Favourable pricing and no further developments hitting its 2004 and 2005 hurricane reserves has given a good year ending for Montpelier Re Holdings.

The company released its fourth quarter and full year results yesterday. The fourth quarter net income came in at $122.3 million, or $1.26 a share, up from a net loss of $61 million, or 68 cents a share, a year earlier.

Operating income, which excludes realised investment and foreign exchange gains and losses, was $111 million, or $1.14 a share, in the final quarter of 2006.

Montpelier was expected to make 76 cents a share, according to the average estimate of ten analysts in a Thomson Financial survey.

"Our quarterly combined ratio was 35.7 percent, a reflection of a favourable pricing environment, the low level of catastrophe losses, zero development of the 2004 and 2005 hurricane reserves and $17 million of net favourable reserve development on prior accident years," said Montpelier chairman and CEO Anthony Taylor.

The company ended the year with a fully converted book value per share of $15.46, a return of 10.4 percent for the quarter and 33.2 percent for the year, inclusive of dividends.

Mr. Taylor said: "A 33.2 percent return represents a fine result for a transitional year. We believe that our focus on short-tail lines of business is the optimal strategy to maximise growth in book value per share over the long run.

"We continue to explore creative ways to leverage our platform through traditional and non-traditional channels to enhance that return."

Comprehensive income for the quarter and year was $140 million and $362 million respectively, or $1.44 and $3.86 per diluted common share. Operating income, which excludes realised investment and foreign exchange gains and losses, was $286 million for the year.