||||||||||
Japan and
Australasia
|
9,292 | 3.8 | % | 11,639 | 5.6 | % | ||||||||||
Other
|
7,012 | 2.9 | % | 4,686 | 2.3 | % | ||||||||||
Total
|
$ | 242,246 | 100.0 | % | $ | 207,013 | 100.0 | % |
(1)
|
Except as otherwise noted, each of
these categories includes contracts that cover risks located primarily in
the designated geographic
area.
|
(2)
|
This geographic area includes
contracts that cover risks primarily in two or more geographic
zones.
|
(3)
|
Gross written premiums related to
the insurance segment are included in the Caribbean geographic
area.
|
Three Months Ended March 31,
2008
|
Three Months Ended March 31,
2007
|
|||||||||||||||
Gross premiums
written
|
Percentage of
total
|
Gross premiums
written
|
Percentage of
total
|
|||||||||||||
Name of
broker
|
||||||||||||||||
Benfield
|
$ | 73,103 | 30.2 | % | $ | 68,633 | 33.2 | % | ||||||||
Guy
Carpenter
|
54,840 | 22.6 | % | 50,559 | 24.4 | % | ||||||||||
Aon Re
Worldwide
|
33,733 | 13.9 | % | 29,279 | 14.1 | % | ||||||||||
Willis
Group
|
19,324 | 8.0 | % | 31,546 | 15.2 | % | ||||||||||
Other brokers(1)
|
61,246 | 25.3 | % | 26,996 | 13.1 | % | ||||||||||
Total
|
$ | 242,246 | 100.0 | % | $ | 207,013 | 100.0 | % |
(1) Other brokers includes the gross written premiums related to the insurance segment
(1)
|
Property
Catastrophe Reinsurance. Property catastrophe reinsurance contracts are
typically “all risk” in nature, meaning that they protect against losses
from earthquakes and hurricanes, as well as other natural and man-made
catastrophes such as tornados, wind, fires, winter storms, and floods
(where the contract specifically provides for coverage). Losses
on these contracts typically stem from direct property damage and business
interruption. To date, property catastrophe reinsurance has been our most
important product. We write property catastrophe reinsurance
primarily on an excess of loss basis. In the event of a loss,
most contracts of this type require us to cover a subsequent event and
generally provide for a premium to reinstate the coverage under the
contract, which is referred to as a “reinstatement
premium”. These contracts typically cover only specific regions
or geographical areas, but may be on a worldwide basis.
|
(2)
|
Property
Reinsurance. We also provide reinsurance on a pro rata share basis and per
risk excess of loss basis. Per risk reinsurance protects insurance
companies on their primary insurance risks on a single risk basis, for
example, covering a single large building. All property per
risk and pro rata business is written with loss limitation provisions,
such as per occurrence or per event caps, in place to limit exposure to
catastrophic events.
|
(3)
|
Short-tail
Specialty and Casualty Reinsurance. We also provide short-tail specialty
and casualty reinsurance for risks such as aviation, energy, accident and
health, satellite, marine and workers’ compensation
catastrophe. Most short-tail specialty and casualty reinsurance
is written with loss limitation provisions. During 2008, we expect to
continue increasing our specialty writings based on our assessment of the
market environment.
|
-
|
an
increase in gross written and earned premiums of $35.2 million and $34.0
million, respectively, as discussed
below;
|
-
|
a decrease
in the loss ratio of 17.8%, from 47.2% in the first quarter 2007 to 29.4%
in the first quarter of 2008, due to the impact of Windstorm Kyrill, which
generated net losses in the amount of $29.3 million in the first quarter
of 2007;
|
-
|
an
increase in investment income of $5.1 million primarily due to returns on
a higher investable asset base;
|
-
|
an increase in the net realized and
unrealized losses on investments and other derivative instruments
of $29.2
million;
|
-
|
an
increase in general and administrative expenses of $11.9 million due to
the increase in staffing levels as we continue to build our global
platform;
|
-
|
an
increase in interest expense of $2.1 million due to interest on the
additional debt issued in June and September 2007;
and
|
-
|
an increase in foreign exchange gains of $5.4 million due to net monetary
assets and liabilities denominated in foreign currencies that appreciated
against the U.S. dollar.
|
For the Three Months
Ended
|
||||||||
March 31,
2008
|
March 31,
2007
|
|||||||
REVENUES
|
||||||||
Gross premiums
written
|
$ | 242,246 | $ | 207,013 | ||||
Premiums
ceded
|
(16,014 | ) | (8,245 | ) | ||||
Net premiums
written
|
226,232 | 198,768 | ||||||
Net premiums
earned
|
135,257 | 101,226 | ||||||
Net investment
income
|
18,696 | 13,631 | ||||||
Net realized and unrealized
(losses) gains - investments
|
(12,412 | ) | 4,508 | |||||
Net realized and unrealized
(losses) gains - other
|
(12,237 | ) | 6 | |||||
Other
income
|
1,724 | 673 | ||||||
Total
revenues
|
131,028 | 120,044 | ||||||
EXPENSES
|
||||||||
Loss and loss adjustment
expenses
|
39,767 | 47,748 | ||||||
Acquisition
costs
|
24,165 | 12,718 | ||||||
General and administrative
expenses
|