Montpelier Re's net income plunged by 59.6 percent in the fourth quarter of 2010 as claims doubled and investment income declined.The Bermuda-based specialty reinsurer said yesterday that net income for the quarter fell from $104.7 million in the three months to the end of December, 2009 to $42.2 million in the same period in 2010.Operating income per share for the quarter was 81 cents compared to $1.12 a year earlier. The company beat analysts' estimates of earnings of 75 cents per share for the quarter. Analysts' estimate typically excludes one-time items.For the year, net income also dropped from $463.5 million to $208.7 million, or from $3.13 a share to $2.30 a share.Despite the earnings drop, chief executive officer Christopher Harris said Montpelier had been successful in increasing net book value per share by 18 percent in 2010.“This result was satisfying considering the challenging market conditions we faced and the large number of earthquakes and other catastrophe losses experienced around the globe.“We expect difficult trading conditions for the remainder of 2011, but we remain very pleased with the quality of our in-force portfolio. We further reduced our net catastrophe risk profile in the January renewal season in response to softening rates, and share repurchases remain a compelling option as part of our ongoing cycle management strategy.”For the fourth quarter, gross premiums written rose from $79.1 million to $102.3 million but loss and loss adjustment expenses jumped from $42 million to $87 million. Net investment income fell from $21.3 million to $16.6 million.Montpelier's combined ratio also soared in the quarter, increasing from 48.7 percent to 74.1 percent.For the full year, gross premiums written rose to $720 million from $634.9 million in 2009, but losses and loss adjustments rose to $411.6 million from $214.4 million in 2009. Net investment income fell from $81 million to $74.1 million.The company's combined ratio was 82 percent for the year, up from 62.2 percent in 2009.