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RenaissanceRe Reports Net Income of $136.3 Million for the Second Quarter of 2016 or $3.22 Per Diluted Common Share; Quarterly Operating Income of $66.6 Million or $1.55 Per Diluted Common Share

July 26, 2016

PEMBROKE, Bermuda--(BUSINESS WIRE)--Jul. 26, 2016-- RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or “RenaissanceRe”) today reported net income available to RenaissanceRe common shareholders of $136.3 million, or $3.22 per diluted common share, in the second quarter of 2016, compared to $73.2 million, or $1.59 per diluted common share, respectively, in the second quarter of 2015. Operating income available to RenaissanceRe common shareholders was $66.6 million, or $1.55 per diluted common share, in the second quarter of 2016, compared to $99.9 million, or $2.18 per diluted common share, respectively, in the second quarter of 2015. The Company reported an annualized return on average common equity of 12.6% and an annualized operating return on average common equity of 6.1% in the second quarter of 2016, compared to 6.6% and 9.1%, respectively, in the second quarter of 2015. Book value per common share increased $2.51, or 2.5%, in the second quarter of 2016 to $103.70, compared to a 1.3% increase in the second quarter of 2015. Tangible book value per common share plus accumulated dividends increased $2.68, or 2.8%, in the second quarter of 2016 to $113.07, compared to a 1.9% increase in the second quarter of 2015.

Kevin J. O'Donnell, CEO, commented: "We reported $136.3 million of net income and 2.8% growth in tangible book value per share plus accumulated dividends for the quarter.”

Mr. O'Donnell continued: "I am pleased with the way our team executed in this competitive market. We were able to grow in select areas we found attractive and to deepen our relationships with key clients, while maintaining our underwriting discipline. We also actively managed our capital position with over $200 million of share repurchases. Overall, I’m proud of what we’ve accomplished in order to maintain our underwriting leadership position heading into the second half of the year.”

SECOND QUARTER 2016 HIGHLIGHTS

  • Gross premiums written of $759.1 million increased $97.1 million, or 14.7%, in the second quarter of 2016, compared to the second quarter of 2015, with the Company’s Lloyd’s, Specialty Reinsurance and Catastrophe Reinsurance segments experiencing increases of $44.3 million, or 38.0%; $40.7 million, or 25.4%; and $12.1 million, or 3.1%, respectively.
  • The Company generated underwriting income of $63.6 million and a combined ratio of 81.9% in the second quarter of 2016, compared to $94.1 million and 75.2%, respectively, in the second quarter of 2015. The increase in the combined ratio in the second quarter of 2016, compared to the second quarter of 2015, was primarily driven by an increase in net claims and claim expenses and underwriting expenses, adding 3.1 and 3.6 percentage points, respectively, to the combined ratio.
  • Included in net claims and claim expenses in the second quarter of 2016 was $32.8 million of net claims and claim expenses associated with a number of weather-related events in Texas (the “2016 Texas Events”) and $28.1 million associated with the wildfire originating near Fort McMurray, Alberta (the “Fort McMurray Wildfire”). The net negative impact of these events on the Company’s consolidated underwriting result was $50.4 million, and added 15.4 percentage points to the Company’s consolidated combined ratio. The net negative impact of these events on the Company’s net income available to RenaissanceRe common shareholders was $41.1 million. See below for additional information related to the 2016 Texas Events and the Fort McMurray Wildfire.
  • The Company’s total investment result, which includes the sum of net investment income and net realized and unrealized gains on investments, was $123.8 million in the second quarter of 2016, compared to $11.3 million in the second quarter of 2015, an increase of $112.5 million. The total investment result during the second quarter of 2016 was primarily driven by net unrealized gains in the Company’s portfolio of fixed maturity investments trading, principally the result of a decrease in U.S. treasury yields and a flattening of the yield curve during the quarter, an increase in net investment income in the Company’s portfolio of fixed maturity investments, driven by an increase in average invested assets, and net realized and unrealized gains on equity investments trading as a result of the strong performance of a number of the Company’s equity positions during the quarter. Partially offsetting these items were net realized and unrealized losses on certain investments-related derivatives due to the flattening of the yield curve, noted above.
  • During the second quarter of 2016, the Company repurchased an aggregate of 1.7 million common shares in open market transactions at an aggregate cost of $187.1 million and at an average share price of $113.33. Subsequent to June 30, 2016 and through the period ended July 25, 2016, the Company repurchased 286 thousand common shares in open market transactions at an aggregate cost of $33.1 million and at an average share price of $115.66.

Net Negative Impact of the 2016 Texas Events and the Fort McMurray Wildfire

Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, lost profit commissions and redeemable noncontrolling interest - DaVinci Re. The Company’s estimates of the 2016 Texas Events and the Fort McMurray Wildfire are based on a review of its potential exposures, preliminary discussions with certain counterparties and catastrophe modeling techniques. Given the magnitude and recent occurrence of these events, delays in receiving claims data, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events. Accordingly, the Company’s actual net negative impact from these events will vary from these estimates, perhaps significantly. Changes in these estimates will be recorded in the period in which they occur.

The supplemental financial data below provides additional information detailing the net negative impact of the 2016 Texas Events and the Fort McMurray Wildfire on the Company’s consolidated financial statements for the three months ended June 30, 2016.

         
Three months ended June 30, 2016 2016 Texas Events Fort McMurray Wildfire Total
(in thousands, except percentages)
Net claims and claim expenses incurred $ (32,821 ) $ (28,061 ) $ (60,882 )
Assumed reinstatement premiums earned 6,102 5,251 11,353
Ceded reinstatement premiums earned (71 ) (71 )
Lost profit commissions (477 ) (370 ) (847 )
Net negative impact on underwriting result (27,196 ) (23,251 ) (50,447 )
Redeemable noncontrolling interest - DaVinciRe 5,124   4,247   9,371  
Net negative impact $ (22,072 ) $ (19,004 ) $ (41,076 )
Percentage point impact on consolidated combined ratio 8.2 7.0 15.4
 
Net negative impact on Catastrophe Reinsurance segment underwriting result $ (24,402 ) $ (18,763 ) $ (43,165 )
Net negative impact on Specialty Reinsurance segment underwriting result (1,901 ) (500 ) (2,401 )
Net negative impact on Lloyd's segment underwriting result (893 ) (3,988 ) (4,881 )
Net negative impact on underwriting result $ (27,196 ) $ (23,251 ) $ (50,447 )

Underwriting Results by Segment

Catastrophe Reinsurance Segment

Gross premiums written in the Catastrophe Reinsurance segment were $397.5 million in the second quarter of 2016, an increase of $12.1 million, or 3.1%, compared to $385.4 million in the second quarter of 2015. Market conditions remained challenging during the second quarter of 2016, however the Company was able to increase its participation on a select number of transactions it believes have comparably attractive risk-return attributes, while continuing to exercise underwriting discipline given prevailing market terms and conditions. Included in gross premiums written in the Catastrophe Reinsurance segment in the second quarter of 2016 was $10.9 million of reinstatement premiums associated with the 2016 Texas Events and the Fort McMurray Wildfire.

Managed catastrophe premiums were $461.8 million in the second quarter of 2016, an increase of $22.5 million, or 5.1%, compared to $439.3 million in the second quarter of 2015. For the first six months of 2016, managed catastrophe premiums were $848.0 million, a decrease of $14.4 million, or 1.7%, compared to $862.4 million in the first six months of 2015.

The Catastrophe Reinsurance segment generated underwriting income of $50.6 million and a combined ratio of 64.3% in the second quarter of 2016, compared to $65.9 million and 59.5% in the second quarter of 2015, respectively. Principally impacting underwriting income in the second quarter of 2016, compared to the second quarter of 2015, was a $21.1 million decrease in net premiums earned, partially offset by a $6.5 million decrease in underwriting expenses. Net claims and claim expenses increased $0.8 million in the second quarter of 2016, compared to the second quarter of 2015, and included $29.7 million and $23.5 million of net claims and claim expenses associated with the 2016 Texas Events and the Fort McMurray Wildfire. The net negative impact on the Catastrophe Reinsurance segment underwriting result of the 2016 Texas Events and the Fort McMurray Wildfire was $43.2 million, and these events increased the Catastrophe Reinsurance segment combined ratio by 36.0 percentage points.

The Company experienced $14.2 million of favorable development on prior accident year net claims and claim reserves within its Catastrophe Reinsurance segment during the second quarter of 2016, compared to $12.0 million in the second quarter of 2015. The $14.2 million of favorable development in the second quarter of 2016 was principally driven by a reduction in ultimate losses on a number of relatively small catastrophe events from 2015.

Specialty Reinsurance Segment

Gross premiums written in the Specialty Reinsurance segment were $200.7 million in the second quarter of 2016, an increase of $40.7 million, or 25.4%, compared to the second quarter of 2015, principally driven by an increase in the credit lines of business. For the first six months of 2016, gross premiums written in the Specialty Reinsurance segment were $569.7 million, an increase of $285.4 million, or 100.4%, compared to $284.3 million in the first six months of 2015, driven in large part by the acquisition of Platinum Underwriters Holdings, Ltd. (“Platinum”), as well as by select organic growth. The Company’s Specialty Reinsurance segment premiums are prone to significant volatility as this business can be influenced by a relatively small number of relatively large transactions.

The Specialty Reinsurance segment generated underwriting income of $15.4 million and a combined ratio of 88.8% in the second quarter of 2016, compared to generating underwriting income of $22.5 million and a combined ratio of 85.5%, respectively, in the second quarter of 2015. The Specialty Reinsurance segment’s combined ratio was impacted by the underwriting expense ratio which increased 9.2 percentage points in the second quarter of 2016, compared to the second quarter of 2015, partially offset by a 5.9 percentage point decrease in the net claims and claim expense ratio in the second quarter of 2016, compared to the second quarter of 2015, principally driven by a $19.2 million decrease in current accident year net claims and claim expenses.

The Company experienced $17.4 million of favorable development on prior accident years net claims and claim reserves within its Specialty Reinsurance segment during the second quarter of 2016, compared to $18.3 million in the second quarter of 2015. The favorable development on prior accident years net claims and claim expenses of $17.4 million in the second quarter of 2016 was principally driven by actual reported losses coming in better than expected on attritional net claims and claim expenses and $6.1 million of favorable development associated with actuarial assumption changes.

Lloyd’s Segment

Gross premiums written in the Lloyd’s segment were $160.9 million in the second quarter of 2016, an increase of $44.3 million, or 38.0%, compared to the second quarter of 2015, primarily due to Syndicate 1458 continuing to grow organically in the Lloyd’s marketplace, notwithstanding challenging overall market conditions. For the first six months of 2016, gross premiums written in the Lloyd’s segment were $293.7 million, an increase of $46.9 million, or 19.0%, compared to $246.7 million in the first six months of 2015.

The Lloyd’s segment incurred an underwriting loss of $2.3 million and a combined ratio of 103.1% in the second quarter of 2016, compared to underwriting income of $5.9 million and a combined ratio of 90.4% in the second quarter of 2015. Impacting the combined ratio in the Lloyd’s segment during the second quarter of 2016, compared to the second quarter of 2015, was a 7.2 and 8.2 percentage point increase in the current year and prior accident years net claims and claim expense ratio, respectively, partially offset by a 2.7 percentage point decrease in the underwriting expense ratio. Included in current accident year net claims and claim expenses was $5.3 million associated with the 2016 Texas Events and the Fort McMurray Wildfire, which increased the Lloyd’s segment combined ratio by 6.7 percentage points.

The Lloyd’s segment experienced $2.3 million of adverse development on prior accident years net claims and claim expenses in the second quarter of 2016, compared to favorable development of $3.1 million in the second quarter of 2015, principally driven by actual reported loss activity coming in slightly higher than expected.

Other Items

  • Net income attributable to noncontrolling interests in the second quarter of 2016 was $30.6 million, an increase from $12.2 million in the second quarter of 2015, principally due to an increase in the profitability of DaVinciRe Holdings Ltd. (“DaVinciRe”). The Company’s ownership in DaVinciRe was 24.0% at June 30, 2016, compared to 26.3% at June 30, 2015.
  • Corporate expenses decreased $7.1 million to $5.8 million in the second quarter of 2016, compared to $12.9 million in the second quarter of 2015, primarily reflecting a decrease to $0.2 million of corporate expenses associated with the acquisition and integration of Platinum incurred during the second quarter of 2016, compared to $7.8 million in the second quarter of 2015.

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 27, 2016 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 Regarding Forward Looking Statements

Any forward-looking statements made in this Press Release reflect RenaissanceRe’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous factors that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements, including the following: the frequency and severity of catastrophic and other events that the Company covers; the effectiveness of the Company’s claims and claim expense reserving process; the Company’s ability to maintain its financial strength ratings; the effect of climate change on the Company’s business; the effect of emerging claims and coverage issues; the Company’s reliance on a small and decreasing number of reinsurance brokers and other distribution services for the preponderance of its revenue; the Company’s exposure to credit loss from counterparties in the normal course of business; the effect of continued challenging economic conditions throughout the world; continued soft reinsurance underwriting market conditions; a contention by the Internal Revenue Service that Renaissance Reinsurance Ltd., or any of the Company’s other Bermuda subsidiaries, is subject to U.S. taxation; the performance of the Company’s investment portfolio; the Company’s ability to successfully implement its business strategies and initiatives; the Company’s ability to retain key senior officers and to attract or retain the executives and employees necessary to manage its business; the Company’s ability to determine the impairments taken on investments; the availability of retrocessional reinsurance on acceptable terms; the effect of inflation; the adequacy of the Company’s ceding companies’ ability to assess the risks they underwrite; the effect of operational risks, including system or human failures; the Company’s ability to effectively manage capital on behalf of investors in joint ventures or other entities it manages; foreign currency exchange rate fluctuations; uncertainties related to the vote in the United Kingdom to leave the European Union; the Company’s ability to raise capital if necessary; the Company’s ability to comply with covenants in its debt agreements; changes to the regulatory systems under which the Company operates; challenges to the claim of exemption from insurance regulation of RenaissanceRe and its subsidiaries and increased global regulation of the insurance and reinsurance industry; losses that the Company could face from terrorism, political unrest or war; the Company’s dependence on the ability of its operating subsidiaries to declare and pay dividends; the success of any of the Company’s strategic investments or acquisitions, including the Company’s ability to manage its operations as its product and geographical diversity increases; the effect of cybersecurity risks, including technology breaches or failure on the Company’s business; aspects of the Company’s corporate structure that may discourage third party takeovers or other transactions; the cyclical nature of the reinsurance and insurance industries; adverse legislative developments that reduce the size of the private markets the Company serves or impede their future growth; regulatory or legislative changes adversely impacting the Company; the effect on the Company’s business of the highly competitive nature of its industry, including the effect of new entrants to, competing products for and consolidation in the (re)insurance industry; consolidation of customers or insurance and reinsurance brokers; adverse tax developments, including potential changes to the taxation of inter-company or related party transactions, or changes to the tax treatment of investors in RenaissanceRe or joint ventures or other entities the Company manages; changes in regulatory regimes and/or accounting rules, including the European Union directive concerning capital adequacy, risk management and regulatory reporting for insurers; the Company’s need to make many estimates and judgments in the preparation of its financial statements; and other factors affecting future results disclosed in RenaissanceRe’s filings with the SEC, including its Annual Reports on Form 10-K and 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,
2016
  June 30,
2015
June 30,
2016
  June 30,
2015
Revenues
Gross premiums written $ 759,128   $ 661,997   $ 1,621,261   $ 1,305,575  
Net premiums written $ 519,916 $ 508,677 $ 1,031,591 $ 912,712
Increase in unearned premiums (168,514 ) (128,849 ) (326,583 ) (236,124 )
Net premiums earned 351,402 379,828 705,008 676,588
Net investment income 54,124 38,604 82,987 78,311
Net foreign exchange losses (690 ) (1,740 ) (2,382 ) (4,870 )
Equity in earnings of other ventures 6,022 6,160 7,633 11,455
Other income 2,654 1,427 6,733 2,966
Net realized and unrealized gains (losses) on investments 69,772   (26,712 ) 131,425   15,037  
Total revenues 483,284   397,567   931,404   779,487  
Expenses
Net claims and claim expenses incurred 167,750 169,344 294,355 246,197
Acquisition expenses 69,005 61,666 134,597 105,067
Operational expenses 51,073 54,673 107,308 100,294
Corporate expenses 5,752 12,868 13,977 58,401
Interest expense 10,536   9,862   21,074   15,178  
Total expenses 304,116   308,413   571,311   525,137  
Income before taxes 179,168 89,154 360,093 254,350
Income tax (expense) benefit (6,612 ) 1,842   (9,356 ) 49,746  
Net income 172,556 90,996 350,737 304,096
Net income attributable to noncontrolling interests (30,635 ) (12,167 ) (75,226 ) (51,829 )
Net income available to RenaissanceRe 141,921 78,829 275,511 252,267
Dividends on preference shares (5,596 ) (5,596 ) (11,191 ) (11,191 )
Net income available to RenaissanceRe common shareholders $ 136,325   $ 73,233   $ 264,320   $ 241,076  
 
Net income available to RenaissanceRe common shareholders per common share - basic $ 3.23 $ 1.60 $ 6.20 $ 5.61
Net income available to RenaissanceRe common shareholders per common share - diluted $ 3.22 $ 1.59 $ 6.16 $ 5.56
 
Average shares outstanding - basic 41,693 45,303 42,135 42,467
Average shares outstanding - diluted 41,885 45,657 42,398 42,839
 
Net claims and claim expense ratio 47.7 % 44.6 % 41.8 % 36.4 %
Underwriting expense ratio 34.2 % 30.6 % 34.3 % 30.3 %
Combined ratio 81.9 % 75.2 % 76.1 % 66.7 %
Net income available to RenaissanceRe common shareholders per common share - diluted $ 3.22 $ 1.59 $ 6.16 $ 5.56
Operating income available to RenaissanceRe common shareholders per common share - diluted (1) $ 1.55 $ 2.18 $ 3.06 $ 5.21
Return on average common equity - annualized 12.6 % 6.6 % 12.2 % 11.8 %
Operating return on average common equity - annualized (1) 6.1 % 9.1 % 6.1 % 11.0 %
 
(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,
2016
December 31,
2015
Assets (Unaudited) (Audited)
Fixed maturity investments trading, at fair value $ 7,073,129 $ 6,765,005
Fixed maturity investments available for sale, at fair value 12,434   17,813
Total fixed maturity investments, at fair value 7,085,563 6,782,818
Short term investments, at fair value 1,000,206 1,208,401
Equity investments trading, at fair value 301,298 393,877
Other investments, at fair value 489,702 481,621
Investments in other ventures, under equity method 133,448   132,351
Total investments 9,010,217 8,999,068
Cash and cash equivalents 455,521 506,885
Premiums receivable 1,332,667 778,009
Prepaid reinsurance premiums 533,092 230,671
Reinsurance recoverable 222,006 134,526
Accrued investment income 37,900 39,749
Deferred acquisition costs 331,152 199,380
Receivable for investments sold 203,165 220,834
Other assets 160,873 181,011
Goodwill and other intangibles 258,170   265,154
Total assets $ 12,544,763   $ 11,555,287
Liabilities, Noncontrolling Interests and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses $ 2,844,243 $ 2,767,045
Unearned premiums 1,518,106 889,102
Debt 954,577 960,495
Reinsurance balances payable 753,699 523,974
Payable for investments purchased 432,926 391,378
Other liabilities 215,592   245,145
Total liabilities 6,719,143   5,777,139
Redeemable noncontrolling interest 1,122,403 1,045,964
Shareholders’ Equity
Preference shares 400,000 400,000
Common shares 41,496 43,701
Additional paid-in capital 242,561 507,674
Accumulated other comprehensive income 2,337 2,108
Retained earnings 4,016,823   3,778,701
Total shareholders’ equity attributable to RenaissanceRe 4,703,217   4,732,184
Total liabilities, noncontrolling interests and shareholders’ equity $ 12,544,763   $ 11,555,287
 
Book value per common share $ 103.70   $ 99.13
 
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
           
Three months ended June 30, 2016
Catastrophe Reinsurance Specialty Reinsurance Lloyd’s Other   Total
Gross premiums written $ 397,454   $ 200,733   $ 160,941   $   $ 759,128  
Net premiums written $ 255,645   $ 132,420   $ 131,851   $   $ 519,916  
Net premiums earned $ 141,616 $ 137,168 $ 72,618 $ $ 351,402
Net claims and claim expenses incurred 56,131 67,701 43,832 86 167,750
Acquisition expenses 16,227 34,127 18,651 69,005
Operational expenses 18,685   19,959   12,408   21   51,073  
Underwriting income (loss) $ 50,573   $ 15,381   $ (2,273 ) $ (107 ) 63,574
Net investment income 54,124 54,124
Net foreign exchange losses (690 ) (690 )
Equity in earnings of other ventures 6,022 6,022
Other income 2,654 2,654
Net realized and unrealized gains on investments 69,772 69,772
Corporate expenses (5,752 ) (5,752 )
Interest expense (10,536 ) (10,536 )
Income before taxes and redeemable noncontrolling interests 179,168
Income tax expense (6,612 ) (6,612 )
Net income attributable to redeemable noncontrolling interests (30,635 ) (30,635 )
Dividends on preference shares (5,596 ) (5,596 )
Net income available to RenaissanceRe common shareholders $ 136,325  
 
Net claims and claim expenses incurred – current accident year $ 70,321 $ 85,117 $ 41,567 $ $ 197,005
Net claims and claim expenses incurred – prior accident years (14,190 ) (17,416 ) 2,265   86   (29,255 )
Net claims and claim expenses incurred – total $ 56,131   $ 67,701   $ 43,832   $ 86   $ 167,750  
 
Net claims and claim expense ratio – current accident year 49.7 % 62.1 % 57.2 % 56.1 %
Net claims and claim expense ratio – prior accident years (10.1 )% (12.7 )% 3.2 % (8.4 )%
Net claims and claim expense ratio – calendar year 39.6 % 49.4 % 60.4 % 47.7 %
Underwriting expense ratio 24.7 % 39.4 % 42.7 % 34.2 %
Combined ratio 64.3 % 88.8 % 103.1 % 81.9 %
 
 
Three months ended June 30, 2015
Catastrophe Reinsurance Specialty Reinsurance Lloyd’s Other Total
Gross premiums written $ 385,366   $ 160,013   $ 116,618   $   $ 661,997  
Net premiums written $ 270,490   $ 139,867   $ 98,320   $   $ 508,677  
Net premiums earned $ 162,705 $ 155,584 $ 61,539 $ $ 379,828
Net claims and claim expenses incurred 55,376 86,062 27,683 223 169,344
Acquisition expenses 19,314 28,251 14,210 (109 ) 61,666
Operational expenses 22,090   18,747   13,719   117   54,673  
Underwriting income (loss) $ 65,925   $ 22,524   $ 5,927   $ (231 ) 94,145
Net investment income 38,604 38,604
Net foreign exchange losses (1,740 ) (1,740 )
Equity in earnings of other ventures 6,160 6,160
Other income 1,427 1,427
Net realized and unrealized losses on investments (26,712 ) (26,712 )
Corporate expenses (12,868 ) (12,868 )
Interest expense (9,862 ) (9,862 )
Income before taxes and noncontrolling interests 89,154
Income tax benefit 1,842 1,842
Net income attributable to noncontrolling interests (12,167 ) (12,167 )
Dividends on preference shares (5,596 ) (5,596 )
Net income available to RenaissanceRe common shareholders $ 73,233  
 
Net claims and claim expenses incurred – current accident year $ 67,334 $ 104,315 $ 30,771 $ $ 202,420
Net claims and claim expenses incurred – prior accident years (11,958 ) (18,253 ) (3,088 ) 223   (33,076 )
Net claims and claim expenses incurred – total $ 55,376   $ 86,062   $ 27,683   $ 223   $ 169,344  
 
Net claims and claim expense ratio – current accident year 41.4 % 67.0 % 50.0 % 53.3 %
Net claims and claim expense ratio – prior accident years (7.4 )% (11.7 )% (5.0 )% (8.7 )%
Net claims and claim expense ratio – calendar year 34.0 % 55.3 % 45.0 % 44.6 %
Underwriting expense ratio 25.5 % 30.2 % 45.4 % 30.6 %
Combined ratio 59.5 % 85.5 % 90.4 % 75.2 %
 
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
           
Six months ended June 30, 2016
Catastrophe Reinsurance Specialty Reinsurance Lloyd’s Other   Total
Gross premiums written $ 757,877   $ 569,722   $ 293,662   $   $ 1,621,261  
Net premiums written $ 444,430   $ 392,511   $ 194,650   $   $ 1,031,591  
Net premiums earned $ 278,601 $ 292,486 $ 133,921 $ $ 705,008
Net claims and claim expenses incurred 63,951 159,553 70,848 3 294,355
Acquisition expenses 25,807 75,852 32,938 134,597
Operational expenses 38,953   41,732   26,542   81   107,308  
Underwriting income (loss) $ 149,890   $ 15,349   $ 3,593   $ (84 ) 168,748
Net investment income 82,987 82,987
Net foreign exchange losses (2,382 ) (2,382 )
Equity in earnings of other ventures 7,633 7,633
Other income 6,733 6,733
Net realized and unrealized gains on investments 131,425 131,425
Corporate expenses (13,977 ) (13,977 )
Interest expense (21,074 ) (21,074 )
Income before taxes and redeemable noncontrolling interests 360,093
Income tax expense (9,356 ) (9,356 )
Net income attributable to redeemable noncontrolling interests (75,226 ) (75,226 )
Dividends on preference shares (11,191 ) (11,191 )
Net income available to RenaissanceRe common shareholders $ 264,320  
 
Net claims and claim expenses incurred – current accident year $ 84,204 $ 173,495 $ 67,515 $ $ 325,214
Net claims and claim expenses incurred – prior accident years (20,253 ) (13,942 ) 3,333   3   (30,859 )
Net claims and claim expenses incurred – total $ 63,951   $ 159,553   $ 70,848   $ 3   $ 294,355  
 
Net claims and claim expense ratio – current accident year 30.2 % 59.3 % 50.4 % 46.1 %
Net claims and claim expense ratio – prior accident years (7.2 )% (4.7 )% 2.5 % (4.3 )%
Net claims and claim expense ratio – calendar year 23.0 % 54.6 % 52.9 % 41.8 %
Underwriting expense ratio 23.2 % 40.2 % 44.4 % 34.3 %
Combined ratio 46.2 % 94.8 % 97.3 % 76.1 %
 
 
Six months ended June 30, 2015
Catastrophe Reinsurance Specialty Reinsurance Lloyd’s Other Total
Gross premiums written (1) $ 774,613   $ 284,304   $ 246,748   $ (90 ) $ 1,305,575  
Net premiums written $ 493,130   $ 243,782   $ 175,889   $ (89 ) $ 912,712  
Net premiums earned $ 306,472 $ 250,460 $ 119,745 $ (89 ) $ 676,588
Net claims and claim expenses incurred 62,970 125,650 57,526 51 246,197
Acquisition expenses 26,968 48,940 28,903 256 105,067
Operational expenses 42,453   32,037   25,659   145   100,294  
Underwriting income (loss) $ 174,081   $ 43,833   $ 7,657   $ (541 ) 225,030
Net investment income 78,311 78,311
Net foreign exchange losses (4,870 ) (4,870 )
Equity in earnings of other ventures 11,455 11,455
Other income 2,966 2,966
Net realized and unrealized gains on investments 15,037 15,037
Corporate expenses (58,401 ) (58,401 )
Interest expense (15,178 ) (15,178 )
Income before taxes and noncontrolling interests 254,350
Income tax benefit 49,746 49,746
Net income attributable to noncontrolling interests (51,829 ) (51,829 )
Dividends on preference shares (11,191 ) (11,191 )
Net income available to RenaissanceRe common shareholders $ 241,076  
 
Net claims and claim expenses incurred – current accident year $ 91,458 $ 153,579 $ 56,381 $ $ 301,418
Net claims and claim expenses incurred – prior accident years (28,488 ) (27,929 ) 1,145   51   (55,221 )
Net claims and claim expenses incurred – total $ 62,970   $ 125,650   $ 57,526   $ 51   $ 246,197  
 
Net claims and claim expense ratio – current accident year 29.8 % 61.3 % 47.1 % 44.5 %
Net claims and claim expense ratio – prior accident years (9.3 )% (11.1 )% 0.9 % (8.1 )%
Net claims and claim expense ratio – calendar year 20.5 % 50.2 % 48.0 % 36.4 %
Underwriting expense ratio 22.7 % 32.3 % 45.6 % 30.3 %
Combined ratio 43.2 % 82.5 % 93.6 % 66.7 %
 
(1)   Included in gross premiums written in the Other category is the elimination of inter-segment gross premiums written of $(0.1) million for the six months ended June 30, 2015.
 
 
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,
2016
June 30,
2015
June 30,
2016
June 30,
2015

Catastrophe Reinsurance Segment

Renaissance catastrophe premiums $ 251,695 $ 243,246 $ 497,784 $ 508,976
DaVinci catastrophe premiums 145,759   142,120   260,093   265,637  
Total Catastrophe Reinsurance segment gross premiums written $ 397,454   $ 385,366   $ 757,877   $ 774,613  
 

Specialty Reinsurance Segment

Casualty $ 87,989 $ 84,953 $ 235,790 $ 147,058
Credit 71,395 19,911 210,025 48,622
Property 18,235 23,215 57,859 28,424
Other 23,114   31,934   66,048   60,200  
Total Specialty Reinsurance segment gross premiums written $ 200,733   $ 160,013   $ 569,722   $ 284,304  
 

Lloyd’s Segment

Casualty $ 62,110 $ 48,426 $ 133,038 $ 110,397
Catastrophe 39,602 33,379 62,635 59,024
Property 38,662 24,130 60,541 47,899
Credit 2,860 1,534 7,064 4,119
Other 17,707   9,149   30,384   25,309  
Total Lloyd’s segment gross premiums written $ 160,941   $ 116,618   $ 293,662   $ 246,748  
 

Managed Premiums (1)

Total Catastrophe Reinsurance segment gross premiums written $ 397,454 $ 385,366 $ 757,877 $ 774,613
Catastrophe premiums written in the Lloyd’s segment 39,602 33,379 62,635 59,024
Catastrophe premiums written on behalf of the Company’s joint venture, Top Layer Re (2) 25,689 21,411 36,785 35,575
Catastrophe premiums written by the Company in its Catastrophe Reinsurance segment and ceded to Top Layer Re (896 ) (835 ) (9,263 ) (6,785 )
Total managed catastrophe premiums (1) $ 461,849   $ 439,321   $ 848,034   $ 862,427  
 
(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,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Fixed maturity investments $ 46,091 $ 33,791 $ 82,097 $ 59,730
Short term investments 1,227 297 2,227 494
Equity investments trading 865 1,913 2,528 4,517
Other investments
Private equity investments 4,356 5,425 (5,002 ) 15,838
Other 5,035 674 8,344 4,182
Cash and cash equivalents 209   127   338   275  
57,783 42,227 90,532 85,036
Investment expenses (3,659 ) (3,623 ) (7,545 ) (6,725 )
Net investment income 54,124   38,604   82,987   78,311  
 
Gross realized gains 22,661 8,672 40,411 30,204
Gross realized losses (7,804 ) (21,552 ) (22,469 ) (26,423 )
Net realized gains (losses) on fixed maturity investments 14,857 (12,880 ) 17,942 3,781
Net unrealized gains (losses) on fixed maturity investments trading 44,271 (48,104 ) 129,736 (22,132 )
Net realized and unrealized (losses) gains on investments-related derivatives (9,151 ) 19,816 (28,600 ) 15,608
Net realized gains on equity investments trading 14,729 8,832 13,911 16,313
Net unrealized gains (losses) on equity investments trading 5,066   5,624   (1,564 ) 1,467  
Net realized and unrealized gains (losses) on investments 69,772 (26,712 ) 131,425 15,037
Change in net unrealized gains on fixed maturity investments available for sale (90 ) (560 ) (359 ) (743 )
Total investment result $ 123,806   $ 11,332   $ 214,053   $ 92,605  
 
Total investment return - annualized 5.5 % 0.5 % 4.7 % 2.2 %
 

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 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 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. 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, equity investments trading and investments-related derivatives. 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,
2016
  June 30,
2015
June 30,
2016
  June 30,
2015
Net income available to RenaissanceRe common shareholders $ 136,325 $ 73,233 $ 264,320 $ 241,076
Adjustment for net realized and unrealized (gains) losses on investments (69,772 ) 26,712   (131,425 ) (15,037 )
Operating income available to RenaissanceRe common shareholders $ 66,553   $ 99,945   $ 132,895   $ 226,039  
 
Net income available to RenaissanceRe common shareholders per common share - diluted $ 3.22 $ 1.59 $ 6.16 $ 5.56
Adjustment for net realized and unrealized (gains) losses on investments (1.67 ) 0.59   (3.10 ) (0.35 )
Operating income available to RenaissanceRe common shareholders per common share - diluted $ 1.55   $ 2.18   $ 3.06   $ 5.21  
 
Return on average common equity - annualized 12.6 % 6.6 % 12.2 % 11.8 %
Adjustment for net realized and unrealized (gains) losses on investments (6.5 )% 2.5 % (6.1 )% (0.8 )%
Operating return on average common equity - annualized 6.1 % 9.1 % 6.1 % 11.0 %
 

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. A reconciliation of “managed catastrophe premiums” to Catastrophe Reinsurance segment gross premiums written is included on page 10 of this Press Release.

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. 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,
2016
  March 31,
2016
  December 31,
2015
  September 30,
2015
  June 30,
2015
Book value per common share $ 103.70 $ 101.19 $ 99.13 $ 97.41 $ 96.43
Adjustment for goodwill and other intangibles (1) (6.73 ) (6.59 ) (6.59 ) (6.65 ) (6.51 )
Tangible book value per common share 96.97 94.60 92.54 90.76 89.92
Adjustment for accumulated dividends 16.10   15.79   15.48   15.18   14.88  
Tangible book value per common share plus accumulated dividends $ 113.07   $ 110.39   $ 108.02   $ 105.94   $ 104.80  
 
Quarterly change in book value per common share 2.5 % 2.1 % 1.8 % 1.0 % 1.3 %
Quarterly change in tangible book value per common share plus change in accumulated dividends 2.8 % 2.6 % 2.3 % 1.3 % 1.9 %
Year to date change in book value per common share 4.6 % 7.0 %
Year to date change in tangible book value per common share plus change in accumulated dividends 5.5 % 1.4 %
 
(1)   At June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, goodwill and other intangibles included $21.4 million, $22.3 million, $23.2 million, $22.9 million and $23.5 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method.

Source: RenaissanceRe Holdings Ltd.

Investors:
RenaissanceRe Holdings Ltd.
Rohan Pai, 441-295-4513
Director - Corporate Finance
or
Media:
RenaissanceRe Holdings Ltd.
Elizabeth Tillman, 212-238-9224
Director - Communications
or
Kekst and Company
Peter Hill or Dawn Dover
212-521-4800