Profits at Blue Capital Reinsurance Holdings dipped sharply in the second quarter driven by higher levels of catastrophe losses globally. On a positive note, the company said declines in rates slowed in the mid-year renewals compared with a year earlier.
The company, which offers collateralized reinsurance and invests in insurance-linked securities, made a profit of $2 million in the second quarter of 2016 compared with $5.5 million in the same period a year earlier. In the first six months of the year it made $6.9 million compared with $10.9 million a year earlier.
Reinsurance premiums written for the current quarter and year to date were $9.3 million and $26.7 million, increasing $1.7 million and declining $1 million compared to the same periods in 2015.
The current quarter's premiums written benefited from $0.7 million of reinstatement premiums compared to no reinstatement premiums received in the same period a year ago, the company said.
The combined ratio for the current quarter was 82 percent and 67.8 percent year to date compared with 43.1 percent and 43.8 percent in the same periods a year ago.
The increase in both periods' combined ratios was driven by higher loss and loss adjustment expenses partially offset by lower reinsurance acquisition costs and general and administrative expenses, Blue Capital said.
Loss and loss adjustment expenses for the current quarter were $6 million compared with $0.1 million in the same period a year ago driven by a higher frequency of global catastrophe events in the current quarter which included the Fort McMurray wildfires in Canada, the convective storms in Texas and Europe and the Kumamoto earthquake in Japan.
Adam Szakmary, president and CEO, said: "The second quarter included a greater frequency of global catastrophe events and Blue Capital's ability to generate a profit reflects our strong risk management and the benefits of maintaining a portfolio of diverse catastrophe risks.
“During mid-year renewals, our portfolio's average price decline of approximately 3 percent moderated compared to the 5 percent decline experienced a year ago. Through our advantageous partnership with Endurance and the leveraging of our experienced underwriters, we were able to assemble an attractive portfolio during the mid-year renewals.”
Blue Capital, Insurance, Reinsurance, Results, Catastrophe, Cat losses, Bermuda