RenaissanceRe Operating EPS More Than Doubles to $1.33 Per Common Share for 2002 Second Quarter, Vs. $0.62 for Second Quarter of 2001
-- Achieves Annualized ROE of 31% for the Second Quarter
-- 56% Growth in Managed Cat Premium for the Quarter
-- Specialty Reinsurance & Glencoe Insurance Premium Increases to
$143.0 Million in the Quarter, Compared to $17.5 Million in
the Second Quarter of 2001
-- Increases 2002 Earnings Estimates to a Range of $4.45 to $4.60
Per Share, from $4.00 to $4.17
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $93.3 million in second
quarter net operating income available to common shareholders (excluding
realized investment gains and losses), compared to $37.5 million in the second
quarter of 2001.
Operating earnings per common share grew to $1.33 in the second quarter, from $0.62 per common share in the second quarter of the previous year. Net income available to common shareholders rose 138% to $96.2 million, or $1.37 per common share in the quarter, from $40.3 million or $0.67 per common share for the same quarter of 2001.
James N. Stanard, Chairman and CEO, commented: "We are very pleased with the 56% increase we achieved in managed cat premium in the quarter, and with the accelerating growth trends in our specialty reinsurance and Glencoe insurance businesses. To support the growth of our catastrophe business, we utilized our joint ventures and increased our purchases of reinsurance. Our 31% annualized return on equity reflects the inherent earnings power of our business in periods with limited catastrophe loss activity. Assuming normal loss activity for the balance of the year, we are increasing our earnings per share estimates for 2002 to a range of $4.45 to $4.60, reflecting the strong earnings we achieved as a result of the limited losses in the second quarter, as well as the growth in our business."
For the six months ended June 30, 2002, net operating income available to common shareholders (excluding realized gains and losses on investments and excluding the cumulative effect of a change in accounting principle) was $179.9 million or $2.57 per common share, compared to $74.7 million or $1.23 per common share for the same period in 2001. Net income available to common shareholders for the six months ended June 30, 2002 was $174.3 million or $2.49 per common share, compared to $85.2 million or $1.41 per common share for the same period in 2001. In conjunction with the adoption of Statement of Financial Accounting Standard 142 ("SFAS 142"), Goodwill and Other Intangible Assets, the Company wrote-off the entire balance of its goodwill, or $9.2 million; this charge has been reflected as a cumulative effect of a change in accounting principle, and is excluded from the net income for the current quarter, and included in the Company's net income for the six months ended June 30, 2002, as required by SFAS 142.
Gross premiums written for the second quarter of 2002 increased by 122% to $270.3 million, compared to $122.0 million for the same quarter of 2001. Net premiums written for the second quarter of 2002 were $198.5 million, versus $92.9 million for the same quarter of 2001. Net premiums earned for the second quarter of 2002 were $184.7 million, compared to $75.5 million for the same quarter of 2001. Those premiums include $34.8 million of gross written premiums, $34.8 million of net written premiums and $34.2 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re during the second quarter of 2002.
Gross premiums written for the six months ended June 30, 2002 were $731.1 million, compared to $320.2 million for the same period of 2001. Net premiums written for the six months ended June 30, 2002 were $577.6 million, compared to $214.2 million for the same period of 2001. Net premiums earned for the first six months of 2002 were $335.1 million, compared to $159.4 million for the same period of 2001. Those premiums include $130.1 million of gross written premiums, $130.1 million of net written premiums and $57.8 million of net premiums earned by DaVinci Re during the first six months of 2002.
Total Managed Catastrophe Premiums Written, representing gross catastrophe premiums written by RenaissanceRe Holdings Ltd. and by related joint ventures, increased by 56% and were $144.8 million for the second quarter, compared to $92.6 million for the same quarter of 2001. Total Managed Cat Premiums for the six months ended June 30, 2002 increased by 68% to $515.2 million, from $307.2 million for the same period of 2001.
Net investment income, excluding realized and unrealized investment gains and losses, for the second quarter of 2002 increased to $26.4 million, compared to $18.3 million for the same period in 2001, primarily due to the Company's capital raising activities during the second half of 2001 and strong cash flows from operations. Net investment income for the first six months of 2002 was $49.1 million, compared to $36.2 million for the same period in 2001. During the quarter, the Company changed its policy regarding the classification of certain investments previously reflected as cash and cash equivalents. These investments were reclassified to short-term investments to more appropriately reflect the Company's investment strategy regarding those assets.
The Company also reported an increase in other income to $8.1 million for the quarter, from $3.9 million for the same quarter in 2001. Other income for the first six months of 2002 was $16.3 million, compared to $7.8 million for the same period in 2001. The increase primarily relates to an increase from its equity participation in its joint venture activities.
The low level of catastrophe losses in the quarter resulted in claims and claim expenses incurred for the quarter ended June 30, 2002 of $73.1 million, or 39.6% of net premiums earned. In comparison, claims and claim expenses incurred for the quarter ended June 30, 2001 were $32.3 million, or 42.8% of net premiums earned. Claims and claim expenses incurred for the six months ended June 30, 2002 also benefited from the low level of catastrophe losses during the first six months of 2002 and were $116.3 million or 34.7% of net premiums earned. In comparison, claims and claim expenses incurred for the six months ended June 30, 2001 were $74.2 million or 46.5% of net premiums earned.
Pro-forma "other income", which includes aggregate earnings from joint venture activities, fees related to catastrophe business, and miscellaneous other items, is presented in the supplemental disclosures. The principal differences between other income as reported and the pro-forma presentation are that the results of DaVinciRe Holdings Ltd. are reflected as if it were reported under the equity method, and the pro-forma presentation also includes fees earned on certain quota share cessions by the Company of catastrophe business, which are reflected on the income statement as a reduction of acquisition and operational expenses. During the quarter, the Company recorded pro-forma other income of $28.9 million, compared to $6.6 million during the second quarter of 2001. Of the total $28.9 million of pro-forma other income during the quarter, $17.3 million relates to fees and profit commissions, compared to $6.3 million in the second quarter of 2001, and $11.6 million relates to the Company's portion of the earnings from its joint ventures, versus $2.2 million in the comparable period of 2001. In 2001, the remaining $1.9 million loss relates primarily to contracts triggered by physical variables.
For the six months ended June 30, 2002, the Company recorded pro-forma other income of $51.2 million, compared to $12.9 million for the same period of 2001. Of the total $51.2 million of pro-forma other income during the first six months, $29.3 million relates to fees and profit commissions, compared to $9.4 million in the first six months of 2001, and $18.7 million relates to the Company's portion of the earnings from its joint ventures, versus $4.9 million in the comparable period of 2001. The remaining $3.1 million of other income in 2002 relates primarily to income from contracts triggered by physical variables, compared to a loss of $1.4 million in the first six months of 2001.
Shareholders' equity attributable to common shareholders was $1.24 billion at June 30, 2002, compared to $1.08 billion at December 31, 2001. Book value per common share at June 30, 2002 was $18.03 per common share, compared to $15.83 per common share at December 31, 2001. The share and per-share information in this press release reflects the Company's three-for-one stock split in May 2002, as if the split had occurred for all periods presented.
Also reflected on the Company's consolidated financial statements is an increase in debt due to the completion of the previously announced $100 million bank credit facility for DaVinci.
RenaissanceRe Holdings Ltd. will host a conference call on Tuesday, July 23, 2002 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the Investor Section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's principal product is property catastrophe reinsurance.
Cautionary Statement under "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news release contain information about the Company's future business prospects. These statements may be considered "forward-looking." These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future operations results, please refer to RenaissanceRe Holdings Ltd.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2001, and Form 10-Q for the quarter ended March 31, 2002.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the periods ended June 30, 2002 and 2001 (in thousands of
United States Dollars, except per share amounts)
(Unaudited)
Quarters Ended Year to Date
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Revenues
Gross premiums
written $ 270,294 $ 122,012 $ 731,128 $ 320,220
Net premiums
written $ 198,517 $ 92,946 $ 577,613 $ 214,178
Increase in
unearned
premiums (13,775) (17,415) (242,563) (54,747)
Net premiums earned 184,742 75,531 335,050 159,431
Net investment income 26,364 18,270 49,147 36,154
Net foreign exchange
gains (losses) 3,650 233 1,700 (63)
Other income 8,147 3,901 16,276 7,769
Net realized gains
on investments 2,968 2,881 3,654 10,497
Total revenues 225,871 100,816 405,827 213,788
Expenses
Claims and claim
expenses incurred 73,149 32,315 116,267 74,210
Acquisition expenses 20,368 10,608 38,917 23,153
Operational expenses 9,962 9,894 20,625 18,406
Corporate expenses 4,688 4,780 7,378 6,308
Interest expense 3,433 683 6,147 1,547
Total expenses 111,600 58,280 189,334 123,624
Income before minority
interest and taxes and
change in accounting
principle 114,271 42,536 216,493 90,164
Minority interest -
Capital Securities 1,831 1,895 3,664 3,742
Minority interest -
DaVinci 13,470 - 22,947 -
Income before taxes and
change in accounting
principle 98,970 40,641 189,882 86,422
Income tax expense
(benefit) (273) 302 323 1,178
Cumulative effect of a
change in accounting
principle - SFAS 142 -
Goodwill - - (9,187) -
Net income 99,243 40,339 180,372 85,244
Dividends on Series A
Preference Shares 3,003 - 6,041 -
Net income available to
Common Shareholders $ 96,240 $ 40,339 $ 174,331 $ 85,244
Operating earnings per
Common Share -
diluted(a) $ 1.33 $ 0.62 $ 2.57 $ 1.23
Earnings per Common
Share - basic $ 1.43 $ 0.70 $ 2.60 $ 1.48
Earnings per Common
Share - diluted $ 1.37 $ 0.67 $ 2.49 $ 1.41
Average shares
outstanding - basic 67,326 57,837 67,057 57,759
Average shares
outstanding - diluted 70,209 60,453 69,998 60,573
Claims and claim expense
ratio 39.6% 42.8% 34.7% 46.5%
Expense ratio 16.4% 27.1% 17.8% 26.1%
Combined ratio 56.0% 69.9% 52.5% 72.6%
Operating return on
average equity
(annualized)(a) 31.3% 19.7% 31.2% 20.2%
(a) - Excludes realized gains and losses on investments and
cumulative effect of a change in accounting principle - SFAS 142 -
Goodwill
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
As at
June 30, 2002 December 31, 2001
(Unaudited) (Audited)
Assets
Fixed maturity investments
available for sale, at
fair value (Amortized cost
$1,813,651 and $1,266,188
at June 30, 2002 and
December 31, 2001,
respectively) $ 1,831,065 $ 1,282,483
Short term investments 631,408 733,925
Other investments 88,745 38,307
Cash and cash equivalents 102,963 139,715
Total investments and cash 2,654,181 2,194,430
Premiums receivable 375,913 102,202
Ceded reinsurance balances 98,467 41,690
Losses and premiums recoverable 204,980 217,556
Accrued investment income 25,397 17,696
Deferred acquisition costs 51,128 12,814
Other assets 52,241 57,264
Total assets $ 3,462,307 $ 2,643,652
Liabilities, Minority Interest
and Shareholders' Equity
Liabilities
Reserve for claims and claim
expenses $ 684,164 $ 572,877
Reserve for unearned premiums 436,009 125,053
Debt 275,000 183,500
Reinsurance balances payable 159,913 115,967
Other 106,558 58,650
Total liabilities 1,661,644 1,056,047
Minority Interest - Capital
Securities 84,630 87,630
Minority Interest - DaVinci 325,709 274,951
Shareholders' Equity
Series A Preference Shares 150,000 150,000
Common shares and additional
paid-in capital 322,689 264,623
Unearned stock grant
compensation (23,305) (20,163)
Accumulated other comprehensive
income 17,414 16,295
Retained earnings 923,526 814,269
Total shareholders' equity 1,390,324 1,225,024
Total liabilities, minority
interest, and shareholders'
equity $ 3,462,307 $ 2,643,652
Book value per Common Share $ 18.03 $ 15.83
Common Shares outstanding 68,808 67,893
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data
(in thousands of United States Dollars)
(Unaudited)
Gross Written
Premiums Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Cat Premium
Renaissance $ 87,854 $ 91,226 $ 289,774 $ 257,273
DaVinci 34,794 - 130,063 -
Assumed from OP
Cat - - 34,873 -
Total Cat
Premium 122,648 91,226 454,710 257,273
Specialty Reinsurance
Premium 71,632 15,488 172,655 37,754
Total Reinsurance
Premium 194,280 106,714 627,365 295,027
Glencoe Premium 71,370 2,037 94,047 3,793
Other Primary
Premium 4,644 13,261 9,716 21,400
Total Primary 76,014 15,298 103,763 25,193
Total Premiums $ 270,294 $ 122,012 $ 731,128 $ 320,220
Total Managed Cat
Premiums $ 144,796 $ 92,560 $ 515,150 $ 307,212
Other Income Quarters Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
As Reported
Cat business - fee
income $ 999 $ 3,617 $ 2,000 $ 4,292
Cat business -
equity pick up 7,146 2,221 11,136 4,921
Other items 2 (1,937) 3,140 (1,444)
Total other income
- as reported $ 8,147 $ 3,901 $ 16,276 $ 7,769
Pro-forma (1)
Cat business - fee
income $ 17,332 $ 6,302 $ 29,308 $ 9,355
Cat business -
equity pick up 11,591 2,221 18,737 4,921
Other items 2 (1,900) 3,140 (1,361)
Total other income
- pro-forma $ 28,925 $ 6,623 $ 51,185 $ 12,915
(1) Adjusted to reflect DaVinci under the equity method and other
fee income on managed cat business.
CONTACT: Investor:
RenaissanceRe Holdings Ltd.
Martin J. Merritt, 441/299-7230
or
Media:
Kekst and Company
David Lilly or Dawn Dover
212/521-4800
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