TRH Posts $144.2 Million Q3 Loss

Transatlantic Holdings, Inc. (TRH) joined the roster of third quarter hurricane victims, posting a $144.2 net loss for the period, or $2.19 per common share (diluted), compared to a net loss of $21.8 million, or 33 cents per common share (diluted), in the same period last year.

However, the company, in which AIG holds a 59.36 percent stake, managed a net profit for the first 9 months of 2005 of $24.4 million, or 37 cents per common share (diluted), compared to $155.6 million, or $2.35 per common share (diluted), for the first 9 months of 2004.

”Third quarter 2005 results include the aggregate estimated pre-tax impact of significant catastrophe loss events amounting to $395 million, or $256 million on an after-tax basis,” said the announcement. “The first nine months of 2005 includes the aggregate estimated pre-tax impact of significant catastrophe loss events amounting to $445 million, or $292 million on an after-tax basis. Such pre-tax costs for the third quarter and first nine months of 2005 include approximately $300 million related to Hurricane Katrina and approximately $50 million related to Hurricane Rita.”

As most other companies have noted, TRH indicated that “these estimates, which are net of reinsurance and also reflect the net cost of reinstatement premiums, are based on preliminary information and reflect significant judgments related to many factors, including the ultimate resolution of certain legal and regulatory issues. As a result, there remains uncertainty at this time as to the ultimate costs TRH will bear related to these catastrophe events.”

TRH highlighted just how severe Katrina’s impact was by observing that “the third quarter and nine months 2004 results include the aggregate estimated pre-tax impact of catastrophe losses amounting to $165 million, or $115 million after-tax, arising principally from hurricanes which struck the United States and the Caribbean and typhoons that affected Japan.”

Chairman, President and CEO Robert F. Orlich commented: “This year’s results have been severely impacted by catastrophe losses related to several events, including Hurricane Katrina, the worst insured catastrophe loss in history. Despite such unprecedented losses, Transatlantic reported positive net income for the year to date period. In addition, operating cash flow and net investment income remain strong.

“The events of 2005 have prompted our industry to reassess catastrophe risk management practices. That process will likely bring about significant change in such practices as well as increased costs to purchase catastrophe-exposed coverages, consistent with the risk adjusted returns needed to adequately compensate for assuming such exposures.”

TRH also saw declines in premiums. Net premiums written for the third quarter of 2005 totaled $858.2 million compared to $987.4 million in the same period in 2004, a decrease of 13.1 percent. Net premiums written for the first nine months of 2005 totaled $2.6272 billion compared to $2.8221 billion in the comparable prior year period, a decrease of 6.9 percent.

Orlich indicated, however, that “prior to the catastrophe events occurring in the latter part of the third quarter, weakening rates and increased ceding company retentions prevailed in many market sectors. Such conditions, as well as net ceded reinstatement premiums related to catastrophe losses approximating $40 million for the 2005 third quarter and $60 million for 2005 to date, have contributed to premium declines compared to the year-ago periods.”

That was the downside, but Orlich also stated: “After the catastrophe events, marine and property rates in affected regions have increased dramatically, while rates in many other areas have firmed. The longer term impact on market conditions is less clear as industry participants reevaluate risk assessment techniques, risk management strategies and risk appetite. While significant challenges lie ahead, Transatlantic retains its position as a well-established and consistent reinsurance market with diversified products and geographic spread, built on a platform of financial strength.”

The full report may be obtained on the company’s Website at: http://www.transre.com.