RenaissanceRe Holdings Ltd. made a profit of $204.8 million in the third quarter — despite taking a $73.6 million hit from an earthquake in New Zealand.

But operating income, which excludes one-off items and gains on investment assets, slumped to $90.9 million, or $1.59 per share, from $242.2 million, or $3.85 per share, in last year's third quarter.

This fell well below the expectations of analysts polled by Bloomberg, who were expecting $2.13 per share.

The Bermuda reinsurer announced last night net earnings broke down to $3.70 per share in the third quarter of 2010, compared to $258.6 million, or $4.12 per share for the same period last year.

Net income included a $15.8 million one-off gain on the sale of Channel Re, as well as net realised and unrealised gains on fixed maturity investments of $98 million.

Annualised return on common equity was 25.4 percent while operating return on average common equity was 11.3 percent. The company said book value per common share increased $3.61 to $60.57 at September 30, 2010, a 6.3 percent increase in the third quarter of 2010.

RenRe chief executive officer Neill Currie said: "Despite a quiet season for land-falling US hurricanes, the New Zealand and Chilean earthquakes this year serve as a reminder that there is significant catastrophe risk around the globe, and that our clients value mitigating this risk. "As one of the largest writers of catastrophe reinsurance risk in the world, we seek to build a diversified portfolio of risks that assists our clients in managing their catastrophe risk while also generating solid returns for our shareholders over the long term. "As we approach the January 1 renewal season, we will continue to maintain our underwriting discipline, focusing on expected profit rather than premium volume." The earthquake on New Zealand's South Island in September caused widespread damage in the Christchurch area. RenRe said its estimate of losses from the quake were based on initial industry insured loss estimates, market share analysis, the company's models, and a review of in-force contracts. Gross premiums written for the third quarter of 2010 decreased $75.7 million, or 37.4 percent, to $126.7 million, compared to $202.4 million for the third quarter of 2009.

RenRe said the insurance GPW fell $67.6 million, or 81.1 percent, while reinsurance premiums fell $13.1 million, or 9.9 percent. Crop insurance gross premiums written decreased $37.4 million, to negative $16.1 million in the third quarter of 2010, compared to $21.3 million in the third quarter of 2009, principally due to the receipt of updated acreage reports for the 2010 crop year.

RenRe recorded a combined ratio of 72.6 percent in the third quarter of 2010, compared to 43.3 percent in the same period last year.

Net investment income was $60.9 million in the third quarter of 2010, compared to $106.8 million in the third quarter of 2009.