RenaissanceRe Reports Operating EPS of $1.75 Per Common Share for 2003 Second Quarter Compared to $1.33 for 2002 Second Quarter
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PEMBROKE, Bermuda--(BUSINESS WIRE)--July 22, 2003--RenaissanceRe Holdings Ltd. (NYSE: RNR)
Increases 2003 Operating Earnings Estimates to a Range of $6.35 to $6.60 Per Common Share, from Prior Estimate of $5.30 to $5.70
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $124.4 million in second quarter net operating income available to common shareholders, compared to $93.3 million in the second quarter of 2002. Operating income excludes realized investment gains of $55.8 million and $3.0 million in the second quarters of 2003 and 2002, respectively. Operating income per common share grew to $1.75 in the second quarter of 2003, from $1.33 per common share in the second quarter of the previous year. Net income available to common shareholders rose 87% to $180.2 million or $2.54 per common share in the quarter, from $96.2 million or $1.37 per common share for the same quarter of 2002.
James N. Stanard, Chairman and CEO, commented: "Our business continues to perform well and our second quarter came in ahead of expectations principally because of light catastrophe losses. We are especially pleased with the growth in our individual risk unit, which is now expected to deliver more than 40% growth in gross written premium for the year. We also continue to expect gross managed premium growth in specialty reinsurance of approximately 20%. While we currently expect gross managed premium in catastrophe reinsurance to be flat with last year, we now believe that overall premium growth, combined with light catastrophe loss activity through the first half of the year, will enable us to produce operating earnings per share in the range of $6.35 to $6.60, versus our previous forecast of $5.30 to $5.70, assuming normal loss levels for the balance of the year."
For the six months ended June 30, 2003, net operating income available to common shareholders was $251.3 million or $3.55 per common share, compared to $179.9 million or $2.57 per common share for the same period in 2002. Operating income excludes realized investments gains of $80.2 million and $3.7 for the six months ended June 30, 2003 and 2002, respectively, and, in 2002, the cumulative effect of a change in accounting principle of $9.2 million. Net income available to common shareholders for the six months ended June 30, 2003 was $331.4 million or $4.68 per common share, compared to $174.3 million or $2.49 per common share for the same period in 2002.
Gross premiums written for the second quarter of 2003 were $212.6 million, compared to $270.3 million for the same quarter of 2002. Net premiums written for the second quarter of 2003 were $160.2 million, versus $198.5 million for the same quarter of 2002. Net premiums earned for the second quarter of 2003 were $275.5 million, compared to $184.7 million for the same quarter of 2002. Those premiums include $17.1 million of gross written premiums, $19.0 million of net written premiums and $46.7 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re during the second quarter of 2003, compared to $34.8 million of gross written premiums, $34.8 million of net written premiums and $34.2 million of net premiums earned by DaVinci Re during the second quarter of 2002.
Gross premiums written for the six months ended June 30, 2003 were $897.7 million, compared to $731.1 million for the same period of 2002. Net premiums written for the six months ended June 30, 2003 were $750.6 million, compared to $577.6 million for the same period of 2002. Net premiums earned for the first six months of 2003 were $539.0 million, compared to $335.1 million for the same period of 2002. Those premiums include $143.6 million of gross written premiums, $145.5 million of net written premiums and $95.8 million of net premiums earned by DaVinci Re during the first six months of 2003, compared to $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 for the first six months of 2002.
Total Managed Catastrophe Premiums Written, representing gross catastrophe premiums written by Renaissance Reinsurance and by related joint ventures, was $103.8 million for the second quarter, compared to $144.8 million for the same quarter of 2002. This decline was primarily attributable to contracts recorded in the second quarter of 2002 which were renewed and recorded in the first quarter of 2003. Total Managed Cat Premium for the six months ended June 30, 2003 increased to $568.5, compared to $515.2 million for the same period in 2002. See the attached supplemental financial data for additional details regarding managed premiums.
Net investment income, excluding realized and unrealized investment gains and losses, for the second quarter of 2003 increased to $28.0 million, compared to $26.4 million for the same period in 2002. Net investment income, excluding realized and unrealized gains and losses, for the six months ended June 30, 2003 was $56.2 million, compared to $49.1 million for the same period in 2002. Investment income for the second quarter of 2003 includes $6.1 million of income and appreciation related to investments in hedge funds and private equity funds, compared with a loss of $.2 million for the same quarter in 2002. For the first six months of 2003, income and appreciation from these investments totaled $9.4 million as compared to $.1 million for the same six month period in 2002.
Claims and claim expenses incurred for the quarter ended June 30, 2003 were $100.1 million, or 36.3% of net premiums earned. In comparison, claims and claim expenses incurred for the quarter ended June 30, 2002 were $73.1 million, or 39.6% of net premiums earned. Claims and claim expenses incurred for the six months ended June 30, 2003 were $182.9 million or 33.9% of net premiums earned, compared to $116.3 million or 34.7% of net premiums earned for the same period in 2002. Claims and claim expenses incurred for the both the quarters and the six months ending June 30, 2003 and 2002 benefited from the relatively low level of catastrophe losses during each of these periods.
During the quarter, income from the DaVinci joint venture and other fee income on managed cat business was $31.6 million, compared to $28.9 million during the second quarter of 2002. Of the total $31.6 million of other income during the quarter, $15.6 million was generated from fees and profit commissions, compared to $14.8 million in the second quarter of 2002, and $16.5 million was generated from the Company's equity pick up from joint ventures, versus $14.2 million in the comparable quarter of 2002. A summary of income from joint venture relationships, 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 summary of income above from joint venture relationships are that the results of DaVinci Re are reflected as if it were reported under the equity accounting method, and the summary 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 $1.82 billion at June 30, 2003, compared to $1.49 billion at December 31, 2002. Book value per common share at June 30, 2003 was $25.94, compared to $21.39 per common share at December 31, 2002.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 23, 2003 at 10:00 a.m. (EST) 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. (NYSE: RNR), is a global provider of reinsurance and insurance. The Company's business primarily consists of four components: (1) catastrophe reinsurance; (2) catastrophe reinsurance written for the account of joint ventures Top Layer Reinsurance Ltd. and DaVinci Reinsurance Ltd; (3) specialty reinsurance, including such lines as catastrophe-exposed workers compensation, surety, terrorism, property per risk, aviation and finite reinsurance; and (4) individual risk business which includes primary insurance and quota share 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, 2002, and Form 10-Q for the quarter ended March 31, 2003.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the three and six months ended June 30, 2003 and 2002
(in thousands of United States Dollars, except per share amounts)
Quarters Ended Six Months Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
(Unaudited) (Unaudited)
Revenues
Gross premiums written $212,560 $270,294 $897,727 $731,128
======== ======== ======== ========
Net premiums written $160,223 $198,517 $750,593 $577,613
Decrease (increase) in
unearned premiums 115,312 (13,775) (211,584) (242,563)
-------- -------- -------- --------
Net premiums earned 275,535 184,742 539,009 335,050
Net investment income 28,012 26,364 56,162 49,147
Net foreign exchange
gains 7,640 3,650 11,591 1,700
Other income 7,238 8,147 12,743 16,276
Net realized gains on
investments 55,757 2,968 80,153 3,654
-------- -------- -------- --------
Total revenues 374,182 225,871 699,658 405,827
-------- -------- -------- --------
Expenses
Claims and claim expenses
incurred 100,076 73,149 182,856 116,267
Acquisition expenses 40,704 20,368 82,837 38,917
Operational expenses 16,332 9,962 31,239 20,625
Corporate expenses 4,677 4,688 8,145 7,378
Interest expense 5,335 3,433 9,834 6,147
-------- -------- -------- --------
Total expenses 167,124 111,600 314,911 189,334
-------- -------- -------- --------
Income before minority
interest and taxes and
change
in accounting principle 207,058 114,271 384,747 216,493
Minority interest -
Capital Securities 1,827 1,831 3,282 3,664
Minority interest -
DaVinci 20,150 13,470 41,035 22,947
-------- -------- -------- --------
Income before taxes and
change in accounting
principle 185,081 98,970 340,430 189,882
Income tax benefit
(expense) - 273 55 (323)
Cumulative effect of a
change in accounting
principle - SFAS 142 -
Goodwill - - - (9,187)
-------- -------- -------- --------
Net income 185,081 99,243 340,485 180,372
Dividends on Preference
Shares 4,917 3,003 9,036 6,041
-------- -------- -------- --------
Net income available to
Common Shareholders $180,164 $ 96,240 $331,449 $174,331
======== ======== ======== ========
Operating Earnings per
Common Share - diluted * $ 1.75 $ 1.33 $ 3.55 $ 2.57
Earnings per Common Share
- basic $ 2.62 $ 1.43 $ 4.82 $ 2.60
Earnings per Common Share
- diluted $ 2.54 $ 1.37 $ 4.68 $ 2.49
Average shares outstanding
- basic 68,914 67,326 68,754 67,057
Average shares outstanding
- diluted 71,056 70,209 70,810 69,998
Claims and claim expense
ratio 36.3% 39.6% 33.9% 34.7%
Expense ratio 20.7% 16.4% 21.2% 17.8%
-------- -------- -------- --------
Combined ratio 57.0% 56.0% 55.1% 52.5%
======== ======== ======== ========
Operating return on
average equity
(annualized) * 28.8% 31.3% 30.5% 31.2%
======== ======== ======== ========
* Excludes realized gains on investments and, in 2002, the 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, December
2003 31, 2002
----------- -----------
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale,
at fair value
(Amortized cost $2,280,154 and $2,153,715 at
June 30, 2003 and
December 31, 2002, respectively) $2,347,341 $2,221,109
Short term investments 1,135,185 570,497
Other investments 190,742 129,918
Equity investment in reinsurance company at
fair value
(Cost $84,199 at June 30, 2003 and December
31, 2002) 129,959 120,288
Cash and cash equivalents 60,129 87,067
---------- ----------
Total investments and cash 3,863,356 3,128,879
Premiums receivable 381,102 199,449
Ceded reinsurance balances 83,385 73,360
Losses recoverable 164,069 199,533
Accrued investment income 22,524 25,833
Deferred acquisition costs 86,746 55,853
Other assets 54,865 62,829
---------- ----------
Total assets $4,656,047 $3,745,736
========== ==========
Liabilities, Minority Interests and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 931,901 $ 804,795
Reserve for unearned premiums 553,747 331,985
Debt 350,000 275,000
Reinsurance balances payable 173,806 146,732
Other 85,076 97,013
---------- ----------
Total liabilities 2,094,530 1,655,525
---------- ----------
Minority Interest - Capital Securities 84,630 84,630
Minority Interest - DaVinci 402,922 363,546
Shareholders' Equity
Preference Shares 250,000 150,000
Common shares and additional paid-in capital 306,257 320,936
Unearned stock grant compensation - (18,468)
Accumulated other comprehensive income 112,947 95,234
Retained earnings 1,404,761 1,094,333
---------- ----------
Total shareholders' equity 2,073,965 1,642,035
---------- ----------
Total liabilities, minority interests, and
shareholders' equity $4,656,047 $3,745,736
========== ==========
Book value per Common Share $ 25.94 $ 21.39
========== ==========
Common Shares outstanding 70,320 69,750
========== ==========
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data
(in thousands of United States Dollars)
Gross Written Premiums
Quarters Ended Six Months Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
Renaissance Cat Premium $ 64,211 $ 87,854 $372,930 $324,647
Renaissance Specialty
Premium 33,557 71,632 219,639 172,655
-------- -------- -------- --------
Total Renaissance
Reinsurance Premium 97,768 159,486 592,569 497,302
-------- -------- -------- --------
DaVinci Cat Premium 16,402 34,794 123,218 130,063
DaVinci Specialty Premium 702 - 20,409 -
-------- -------- -------- --------
Total DaVinci
Reinsurance Premium 17,104 34,794 143,627 130,063
-------- -------- -------- --------
Total Reinsurance
Premium 114,872 194,280 736,196 627,365
Individual Risk Premium (1) 97,688 76,014 161,531 103,763
-------- -------- -------- --------
Total Premiums $212,560 $270,294 $897,727 $731,128
======== ======== ======== ========
Total Managed Cat Premiums
(2) $103,821 $144,796 $568,509 $515,150
======== ======== ======== ========
(1) Includes premium ceded to the reinsurance unit of $1.0 million for
each of the quarters ended June 30, 2003 and 2002 and $5.7 million
and $1.0 million for the six months ended June 30, 2003 and 2002,
respectively.
(2) Total Managed Cat Premiums include Renaissance and DaVinci Cat
Premium, as above, and Cat Premium of $23.2 million and $22.1
million for the quarters ended June 30, 2003 and 2002,
respectively, and $72.4 million and $60.4 million for the six
months ended June 30, 2003 and 2002, respectively, written on
behalf of our joint venture, Top Layer Re.
Other Income
Quarters Ended Six Months Ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
As Reported
----------------------------
Cat business - fee income $ 1,250 $ 999 $ 2,478 $ 2,000
Cat business - equity pick
up 6,493 7,146 12,561 11,136
Other items (505) 2 (2,296) 3,140
-------- -------- -------- --------
Total other income - as
reported $ 7,238 $ 8,147 $ 12,743 $ 16,276
======== ======== ======== ========
Summary of all income from joint
venture relationships (3)
--------------------------------
Cat business - fee income
(4) $ 15,616 $ 14,771 $ 35,820 $ 24,189
Cat business - equity pick
up 16,522 14,152 34,224 23,856
Other items (505) 2 (2,296) 3,140
-------- -------- -------- --------
Total $ 31,633 $ 28,925 $ 67,748 $ 51,185
======== ======== ======== ========
(3) Reported GAAP presentation adjusted to reflect:
-- fee income and the Company's interest in DaVinci as if DaVinci
were accounted for under the equity method
-- other fee income on managed cat business which is reflected on
the income statement as a reduction of acquisition and
operational expenses
(4) Excludes fee income received on capital invested by RenaissanceRe
Holdings.
CONTACT:
Investor Contact:
RenaissanceRe Holdings Ltd.
Senior Vice President - Finance
Martin J. Merritt, 441-299-7230
or
Media Contact:
Kekst and Company
David Lilly or Dawn Dover, 212-521-4800
SOURCE: RenaissanceRe Holdings Ltd.