RenaissanceRe Reports Operating Income of $159.9 Million for the Second Quarter of 2008 or $2.50 Per Common Share
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$2.13 Per Common Share
Annualized Operating Return on Equity of 23.4% and Annualized
Return on Equity of 19.9%
PEMBROKE, Bermuda--(BUSINESS WIRE)--July 29, 2008--RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $159.9 million in second quarter operating income available to common shareholders compared to $194.7 million in the second quarter of 2007. Operating income excludes net realized investment losses of $24.2 million and $11.6 million in the second quarters of 2008 and 2007, respectively. Operating income per diluted common share was $2.50 in the second quarter of 2008, compared to $2.69 in the second quarter of 2007. Net income available to common shareholders was $135.7 million or $2.13 per diluted common share in the quarter, compared to net income available to common shareholders of $183.2 million or $2.53 per diluted common share for the same quarter of 2007.
The Company reported an annualized operating return on average common equity of 23.4% and an annualized return on average common equity of 19.9% in the second quarter of 2008, compared to 28.5% and 26.8%, respectively, in the second quarter of 2007. Tangible book value per common share increased to $42.14 at June 30, 2008, a 0.2% increase in the second quarter of 2008, compared to a 6.0% increase in the second quarter of 2007. Book value per common share increased to $43.32 at June 30, 2008, a 2.8% increase in the second quarter of 2008, compared to a 5.9% increase in the second quarter of 2007.
Neill A. Currie, CEO, commented: "I am pleased to report another solid quarter with an annualized operating ROE of over 23%. We generated strong underwriting profits and had a successful June 1st renewal season. We are pleased with our portfolio of risks, despite softening market conditions and a challenging investment environment."
Mr. Currie added: "Our ability to produce an attractive portfolio of business in this market is a testament to our position as a market leader with strong client and broker relationships. We continue to strengthen our franchise by investing in our people, risk management capabilities and underwriting tools. During the quarter we added to our business capabilities, with the addition of Agro National LLC, a managing general underwriter of multi-peril crop insurance, and Claims Management Services, Inc., a third party claims administrator. As we maintain our strong underwriting discipline in a difficult market, we continue to lay the groundwork for future opportunities."
Underwriting Results
Gross premiums written for the second quarter of 2008 were $807.6 million, a $38.3 million decrease from the second quarter of 2007. The decrease in gross premiums written in the second quarter of 2008, compared to the second quarter of 2007, was primarily due to a $118.4 million decrease in gross premiums written in the Company's Reinsurance segment and partially offset by a $76.5 million increase in gross premiums written within the Company's Individual Risk segment, as described in more detail below. The Company generated $175.2 million of underwriting income and had a combined ratio of 53.5% in the second quarter of 2008, compared to $133.6 million of underwriting income and a 62.7% combined ratio in the second quarter of 2007. The Company's underwriting results for the second quarter of 2008 were driven by a combination of higher net premiums earned and lower net claims and claim expenses incurred. The Company experienced $49.6 million of favorable development on prior year reserves in the second quarter of 2008, compared to $59.1 million of favorable development in the second quarter of 2007. The favorable development is primarily due to lower than expected claims emergence in both the Company's Reinsurance and Individual Risk segments.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment decreased $118.4 million, or 19.5%, to $487.8 million in the second quarter of 2008, compared to the second quarter of 2007. The Company's managed catastrophe premiums decreased $47.3 million, or 8.7%, from the second quarter of 2007 and the Company's specialty reinsurance premiums decreased $70.3 million, or 75.2%, from the second quarter of 2007. The decrease in the Company's managed catastrophe premiums was primarily due to softening market conditions which resulted in lower premium rates on business written during the quarter. The decrease in the Company's specialty reinsurance premiums was principally driven by the impact of one large catastrophe exposed personal lines quota share contract which generated $2.6 million in gross premiums written in the second quarter of 2008 compared to $75.4 million in the second quarter of 2007, a decrease of $72.8 million. The second quarter of 2007 benefited from the assumed portfolio transfer in of this contract for the 2007 underwriting year which increased gross premiums written in that quarter while the second quarter of 2008 was impacted by the portfolio transfer out of the 2007 contract, followed by an assumed portfolio transfer in of the 2008 contract on a lower premium base.
The Reinsurance segment generated $157.9 million of underwriting income and had a combined ratio of 30.2% in the second quarter of 2008, compared to $121.1 million of underwriting income and a combined ratio of 46.5% in the second quarter of 2007. The increase in underwriting income in the second quarter of 2008 was primarily due to a comparably low level of insured catastrophe events occurring compared to the second quarter of 2007 where the Company experienced $53.0 million of net claims and claim expenses associated with the flooding that occurred in the United Kingdom. The Reinsurance segment experienced $37.7 million of favorable development on prior year reserves in the second quarter of 2008, compared to $49.7 million of favorable development in the second quarter of 2007. The favorable development in the second quarters of 2008 and 2007 was the result of lower than expected claims emergence in the Company's catastrophe and specialty reinsurance units.
Individual Risk
Gross premiums written for the Company's Individual Risk segment increased $76.5 million, or 32.1%, to $314.8 million in the second quarter of 2008, compared to $238.4 million in the second quarter of 2007. The increase in gross premiums written was primarily due to the Company's multi-peril crop insurance line of business which increased $86.4 million in the second quarter of 2008, principally due to higher agricultural commodity prices in the second quarter of 2008 compared to the second quarter of 2007, which resulted in higher premiums written for this business. The increase in the Company's multi-peril crop insurance business was partially offset by decreases in the Company's commercial multi-line and commercial property business, respectively, as a result of the Company maintaining its underwriting discipline due to the overall softening of market conditions with respect to premium rates.
The Individual Risk segment generated $17.4 million of underwriting income in the second quarter of 2008, compared to $12.5 million in the second quarter of 2007, an increase of $4.9 million. In the second quarter of 2008, the Individual Risk segment generated a net claims and claim expenses ratio of 62.6%, an underwriting expense ratio of 25.9% and a combined ratio of 88.5%, compared to 57.7%, 33.0% and 90.7%, respectively, in the second quarter of 2007. The improved underwriting performance was primarily due to an increase in net premiums earned, principally due to the Company's multi-peril crop insurance business, and a decrease in underwriting expenses, offset by an increase in net claims and claim expenses incurred. The decrease in the underwriting expense ratio and increase in the net claims and claim expense ratio was principally driven by an increase in the proportion of net premiums earned from the Company's multi-peril crop insurance, compared to the Company's other lines of business, as the multi-peril crop insurance line of business currently has a lower net acquisition expense ratio and higher net claims and claim expense ratio than the other lines of business within Individual Risk. The 5.7 percentage point increase in the current accident year net claims and claim expenses ratio also reflects a modest increase in the ultimate loss ratio for the multi-peril crop insurance business, compared to the same period of 2007, due to weather-related crop losses during the quarter such as flooding and hail storms in the Midwest portion of the U.S. and drought conditions in portions of Texas. Our Individual Risk prior year reserves experienced $11.8 million of favorable development in the second quarter of 2008 compared to $9.5 million of favorable development in the second quarter of 2007, primarily as a result of lower than expected reported claims on prior year reserves.
-
Other Items
- Net investment income for the second quarter of 2008 was $38.7
million, compared to $118.1 million for the same quarter in
2007, a decrease of $79.5 million, as a result of lower
returns in the Company's investment portfolio. Net investment
income from fixed maturity investments available for sale
remained relatively stable at $46.3 million in the second
quarter of 2008 compared to $47.7 million in the second
quarter of 2007. Net investment income from the Company's
other investments generated a net investment loss of $17.5
million in the second quarter of 2008 compared with $41.6
million of net investment income in the second quarter of
2007, a decrease of $59.1 million. Included in the net
investment loss from other investments is a $29.4 million loss
from hedge funds and private equity investments in the second
quarter of 2008 compared to $35.2 million of net investment
income in the second quarter of 2007, a decrease of $64.6
million. Net investment income from short term investments
decreased $16.3 million in the second quarter of 2008 to $12.1
million from $28.3 million in the second quarter of 2007,
principally due to a decrease in the average balances of short
term investments and a decrease in short term interest rates.
- Net realized losses on investments totaled $24.2 million in
the second quarter of 2008 and includes $26.6 million of other
than temporary impairment charges on the Company's fixed
maturity investments available for sale, compared to net
realized investment losses and other than temporary impairment
charges of $11.6 million and $12.1 million, respectively, in
the second quarter of 2007. None of the other than temporary
impairment charges were credit-related and the Company had no
fixed maturity investments available for sale in an unrealized
loss position at June 30, 2008.
- The Company's cash flows from operations were $100.1 million for the second quarter of 2008, compared to $190.7 million for the second quarter of 2007.
- During the second quarter of 2008, the Company repurchased
approximately 2.2 million common shares in open market
transactions at an aggregate cost of $113.0 million and at an
average share price of $52.12.
- During the second quarter of 2008, goodwill and other intangible assets increased by $68.6 million to $74.2 million at June 30, 2008 due to the acquisition of substantially all the net assets of Agro National LLC, a managing general underwriter of multi-peril crop insurance, and Claims Management Services, Inc., a third party claims administrator.
This press release includes certain non-GAAP financial measures including "operating income", "operating income per common share - diluted", "operating return on average common equity - annualized", "managed catastrophe premium" and "tangible book value per common share plus accumulated dividends". A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
Please refer to the Investor Information - Financial Reports - Financial Supplements section of the Company's website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company's financial performance.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 30, 2008 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 business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by the Company's subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk, 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 results, please refer to RenaissanceRe Holdings Ltd.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, as amended, for the year ended December 31, 2007 and its quarterly report on Form 10-Q for the quarter ending March 31, 2008.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
For the three and six months ended June 30, 2008 and 2007
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Six months ended
--------------------- -----------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
---------- ---------- ----------- -----------
Revenues
Gross premiums written $ 807,575 $ 845,860 $1,334,613 $1,478,589
========== ========== =========== ===========
Net premiums written $ 614,022 $ 609,842 $1,017,138 $1,180,869
Increase in unearned
premiums (237,449) (251,388) (331,651) (459,797)
---------- ---------- ----------- -----------
Net premiums earned 376,573 358,454 685,487 721,072
Net investment income 38,685 118,140 91,188 226,155
Net foreign exchange
(losses) gains (231) (373) 4,705 4,794
Equity in earnings of
other ventures 4,872 9,675 11,122 20,376
Other (loss) income (24) (5,498) 7,988 (7,701)
Net realized losses on
investments (24,161) (11,566) (34,831) (7,481)
---------- ---------- ----------- -----------
Total revenues 395,714 468,832 765,659 957,215
---------- ---------- ----------- -----------
Expenses
Net claims and claim
expenses incurred 114,217 138,854 196,373 284,846
Acquisition expenses 53,613 59,509 100,041 123,238
Operational expenses 33,494 26,527 63,607 55,051
Corporate expenses 7,111 4,927 15,814 11,931
Interest expense 5,937 7,195 12,741 19,174
---------- ---------- ----------- -----------
Total expenses 214,372 237,012 388,576 494,240
---------- ---------- ----------- -----------
Income before minority
interest and taxes 181,342 231,820 377,083 462,975
Minority interest -
DaVinciRe (41,341) (37,399) (81,656) (66,506)
---------- ---------- ----------- -----------
Income before taxes 140,001 194,421 295,427 396,469
Income tax benefit
(expense) 6,295 (680) (1,391) (787)
---------- ---------- ----------- -----------
Net income 146,296 193,741 294,036 395,682
Dividends on preference
shares (10,575) (10,575) (21,150) (21,711)
---------- ---------- ----------- -----------
Net income available
to common
shareholders $ 135,721 $ 183,166 $ 272,886 $ 373,971
========== ========== =========== ===========
Operating income
available to common
shareholders per Common
Share - diluted (1) $ 2.50 $ 2.69 $ 4.71 $ 5.26
Net income available to
common shareholders per
Common Share - basic $ 2.16 $ 2.57 $ 4.25 $ 5.25
Net income available to
common shareholders per
Common Share - diluted $ 2.13 $ 2.53 $ 4.18 $ 5.16
Average shares
outstanding - basic 62,921 71,259 64,224 71,270
Average shares
outstanding - diluted 63,878 72,430 65,340 72,472
Net claims and claim
expense ratio 30.3% 38.7% 28.6% 39.5%
Underwriting expense
ratio 23.2% 24.0% 23.9% 24.7%
---------- ---------- ----------- -----------
Combined ratio 53.5% 62.7% 52.5% 64.2%
========== ========== =========== ===========
Operating return on
average common equity -
annualized (1) 23.4% 28.5% 22.3% 28.8%
========== ========== =========== ===========
(1) See Comments on Regulation G for a reconciliation of non-GAAP
financial measures.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
-------------------------------
June 30, 2008 December 31, 2007
------------- -----------------
(Unaudited) (Audited)
Assets
Fixed maturity investments available
for sale, at fair value $ 3,775,345 $ 3,914,363
Short term investments, at fair value 1,400,884 1,821,549
Other investments, at fair value 927,247 807,864
Investments in other ventures, under
equity method 104,438 90,572
------------- -----------------
Total investments 6,207,914 6,634,348
Cash and cash equivalents 262,951 330,226
Premiums receivable 965,955 475,075
Ceded reinsurance balances 206,888 107,916
Losses recoverable 191,789 183,275
Accrued investment income 32,976 39,084
Deferred acquisition costs 134,319 104,212
Receivable for investments sold 209,320 144,037
Other secured assets 107,025 90,488
Other assets 156,970 171,457
Goodwill and other intangibles 74,169 6,237
------------- -----------------
Total assets $ 8,550,276 $ 8,286,355
============= =================
Liabilities, Minority Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 2,009,803 $ 2,028,496
Reserve for unearned premiums 993,959 563,336
Debt 450,000 451,951
Reinsurance balances payable 408,775 275,430
Payable for investments purchased 247,482 422,974
Other secured liabilities 106,420 88,920
Other liabilities 165,905 162,294
------------- -----------------
Total liabilities 4,382,344 3,993,401
------------- -----------------
Minority interest - DaVinciRe 794,499 815,451
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 62,862 68,920
Additional paid-in capital - 107,867
Accumulated other comprehensive income 35,562 44,719
Retained earnings 2,625,009 2,605,997
------------- -----------------
Total shareholders' equity 3,373,433 3,477,503
------------- -----------------
Total liabilities, minority interest
and shareholders' equity $ 8,550,276 $ 8,286,355
============= =================
Book value per common share
(unaudited) $ 43.32 $ 41.03
============= =================
Common shares outstanding 62,862 68,920
============= =================
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
Three months ended June 30, 2008
----------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------- --------- ----------
Gross
premiums
written $ 487,793 $ 314,845 $ 4,937 $ - $ 807,575
========== ========= ======== ==========
Net premiums
written $ 353,187 $ 260,835 - $ 614,022
========== ========= ==========
Net premiums
earned $ 226,286 $ 150,287 - $ 376,573
Net claims
and claim
expenses
incurred 20,120 94,097 - 114,217
Acquisition
expenses 25,511 28,102 - 53,613
Operational
expenses 22,756 10,738 - 33,494
---------- --------- --------- ----------
Underwriting
income $ 157,899 $ 17,350 - 175,249
========== =========
Net
investment
income 38,685 38,685
Equity in
earnings of
other
ventures 4,872 4,872
Other loss (24) (24)
Interest and
preference
share
dividends (16,512) (16,512)
Minority
interest -
DaVinciRe (41,341) (41,341)
Other items,
net (1,047) (1,047)
Net realized
losses on
investments (24,161) (24,161)
--------- ----------
Net income available
to common
shareholders $(39,528) $ 135,721
========= ==========
Net claims
and claim
expenses
incurred -
current
accident
year $ 57,861 $ 105,926 $ 163,787
Net claims
and claim
expenses
incurred -
prior
accident
years (37,741) (11,829) (49,570)
---------- --------- ----------
Net claims
and claim
expenses
incurred -
total $ 20,120 $ 94,097 $ 114,217
========== ========= ==========
Net claims
and claim
expense
ratio -
current
accident
year 25.6% 70.5% 43.5%
Net claims
and claim
expense
ratio -
prior
accident
years (16.7%) (7.9%) (13.2%)
---------- --------- ----------
Net claims
and claim
expense
ratio -
calendar
year 8.9% 62.6% 30.3%
Underwriting
expense
ratio 21.3% 25.9% 23.2%
---------- --------- ----------
Combined
ratio 30.2% 88.5% 53.5%
========== ========= ==========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Three months ended June 30, 2007
----------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------- --------- ----------
Gross
premiums
written $ 606,215 $ 238,391 $ 1,254 $ - $ 845,860
========== ========= ======== ==========
Net premiums
written $ 428,355 $ 181,487 - $ 609,842
========== ========= ==========
Net premiums
earned $ 225,987 $ 132,467 - $ 358,454
Net claims
and claim
expenses
incurred 62,528 76,326 - 138,854
Acquisition
expenses 25,927 33,582 - 59,509
Operational
expenses 16,451 10,076 - 26,527
---------- --------- --------- ----------
Underwriting
income $ 121,081 $ 12,483 - 133,564
========== =========
Net
investment
income 118,140 118,140
Equity in
earnings of
other
ventures 9,675 9,675
Other loss (5,498) (5,498)
Interest and
preference
share
dividends (17,770) (17,770)
Minority
interest -
DaVinciRe (37,399) (37,399)
Other items,
net (5,980) (5,980)
Net realized
losses on
investments (11,566) (11,566)
--------- ----------
Net income available
to common
shareholders $ 49,602 $ 183,166
========= ==========
Net claims
and claim
expenses
incurred -
current
accident
year $ 112,208 $ 85,793 $ 198,001
Net claims
and claim
expenses
incurred -
prior
accident
years (49,680) (9,467) (59,147)
---------- --------- ----------
Net claims
and claim
expenses
incurred -
total $ 62,528 $ 76,326 $ 138,854
========== ========= ==========
Net claims
and claim
expense
ratio -
current
accident
year 49.7% 64.8% 55.2%
Net claims
and claim
expense
ratio -
prior
accident
years (22.0%) (7.1%) (16.5%)
---------- --------- ----------
Net claims
and claim
expense
ratio -
calendar
year 27.7% 57.7% 38.7%
Underwriting
expense
ratio 18.8% 33.0% 24.0%
---------- --------- ----------
Combined
ratio 46.5% 90.7% 62.7%
========== ========= ==========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
----------------------------------------------------------------------
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
Six months ended June 30, 2008
----------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------- --------- ----------
Gross
premiums
written $ 931,521 $ 395,666 $ 7,426 $ - $1,334,613
========== ========= ======== ==========
Net premiums
written $ 696,107 $ 321,031 - $1,017,138
========== ========= ==========
Net premiums
earned $ 458,513 $ 226,974 - $ 685,487
Net claims
and claim
expenses
incurred 67,189 129,184 - 196,373
Acquisition
expenses 44,026 56,015 - 100,041
Operational
expenses 43,895 19,712 - 63,607
---------- --------- --------- ----------
Underwriting
income $ 303,403 $ 22,063 - 325,466
========== =========
Net
investment
income 91,188 91,188
Equity in
earnings of
other
ventures 11,122 11,122
Other income 7,988 7,988
Interest and
preference
share
dividends (33,891) (33,891)
Minority
interest -
DaVinciRe (81,656) (81,656)
Other items,
net (12,500) (12,500)
Net realized
losses on
investments (34,831) (34,831)
--------- ----------
Net income available
to common
shareholders $(52,580) $ 272,886
========= ==========
Net claims
and claim
expenses
incurred -
current
accident
year $ 128,437 $ 162,591 $ 291,028
Net claims
and claim
expenses
incurred -
prior
accident
years (61,248) (33,407) (94,655)
---------- --------- ----------
Net claims
and claim
expenses
incurred -
total $ 67,189 $ 129,184 $ 196,373
========== ========= ==========
Net claims
and claim
expense
ratio -
current
accident
year 28.0% 71.6% 42.5%
Net claims
and claim
expense
ratio -
prior
accident
years (13.3%) (14.7%) (13.9%)
---------- --------- ----------
Net claims
and claim
expense
ratio -
calendar
year 14.7% 56.9% 28.6%
Underwriting
expense
ratio 19.1% 33.4% 23.9%
---------- --------- ----------
Combined
ratio 33.8% 90.3% 52.5%
========== ========= ==========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Six months ended June 30, 2007
----------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------- --------- ----------
Gross
premiums
written $1,122,182 $ 361,707 $(5,300) $ - $1,478,589
========== ========= ======== ==========
Net premiums
written $ 904,574 $ 276,295 - $1,180,869
========== ========= ==========
Net premiums
earned $ 480,766 $ 240,306 - $ 721,072
Net claims
and claim
expenses
incurred 154,655 130,191 - 284,846
Acquisition
expenses 54,289 68,949 - 123,238
Operational
expenses 34,642 20,409 - 55,051
---------- --------- --------- ----------
Underwriting
income $ 237,180 $ 20,757 - 257,937
========== =========
Net
investment
income 226,155 226,155
Equity in
earnings of
other
ventures 20,376 20,376
Other loss (7,701) (7,701)
Interest and
preference
share
dividends (40,885) (40,885)
Minority
interest -
DaVinciRe (66,506) (66,506)
Other items,
net (7,924) (7,924)
Net realized
losses on
investments (7,481) (7,481)
--------- ----------
Net income available
to common
shareholders $ 116,034 $ 373,971
========= ==========
Net claims
and claim
expenses
incurred -
current
accident
year $ 234,614 $ 156,452 $ 391,066
Net claims
and claim
expenses
incurred -
prior
accident
years (79,959) (26,261) (106,220)
---------- --------- ----------
Net claims
and claim
expenses
incurred -
total $ 154,655 $ 130,191 $ 284,846
========== ========= ==========
Net claims
and claim
expense
ratio -
current
accident
year 48.8% 65.1% 54.2%
Net claims
and claim
expense
ratio -
prior
accident
years (16.6%) (10.9%) (14.7%)
---------- --------- ----------
Net claims
and claim
expense
ratio -
calendar
year 32.2% 54.2% 39.5%
Underwriting
expense
ratio 18.5% 37.2% 24.7%
---------- --------- ----------
Combined
ratio 50.7% 91.4% 64.2%
========== ========= ==========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written Analysis
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
Three months ended Six months ended
------------------- ---------------------
June 30, June 30, June 30, June 30,
Reinsurance Segment 2008 2007 2008 2007
---------------------------- --------- --------- --------- -----------
Renaissance catastrophe
premiums $291,317 $340,913 $516,285 $ 580,940
Renaissance specialty
premiums 22,955 93,258 98,418 200,848
--------- --------- --------- -----------
Total Renaissance
premiums 314,272 434,171 614,703 781,788
--------- --------- --------- -----------
DaVinci catastrophe premiums 173,349 171,915 312,527 330,852
DaVinci specialty premiums 172 129 4,291 9,542
--------- --------- --------- -----------
Total DaVinci premiums 173,521 172,044 316,818 340,394
--------- --------- --------- -----------
Total Reinsurance premiums $487,793 $606,215 $931,521 $1,122,182
========= ========= ========= ===========
Total specialty premiums $ 23,127 $ 93,387 $102,709 $ 210,390
========= ========= ========= ===========
Total catastrophe premiums $464,666 $512,828 $828,812 $ 911,792
Catastrophe premiums
written on behalf of our
joint venture, Top Layer
Re (1) 24,042 26,822 55,663 63,725
Catastrophe premiums
assumed from the
Individual Risk segment 4,937 1,254 7,426 (5,300)
--------- --------- --------- -----------
Total managed
catastrophe
premiums (2) 493,645 540,904 891,901 970,217
Managed premiums
assumed for fully-
collateralized
joint ventures (2,286) (65,798) (2,286) (59,363)
--------- --------- --------- -----------
Total managed catastrophe
premiums, net of fully-
collateralized joint
ventures (2) $491,359 $475,106 $889,615 $ 910,854
========= ========= ========= ===========
(1)Top Layer Re is accounted for under the equity method of
accounting.
(2)See Comments on Regulation G for a reconciliation of non-GAAP
financial measures.
----------------------------------------------------------------------
----------------------------------------------------------------------
Three months ended Six months ended
------------------- ---------------------
June 30, June 30, June 30, June 30,
Individual Risk Segment 2008 2007 2008 2007
---------------------------- --------- --------- --------- -----------
Multi-peril crop $203,077 $116,690 $208,449 $ 127,941
Commercial multi-line 31,699 44,435 63,083 92,325
Commercial property 60,830 75,013 91,683 117,518
Personal lines property 19,239 2,253 32,451 23,923
--------- --------- --------- -----------
Total Individual Risk
premiums $314,845 $238,391 $395,666 $ 361,707
========= ========= ========= ===========
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating income" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating income" as used herein differs from "net income available to common shareholders," which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on the Company's investments. The Company's management believes that "operating income" is useful to investors because it more accurately measures and predicts the Company's results of operations by removing the variability arising from fluctuations in the Company's investment portfolio, which is not considered by management to be a relevant indicator of business operations. The Company also uses "operating income" to calculate "operating income per common share - diluted" and "operating return on average common equity - annualized". The following is a reconciliation of: 1) net income available to common shareholders to operating income available to common shareholders; 2) net income available to common shareholders per common share - diluted to operating income available to common shareholders per common share - diluted; and 3) return on average common equity - annualized to operating return on average common equity - annualized:
Three months ended Six months ended
------------------- -------------------
(in thousands of United States
dollars, except for per share June 30, June 30, June 30, June 30,
amounts) 2008 2007 2008 2007
--------- --------- --------- ---------
Net income available to common
shareholders $135,721 $183,166 $272,886 $373,971
Adjustment for net realized
losses on investments 24,161 11,566 34,831 7,481
--------- --------- --------- ---------
Operating income available to
common shareholders $159,882 $194,732 $307,717 $381,452
========= ========= ========= =========
Net income available to common
shareholders per common share
- diluted $ 2.13 $ 2.53 $ 4.18 $ 5.16
Adjustment for net realized
losses on investments 0.37 0.16 0.53 0.10
--------- --------- --------- ---------
Operating income available to
common shareholders per
common share - diluted $ 2.50 $ 2.69 $ 4.71 $ 5.26
========= ========= ========= =========
Return on average common
equity - annualized 19.9% 26.8% 19.8% 28.2%
Adjustment for net realized
losses on investments 3.5% 1.7% 2.5% 0.6%
--------- --------- --------- ---------
Operating return on average
common equity - annualized 23.4% 28.5% 22.3% 28.8%
========= ========= ========= =========
The Company has also included in this Press Release "managed catastrophe premiums" and "managed catastrophe premiums, net of fully-collateralized joint ventures." "Managed catastrophe premiums" is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. "Managed catastrophe premiums" differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company's joint venture Top Layer Re, which is accounted for under the equity method of accounting. "Managed catastrophe premiums, net of fully-collateralized joint ventures" differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to: 1) the inclusion of catastrophe premiums written on behalf of the Company's joint venture Top Layer Re, which is accounted for under the equity method of accounting; and 2) the deduction of catastrophe premiums that are written by the Company and ceded directly to the Company's fully-collateralized joint ventures which include Starbound Reinsurance Ltd., Starbound Reinsurance II Ltd. and Timicuan Reinsurance Ltd. The Company's management believes "managed catastrophe premiums" is useful to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures. The Company believes "managed catastrophe premiums, net of fully-collateralized joint ventures" is also a useful measure to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures, net of catastrophe premiums written directly on behalf of the Company's fully-collateralized joint ventures.
The Company has also included in this Press Release "tangible book value per common share plus accumulated dividends". This is defined as book value per common share excluding goodwill and other intangibles, plus accumulated dividends. "Tangible book value per common share plus accumulated dividends" differs from book value per common share, which the Company believes is the most directly comparable GAAP measure, due to the exclusion of goodwill and other intangibles and the inclusion of accumulated dividends. The following is a reconciliation of book value per common share to tangible book value per common share plus accumulated dividends:
----------------------------------------------------------------------
At
-----------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
-------- --------- -------- --------- ---------
Book value per common
share $43.32 $42.14 $41.03 $40.53 $38.88
Adjustment for
goodwill and
intangible assets (1.18) (0.09) (0.09) (0.09) (0.09)
-------- --------- -------- --------- ---------
Tangible book value
per common share $42.14 $42.05 $40.94 $40.44 $38.79
Adjustment for
accumulated
dividends 7.46 7.23 7.00 6.78 6.56
-------- --------- -------- --------- ---------
Tangible book value
per common share plus
accumulated dividends $49.60 $49.28 $47.94 $47.22 $45.35
======== ========= ======== ========= =========
CONTACT: Investor:
RenaissanceRe Holdings Ltd.
Fred R. Donner, 441-295-4513
Chief Financial Officer and Executive Vice President
or
Media:
Kekst and Company
David Lilly or Dawn Dover, 212-521-4800
SOURCE: RenaissanceRe Holdings Ltd.