Bermuda reinsurer Montpelier Re Holdings Ltd. posted third-quarter net income of $148 million on strong underwriting results and gains in the value of investments.

The result was a spectacular rebound from last year, when the reinsurer made a loss of $142 million in a quarter impacted by hurricanes Ike and Gustav and treacherous financial markets.

Realised and unrealised gains on investments and foreign exchange, which are included in net income, were $87 million for the quarter and $176 million through the first nine months of the year.

Operating income was $62 million, or $0.71 per share, for the third quarter and $178 million, or $2.03 per share, for the nine months ended September 30, 2009.

Net income for the first nine months was $359 million, or $4.11 per share.

Fully converted book value per share was $19.78 at the end of September, an increase of 9.6 percent for the quarter and 25.5 percent from December 31, 2008, inclusive of dividends.

The company added that it repurchased 1.18 million shares in September at an average price of $16.26 per share and a further 1.46 million shares in October at an average price per share of $17.11. Montpelier spent 66.3 cents of every premium dollar on claims and expenses during the third quarter, compared to 149.6 cents last year.

The third quarter 2009 loss ratio totalled 29 percent, which includes 13.5 points ($19.4 million) in favourable releases from prior years' loss reserves.

Montpelier chief executive officer Chris Harris said: "We produced an excellent quarterly result with a low loss ratio and solid investment results leading to 9.6 percent growth in our fully converted book value per share.

"Net written premiums grew by 16 percent for the quarter due to strong property catastrophe rate levels and increased opportunities in our Lloyds' and US operations.

"In light of the strong growth in our capital base since the beginning of the year, we resumed our share repurchase programme in September and have deployed a portion of that increased capital in a manner that is accretive to our book value per share."