RenaissanceRe Reports $126.9 Million Operating Profit for 2003 First Quarter
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PEMBROKE, Bermuda, Apr 22, 2003 (BUSINESS WIRE) -- RenaissanceRe Holdings Ltd. (NYSE: RNR)
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $126.9 million in first quarter net operating income available to common shareholders, compared to $86.6 million in the first quarter of 2002.
Operating income excludes realized investment gains of $24.4 million and $0.7 million in the first quarters of 2003 and 2002, respectively and also excludes the cumulative effect of a change in our accounting for goodwill of $9.2 million in the first quarter of 2002. Operating earnings per common share grew to $1.80 in the first quarter, from $1.24 per common share in the first quarter of the previous year. Net income available to common shareholders rose 94% to $151.3 million, or $2.14 per common share in the quarter, from $78.1 million or $1.12 per common share for the same quarter of 2002.
James N. Stanard, Chairman and CEO, commented: "We are very pleased with the performance of our business across all categories. In particular, the 25% increase in Managed Catastrophe Premium reflects the ongoing strength of our market presence in our traditional core business."
"We are confident in our ability to deliver another year of growth in all of our businesses in 2003. At the same time, we remain committed to careful underwriting in a market in which property catastrophe prices have roughly stabilized. Significant premium from large transactions produced growth in the first quarter beyond our original expectations, and may create some variability in premium growth rates going forward. For the 2003 first quarter, we also estimate that we experienced approximately $25 million, or $0.35 per common share, of benefit from the low level of catastrophe loss activity compared to results from a period of normalized activity."
Gross premiums written for the first quarter of 2003 increased by 49% to $685.2 million, compared to $460.8 million for the same quarter of 2002. Net premiums written for the first quarter of 2003 were $590.4 million, versus $379.1 million for the same quarter of 2002. Net premiums earned for the first quarter of 2003 were $263.5 million, compared to $150.3 million for the same quarter of 2002. Those premiums include $126.5 million of gross written premiums, $126.5 million of net written premiums and $49.1 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re during the first quarter of 2003, compared to $95.3 million of gross written premiums, $95.3 million of net written premiums and $23.6 million of net premiums earned by DaVinci Re during the first quarter of 2002.
Total Managed Catastrophe Premiums Written, representing gross catastrophe premiums written by RenaissanceRe Holdings Ltd. and by related joint ventures, increased to $464.7 million for the first quarter, compared to $370.4 million for the same quarter of 2002. See attached supplemental financial data for a reconciliation of Managed Catastrophe Premiums.
Net investment income, excluding realized and unrealized investment gains and losses, for the first quarter of 2003 increased to $28.2 million, compared to $22.8 million for the same period in 2002. This increase was driven by the increase in invested assets resulting both from strong operating cash flows as well as the $196 million of net proceeds from the Perpetual Preferred Stock and Senior Notes sold in the first quarter.
Claims and claim expenses incurred for the quarter ended March 31, 2003 were $82.8 million, or 31.4% of net premiums earned. In comparison, claims and claim expenses incurred for the quarter ended March 31, 2002 were $43.1 million, or 28.7% of net premiums earned.
During the quarter, the Company recorded pro-forma other income of $36.1 million, compared to $22.3 million during the first quarter of 2002. Of the total $36.1 million of pro-forma other income during the quarter, $20.2 million was generated from fees and profit commissions, compared to $9.4 million in the first quarter of 2002, $17.7 million was generated from the Company's equity pick up from joint ventures, versus $9.7 million in the comparable quarter of 2002 and the remaining loss of $1.8 million was primarily related to losses from contracts triggered by physical variables, compared to income of $3.1 million in the first quarter of last year. 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 DaVinci Re are reflected as if it were reported under the equity accounting method, and the pro-forma presentation also includes fees earned on certain quota share cessions of catastrophe business by the Company which are reflected on the income statement as a reduction of acquisition and operational expenses.
Shareholders' equity attributable to common shareholders was $1.63 billion at March 31, 2003, compared to $1.49 billion at December 31, 2002. Book value per common share at March 31, 2003 was $23.37, compared to $21.39 per common share at December 31, 2002.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, April 23, 2003 at 10:00 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.
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, 2002.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the quarters ended March 31, 2003 and 2002
(in thousands of United States Dollars, except per share amounts)
Quarters Ended
-------------------
Mar 31, Mar 31,
2003 2002
--------- ---------
(Unaudited)
Revenues
Gross premiums written $ 685,167 $ 460,834
========= =========
Net premiums written $ 590,370 $ 379,096
Increase in unearned premiums (326,896) (228,788)
--------- ---------
Net premiums earned 263,474 150,308
Net investment income 28,150 22,783
Net foreign exchange gains (losses) 3,951 (1,950)
Other income 5,505 8,129
Net realized gains on investments 24,396 686
--------- ---------
Total revenues 325,476 179,956
--------- ---------
Expenses
Claims and claim expenses incurred 82,780 43,118
Acquisition expenses 42,133 18,549
Operational expenses 14,907 10,663
Corporate expenses 3,468 2,690
Interest expense 4,499 2,714
--------- ---------
Total expenses 147,787 77,734
--------- ---------
Income before minority interest and taxes and
change in accounting principle 177,689 102,222
Minority interest - Capital Securities 1,455 1,833
Minority interest - DaVinci 20,885 9,477
--------- ---------
Income before taxes and change in accounting
principle 155,349 90,912
Income tax benefit (expense) 55 (596)
Cumulative effect of a change in accounting
principle - SFAS 142 - Goodwill - (9,187)
--------- ---------
Net income 155,404 81,129
Dividends on Preference Shares 4,119 3,038
--------- ---------
Net income available to Common Shareholders $ 151,285 $ 78,091
========= =========
Operating earnings per Common Share - diluted (*) $ 1.80 $ 1.24
Earnings per Common Share - basic $ 2.21 $ 1.17
Earnings per Common Share - diluted $ 2.14 $ 1.12
Average shares outstanding - basic 68,593 66,788
Average shares outstanding - diluted 70,564 69,787
Claims and claim expense ratio 31.4% 28.7%
Expense ratio 21.6% 19.4%
--------- ---------
Combined ratio 53.0% 48.1%
========= =========
Operating return on average equity (annualized)(*) 32.5% 31.2%
========= =========
(*) - 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
---------------------
March December
31, 2003 31, 2002
---------- ----------
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale,
at fair value
(Amortized cost $2,458,937 and $2,153,715 at
March 31, 2003 and December 31, 2002,
respectively) $2,521,244 $2,221,109
Short term investments 922,444 570,497
Other investments 140,947 129,918
Equity investment in reinsurance company at fair
value
(Cost $84,199 at March 31, 2003 and December
31, 2002) 117,914 120,288
Cash and cash equivalents 99,389 87,067
---------- ----------
Total investments and cash 3,801,938 3,128,879
Premiums receivable 474,523 199,449
Ceded reinsurance balances 96,976 73,360
Losses recoverable 178,593 199,533
Accrued investment income 25,212 25,833
Deferred acquisition costs 89,084 55,853
Other assets 70,205 62,829
---------- ----------
Total assets $4,736,531 $3,745,736
========== ==========
Liabilities, Minority Interest and Shareholders'
Equity
Liabilities
Reserve for claims and claim expenses $ 874,092 $ 804,795
Reserve for unearned premiums 682,649 331,985
Debt 375,000 275,000
Reinsurance balances payable 185,168 146,732
Net payable for investments purchased 210,653 24,734
Other 59,118 72,279
---------- ----------
Total liabilities 2,386,680 1,655,525
---------- ----------
Minority Interest - Capital Securities 84,630 84,630
Minority Interest - DaVinci 382,953 363,546
Shareholders' Equity
Preference Shares 250,000 150,000
Common shares and additional paid-in capital 301,121 320,936
Unearned stock grant compensation - (18,468)
Accumulated other comprehensive income 96,005 95,234
Retained earnings 1,235,142 1,094,333
---------- ----------
Total shareholders' equity 1,882,268 1,642,035
---------- ----------
Total liabilities, minority interest, and
shareholders' equity $4,736,531 $3,745,736
========== ==========
Book value per Common Share $ 23.37 $ 21.39
========== ==========
Common Shares outstanding 69,840 69,750
========== ==========
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data
(in thousands of United States Dollars)
Gross Written Premiums Quarters Ended
-----------------
Mar 31, Mar 31,
2003 2002
-------- --------
Renaissance Cat Premium $308,719 $236,793
Renaissance Specialty Premium 186,082 101,023
-------- --------
Total Renaissance Reinsurance Premium 494,801 337,816
-------- --------
DaVinci Cat Premium 106,816 95,269
DaVinci Specialty Premium 19,707 -
-------- --------
Total DaVinci Reinsurance Premium 126,523 95,269
-------- --------
Total Reinsurance Premium 621,324 433,085
Individual Risk Premium 63,843 27,749
-------- --------
Total Premiums $685,167 $460,834
======== ========
Total Managed Cat Premiums (1) $464,688 $370,354
======== ========
(1) Total Managed Cat Premiums include Renaissance and DaVinci Cat
Premium, as above, and Cat Premium of $49.2 million and $38.3
million in 2003 and 2002, respectively, written on behalf of our
joint venture, Top Layer Re.
Other Income Quarters Ended
-----------------
Mar 31, Mar 31,
2003 2002
-------- --------
As Reported
-----------
Cat business - fee income $ 1,228 $ 1,001
Cat business - equity pick up 6,068 3,990
Other items (1,791) 3,138
-------- --------
Total other income - as reported $ 5,505 $ 8,129
======== ========
Pro-forma (2)
---------
Cat business - fee income (3) $ 20,204 $ 9,418
Cat business - equity pick up 17,702 9,704
Other items (1,791) 3,138
-------- --------
Total other income - pro-forma $ 36,115 $ 22,260
======== ========
(2) Non-GAAP restatement to reflect DaVinci under the equity method
and other fee income on managed cat business.
(3) Excludes fee income received on capital invested by RenaissanceRe
Holdings.
Investor:
RenaissanceRe Holdings Ltd.
Martin J. Merritt, 441/299-7230
or
Media:
Kekst and Company
David Lilly/Dawn Dover, 212/521-4800