Blue Capital Reinsurance Holdings Ltd. (NYSE:BCRH) (the "Company"),
a Bermuda holding company today reported its financial results for
the second quarter of 2019. The Company, through its
operating subsidiaries, previously offered collateralized
reinsurance in the property catastrophe market and invested in
various insurance-linked securities. The Company is currently
winding down its operations.
The Company recorded net income of $1.0 million ($0.12 per
share) for the quarter and $2.8 million ($0.33 per share) for the
six months ended June 30, 2019. The Company’s fully converted
book value per common share was $10.33 at June 30, 2019,
reflecting a 1.0% increase for the quarter inclusive of dividends
declared.
Reinsurance premiums written for the current quarter were $4.2
million, decreasing by $3.2 million over the same period a year
ago. The decrease was a result of a smaller available capital
base and a shift away from excess of loss to quota share contract
business that incepted at January 1, 2019 where premiums are
recognized when earned throughout the contract period rather than
at the contract's inception date. The Company did not
underwrite any new business in the second quarter of 2019, as the
Company considered strategic alternatives and ultimately determined
to cease active operations.
The combined ratio for the current quarter was 94.3% compared to
73.5% in the same period a year ago. The increase in the current
period's combined ratio was driven by higher loss and loss
adjustment expense, acquisition and general and administrative
expense ratios. The current quarter's loss and loss adjustment
expenses of $1.8 million included increased losses related to 2018
catastrophe events, partially offset by reductions in losses from
2017 catastrophe events. Reinsurance acquisition costs for
the current quarter of $1.4 million led to an increase in the
acquisition expense ratio as a result of the shift to quota share
contract business which contains higher levels of commissions.
General and administrative expenses for the current quarter were
$1.1 million and included higher professional fees related to a
strategic review completed by the Board of Directors in the current
quarter.
During the second quarter of 2019, the Company declared a
regular dividend of $0.15 per common share, which was paid on July
15, 2019.
Michael J. McGuire, Chairman and CEO, commented: "As announced
on July 25, 2019, the Board of Directors after considering
strategic alternatives decided to cease active operations of the
Company and pursue an orderly run-off. In connection with
this decision, no new contracts were incepted in the second quarter
as the Company prepares to wind down its business in order to
maximize value for our shareholders."
About the Company
Blue Capital Reinsurance Holdings Ltd., is currently winding
down its operations. The Company, through its operating
subsidiaries, previously offered 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, future
special distributions and future 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 the Company’s run-off performance and the
timing and amount of special distributions to differ materially
from those indicated in the forward-looking statements. These
factors include, but are not limited to, greater frequency or
severity of claims and loss activity, uncertainties in our
reserving process, changes to our tax status, 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, 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, 2018
and our Current Report on Form 8-K dated July 25, 2019.
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, our Current Report on Form 8-K dated July 25,
2019 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 special distributions,
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) |
|
|
|
June 30, 2019 |
|
December 31, 2018 |
Assets |
|
(Unaudited) |
|
|
Cash and cash equivalents |
|
$ |
3.0 |
|
|
$ |
2.2 |
|
Reinsurance premiums
receivable |
|
8.0 |
|
|
8.9 |
|
Deferred reinsurance
acquisition costs |
|
— |
|
|
0.1 |
|
Funds held by reinsured
companies as collateral |
|
125.3 |
|
|
150.4 |
|
Other assets |
|
3.2 |
|
|
1.7 |
|
Total Assets |
|
$ |
139.5 |
|
|
$ |
163.3 |
|
Liabilities |
|
|
|
|
Loss and loss adjustment
expense reserves |
|
$ |
38.4 |
|
|
$ |
49.9 |
|
Unearned reinsurance
premiums |
|
— |
|
|
0.8 |
|
Debt |
|
— |
|
|
4.0 |
|
Reinsurance balances
payable |
|
7.7 |
|
|
16.4 |
|
Other liabilities |
|
2.5 |
|
|
1.5 |
|
Total Liabilities |
|
48.6 |
|
|
72.6 |
|
Shareholders’
Equity |
|
|
|
|
Common Shares |
|
8.8 |
|
|
8.8 |
|
Additional paid-in
capital |
|
155.2 |
|
|
157.8 |
|
Retained deficit |
|
(73.1 |
) |
|
(75.9 |
) |
Total Shareholders’ Equity |
|
90.9 |
|
|
90.7 |
|
Total Liabilities and
Shareholders’ Equity |
|
$ |
139.5 |
|
|
$ |
163.3 |
|
Common shares
outstanding (000s) |
|
8,775 |
|
|
8,767 |
|
Common and common
equivalent shares outstanding (000s) |
|
8,802 |
|
|
8,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
|
Reinsurance premiums written |
|
$ |
4.2 |
|
|
$ |
7.4 |
|
|
$ |
9.6 |
|
|
$ |
19.9 |
|
Change in net unearned reinsurance premiums |
|
0.3 |
|
|
(0.2 |
) |
|
0.8 |
|
|
(5.1 |
) |
Net reinsurance premiums earned |
|
4.5 |
|
|
7.2 |
|
|
10.4 |
|
|
14.8 |
|
Net investment income |
|
0.8 |
|
|
0.5 |
|
|
1.6 |
|
|
0.9 |
|
Total revenues |
|
5.3 |
|
|
7.7 |
|
|
12.0 |
|
|
15.7 |
|
Expenses |
|
|
|
|
|
|
|
|
Underwriting expenses: |
|
|
|
|
|
|
|
|
Loss and loss adjustment expenses - current year |
|
0.6 |
|
|
0.6 |
|
|
1.9 |
|
|
1.4 |
|
Loss and loss adjustment expenses - prior year |
|
1.2 |
|
|
1.6 |
|
|
1.8 |
|
|
5.3 |
|
Acquisition costs |
|
1.4 |
|
|
2.0 |
|
|
3.4 |
|
|
3.9 |
|
General and administrative expenses |
|
1.1 |
|
|
1.0 |
|
|
2.1 |
|
|
2.1 |
|
Total expenses |
|
4.3 |
|
|
5.2 |
|
|
9.2 |
|
|
12.7 |
|
Net income and
comprehensive income |
|
$ |
1.0 |
|
|
$ |
2.5 |
|
|
$ |
2.8 |
|
|
$ |
3.0 |
|
Per share
data: |
|
|
|
|
|
|
|
|
Basic and diluted earnings per Common Share |
|
$ |
0.12 |
|
|
$ |
0.28 |
|
|
$ |
0.33 |
|
|
$ |
0.34 |
|
Dividends declared per Common Share and RSU |
|
0.15 |
|
|
0.30 |
|
|
0.30 |
|
|
0.60 |
|
Insurance
ratios: |
|
|
|
|
|
|
|
|
Loss and loss adjustment expense ratio |
|
38.9 |
% |
|
31.5 |
% |
|
34.5 |
% |
|
45.4 |
% |
Acquisition cost ratio |
|
30.4 |
% |
|
27.7 |
% |
|
32.6 |
% |
|
26.2 |
% |
General and administrative expense ratio |
|
25.0 |
% |
|
14.3 |
% |
|
20.9 |
% |
|
14.6 |
% |
Combined ratio |
|
94.3 |
% |
|
73.5 |
% |
|
88.0 |
% |
|
86.2 |
% |
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, 2019 |
|
$ |
90.7 |
|
|
$ |
8.8 |
|
|
$ |
157.8 |
|
|
$ |
(75.9 |
) |
Net income |
|
2.8 |
|
|
— |
|
|
— |
|
|
2.8 |
|
Dividends declared on Common
Shares and RSUs |
|
(2.6 |
) |
|
— |
|
|
(2.6 |
) |
|
— |
|
Balance at June 30,
2019 |
|
$ |
90.9 |
|
|
$ |
8.8 |
|
|
$ |
155.2 |
|
|
$ |
(73.1 |
) |
|
|
Totalshareholders’equity |
|
CommonShares, atpar value |
|
Additionalpaid-incapital |
|
Retaineddeficit |
Balance at January 1, 2018 |
|
$ |
127.1 |
|
|
$ |
8.8 |
|
|
$ |
165.6 |
|
|
$ |
(47.3 |
) |
Net income |
|
3.0 |
|
|
— |
|
|
— |
|
|
3.0 |
|
Dividends declared on Common
Shares and RSUs |
|
(5.3 |
) |
|
— |
|
|
(5.3 |
) |
|
— |
|
Balance at June 30, 2018 |
|
$ |
124.8 |
|
|
$ |
8.8 |
|
|
$ |
160.3 |
|
|
$ |
(44.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOOK VALUE AND FULLY CONVERTED BOOK VALUE PER COMMON
SHARE(1) |
Unaudited |
|
|
|
June 30, 2019 |
|
March 31, 2019 |
|
December 31, 2018 |
|
June 30, 2018 |
Book value per share
numerator (in millions of U.S. dollars): |
|
|
|
|
|
|
|
|
[A] Shareholders’ Equity (in millions of U.S.
dollars) |
|
$ |
90.9 |
|
|
$ |
91.2 |
|
|
$ |
90.7 |
|
|
$ |
124.8 |
|
Book value per share
denominators (in thousands of shares): |
|
|
|
|
|
|
|
|
[B]
Common Shares outstanding |
|
8,775 |
|
|
8,767 |
|
|
8,767 |
|
|
8,767 |
|
Restricted Share Units outstanding |
|
27 |
|
|
17 |
|
|
17 |
|
|
17 |
|
[C]
Fully converted book value per common share denominator |
|
8,802 |
|
|
8,784 |
|
|
8,784 |
|
|
8,784 |
|
Book value per common
share [A]/[B] |
|
$ |
10.36 |
|
|
$ |
10.40 |
|
|
$ |
10.34 |
|
|
$ |
14.24 |
|
Fully converted book
value per common share [A]/[C] |
|
$ |
10.33 |
|
|
$ |
10.38 |
|
|
$ |
10.32 |
|
|
$ |
14.21 |
|
Change in fully converted book
value per common share:(2) |
|
|
|
|
|
|
|
|
From March 31, 2019 |
|
1.0 |
% |
|
|
|
|
|
|
From December 31, 2018 |
|
3.0 |
% |
|
|
|
|
|
|
From June 30, 2018 |
|
(23.1 |
)% |
|
|
|
|
|
|
(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 $0.15, $0.30 and
$0.60 during the three, six and twelve month periods ended
June 30, 2019, 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 2018
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 January 1, 2019. Our January
1, 2019 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 June 30, 2019 shareholders’
equity. These broadly defined major catastrophe zones are defined
as follows:
|
North America: |
|
Europe: |
|
Rest of World: |
|
|
|
|
|
|
|
|
|
U.S. - Northeast |
|
Europe |
|
Australia |
|
|
U.S. - Southeast |
|
|
|
New Zealand |
|
|
U.S. - Florida |
|
|
|
Japan |
|
|
U.S. - Gulf |
|
|
|
South America |
|
|
U.S. - New Madrid |
|
|
|
|
|
|
U.S. - Midwest |
|
|
|
|
|
|
U.S. - California |
|
|
|
|
|
|
U.S. - Hawaii |
|
|
|
|
|
|
Canada - Eastern |
|
|
|
|
|
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, 2019 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 June 30, 2019 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 June 30, 2019 shareholders’ equity.
Updated Single Event Loss ProjectionsThe table that follows
details our estimated net impact from single event losses as of
June 1, 2019 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, 2019
Shareholders’ Equity |
U.S. - Florida hurricane |
|
$ |
13 |
|
1 in 100 year |
|
14% |
Japan earthquake |
|
9 |
|
1 in 250 year |
|
9% |
All other zones |
|
|
|
|
|
less than 10% |
(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, 2019 to June 30, 2019.
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