Blue Capital Reinsurance Holdings up 6% for first nine months of 2014

Blue Capital Reinsurance Holdings Ltd. (BCRH), the NY stock exchange listed collateralized reinsurance subsidiary of Bermuda-based Montpelier Re, has reported a 6% gain in its book value per share for the first nine months of 2014.

Blue Capital Re is an interesting venture. Launched as a listed reinsurance company, but underwriting reinsurance on a fully-collateralized basis as well as investing in certain insurance-linked securities (ILS), it offers U.S. investors an efficient way to access the returns of the reinsurance market akin to an ILS fund.

With a total-return approach, to combining share price gains and dividends as its return to investors, Blue Capital Re continues to make progress in the currently challenging market. For the third-quarter of 2014 Blue Capital Re has reported net income and operating income for the quarter was $3.2m, while its fully converted book value per common share was $20.09 at September 30, 2014, up 1.8% increase for the quarter and 6.0% for the first nine months of 2014, each inclusive of dividends.

William Pollett, President and CEO, commented on the results; “We had another solid quarter in Q3. We have successfully deployed our available capital and are pleased with the diversified portfolio of risks that we have constructed.”

During the first nine months Blue Capital Re earned $32.7m of reinsurance premiums, which represents approximately 72% of the expected total annual premium associated with its in-force reinsurance contracts at September 30, 2014. The reinsurer earned $10.2m of premiums in Q1, $11.1m in Q2 and so $11.4m in Q3, its highest single quarter yet. The firm also earned $0.4m from reinsurance derivative contracts year-to-date.

Loss and loss adjustment expenses for the quarter were $5.3m, the majority of which represented net losses from catastrophe events that occurred in June.

Blue Capital Reinsurance Holdings reports total assets of $200.8m at September 30th.

Blue Capital Re’s strategy of returning much of its profit in the form of dividends, so providing a total return opportunity, remains a good way for investors to access the reinsurance linked asset class through a stock exchange listed type of collateralized reinsurance vehicle.