Greater-than-expected losses from last year’s Hurricane Irma hit Blue Capital Reinsurance Holdings’ first-quarter earnings.

The Bermuda collateralised reinsurance provider made net income of $0.5 million, compared to $4.1 million in the first quarter of 2017.

The company reported rate increases averaging 12 per cent at January renewals, but revenues slumped by almost one third to $12.5 million from $17 million a year earlier.

Michael McGuire, Blue Capital’s chairman and CEO, said: “The first-quarter results were adversely impacted by an increase in reported losses related to Hurricane Irma as claim settlements and related loss adjustment expenses were greater than originally expected.

“Pricing continues to show positive momentum, and as we previously reported, we achieved improved pricing during January renewals

“The market improvements coupled with our strategic alignment with Sompo International Holdings has enabled us to construct an improved portfolio year over year with higher return expectations and a lower risk profile.”

Combined ratio for the quarter was 98 per cent compared with 56.5 per cent in the same period a year ago. Blue Capital said the deterioration in the period’s combined ratio was driven by higher loss and loss adjustment expense ratios.

Loss and loss adjustment expenses of $4.5 million rose from $1.8 million reported a year ago, stemming from an increase in estimated losses related to Hurricane Irma which made landfall in Florida in September 2017.

Reinsurance acquisition costs for the current quarter were $1.9 million compared to $2.7 million a year ago, reflecting lower premium earnings and profit commissions. General and administrative expenses for the current quarter were $1.1 million compared to $1.3 million a year ago due to lower performance fees in the current quarter.