Odyssey Re 1-Q earnings plummet (May 02, 2005)

The Fairfax group’s reinsurance operation, Odyssey Re Holdings Corp. (NYSE: ORH) saw net income for the first quarter of this year fall by 38.5% to US$36.2 million compared with the US$59 million reported for the same period in 2004. This equates to earnings of 53c a share for latest reporting period versus 85c a share disclosed the year prior.The reinsurer’s gross premiums for the first quarter of 2005 clocked in 8.3% higher at US$681.6 million versus the US$629.5 million reported for the same period the year before. Although Odyssey Re’s U.S. traditional “reinsurance business” volume declined by just over 9% for this year’s first quarter, the company was able to boost its overall premium revenue by a 21.7% increase in international and specialty business. The reinsurer’s net premiums written for the latest quarter grew by 11.3% year-on-year to US$615.6 million (2004 1-Q: US$553.2 million).Odyssey Re’s underwriting result for the first quarter if this year shows marked deterioration with the combined ratio clocking in at 99.4% against the 95% ratio shown at the end of 2004’s first quarter. The company highlights an after-tax loss of US$26.2 million, equivalent to 37c a share, attributable to weather losses arising from the European windstorm Erwin and higher than expected costs relating to the Florida hurricanes, Typhoon Songda and the Indonesian earthquake/tsunami of last year. The company’s total investment performance (investment income and realized gains combined) also shows weakness for the latest quarter at US$65.3 million compared with the US$70.3 million reported for the same period the previous year. “We continue to benefit from our global platform, as our international and specialty U.S. insurance operations expanded while our U.S. reinsurance business declined. As market conditions become more challenging, underwriting discipline, combined with strong investment performance, remains our focus,” comments Odyssey Re’s CEO Andrew Barnard.