Press Release

Printer Friendly Version View printer-friendly version
<< Back
Blue Capital Reinsurance Holdings Reports Second Quarter 2017 Financial Results
Download PDF Download PDF

HAMILTON, Bermuda, July 31, 2017 (GLOBE NEWSWIRE) -- Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) ("Blue Capital"), 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 second quarter of 2017.

The Company’s net income was $4.6 million ($0.52 per share) for the second quarter of 2017 and $8.7 million ($0.99 per share) for the six months ended June 30, 2017. The Company’s fully converted book value per common share was $20.70 at June 30, 2017, reflecting a 2.5% increase for the quarter and a 9.2% increase over the past twelve months, each inclusive of dividends declared in such periods.

Reinsurance premiums written for the current quarter and year-to-date were $12.1 million and $29.1 million, increasing by $2.8 million and $2.4 million over the same periods a year ago. The current quarter's reinsurance premium increase was predominantly driven by an increase in direct written premium, partially offset by lower reinstatement premiums recorded.

The combined ratio for the current quarter was 56.1% and 56.3% year-to-date compared to 82.0% and 67.8% in the same periods a year ago. The improvement in the combined ratio was driven by lower loss and loss adjustment expense ratios, partially offset by higher reinsurance acquisition and general and administrative expense ratios. The current quarter's loss and loss adjustment expenses of $1.8 million compared favorably to the  $6.0 million reported a year ago, which were impacted by losses related to the Fort McMurray wildfires in Canada, the convective storms in Texas and Europe and the Kumamoto earthquake in Japan. Reinsurance acquisition costs for the current quarter were $2.5 million compared to $2.1 million a year ago, as the current quarter included higher profit commissions on quota share business, driven by the improved loss ratio.  General and administrative expenses for the current quarter were $1.4 million, or $0.2 million higher than a year ago, due to higher performance fees being accrued to reflect the increased profitability of the current quarter.

During the second quarter of 2017, the Company declared a regular dividend of $0.30 per common share, which was paid on July 14, 2017.

Michael J. McGuire, Chairman and CEO, commented: "I am pleased with the strong results we have generated in the first six months of 2017 as evidenced by our excellent underwriting profitability and expanding premium base which led to solid growth in book value per share inclusive of dividends.   While market conditions remain competitive,  our established long term relationships, our high quality underwriting and portfolio management teams and our strategic alignment with Sompo International have allowed us to maintain an attractive portfolio for our shareholders."

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. (a wholly owned subsidiary of Sompo Holdings, Inc.), a recognized global specialty provider of property and casualty insurance and reinsurance and a leading property catastrophe and short tail reinsurer since 2001. Additional information can be found in Blue Capital's public filings with the U.S. Securities and Exchange Commission or at www.bcapre.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, 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 most recent report on Form 10-K and other documents of Blue Capital on file with the Securities and Exchange Commission. Any forward-looking statements made in this material 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)
         
    June 30, 2017   December 31, 2016
Assets   (Unaudited)    
Cash and cash equivalents   $ 3.8     $ 1.6  
Cash and cash equivalents pledged as collateral       3.1  
Reinsurance premiums receivable   22.8     7.7  
Deferred reinsurance acquisition costs   1.3     0.1  
Funds held by reinsured companies as collateral   182.0     191.4  
Other assets   2.0     0.8  
  Total Assets   $ 211.9     $ 204.7  
Liabilities        
Loss and loss adjustment expense reserves   $ 11.2     $ 11.1  
Unearned reinsurance premiums   9.5     0.9  
Reinsurance balances payable   5.9     7.1  
Other liabilities   3.7     2.3  
Total Liabilities   30.3     21.4  
Shareholders’ Equity        
Common Shares   8.8     8.8  
Additional paid-in capital   165.5     165.5  
Retained earnings   7.3     9.0  
Total Shareholders’ Equity   181.6     183.3  
Total Liabilities and Shareholders’ Equity   $ 211.9     $ 204.7  
Common shares outstanding (000s)   8,761     8,756  
Common and common equivalent shares outstanding (000s)   8,773     8,769  
             


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
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Revenues                
Reinsurance premiums written   $ 12.1     $ 9.3     $ 29.1     $ 26.7  
Change in net unearned reinsurance premiums   (1.8 )   2.1     (8.6 )   (5.0 )
Net reinsurance premiums earned   10.3     11.4     20.5     21.7  
Net loss from derivative instruments   (0.2 )   (0.1 )   (0.6 )   (0.1 )
Net investment income   0.2         0.3      
Total revenues   10.3     11.3     20.2     21.6  
Expenses                
Underwriting expenses:                
Loss and loss adjustment expenses - current year   1.3     6.1     2.6     7.2  
Loss and loss adjustment expenses - prior year   0.5     (0.1 )   1.0     0.6  
Acquisition costs   2.5     2.1     5.2     4.2  
General and administrative expenses   1.4     1.2     2.7     2.7  
Total expenses   5.7     9.3     11.5     14.7  
Net income and comprehensive income   $ 4.6     $ 2.0     $ 8.7     $ 6.9  
Per share data:                
Basic and diluted earnings per Common Share   $ 0.52     $ 0.22     $ 0.99     $ 0.79  
Dividends declared per Common Share and RSU(1)   0.30     0.30     1.19      
Insurance ratios:                
Loss and loss adjustment expense ratio   18.0 %   53.1 %   17.6 %   35.9 %
Acquisition cost ratio   24.6 %   18.6 %   25.5 %   19.6 %
General and administrative expense ratio   13.5 %   10.3 %   13.2 %   12.3 %
Combined ratio   56.1 %   82.0 %   56.3 %   67.8 %
                         
RSU = restricted share unit

(1) The six month period ended June 30, 2017 includes a special dividend with respect to 2016 of $0.59 per common share and RSU, which was declared and paid during the first quarter of 2017.
 


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, 2017   $ 183.3     $ 8.8     $ 165.5     $ 9.0  
Net income   8.7             8.7  
Dividends declared on Common Shares and RSUs   (10.4 )           (10.4 )
Balance at June 30, 2017   $ 181.6     $ 8.8     $ 165.5     $ 7.3  
                                 


    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   6.9             6.9  
Expense recognized for RSUs   0.1         0.1      
Dividends declared on Common Shares and RSUs   (16.1 )           (16.1 )
Balance at June 30, 2016   $ 178.5     $ 8.8     $ 165.4     $ 4.3  
                                 


BOOK VALUE AND FULLY CONVERTED BOOK VALUE PER COMMON SHARE(1)
Unaudited
                 
    June 30,
2017
  March 31,
2017
  December 31,
2016
  June 30,
2016
Book value per share numerator (in millions of U.S. dollars):                
[A] Shareholders’ Equity (in millions of U.S. dollars)   $ 181.6     $ 179.6     $ 183.3     $ 178.5  
Book value per share denominators (in thousands of shares):                
[B] Common Shares outstanding   8,761     8,756     8,756     8,756  
Restricted Share Units outstanding   12     13     13     13  
[C] Fully converted book value per common share denominator   8,773     8,769     8,769     8,769  
Book value per common share [A]/[B]   $ 20.73     $ 20.52     $ 20.93     $ 20.38  
Fully converted book value per common share [A]/[C]   $ 20.70     $ 20.49     $ 20.90     $ 20.35  
Change in fully converted book value per common share:(2)                
From March 31, 2017   2.5 %            
From December 31, 2016   4.7 %            
From June 30, 2016   9.2 %            
                   
(1) These measures constitute "non-GAAP financial measures" as defined in Regulation G.  Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain Blue Capital’s results of operations in a manner that allows for a more complete understanding of the underlying trends in Blue Capital’s business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.
(2) Computed as the change in fully converted book value per common share plus common dividends declared of $0.30, $1.19 and $1.49 during the three, six and twelve month periods ended June 30, 2017, 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 2016 Form 10-K, 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 June 1, 2017 projected net exposures by zone were in compliance with our underwriting guidelines. Namely, our projected net exposure from any one catastrophe loss event in any individual zone was at or below 50% of our shareholders’ equity at June 30, 2017. 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 our projected net impact from single event losses as of June 1, 2017 for selected zones at specified return periods using industry-recognized third-party vendor models.  It is important to note that each catastrophe model we use contains its own assumptions as to the frequency and severity of loss events, and results may vary significantly from model to model.

Net Impact From Single Event Losses at Specified Return Periods
             
    Net Impact
(Millions)
  Return Period(1)   Percentage of June 30, 2017
Shareholders’ Equity
U.S. - Florida hurricane   $ 55   1 in 100 year   30%
Japan earthquake   36   1 in 250 year   20%
California earthquake   28   1 in 250 year   15%
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 an estimated 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 an estimated 0.4% chance in any given year that this level will be exceeded.
 

On June 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 shareholders’ equity at June 30, 2017, 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 shareholders’ equity at June 30, 2017.

Our single event loss estimates represent snapshots as of June 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.

Contacts
Investor Relations
Phone: +1 441 278 0988
Email: investorrelations@Sompo-Intl.com

Blue Capital Reinsurance Holdings

Print Page Print Page | E-mail Page Email Page | RSS Feeds RSS Feed | E-mail Alerts Email Notification | Financial Tear Sheet Financial Tear Sheet

IMPORTANT DISCLAIMER AND TERMS OF USE

ELECTRONIC VERSIONS OF THE MATERIALS RELATING TO BLUE CAPITAL GLOBAL REINSURANCE FUND LIMITED (THE "COMPANY") YOU ARE SEEKING TO ACCESS ARE BEING MADE AVAILABLE ON THIS WEBSITE IN GOOD FAITH AND ARE FOR INFORMATION PURPOSES ONLY.

THESE MATERIALS ARE NOT, DIRECTLY OR INDIRECTLY, DIRECTED AT OR ACCESSIBLE BY PERSONS IN THE UNITED STATES OR PERSONS RESIDENT OR LOCATED IN THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA") (OTHER THAN THE UNITED KINGDOM AND ANY SUCH OTHER MEMBER STATES WHERE MARKETING IS PERMITTED PURSUANT TO THE ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (61/2011/EU) (TOGETHER, "ELIGIBLE MEMBER STATES")) OR ANY OTHER JURISDICTION WHERE THE EXTENSION OF AVAILABILITY OF SUCH MATERIALS WOULD BREACH ANY APPLICABLE LAW OR REGULATION.


By accessing this website you are representing to the Company and its advisers that you are not: (i) a US Person (within the meaning of Regulation S under the Securities Act of 1933 (as amended, the "Securities Act") (a "US Person")) and are not acting on behalf of a US Person, nor purchasing with a view to re-sale in the US or to or for the account of a US Person, and that you are not an employee benefit plan as defined in section 3(3) of the United States Employee Retirement Income Security Act of 1974 and the regulations promulgated thereunder (in each case as amended) ("ERISA") (whether or not subject to the provisions of Title 1 of ERISA) or similar US laws or an individual retirement account as defined in section 408 of the US Internal Revenue Code; (ii) a resident of Australia, Canada, Japan, the Republic of South Africa or a jurisdiction where the extension of availability of the materials to which you are seeking access would breach any applicable law or regulation; and that you will not: (x) offer, sell, renounce, transfer or deliver, directly or indirectly, Shares subscribed for by you in the United States, Australia, Canada, Japan, the Republic of South Africa or in any jurisdiction in which such offers or sales are unlawful ("Excluded Territories") or to any US Person or resident of Australia, Canada, Japan, the Republic of South Africa or any Excluded Territories, or: (y) release or otherwise forward, distribute or send any materials on this website in or into the United States, Australia, Canada, Japan, the Republic of South Africa or any Excluded Territories.

Shares ("Shares") in the capital of the Company have not been and will not be registered under the Securities Act, or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, Shares may not be offered, sold, resold, pledged, delivered, distributed or otherwise transferred, directly or indirectly, into or within the United States, or to, or for the account or benefit of, US Persons. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended, (the "Investment Company Act") and, as such, investors will not be entitled to the benefits of the Investment Company Act. A US Person that acquires Shares may be required to sell or transfer such Shares to a person qualified to hold Shares or forfeit the Shares if the transfer is not made in a timely manner.

Any person outside the United Kingdom wishing to acquire, subscribe for or purchase any Shares should satisfy himself that, in doing so, he complies with the laws of any relevant territory, and that he obtains any requisite governmental or other consents and observes any other applicable formalities.

In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan, the Republic of South Africa or any other Excluded Territory and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan, the Republic of South Africa or any other Excluded Territory.

These materials are only addressed to and directed at persons in Eligible Member States who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in the Relevant Member State)) ("Qualified Investors"). If you are located in the EEA but outside the UK, by accessing this website, you warrant, represent, acknowledge and agree that: (i) you are a Qualified Investor; (ii) you are a recipient in an Eligible Member State; and (iii) you have read, agree to and will comply with the contents of this notice.

Access to electronic versions of these materials is being made available on the webpage in good faith and for information purposes only. Making press announcements and other documents relating to any offering of securities available in electronic format does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for securities, nor does it constitute a recommendation by any party to sell or buy securities.

The contents of this website are not a financial promotion and none of the contents of this website constitute an invitation or inducement to engage in investment activity. If and to the extent that this website or any of its contents are deemed to be a financial promotion, the Company is relying on the exemption provided by Article 69 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005/1529 in respect of section 21 of the Financial Services and Markets Act 2000. In particular, any information in respect of past performance (including without limitation past performance of the Company, the Shares and/or the Company's portfolio) cannot be relied upon as a guide to future performance.

Any person accessing the website should carefully review the Terms of Use of the website. By using the website, you indicate that you accept the Terms of Use and that you agree to abide by them. If you do not agree to the Terms of Use, please refrain from using the website.

[By clicking on the "Accept" button/checking the box below], I confirm, represent, warrant and agree that:

  1. I am not a US Person or located in the United States, Australia, Canada, Japan or the Republic of South Africa or any other Excluded Territory, and I confirm that I am permitted to view electronic versions of these materials;
  2. I will not forward, transmit or show the materials contained in this webpage to any US Person or person located in, or a resident of, the United States, Australia, Canada, Japan or the Republic of South Africa or any other Excluded Territory;
  3. I am not investing or otherwise acting for the account or benefit of a us person or a resident of Australia, Canada, Japan, the Republic of South Africa or any Excluded Territory; and
  4. I have read and understood the disclaimer set out above and will read carefully any additional disclaimers or important notices attaching to or forming part of the materials or information on this website. I understand that this may affect my rights, and I agree to be bound by their terms.

[Click through, Yes - I have read and accept the above terms and conditions/No - I have read the above and do not wish to access the website]