Odyssey Re Holdings Corp. Reports Second Quarter 2009 Results

Odyssey Re Holdings Corp. (NYSE: ORH) today reported net income available to common shareholders of $121.8 million, or $2.03 per diluted share, for the quarter ended June 30, 2009, compared to $65.2 million, or $0.99 per diluted share, for the quarter ended June 30, 2008. Operating income after tax ⁽¹⁾ was $85.9 million, or $1.43 per diluted share, for the second quarter of 2009, compared to $35.5 million, or $0.54 per diluted share, for the second quarter of 2008. Included in second quarter 2009 net income available to common shareholders were after-tax net realized investment gains of $35.9 million, or $0.60 per diluted share, compared to after-tax net realized investment gains of $29.7 million, or $0.45 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009, net income available to common shareholders was $122.7 million, or $2.04 per diluted share, compared to $314.2 million, or $4.66 per diluted share, for the comparable period of 2008.

Highlights for the second quarter of 2009:

• Shareholders’ equity of $3.14 billion as of June 30, 2009, an increase of $310.6 million, or 11.0%, compared to December 31, 2008, and a 15.7% increase compared to March 31, 2009;
• Book value per common share⁽²⁾ of $51.90 as of June 30, 2009, an increase of $6.53, or 14.4%, compared to December 31, 2008, and an increase of $8.10, or 18.5%, compared to March 31, 2009;
• Total invested assets and cash of $8.1 billion as of June 30, 2009, an increase of $197.6 million, or 2.5%, compared to December 31, 2008; and
• During the second quarter of 2009, 1.2 million shares of the Company’s common stock were repurchased and retired at an aggregate cost of $47.5 million; 532,000 shares of the Company’s common stock were repurchased and retired from July 1 through July 29, 2009 at an aggregate cost of $21.6 million.

Gross premiums written for the quarter ended June 30, 2009 were $511.4 million, compared to $566.2 million for the quarter ended June 30, 2008. Gross premiums written related to the Company’s worldwide reinsurance business decreased 10.3%, due largely to our non-U.S. Dollar denominated business. Gross premiums written related to the Company’s insurance business decreased 8.4% compared to the quarter ended June 30, 2008. Net premiums written for the second quarter of 2009 were $459.8 million, an 8.7% decrease compared to second quarter 2008 net premiums written of $503.5 million.

The combined ratio for the second quarter of 2009 was 96.5%, compared to 98.7% for the second quarter of 2008. Results for the quarter ended June 30, 2009 reflect after-tax net current year catastrophe losses, principally related to our EuroAsia division, of $9.1 million, or $0.15 per diluted share, compared to $23.2 million, or $0.36 per diluted share, for the second quarter of 2008. For the six months ended June 30, 2009 and 2008, the combined ratio was 96.5% and 98.5%, respectively.

Net investment income amounted to $93.0 million for the second quarter of 2009, compared to $64.7 million for the second quarter of 2008. Net pre-tax realized investment gains were $55.2 million for the second quarter of 2009, compared to $45.6 million for the second quarter of 2008. Net pre-tax realized investment gains were reduced by $45.3 million and $0.3 million for the quarters ended June 30, 2009 and 2008, respectively, related to other-than-temporary write-downs of investments. Net unrealized investment gains, after tax, were $346.3 million at June 30, 2009, compared to $75.2 million at December 31, 2008.

For the quarter ended June 30, 2009, cash flow from operations was a negative $1.5 million, compared to positive cash flow from operations of $15.2 million for the quarter ended June 30, 2008.

In the second quarter of 2009, OdysseyRe paid a cash dividend of $0.075 per common share on June 30, 2009 to common shareholders of record as of June 16, 2009.

A conference call to discuss the second quarter financial results will be held at 10:00 a.m. Eastern Time on Friday, July 31, 2009.

A live audio webcast of the conference call will be available on the Odyssey Re Holdings Corp. web site (www.odysseyre.com). In addition, callers not able to access the Internet may listen to the conference call by dialing (888) 215-7030 (domestic) or (913) 312-0648 (international); the passcode number is 1650124. A replay of the call will be available from 12:00 p.m. Eastern Time on Friday, July 31, 2009 until 11:59 p.m. Eastern Time on Sunday, August 9, 2009. To access the replay, please call either (888) 203-1112 (domestic) or (719) 457-0820 (international); the passcode number is 1650124.

Odyssey Re Holdings Corp. is a leading worldwide underwriter of property and casualty treaty and facultative reinsurance, as well as specialty insurance. OdysseyRe operates through its subsidiaries, Odyssey America Reinsurance Corporation, Hudson Insurance Company, Hudson Specialty Insurance Company, Clearwater Insurance Company, Newline Underwriting Management Limited, Newline Asia Services Pte. Ltd. and Newline Insurance Company Limited. The Company underwrites through offices in the United States, London, Paris, Singapore, Toronto and Mexico City. Odyssey Re Holdings Corp. is listed on the New York Stock Exchange under the symbol "ORH”.

Certain statements contained herein may constitute forward-looking statements and are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: a reduction in net income if the Company's loss reserves are insufficient; the occurrence of catastrophic events with a frequency or severity exceeding the Company’s estimates; the lowering or loss of one of the Company's financial or claims-paying ratings, including those of the Company’s subsidiaries; an inability to realize the Company's investment objectives; a decrease in the level of demand for the Company's reinsurance or insurance business, or increased competition; emerging claim and coverage issues; the risk that ongoing regulatory developments will disrupt the Company's business or mandate changes in industry practices that increase the Company's costs; changes in economic conditions, including interest rate, currency, equity and credit conditions; the Company's inability to access its subsidiaries' cash; loss of services of any of the Company's key employees; risks related to the Company's use of reinsurance brokers; failure of the Company's reinsurers to honor their obligations; regulatory and legislative changes; risks associated with the growth of the Company's specialty insurance business; and other factors that are described in the Company's filings with the Securities and Exchange Commission. Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Visit OdysseyRe’s web site – www.odysseyre.com – for additional information about the Company. In addition, anyone may view the Company’s historical press releases and filings with the Securities and Exchange Commission, which provide additional data regarding the Company's prior quarterly and year-to-date results. This historical information may be found on OdysseyRe’s web site under "Investor Information.”

Consolidated financial and segment information follows: