PEMBROKE, Bermuda - February 1, 2017 -
Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) ("Blue Capital"
or the "Company"), a Bermuda holding company that, through its
operating subsidiaries, offers collateralized reinsurance in the
property catastrophe market and invests in various insurance-linked
securities, today reported its financial results for the fourth
quarter of 2016.
The Company's net income was $4.0 million ($0.46
per share) for the fourth quarter of 2016 and $14.3 million ($1.63
per share) for the twelve months ended December 31, 2016. The
Company's fully converted book value per common share was $20.90 at
December 31, 2016, reflecting a 2.3% increase for the quarter
and a 7.6% increase year-to-date, each inclusive of dividends
declared in both periods.
Reinsurance premiums written for the current
quarter and full year 2016 were $8.7 million and $43.2 million,
increasing by $3.7 million and $4.6 million compared to the same
periods in 2015 primarily due to increased participation in quota
share contracts, partially offset by a decrease in direct written
premiums.
The combined ratio for the current quarter and
full year 2016 was 61.1% and 65.0% compared to 42.4% and 45.3% in
the same periods in 2015. The increases in the current period
combined ratios were driven by higher loss and loss adjustment
expense ratios partially offset by lower acquisition and general
and administrative expense ratios. Loss and loss adjustment
expenses were $3.4 million for the current quarter and were $13.7
million for the current year compared to $0.3 million and $2.6
million, respectively, in 2015. The increase in loss and loss
adjustment expenses was predominantly driven by a higher level of
2016 global loss activity, including Hurricane Matthew and the New
Zealand earthquake in the fourth quarter and the Canadian
wildfires, the Japanese earthquake, and U.S. severe weather
activity, which occurred earlier in the year. General and
administrative expenses were lower in the current periods compared
to a year ago largely due to lower performance fees reflecting the
higher catastrophe activity. Acquisition expenses were lower
in the current periods compared to a year ago due to lower profit
commissions.
The Company's Board of Directors has declared a
special dividend of $0.59 per common share, which is payable on
March 15, 2017 to all shareholders of record as of February 28,
2017. This special dividend, together with the regular dividends
declared during each of the first three quarters of 2016,
represents 90.6% of the Company's "Distributable Income" with
respect to 2016. Distributable Income, a non-GAAP measure, has been
defined within the Company's capital management policy to be its
net income plus (minus) non-cash expenses (revenues) recorded in
net income for the period.
Adam Szakmary, President and CEO, commented: "2016
was a solid year for Blue Capital as we generated growth in book
value of 7.6% inclusive of dividends and a combined ratio of 65.0%
against a backdrop of the costliest year for industry losses within
the last five years. These results led to our declaring a
special dividend for the third year in a row which, when combined
with our previous 2016 regular quarterly dividends, represents a
return of over 90% of total annual earnings. 2016 was also
the first full year of the Company's operations since Blue Capital
Management Ltd. was purchased by Endurance Specialty Holdings Ltd.,
resulting in greater access by the Company to a larger more
diversified catastrophe portfolio, thereby enhancing our ability to
effectively select risks and build a higher quality portfolio
designed to generate shareholder value."
January Renewal Update
As of January 31, 2017 the Company bound indemnity
reinsurance contracts with expected total annual premiums of $35.5
million, a decrease of $2.1 million when compared to the same
period in 2016 as a result of a bound portfolio timing change year
over year. The business underwritten by the Company is
expected to produce a net rate on line for the portfolio of 21.2%,
which is a 1.7% increase when compared to the same period in 2016
due to a shift to greater retrocessional market exposure because of
a more favorable pricing environment.
The Company's in-force portfolio deployed as of
January 31, 2017 consisted of approximately 29.8% in support of
first event reinsurance coverages, 56.3% in support of catastrophe
quota share coverages and the balance in support of second and
subsequent event reinsurance coverages.
About Blue Capital
Blue Capital Reinsurance Holdings Ltd., through
its operating subsidiaries, offers collateralized reinsurance in
the property catastrophe market, leveraging underwriting expertise
and infrastructure from established resources. Underwriting
decisions, operations and other management services are
provided to Blue Capital by Blue Capital Management Ltd., a
subsidiary of Endurance Specialty Holdings Ltd. (NYSE: ENH), a
recognized global specialty provider of property and casualty
insurance and reinsurance and a leading property catastrophe and
short tail reinsurer since 2001. Endurance acquired Blue Capital
Management Ltd. as part of its acquisition of Montpelier Re
Holdings Ltd. and its subsidiaries in July 2015. Additional
information can be found in Blue Capital's public filings with the
U.S. Securities and Exchange Commission or at www.bcapre.bm.
Contacts
Investor Relations
Phone: +1 441 278 0988
Email: investorrelations@endurance.bm
Safe Harbor for Forward-Looking
Statements
Some of the statements in this press release may
include, and Blue Capital may make related oral forward-looking
statements which reflect our current views with respect to future
events and financial performance. Such statements may include
forward-looking statements both with respect to us in general and
the insurance and reinsurance sectors specifically, both as to
underwriting and investment matters. Statements that include the
words "should," "would," "expect," "estimates", "intend," "plan,"
"believe," "project," "target," "anticipate," "seek," "will,"
"deliver," and similar statements of a future or forward-looking
nature identify forward-looking statements in this press release
for purposes of the U.S. federal securities laws or otherwise. We
intend these forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements in the Private
Securities Litigation Reform Act of 1995.
All forward-looking statements address matters that involve risks
and uncertainties. Accordingly, there are or may be important
factors that could cause actual results to differ materially from
those indicated in the forward-looking statements. These factors
include, but are not limited to, the effects of competitors'
pricing policies, greater frequency or severity of claims and loss
activity, changes in market conditions, decreased demand for
property and casualty reinsurance, changes in the availability,
cost or quality of reinsurance or retrocessional coverage, our
inability to renew business previously underwritten or acquired,
uncertainties in our reserving process, changes to our tax status,
reduced acceptance of our existing or new products and services, a
loss of business from and credit risk related to our broker
counterparties, assessments for high risk or otherwise uninsured
individuals, possible terrorism or the outbreak of war, a loss of
key personnel, political conditions, changes in insurance
regulation, operational risk, including the risk of fraud and
errors and omissions, as well as technology breaches or failure,
changes in accounting policies, our investment performance, the
valuation of our invested assets, a breach of our investment
guidelines, potential treatment of us as an investment company or a
passive foreign investment company for purposes of U.S. securities
laws or U.S. federal taxation, respectively, our dependence as a
holding company upon dividends or distributions from our operating
subsidiaries, the unavailability of capital in the future,
developments in the world's financial and capital markets and our
access to such markets, government intervention in the insurance
and reinsurance industry, illiquidity in the credit markets,
changes in general economic conditions and other factors described
in our Annual Report on Form 10-K for the year
ended December 31, 2015 and Quarterly Reports on Form
10-Q for the quarters ended June 30, 2016 and September 30,
2016.
The foregoing review of important factors should not be construed
as exhaustive and should be read in conjunction with the other
cautionary statements that are included herein and elsewhere,
including the risk factors included in Blue Capital's reports on
Form 10-K and Form 10-Q and other documents of Blue Capital on file
with the Securities and Exchange Commission. Any forward-looking
statements made in this press release are qualified by these
cautionary statements, and there can be no assurance that the
actual results or developments anticipated by Blue Capital will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, Blue Capital or its
business or operations. Except as required by law, Blue Capital
undertakes no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
The contents of any website referenced in this press release are
not incorporated by reference herein.
BLUE CAPITAL REINSURANCE HOLDINGS
LTD.
CONSOLIDATED BALANCE SHEETS
(In millions of U.S. dollars, except share
amounts)
|
|
December 31, 2016 |
|
December 31, 2015 |
Assets |
|
(Unaudited) |
|
|
Cash and
cash equivalents |
|
$ |
1.6 |
|
|
$ |
1.0 |
|
Cash and
cash equivalents pledged as collateral |
|
3.1 |
|
|
5.1 |
|
Reinsurance premiums receivable |
|
7.7 |
|
|
15.9 |
|
Deferred
reinsurance acquisition costs |
|
0.1 |
|
|
0.1 |
|
Funds
held by reinsured companies as collateral |
|
191.4 |
|
|
195.3 |
|
Other
assets |
|
0.8 |
|
|
0.2 |
|
Total Assets |
|
$ |
204.7 |
|
|
$ |
217.6 |
|
Liabilities |
|
|
|
|
Loss and
loss adjustment expense reserves |
|
$ |
11.1 |
|
|
$ |
4.0 |
|
Unearned
reinsurance premiums |
|
0.9 |
|
|
1.3 |
|
Debt |
|
- |
|
|
13.0 |
|
Reinsurance balances payable |
|
7.1 |
|
|
7.6 |
|
Other
liabilities |
|
2.3 |
|
|
4.1 |
|
Total Liabilities |
|
21.4 |
|
|
30.0 |
|
Shareholders' Equity |
|
|
|
|
Common
Shares and additional paid-in capital |
|
8.8 |
|
|
8.8 |
|
Additional paid-in capital |
|
165.5 |
|
|
165.3 |
|
Retained
earnings |
|
9.0 |
|
|
13.5 |
|
Total Shareholders' Equity |
|
183.3 |
|
|
187.6 |
|
Total Liabilities and Shareholders' Equity |
|
$ |
204.7 |
|
|
$ |
217.6 |
|
Common shares outstanding (000s) |
|
8,756 |
|
|
8,752 |
|
Common and common equivalent shares outstanding
(000s) |
|
8,769 |
|
|
8,762 |
|
BLUE CAPITAL
REINSURANCE HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF NET INCOME AND
COMPREHENSIVE INCOME
(In millions of U.S. dollars, except per share
data)
Unaudited
|
|
Three Months
Ended December 31, |
|
Twelve Months
Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
|
|
|
|
|
|
|
Reinsurance premiums written |
|
$ |
8.7 |
|
|
$ |
5.0 |
|
|
$ |
43.2 |
|
|
$ |
38.6 |
|
Change in
net unearned reinsurance premiums |
|
2.8 |
|
|
4.3 |
|
|
0.4 |
|
|
(0.3 |
) |
Net
reinsurance premiums earned |
|
11.5 |
|
|
9.3 |
|
|
43.6 |
|
|
38.3 |
|
Net
(loss) income from derivative instruments |
|
(0.5 |
) |
|
0.1 |
|
|
(1.0 |
) |
|
(0.2 |
) |
Total
revenues |
|
11.0 |
|
|
9.4 |
|
|
42.6 |
|
|
38.1 |
|
Expenses |
|
|
|
|
|
|
|
|
Underwriting expenses: |
|
|
|
|
|
|
|
|
Loss and
loss adjustment expenses - current year |
|
3.7 |
|
|
0.6 |
|
|
13.7 |
|
|
3.2 |
|
Loss and
loss adjustment expenses - prior year |
|
(0.3 |
) |
|
(0.3 |
) |
|
- |
|
|
(0.6 |
) |
Acquisition costs |
|
2.4 |
|
|
2.1 |
|
|
9.6 |
|
|
8.6 |
|
General
and administrative expenses |
|
1.2 |
|
|
1.6 |
|
|
5.0 |
|
|
6.1 |
|
Non-underwriting expenses: |
|
|
|
|
|
|
|
|
Interest
expense |
|
- |
|
|
- |
|
|
- |
|
|
0.1 |
|
Total
expenses |
|
7.0 |
|
|
4.0 |
|
|
28.3 |
|
|
17.4 |
|
Net income and comprehensive income |
|
$ |
4.0 |
|
|
$ |
5.4 |
|
|
$ |
14.3 |
|
|
$ |
20.7 |
|
Per share data: |
|
|
|
|
|
|
|
|
Basic and
diluted earnings per Common Share |
|
$ |
0.46 |
|
|
$ |
0.62 |
|
|
$ |
1.63 |
|
|
$ |
2.36 |
|
Dividends
declared per Common Share and RSU(1) |
|
- |
|
|
- |
|
|
2.14 |
|
|
1.56 |
|
Insurance ratios: |
|
|
|
|
|
|
|
|
Loss and
loss adjustment expense ratio |
|
29.2 |
% |
|
3.1 |
% |
|
31.5 |
% |
|
6.9 |
% |
Acquisition cost ratio |
|
21.1 |
% |
|
22.4 |
% |
|
22.1 |
% |
|
22.4 |
% |
General
and administrative expense ratio |
|
10.8 |
% |
|
16.9 |
% |
|
11.4 |
% |
|
16.0 |
% |
Combined
ratio |
|
61.1 |
% |
|
42.4 |
% |
|
65.0 |
% |
|
45.3 |
% |
RSU = restricted share unit
(1) The twelve
month period ended December 31, 2016 includes a special
dividend with respect to 2015 of $1.24 per common share and RSU,
which was declared and paid during the first quarter of
2016.
BLUE CAPITAL REINSURANCE HOLDINGS
LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(In millions of U.S. dollars)
Unaudited
|
|
Total
shareholders'
equity |
|
Common
Shares, at
par value |
|
Additional
paid-in
capital |
|
Retained
earnings |
Balance
at January 1, 2016 |
|
$ |
187.6 |
|
|
$ |
8.8 |
|
|
$ |
165.3 |
|
|
$ |
13.5 |
|
Net income |
|
14.3 |
|
|
- |
|
|
- |
|
|
14.3 |
|
Expense
recognized for RSUs |
|
0.2 |
|
|
- |
|
|
0.2 |
|
|
- |
|
Dividends
declared on Common Shares and RSUs |
|
(18.8 |
) |
|
- |
|
|
- |
|
|
(18.8 |
) |
Balance at December 31, 2016 |
|
$ |
183.3 |
|
|
$ |
8.8 |
|
|
$ |
165.5 |
|
|
$ |
9.0 |
|
|
|
Total
shareholders'
equity |
|
Common
Shares, at
par value |
|
Additional
paid-in
capital |
|
Retained
earnings |
Balance
at January 1, 2015 |
|
$ |
180.5 |
|
|
$ |
8.8 |
|
|
$ |
165.2 |
|
|
$ |
6.5 |
|
Net
income |
|
20.7 |
|
|
- |
|
|
- |
|
|
20.7 |
|
Expense
recognized for RSUs |
|
0.1 |
|
|
- |
|
|
0.1 |
|
|
- |
|
Dividends
declared on Common Shares and RSUs |
|
(13.7 |
) |
|
- |
|
|
- |
|
|
(13.7 |
) |
Balance
at December 31, 2015 |
|
$ |
187.6 |
|
|
$ |
8.8 |
|
|
$ |
165.3 |
|
|
$ |
13.5 |
|
BOOK VALUE AND
FULLY CONVERTED BOOK VALUE PER COMMON SHARE(1)
Unaudited
|
|
Dec. 31,
2016 |
|
Sept. 30,
2016 |
|
June 30,
2016 |
|
Dec. 31,
2015 |
Book value per share numerator (in
millions of U.S. dollars): |
|
|
|
|
|
|
|
|
[A] Shareholders' Equity (in millions of U.S.
dollars) |
|
$ |
183.3 |
|
|
$ |
179.2 |
|
|
$ |
178.5 |
|
|
$ |
187.6 |
|
Book value per share denominators (in
thousands of shares): |
|
|
|
|
|
|
|
|
[B] Common Shares outstanding |
|
8,756 |
|
|
8,756 |
|
|
8,756 |
|
|
8,752 |
|
Restricted Share Units outstanding |
|
13 |
|
|
13 |
|
|
13 |
|
|
10 |
|
[C] Fully converted book value per common
share denominator |
|
8,769 |
|
|
8,769 |
|
|
8,769 |
|
|
8,762 |
|
Book value per common share [A]/[B] |
|
$ |
20.93 |
|
|
$ |
20.47 |
|
|
$ |
20.38 |
|
|
$ |
21.44 |
|
Fully converted book value per common share
[A]/[C] |
|
$ |
20.90 |
|
|
$ |
20.44 |
|
|
$ |
20.35 |
|
|
$ |
21.41 |
|
Change
in fully converted book value per common share:(2) |
|
|
|
|
|
|
|
|
From
September 30, 2016 |
|
2.3 |
% |
|
|
|
|
|
|
From
December 31, 2015 |
|
7.6 |
% |
|
|
|
|
|
|
(1) These measures
constitute "non-GAAP financial measures" as defined in Regulation
G.
(2) Computed as the
change in fully converted book value per common share after taking
into account common dividends declared of $0.00 and $2.14 during
the three and twelve month periods ended December 31, 2016,
respectively.
BLUE CAPITAL REINSURANCE HOLDINGS
LTD.
Natural Catastrophe Risk Management
The following discussion should be read in
conjunction with the "Risk Factors" included
in Item 1A of the Company's 2015 Form 10-K and June 30, 2016
and September 30, 2016 Forms10-Q, as filed with the Securities and
Exchange Commission, in particular the risk factor entitled
"Our stated catastrophe and enterprise-wide risk
management exposures are based on estimates and judgments which are
subject to significant uncertainties."
Exposure Management
The Company's Investment and Insurance Manager (the
"Manager") monitors our net exposure to any one catastrophe loss
event in any single zone within certain broadly defined major
catastrophe zones. Our January 1, 2017 projected net exposures
by zone were in compliance with our underwriting guidelines.
Namely, our projected net exposure to any one zone was below 50% of
our projected shareholders' equity at December 31, 2016. These
broadly defined major catastrophe zones are defined as follows:
North America: |
|
Europe: |
|
Rest of World: |
|
|
|
|
|
U.S. -
Northeast |
|
Western
Central Europe(1) |
|
Australia |
U.S. -
Mid-Atlantic |
|
Eastern
Europe |
|
New
Zealand |
U.S. -
Florida |
|
Southern
Europe |
|
Japan |
U.S. -
Gulf |
|
Northern
Europe, Benelux |
|
South
America |
U.S. -
New Madrid |
|
and
Scandinavia |
|
Middle
East |
U.S. -
Midwest |
|
U.K. and
Ireland |
|
|
U.S. -
California |
|
|
|
|
U.S. -
Hawaii |
|
|
|
|
Canada -
Eastern |
|
|
|
|
Canada -
Western |
|
|
|
|
(1) Consisting of France, Germany,
Switzerland and Austria.
Single Event Losses
For certain defined natural catastrophe region and peril
combinations, the Manager assesses the probability and likely
magnitude of losses using a combination of industry third-party
models, proprietary models and underwriting judgment. The Manager
attempts to model the projected net impact from a single event,
taking into account contributions from property catastrophe
reinsurance (including retrocessional business), property pro-rata
reinsurance and event-linked derivative securities, offset by the
net benefit of any reinsurance or derivative protections we
purchase and the benefit of premiums.
The table that follows details the projected net
impact from single event losses as of January 1, 2017 for
selected zones at specified return periods. It is important to note
that each catastrophe model contains its own assumptions as to the
frequency and severity of loss events, and results may vary
significantly from model to model.
Since the Manager utilizes a combination of
third-party models, proprietary models and underwriting judgment to
project the net impact from single event losses, our internal
projections may be higher or lower than those presented in the
table below:
Net Impact From
Single Event Losses at Specified Return Periods
|
|
Net Impact
(Millions) |
|
Return Period(1) |
|
Percentage of December
31,2016
Shareholders' Equity |
U.S. -
Florida hurricane |
|
$ |
53 |
|
|
1 in 100 year |
|
29 |
% |
Japan
earthquake |
|
34 |
|
|
1 in 250 year |
|
19 |
% |
All other
zones |
|
|
|
|
|
less than 15% |
(1) A "100-year"
return period can also be referred to as the 1.0% occurrence
exceedance probability ("OEP"), meaning there is a 1.0% chance in
any given year that this level will be exceeded. A "250-year"
return period can also be referred to as the 0.4% OEP, meaning
there is a 0.4% chance in any given year that this level will be
exceeded.
On January 1, 2017 our projected single event
loss exposures were within our underwriting guidelines. Namely, the
projected net impact from any one catastrophe loss event (excluding
earthquake) at the 1 in 100 year return period for any one zone did
not exceed 35% of our projected shareholders' equity at
December 31, 2016, and the projected net impact from any one
earthquake loss event at the 1 in 250 year return period for any
zone did not exceed 35% of our projected shareholders' equity at
December 31, 2016.
Our single event loss estimates represent
snapshots as of January 1, 2017. The composition of our
in-force portfolio may change materially at any time due to the
acceptance of new policies, losses incurred, the expiration of
existing policies and changes in our ceded reinsurance and
derivative protections.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Endurance Specialty Holdings Ltd via
Globenewswire
Endurance Splty (NYSE:ENH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Endurance Splty (NYSE:ENH)
Historical Stock Chart
From Jul 2023 to Jul 2024