Alabama-based Vesta Insurance Group Inc. (NYSE:VTA) announced its third-quarter earnings indicate $53.8 million operating losses for the third quarter. The release of information about its earnings was delayed last week after what the company described as “an adverse jury decision.”
As the company revealed last week, losses were largely the result of the impact of the Florida hurricanes. A year ago the company reported a third quarter operating profit of $6.4m. The company’s net loss for the quarter totaled $42.8m, compared with last year’s net profit of $6.4m.
The delay was due to a jury verdict received last week in a previously disclosed litigation case, Muhl v. Vesta, in the Supreme Court of the State of New York holding that a retrocessional reinsurance agreement referred to as Pool III did exist.
Although the damages phase of the trial for both Pool I and Pool III is scheduled for December, Vesta is currently estimating the potential impact of this verdict. The charge is initially estimated to be in the range of $10 to $15 million and will impact the company’s loss from discontinued operations in the third quarter.
“The loss for the third quarter reflects the previously-announced impact of the unprecedented four hurricanes that affected Florida, our second largest state,” explained Norman Gayle, Vesta’s president and chief executive officer. The $60.6m loss, including reinsurance reinstatement premiums, from those catastrophes overshadows the excellent underlying results in our residential property portfolio.”
The hurricanes also pushed Vesta’s earnings for the first nine months of the year into the red. The company confirmed a net operating loss for the nine-month period of $30.9m, well down on last year’s net operating profit at this stage of $3.2m.
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