Transatlantic 2005 Net Income Drops 85% to $37.9 Million; Q4 Off 86.3%

Transatlantic Holdings, Inc.(TRH) reported that its net income for the year ended December 31, 2005 amounted to $37.9 million, or $0.57 per common share (diluted), compared to $254.6 million, or $3.85 per common share (diluted), in 2004. Net income for the fourth quarter of 2005 was $13.5 million, or $0.20 per common share (diluted), compared to $98.9 million, or $1.50 per common share (diluted), in the same prior year period.

TRH, in which AIG owns a 59.39 percent stake, suffered heavily from the fall hurricanes. The company noted that’s its income statement “includes the aggregate estimated pre-tax impact of significant catastrophe loss events amounting to $544 million, or $354 million on an after-tax basis. The fourth quarter of 2005 includes the estimated pre-tax impact of significant catastrophe costs amounting to $99 million, or $81 million on an after-tax basis, principally related to Hurricane Wilma.”

TRH also cautioned, as have most carriers, that these “catastrophe cost estimates, which are net of reinsurance and also include the net cost of reinstatement premiums, 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.”

The impact shows up sharply in TRH’s combined ratio, which was 112 percent in 2005, compared to 101.5 percent in 2004. “The net impact of significant catastrophe loss events added 16.0 to the combined ratio for 2005 and 5.9 to the combined ratio for 2004,” said the bulletin. “For the fourth quarter of 2005, the combined ratio was 109.1 versus 100.7 in the comparable year ago period. The net impact of significant catastrophe loss events added 12.6 to the combined ratio for the fourth quarter of 2005 and 5.4 to the combined ratio for the fourth quarter of 2004.”

President and CEO Robert F. Orlich commented: “Despite record catastrophe losses, Transatlantic reported net income for the year. While dissatisfied with results, the level of our net losses and loss adjustment expenses incurred was somewhat mitigated by our diversified underwriting portfolio and global platform.

“Premium volume declined this quarter due to competitive market conditions and increased ceding company retentions. Catastrophe activity in the latter part of the year has significantly increased rates in affected areas and classes, with some residual firming of conditions observed in other markets as well.

“While the impact of these improvements had little effect on 2005 results, as a financially strong and well-established global reinsurance market, we are optimistic about 2006.”

To consult the complete report and comments go to the Company’s Website at: www.transre.com.