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Blue Capital Reinsurance Holdings Reports Third Quarter 2016 Financial Results


HAMILTON, Bermuda -  October 31, 2016 - 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 third quarter of 2016.

The Company's net income and operating income was $3.3 million ($0.38 per share) for the third quarter of 2016 and $10.3 million ($1.17 per share) for the nine months ended September 30, 2016. The Company's fully converted book value per common share was $20.44 at September 30, 2016, reflecting a 1.9% increase for the quarter and a 5.5% increase year-to-date, each inclusive of dividends declared in such periods.

Reinsurance premiums written for the current quarter were $7.8 million increasing $1.9 million compared to the same period in 2015. The current quarter's reinsurance premium growth resulted from a greater level of quota share premium in the current period which is recognized more evenly throughout the year compared to a year ago when a greater percentage of premiums related to excess of loss contracts which were recognized at contract inception.  On a year to date basis, the current period's reinsurance premiums written of $34.5 million were 2.6% or $0.9 million higher than the prior year.

The combined ratio for the current quarter was 63.5% compared to 50.8% in the same period a year ago. The increase in the combined ratio was driven by higher loss and loss adjustment expenses and higher reinsurance acquisition costs partially offset by lower general and administrative expenses. Loss and loss adjustment expenses for the current quarter were $2.6 million compared to $1.4 million in the same period a year ago as a result of a  higher frequency of losses from smaller events.  Reinsurance acquisition costs were $2.9 million in the current period compared to $2.0 million a year ago due to the larger concentration of quota share business which maintains a higher acquisition cost.  General and administrative expenses for the current quarter were $1.1 million, or $0.2 million lower than a year ago due to lower performance fees based on reduced profitability. On a year to date basis, the combined ratio was 66.4% in the current period compared to 46.1% in the prior period.  The deterioration in the current period's year to date combined ratio was largely driven by a significantly higher level of industry global catastrophe losses compared to a year ago, partially offset by reduced general and administrative expenses, reflecting lower performance fees.

During the third quarter of 2016, the Company declared a regular dividend of $0.30 per common share, which was paid on October 14, 2016.

Adam Szakmary, President and CEO, commented: "Our third quarter and year to date results reflect our effective underwriting and risk management capabilities as we generated strong profitability despite a greater frequency of global loss events in 2016.  Our strategy of exclusively focusing on catastrophe exposures to create a portfolio of risks diversified across global geographies, products and insurers continues to generate attractive shareholder returns."

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. (NYSE: ENH), 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

Investor Relations
Phone: +1 441 278 0988

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, 2015 and Quarterly Report on Form 10-Q for the quarter ended June 30, 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 reports on Form 10-K and Form 10-Q 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.

(In millions of U.S. dollars, except share amounts)

    September 30, 2016   December 31, 2015
Assets   (Unaudited)    
Cash and cash equivalents   $ 4.7     $ 1.0  
Cash and cash equivalents pledged as collateral   3.1     5.1  
Reinsurance premiums receivable   14.2     15.9  
Deferred reinsurance acquisition costs   0.5     0.1  
Funds held by reinsured companies as collateral   180.8     195.3  
Other assets   1.3     0.2  
Total Assets   $ 204.6     $ 217.6  
Loss and loss adjustment expense reserves   $ 10.3     $ 4.0  
Unearned reinsurance premiums   3.7     1.3  
Debt   -     13.0  
Reinsurance balances payable   7.1     7.6  
Other liabilities   4.3     4.1  
Total Liabilities   25.4     30.0  
Shareholders' Equity        
Common Shares and additional paid-in capital   8.8     8.8  
Additional paid-in capital   165.4     165.3  
Retained earnings   5.0     13.5  
Total Shareholders' Equity   179.2     187.6  
Total Liabilities and Shareholders' Equity   $ 204.6     $ 217.6  
Common shares outstanding (000s)   8,756     8,752  
Common and common equivalent shares outstanding (000s)   8,769     8,762  

(In millions of U.S. dollars, except per share data)

    Three Months Ended September 30,   Nine Months Ended September 30,
    2016   2015   2016   2015
Reinsurance premiums written   $ 7.8     $ 5.9     $ 34.5     $ 33.6  
Change in net unearned reinsurance premiums   2.6     3.6     (2.4 )   (4.6 )
Net reinsurance premiums earned   10.4     9.5     32.1     29.0  
Net loss from derivative instruments  
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