Odyssey Re income drops on storm losses

Fairfax’s Odyssey Re Holdings Corp. (NYSE: ORH) saw its income decline for the third quarter of 2004 on the back of losses suffered from the U.S. hurricane season.The company suffered heavy claims as a results of Hurricanes Charley, Frances, Ivan and Jeanne, which a net after tax loss of US$55.7 million recorded in the third quarter. Overall the company produced net income for the quarter ending September 30, 2004 of US$18.0 million (US$0.28 per share), down from US$42.3 million (US$0.65 per share) a year earlier. Gross written premiums in the third quarter were US$754.2 million, up from US$703.0 million a year prior. And net written premiums grew to US$671.3 million from US$582.2 million over the same comparative period. Net investment income excluding realized gains also grew in the third quarter of 2004, to US$46.2 million from US$31.8 million the year prior. Total investment results were US$79.8 million for the most recent quarter, up from US$49.1 million in third quarter 2003. However, the company’s combined ratio rose sharply for the third quarter, coming in at 106.9%, compared to 96.3% in the third quarter of 2003.For the first nine months of 2004, the company produced net income of US$136.0 million (US$2.09 per share), down from US$201.6 million (US$3.10 per share) in the first nine months of 2003. Gross written premiums were up over the same comparative period to US$2.0 billion from US$1.9 billion, and net written premiums also grew to US$1.8 billion from US$1.6 billion.Net investment income for the first three quarters of 2004 was US$116.8 million, up from US$91.0 million the year prior. And including realized gains, total investment results were US$217.6 million, down from US$278.1 million.The combined ratio for the first three quarters of the year was 99.0%, compared to 97.2% at the same point in 2003.Commenting on the results, Odyssey Re CEO Andrew Barnard says, “OdysseyRe’s return on equity through the first three quarters stands at 13%, despite the unprecedented storm activity in the third quarter. Our diversified platform continues to generate a strong flow of profitable opportunities worldwide.”