Q2 2005 Odyssey Re Holdings Corp. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning everyone, and welcome ladies and gentlemen, to the Odyssey Re Holdings Corporation's's second quarter 2005 Conference Call. At this time, I would like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. At the request of the Company, we will open up the conference for questions and answers, after the presentation. I would now like to turn the conference over to Don Smith, General Counsel and Secretary. Please go ahead, sir.

DON SMITH, GENERAL COUNSEL AND SECRETARY, ODYSSEY RE HOLDINGS CORP.: Thank you. Odyssey Re's results will be discussed by our President and Chief Executive Officer, Andy Barnard, and by Rob Giammarco, Executive Vice President and Chief Financial Officer of the Company.

The following discussion may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements, may relate to risks and uncertainties. Actual results may be materially different from those contained in, or suggested by such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements, is contained in the Company's filings with the Securities and Exchange Commission. Now Andy Barnard will open the discussion. Andy?

ANDY BARNARD, CEO, ODYSSEY RE HOLDINGS CORP.: Thank you, Don. Good morning, everyone. Our second quarter results, reflect continuation of the broad market trends that have been in place over recent quarters. In the reinsurance world in the United States, we continue to see weaker demand for casualty treat cover. As many ceding's have actively increased their net retentions. Generally speaking, the terms and conditions of those treaty's in the market have remained firm but we are carefully choosing our spots.

While the casualty treaty business is diminishing, our U.S. casualty facultative operation continues to produce a healthy volume. In general, there is much less competition in the facultative market than there is in treaty.

Reinsurance opportunities in the property catastrophe arena, have increased. We expect our volume of U.S.-based catastrophe premium to expand over the year, partially offsetting the decreases we are experiencing on the casualty side. In Florida, in particular, we have been able to grow our business significantly without taking on a commensurate increase in hurricane exposure. This is due, of course, to last year's abnormally high loss levels and the resulting pressure, for tightened terms of trade.

In Latin America, we continue to see a good flow of opportunities, although our volume will likely decrease for the year, due to reductions in our property facultative book.

In London, we expect our volume to continue facing modest, downward pressure. Our liability business, written through Lloyd's, has performed exceptionally well over the last several years. The price competition in both the U.K. and Australia has, however, picked up in intensity. As the year progresses we may find in necessary to cut back further.

Our international reinsurance business, managed from Paris, has returned to a nice profit after the natural catastrophe losses that marked our last quarter. The vast majority of underwriting activity in this division, takes place at January and April 1st. Our portfolio is already largely in place.

Finally, our U.S. insurance division, which focuses on specialty insurance products, has registered another quarter of strong growth and profitability. Our surplus lined healthcare business, continues to grow. Rates are holding up and our market position is allowing us to expand the portfolio. Other market segments we've focused on; such as, professional liability and nonstandard auto, have generated growth as our business relationships mature. Across all of the subclasses in our U.S. insurance division we find competition to be reasonably disciplined and the opportunity for attractive returns to be high. That is not to say we did not encounter isolated instances of aggressive behavior which forced us to let business go rather than chase deteriorating margins.

Adding it all up, our take on the business is …