PEMBROKE, Bermuda--(BUSINESS WIRE)--Jul. 31, 2012-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to RenaissanceRe common shareholders of $142.3 million or $2.75 per diluted common share in the second quarter of 2012, compared to $24.8 million or $0.48 per diluted common share in the second quarter of 2011. Operating income available to RenaissanceRe common shareholders was $111.5 million or $2.14 per diluted common share for the second quarter of 2012, compared to an operating loss attributable to RenaissanceRe common shareholders of $10.2 million or $0.21 per diluted common share in the second quarter of 2011. The Company reported an annualized return on average common equity of 17.5% and an annualized operating return on average common equity of 13.7% in the second quarter of 2012, compared to 3.3% and negative 1.4%, respectively, in the second quarter of 2011. Book value per common share increased $2.39, or 3.8%, in the second quarter of 2012 to $65.07, compared to a 0.5% increase in the second quarter of 2011.

See Comments on Regulation G for a reconciliation of non-GAAP measures.

Neill A. Currie, CEO, commented: “In the second quarter of 2012, we generated an annualized operating ROE of 13.7%. We increased our book value per share by 3.8% for the quarter and almost 10% year to date. Our results benefited from relatively low catastrophe losses, solid investment returns and favorable reserve development.”

Mr. Currie, continued: “Although property catastrophe pricing at June 1^st was a little lower than we had anticipated, we are pleased with the results of the recent renewal season. We have grown significantly in each unit this year, and have produced an attractive portfolio of risks.”

SECOND QUARTER 2012 HIGHLIGHTS ⁽¹⁾

• Underwriting income of $127.9 million and a combined ratio of 47.7%, compared to $9.7 million and 95.5%, respectively, was primarily driven by a relatively low level of insured catastrophes during the second quarter of 2012, compared to the second quarter of 2011, which was impacted by the U.S. tornadoes which had a net negative impact ⁽²⁾ of $70.8 million and added 51.8 percentage points to the combined ratio.
• Gross premiums written increased $25.8 million, or 4.0%, to $667.3 million. Excluding the impact of $30.7 million of negative reinstatement premium adjustments on the 2011 New Zealand and Tohoku earthquakes during the second quarter of 2012, and $23.2 million of reinstatement premiums written from large losses during the second quarter of 2011, respectively, gross premiums written increased $79.7 million, or 12.9%, due to growth in the Company's catastrophe, specialty and Lloyd's units, and inclusive of $37.7 million of gross premiums written on behalf of the Company's most recent fully collateralized joint venture, Timicuan Reinsurance III Limited ("Tim Re III").
• Total investment income of $44.8 million, which includes the sum of net investment income, net realized and unrealized gains on investments and net other-than-temporary impairments, compared to $66.5 million. The decrease in total investment income was primarily due to lower returns in the Company's portfolio of other investments, principally its private equity investments.
• Other income of $11.3 million, compared to an other loss of $5.2 million, was primarily due to the Company's weather and energy risk management operations generating income of $5.9 million, compared to incurring a loss of $3.8 million primarily as a result of positive results from its positions in the United Kingdom and its summer positions as at June 30, 2012 in certain regions of the United States and Canada.

Underwriting Results by Segment ⁽¹⁾

Reinsurance Segment

Gross premiums written in the Reinsurance segment were $617.0 million, an increase of $9.6 million, or 1.6%. Excluding the impact of $30.7 million of negative reinstatement premiums adjustments on the 2011 New Zealand and Tohoku earthquakes, as discussed below, and $23.0 million of reinstatement premiums written from large losses in the second quarter of 2012 and 2011, respectively, gross premiums written increased $63.4 million, or 10.9%, primarily due to the catastrophe unit writing more business during the June 2012 renewals, and inclusive of $37.7 million of gross premiums written on behalf of Tim Re III. Managed catastrophe premiums totaled $628.3 million, an increase of $63.3 million, or 10.6%, excluding the impact of the negative reinstatement premiums adjustments in the second quarter of 2012, as discussed below, and the reinstatement premiums written from large losses in the second quarter of 2011. In addition, gross premiums written in the specialty unit were $37.3 million, an increase of $13.1 million, or 54.4%, due to the inception of several new quota share contracts and loss related premiums.

During the second quarter of 2012, the Company's remaining incurred but not reported (“IBNR”) reserves for the 2011 New Zealand and Tohoku earthquakes were allocated to the contract level and in doing so the Company re-estimated its allocation of losses from higher rate on line excess of loss retrocessional reinsurance contracts to lower rate on line excess of loss primary reinsurance contracts resulting in a downward adjustment to its estimate of ultimate reinstatement premiums from these two large events. In addition, the reinstatement premiums were also impacted by changes to the ultimate losses for these two large events. The net negative impact ⁽²⁾ from the movement in the ultimate reinstatement premium and related losses for these two large events was $19.8 million for the second quarter of 2012.

For the first six months of 2012, managed catastrophe premiums totaled $1,187.3 million, an increase of $207.2 million, or 20.5%, compared to the first six months of 2011, excluding the impact of $30.7 million of negative reinstatement premiums adjustments in the first six months of 2012, as discussed above, and $136.6 million of reinstatement premiums written from large losses in the first six months of 2011. Gross premiums written in the specialty unit for the first six months of 2012 were $137.8 million, an increase of $38.7 million, or 39.0%, compared to the first six months of 2011.

The Reinsurance segment generated underwriting income of $128.4 million and a combined ratio of 40.1%, compared to $12.9 million and 93.5%, respectively, primarily the result of a $107.7 million decrease in net claims and claim expenses. The Reinsurance segment experienced a relatively light insured catastrophe loss quarter during the second quarter of 2012, compared to the second quarter of 2011, which was negatively impacted by the U.S. tornadoes which had a net impact on the Reinsurance segment underwriting result of $96.9 million and added 55.5 percentage points to the Reinsurance segment combined ratio. Included in net claims and claim expenses in the second quarter of 2012 is $20.5 million related to the June 29, 2012 derecho (PCS 83) which impacted the Midwest to Mid-Atlantic coast of the U.S.

The Reinsurance segment experienced $41.1 million of favorable development on prior year reserves, compared to $19.2 million, including $33.2 million in the catastrophe unit and $7.9 million in the specialty unit. The favorable development within the catastrophe unit is primarily due to reductions in estimated ultimate losses on certain specific events occurring in prior accident years including the Tohoku earthquake ($10.6 million), the 2011 Thailand floods ($3.9 million), a number of other relatively small catastrophes and $5.9 million of actuarial assumption changes, partially offset by adverse development on the 2011 New Zealand earthquake of $5.9 million.

Lloyd's Segment

Gross premiums written in the Lloyd's segment were $50.3 million, an increase of $16.2 million, or 47.4%, primarily due to continued growth within the segment. The Lloyd's segment incurred an underwriting loss of $0.9 million and a combined ratio of 103.0%, compared to $3.3 million and 119.3%, respectively. The decrease in underwriting loss and corresponding improvement in the combined ratio was primarily due to an increase in net earned premiums due to the growth in gross premiums written noted above.

Other Items ⁽¹⁾

• Net income attributable to redeemable noncontrolling interests of $33.6 million increased from $21.9 million, primarily impacted by an increase in profitability of DaVinciRe and a decrease in the Company's ownership percentage in DaVinciRe from 34.7% at March 31, 2012 to 31.5% at June 30, 2012 and compared to 42.8% at June 30, 2011.
• During the second quarter of 2012, the Company repurchased approximately 1.2 million common shares in open market transactions at an aggregate cost of $88.0 million and at an average share price of $74.69.
• Subsequent to June 30, 2012 and through the period ending July 30, 2012, the Company repurchased approximately 71 thousand common shares in open market transactions at an aggregate cost of $5.3 million and at an average share price of $74.21.

This Press Release includes certain non-GAAP financial measures including “operating income (loss) available (attributable) to RenaissanceRe common shareholders”, “operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted”, “operating return on average common equity - annualized” and “managed catastrophe premiums”. 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, August 1, 2012 at 10:00 a.m. (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 segments: (i) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures managed by the Company's ventures unit, (ii) Lloyd's, which includes reinsurance and insurance business written through Syndicate 1458, and (iii) Insurance, which principally includes the Company's Bermuda-based insurance operations.

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 Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

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 (loss) available (attributable) 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 (loss) available (attributable) to RenaissanceRe common shareholders” as used herein differs from “net income (loss) available (attributable) 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 from continuing and discontinued operations. The Company's management believes that “operating income (loss) available (attributable) 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 (loss) available (attributable) to RenaissanceRe common shareholders” to calculate “operating income (loss) available (attributable) 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 (loss) available (attributable) to RenaissanceRe common shareholders to operating income (loss) available (attributable) to RenaissanceRe common shareholders; 2) net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted to operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted; and 3) return on average common equity - annualized to operating return on average common equity - annualized:

The Company has also included in this Press Release “managed catastrophe premiums”. “Managed catastrophe premiums” is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. “Managed catastrophe premiums” differs from total catastrophe unit 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, as applicable, assumed by the Company through its consolidated subsidiaries and related joint ventures.

Source: RenaissanceRe Holdings Ltd.

Investor:
RenaissanceRe Holdings Ltd.
Rohan Pai, Director of Investor Relations, 441-295-4513
or
Media:
Kekst and Company
Peter Hill or Dawn Dover, 212-521-4800