Bermuda
|
98-0481623
|
|
(State or Other Jurisdiction
of
Incorporation or
Organization)
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(I.R.S.
Employer
Identification
No.)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer þ
(Do not check if a smaller reporting company)
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Smaller
reporting company o
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As
at June 30,
2008
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As
at December 31, 2007
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Fixed
maturities, at fair value (Amortized cost: 2008 - $803,528; 2007 -
$1,099,149)
|
$ | 804,798 | $ | 1,109,105 | ||||
Short
term investments, at fair value (Amortized cost: 2008 - $20,267; 2007 -
$23,660)
|
20,196 | 23,616 | ||||||
Equity
investments, at fair value (Cost: 2008 - $117,556; 2007 -
$73,603)
|
107,935 | 74,357 | ||||||
Other
investments
|
464,141 | 293,166 | ||||||
Total
Investments
|
1,397,070 | 1,500,244 | ||||||
Cash
and cash equivalents
|
562,816 | 362,680 | ||||||
Premium
balances receivable
|
314,456 | 136,555 | ||||||
Unearned
premiums ceded
|
39,682 | 14,608 | ||||||
Accrued
interest receivable
|
7,214 | 9,915 | ||||||
Receivable
for investments sold
|
2,942 | – | ||||||
Deferred
acquisition costs
|
51,467 | 30,607 | ||||||
Funds
withheld
|
10,096 | 6,666 | ||||||
Goodwill
|
13,171 | 10,781 | ||||||
Intangible
assets
|
775 | 775 | ||||||
Other
assets
|
73,423 | 30,942 | ||||||
Due
from related parties
|
64 | – | ||||||
Total
Assets
|
$ | 2,473,176 | $ | 2,103,773 | ||||
LIABILITIES
|
||||||||
Loss
and loss adjustment expense reserves
|
$ | 233,596 | $ | 180,978 | ||||
Unearned
premiums
|
389,223 | 175,607 | ||||||
Insurance
and reinsurance balances payable
|
33,749 | 12,088 | ||||||
Payable
for investments purchased
|
6,162 | 41,750 | ||||||
Long
term debt
|
255,037 | 264,889 | ||||||
Other
liabilities
|
79,302 | 33,198 | ||||||
Total
Liabilities
|
997,069 | 708,510 | ||||||
Minority
Interest
|
195,923 | 184,778 | ||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Common
voting shares, 150,000,000 authorized, $0.01 par value, issued and
outstanding (2008 - 85,346,325; 2007 - 85,309,107)
|
853 | 853 | ||||||
Additional
paid-in capital
|
911,964 | 905,316 | ||||||
Accumulated
other comprehensive income
|
2,718 | 7,426 | ||||||
Retained
earnings
|
364,649 | 296,890 | ||||||
Total Shareholders'
Equity
|
1,280,184 | 1,210,485 | ||||||
Total
Liabilities, Minority Interest and Shareholders' Equity
|
$ | 2,473,176 | $ | 2,103,773 | ||||
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||
June
30, 2008
|
June
30, 2007
|
June
30, 2008
|
June
30, 2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Gross
premiums written
|
$ | 271,178 | $ | 181,345 | $ | 513,424 | $ | 388,358 | ||||||||
Premiums
ceded
|
(38,435 | ) | – | (54,449 | ) | (8,245 | ) | |||||||||
Net
premiums written
|
232,743 | 181,345 | 458,975 | 380,113 | ||||||||||||
Change
in net unearned premiums
|
(90,976 | ) | (69,503 | ) | (181,951 | ) | (167,045 | ) | ||||||||
Net
premiums earned
|
141,767 | 111,842 | 277,024 | 213,068 | ||||||||||||
Net
investment income
|
13,279 | 20,531 | 31,975 | 34,162 | ||||||||||||
Net
realized and unrealized (losses) gains - investments
|
(9,339 | ) | (3,741 | ) | (21,751 | ) | 767 | |||||||||
Net
realized and unrealized gains (losses) - other
|
11,132 | 1,840 | (1,105 | ) | 1,846 | |||||||||||
Other
income
|
2,127 | 251 | 3,851 | 924 | ||||||||||||
Total
revenues
|
158,966 | 130,723 | 289,994 | 250,767 | ||||||||||||
EXPENSES
|
||||||||||||||||
Loss
and loss adjustment expenses
|
56,298 | 77,257 | 96,065 | 125,005 | ||||||||||||
Acquisition
costs
|
27,210 | 14,725 | 51,375 | 27,443 | ||||||||||||
General
and administrative expenses
|
24,214 | 13,800 | 50,763 | 28,469 | ||||||||||||
Interest
expense
|
4,609 | 3,520 | 9,949 | 6,784 | ||||||||||||
Net
foreign exchange losses (gains)
|
1,630 | (56 | ) | (5,069 | ) | (1,338 | ) | |||||||||
Total
expenses
|
113,961 | 109,246 | 203,083 | 186,363 | ||||||||||||
Income
before income taxes, minority interest and interest in earnings of equity
investments
|
45,005 | 21,477 | 86,911 | 64,404 | ||||||||||||
Provision
for income tax
|
(442 | ) | (77 | ) | (1,307 | ) | (122 | ) | ||||||||
Minority
interest
|
(2,615 | ) | (7,892 | ) | (10,796 | ) | (15,625 | ) | ||||||||
Interest
in earnings of equity investments
|
– | 1,186 | – | 1,647 | ||||||||||||
NET
INCOME
|
$ | 41,948 | $ | 14,694 | $ | 74,808 | $ | 50,304 | ||||||||
Change
in currency translation adjustment
|
(2,766 | ) | (1,741 | ) | (4,186 | ) | (2,017 | ) | ||||||||
COMPREHENSIVE
INCOME
|
$ | 39,182 | $ | 12,953 | $ | 70,622 | $ | 48,287 | ||||||||
Weighted
average common shares outstanding—Basic
|
85,470,205 | 85,139,757 | 85,470,043 | 78,479,958 | ||||||||||||
Weighted
average common shares outstanding—Diluted
|
85,638,506 | 85,198,147 | 85,714,196 | 78,529,631 | ||||||||||||
Net
income per common share outstanding—Basic
|
$ | 0.49 | $ | 0.17 | $ | 0.88 | $ | 0.64 | ||||||||
Net
income per common share outstanding—Diluted
|
$ | 0.49 | $ | 0.17 | $ | 0.87 | $ | 0.64 | ||||||||
Dividends
declared per common share
|
$ | 0.04 | $ | – | $ | 0.08 | $ | – | ||||||||
For
the Six Months Ended
|
||||||||
June
30, 2008
|
June
30, 2007
|
|||||||
Common voting
shares:
|
||||||||
Balance
at beginning of period
|
85,309,107 | 71,547,891 | ||||||
Issued
during the period, net
|
37,218 | 13,750,000 | ||||||
Balance
at end of period
|
85,346,325 | 85,297,891 | ||||||
Share
capital:
|
||||||||
Common voting
shares
|
||||||||
Balance
at beginning of period
|
$ | 853 | $ | 715 | ||||
Issued
during period, net
|
– | 138 | ||||||
Balance
at end of period
|
853 | 853 | ||||||
Additional paid-in
capital
|
||||||||
Balance
at beginning of period
|
905,316 | 728,378 | ||||||
Issue
of shares, net
|
(364 | ) | 185,488 | |||||
Issuance
costs (related party: 2008 - $nil ; 2007 -
$3,430)
|
– | (16,839 | ) | |||||
Share
based compensation expense
|
7,012 | 4,252 | ||||||
Balance
at end of period
|
911,964 | 901,279 | ||||||
Accumulated other comprehensive
income (loss)
|
||||||||
Balance
at beginning of period
|
7,426 | (4,528 | ) | |||||
Change
in currency translation adjustment
|
(4,186 | ) | (2,017 | ) | ||||
Defined
benefit plan - transitional obligation
|
(522 | ) | – | |||||
Cumulative
effect adjustment from adoption of new accounting principle SFAS
159
|
– | 4,009 | ||||||
Balance
at end of period
|
2,718 | (2,536 | ) | |||||
Retained
earnings
|
||||||||
Balance
at beginning of period
|
296,890 | 139,954 | ||||||
Cumulative
effect adjustment from adoption of accounting principle
|
– | (4,009 | ) | |||||
Dividend
declared
|
(7,049 | ) | – | |||||
Net
income for the period
|
74,808 | 50,304 | ||||||
Balance
at end of period
|
364,649 | 186,249 | ||||||
Total
Shareholders' Equity
|
$ | 1,280,184 | $ | 1,085,845 | ||||
For
the Six Months Ended
|
||||||||
June
30, 2008
|
June
30, 2007
|
|||||||
Cash flows provided by (used
in) operating activities:
|
||||||||
Net
income
|
$ | 74,808 | $ | 50,304 | ||||
Adjustments to reconcile net
income to net cash provided by operating
activities:
|
||||||||
Net
realized and unrealized losses (gains)
|
22,856 | (2,613 | ) | |||||
Minority
interest
|
10,796 | 15,625 | ||||||
Depreciation
expense
|
2,214 | 820 | ||||||
Share
based compensation expense
|
6,788 | 4,252 | ||||||
Interest
in earnings of equity investments
|
– | (1,647 | ) | |||||
Accretion/amortization
on fixed maturities
|
(9,736 | ) | (5,975 | ) | ||||
Changes
in assets and liabilities, excluding net assets acquired:
|
||||||||
Reinsurance
premium receivable
|
(175,080 | ) | (151,289 | ) | ||||
Unearned
premiums ceded
|
(24,728 | ) | (3,323 | ) | ||||
Deferred
acquisition costs
|
(20,439 | ) | (21,977 | ) | ||||
Funds
withheld
|
(3,386 | ) | (5,138 | ) | ||||
Loss
and loss adjustment expense reserves
|
47,063 | 112,627 | ||||||
Unearned
premiums
|
210,635 | 170,361 | ||||||
Insurance
and reinsurance balances payable
|
21,478 | 883 | ||||||
Other
changes in assets and liabilities, net
|
4,785 | 3,984 | ||||||
Net
cash provided by operating activities
|
168,054 | 166,894 | ||||||
Cash flows provided by (used
in) investing activities:
|
||||||||
Net
cash received in acquisitions of subsidiaries
|
4,729 | 4,581 | ||||||
Purchases
of fixed income securities
|
(936,439 | ) | (838,231 | ) | ||||
Sales
and maturities of fixed income securities
|
1,230,546 | 574,260 | ||||||
Purchases
of equity securities
|
(39,974 | ) | (25,171 | ) | ||||
Purchases
of other investments
|
(330,203 | ) | (69,405 | ) | ||||
Sales
of other investments
|
144,675 | – | ||||||
Purchases
of fixed assets
|
(10,786 | ) | (3,666 | ) | ||||
Net
cash provided by (used in) investing activities
|
62,548 | (357,632 | ) | |||||
Cash flows (used in) provided
by financing activities:
|
||||||||
Issue
of common shares, net of issuance costs paid
|
(364 | ) | 171,644 | |||||
Issue
of notes, net of issuance costs paid
|
– | 98,940 | ||||||
Contribution
of minority interest
|
(429 | ) | 83,100 | |||||
Repurchase
of minority interest
|
(8,652 | ) | – | |||||
Dividend
paid on common shares
|
(6,825 | ) | – | |||||
Repayment
of long term debt
|
(9,195 | ) | – | |||||
Other
|
(4,003 | ) | (763 | ) | ||||
Net
cash (used in) provided by financing activities
|
(29,468 | ) | 352,921 | |||||
Effect
of foreign exchange rate on cash and cash equivalents
|
(998 | ) | (1,490 | ) | ||||
Increase
in cash and cash equivalents
|
200,136 | 160,693 | ||||||
Cash
and cash equivalents - beginning of period
|
362,680 | 261,352 | ||||||
Cash
and cash equivalents - end of period
|
$ | 562,816 | $ | 422,045 | ||||
Supplemental cash flow
information:
|
||||||||
Receivable
for investments sold
|
$ | 2,942 | $ | – | ||||
Payable
for investments purchased
|
$ | 6,162 | $ | 1,201 | ||||
Interest
paid
|
$ | 10,679 | $ | 6,416 | ||||
3.
|
Business
Combinations
|
Fair
Value Measurement at June 30, 2008, using:
|
||||||||||||||||
|
Significant
Other
|
Significant
Other
|
||||||||||||||
Fair
Value
|
Quoted
Prices in Active
Markets |
Observable
Inputs
|
Unobservable
Inputs
|
|||||||||||||
Measurements
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
Description
|
||||||||||||||||
Fixed
maturity investments
|
$ | 804,798 | $ | 409,958 | $ | 394,840 | $ | – | ||||||||
Short
term investments
|
20,196 | 20,196 | – | – | ||||||||||||
Equity
investments
|
107,935 | 107,935 | – | – | ||||||||||||
932,929 | 538,089 | 394,840 | – | |||||||||||||
Other
Investments
|
||||||||||||||||
Alliance
Re
|
6,846 | – | – | 6,846 | ||||||||||||
Real
estate investment trust funds
|
69,679 | – | 69,679 | – | ||||||||||||
Investment
funds
|
31,268 | – | 19,404 | 11,864 | ||||||||||||
Catastrophe
bonds
|
40,081 | – | – | 40,081 | ||||||||||||
Fixed
income fund
|
316,267 | 316,267 | – | – | ||||||||||||
464,141 | 316,267 | 89,083 | 58,791 | |||||||||||||
Totals
|
$ | 1,397,070 | $ | 854,356 | $ | 483,923 | $ | 58,791 |
Fair
Value Measurement at December 31, 2007, using:
|
|||||||||||||||||
|
Significant
Other
|
Significant
Other
|
|||||||||||||||
Fair
Value
|
Quoted
Prices in Active
Markets |
Observable
Inputs
|
Unobservable
Inputs
|
||||||||||||||
Measurements
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||||||||||||
Description
|
|||||||||||||||||
Fixed
maturity investments
|
$ | 1,109,105 | $ | 471,811 | $ | 637,294 | $ | – | |||||||||
Short
term investments
|
23,616 | 4,914 | 18,702 | – | |||||||||||||
Equity
investments
|
74,357 | 74,357 | – | – | |||||||||||||
1,207,078 | 551,082 | 655,996 | – | ||||||||||||||
Other
Investments
|
|||||||||||||||||
Real
estate investment trusts
|
12,204 | – | 12,204 | – | |||||||||||||
Investment
funds
|
31,249 | – | 20,041 | 11,208 | |||||||||||||
Catastrophe
bonds
|
36,619 | – | – | 36,619 | |||||||||||||
Fixed
income fund
|
212,982 | 212,982 | – | – | |||||||||||||
293,054 | 212,982 | 32,245 | 47,827 | ||||||||||||||
Totals
|
$ | 1,500,132 | $ | 764,064 | $ | 688,241 | $ | 47,827 | |||||||||
Description
|
Investment
funds
|
Catastrophe
bonds
|
Alliance
Re
|
|||||||||
Fair
value, December 31, 2007
|
$ | 11,208 | $ | 36,619 | $ | – | ||||||
Total
unrealized gains included in earnings
|
1,006 | 33 | – | |||||||||
Fair
value, March 31, 2008
|
$ | 12,214 | $ | 36,652 | $ | – | ||||||
Total
unrealized gains included in earnings
|
(856 | ) | (71 | ) | – | |||||||
Net
purchases and sales
|
506 | 3,500 | 6,846 | |||||||||
Closing
fair value, June 30, 2008
|
$ | 11,864 | $ | 40,081 | $ | 6,846 |
Fair
Value Measurement at June 30, 2008, using:
|
||||||||||||||||
Fair
Value
Measurements
|
Quoted Prices in Active
Markets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Other Unobservable Inputs
(Level
3)
|
|||||||||||||
Derivatives
|
||||||||||||||||
Futures
contracts
|
$ | (10,914 | ) | $ | (10,914 | ) | $ | – | $ | – | ||||||
Swaps
|
(56 | ) | – | (56 | ) | – | ||||||||||
Forward
currency contracts
|
(8,334 | ) | – | (8,334 | ) | – | ||||||||||
Mortgage
backed securities TBA
|
213 | – | 213 | – | ||||||||||||
Other
reinsurance derivatives
|
(1,165 | ) | – | (1,038 | ) | (127 | ) | |||||||||
Total
derivatives
|
$ | (20,256 | ) | $ | (10,914 | ) | $ | (9,215 | ) | $ | (127 | ) |
Fair
Value Measurement at December 31, 2007, using:
|
||||||||||||||||
Fair
Value
Measurements
|
Quoted Prices in Active
Markets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Other Unobservable Inputs
(Level
3)
|
|||||||||||||
Derivatives
|
||||||||||||||||
Futures
contracts
|
$ | (2,228 | ) | $ | (2,228 | ) | $ | – | $ | – | ||||||
Swaps
|
(153 | ) | – | (153 | ) | – | ||||||||||
Forward
currency contracts
|
(7,067 | ) | – | (7,067 | ) | – | ||||||||||
Mortgage
backed securities TBA
|
173 | – | 173 | – | ||||||||||||
Other
reinsurance derivatives
|
(1,305 | ) | – | – | (1,305 | ) | ||||||||||
Total
derivatives
|
$ | (10,580 | ) | $ | (2,228 | ) | $ | (7,047 | ) | $ | (1,305 | ) |
Other
reinsurance derivatives
|
||||
Opening
fair value, December 31, 2007
|
$ | (1,305 | ) | |
Total
unrealized gains included in earnings
|
714 | |||
Closing
fair value, March 31, 2008
|
(591 | ) | ||
Total
unrealized gains included in earnings
|
464 | |||
Closing
fair value, June 30, 2008
|
$ | (127 | ) |
Three Months Ended June 30,
2008
|
Six Months Ended June 30,
2008
|
|||||||||||||||||||||||
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
|
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
|
|||||||||||||||||||
Outstanding at beginning of
period
|
2,308,658 | $ | 12.63 | 1.8 | 1,658,700 | $ | 12.07 | 1.7 | ||||||||||||||||
Granted
|
4,000 | 12.00 | 731,958 | 13.89 | ||||||||||||||||||||
Forfeited
|
– | 0.00 | (78,000 | ) | 12.54 | |||||||||||||||||||
Outstanding at end of
period
|
2,312,658 | 12.63 | 1.5 | 2,312,658 | 12.63 | 1.5 |
Three Months Ended June 30,
2008
|
Six Months Ended June 30,
2008
|
|||||||||||||||||||||||
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
|
Number
|
Weighted average grant date fair
value
|
Weighted average remaining
contractual term
|
|||||||||||||||||||
Outstanding at beginning of
period
|
532,558 | $ | 13.04 | 0.8 | 326,610 | $ | 12.45 | 0.6 | ||||||||||||||||
Granted
|
8,600 | 12.15 | 239,315 | 13.82 | ||||||||||||||||||||
Forfeited
|
(3,950 | ) | 13.35 | (20,900 | ) | 13.67 | ||||||||||||||||||
Vested in the
period
|
(59,700 | ) | 10.72 | (67,517 | ) | 10.81 | ||||||||||||||||||
Outstanding at end of
period
|
477,508 | 13.32 | 0.7 | 477,508 | 13.32 | 0.7 |
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Basic earnings
per common share
|
||||||||||||||||
Net income
|
$ | 41,948 | $ | 14,694 | $ | 74,808 | $ | 50,304 | ||||||||
Weighted average common shares
outstanding
|
85,317,247 | 85,050,638 | 85,314,637 | 78,408,388 | ||||||||||||
Weighted average vested restricted
share units
|
152,958 | 89,119 | 155,406 | 71,570 | ||||||||||||
Weighted average common shares
outstanding—Basic
|
85,470,205 | 85,139,757 | 85,470,043 | 78,479,958 | ||||||||||||
Basic earnings per common
share
|
$ | 0.49 | $ | 0.17 | $ | 0.88 | 0.64 | |||||||||
Diluted
earnings per common share
|
||||||||||||||||
Net income
|
$ | 41,948 | $ | 14,694 | $ | 74,808 | $ | 50,304 | ||||||||
Weighted average common shares
outstanding
|
85,317,247 | 85,050,638 | 85,314,637 | 78,408,388 | ||||||||||||
Weighted average vested restricted
share units outstanding
|
152,958 | 89,119 | 155,406 | 71,570 | ||||||||||||
85,470,205 | 85,139,757 | 85,470,043 | 78,479,958 | |||||||||||||
Share
equivalents:
|
||||||||||||||||
Weighted average unvested
restricted share units
|
168,301 | 58,390 | 244,153 | 49,673 | ||||||||||||
Weighted average common shares
outstanding—Diluted
|
85,638,506 | 85,198,147 | 85,714,196 | 78,529,631 | ||||||||||||
Diluted earnings per common
share
|
$ | 0.49 | $ | 0.17 | $ | 0.87 | $ | 0.64 |
1)
|
Property
Catastrophe Reinsurance. Property catastrophe reinsurance
contracts are typically “all risk” in nature, meaning that they
protect against losses from earthquakes and hurricanes, as well as other
natural and man-made catastrophes such as tornados, wind, fires, winter
storms, and floods (where the contract specifically provides for
coverage). Losses on these contracts typically stem from direct
property damage and business interruption. To date, property catastrophe
reinsurance has been our most important product. We write property
catastrophe reinsurance primarily on an excess of loss basis. In the
event of a loss, most contracts of this type require us to cover a
subsequent event and generally provide for a premium to reinstate the
coverage under the contract, which is referred to as a “reinstatement
premium”. These contracts typically cover only specific regions
or geographical areas, but may be on a worldwide
basis.
|
2)
|
Property
Reinsurance. We also
provide reinsurance on a pro rata share basis and per risk excess of loss
basis. Per risk reinsurance protects insurance companies on their primary
insurance risks on a single risk basis, for example, covering a single
large building. All property per risk and pro rata business is
written with loss limitation provisions, such as per occurrence or per
event caps, which serve to limit exposure to catastrophic
events.
|
3)
|
Short-tail
Specialty and Casualty Reinsurance. We also provide short-tail
specialty and casualty reinsurance for risks such as aviation, energy,
accident and health, satellite, marine and workers’ compensation
catastrophe. Most short-tail specialty and casualty reinsurance
is written with loss limitation provisions.
|
Three Months Ended June 30,
2008
|
Three Months Ended June 30,
2007
|
|||||||||||||||||||||||
Reinsurance
|
Insurance
|
Total
|
Reinsurance
|
Insurance
|
Total
|
|||||||||||||||||||
Underwriting
Revenues
|
||||||||||||||||||||||||
Gross premiums
written
|
$ | 244,505 | $ | 26,673 | $ | 271,178 | $ | 181,345 | $ | – | $ | 181,345 | ||||||||||||
Premiums
ceded
|
(15,039 | ) | (23,396 | ) | (38,435 | ) | – | – | – | |||||||||||||||
Net written
premiums
|
229,466 | 3,277 | 232,743 | 181,345 | – | 181,345 | ||||||||||||||||||
Change in net unearned
premiums
|
(95,178 | ) | 4,202 | (90,976 | ) | (69,503 | ) | – | (69,503 | ) | ||||||||||||||
Net premiums
earned
|
134,288 | 7,479 | 141,767 | 111,842 | – | 111,842 | ||||||||||||||||||
Other insurance related
income
|
569 | (341 | ) | 228 | 197 | – | 197 | |||||||||||||||||
Total underwriting
revenues
|
134,857 | 7,138 | 141,995 | 112,039 | – | 112,039 | ||||||||||||||||||
Underwriting
Expenses
|
||||||||||||||||||||||||
Losses and loss adjustment
expenses
|
56,151 | 147 | 56,298 | 77,257 | – | 77,257 | ||||||||||||||||||
Acquisition
costs
|
24,074 | 3,136 | 27,210 | 14,725 | – | 14,725 | ||||||||||||||||||
General and administrative
expenses
|
22,686 | 1,528 | 24,214 | 13,800 | – | 13,800 | ||||||||||||||||||
Total underwriting
expenses
|
102,911 | 4,811 | 107,722 | 105,782 | – | 105,782 | ||||||||||||||||||
Underwriting
Income
|
$ | 31,946 | $ | 2,327 | $ | 34,273 | $ | 6,257 | $ | – | $ | 6,257 | ||||||||||||
Total
Assets
|
$ | 2,349,458 | $ | 123,718 | $ | 2,473,176 | $ | 1,910,448 | $ | – | $ | 1,910,448 | ||||||||||||
Net reserves for loss and loss
adjustment expenses
|
$ | 230,546 | $ | 3,050 | $ | 233,596 | $ | 135,143 | $ | – | $ | 135,143 | ||||||||||||
Ratios
|
||||||||||||||||||||||||
Loss ratio
|
41.8% | 2.0% | 39.7% | 69.1% | 0.0% | 69.1% | ||||||||||||||||||
Acquisition cost
ratio
|
17.9% | 41.9% | 19.2% | 13.2% | 0.0% | 13.2% | ||||||||||||||||||
General and administrative expense
ratio
|
16.9% | 20.4% | 17.1% | 12.3% | 0.0% | 12.3% | ||||||||||||||||||
Combined
ratio
|
76.6% | 64.3% | 76.0% | 94.6% | 0.0% | 94.6% |
Six Months Ended June 30,
2008
|
Six Months Ended June 30,
2007
|
|||||||||||||||||||||||
Reinsurance
|
Insurance
|
Total
|
Reinsurance
|
Insurance
|
Total
|
|||||||||||||||||||
Underwriting
Revenues
|
||||||||||||||||||||||||
Gross premiums
written
|
$ | 467,646 | $ | 45,778 | $ | 513,424 | $ | 388,358 | $ | – | $ | 388,358 | ||||||||||||
Premiums
ceded
|
(20,359 | ) | (34,090 | ) | (54,449 | ) | (8,245 | ) | – | (8,245 | ) | |||||||||||||
Net written
premiums
|
447,287 | 11,688 | 458,975 | 380,113 | – | 380,113 | ||||||||||||||||||
Change in net unearned
premiums
|
(184,878 | ) | 2,927 | (181,951 | ) | (167,045 | ) | – | (167,045 | ) | ||||||||||||||
Net premiums
earned
|
262,409 | 14,615 | 277,024 | 213,068 | – | 213,068 | ||||||||||||||||||
Other insurance related
income
|
781 | 488 | 1,269 | 422 | – | 422 | ||||||||||||||||||
Total underwriting
revenues
|
263,190 | 15,103 | 278,293 | 213,490 | – | 213,490 | ||||||||||||||||||
Underwriting
Expenses
|
||||||||||||||||||||||||
Losses and loss adjustment
expenses
|
95,953 | 112 | 96,065 | 125,005 | – | 125,005 | ||||||||||||||||||
Acquisition
costs
|
44,984 | 6,391 | 51,375 | 27,443 | – | 27,443 | ||||||||||||||||||
General and administrative
expenses
|
46,819 | 3,944 | 50,763 | 28,469 | – | 28,469 | ||||||||||||||||||
Total underwriting
expenses
|
187,756 | 10,447 | 198,203 | 180,917 | – | 180,917 | ||||||||||||||||||
Underwriting
Income
|
$ | 75,434 | $ | 4,656 | $ | 80,090 | $ | 32,573 | $ | – | $ | 32,573 | ||||||||||||
Total
Assets
|
$ | 2,349,458 | $ | 123,718 | $ | 2,473,176 | $ | 1,910,448 | $ | – | $ | 1,910,448 | ||||||||||||
Net reserves for loss and loss
adjustment expenses
|
$ | 230,546 | $ | 3,050 | $ | 233,596 | $ | 135,143 | $ | – | $ | 135,143 | ||||||||||||
Ratios
|
||||||||||||||||||||||||
Loss ratio
|
36.6% | 0.8% | 34.7% | 58.7% | 0.0% | 58.7% | ||||||||||||||||||
Acquisition cost
ratio
|
17.1% | 43.7% | 18.5% | 12.9% | 0.0% | 12.9% | ||||||||||||||||||
General and administrative expense
ratio
|
17.8% | 27.0% | 18.3% | 13.3% | 0.0% | 13.3% | ||||||||||||||||||
Combined
ratio
|
71.5% | 71.5% | 71.5% | 84.9% | 0.0% | 84.9% |
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Underwriting
income
|
$ | 34,273 | $ | 6,257 | $ | 80,090 | $ | 32,573 | ||||||||
Net investment
income
|
13,279 | 20,531 | 31,975 | 34,162 | ||||||||||||
Net realized and unrealized
(losses) gains - investments
|
(9,339 | ) | (3,741 | ) | (21,751 | ) | 767 | |||||||||
Net realized and unrealized
(losses) gains - other
|
11,132 | 1,840 | (1,105 | ) | 1,846 | |||||||||||
Other
income
|
1,899 | 54 | 2,582 | 502 | ||||||||||||
Interest
expense
|
(4,609 | ) | (3,520 | ) | (9,949 | ) | (6,784 | ) | ||||||||
Net foreign exchange (gains)
losses
|
(1,630 | ) | 56 | 5,069 | 1,338 | |||||||||||
Income before income taxes,
minority interest and interest in earnings of equity
investments
|
$ | 45,005 | $ | 21,477 | $ | 86,911 | $ | 64,404 |
(1)
|
Property Catastrophe Reinsurance.
Property catastrophe reinsurance contracts are typically “all risk” in
nature, meaning that they protect against losses from earthquakes and
hurricanes, as well as other natural and man-made catastrophes such as
tornados, wind, fires, winter storms, and floods (where the contract
specifically provides for coverage). Losses on these contracts
typically stem from direct property damage and business interruption. To
date, property catastrophe reinsurance has been our most important
product. We write property catastrophe reinsurance primarily on
an excess of loss basis. In the event of a loss, most contracts
of this type require us to cover a subsequent event and generally provide
for a premium to reinstate the coverage under the contract, which is
referred to as a “reinstatement premium”. These contracts
typically cover only specific regions or geographical areas, but may be on
a worldwide basis.
|
(2)
|
Property Reinsurance. We also
provide reinsurance on a pro rata share basis and per risk excess of loss
basis. Per risk reinsurance protects insurance companies on their primary
insurance risks on a single risk basis, for example, covering a single
large building. All property per risk and pro rata business is
written with loss limitation provisions, such as per occurrence or per
event caps, which serve to limit exposure to catastrophic
events.
|
(3)
|
Short-tail Specialty and Casualty
Reinsurance. We also provide short-tail specialty and casualty reinsurance
for risks such as aviation, energy, accident and health, satellite, marine
and workers’ compensation catastrophe. Most short-tail
specialty and casualty reinsurance is written with loss limitation
provisions. During 2008, we expect to continue increasing our specialty
writings based on our assessment of the market
environment.
|
For the three months
ended June 30,
2008
|
For the six months
ended June 30,
2008
|
|
- an increase in underwriting income
of:
|
$28.0
million
|
$47.5
million
|
- a decrease in investment income
of:
|
$(7.3)
million
|
$(2.2)
million
|
- an increase (decrease) in the net
realized and unrealized gains (losses) on investments and other derivative
instruments of:
|
$3.7
million
|
$(25.5)
million
|
- an increase in other income, net
of other reinsurance related income, of:
|
$1.8
million
|
$2.1
million
|
- a net decrease in other expenses
of:
|
$1.1
million
|
$2.6
million
|
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||
June
30, 2008
|
June
30, 2007
|
June
30, 2008
|
June
30, 2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Gross
premiums written
|
$ | 271,178 | $ | 181,345 | $ | 513,424 | $ | 388,358 | ||||||||
Premiums
ceded
|
(38,435 | ) | – | (54,449 | ) | (8,245 | ) | |||||||||
Net
premiums written
|
232,743 | 181,345 | 458,975 | 380,113 | ||||||||||||
Change
in net unearned premiums
|
(90,976 | ) | (69,503 | ) | (181,951 | ) | (167,045 | ) | ||||||||
Net
premiums earned
|
141,767 | 111,842 | 277,024 | 213,068 | ||||||||||||
Net
investment income
|
13,279 | 20,531 | 31,975 | 34,162 | ||||||||||||
Net
realized and unrealized (losses) gains - investments
|
(9,339 | ) | (3,741 | ) | (21,751 | ) | 767 | |||||||||
Net
realized and unrealized gains (losses) - other
|
11,132 | 1,840 | (1,105 | ) | 1,846 | |||||||||||
Other
income
|
2,127 | 251 | 3,851 | 924 | ||||||||||||
Total
revenues
|
158,966 | 130,723 | 289,994 | 250,767 | ||||||||||||
EXPENSES
|
||||||||||||||||
Loss
and loss adjustment expenses
|
56,298 | 77,257 | 96,065 | 125,005 | ||||||||||||
Acquisition
costs
|
27,210 | 14,725 | 51,375 | 27,443 | ||||||||||||
General
and administrative expenses
|
24,214 | 13,800 | 50,763 | 28,469 | ||||||||||||
Interest
expense
|
4,609 | 3,520 | 9,949 | 6,784 | ||||||||||||
Net
foreign exchange losses (gains)
|
1,630 | (56 | ) | (5,069 | ) | (1,338 | ) | |||||||||
Total
expenses
|
113,961 | 109,246 | 203,083 | 186,363 | ||||||||||||
Income
before income taxes, minority interest and interest in earnings of equity
investments
|
45,005 | 21,477 | 86,911 | 64,404 | ||||||||||||
Provision
for income tax
|
(442 | ) | (77 | ) | (1,307 | ) | (122 | ) | ||||||||
Minority
interest
|
(2,615 | ) | (7,892 | ) | (10,796 | ) | (15,625 | ) | ||||||||
Interest
in earnings of equity investments
|
– | 1,186 | – | 1,647 | ||||||||||||
NET
INCOME
|
$ | 41,948 | $ | 14,694 | $ | 74,808 | $ | 50,304 | ||||||||
Change
in currency translation adjustment
|
(2,766 | ) | (1,741 | ) | (4,186 | ) | (2,017 | ) | ||||||||
COMPREHENSIVE
INCOME
|
$ | 39,182 | $ | 12,953 | $ | 70,622 | $ | 48,287 | ||||||||
Weighted
average common shares outstanding—Basic
|
85,470,205 | 85,139,757 | 85,470,043 | 78,479,958 | ||||||||||||
Weighted
average common shares outstanding—Diluted
|
85,638,506 | 85,198,147 | 85,714,196 | 78,529,631 | ||||||||||||
Net
income per common share outstanding—Basic
|
$ | 0.49 | $ | 0.17 | $ | 0.88 | $ | 0.64 | ||||||||
Net
income per common share outstanding—Diluted
|
$ | 0.49 | $ | 0.17 | $ | 0.87 | $ | 0.64 | ||||||||
Dividends
declared per common share
|
$ | 0.04 | $ | - | $ | 0.08 | $ | – |
Three Months Ended June 30,
2008
|
Three Months Ended June 30,
2007
|
|||||||||||||||||||||||
Reinsurance
|
Insurance
|
Total
|
Reinsurance
|
Insurance
|
Total
|
|||||||||||||||||||
Underwriting
Revenues
|
||||||||||||||||||||||||
Gross premiums
written
|
$ | 244,505 | $ | 26,673 | $ | 271,178 | $ | 181,345 | $ | – | $ | 181,345 | ||||||||||||
Premiums
ceded
|
(15,039 | ) | (23,396 | ) | (38,435 | ) | – | – | – | |||||||||||||||
Net written
premiums
|
229,466 | 3,277 | 232,743 | 181,345 | – | 181,345 | ||||||||||||||||||
Change in net unearned
premiums
|
(95,178 | ) | 4,202 | (90,976 | ) | (69,503 | ) | – | (69,503 | ) | ||||||||||||||
Net premiums
earned
|
134,288 | 7,479 | 141,767 | 111,842 | – | 111,842 | ||||||||||||||||||
Other insurance related
income
|
569 | (341 | ) | 228 | 197 | – | 197 | |||||||||||||||||
Total underwriting
revenues
|
134,857 | 7,138 | 141,995 | 112,039 | – | 112,039 | ||||||||||||||||||
Underwriting
Expenses
|
||||||||||||||||||||||||
Losses and loss adjustment
expenses
|
56,151 | 147 | 56,298 | 77,257 | – | 77,257 | ||||||||||||||||||
Acquisition
costs
|
24,074 | 3,136 | 27,210 | 14,725 | – | 14,725 | ||||||||||||||||||
General and administrative
expenses
|
22,686 | 1,528 | 24,214 | 13,800 | – | 13,800 | ||||||||||||||||||
Total underwriting
expenses
|
102,911 | 4,811 | 107,722 | 105,782 | – | 105,782 | ||||||||||||||||||
Underwriting
Income
|
$ | 31,946 | $ | 2,327 | $ | 34,273 | $ | 6,257 | $ | – | $ | 6,257 | ||||||||||||
Total
Assets
|
$ | 2,349,458 | $ | 123,718 | $ | 2,473,176 | $ | 1,910,448 | $ | – | $ | 1,910,448 | ||||||||||||
Net reserves for loss and loss
adjustment expenses
|
$ | 230,546 | $ | 3,050 | $ | 233,596 | $ | 135,143 | $ | – | $ | 135,143 | ||||||||||||
Ratios
|
||||||||||||||||||||||||
Loss ratio
|
41.8% | 2.0% | 39.7% | 69.1% | 0.0% | 69.1% | ||||||||||||||||||
Acquisition cost
ratio
|
17.9% | 41.9% | 19.2% | 13.2% | 0.0% | 13.2% | ||||||||||||||||||
General and administrative expense
ratio
|
16.9% | 20.4% | 17.1% | 12.3% | 0.0% | 12.3% | ||||||||||||||||||
Combined
ratio
|
76.6% | 64.3% | 76.0% | 94.6% | 0.0% | 94.6% |
Six
Months Ended June 30, 2008
|
Six
Months Ended June 30, 2007
|
|||||||||||||||||||||||
Reinsurance
|
Insurance
|
Total
|
Reinsurance
|
Insurance
|
Total
|
|||||||||||||||||||
Underwriting
Revenues
|
||||||||||||||||||||||||
Gross
premiums written
|
$ | 467,646 | $ | 45,778 | $ | 513,424 | $ | 388,358 | $ | $ | 388,358 | |||||||||||||
Premiums
ceded
|
(20,359 | ) | (34,090 | ) | (54,449 | ) | (8,245 | ) | – | (8,245 | ) | |||||||||||||
Net
written premiums
|
447,287 | 11,688 | 458,975 | 380,113 | – | 380,113 | ||||||||||||||||||
Change
in net unearned premiums
|
(184,878 | ) | 2,927 | (181,951 | ) | (167,045 | ) | – | (167,045 | ) | ||||||||||||||
Net
premiums earned
|
262,409 | 14,615 | 277,024 | 213,068 | – | 213,068 | ||||||||||||||||||
Other
insurance related income
|
781 | 488 | 1,269 | 422 | – | 422 | ||||||||||||||||||
Total
underwriting revenues
|
263,190 | 15,103 | 278,293 | 213,490 | – | 213,490 | ||||||||||||||||||
Underwriting
Expenses
|
||||||||||||||||||||||||
Losses
and loss adjustment expenses
|
95,953 | 112 | 96,065 | 125,005 | – | 125,005 | ||||||||||||||||||
Acquisition
costs
|
44,984 | 6,391 | 51,375 | 27,443 | – | 27,443 | ||||||||||||||||||
General
and administrative expenses
|
46,819 | 3,944 | 50,763 | 28,469 | – | 28,469 | ||||||||||||||||||
Total
underwriting expenses
|
187,756 | 10,447 | 198,203 | 180,917 | – | 180,917 | ||||||||||||||||||
Underwriting
Income
|
$ | 75,434 | $ | 4,656 | $ | 80,090 | $ | 32,573 | $ | – | $ | 32,573 | ||||||||||||
Total
Assets
|
$ | 2,349,458 | $ | 123,718 | $ | 2,473,176 | $ | 1,910,448 | $ | – | $ | 1,910,448 | ||||||||||||
Net
reserves for loss and loss adjustment expenses
|
$ | 230,546 | $ | 3,050 | $ | 233,596 | $ | 135,143 | $ | – | $ | 135,143 | ||||||||||||
Ratios
|
||||||||||||||||||||||||
Loss
ratio
|
36.6% | 0.8% | 34.7% | 58.7% | 0.0% | 58.7% | ||||||||||||||||||
Acquisition
cost ratio
|
17.1% | 43.7% | 18.5% | 12.9% | 0.0% | 12.9% | ||||||||||||||||||
General
and administrative expense ratio
|
17.8% | 27.0% | 18.3% | 13.3% | 0.0% | 13.3% | ||||||||||||||||||
Combined
ratio
|
71.5% | 71.5% | 71.5% | 84.9% | 0.0% | 84.9% |
Three
Months Ended June 30, 2008
|
Three
Months Ended June 30, 2007
|
|||||||||||||||
Gross
premiums written
|
Percentage
of
total
|
Gross
premiums written
|
Percentage
of total
|
|||||||||||||
Line of
business
|
||||||||||||||||
Reinsurance
|
||||||||||||||||
Property
catastrophe
|
$ | 182,600 | 67.3% | $ | 144,389 | 79.6% | ||||||||||
Property
|
19,057 | 7.0% | 26,344 | 14.5% | ||||||||||||
Short-tail
specialty and casualty
|
42,848 | 15.8% | 10,612 | 5.9% | ||||||||||||
Insurance
|
26,673 | 9.9% | – | 0.0% | ||||||||||||
Total
|
$ | 271,178 | 100.0% | $ | 181,345 | 100.0% | ||||||||||
Six
Months Ended June 30, 2008
|
Six
Months Ended June 30, 2007
|
|||||||||||||||
Gross
premiums written
|
Percentage
of
total
|
Gross
premiums written
|
Percentage
of total
|
|||||||||||||
Line of
business
|
||||||||||||||||
Reinsurance
|
||||||||||||||||
Property
catastrophe
|
$ | 344,128 | 67.0% | $ | 302,757 | 78.0% | ||||||||||
Property
|
39,115 | 7.6% | 50,900 | 13.1% | ||||||||||||
Short-tail
specialty and casualty
|
84,403 | 16.5% | 34,701 | 8.9% | ||||||||||||
Insurance
|
45,778 | 8.9% | – | 0.0% | ||||||||||||
Total
|
$ | 513,424 | 100.0% | $ | 388,358 | 100.0% |
Three
Months Ended June 30, 2008
|
Three
Months Ended June 30, 2007
|
|||||||||||||||
Gross
premiums written
|
Percentage
of
total
|
Gross
premiums written
|
Percentage
of total
|
|||||||||||||
Geographic area of risk
insured(1)
|
||||||||||||||||
Caribbean (2)
|
$ | 28,537 | 10.5% | $ | 7,692 | 4.2% | ||||||||||
Europe
|
10,352 | 3.8% | 17,053 | 9.4% | ||||||||||||
Japan
and Australasia
|
24,606 | 9.1% | 17,874 | 9.9% | ||||||||||||
North
America
|
165,072 | 60.9% | 123,682 | 68.2% | ||||||||||||
Worldwide
risks(3)
|
36,312 | 13.4% | 14,058 | 7.8% | ||||||||||||
Other
|
6,299 | 2.3% | 986 | 0.5% | ||||||||||||
Total
|
$ | 271,178 | 100.0% | $ | 181,345 | 100.0% | ||||||||||
Six
Months Ended June 30, 2008
|
Six
Months Ended June 30, 2007
|
|||||||||||||||
Gross
premiums written
|
Percentage
of
total
|
Gross
premiums written
|
Percentage
of total
|
|||||||||||||
Geographic area of risk
insured(1)
|
||||||||||||||||
Caribbean (2)
|
$ | 54,158 | 10.5% | $ | 15,055 | 3.9% | ||||||||||
Europe
|
75,441 | 14.7% | 84,021 | 21.6% | ||||||||||||
Japan
and Australasia
|
33,756 | 6.6% | 29,513 | 7.6% | ||||||||||||
North
America
|
242,823 | 47.3% | 214,433 | 55.2% | ||||||||||||
Worldwide
risks(3)
|
93,480 | 18.2% | 39,664 | 10.2% | ||||||||||||
Other
|
13,766 | 2.7% | 5,672 | 1.5% | ||||||||||||
Total
|
$ | 513,424 | 100.0% | $ | 388,358 | 100.0% |
(1)
|
Except as otherwise noted, each of
these categories includes contracts that cover risks located primarily in
the designated geographic area.
|
(2) |
Gross written premiums related to
the Insurance segment are included in
the Caribbean geographic area.
|
(3)
|
This geographic area includes
contracts that cover risks in two or more geographic
zones.
|
a.
|
Property Catastrophe
Reinsurance
|
b.
|
Property
Reinsurance
|
c.
|
Short-tail Specialty and Casualty
Reinsurance
|
a.
|
Loss and Loss Adjustment
Expenses
|
b.
|
Acquisition
Costs
|
c.
|
General and Administrative
Expenses
|
a.
|
Loss and Loss Adjustment
Expenses
|
b.
|
Acquisition
Costs
|
c.
|
General and Administrative
Expenses
|
a.
|
Net investment
income
|
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Interest and dividend
income
|
||||||||||||||||
Cash and cash
equivalents
|
$ | 3,125 | $ | 3,247 | $ | 7,971 | $ | 6,659 | ||||||||
Fixed
maturities
|
7,119 | 11,647 | 16,315 | 21,522 | ||||||||||||
Short term
|
12 | – | 138 | 35 | ||||||||||||
Equity
investments
|
– | 225 | – | 225 | ||||||||||||
Other
investments
|
450 | 25 | 453 | (67 | ) | |||||||||||
Amortization
income
|
||||||||||||||||
Cash and cash
equivalents
|
– | – | – | – | ||||||||||||
Fixed
maturities
|
4,838 | 5,534 | 9,351 | 5,975 | ||||||||||||
Short term
|
141 | – | 302 | – | ||||||||||||
Other
investments
|
– | – | 83 | – | ||||||||||||
Investment
expenses
|
(2,406 | ) | (147 | ) | (2,638 | ) | (187 | ) | ||||||||
Net investment
income
|
$ | 13,279 | $ | 20,531 | $ | 31,975 | $ | 34,162 |
b.
|
Net realized and unrealized gains
and losses – investments
|
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Net realized gains (losses) on
fixed maturities
|
$ | (4,052 | ) | $ | (2,619 | ) | $ | 12,354 | $ | (2,680 | ) | |||||
Net unrealized (losses) gains on
fixed maturities
|
(6,694 | ) | (11,824 | ) | (9,886 | ) | (8,501 | ) | ||||||||
Net realized gains (losses) on
equities
|
– | – | – | – | ||||||||||||
Net unrealized (losses) gains on
equities
|
(3,515 | ) | 3,186 | (11,149 | ) | 3,186 | ||||||||||
Net realized and unrealized gains
(losses) on derivative instruments
|
13,660 | 6,994 | (4,522 | ) | 6,128 | |||||||||||
Net realized and unrealized gains
(losses) on other investments
|
(8,738 | ) | 522 | (8,548 | ) | 2,634 | ||||||||||
Total net realized and unrealized
(losses) gains - investments
|
$ | (9,339 | ) | $ | (3,741 | ) | $ | (21,751 | ) | $ | 767 |
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Futures
contracts
|
$ | 19,141 | $ | 9,594 | $ | (930 | ) | $ | 9,732 | |||||||
Swap
contracts
|
(4,738 | ) | (1,905 | ) | (3,291 | ) | (3,038 | ) | ||||||||
Mortgage-backed securities
TBA
|
(743 | ) | (695 | ) | (301 | ) | (566 | ) | ||||||||
Net realized and unrealized gains
(losses) on derivatives - investments
|
$ | 13,660 | $ | 6,994 | $ | (4,522 | ) | $ | 6,128 |
|
Net realized and unrealized gains
and losses – other
|
Three Months
Ended
|
Six Months
Ended
|
|||||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
|||||||||||||
Swap
contracts
|
$ | 8,064 | $ | 265 | $ | 672 | $ | 503 | ||||||||
Foreign currency forward
contracts
|
2,600 | 1,317 | (2,959 | ) | 946 | |||||||||||
Reinsurance
derivatives
|
468 | 258 | 1,182 | 397 | ||||||||||||
Net realized and unrealized gains
(losses) on derivatives - other
|
$ | 11,132 | $ | 1,840 | $ | (1,105 | ) | $ | 1,846 |
For the three months
ended June 30,
2008
|
For
the six months
ended June 30,
2008
|
||
Operational hedge which comprises
foreign currency forwards on our reinsurance
balances:
|
$0.7
million
|
$(0.3)
million
|
|
Balance sheet
hedge:
|
|||
-
|
foreign currency forwards on
Flagstone Suisse’s net assets (undesignated hedge) and
a portion of long term debt
incurred:
|
$1.9
million
|
$(2.7)
million
|
-
|
foreign currency swaps on our
subordinated debt:
|
$0.1
million
|
$1.9
million
|
-
|
interest rate swaps on our
subordinated debt:
|
$7.9
million
|
$(1.3)
million
|
Unrealized
gains on other reinsurance derivatives
|
$0.5
million
|
$1.2
million
|
As at
June 30,
2008
|
As at
December 31,
2007
|
|||||||
Long term
debt
|
$ | 255,037 | $ | 264,889 | ||||
Common
shares
|
853 | 853 | ||||||
Additional paid-in
capital
|
911,964 | 905,316 | ||||||
Accumulated other comprehensive
income
|
2,718 | 7,426 | ||||||
Retained
earnings
|
364,649 | 296,890 | ||||||
Total
capitalization
|
$ | 1,535,221 | $ | 1,475,374 |
NONE
|
|
There have been no material
changes to the risk factors previously described in Part I, Item 1A of our
annual report on
Form 10-K for the year ended
December 31, 2007.
|
|
NONE
|
|
NONE
|
On May 16, 2008 the Company held its Annual General Meeting of
shareholders. Shareholders were asked to vote upon the resolutions set out
below. The following tabulation indicates the number of shares voted for
or against, or withheld, or abstaining with respect to each resolution
after giving effect to the voting limitations contained in the Company’s
Bye-laws:
|
|
1)
|
electing
the following persons as directors to hold office until the Company’s next
Annual General Meeting or until their successors are elected or
appointed or their offices are otherwise
vacated:
|
FOR
|
AGAINST
|
ABSTAIN
|
BROKER NON
VOTE
|
|
GARY BLACK
|
71,569,178
|
0
|
27,128
|
0
|
THOMAS DICKSON
|
71,577,678
|
0
|
18,628
|
0
|
JAN SPIERING
|
71,577,678
|
0
|
18,628
|
0
|
WRAY T. THORN
|
71,569,027
|
0
|
27,279
|
0
|
In accordance with the Company’s Bye-Laws the Class A Directors, Mark J.
Byrne, Stewart Gross, E. Daniel James and Marc Roston have terms which
expire at the 2009 Annual General Meeting. The Class C Directors, David A.
Brown, Stephen Coley, Dr. Anthony Knap and Peter F. Watson have terms
which expire at the 2010 Annual General
Meeting.
|
|
2)
|
to
appoint Deloitte & Touche, independent auditors, to serve as our
independent auditors for the 2008 Fiscal year until our 2009 Annual
General Meeting, and to refer the determination of the auditors’
remuneration to the Board of
Directors:
|
FOR
|
AGAINST
|
ABSTAIN
|
BROKER NON
VOTE
|
|
71,568,754
|
25,562
|
1,990
|
0
|
|
3)
|
to
approve an amendment to the Company’s Performance Share Unit
Plan:
|
FOR
|
AGAINST
|
ABSTAIN
|
BROKER NON
VOTE
|
|
61,692,974
|
1,217,956
|
25,432
|
8,659,945
|
|
4)
|
to
approve the list of Designated Company Directors for certain subsidiaries
of the
Company:
|
FOR
|
AGAINST
|
ABSTAIN
|
BROKER NON
VOTE
|
|
71,540,666
|
31,008
|
24,632
|
0
|
At the Company’s Annual General Meeting of shareholders held on May 16,
2008, the PSU Plan was amended to increase the maximum number of PSUs that
can be issued under the PSU Plan from 2.8 million to 5.6 million and to
increase the maximum number of common shares that can be issued under the
PSU Plan from 5.6 million to 11.2
million.
|
The exhibits listed on the accompanying Exhibit Index, and such Exhibit
Index, are filed or incorporated by reference as a part of this
report.
|
FLAGSTONE REINSURANCE HOLDINGS
LIMITED
|
|||
By:
|
/s/ David
Brown
|
||
David
Brown
|
|||
Chief Executive
Officer
|
|||
(Authorized
Officer)
|
By:
|
/s/ James
O’Shaughnessy
|
||
James
O’Shaughnessy
|
|||
Chief Financial
Officer
|
|||
(Principal Financial
Officer)
|
Exhibit No.
|
Description of
Exhibit
|
|
10.1
|
Flagstone Reinsurance Holdings
Limited Performance Share Unit Plan, as amended and
restated.
|
|
31.1
|
Certification of Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, with respect to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008.
|
|
31.2
|
Certification of Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, with respect to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008.
|
|
32.1
|
Certification of Principal
Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, with respect to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008.
|
|
32.2
|
Certification of Principal
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, with respect to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008.
|