Bermuda-based Platinum Underwriters Holdings Ltd.'s third-quarter earnings fell 14 percent on an estimated loss of $28.5 million from last month's earthquake in New Zealand.

Last night the reinsurer announced net earnings of $93.7 million for July through September period, compared to $109.5 million in the same period last year.

Despite the earthquake, which caused widespread damage in the city of Christchurch, Platinum's combined ratio, a measure of underwriting profitability, improved by 4.2 points, helped by $34.6 million of net favourable development of reserves.

"Despite an overcapitalised reinsurance marketplace, we have developed an acceptable portfolio of treaty reinsurance risks," Platinum's chief executive officer Michael Price said. "Through active management, we have better aligned our capital base with business opportunities."

Reinsurance broker Guy Carpenter estimated last month that excess capital in the reinsurance industry totalled around $13 billion. The oversupply of capacity, which is putting downward pressure on reinsurance rates, has accumulated after reinsurers wracked up bumper profits last year, thanks to rebounding stock markets and an absence of catastrophe claims.

Platinum, the first of the Bermuda commercial reinsurers to announce third-quarter earnings, said its book value rose 7.6 percent during the quarter to $55.13 per share. In New York Stock Exchange trading yesterday, Platinum's share price rose 11 cents to $43.40, before the company announced earnings.

Mr. Price said the company had benefited from "a change to our estimate of administrative costs of managing claims".

Earnings per common share broke down to $2.13 and combined ratio — the percentage of premium dollars spent on claims and expenses — was 68.1 percent.

Net investment income fell 30 percent to $13.7 million, but net realised gains on investments totalled $44.3 million, up $21.8 million.

For the first nine months of the year, net income was $233.2 million, or $5.04 per share, a fall of 20 percent compared to the same period last year.

Net premiums written for the first nine months were down 14 percent to $598.6 million.