Odyssey Re Holdings Corp. Reports Full Year and Fourth Quarter 2008 Results

For the year ended December 31, 2008, net income available to common shareholders was $543.1 million, or $8.50 per diluted share, compared to $587.2 million, or $8.23 per diluted share, for the year ended December 31, 2007. Operating income after tax was $93.1 million, or $1.46 per diluted share, for the year ended December 31, 2008, compared to operating income after tax of $236.8 million, or $3.32 per diluted share, for the year ended December 31, 2007.

Financial highlights for the fourth quarter and full year of 2008 include the following:

-- Pre-tax net income for the quarter of $156.7 million, and for the year of $827.5 million;

-- Total invested assets and cash as of December 31, 2008 of $7.9 billion, or $131.01 per common share, compared to $7.8 billion, or $111.90 per common share, as of December 31, 2007;

-- For the full year, the repurchase of 9.5 million shares of common stock for an aggregate cost of $351.4 million, or $37.06 per share. No common shares were repurchased in the fourth quarter;

-- Book value per common share as of December 31, 2008 of $45.37, an increase of 8.6% for the quarter, and 23.4% for the year;

-- Operating income for the quarter was reduced by an after-tax charge of $30.7 million, or $0.51 per share, related to foreign currency translation.

Gross premiums written for the quarter ended December 31, 2008 were $494.1 million, a decrease of 5.9% compared to $525.3 million for the quarter ended December 31, 2007. This reflects a 9.3% increase in the Company's insurance premiums compared to the fourth quarter of 2007, which is more than offset by a decline of 13.3% in the Company's worldwide reinsurance premiums. Net premiums written during the fourth quarter of 2008 were $437.7 million, a decrease of 9.3% compared to fourth quarter of 2007 net premiums written of $482.4 million, resulting from an increase in reinsurance purchased related to our insurance business. The combined ratio for the fourth quarter of 2008 was 93.9%, compared to 93.7% for the fourth quarter of 2007.

Gross premiums written for the year ended December 31, 2008 were $2.29 billion, compared to $2.28 billion for the year ended December 31, 2007. Insurance gross premiums written increased by 7.5%, substantially offset by a 2.8% decrease in reinsurance gross premiums written. Net premiums written over the same period decreased to $2.03 billion from $2.09 billion. The combined ratio for the year ended December 31, 2008 was 101.2%, which included 11.7 combined ratio points related to current year catastrophe losses, compared to 95.5% for the year ended December 31, 2007, which included 4.7 combined ratio points related to current year catastrophe events.

Net investment income amounted to $54.9 million and $255.2 million for the fourth quarter and year ended December 31, 2008, respectively, compared to $77.0 million for the fourth quarter and $329.4 million for the year ended December 31, 2007. Net pre-tax realized gains were $126.9 million and $282.4 million for the fourth quarters of 2008 and 2007, respectively. Net pre-tax realized gains were $692.3 million and $539.1 million for the years ended December 31, 2008 and 2007, respectively. Net pre-tax realized gains for the quarters ended December 31, 2008 and 2007 were reduced by $256.3 million and $13.6 million, respectively, related to other-than-temporary impairments on certain investments.

For the quarter ended December 31, 2008, net cash flow from operations was negative $125.7 million. The recognition of realized investment gains on closed credit default swaps and total return swaps generated a substantial tax payment during the quarter. For the year, net operating cash flow was $112.1 million.

On December 30, 2008, OdysseyRe paid a cash dividend of $0.075 per common share to common shareholders of record on December 16, 2008.

(1) "Operating income" after tax is a non-generally accepted accounting principles ("GAAP") financial measure often used by investors to evaluate performance in the insurance and reinsurance industry. Operating income after tax is equal to net income available to common shareholders, excluding net realized gains. Although realized gains or losses are an integral part of the Company's operations, the amount recognized during any particular period cannot be reasonably estimated and can vary significantly. Management believes that providing operating income after tax to investors is a useful supplement to GAAP information concerning the Company's performance. A reconciliation of net income available to common shareholders to operating income, after tax and related amounts per diluted share is as follows (in millions, except per share amounts):

Three months ended, (unaudited) December 31, 2008 December 31, 2007 Per Diluted Per Diluted $ Share $ Share Net income available to common shareholders $ 107.4 $ 1.80 $ 243.0 $ 3.48 Less: Net realized gains, after tax (82.5 ) (1.38 ) (183.5 ) (2.63 ) Operating income, after tax $ 24.9 $ 0.42 $ 59.5 $ 0.85

Year ended, (unaudited) December 31, 2008 December 31, 2007 Per Diluted Per Diluted $ Share $ Share Net income available to common shareholders $ 543.1 $ 8.50 $ 587.2 $ 8.23 Less: Net realized gains, after tax (450.0 ) (7.04 ) (350.4 ) (4.91 ) Operating income, after tax $ 93.1 $ 1.46 $ 236.8 $ 3.32

(2) Book value per common share, a financial measure often used by investors, is calculated using common shareholders' equity, a non-GAAP financial measure, which represents total shareholders' equity, a GAAP financial measure, reduced by the equity attributable to our preferred stock. The common shareholders' equity is divided by our common shares outstanding at each respective year end to derive book value per common share as reflected in the following table (in millions, except share and per share amounts):

As of December 31, 2008 2007 Total shareholders' equity $ 2,827.7 $ 2,654.7 Less: equity related to preferred stock (94.4 ) (97.5 ) Total common shareholders' equity $ 2,733.3 $ 2,557.2 Common shares outstanding 60,242,949 69,521,494 Book value per common share $ 45.37 $ 36.78

A conference call to discuss the financial results will be held at 10:00 a.m. Eastern Standard Time on Friday, February 20, 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 (866) 575-6534 (domestic) or (913) 312-1517 (international), the passcode number is 5489334. A replay of the call will be available from 12:00 p.m. Eastern Standard Time on Friday, February 20, 2009, until 11:59 p.m. Eastern Standard Time on Sunday, March 1, 2009. To access the replay, please call either (888) 203-1112 (domestic) or (719) 457-0820 (international); the passcode number is 5489334.

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 or more 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; risks relating to current governmental investigations; 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:

ODYSSEY RE HOLDINGS CORP. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) December 31, December 31, 2008 2007 (unaudited) ASSETS Investments and cash: Fixed income securities, available for sale, at fair value $ 3,594,278 $ 4,402,260 (amortized cost $3,429,226 and $4,370,999, respectively) Fixed income securities, held as trading securities, at fair value 338,209 243,164 (amortized cost $474,465 and $232,505, respectively) Redeemable preferred stock, at fair value (cost $510 and $2,086, 114 1,187 respectively) Equity securities: Common stocks, at fair value (cost $1,628,611 and $805,707, 1,555,142 885,751 respectively) Common stocks, at equity 141,473 157,450 Short-term investments, at fair value (amortized cost $1,202,366 and 1,202,360 483,757 $483,757, respectively) Cash and cash equivalents 755,747 897,963 Cash and cash equivalents held as collateral 82,374 295,225 Other invested assets 222,841 412,687 Total investments and cash 7,892,538 7,779,444 Accrued investment income 66,575 70,597 Premiums receivable 496,418 470,227 Reinsurance recoverable on paid losses 82,999 83,123 Reinsurance recoverable on unpaid losses 690,171 643,509 Prepaid reinsurance premiums 94,797 60,528 Funds held by reinsureds 128,543 151,997 Deferred acquisition costs 139,069 150,800 Federal and foreign income taxes receivable 52,096 - Other assets 83,303 90,776 Total assets $ 9,726,509 $ 9,501,001 LIABILITIES Unpaid losses and loss adjustment expenses $ 5,250,484 $ 5,119,085 Unearned premiums 701,955 724,272 Reinsurance balances payable 116,388 98,864 Funds held under reinsurance contracts 55,495 84,696 Debt obligations 489,278 489,154 Federal and foreign income taxes payable - 13,615 Obligation to return borrowed securities - 60,675 Other liabilities 285,174 255,940 Total liabilities 6,898,774 6,846,301 SHAREHOLDERS' EQUITY Preferred shares, $0.01 par value; 200,000,000 shares authorized; 2,000,000 and 2,000,000 Series A shares and 1,872,000 and 2,000,000 Series B shares issued and 39 40 outstanding, respectively Common shares, $0.01 par value; 500,000,000 shares authorized; 60,264,270 and 69,684,726 shares issued, respectively 603 697 Additional paid-in capital 602,727 958,544 Treasury shares, at cost (21,321 and 163,232 shares, respectively) (795 ) (6,250 ) Accumulated other comprehensive income, net of deferred income taxes 82,421 85,023 Retained earnings 2,142,740 1,616,646 Total shareholders' equity 2,827,735 2,654,700 Total liabilities and shareholders' equity $ 9,726,509 $ 9,501,001

ODYSSEY RE HOLDINGS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) Years Ended December 31, Three Months Ended December 31, 2008 2007 2008 2007 (unaudited) (unaudited) (unaudited) REVENUES Gross premiums written $ 2,294,542 $ 2,282,682 $ 494,086 $ 525,335 Ceded premiums written 263,721 193,239 56,374 42,972 Net premiums written 2,030,821 2,089,443 437,712 482,363 Decrease in net unearned premiums 45,543 31,094 66,293 36,544 Net premiums earned 2,076,364 2,120,537 504,005 518,907 Net investment income 255,199 329,422 54,870 76,952 Net realized investment gains 692,259 539,136 126,891 282,350 Total revenues 3,023,822 2,989,095 685,766 878,209 EXPENSES Losses and loss adjustment expenses 1,508,725 1,408,364 327,337 327,500 Acquisition costs 418,005 437,257 101,022 107,980 Other underwriting expenses 175,013 178,555 45,125 50,627 Other expense, net 60,419 14,006 47,227 2,696 Interest expense 34,180 37,665 8,353 9,379 Total expenses 2,196,342 2,075,847 529,064 498,182 Income before income taxes 827,480 913,248 156,702 380,027 Federal and foreign income tax provision (benefit): Current 533,899 201,803 221,787 67,994 Deferred (255,427 ) 115,870 (172,967 ) 66,952 Total federal and foreign income tax provision 278,472 317,673 48,820 134,946 Net income 549,008 595,575 107,882 245,081 Preferred dividends (7,380 ) (8,345 ) (1,923 ) (2,070 ) Gain on redemption of Series B preferred shares 1,456 - 1,456 - NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 543,084 $ 587,230 $ 107,415 $ 243,011 BASIC Weighted average common shares outstanding 63,384,032 70,443,600 59,325,231 69,221,744 Basic earnings per common share $ 8.57 $ 8.34 $ 1.81 $ 3.51 DILUTED Weighted average common shares outstanding 63,870,337 71,387,255 59,817,689 69,734,046 Diluted earnings per common share $ 8.50 $ 8.23 $ 1.80 $ 3.48 DIVIDENDS Dividends paid per common share $ 0.275 $ 0.250 $ 0.075 $ 0.063 COMPREHENSIVE INCOME Net income $ 549,008 $ 595,575 $ 107,882 $ 245,081 Other comprehensive (loss) income, net of tax (1,217 ) 76,190 113,996 31,821 Comprehensive income $ 547,791 $ 671,765 $ 221,878 $ 276,902

ODYSSEY RE HOLDINGS CORP. BUSINESS SEGMENTS (UNAUDITED) (IN THOUSANDS) Years Ended Three Months Ended December 31, % December 31, % 2008 2007 Change 2008 2007 Change GROSS PREMIUMS WRITTEN Americas $ 776,387 $ 834,921 (7.0 ) % $ 177,430 $ 191,960 (7.6 ) % EuroAsia 596,710 565,608 5.5 104,845 134,993 (22.3 ) London Market 381,764 349,874 9.1 103,301 86,167 19.9 U.S. Insurance 539,681 532,279 1.4 108,510 112,215 (3.3 ) Total $ 2,294,542 $ 2,282,682 0.5 % $ 494,086 $ 525,335 (5.9 ) % NET PREMIUMS WRITTEN Americas $ 760,696 $ 817,849 (7.0 ) % $ 174,103 $ 188,810 (7.8 ) % EuroAsia 569,289 542,058 5.0 99,928 131,724 (24.1 ) London Market 306,526 305,601 0.3 82,691 71,943 14.9 U.S. Insurance 394,310 423,935 (7.0 ) 80,990 89,886 (9.9 ) Total $ 2,030,821 $ 2,089,443 (2.8 ) % $ 437,712 $ 482,363 (9.3 ) % NET PREMIUMS EARNED Americas $ 780,027 $ 841,869 (7.3 ) % $ 193,267 $ 208,270 (7.2 ) % EuroAsia 566,517 543,141 4.3 129,302 131,877 (2.0 ) London Market 314,616 306,799 2.5 83,379 75,156 10.9 U.S. Insurance 415,204 428,728 (3.2 ) 98,057 103,604 (5.4 ) Total $ 2,076,364 $ 2,120,537 (2.1 ) % $ 504,005 $ 518,907 (2.9 ) % Years Ended Percentage Three Months Ended Percentage December 31, Point December 31, Point 2008 2007 Change 2008 2007 Change LOSSES AND LOSS ADJUSTMENT EXPENSES RATIO Americas 82.8 % 78.6 % 4.2 67.5 % 99.2 % (31.7 ) EuroAsia 70.1 64.2 5.9 60.6 53.2 7.4 London Market 59.9 49.0 10.9 49.9 12.0 37.9 U.S. Insurance 66.8 57.8 9.0 78.4 40.4 38.0 Total 72.7 % 66.4 % 6.3 65.0 % 63.1 % 1.9 ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES RATIO Americas 32.5 % 32.1 % 0.4 33.7 % 35.7 % (2.0 ) EuroAsia 26.0 27.5 (1.5 ) 25.6 28.3 (2.7 ) London Market 26.0 26.3 (0.3 ) 23.6 26.5 (2.9 ) U.S. Insurance 26.7 26.8 (0.1 ) 28.8 26.0 2.8 Total 28.5 % 29.1 % (0.6 ) 28.9 % 30.6 % (1.7 ) COMBINED RATIO Americas 115.3 % 110.7 % 4.6 101.2 % 134.9 % (33.7 ) EuroAsia 96.1 91.7 4.4 86.2 81.5 4.7 London Market 85.9 75.3 10.6 73.5 38.5 35.0 U.S. Insurance 93.5 84.6 8.9 107.2 66.4 40.8 Total 101.2 % 95.5 % 5.7 93.9 % 93.7 % 0.2

SOURCE: Odyssey Re Holdings Corp.

Odyssey Re Holdings Corp. R. Scott Donovan, 203-977-0199 Chief Financial Officer