Bermuda-based insurer and reinsurer Montpelier Re Holdings Ltd. reported third-quarter income dropped 240 percent compared to last year on catastrophe and investment losses.

For the third quarter, the company reported a net loss of $142.2 million, compared to 2007 third-quarter net income of $101.3 million.

Calling the quarter "a challenging period for our industry," Montpelier Re President and Chief Executive Officer Chris Harris cited major storms and investment market volatility as contributing to the results.

The net loss, Montpelier Re said, reflects $27 million of net realized losses, $48 million of net unrealized losses and $13 million of net foreign exchange losses. A statement explained that "as a result of the adoption of FAS 159 in January 2007, [the company] reports virtually all of its net unrealized investment gains and losses, whether considered temporary or permanent, as a component of net income."

The company reported $91.7 million in net premiums written in the third quarter, down from $118.6 million in 2007, and $134.2 million in net premiums earned, down from $138.4 million a year ago.

Basic loss per share was $1.69 compared to 2007 third-quarter basic earnings per share of $1.06.

Montpelier Re had a 2008 third-quarter operating loss of $54.6 million versus operating income of $78.3 billion in 2007. The 2008 third-quarter combined ratio jumped to 149.6 from 57.9 a year ago.

For the 2008 nine-month period, Montpelier Re reported a net loss of $97.8 million versus net income of $225.3 million in 2007; basic loss per share of $1.13 versus basic earnings per share of $2.33 in 2007; and a combined ratio of 100.5 versus 64.3 in 2007.

Mr. Harris said in a statement, "While it is disappointing to suffer a loss in any quarter, our Ike and Gustav losses were in line with expectations. Additionally, our conservatively positioned investment portfolio held up well in a difficult investing climate. We enter the January renewal season with a strong balance sheet and plan to take full advantage of the attractive opportunities that we believe will increasingly present themselves."

Montpelier Re also announced that it has received permission by the U.K. Financial Services Authority (FSA) to establish a wholly owned Lloyd's managing agent subsidiary called Montpelier Underwriting Agencies Ltd. It will assume the management of Montpelier syndicate 5151 effective Jan. 1, 2009, the company said.