Transatlantic Holdings, Inc. (NYSE: TRH) reported financial results for the second quarter and six months ended June 30, 2009. The results include net income for the second quarter of $112 million, or $1.68 per common share (diluted), compared to $90 million, or $1.34 per common share (diluted), in the second quarter of 2008. Book value per share increased 6.9% in the quarter, reaching a record high of $53.47 at June 30, 2009.
TRHâ€™s net operating income for the second quarter of 2009 was $129 million, or $1.93 per common share (diluted), remaining level with the second quarter of 2008.
Commenting on the quarter, Robert F. Orlich, President and Chief Executive Officer, said, â€œBook value per share grew significantly during the quarter as a result of strong earnings and the positive momentum reflected in certain financial markets compared with earlier this year. The quarterâ€™s earnings benefited from benign catastrophe loss activity and a generally positive underwriting environment, particularly in catastrophe exposed classes.
â€œIn June, the uncertainty surrounding the majority ownership of Transatlanticâ€™s common stock was successfully resolved with the completion of a secondary public offering of our shares owned by AIG companies. Such AIG companies now own approximately 13.9% of Transatlanticâ€™s outstanding shares.
â€œWith operations on six continents, we are well-positioned in the marketplace and our financial condition is strong. We are excited about our future, grateful to our clients, brokers and staff who supported us through this period of uncertainty, and proud of our long and rich history, which we will continue to build upon as we move ahead.â€
Other highlights in the second quarter of 2009 include:
* Annualized operating ROE of 15.0% based on second quarter results; GAAP basis annualized ROE of 13.1%.
* Combined ratio of 93.6%, on the strength of improved underwriting performance in domestic operations. Catastrophe costs and loss reserve development were insignificant in the quarter.
* Net premiums written of $1.01 billion, up 1.8% over the prior year; excluding the impact of foreign exchange, net premiums written would have increased 6.5% over the prior year quarter.
* Net operating cash flow of $231 million.
* Net investment income of $111 million, a decline of 7.7% compared to the year ago quarter, principally as a result of a decline in income from alternative investments.
* Realized net capital losses of $25 million, including $20 million representing other-than-temporary impairment losses charged to earnings which related to equities and fixed maturities.
* Net loss and loss adjustment expense reserves increased $281 million during the quarter, bringing the amount of such reserves to $7.64 billion at June 30, 2009. $210 million of such increase was due to foreign exchange.
* At quarter end, consolidated investments and assets totaled $10.96 billion and $14.08 billion, respectively; stockholdersâ€™ equity totaled $3.55 billion.
* In June, AIG companies sold through a secondary public offering 29.9 million shares of TRH common stock, including the full exercise of the underwritersâ€™ overallotment option. None of the proceeds of the offering were received by TRH. Such AIG companies now own approximately 13.9% of TRHâ€™s outstanding common shares.
For the first six months of 2009, net income totaled $188 million, or $2.81 per common share (diluted), compared to $205 million, or $3.08 per common share (diluted), for the first six months of 2008. Net operating income for the first six months of 2009 decreased 6.7% to $237 million, or $3.55 per common share (diluted), compared to $254 million, or $3.80 per common share (diluted), for the first six months of 2008. The decline in net income and net operating income for the six month period was primarily due to lower net investment income year-over-year.