Meadowbrook Insurance Group Inc. reports a second-quarter net loss of more than $11 million—an increase net loss of 49 percent over the same period last year.
The Southfield, Mich.-based company blamed the negative results on an adverse reinsurance arbitration award on ceded losses dating back to a reinsurance treaty in place for the 1999 to 2001 policy period. The total pre-tax impact was more than $8 million and after-tax impact was in excess of $5 million.
Meadowbrook is a specialty program management market that includes six P&C carriers, several agencies, claims and loss prevention facilities and self-insured management organizations.
Revenues in the quarter fell 15 percent to $199 million as net written premium dropped 24 percent to $167 million. The combined ratio for Q2 jumped 4.9 points to 116.
In addition to the arbitration award, the quarter suffered from $21 million in discontinued business and $5.8 million in storm losses.
For the six months, Meadowbrook reports a net loss of $4 million, compared to net income of $372 million for the prior year. Revenues fell 13 percent to $391 million on net written premium of $361 million, which was down 18 percent from 2012. The combined ratio was up 2 points to 108.6.
The decrease in premium reflects the impact of discontinued business in the fourth quarter of 2012, offset by rate increases. Investment income also had an impact, falling close to $5 million to $23 million on the sale of a portion of its bond portfolio in order to generate realized gains.
Meanwhile, second-quarter net income for Houston-based HCC Insurance Holdings Inc. dropped 6 percent as catastrophe losses impacted earnings.
The specialty insurer reports net earnings of $88 million, down $5 million from the same period last year. Revenues for the period were off less than 1 percent to $629 million. The combined ratio was off less than 0.1 percent to 85.3.
For the first half of the year, HCC's net earnings remain up 10 percent to $194 million. Revenues increased slightly by 2 percent to $1.26 billion, and its combined ratio improved 0.8 points to 84.5.
HCC's Q2 results suffered from the impact of pretax net catastrophe losses of $21 million for the quarter and $27 million for the first half of the year.
HCC's CEO Christopher J.B. Williams says the company continues to “generate strong, consistent returns” and it is “finding good opportunities to grow our existing businesses, as well as to add teams focused on new lines.”
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