Blue Capital grows premiums earned in third-quarter

Bermuda reinsurer Montpelier Re’s third-party capital and reinsurance-linked investment fund management unit Blue Capital Management is showing steady progress as its premiums written increased to $35.3m and premiums earned reach $17.5m for 2013.

The third-party capital management unit has been steadily growing its contribution to Montpelier Re’s earnings over the course of the year and premiums earned has shown a steady increase from quarter to quarter, with third-quarter premiums earned up by almost 50%, from $5.5m in Q2 to $8.2m in Q3.

Premiums written during Q3 by Blue Capital were just $1.1m, which brings its total premiums written for the first three-quarters of the year to $35.3m. Year to date Blue Capital has written 14% of the Montpelier Re total net written premiums in property catastrophe treaty reinsurance.

In terms of premiums earned in property catastrophe treaty reinsurance, Blue Capital accounts for almost 9% over the first three-quarters of the year, but looking at just Q3 that jumps to almost 13% of the Montpelier Re groups net premiums earned from property catastrophe reinsurance treaties.

The contribution in premiums earned should continue to grow by quarter as Blue Capital deploys more of its capital towards the end of this year. The units flagship listed ILS and reinsurance-linked investment fund is set to close its latest capital raising in mid-November which will increase the amount of capacity it has to deploy in the upcoming renewals as well. This should see Blue Capital’s contribution to the Montpelier Re groups premiums written and earned continue to grow over 2014.

Christopher Harris, President and Chief Executive Officer, commented on Montpelier Re’s quarterly results; “Our focused business strategy and solid underwriting execution contributed to a strong third quarter. Montpelier Re Bermuda, Montpelier at Lloyd’s, and Blue Capital combined to deliver strong profitability with a 5.0% quarterly operating ROE and a 54% quarterly combined ratio.”

As we wrote in early October, Montpelier Re is planning the launch of another entity within its Blue Capital stable of third-party capital vehicles, an NYSE listed collateralized reinsurer, Blue Capital Reinsurance Holdings.

In the earnings release published yesterday Montpelier Re explained:

In June 2013 the Company established Blue Capital Reinsurance Holdings Ltd. (“BCRH”), a Bermuda reinsurance holding company. BCRH intends to offer collateralized reinsurance in the property catastrophe market through its wholly-owned subsidiary Blue Capital Re Ltd., a registered Bermuda Class 3A insurer. BCRH may also enter into industry loss warranty contracts through its wholly-owned subsidiary, Blue Capital Re ILS Ltd., a Bermuda exempted company. BCRH’s underwriting decisions and operations will be managed by Montpelier and BCRH will use Montpelier’s reinsurance underwriting expertise and infrastructure to conduct its business.

On October 7, 2013, BCRH publicly filed its initial Registration Statement on Form S-1 with the SEC for a potential offering of BCRH common shares to the public (the “Offering”). The common shares would be listed on the New York Stock Exchange.

Montpelier expects to purchase common shares of BCRH in a concurrent private placement transaction upon completion of the Offering.

We will keep you updated as Blue Capital announces the results of its latest share offering for the Blue Capital Global Reinsurance Fund as well as the progress on the launch of the collateralized reinsurer, Blue Capital Reinsurance Holdings.