Bermuda reinsurer RenaissanceRe Holdings Ltd. swung to a 2006 fourth-quarter profit from a loss a year earlier, but warned that revenue could fall in 2007.

RenRe said earnings for the latest quarter were $201.1 million or $2.78 a share, compared with a year-ago fourth quarter loss of $210.4 million or $2.97 when it paid $314 million in claims to victims of Florida’s Hurricane Wilma.

Full-year net income amounted to $761.6 million, or $10.57 per share, compared to a net loss of $281.4 million, or $3.99 per share for 2005.

In its earnings statement, RenRe estimated that its first-quarter 2007 earnings would be hit by a net loss of around $50 million through claims relating to winter storm Kyrill.

The storm raged through parts of northern and western Europe in mid-January causing more than 40 deaths and billions of dollars worth of damage.

“We are seeing signs of softening in several of our markets,” said Neill Currie, RenRe’s chief executive officer. “Overall we expect our top line (revenue) to be down slightly in 2007 versus 2006.”

Operating earnings were $198.6 million or $2.74 a share, compared with an operating loss of $206.9 million or $2.92 a share in the year earlier quarter. Operating earnings excluded investment gains and losses.

Analysts had expected the reinsurer to earn $2.38 a share in the latest quarter, according to a poll of Reuters Estimates.

“They had fabulous results, but it’s a give and take away situation,” said Chuck Hamilton, an analyst with FTN Midwest Research told Reuters. While the reinsurer exceeded analysts’ estimates by a wide margin, Mr. Currie also said he sees premiums in its catastrophe business, excluding certain joint ventures, down about 5 percent in the coming year.

Mr. Currie cited a recent Florida law, which effectively puts the state in competition with reinsurers like his company. Reinsurers provide back-up coverage to regular property insurers such as Allstate Corp. in case of major catastrophes.

Mr. Currie said: “I am pleased to report record full-year earnings, resulting in a 40 percent increase in book value per common share, and an operating return on equity of approximately 38 percent.

“These record earnings are a result of a low level of catastrophe losses and the extraordinary performance of our team. In particular, we supported our clients by providing needed capacity in a highly dislocated US property cat market, further strengthening our franchise.”

Mr. Currie added that the company was aware that the change in Florida law could reduce demand for some of RenRe’s products.

“We are responding as we have in past cycles — by shrinking in areas that do not meet our standards and growing in areas that we find attractive,” Mr. Currie said.

“Overall, we are now expecting our top line to be down slightly in 2007 versus 2006. In terms of our prospects, we have a strong track record of successfully navigating such markets and are well positioned to do so once again.”