RenaissanceRe Reports Operating EPS of $1.14 Per Common Share for 2002 Third Quarter
PEMBROKE, Bermuda--(BUSINESS WIRE)--Oct. 21, 2002--RenaissanceRe Holdings Ltd. (NYSE: RNR)
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Managed Catastrophe Premium Increases by 54% in the Third Quarter 2002
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Individual Risk Premium Grows to $81 million in 2002 Third Quarter Compared to $11 million in 2001
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Specialty Reinsurance Premium Grows to $48 million in 2002 Third Quarter Compared to $21 million in 2001
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Achieves Annualized Operating ROE of 25% for the Third Quarter 2002
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $80.4 million in third quarter net operating income available to common shareholders (excluding realized investment gains and losses), compared to $25.0 million in the third quarter of 2001.
Operating earnings per common share grew to $1.14 in the third quarter, from $0.41 per common share in the third quarter of the previous year. Net income available to common shareholders rose to $88.2 million, or $1.26 per common share in the quarter, compared to $29.9 million or $0.49 per common share for the same quarter of 2001. The third quarter of 2001 reflects the impact of the events of September 11th, 2001.
James N. Stanard, Chairman and CEO, commented: "Gross premiums written for the first nine months of 2002 have more than doubled compared to 2001. Each of our four major business segments -- catastrophe reinsurance, specialty reinsurance, structured products, and individual risk -- are strong contributors to our 25% annualized operating return on equity in the third quarter. Moving forward, we will continue to focus on building shareholder value by aggressively pursuing growth opportunities while maintaining our commitment to disciplined underwriting in all our business."
For the nine months ended September 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 $260.2 million or $3.71 per common share, compared to $99.7 million or $1.64 per common share for the same period in 2001. Net income available to common shareholders for the nine months ended September 30, 2002 was $262.6 million or $3.75 per common share, compared to $115.2 million or $1.90 per common share for the same period in 2001.
Gross premiums written for the third quarter of 2002 increased by 129% to $282.6 million, compared to $123.6 million for the same quarter of 2001. Net premiums written for the third quarter of 2002 were $192.7 million, versus $79.0 million for the same quarter of 2001. Net premiums earned for the third quarter of 2002 were $191.3 million, compared to $79.9 million for the same quarter of 2001. Those premiums include $38.5 million of gross written premiums, $36.2 million of net written premiums and $42.3 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re during the third quarter of 2002.
Gross premiums written for the nine months ended September 30, 2002 were $1.01 billion, compared to $443.8 million for the same period of 2001. Net premiums written for the nine months ended September 30, 2002 were $770.3 million, compared to $293.2 million for the same period of 2001. Net premiums earned for the first nine months of 2002 were $526.4 million, compared to $239.4 million for the same period of 2001. Those premiums include $168.6 million of gross written premiums, $166.3 million of net written premiums and $100.1 million of net premiums earned by DaVinci Re during the first nine months of 2002.
Total Managed Catastrophe Premiums Written, representing gross catastrophe premiums written by RenaissanceRe Holdings Ltd. and by related joint ventures, increased by 54% and were $165.9 million for the third quarter, compared to $107.4 million for the same quarter of 2001. Total Managed Cat Premiums for the nine months ended September 30, 2002 increased by 64% to $681.1 million, from $414.7 million for the same period of 2001.
Net investment income, excluding realized and unrealized investment gains and losses, for the third quarter of 2002 increased to $26.1 million, compared to $18.7 million for the same period in 2001, primarily due to the growth in the Company's investment portfolio resulting from financings in the fourth quarter of 2001, and the Company's strong cash flows from operations. Net investment income for the first nine months of 2002 was $75.2 million, compared to $54.9 million for the same period in 2001
The Company also reported an increase in other income to $8.0 million for the quarter, from $1.1 million for the same quarter in 2001. Other income for the first nine months of 2002 was $24.2 million, compared to $8.8 million for the same period in 2001. The increase primarily relates to an increase from its equity participation in certain of its joint venture activities and an increase in miscellaneous other items.
Claims and claim expenses incurred for the quarter ended September 30, 2002 were $82.9 million, or 43.3% of net premiums earned. In comparison, claims and claim expenses incurred for the quarter ended September 30, 2001 were $47.0 million, or 58.8% of net premiums earned. Claims and claim expenses incurred for the nine months ended September 30, 2002 were $199.2 million or 37.8% of net premiums earned. In comparison, claims and claim expenses incurred for the nine months ended September 30, 2001 were $121.2 million or 50.6% of net premiums earned. The reduction in the loss ratio during 2002 resulted from the relatively low level of catastrophe losses during 2002 as compared to 2001. Also, the 2001 loss ratio includes losses related to the events of September 11th, 2001.
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 of catastrophe business by the Company 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 $29.8 million, compared to $3.1 million during the third quarter of 2001. Of the total $29.8 million of pro-forma other income during the quarter, $16.9 million relates to fees and profit commissions, compared to $2.8 million in the third quarter of 2001, and $10.9 million relates to the Company's portion of the earnings from its joint ventures, versus $2.3 million in the comparable period of 2001.
For the nine months ended September 30, 2002, the Company recorded pro-forma other income of $81.0 million, compared to $16.0 million for the same period of 2001. Of the total $81.0 million of pro-forma other income during the first nine months, $46.2 million relates to fees and profit commissions, compared to $12.2 million in the first nine months of 2001, and $29.6 million relates to the Company's portion of the earnings from its joint ventures, versus $7.2 million in the comparable period of 2001.
Shareholders' equity attributable to common shareholders was $1.34 billion at September 30, 2002, compared to $1.08 billion at December 31, 2001. Book value per common share at September 30, 2002 was $19.44 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.
RenaissanceRe Holdings Ltd. will host a conference call on Tuesday, October 22, 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 quarters ended March 31, 2002 and June 30, 2002.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the periods ended September 30, 2002 and 2001 (in thousands
of United States Dollars, except per share amounts)
(Unaudited)
Quarters Ended Year to Date
-------------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
----------- ------------- ---------- ----------
Revenues
Gross premiums
written $282,597 $ 123,571 $1,013,725 $443,791
========== ========== ========== ==========
Net premiums written $192,687 $ 79,030 $ 770,300 $ 293,208
Decrease (increase) in
unearned premiums (1,377) 903 (243,940) (53,844)
----------- --------- ------------ ----------
Net premiums earned 191,310 79,933 526,360 239,364
Net investment income 26,065 18,738 75,212 54,892
Net foreign exchange
gains (losses) 888 (1,051) 2,588 (1,113)
Other income 7,951 1,070 24,227 8,840
Net realized gains
on investments 7,891 4,978 11,545 15,474
----------- --------- ----------- ----------
Total revenues 234,105 103,668 639,932 317,457
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Expenses
Claims and claim
expenses incurred 82,931 46,986 199,198 121,196
Acquisition expenses 23,802 11,461 62,719 34,614
Operational expenses 9,616 9,408 30,241 27,814
Corporate expenses 3,466 1,366 10,844 7,674
Interest expense 3,499 2,699 9,646 4,246
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Total expenses 123,314 71,920 312,648 195,544
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Income before minority
interest and taxes and
change in accounting
principle 110,791 31,748 327,284 121,913
Minority interest -
Capital Securities 1,759 1,823 5,423 5,565
Minority interest -
DaVinci 17,689 - 40,636 -
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Income before taxes and
change in accounting
principle 91,343 29,925 281,225 116,348
Income tax expense
(benefit) 59 (3) 382 1,175
Cumulative effect of a
change in accounting
principle - SFAS 142 -
Goodwill - - (9,187) -
---------- --------- ----------- ----------
Net income 91,284 29,928 271,656 115,173
Dividends on Series A
Preference Shares 3,038 - 9,079 -
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Net income available
to Common
Shareholders $ 88,246 $ 29,928 $ 262,577 $ 115,173
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Operating earnings per
Common Share -
diluted (a) $ 1.14 $ 0.41 $ 3.71 $ 1.64
Earnings per Common
Share - basic $ 1.30 $ 0.51 $ 3.90 $ 1.99
Earnings per Common
Share - diluted $ 1.26 $ 0.49 $ 3.75 $ 1.90
Average shares
outstanding - basic 67,865 58,131 67,326 57,882
Average shares
outstanding - diluted 70,272 60,864 70,090 60,669
Claims and claim
expense ratio 43.3% 58.8% 37.8% 50.6%
Expense ratio 17.5% 26.1% 17.7% 26.1%
----------- ---------- ----------- ---------
Combined ratio 60.8% 84.9% 55.5% 76.7%
=========== ========== ============ ==========
Operating return on average
equity (annualized) (a) 24.9% 12.5% 28.9% 17.5%
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(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
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September 30, 2002 December 31, 2001
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(Unaudited) (Audited)
Assets
Fixed maturity investments
available for sale, at
fair value (Amortized cost
$2,211,608 and $1,266,188 at
September 30, 2002 and
December 31, 2001,
respectively) $ 2,254,919 $ 1,282,483
Short term investments 397,552 733,925
Other investments 96,920 38,307
Cash and cash equivalents 86,451 139,715
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Total investments and cash 2,835,842 2,194,430
Premiums receivable 318,978 102,202
Ceded reinsurance balances 126,660 41,690
Losses and premiums recoverable 219,614 217,556
Accrued investment income 20,708 17,696
Deferred acquisition costs 59,444 12,814
Other assets 59,967 57,264
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Total assets $ 3,641,213 $ 2,643,652
===================== ===================
Liabilities, Minority Interest
and Shareholders' Equity
Liabilities
Reserve for claims and
claim expenses $ 754,215 $ 572,877
Reserve for unearned premiums 464,393 125,053
Debt 275,000 183,500
Reinsurance balances payable 164,950 115,967
Other 56,656 58,650
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Total liabilities 1,715,214 1,056,047
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Minority Interest -
Capital Securities 84,630 87,630
Minority Interest -
DaVinci 348,301 274,951
Shareholders' Equity
Series A Preference Shares 150,000 150,000
Common shares and additional
paid-in capital 323,071 264,623
Unearned stock grant compensation (20,470) (20,163)
Accumulated other
comprehensive income 38,509 16,295
Retained earnings 1,001,958 814,269
--------------------- -------------------
Total shareholders' equity 1,493,068 1,225,024
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Total liabilities, minority
interest, and
shareholders' equity $ 3,641,213 $ 2,643,652
==================== ===================
Book value per Common Share $ 19.44 $ 15.83
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Common Shares outstanding 69,076 67,893
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RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data
(in thousands of United States Dollars)
(Unaudited)
Gross Written
Premiums Quarters Ended Nine Months Ended
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Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
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Cat Premium
Renaissance $ 114,756 $ 92,099 $ 404,530 $ 349,372
DaVinci 38,491 - 168,554 -
Assumed from OP Cat - - 34,873 -
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Total Cat Premium 153,247 92,099 607,957 349,372
Specialty Reinsurance
Premium 48,104 20,773 220,759 58,527
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Total Reinsurance
Premium 201,351 112,872 828,716 407,899
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Individual Risk
Premium 81,246 10,699 185,009 35,892
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Total Premiums $ 282,597 $ 123,571 $ 1,013,725 $ 443,791
========= =========== =========== ===========
Total Managed
Cat Premiums $ 165,906 $ 107,445 $ 681,056 $ 414,657
========= =========== =========== ===========
Other Income Quarters Ended Nine Months Ended
---------------------- ---------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
--------- ---------- --------- ----------
As Reported
Cat business -
fee income $ 941 $ 851 $ 2,941 $ 5,143
Cat business -
equity pick up 4,923 2,291 16,059 7,212
Other items 2,087 (2,071) 5,227 (3,515)
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Total other income -
as reported $ 7,951 $ 1,071 $ 24,227 $ 8,840
========== ========== ========= ==========
Pro-forma (a)
Cat business -
fee income $ 16,854 $ 2,813 $ 46,162 $ 12,168
Cat business -
equity pick up 10,874 2,291 29,611 7,212
Other items 2,087 (1,999) 5,227 (3,360)
----------- ----------- --------- ----------
Total other income -
pro-forma $ 29,815 $ 3,105 $ 81,000 $ 16,020
=========== ========== ========= ==========
(a) Adjusted to reflect DaVinci under the equity method and other fee
income on managed cat business.
--30--kk/ny*
| CONTACT: | RenaissanceRe Holdings Ltd. |
|---|---|
| Investor Contact: | |
| Martin J. Merritt, (441) 299-7230 | |
| or | |
| Kekst and Company | |
| Media Contact: | |
| David Lilly or Dawn Dover, 212/521-4800 | |