Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) (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 third quarter of 2018.
The Company recorded net losses of $6.7 million ($(0.76) per
share) for the third quarter of 2018 and $3.7 million ($(0.42) per
share) for the nine months ended September 30, 2018. The
Company’s fully converted book value per common share was $13.15 at
September 30, 2018, reflecting a 5.3% decrease for the quarter
and a 3.0% decrease since December 31, 2017, each inclusive of
dividends declared in such periods.
Reinsurance premiums written for the current quarter and
year-to-date were $4.2 million and $24.1 million, decreasing by
$6.1 million and $15.3 million over the same periods a year
ago. The reduced writings were driven by a smaller capital
base, lower reinstatement premiums and greater cessions to third
party reinsurers, partially offset by price improvements during the
January and June renewals.
The combined ratio for the current quarter was 212.6% and 124.7%
year-to-date compared to 455.7% and 228.7% in the same periods a
year ago. The higher combined ratios for the comparable periods in
2017 were driven by significant losses and loss adjustment expenses
from Hurricane Harvey, Hurricane Irma and Hurricane Maria. As
previously announced, the current quarter's loss and loss
adjustment expenses were impacted by an increase in estimated
losses related to Hurricane Irma and from third quarter 2018 losses
stemming from Typhoon Jebi and Hurricane Florence. Reinsurance
acquisition costs for the current quarter were $2.0 million
compared to $1.6 million a year ago when negative profit commission
adjustments were reflected. General and administrative expenses for
the current quarter were $1.2 million compared to $1.3 million a
year ago.
During the third quarter of 2018, the Company declared a regular
dividend of $0.30 per common share, which was paid on October 15,
2018.
Michael J. McGuire, Chairman and CEO, commented: "While our 3rd
quarter results have been impacted by increased loss estimates
related to 2017's Hurricane Irma and from losses incurred on
Hurricane Florence and Typhoon Jebi and other smaller events, the
price increases we achieved during this year's renewals have helped
to partially offset these impacts.
"As we look forward to the January renewals we expect a
stabilizing pricing environment and are confident in our ability to
continue building an attractive portfolio of business which should
enable us to generate value for our shareholders."
Subsequent Event
On October 3, 2018 Hurricane Michael made landfall in Florida
causing extensive damage and loss of life. While it is too
early to provide an accurate loss estimate, it is expected that the
Company's fourth quarter 2018 results will be negatively impacted
by losses related to Hurricane Michael.
About the Company
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 the
Company by Blue Capital Management Ltd., a subsidiary of Sompo
International 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 the Company's public filings with the
U.S. Securities and Exchange Commission or at www.bcapre.bm.
ContactsInvestor RelationsPhone: +1 441 278 0988Email:
investorrelations@Sompo-Intl.com
Safe Harbor for Forward-Looking Statements
Some of the statements in this press release may include, and
the Company 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, 2017. 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 the Company's most recent report on Form 10-K and other
documents of the Company 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
the Company will be realized or, even if substantially realized,
that they will have the expected consequences to, or effects on,
the Company or its business or operations. Except as required by
law, the Company 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)
|
|
September 30,
2018 |
|
December 31,
2017 |
Assets |
|
(Unaudited) |
|
|
Cash and cash equivalents |
|
$ |
0.1 |
|
|
$ |
1.0 |
|
Cash and cash equivalents pledged as collateral |
|
— |
|
|
5.0 |
|
Reinsurance premiums receivable |
|
6.5 |
|
|
11.1 |
|
Deferred reinsurance acquisition costs |
|
0.5 |
|
|
0.1 |
|
Funds held by reinsured companies as collateral |
|
153.5 |
|
|
164.8 |
|
Other assets |
|
1.2 |
|
|
0.2 |
|
Total Assets |
|
$ |
161.8 |
|
|
$ |
182.2 |
|
Liabilities |
|
|
|
|
Loss and loss adjustment expense reserves |
|
$ |
34.7 |
|
|
$ |
43.4 |
|
Unearned reinsurance premiums |
|
3.8 |
|
|
1.0 |
|
Reinsurance balances payable |
|
3.8 |
|
|
10.1 |
|
Other liabilities |
|
4.0 |
|
|
0.6 |
|
Total Liabilities |
|
46.3 |
|
|
55.1 |
|
Shareholders’ Equity |
|
|
|
|
Common Shares |
|
8.8 |
|
|
8.8 |
|
Additional paid-in capital |
|
165.6 |
|
|
165.6 |
|
Retained deficit |
|
(58.9 |
) |
|
(47.3 |
) |
Total Shareholders’ Equity |
|
115.5 |
|
|
127.1 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
161.8 |
|
|
$ |
182.2 |
|
Common shares outstanding (000s) |
|
8,767 |
|
|
8,761 |
|
Common and common equivalent shares outstanding
(000s) |
|
8,784 |
|
|
8,773 |
|
|
|
|
|
|
|
|
BLUE CAPITAL REINSURANCE HOLDINGS
LTD.CONSOLIDATED STATEMENTS OF NET LOSS AND
COMPREHENSIVE LOSS(In millions of U.S. dollars,
except per share data)Unaudited
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
|
Reinsurance premiums written |
|
$ |
4.2 |
|
|
$ |
10.3 |
|
|
$ |
24.1 |
|
|
$ |
39.4 |
|
Change in net unearned reinsurance premiums |
|
2.3 |
|
|
5.3 |
|
|
(2.8 |
) |
|
(3.3 |
) |
Net reinsurance premiums earned |
|
6.5 |
|
|
15.6 |
|
|
21.3 |
|
|
36.1 |
|
Net gain from derivative instruments |
|
— |
|
|
3.1 |
|
|
— |
|
|
2.5 |
|
Net investment income |
|
0.6 |
|
|
0.4 |
|
|
1.5 |
|
|
0.7 |
|
Total revenues |
|
7.1 |
|
|
19.1 |
|
|
22.8 |
|
|
39.3 |
|
Expenses |
|
|
|
|
|
|
|
|
Underwriting expenses: |
|
|
|
|
|
|
|
|
Loss and loss adjustment expenses - current
year |
|
4.2 |
|
|
67.8 |
|
|
5.6 |
|
|
70.4 |
|
Loss and loss adjustment expenses - prior year |
|
6.4 |
|
|
0.3 |
|
|
11.7 |
|
|
1.3 |
|
Acquisition costs |
|
2.0 |
|
|
1.6 |
|
|
5.9 |
|
|
6.8 |
|
General and administrative expenses |
|
1.2 |
|
|
1.3 |
|
|
3.3 |
|
|
4.0 |
|
Total expenses |
|
13.8 |
|
|
71.0 |
|
|
26.5 |
|
|
82.5 |
|
Net loss and comprehensive loss |
|
$ |
(6.7 |
) |
|
$ |
(51.9 |
) |
|
$ |
(3.7 |
) |
|
$ |
(43.2 |
) |
Per share data: |
|
|
|
|
|
|
|
|
Basic and diluted losses per Common Share |
|
$ |
(0.76 |
) |
|
$ |
(5.93 |
) |
|
$ |
(0.42 |
) |
|
$ |
(4.94 |
) |
Dividends declared per Common Share and RSU |
|
0.30 |
|
|
0.30 |
|
|
0.90 |
|
|
1.49 |
|
Insurance ratios: |
|
|
|
|
|
|
|
|
Loss and loss adjustment expense ratio |
|
164.3 |
% |
|
437.5 |
% |
|
81.6 |
% |
|
198.8 |
% |
Acquisition cost ratio |
|
30.2 |
% |
|
10.1 |
% |
|
27.4 |
% |
|
18.9 |
% |
General and administrative expense ratio |
|
18.1 |
% |
|
8.1 |
% |
|
15.7 |
% |
|
11.0 |
% |
Combined ratio |
|
212.6 |
% |
|
455.7 |
% |
|
124.7 |
% |
|
228.7 |
% |
RSU = restricted share unit
BLUE CAPITAL REINSURANCE HOLDINGS
LTD.CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY(In millions of U.S.
dollars)Unaudited
|
|
Totalshareholders’equity |
|
CommonShares, atpar value |
|
Additionalpaid-incapital |
|
Retaineddeficit |
Balance at January 1, 2018 |
|
$ |
127.1 |
|
|
$ |
8.8 |
|
|
$ |
165.6 |
|
|
$ |
(47.3 |
) |
Net loss |
|
(3.7 |
) |
|
— |
|
|
— |
|
|
(3.7 |
) |
Dividends declared on Common Shares and RSUs |
|
(7.9 |
) |
|
— |
|
|
— |
|
|
(7.9 |
) |
Balance at September 30, 2018 |
|
$ |
115.5 |
|
|
$ |
8.8 |
|
|
$ |
165.6 |
|
|
$ |
(58.9 |
) |
|
|
Totalshareholders’equity |
|
CommonShares, atpar value |
|
Additionalpaid-incapital |
|
Retainedearnings |
Balance at January 1, 2017 |
|
$ |
183.3 |
|
|
$ |
8.8 |
|
|
$ |
165.5 |
|
|
$ |
9.0 |
|
Net loss |
|
(43.2 |
) |
|
— |
|
|
— |
|
|
(43.2 |
) |
Dividends declared on Common Shares and RSUs |
|
(13.1 |
) |
|
— |
|
|
— |
|
|
(13.1 |
) |
Balance at September 30, 2017 |
|
$ |
127.0 |
|
|
$ |
8.8 |
|
|
$ |
165.5 |
|
|
$ |
(47.3 |
) |
BOOK VALUE AND FULLY CONVERTED BOOK VALUE
PER COMMON SHARE(1)Unaudited
|
|
September 30,
2018 |
|
June 30, 2018 |
|
December 31,
2017 |
|
September 30,
2017 |
Book value per share numerator (in millions of U.S.
dollars): |
|
|
|
|
|
|
|
|
[A] Shareholders’ Equity (in millions of U.S.
dollars) |
|
$ |
115.5 |
|
|
$ |
124.8 |
|
|
$ |
127.1 |
|
|
$ |
127.0 |
|
Book value per share denominators (in thousands of
shares): |
|
|
|
|
|
|
|
|
[B] Common Shares outstanding |
|
8,767 |
|
|
8,767 |
|
|
8,761 |
|
|
8,761 |
|
Restricted Share Units outstanding |
|
17 |
|
|
17 |
|
|
12 |
|
|
12 |
|
[C] Fully converted book value per common share
denominator |
|
8,784 |
|
|
8,784 |
|
|
8,773 |
|
|
8,773 |
|
Book value per common share [A]/[B] |
|
$ |
13.18 |
|
|
$ |
14.24 |
|
|
$ |
14.50 |
|
|
$ |
14.50 |
|
Fully converted book value per common share
[A]/[C] |
|
$ |
13.15 |
|
|
$ |
14.21 |
|
|
$ |
14.48 |
|
|
$ |
14.48 |
|
Change in fully converted book value per common share:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From June 30, 2018 |
|
(5.3 |
)% |
|
|
|
|
|
|
From December 31, 2017 |
|
(3.0 |
)% |
|
|
|
|
|
|
From September 30, 2017 |
|
(3.0 |
)% |
|
|
|
|
|
|
(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 the Company's results of operations
in a manner that allows for a more complete understanding of the
underlying trends in the Company'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,
$0.90 and $0.90 during the three, nine and twelve month periods
ended September 30, 2018, 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 2017
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 ManagementThe 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 at each treaty renewal date.
The last major treaty renewal date was June 1, 2018. Our June 1,
2018 estimated net exposures by zone were in compliance with our
underwriting guidelines. Namely, our estimated net exposure from
any one catastrophe loss event in any individual zone was at or
below 50% of our then-projected September 30, 2018
shareholders’ equity. 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 LossesFor 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 estimated 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.
On June 1, 2018 our estimated single event loss exposures were
within our underwriting guidelines. Namely, the estimated 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 then-projected September 30, 2018 shareholders’
equity, and the estimated 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 then-projected September 30, 2018
shareholders’ equity.
Updated Single Event Loss ProjectionsThe table that follows
details our estimated net impact from single event losses as of
June 1, 2018 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 September 30, 2018
Shareholders’ Equity |
U.S. - Florida
hurricane |
|
$ |
37 |
|
|
1 in 100 year |
|
32 |
% |
U.S. - California
earthquake |
|
22 |
|
|
1 in
250 year |
|
19 |
% |
Japan earthquake |
|
19 |
|
|
1 in
250 year |
|
17 |
% |
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.
Our single event loss estimates represent snapshots as of the
time of such estimates. 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. There
were no material changes made to the composition of our in-force
portfolio from June 1, 2018 to September 30, 2018.
Grafico Azioni Blue Capital Reinsurance (NYSE:BCRH)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Blue Capital Reinsurance (NYSE:BCRH)
Storico
Da Giu 2023 a Giu 2024