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RenaissanceRe Reports Net Income of $120.8 Million for the Second Quarter of 2014 or $2.95 Per Diluted Common Share; Quarterly Operating Income of $93.6 Million or $2.28 Per Diluted Common Share

July 29, 2014

PEMBROKE, Bermuda--(BUSINESS WIRE)--Jul. 29, 2014-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to RenaissanceRe common shareholders of $120.8 million, or $2.95 per diluted common share, in the second quarter of 2014, compared to $26.8 million, or $0.60 per diluted common share, in the second quarter of 2013. Operating income available to RenaissanceRe common shareholders was $93.6 million, or $2.28 per diluted common share, for the second quarter of 2014, compared to $96.4 million or $2.17, respectively, in the second quarter of 2013. The Company reported an annualized return on average common equity of 14.2% and an annualized operating return on average common equity of 11.0% in the second quarter of 2014, compared to 3.4% and 12.2%, respectively, in the second quarter of 2013. Book value per common share increased $2.49, or 3.0%, in the second quarter of 2014 to $84.79, compared to a 0.4% increase in the second quarter of 2013. Tangible book value per common share plus accumulated dividends increased 3.5% in the second quarter of 2014, compared to a 0.8% increase in the second quarter of 2013.

Kevin J. O’Donnell, CEO, commented: “In the second quarter, we generated $120.8 million of net income, an annualized operating ROE of 11% and 3.5% growth in tangible book value per share, plus accumulated dividends. Our team executed well in tough market conditions and I am pleased with the book of business we constructed.”

Mr. O’Donnell continued: “We believe that over the long-term the proper assessment of risk and disciplined underwriting will continue to be key differentiators in our industry. Our strategy of matching well-structured risk with efficient capital across cycles has been the basis for our success for over two decades. We intend to continue this strategy going forward, providing customers and capital providers with a suite of innovative and flexible solutions along with industry-leading underwriting expertise and customer service.”

SECOND QUARTER 2014 HIGHLIGHTS

  • The Company generated underwriting income of $99.7 million and a combined ratio of 61.7% in the second quarter of 2014, compared to $113.4 million and 61.2% in the second quarter of 2013, respectively. The $13.7 million decrease in underwriting income was principally driven by a $31.5 million decrease in net premiums earned, primarily as a result of reduced gross premiums written, as discussed below, and partially offset by a $22.6 million decrease in net claims and claim expenses.
  • Gross premiums written of $511.5 million decreased $191.7 million, or 27.3%, in the second quarter of 2014, compared to the second quarter of 2013, with the decrease principally driven by the Company’s Catastrophe Reinsurance segment, which experienced a decrease of $188.8 million, or 32.7%, driven by the continued softening of market conditions, including reduced risk-adjusted pricing for the second quarter renewals. Managed catastrophe premiums written were $437.9 million, a 28.0% decrease, compared to the second quarter of 2013, excluding the impact of $9.8 million of reinstatement premiums written in the second quarter of 2013. For the first six months of 2014, managed catastrophe premiums, net of reinstatement premiums written, totaled $933.9 million, a decrease of $204.2 million, or 17.9%, compared to the first six months of 2013, excluding the impact of $9.8 million of reinstatement premiums written in the first six months of 2013.
  • The total investment result in the second quarter of 2014 was positive $61.6 million, which includes the sum of net investment income, net realized and unrealized gains on investments and the change in net unrealized gains on fixed maturity investments available for sale, compared to negative $44.6 million in the second quarter of 2013. The total investment result was primarily driven by the improved returns in the Company’s fixed maturity investment portfolio as a result of the flattening of the yield curve and higher average invested assets during the second quarter of 2014, compared to the second quarter of 2013.
  • Net income attributable to noncontrolling interests in the second quarter of 2014 was $36.1 million and increased from $14.0 million in the second quarter of 2013, principally due to an increase in the profitability of DaVinciRe Holdings Ltd. (“DaVinciRe”), as well as a decrease in the Company’s ownership in DaVinciRe to 26.5% at June 30, 2014, compared to 32.9% at June 30, 2013.
  • During the second quarter of 2014, the Company repurchased an aggregate of 385 thousand common shares in open market transactions at an aggregate cost of $37.5 million and at an average share price of $97.29.

Underwriting Results by Segment

Catastrophe Reinsurance Segment

Gross premiums written in the Catastrophe Reinsurance segment were $388.1 million in the second quarter of 2014, a decrease of $188.8 million compared to the second quarter of 2013, primarily driven by the continued softening of market conditions, including reduced risk-adjusted pricing for the second quarter renewals, the Company’s underwriting discipline given prevailing terms and conditions, and the absence of $9.8 million in reinstatement premiums written in the second quarter of 2013, which did not reoccur in the second quarter of 2014. In addition, gross premiums written in the Catastrophe Reinsurance segment in the second quarter of 2014 were impacted by a decrease of $28.2 million in gross premiums written related to one quota share deal and a $27.0 million multi-year transaction that was booked in the second quarter of 2013, which did not reoccur in the second quarter of 2014.

Managed catastrophe premiums decreased $170.5 million, or 28.0%, to $437.9 million in the second quarter of 2014, compared to $608.3 million in the second quarter of 2013, driven by the items noted above, and excluding the impact of $9.8 million of reinstatement premiums written in the second quarter of 2013.

For the first six months of 2014, managed catastrophe premiums totaled $933.9 million, a decrease of $204.2 million, or 17.9%, compared to the first six months of 2013, net of $9.8 million of reinstatement premiums written in the first six months of 2013, and principally driven by the continued softening of market conditions, including reduced risk-adjusted pricing for the second quarter renewals and decreased signings on certain specific quota share deals.

The Catastrophe Reinsurance segment generated underwriting income of $82.4 million and a combined ratio of 48.2% in the second quarter of 2014, compared to $109.8 million and 45.2% in the second quarter of 2013, respectively. The $27.4 million decrease in underwriting income in the second quarter of 2014, compared to the second quarter of 2013, was driven by a $41.3 million decrease in net premiums earned, driven by the decrease in gross premiums written, noted above, combined with a $16.7 million decrease in favorable development on prior accident years net claims and claim expenses, and partially offset by a $32.9 million decrease in current accident year net claims and claim expenses. Included in the Catastrophe Reinsurance segment’s current accident year net claims and claim expenses in the second quarter of 2014 of $38.5 million are a number of relatively small U.S. wind and thunderstorm events, compared to the second quarter of 2013, which experienced $71.4 million of current accident year net claims and claim expenses and included $26.4 million and $25.2 million related to the 2013 European Floods and May 2013 U.S. Tornadoes, respectively.

The Catastrophe Reinsurance segment experienced $1.7 million of favorable development on prior accident years net claims and claim expenses in the second quarter of 2014, compared to $18.5 million in the second quarter of 2013.

Specialty Reinsurance Segment

Gross premiums written in the Specialty Reinsurance segment were $51.6 million in the second quarter of 2014, a decrease of $7.0 million, or 11.9%, compared to the second quarter of 2013.

Gross premiums written in the Specialty Reinsurance segment were $205.8 million in the first six months of 2014, an increase of $65.0 million, or 46.1%, compared to the first six months of 2013, driven primarily by increases in certain financial liability related lines of business. Our specialty reinsurance premiums are prone to significant volatility as this business can be influenced by a small number of relatively large transactions.

The Specialty Reinsurance segment generated underwriting income of $11.3 million and a combined ratio of 78.9% in the second quarter of 2014, compared to $7.1 million and 85.6% in the second quarter of 2013, respectively. The underwriting expense ratio in the Specialty Reinsurance segment increased 7.6 percentage points to 41.4% in the second quarter of 2014, compared to 33.8% in the second quarter of 2013, primarily due to the relative increase in the percentage of quota share reinsurance premiums, compared to excess of loss reinsurance premiums, as a percentage of total gross premiums written within the Specialty Reinsurance segment, as quota share reinsurance premiums typically carries a higher acquisition expense ratio, compared to excess of loss reinsurance.

The Specialty Reinsurance segment experienced $5.4 million of favorable development on prior years reserves in the second quarter of 2014, compared to $5.4 million in the second quarter of 2013, principally due to reported claims activity coming in lower than expected on prior accident years events.

Lloyd’s Segment

Gross premiums written in the Lloyd’s segment were $71.9 million in the second quarter of 2014, an increase of $3.1 million, or 4.6%, compared to the second quarter of 2013, primarily due to Syndicate 1458 continuing to grow organically in the Lloyd’s marketplace, principally in its property lines of business, notwithstanding challenging market conditions.

Gross premiums written in the Lloyd’s segment increased $12.1 million, or 8.5%, to $155.2 million in the first six months of 2014, compared to $143.1 million in the first six months of 2013, primarily due to Syndicate 1458 continuing to grow organically in the Lloyd’s marketplace, principally in its property lines of business, notwithstanding challenging market conditions.

The Lloyd’s segment incurred an underwriting loss of $0.6 million and a combined ratio of 101.3% in the second quarter of 2014, compared to an underwriting loss of $3.5 million and a combined ratio of 108.4% in the second quarter of 2013, respectively. Net premiums earned increased $5.7 million primarily as a result of the increase in gross premiums written noted above.

The favorable development of prior accident years net claims and claim expenses within the Lloyd’s segment of $9.4 million during the second quarter of 2014, compared to $3.0 million in the second quarter of 2013, was principally due to reported claims activity coming in lower than expected on prior accident years events.

Other Items

  • Effective July 1, 2014, the Company sold a portion of its shares of DaVinciRe to an existing third party shareholder. The Company sold these shares for $38.9 million. The Company's ownership in DaVinciRe was 26.5% at June 30, 2014 and, subsequent to the above transaction, its ownership interest in DaVinciRe decreased to 23.4% effective July 1, 2014.
  • During the second quarter of 2014, the Company recognized the release of $6.2 million of profit commissions in its Other category as a result of the commutation of several quota share agreements from its former Insurance segment.

This Press Release includes certain non-GAAP financial measures including “operating income available to RenaissanceRe common shareholders”, “operating income available to RenaissanceRe common shareholders per common share - diluted”, “operating return on average common equity - annualized”, “managed catastrophe premiums”, “tangible book value per common share” 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, 2014 at 10:00 am (ET) to discuss this release. Live broadcast of the conference call will be available through the “Investor Information - Company Webcasts” 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 three reportable segments: (1) Catastrophe Reinsurance, which includes catastrophe reinsurance and certain property catastrophe joint ventures managed by the Company’s ventures unit; (2) Specialty Reinsurance, which includes specialty reinsurance and certain specialty joint ventures managed by the Company’s ventures unit; and (3) Lloyd’s, which includes reinsurance and insurance business written through RenaissanceRe Syndicate 1458.

Cautionary Statement under “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this earnings 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 U.S. Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

 
RenaissanceRe Holdings Ltd.
Summary Consolidated Statements of Operations
(in thousands of United States Dollars, except per share amounts and percentages)
(Unaudited)
 
  Three months ended   Six months ended

June 30,
2014

  June 30,
2013
June 30,
2014
  June 30,
2013
Revenues
Gross premiums written $ 511,540   $ 703,223   $ 1,216,800   $ 1,338,641  
Net premiums written $ 346,407 $ 559,109 $ 796,754 $ 995,922
Increase in unearned premiums (85,991 ) (267,220 ) (249,804 ) (432,778 )
Net premiums earned 260,416 291,889 546,950 563,144
Net investment income 34,541 26,163 73,489 69,365
Net foreign exchange gains (losses) 2,392 (932 ) 1,331 (318 )
Equity in earnings of other ventures 7,232 3,772 11,431 9,607
Other loss (535 ) (1,128 ) (473 ) (2,837 )
Net realized and unrealized gains (losses) on investments 27,128   (69,529 ) 42,055   (55,260 )
Total revenues 331,174   250,235   674,783   583,701  
Expenses
Net claims and claim expenses incurred 81,388 103,962 140,303 131,213
Acquisition expenses 33,477 31,767 67,177 56,776
Operational expenses 45,841 42,789 88,465 88,775
Corporate expenses 3,954 21,529 8,499 26,011
Interest expense 4,292   4,300   8,585   9,334  
Total expenses 168,952   204,347   313,029   312,109  
Income from continuing operations before taxes 162,222 45,888 361,754 271,592
Income tax benefit (expense) 204   (11 ) 38   (133 )
Income from continuing operations 162,426 45,877 361,792 271,459
Income from discontinued operations   2,427     12,201  
Net income 162,426 48,304 361,792 283,660
Net income attributable to noncontrolling interests (36,078 ) (14,015 ) (78,846 ) (52,622 )

Net income available to RenaissanceRe

126,348 34,289 282,946 231,038
Dividends on preference shares (5,596 ) (7,483 ) (11,191 ) (13,758 )
Net income available to RenaissanceRe common shareholders $ 120,752   $ 26,806   $ 271,755   $ 217,280  
 

Income from continuing operations available to RenaissanceRe
common shareholders per common share - basic

$ 3.00 $ 0.55 $ 6.62 $ 4.65

Income from discontinued operations available to RenaissanceRe
common shareholders per common share - basic

  0.06     0.28  

Net income available to RenaissanceRe common shareholders per
common share - basic

$ 3.00   $ 0.61   $ 6.62   $ 4.93  

Income from continuing operations available to RenaissanceRe
common shareholders per common share - diluted

$ 2.95 $ 0.55 $ 6.52 $ 4.55

Income from discontinued operations available to RenaissanceRe
common shareholders per common share - diluted

  0.05     0.28  

Net income available to RenaissanceRe common shareholders per
common share - diluted

$ 2.95   $ 0.60   $ 6.52   $ 4.83  
 
Average shares outstanding - basic 39,736 43,372 40,487 43,453
Average shares outstanding - diluted 40,395 44,243 41,149 44,303
 
Net claims and claim expense ratio 31.3 % 35.6 % 25.7 % 23.3 %
Underwriting expense ratio 30.4 % 25.6 % 28.4 % 25.9 %
Combined ratio 61.7 % 61.2 % 54.1 % 49.2 %

Operating income available to RenaissanceRe common shareholders
per common share - diluted (1)

$ 2.28 $ 2.17 $ 5.50 $ 6.08
Operating return on average common equity - annualized (1) 11.0 % 12.2 % 13.4 % 17.3 %

(1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures.

 
RenaissanceRe Holdings Ltd.
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
   
June 30,
2014
December 31,
2013
Assets (Unaudited) (Audited)
Fixed maturity investments trading, at fair value $ 4,841,609 $ 4,809,036
Fixed maturity investments available for sale, at fair value 29,219   34,241
Total fixed maturity investments, at fair value 4,870,828 4,843,277
Short term investments, at fair value 957,698 1,044,779
Equity investments trading, at fair value 254,408 254,776
Other investments, at fair value 513,614 573,264
Investments in other ventures, under equity method 110,354   105,616
Total investments 6,706,902 6,821,712
Cash and cash equivalents 294,457 408,032
Premiums receivable 837,116 474,087
Prepaid reinsurance premiums 267,963 66,132
Reinsurance recoverable 85,115 101,025
Accrued investment income 28,019 34,065
Deferred acquisition costs 140,765 81,684
Receivable for investments sold 58,205 75,845
Other assets 89,076 108,438
Goodwill and other intangibles 8,007   8,111
Total assets $ 8,515,625   $ 8,179,131
Liabilities, Noncontrolling Interests and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses $ 1,552,618 $ 1,563,730
Unearned premiums 929,523 477,888
Debt 249,476 249,430
Reinsurance balances payable 558,185 293,022
Payable for investments purchased 201,340 193,221
Other liabilities 164,650   397,596
Total liabilities 3,655,792   3,174,887
Redeemable noncontrolling interest 1,023,892 1,099,860
Shareholders’ Equity
Preference shares 400,000 400,000
Common shares 40,523 43,646
Accumulated other comprehensive income 3,918 4,131
Retained earnings 3,391,500   3,456,607
Total shareholders’ equity attributable to RenaissanceRe 3,835,941   3,904,384
Total liabilities, noncontrolling interests and shareholders’ equity $ 8,515,625   $ 8,179,131
 
Book value per common share $ 84.79   $ 80.29
 
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
       
Three months ended June 30, 2014

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other   Total
Gross premiums written $ 388,083   $ 51,554   $ 71,903   $   $ 511,540  
Net premiums written $ 233,698   $ 46,254   $ 66,452   $ 3   $ 346,407  
Net premiums earned $ 159,152 $ 53,588 $ 47,672 $ 4 $ 260,416
Net claims and claim expenses incurred 36,730 20,075 25,111 (528 ) 81,388
Acquisition expenses 17,806 11,699 10,122 (6,150 ) 33,477
Operational expenses 22,200   10,514   13,058   69   45,841  
Underwriting income (loss) $ 82,416   $ 11,300   $ (619 ) $ 6,613   99,710
Net investment income 34,541 34,541
Net foreign exchange gains 2,392 2,392
Equity in earnings of other ventures 7,232 7,232
Other loss (535 ) (535 )
Net realized and unrealized gains on investments 27,128 27,128
Corporate expenses (3,954 ) (3,954 )
Interest expense (4,292 ) (4,292 )
Income before taxes and noncontrolling interests 162,222
Income tax benefit 204 204
Net income attributable to noncontrolling interests (36,078 ) (36,078 )
Dividends on preference shares (5,596 ) (5,596 )
Net income available to RenaissanceRe common shareholders $ 120,752  
 
Net claims and claim expenses incurred – current accident year $ 38,473 $ 25,443 $ 34,555 $ $ 98,471
Net claims and claim expenses incurred – prior accident years (1,743 ) (5,368 ) (9,444 ) (528 ) (17,083 )
Net claims and claim expenses incurred – total $ 36,730   $ 20,075   $ 25,111   $ (528 ) $ 81,388  
 
Net claims and claim expense ratio – current accident year 24.2 % 47.5 % 72.5 % % 37.8 %
Net claims and claim expense ratio – prior accident years (1.1 )% (10.0 )% (19.8 )% (13,200.0 )% (6.5 )%
Net claims and claim expense ratio – calendar year 23.1 % 37.5 % 52.7 % (13,200.0 )% 31.3 %
Underwriting expense ratio 25.1 % 41.4 % 48.6 % (152,025.0 )% 30.4 %
Combined ratio 48.2 % 78.9 % 101.3 % (165,225.0 )% 61.7 %
 
 
Three months ended June 30, 2013

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other Total
Gross premiums written (1) $ 576,903   $ 58,539   $ 68,769   $ (988 ) $ 703,223  
Net premiums written $ 436,852   $ 57,348   $ 64,643   $ 266   $ 559,109  
Net premiums earned $ 200,483 $ 49,206 $ 41,933 $ 267 $ 291,889
Net claims and claim expenses incurred 52,915 25,511 25,536 103,962
Acquisition expenses 14,197 9,009 8,484 77 31,767
Operational expenses 23,599   7,595   11,456   139   42,789  
Underwriting income (loss) $ 109,772   $ 7,091   $ (3,543 ) $ 51   113,371
Net investment income 26,163 26,163
Net foreign exchange losses (932 ) (932 )
Equity in earnings of other ventures 3,772 3,772
Other loss (1,128 ) (1,128 )
Net realized and unrealized losses on investments (69,529 ) (69,529 )
Corporate expenses (21,529 ) (21,529 )
Interest expense (4,300 ) (4,300 )
Income from continuing operations before taxes 45,888
Income tax expense (11 ) (11 )
Income from discontinued operations 2,427 2,427
Net income attributable to noncontrolling interests (14,015 ) (14,015 )
Dividends on preference shares (7,483 ) (7,483 )
Net income attributable to RenaissanceRe common shareholders $ 26,806  
 
Net claims and claim expenses incurred – current accident year $ 71,369 $ 30,903 $ 28,517 $ $ 130,789
Net claims and claim expenses incurred – prior accident years (18,454 ) (5,392 ) (2,981 )   (26,827 )
Net claims and claim expenses incurred – total $ 52,915   $ 25,511   $ 25,536   $   $ 103,962  
 
Net claims and claim expense ratio – current accident year 35.6 % 62.8 % 68.0 % % 44.8 %
Net claims and claim expense ratio – prior accident years (9.2 )% (11.0 )% (7.1 )% % (9.2 )%
Net claims and claim expense ratio – calendar year 26.4 % 51.8 % 60.9 % % 35.6 %
Underwriting expense ratio 18.8 % 33.8 % 47.5 % 80.9 % 25.6 %
Combined ratio 45.2 % 85.6 % 108.4 % 80.9 % 61.2 %

(1) Included in gross premiums written in the Other category is the elimination of inter-segment gross premiums written of $1.0 million.

 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
       
Six months ended June 30, 2014

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other   Total
Gross premiums written $ 855,794   $ 205,844   $ 155,162   $   $ 1,216,800  
Net premiums written $ 493,187   $ 171,743   $ 131,821   $ 3   $ 796,754  
Net premiums earned $ 323,736 $ 123,218 $ 99,969 $ 27 $ 546,950
Net claims and claim expenses incurred 43,185 46,156 51,392 (430 ) 140,303
Acquisition expenses 24,932 28,246 20,689 (6,690 ) 67,177
Operational expenses 42,619   20,620   25,091   135   88,465  
Underwriting income $ 213,000   $ 28,196   $ 2,797   $ 7,012   251,005
Net investment income 73,489 73,489
Net foreign exchange gains 1,331 1,331
Equity in earnings of other ventures 11,431 11,431
Other loss (473 ) (473 )
Net realized and unrealized gains on investments 42,055 42,055
Corporate expenses (8,499 ) (8,499 )
Interest expense (8,585 ) (8,585 )
Income before taxes and noncontrolling interests 361,754
Income tax benefit 38 38
Net income attributable to noncontrolling interests (78,846 ) (78,846 )
Dividends on preference shares (11,191 ) (11,191 )
Net income available to RenaissanceRe common shareholders $ 271,755  
 
Net claims and claim expenses incurred – current accident year $ 51,002 $ 67,365 $ 55,712 $ $ 174,079
Net claims and claim expenses incurred – prior accident years (7,817 ) (21,209 ) (4,320 ) (430 ) (33,776 )
Net claims and claim expenses incurred – total $ 43,185   $ 46,156   $ 51,392   $ (430 ) $ 140,303  
 
Net claims and claim expense ratio – current accident year 15.8 % 54.7 % 55.7 % % 31.8 %
Net claims and claim expense ratio – prior accident years (2.5 )% (17.2 )% (4.3 )% (1,592.6 )% (6.1 )%
Net claims and claim expense ratio – calendar year 13.3 % 37.5 % 51.4 % (1,592.6 )% 25.7 %
Underwriting expense ratio 20.9 % 39.6 % 45.8 % (24,277.8 )% 28.4 %
Combined ratio 34.2 % 77.1 % 97.2 % (25,870.4 )% 54.1 %
 
 
Six months ended June 30, 2013

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other Total
Gross premiums written (1) $ 1,055,699   $ 140,869   $ 143,061   $ (988 ) $ 1,338,641  
Net premiums written $ 742,205   $ 132,867   $ 120,567   $ 283   $ 995,922  
Net premiums earned $ 387,134 $ 96,015 $ 79,712 $ 283 $ 563,144
Net claims and claim expenses incurred 55,623 36,203 40,064 (677 ) 131,213
Acquisition expenses 23,817 17,448 15,400 111 56,776
Operational expenses 49,714   15,155   23,634   272   88,775  
Underwriting income $ 257,980   $ 27,209   $ 614   $ 577   286,380
Net investment income 69,365 69,365
Net foreign exchange losses (318 ) (318 )
Equity in earnings of other ventures 9,607 9,607
Other loss (2,837 ) (2,837 )
Net realized and unrealized losses on investments (55,260 ) (55,260 )
Corporate expenses (26,011 ) (26,011 )
Interest expense (9,334 ) (9,334 )
Income from continuing operations before taxes 271,592
Income tax expense (133 ) (133 )
Income from discontinued operations 12,201 12,201
Net income attributable to noncontrolling interests (52,622 ) (52,622 )
Dividends on preference shares (13,758 ) (13,758 )
Net income attributable to RenaissanceRe common shareholders $ 217,280  
 
Net claims and claim expenses incurred – current accident year $ 92,545 $ 56,756 $ 46,388 $ $ 195,689
Net claims and claim expenses incurred – prior accident years (36,922 ) (20,553 ) (6,324 ) (677 ) (64,476 )
Net claims and claim expenses incurred – total $ 55,623   $ 36,203   $ 40,064   $ (677 ) $ 131,213  
 
Net claims and claim expense ratio – current accident year 23.9 % 59.1 % 58.2 % % 34.7 %
Net claims and claim expense ratio – prior accident years (9.5 )% (21.4 )% (7.9 )% (239.2 )% (11.4 )%
Net claims and claim expense ratio – calendar year 14.4 % 37.7 % 50.3 % (239.2 )% 23.3 %
Underwriting expense ratio 19.0 % 34.0 % 48.9 % 135.3 % 25.9 %
Combined ratio 33.4 % 71.7 % 99.2 % (103.9 )% 49.2 %

(1) Included in gross premiums written in the Other category is the elimination of inter-segment gross premiums written of $1.0 million.

 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Gross Premiums Written and Managed Premiums
(in thousands of United States Dollars)
(Unaudited)
 
  Three months ended   Six months ended
June 30,
2014
  June 30,
2013
June 30,
2014
  June 30,
2013

Catastrophe Reinsurance Segment

Renaissance catastrophe premiums $ 240,137 $ 368,077 $ 562,885 $ 678,079
DaVinci catastrophe premiums

 

147,946

 

 

208,826

  292,909   377,620

Total Catastrophe Reinsurance segment gross premiums
written

$ 388,083   $ 576,903   $ 855,794   $ 1,055,699
 

Specialty Reinsurance Segment

Renaissance specialty premiums $ 50,001 $ 56,567 $ 203,995 $ 138,184
DaVinci specialty premiums

 

1,553

 

 

1,972

  1,849   2,685
Total Specialty Reinsurance segment gross premiums written $ 51,554   $ 58,539   $ 205,844   $ 140,869
 

Lloyd’s Segment

Specialty $ 45,238 $ 53,207 $ 106,942 $ 108,964
Catastrophe

 

26,665

 

 

15,562

  48,220   34,097
Total Lloyd’s segment gross premiums written $ 71,903   $ 68,769   $ 155,162   $ 143,061
 

Managed Premiums (1)

Total Catastrophe Reinsurance segment gross premiums written

$

388,083

$

576,903

$ 855,794 $ 1,055,699

Catastrophe premiums written on behalf of the Company’s joint
venture, Top Layer Re (2)

 

23,110

 

25,682

37,225 58,064
Catastrophe premiums written in the Lloyd’s segment

 

26,665

 

15,562

48,220 34,097

Catastrophe premiums written by the Company in its Catastrophe
Reinsurance segment and ceded to Top Layer Re

 

 

 

  (7,355 )
Total managed catastrophe premiums (1) $ 437,858   $ 618,147   $ 933,884   $ 1,147,860

(1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures.
(2) Top Layer Re is accounted for under the equity method of accounting.

 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars)
(Unaudited)
       
Three months ended Six months ended
June 30,
2014
June 30,
2013
June 30,
2014
June 30,
2013
Fixed maturity investments $ 26,372 $ 22,839 $ 50,232 $ 46,725
Short term investments 286 426 476 755
Equity investments trading 779 344 1,575 344
Other investments
Hedge funds and private equity investments 8,340 2,237 20,657 17,117
Other 1,483 3,144 6,011 10,139
Cash and cash equivalents 93   9   184   61  
37,353 28,999 79,135 75,141
Investment expenses (2,812 ) (2,836 ) (5,646 ) (5,776 )
Net investment income 34,541   26,163   73,489   69,365  
 
Gross realized gains 12,166 17,548 25,633 51,624
Gross realized losses (2,587 ) (14,601 ) (8,151 ) (19,155 )
Net realized gains on fixed maturity investments 9,579 2,947 17,482 32,469
Net unrealized gains (losses) on fixed maturity investments trading 29,918 (95,680 ) 57,800 (118,743 )

Net realized and unrealized (losses) gains on investments-related
derivatives

(6,884 ) 20,510 (17,783 ) 20,931
Net realized gains on equity investments trading 5,134 74 5,055 17,635
Net unrealized (losses) gains on equity investments trading (10,619 ) 2,620   (20,499 ) (7,552 )
Net realized and unrealized gains (losses) on investments 27,128 (69,529 ) 42,055 (55,260 )

Change in net unrealized gains on fixed maturity investments
available for sale

(96 ) (1,239 ) (261 ) (7,306 )
Total investment result $ 61,573   $ (44,605 ) $ 115,283   $ 6,799  
 
Total investment return - annualized 3.7 % (2.8 )% 3.4 % 0.2 %
 

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 available to RenaissanceRe common shareholders” 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 available to RenaissanceRe common shareholders” as used herein differs from “net income available to RenaissanceRe common shareholders,” which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on investments from continuing and discontinued operations and net other-than-temporary impairments. The Company’s management believes that “operating income available to RenaissanceRe common shareholders” 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 fixed maturity investment portfolio and equity investments trading. The Company also uses “operating income available to RenaissanceRe common shareholders” to calculate “operating income available to RenaissanceRe common shareholders per common share - diluted” and “operating return on average common equity - annualized”. The following is a reconciliation of: 1) net income available to RenaissanceRe common shareholders to operating income available to RenaissanceRe common shareholders; 2) net income available to RenaissanceRe common shareholders per common share - diluted to operating income available to RenaissanceRe 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 percentages) June 30,
2014
  June 30,
2013
June 30,
2014
  June 30,
2013
Net income available to RenaissanceRe common shareholders $ 120,752 $ 26,806 $ 271,755 $ 217,280

Adjustment for net realized and unrealized (gains) losses on
investments from continuing operations

(27,128 ) 69,529 (42,055 ) 55,260

Adjustment for net realized and unrealized gains on investments
from discontinued operations

  15     13  
Operating income available to RenaissanceRe common shareholders $ 93,624   $ 96,350   $ 229,700   $ 272,553  
 

Net income available to RenaissanceRe common shareholders per
common share - diluted

$ 2.95 $ 0.60 $ 6.52 $ 4.83

Adjustment for net realized and unrealized (gains) losses on
investments from continuing operations

(0.67 ) 1.57 (1.02 ) 1.25

Adjustment for net realized and unrealized gains on investments
from discontinued operations

       

Operating income available to RenaissanceRe common shareholders
per common share - diluted

$ 2.28   $ 2.17   $ 5.50   $ 6.08  
 
Return on average common equity - annualized 14.2 % 3.4 % 15.8 % 13.8 %

Adjustment for net realized and unrealized (gains) losses on
investments from continuing operations

(3.2 )% 8.8 % (2.4 )% 3.5 %

Adjustment for net realized and unrealized gains on investments
from discontinued operations

% % % %
Operating return on average common equity - annualized 11.0 % 12.2 % 13.4 % 17.3 %
 

The Company has also included in this Press Release “managed catastrophe premiums”. “Managed catastrophe premiums” is defined as gross catastrophe premiums written by the Company and its related joint ventures. “Managed catastrophe premiums” differs from total Catastrophe Reinsurance segment gross premiums written, 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, and the inclusion of catastrophe premiums written on behalf of the Company’s Lloyd’s segment. The Company’s management believes “managed catastrophe premiums” is useful to investors and other interested parties because it provides a measure of total catastrophe premiums assumed by the Company through its consolidated subsidiaries and related joint ventures.

The Company has also included in this Press Release “tangible book value per common share” and “tangible book value per common share plus accumulated dividends”. “Tangible book value per common share” is defined as book value per common share excluding goodwill and intangible assets per share. “Tangible book value per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible assets per share, plus accumulated dividends. “Tangible book value per common share” 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 intangible assets per share. The Company’s management believes “tangible book value per common share” and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets.

The following is a reconciliation of book value per common share to tangible book value per common share and tangible book value per common share plus accumulated dividends:

 
At
June 30,
2014
  March 31,
2014
  December 31,
2013
  September 30,
2013
  June 30,
2013
Book value per common share $ 84.79 $ 82.30 $ 80.29 $ 74.58 $ 71.38

Adjustment for goodwill and other
intangibles (1)

(0.86 ) (0.89 ) (0.85 ) (0.84 ) (0.85 )
Tangible book value per common share 83.93 81.41 79.44 73.74 70.53
Adjustment for accumulated dividends 13.70   13.41   13.12   12.84   12.56  

Tangible book value per common share
plus accumulated dividends

$ 97.63   $ 94.82   $ 92.56   $ 86.58   $ 83.09  
 

Quarterly change in book value per
common share

3.0 % 2.5 % 7.7 % 4.5 % 0.4 %

Quarterly change in tangible book value
per common share plus change in
accumulated dividends

3.5 % 2.8 % 8.1 % 4.9 % 0.8 %

Annual change in book value per
common share

5.6 % 4.8 %

Annual change in tangible book value per
common share plus change in
accumulated dividends

6.4 % 5.7 %

(1) At June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, goodwill and other intangibles included $27.0 million, $28.3 million, $29.2 million, $28.5 million and $29.3 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method.

Source: RenaissanceRe Holdings Ltd.

INVESTOR CONTACT:
Rohan Pai
Director - Corporate Finance
RenaissanceRe Holdings Ltd.
(441) 295-4513
or
MEDIA CONTACT:
Kekst and Company
Peter Hill or Dawn Dover
(212) 521-4800