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RenaissanceRe Reports Net Income of $67.8 Million for the Third Quarter of 2014 or $1.70 Per Diluted Common Share; Quarterly Operating Income of $98.9 Million or $2.49 Per Diluted Common Share

November 4, 2014

PEMBROKE, Bermuda--(BUSINESS WIRE)--Nov. 4, 2014-- RenaissanceRe Holdings Ltd. (NYSE:RNR) today reported net income available to RenaissanceRe common shareholders of $67.8 million, or $1.70 per diluted common share, in the third quarter of 2014, compared to $179.7 million, or $4.01, respectively, in the third quarter of 2013. Operating income available to RenaissanceRe common shareholders was $98.9 million, or $2.49 per diluted common share, for the third quarter of 2014, compared to $151.3 million or $3.36, respectively, in the third quarter of 2013. The Company reported an annualized return on average common equity of 8.0% and an annualized operating return on average common equity of 11.7% in the third quarter of 2014, compared to 22.2% and 18.7%, respectively, in the third quarter of 2013. Book value per common share increased $0.99, or 1.2%, in the third quarter of 2014 to $85.78, compared to a 4.5% increase in the third quarter of 2013. Tangible book value per common share plus accumulated dividends increased 1.5% in the third quarter of 2014, compared to a 4.9% increase in the third quarter of 2013.

Kevin J. O’Donnell, CEO, commented: “For the third quarter we generated an annualized operating ROE of 11.7% and 1.5% growth in tangible book value per share, plus accumulated dividends. Our results reflect our actions to reduce risk and optimize risk-adjusted returns in a difficult market.”

Mr. O’Donnell continued: “In a market that looks set to remain challenging absent a major event, we will continue to provide the capacity, flexibility and scope our clients and partners seek. At the same time, we will maintain the same discipline and focus they have come to appreciate. The investments we have made over the years to develop the platforms and the breadth of products sought by our clients positions us particularly well in this environment.”

THIRD QUARTER 2014 HIGHLIGHTS

  • The Company generated underwriting income of $104.8 million and a combined ratio of 59.5% in the third quarter of 2014, compared to $151.4 million and 48.6%, respectively, in the third quarter of 2013. The $46.6 million decrease in underwriting income was principally driven by a $35.7 million decrease in net premiums earned, primarily as a result of reduced gross premiums written during the first nine months of 2014, and an $8.7 million increase in net claims and claim expenses.
  • Gross premiums written of $201.0 million increased $18.3 million, or 10.0%, in the third quarter of 2014, compared to the third quarter of 2013, with the increase principally driven by the Company’s Lloyd’s and Specialty Reinsurance segments, which experienced an increase of $23.9 million, or 59.8%, and $8.7 million, or 14.5%, respectively, as discussed below. Offsetting the increases in the Company’s Lloyd’s and Specialty Reinsurance segments’ gross premiums written, was a decrease of $14.3 million, or 17.3%, in the Company’s Catastrophe Reinsurance segment.
  • The total investment result in the third quarter of 2014 was negative $6.5 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 positive $88.2 million in the third quarter of 2013. The negative total investment result was primarily driven by rising interest rates and widening credit spreads in the Company’s fixed maturity investment portfolio which resulted in net unrealized losses, combined with lower returns in the Company’s portfolio of private equity investments, principally driven by weaker returns in the public equity markets during the third quarter of 2014, compared to the third quarter of 2013, partially offset by higher average invested assets during the third quarter of 2014, compared to the third quarter of 2013.
  • Net income attributable to noncontrolling interests in the third quarter of 2014 was $30.5 million and decreased from $44.3 million in the third quarter of 2013, principally due to a decrease in the profitability of DaVinciRe Holdings Ltd. (“DaVinciRe”), partially offset by a decrease in the Company’s ownership in DaVinciRe to 23.4% at September 30, 2014, compared to 32.9% at September 30, 2013.
  • During the third quarter of 2014, the Company repurchased an aggregate of 1.6 million common shares in open market transactions at an aggregate cost of $164.0 million and at an average share price of $100.44.

Underwriting Results by Segment

Catastrophe Reinsurance Segment

Gross premiums written in the Catastrophe Reinsurance segment were $68.3 million in the third quarter of 2014, a decrease of $14.3 million compared to the third quarter of 2013, primarily driven by the continued softening of market conditions and the Company’s underwriting discipline given prevailing terms and conditions.

Managed catastrophe premiums decreased $12.3 million, or 14.0%, to $75.6 million in the third quarter of 2014, compared to $87.9 million in the third quarter of 2013.

Gross premiums written in the Catastrophe Reinsurance segment were $924.0 million in the first nine months of 2014, a decrease of $214.2 million compared to the first nine months of 2013. For the first nine months of 2014, managed catastrophe premiums totaled $1,009.5 million, a decrease of $216.5 million, or 17.7%, compared to the first nine months of 2013, net of $9.8 million of reinstatement premiums written in the first nine months of 2013, and principally driven by the continued softening of market conditions, including reduced risk-adjusted pricing and reduced participation on certain specific quota share deals.

The Catastrophe Reinsurance segment generated underwriting income of $104.1 million and a combined ratio of 23.9% in the third quarter of 2014, compared to $128.9 million and 30.1% in the third quarter of 2013, respectively. The $24.8 million decrease in underwriting income in the third quarter of 2014, compared to the third quarter of 2013, was driven by a $47.7 million decrease in net premiums earned, primarily driven by the decrease in gross premiums written, noted above, partially offset by a $13.4 million decrease in current accident year net claims as a result of the relatively light catastrophe loss quarter, and a $4.2 million increase in favorable development on prior accident years net claims and claim expenses.

The Catastrophe Reinsurance segment experienced $10.3 million of favorable development on prior accident years net claims and claim expenses in the third quarter of 2014, compared to $6.1 million in the third quarter of 2013.

Specialty Reinsurance Segment

Gross premiums written in the Specialty Reinsurance segment were $68.9 million in the third quarter of 2014, an increase of $8.7 million, or 14.5%, compared to the third quarter of 2013, driven primarily by increases in certain casualty related lines of business.

Gross premiums written in the Specialty Reinsurance segment were $274.7 million in the first nine months of 2014, an increase of $73.7 million, or 36.7%, compared to the first nine months of 2013, driven by the items noted above. 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 $5.7 million and a combined ratio of 91.1% in the third quarter of 2014, compared to $23.5 million and 62.7% in the third quarter of 2013, respectively. The $17.9 million decrease in underwriting income in the third quarter of 2014, compared to the third quarter of 2013, was driven by a $26.2 million increase in current accident year net claims and claim expenses, partially offset by a $12.0 million increase in favorable development on prior accident year net claims and claim expenses. The increase in current accident year net claims and claim expenses is due to a higher level of attritional losses primarily due to the increase in net earned premiums. The Specialty Reinsurance segment experienced $14.7 million of favorable development on prior years reserves in the third quarter of 2014, compared to $2.7 million in the third quarter of 2013, principally due to reported claims activity coming in lower than expected on prior accident years events.

The underwriting expense ratio in the Specialty Reinsurance segment increased 6.2 percentage points to 41.1% in the third quarter of 2014, compared to 34.9% in the third 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, as well as an increase in operational expenses.

Lloyd’s Segment

Gross premiums written in the Lloyd’s segment were $63.9 million in the third quarter of 2014, an increase of $23.9 million, or 59.8%, compared to the third 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 $36.0 million, or 19.7%, to $219.0 million in the first nine months of 2014, compared to $183.0 million in the first nine months of 2013, primarily driven by the items noted above.

The Lloyd’s segment incurred an underwriting loss of $5.3 million and a combined ratio of 109.1% in the third quarter of 2014, compared to an underwriting loss of $2.5 million and a combined ratio of 105.3% in the third quarter of 2013, respectively. Impacting the underwriting loss was a $10.9 million increase in net claims and claim expenses driven primarily by attritional net claims and claim expenses and a $3.7 million increase in acquisition expenses, partially offset by an $11.6 million increase in net premiums earned, with the increase in attritional net claims and claim expenses, acquisition expenses and net premiums earned primarily the result of the increase in gross premiums written noted above.

The Lloyd’s segment experienced current accident year net claims and claim expenses of $38.9 million in the third quarter of 2014, compared to $24.9 million in the third quarter of 2013, which increase was principally due to attritional loss activity driven by the increase in net premiums earned noted above.

The adverse development of prior accident years net claims and claim expenses within the Lloyd’s segment of $0.1 million during the third quarter of 2014, compared to $3.3 million of adverse development on prior accident years net claims and claim expenses in the third quarter of 2013.

Other Items

  • Subsequent to September 30, 2014 and through the period ended November 3, 2014, the Company repurchased 358 thousand common shares in open market transactions at an aggregate cost of $35.7 million and at an average share price of $99.54.

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, November 5, 2014 at 9:00 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   Nine months ended
September 30,
2014
  September 30,
2013
September 30,
2014
  September 30,
2013
Revenues
Gross premiums written $ 200,992   $ 182,649   $ 1,417,792   $ 1,521,290  
Net premiums written $ 159,713 $ 127,241 $ 956,467 $ 1,123,163
Decrease (increase) in unearned premiums 99,266   167,476   (150,538 ) (265,302 )
Net premiums earned 258,979 294,717 805,929 857,861
Net investment income 24,941 59,931 98,430 129,296
Net foreign exchange gains 5,036 488 6,367 170
Equity in earnings of other ventures 9,806 7,313 21,237 16,920
Other (loss) income (1,169 ) 651 (1,642 ) (2,186 )
Net realized and unrealized (losses) gains on investments (31,097 ) 28,472   10,958   (26,788 )
Total revenues 266,496   391,572   941,279   975,273  
Expenses
Net claims and claim expenses incurred 69,647 60,928 209,950 192,141
Acquisition expenses 37,550 37,699 104,727 94,475
Operational expenses 46,972 44,672 135,437 133,447
Corporate expenses 3,905 4,307 12,404 30,318
Interest expense 4,290   4,298   12,875   13,632  
Total expenses 162,364   151,904   475,393   464,013  
Income from continuing operations before taxes 104,132 239,668 465,886 511,260
Income tax expense (245 ) (223 ) (207 ) (356 )
Income from continuing operations 103,887 239,445 465,679 510,904
(Loss) income from discontinued operations   (9,779 )   2,422  
Net income 103,887 229,666 465,679 513,326
Net income attributable to noncontrolling interests (30,477 ) (44,331 ) (109,323 ) (96,953 )
Net income available to RenaissanceRe 73,410 185,335 356,356 416,373
Dividends on preference shares (5,595 ) (5,595 ) (16,786 ) (19,353 )
Net income available to RenaissanceRe common shareholders $ 67,815   $ 179,740   $ 339,570   $ 397,020  
 

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

$ 1.72 $ 4.32 $ 8.38 $ 8.95

(Loss) income from discontinued operations (attributable) available to
RenaissanceRe common shareholders per common share - basic

  (0.23 )   0.06  

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

$ 1.72   $ 4.09   $ 8.38   $ 9.01  

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

$ 1.70 $ 4.23 $ 8.26 $ 8.79

(Loss) income from discontinued operations (attributable) available to
RenaissanceRe common shareholders per common share - diluted

  (0.22 )   0.05  

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

$ 1.70   $ 4.01   $ 8.26   $ 8.84  
 
Average shares outstanding - basic 38,975 43,330 39,983 43,412
Average shares outstanding - diluted 39,433 44,135 40,578 44,247
 
Net claims and claim expense ratio 26.9 % 20.7 % 26.1 % 22.4 %
Underwriting expense ratio 32.6 % 27.9 % 29.8 % 26.6 %
Combined ratio 59.5 % 48.6 % 55.9 % 49.0 %

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

$ 2.49 $ 3.36 $ 7.99 $ 9.45
Operating return on average common equity - annualized (1) 11.7 % 18.7 % 12.9 % 17.7 %
 

(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)
       

September 30,
2014

December 31,
2013

Assets (Unaudited) (Audited)
Fixed maturity investments trading, at fair value $ 4,750,766 $ 4,809,036
Fixed maturity investments available for sale, at fair value 28,069   34,241
Total fixed maturity investments, at fair value 4,778,835 4,843,277
Short term investments, at fair value 1,031,143 1,044,779
Equity investments trading, at fair value 301,714 254,776
Other investments, at fair value 501,487 573,264
Investments in other ventures, under equity method 118,245   105,616
Total investments 6,731,424 6,821,712
Cash and cash equivalents 300,547 408,032
Premiums receivable 630,718 474,087
Prepaid reinsurance premiums 195,978 66,132
Reinsurance recoverable 79,043 101,025
Accrued investment income 25,514 34,065
Deferred acquisition costs 130,108 81,684
Receivable for investments sold 147,206 75,845
Other assets 108,443 108,438
Goodwill and other intangibles 7,954   8,111

Total assets

$ 8,356,935   $ 8,179,131
Liabilities, Noncontrolling Interests and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses $ 1,532,780 $ 1,563,730
Unearned premiums 758,272 477,888
Debt 249,499 249,430
Reinsurance balances payable 501,155 293,022
Payable for investments purchased 284,295 193,221
Other liabilities 203,908   397,596

Total liabilities

3,529,909   3,174,887
Redeemable noncontrolling interest 1,091,166 1,099,860
Shareholders’ Equity
Preference shares 400,000 400,000
Common shares 38,888 43,646
Accumulated other comprehensive income 3,829 4,131
Retained earnings 3,293,143   3,456,607
Total shareholders’ equity attributable to RenaissanceRe 3,735,860   3,904,384
Total liabilities, noncontrolling interests and shareholders’ equity $ 8,356,935   $ 8,179,131
 
Book value per common share $ 85.78   $ 80.29
 
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
           
Three months ended September 30, 2014

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other   Total
Gross premiums written $ 68,252   $ 68,883   $ 63,857   $   $ 200,992  
Net premiums written $ 41,807   $ 61,879   $ 56,027   $   $ 159,713  
Net premiums earned $ 136,719 $ 63,473 $ 58,788 $ (1 ) $ 258,979
Net claims and claim expenses incurred (666 ) 31,759 39,027 (473 ) 69,647
Acquisition expenses 9,131 15,806 12,614 (1 ) 37,550
Operational expenses 24,154   10,234   12,475   109   46,972  
Underwriting income (loss) $ 104,100   $ 5,674   $ (5,328 ) $ 364   104,810
Net investment income 24,941 24,941
Net foreign exchange gains 5,036 5,036
Equity in earnings of other ventures 9,806 9,806
Other loss (1,169 ) (1,169 )
Net realized and unrealized losses on investments (31,097 ) (31,097 )
Corporate expenses (3,905 ) (3,905 )
Interest expense (4,290 ) (4,290 )
Income before taxes and noncontrolling interests 104,132
Income tax expense (245 ) (245 )
Net income attributable to noncontrolling interests (30,477 ) (30,477 )
Dividends on preference shares (5,595 ) (5,595 )
Net income available to RenaissanceRe common shareholders $ 67,815  
 
Net claims and claim expenses incurred – current accident year $ 9,661 $ 46,444 $ 38,882 $ $ 94,987
Net claims and claim expenses incurred – prior accident years (10,327 ) (14,685 ) 145   (473 ) (25,340 )
Net claims and claim expenses incurred – total $ (666 ) $ 31,759   $ 39,027   $ (473 ) $ 69,647  
 
Net claims and claim expense ratio – current accident year 7.1 % 73.2 % 66.1 % % 36.7 %
Net claims and claim expense ratio – prior accident years (7.6 )% (23.2 )% 0.3 % 47,300.0 % (9.8 )%
Net claims and claim expense ratio – calendar year (0.5 )% 50.0 % 66.4 % 47,300.0 % 26.9 %
Underwriting expense ratio 24.4 % 41.1 % 42.7 % (10,800.0 )% 32.6 %
Combined ratio 23.9 % 91.1 % 109.1 % 36,500.0 % 59.5 %
 
 
Three months ended September 30, 2013

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other Total
Gross premiums written $ 82,539   $ 60,156   $ 39,954   $   $ 182,649  
Net premiums written $ 32,380   $ 55,717   $ 39,014   $ 130   $ 127,241  
Net premiums earned $ 184,416 $ 63,045 $ 47,150 $ 106 $ 294,717
Net claims and claim expenses incurred 16,897 17,520 28,175 (1,664 ) 60,928
Acquisition expenses 14,049 14,691 8,938 21 37,699
Operational expenses 24,573   7,303   12,559   237   44,672  
Underwriting income (loss) $ 128,897   $ 23,531   $ (2,522 ) $ 1,512   151,418
Net investment income 59,931 59,931
Net foreign exchange gains 488 488
Equity in earnings of other ventures 7,313 7,313
Other income 651 651
Net realized and unrealized gains on investments 28,472 28,472
Corporate expenses (4,307 ) (4,307 )
Interest expense (4,298 ) (4,298 )
Income from continuing operations before taxes 239,668
Income tax expense (223 ) (223 )
Loss from discontinued operations (9,779 ) (9,779 )
Net income attributable to noncontrolling interests (44,331 ) (44,331 )
Dividends on preference shares (5,595 ) (5,595 )
Net income attributable to RenaissanceRe common shareholders $ 179,740  
 
Net claims and claim expenses incurred – current accident year $ 23,041 $ 20,227 $ 24,886 $ $ 68,154
Net claims and claim expenses incurred – prior accident years (6,144 ) (2,707 ) 3,289   (1,664 ) (7,226 )
Net claims and claim expenses incurred – total $ 16,897   $ 17,520   $ 28,175   $ (1,664 ) $ 60,928  
 
Net claims and claim expense ratio – current accident year 12.5 % 32.1 % 52.8 % % 23.1 %
Net claims and claim expense ratio – prior accident years (3.3 )% (4.3 )% 7.0 % (1,569.8 )% (2.4 )%
Net claims and claim expense ratio – calendar year 9.2 % 27.8 % 59.8 % (1,569.8 )% 20.7 %
Underwriting expense ratio 20.9 % 34.9 % 45.5 % 243.4 % 27.9 %
Combined ratio 30.1 % 62.7 % 105.3 % (1,326.4 )% 48.6 %
 
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
           
Nine months ended September 30, 2014

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other   Total
Gross premiums written $ 924,046   $ 274,727   $ 219,019   $   $ 1,417,792  
Net premiums written $ 534,994   $ 233,622   $ 187,848   $ 3   $ 956,467  
Net premiums earned $ 460,455 $ 186,691 $ 158,757 $ 26 $ 805,929
Net claims and claim expenses incurred 42,519 77,915 90,419 (903 ) 209,950
Acquisition expenses 34,063 44,052 33,303 (6,691 ) 104,727
Operational expenses 66,773   30,854   37,566   244   135,437  
Underwriting income (loss) $ 317,100   $ 33,870   $ (2,531 ) $ 7,376   355,815
Net investment income 98,430 98,430
Net foreign exchange gains 6,367 6,367
Equity in earnings of other ventures 21,237 21,237
Other loss (1,642 ) (1,642 )
Net realized and unrealized gains on investments 10,958 10,958
Corporate expenses (12,404 ) (12,404 )
Interest expense (12,875 ) (12,875 )
Income before taxes and noncontrolling interests 465,886
Income tax expense (207 ) (207 )
Net income attributable to noncontrolling interests (109,323 ) (109,323 )
Dividends on preference shares (16,786 ) (16,786 )
Net income available to RenaissanceRe common shareholders $ 339,570  
 
Net claims and claim expenses incurred – current accident year $ 60,663 $ 113,809 $ 94,594 $ $ 269,066
Net claims and claim expenses incurred – prior accident years (18,144 ) (35,894 ) (4,175 ) (903 ) (59,116 )
Net claims and claim expenses incurred – total $ 42,519   $ 77,915   $ 90,419   $ (903 ) $ 209,950  
 
Net claims and claim expense ratio – current accident year 13.2 % 61.0 % 59.6 % % 33.4 %
Net claims and claim expense ratio – prior accident years (4.0 )% (19.3 )% (2.6 )% (3,473.1 )% (7.3 )%
Net claims and claim expense ratio – calendar year 9.2 % 41.7 % 57.0 % (3,473.1 )% 26.1 %
Underwriting expense ratio 21.9 % 40.2 % 44.6 % (24,796.1 )% 29.8 %
Combined ratio 31.1 % 81.9 % 101.6 % (28,269.2 )% 55.9 %
 
 
Nine months ended September 30, 2013

Catastrophe
Reinsurance

Specialty
Reinsurance

Lloyd’s Other Total
Gross premiums written (1) $ 1,138,238   $ 201,025   $ 183,015   $ (988 ) $ 1,521,290  
Net premiums written $ 774,585   $ 188,584   $ 159,581   $ 413   $ 1,123,163  
Net premiums earned $ 571,550 $ 159,060 $ 126,862 $ 389 $ 857,861
Net claims and claim expenses incurred 72,520 53,723 68,239 (2,341 ) 192,141
Acquisition expenses 37,866 32,139 24,338 132 94,475
Operational expenses 74,287   22,458   36,193   509   133,447  
Underwriting income (loss) $ 386,877   $ 50,740   $ (1,908 ) $ 2,089   437,798
Net investment income 129,296 129,296
Net foreign exchange gains 170 170
Equity in earnings of other ventures 16,920 16,920
Other loss (2,186 ) (2,186 )
Net realized and unrealized losses on investments (26,788 ) (26,788 )
Corporate expenses (30,318 ) (30,318 )
Interest expense (13,632 ) (13,632 )
Income from continuing operations before taxes 511,260
Income tax expense (356 ) (356 )
Income from discontinued operations 2,422 2,422
Net income attributable to noncontrolling interests (96,953 ) (96,953 )
Dividends on preference shares (19,353 ) (19,353 )
Net income attributable to RenaissanceRe common shareholders $ 397,020  
 
Net claims and claim expenses incurred – current accident year $ 115,586 $ 76,983 $ 71,274 $ $ 263,843
Net claims and claim expenses incurred – prior accident years (43,066 ) (23,260 ) (3,035 ) (2,341 ) (71,702 )
Net claims and claim expenses incurred – total $ 72,520   $ 53,723   $ 68,239   $ (2,341 ) $ 192,141  
 
Net claims and claim expense ratio – current accident year 20.2 % 48.4 % 56.2 % % 30.8 %
Net claims and claim expense ratio – prior accident years (7.5 )% (14.6 )% (2.4 )% (601.8 )% (8.4 )%
Net claims and claim expense ratio – calendar year 12.7 % 33.8 % 53.8 % (601.8 )% 22.4 %
Underwriting expense ratio 19.6 % 34.3 % 47.7 % 164.8 % 26.6 %
Combined ratio 32.3 % 68.1 % 101.5 % (437.0 )% 49.0 %
 

(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 Nine months ended
September 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013

Catastrophe Reinsurance Segment

Renaissance catastrophe premiums $ 49,480 $ 55,849 $ 612,365 $ 733,928
DaVinci catastrophe premiums 18,772   26,690   311,681   404,310

Total Catastrophe Reinsurance segment gross
premiums written

$ 68,252   $ 82,539   $ 924,046   $ 1,138,238
 

Specialty Reinsurance Segment

Renaissance specialty premiums $ 68,699 $ 60,156 $ 272,694 $ 198,340
DaVinci specialty premiums 184     2,033   2,685
Total Specialty Reinsurance segment gross premiums written $ 68,883   $ 60,156   $ 274,727   $ 201,025
 

Lloyd’s Segment

Specialty $ 58,696 $ 36,545 $ 165,638 $ 145,509
Catastrophe 5,161   3,409   53,381   37,506

Total Lloyd’s segment gross premiums written

$ 63,857   $ 39,954   $ 219,019   $ 183,015
 

Managed Premiums (1)

Total Catastrophe Reinsurance segment gross premiums written $ 68,252 $ 82,539 $ 924,046 $ 1,138,238

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

2,169 1,963 39,394 60,027
Catastrophe premiums written in the Lloyd’s segment 5,161 3,409 53,381 37,506

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

    (7,355 )
 
Total managed catastrophe premiums (1) $ 75,582   $ 87,911   $ 1,009,466   $ 1,235,771
 
(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 Nine months ended
September 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
Fixed maturity investments $ 24,519 $ 24,423 $ 74,751 $ 71,148
Short term investments 251 563 727 1,318
Equity investments trading 736 706 2,311 1,050
Other investments
Hedge funds and private equity investments (3,320 ) 14,179 17,337 31,296
Other 5,547 22,735 11,558 32,874
Cash and cash equivalents 116   47   300   108  
27,849 62,653 106,984 137,794
Investment expenses (2,908 ) (2,722 ) (8,554 ) (8,498 )
Net investment income 24,941   59,931   98,430   129,296  
 
Gross realized gains 7,962 8,813 33,595 60,437
Gross realized losses (2,720 ) (22,241 ) (10,871 ) (41,396 )
Net realized gains (losses) on fixed maturity investments 5,242 (13,428 ) 22,724 19,041
Net unrealized (losses) gains on fixed maturity investments trading (36,600 ) 33,405 21,200 (85,338 )

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

(1,868 ) 3,557 (19,651 ) 24,488
Net realized gains on equity investments trading 3,523 560 8,578 18,195
Net unrealized (losses) gains on equity investments trading (1,394 ) 4,378   (21,893 ) (3,174 )
Net realized and unrealized (losses) gains on investments (31,097 ) 28,472 10,958 (26,788 )

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

(302 ) (252 ) (563 ) (7,558 )
Total investment result $ (6,458 ) $ 88,151   $ 108,825   $ 94,950  
 
Total investment return - annualized (0.4

)%

5.7 % 2.1 % 2.0 %
 

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 Nine months ended
(in thousands of United States Dollars, except percentages)

September 30,
2014

 

September 30,
2013

September 30,
2014

 

September 30,
2013

Net income available to RenaissanceRe common shareholders $ 67,815 $ 179,740 $ 339,570 $ 397,020

Adjustment for net realized and unrealized losses

(gains) on investments from continuing operations

31,097 (28,472 ) (10,958 ) 26,788

Adjustment for net realized and unrealized losses on

investments from discontinued operations

  5     18  
Operating income available to RenaissanceRe common shareholders $ 98,912   $ 151,273   $ 328,612   $ 423,826  
 

Net income available to RenaissanceRe common shareholders

per common share - diluted

$ 1.70 $ 4.01 $ 8.26 $ 8.84

Adjustment for net realized and unrealized losses

(gains) on investments from continuing operations

0.79 (0.65 ) (0.27 ) 0.61

Adjustment for net realized and unrealized losses on

investments from discontinued operations

       
Operating income available to RenaissanceRe common
shareholders per common share - diluted $ 2.49   $ 3.36   $ 7.99   $ 9.45  
 
Return on average common equity - annualized 8.0 % 22.2 % 13.3 % 16.6 %

Adjustment for net realized and unrealized losses

(gains) on investments from continuing operations

3.7 % (3.5 )% (0.4 )% 1.1 %

Adjustment for net realized and unrealized losses on

investments from discontinued operations

% % % %
Operating return on average common equity - annualized 11.7 % 18.7 % 12.9 % 17.7 %
 

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
September 30,
2014
  June 30,
2014
  March 31,
2014
  December 31,
2013
  September 30,
2013
Book value per common share $ 85.78 $ 84.79 $ 82.30 $ 80.29 $ 74.58

Adjustment for goodwill and other
intangibles (1)

(0.88 ) (0.86 ) (0.89 ) (0.85 ) (0.84 )
Tangible book value per common share 84.90 83.93 81.41 79.44 73.74
Adjustment for accumulated dividends 13.99   13.70   13.41   13.12   12.84  

Tangible book value per common share
plus accumulated dividends

$ 98.89   $ 97.63   $ 94.82   $ 92.56   $ 86.58  
 

Quarterly change in book value per
common share

1.2 % 3.0 % 2.5 % 7.7 % 4.5 %

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

1.5 % 3.5 % 2.8 % 8.1 % 4.9 %

Year to date change in book value per
common share

6.8 % 9.5 %

Year to date change in tangible book
value per common share plus change
in accumulated dividends

8.0 % 10.9 %
 
(1)   At September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, goodwill and other intangibles included $26.1 million, $27.0 million, $28.3 million, $29.2 million and $28.5 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method.
 

Source: RenaissanceRe Holdings Ltd.

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