RenaissanceRe Reports Operating Income of $170.4 Million for the Second Quarter of 2005; Operating EPS of $2.37 Per Common Share for the Second Quarter of 2005 vs. $2.07 for the Second Quarter of 2004
PEMBROKE, Bermuda--(BUSINESS WIRE)--July 26, 2005--RenaissanceRe Holdings Ltd. (NYSE: RNR):
- $172.0 Million Net Income for the Second Quarter of 2005; EPS of $2.39 for the Second Quarter of 2005 vs. EPS of $1.69 for the Second Quarter of 2004.
- Catastrophe Reserve Review Benefits Second Quarter 2005 Net Income by $108.2 million.
- Adverse Development in the Reinsurance Segment From 2004 Florida Hurricanes Reduces Second Quarter 2005 Net Income by $29.9 Million.
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $170.4 million in second quarter operating income available to common shareholders, compared to $148.1 million in the second quarter of 2004. Operating income excludes net realized investment gains of $1.6 million and net realized investment losses of $26.9 million in the second quarters of 2005 and 2004, respectively. Operating income per common share was $2.37 in the second quarter of 2005, compared to $2.07 per common share in the second quarter of 2004. Net income available to common shareholders was $172.0 million or $2.39 per common share in the quarter, compared to $121.2 million or $1.69 per common share for the same quarter of 2004.
James N. Stanard, Chairman and CEO, commented: "Our better than expected bottom line performance this quarter was driven by a $108.2 million positive impact associated with our Catastrophe loss reserve review, partially offset by a $29.9 million negative impact from development related to the 2004 Florida hurricanes in our Reinsurance segment. On the top line, we saw managed Catastrophe premium decline by 9% for the first six months of 2005, which is less than the 15% annual decline we had previously projected; this is as a result of higher than expected premium in Florida given the favorable market conditions there. Specialty premium has declined modestly for the first six months of 2005; we now expect flat to modestly declining Specialty premium for the year versus the 10% growth that we had previously projected. Our Individual Risk business is growing on track with our expectations for 35% growth for the year and may exceed that level. So, all told, we're seeing the increasing scale of our Individual Risk business as the driver of top line growth, given the softening of the reinsurance markets."
SECOND QUARTER 2005 RESULTS
Premiums
Gross premiums written for the second quarter of 2005 were $443.5 million, compared to $326.9 million for the same quarter of 2004. Gross premiums written include $223.3 million in gross premiums written for the Company's Reinsurance segment in the second quarter of 2005, compared to $215.3 million for the same quarter of 2004; and $220.1 million in gross premiums written for the Company's Individual Risk segment in the second quarter of 2005, including $56.5 million of premium from a seasonal program, compared to $111.6 million for the same quarter of 2004. Net premiums written for the second quarter of 2005 were $387.9 million, compared to $285.9 million for the same quarter of 2004. Net premiums written include $184.5 million in net premiums written for the Company's Reinsurance segment in the second quarter of 2005, compared to $176.2 million for the same quarter of 2004; and $203.4 million in net premiums written for the Company's Individual Risk segment in the second quarter of 2005, compared to $109.7 million for the same quarter of 2004.
Net premiums earned for the second quarter of 2005 were $338.8 million, compared to $349.0 million for the same quarter of 2004. Net premiums earned include $206.7 million in net premiums earned for the Company's Reinsurance segment in the second quarter of 2005, compared to $240.9 million for the same quarter of 2004; and $132.1 million in net premiums earned for the Company's Individual Risk segment in the second quarter of 2005, compared to $108.1 million for the same quarter of 2004.
Premiums for the second quarter of 2005 include $32.2 million of gross written premiums, $39.2 million of net written premiums and $42.2 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re, during the second quarter of 2005, compared to $34.2 million of gross written premiums, $38.3 million of net written premiums and $53.7 million of net premiums earned by DaVinci Re during the second quarter of 2004.
Underwriting Ratios, Reserve Development and Reserve Review
General
For the second quarter of 2005, the Company generated a combined ratio of 52.5%, a loss ratio of 32.1% and an expense ratio of 20.4%, compared to a combined ratio, loss ratio and expense ratio of 57.7%, 34.6% and 23.1% for the second quarter of 2004, respectively. The Company's Reinsurance segment generated a loss ratio of 12.6% and an expense ratio of 14.8% for the second quarter of 2005, compared to a loss ratio and an expense ratio of 27.0% and 16.0%, for the second quarter of 2004, respectively. For the quarter, the Company's Individual Risk segment generated a loss ratio of 62.6% and an expense ratio of 29.0%, compared to a loss ratio and an expense ratio of 51.5% and 38.8%, for the second quarter of 2004, respectively.
During the quarter, the Company recorded favorable development on prior year reserves of $65.1 million or a benefit of 19.2 percentage points to the Company's quarterly loss ratio, principally due to the reserve review described below. The Company's Reinsurance segment contributed $65.7 million of favorable development, and the Company's Individual Risk segment contributed $0.7 million of adverse development. Net paid losses for the quarter were $149.2 million.
See the attached supplemental financial data for additional information regarding claims and claim expenses incurred and loss ratios by segment.
Components of the Reinsurance Segment Reserve Development
The Company announced on May 3, 2005 that it would undertake a review of its processes and assumptions used in establishing its catastrophe reinsurance reserves during the second quarter of 2005. As a result of this review, which is now complete, the Company reduced its prior years net catastrophe reserves within the Reinsurance segment by $118.2 million, which reduced the Company's quarterly Reinsurance loss ratio by 57.2 percentage points. After adjusting for the impact of minority interest, the net financial statement impact of the catastrophe reinsurance reserve review was $108.2 million. The reserve changes reflect a reassessment of the Company's reserves for claims and claim expenses in light of its historical paid loss trends and reported loss activity in its catastrophe portfolio for the 1994 to 2004 accident years.
Partially offsetting the favorable impact of the catastrophe reinsurance reserve review, the Company's net claims and claim expenses were negatively impacted during the quarter by $37.3 million of net adverse development related to the 2004 Florida hurricanes in the Reinsurance segment. After adjusting for the impact of minority interest, the net financial statement effect of the adverse development from the 2004 Florida hurricanes in the Reinsurance segment was $29.9 million.
Other normal course prior year reserve changes negatively impacted the Reinsurance segment by $15.2 million during the quarter. The table below summarizes the impact of the reserve development in the Reinsurance segment this quarter.
----------------------------------------------------------------------
Three months ended
June 30, 2005
-----------------------
Reinsurance net claims and claim expense Reinsurance Reinsurance
ratio net net
------------------------------------------ claims and claims and
claim claim
expenses expense
incurred ratio
----------- -----------
Net claims and claim expenses incurred -
prior years:
Catastrophe reserve review $(118,202) (57.2%)
2004 Florida hurricanes 37,323 18.1%
Other 15,151 7.3%
----------- -----------
Total prior years (65,728) (31.8%)
Net claims and claim expenses incurred -
current accident year 91,845 44.4%
----------- -----------
Net claims and claim expenses incurred -
total $ 26,117 12.6%
=========== ===========
Further Reserve Reviews; Reserving Philosophy
The Company expects, during the remainder of the year, to review its processes and assumptions used in establishing its specialty reinsurance and Individual Risk reserves. It is possible that these reviews may result in a change to these reserves.
Because any reserve estimate is simply an insurer's estimate of its ultimate liability, and since there are numerous factors which affect reserves but cannot be determined with certainty in advance, the Company's ultimate payments will vary, perhaps materially, from its estimates of reserves. In response to these inherent uncertainties, the Company has developed a reserving philosophy which attempts to incorporate prudent assumptions and estimates. The reserve reviews described above are not intended to change the Company's reserving philosophy, but rather are intended to update the assumptions for new information received to date and to further enhance the Company's reserving process.
Other Income (Loss)
During the second quarter of 2005 the Company recognized income of $3.2 million on fees and other items compared to a loss of $0.7 million in the second quarter of 2004. Fee income remained stable at $1.0 million in the second quarter of 2005 compared to $1.1 million in the second quarter of 2004 while other items generated income of $2.2 million in the second quarter of 2005 compared to a $1.8 million loss for the second quarter of 2004. The $2.2 million income from other items was primarily a result of a $2.3 million increase in the fair value of the Company's Platinum Underwriters Holdings Ltd. warrant.
Equity in Earnings of Other Ventures
Equity in earnings of other ventures generated $7.8 million in income in the second quarter of 2005 compared to $4.9 million in income in the second quarter of 2004. Included in this is the Company's equity in the earnings of its investments in Top Layer Reinsurance Ltd., ChannelRe Holdings Ltd. ("Channel Re") and Tower Hill Capital Holdings Inc. for the second quarter of 2005. The increase is largely due to an increase in the Company's equity in the earnings of Channel Re, as it commenced operations in 2004 and the equity pickup in the second quarter of 2004 contained only a partial quarter of operating results.
Net Investment Income and Net Realized Gains and Losses on Investments
Net investment income for the second quarter of 2005 was $45.8 million, compared to $29.8 million for the same quarter in 2004. Net investment income includes $2.7 million of net unrealized losses in the second quarter of 2005 compared to net unrealized losses of $2.5 million in the second quarter of 2004 reflecting the Company's investments in hedge funds, private equity funds and other investments.
During the second quarter of 2005, the Company incurred net realized gains of $1.6 million compared to net realized losses of $26.9 million during the second quarter of 2004.
Other Items
During the second quarter of 2005, the Company generated $7.1 million of net foreign exchange gains compared with $0.8 million in the first quarter of 2004. The increase was principally due to foreign exchange gains on derivatives used to hedge a non-US dollar denominated fixed income investment portfolio, which is classified as available for sale. These gains are partially offset by unrealized foreign exchange losses on the investments, which are recorded in other comprehensive income.
The Company's corporate expenses of $8.7 million incurred during the second quarter of 2005 were $3.7 million higher than the second quarter of 2004. The increase in such expenses is due principally to $4.7 million of professional fees incurred during the second quarter of 2005 related to the Company's responses to requests for information and subpoenas by various governmental authorities.
The Company's cash flows from operations were $172.2 million for the second quarter of 2005, compared to $231.0 million for the second quarter of 2004.
As described in the Company's press release issued February 22, 2005 and the Company's 2004 Annual Report filed on Form 10-K, the Company has corrected accounting errors relating to the timing of the recognition of premium on multi-year ceded reinsurance contracts for the first three quarters of 2004. The comparative 2004 financial data contained in this press release includes these corrections.
Shareholders' Equity
Shareholders' equity attributable to common shareholders was $2.3 billion at June 30, 2005, compared to $2.1 billion at December 31, 2004. Book value per common share at June 30, 2005 was $32.63, compared to $30.19 per common share at December 31, 2004.
HURRICANES DENNIS AND EMILY
The Company estimates that Hurricane Dennis will have a net negative impact of approximately $40 million on its third quarter results. The Company is currently evaluating the impact of Hurricane Emily, although it currently does not believe it will have a material impact on the Company's third quarter results.
This Press Release includes certain non-GAAP financial measures including "operating income," "operating EPS or operating income per common share," "annualized operating return on equity" and "managed catastrophe premium." A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 27, 2005 at 8:00 a.m. (EDT) to discuss this release. Live broadcast of the conference call will be available through the Investor Section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. Our business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by our subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk business, which includes primary insurance and quota share reinsurance.
Cautionary Statement under "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news release contain information about the Company's future business prospects. These statements may be considered "forward-looking." These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future results, please refer to RenaissanceRe Holdings Ltd.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2004.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the three and six months ended June 30, 2005 and 2004
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Six months ended
--------------------- -----------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
--------- ----------- ----------- -----------
(Restated) (Restated)
Revenues
Gross premiums written $443,483 $326,876 $1,137,816 $1,107,164
========= =========== =========== ===========
Net premiums written $387,889 $285,925 $1,003,682 $ 986,144
Decrease (increase) in
unearned premiums (49,136) 63,077 (363,428) (329,050)
--------- ----------- ----------- -----------
Net premiums earned 338,753 349,002 640,254 657,094
Net investment income 45,769 29,833 96,984 64,883
Net foreign exchange
gains 7,134 786 7,848 2,873
Equity in earnings of
other ventures 7,798 4,923 15,365 11,443
Other income (loss) 3,205 (689) (310) 420
Net realized gains
(losses) on
investments 1,583 (26,920) (8,606) 5,601
--------- ----------- ----------- -----------
Total revenues 404,242 356,935 751,535 742,314
--------- ----------- ----------- -----------
Expenses
Net claims and claim
expenses incurred 108,799 120,737 310,447 232,915
Acquisition expenses 45,574 64,047 97,082 122,078
Operational expenses 23,377 16,502 42,220 28,878
Corporate expenses 8,694 4,986 20,033 9,538
Interest expense 6,967 6,334 13,572 12,605
--------- ----------- ----------- -----------
Total expenses 193,411 212,606 483,354 406,014
--------- ----------- ----------- -----------
Income before minority
interest 210,831 144,329 268,181 336,300
Minority interest -
DaVinciRe 30,283 14,492 34,667 32,482
--------- ----------- ----------- -----------
Net income 180,548 129,837 233,514 303,818
Dividends on preference
shares 8,566 8,609 17,229 13,713
--------- ----------- ----------- -----------
Net income available to
common shareholders $171,982 $121,228 $ 216,285 $ 290,105
========= =========== =========== ===========
Operating Income available to
common shareholders
per Common Share -
diluted (a) $ 2.37 $ 2.07 $ 3.12 $ 3.97
Net income available to
common shareholders
per Common Share -
basic $ 2.44 $ 1.74 $ 3.07 $ 4.17
Net income available to
common shareholders
per Common Share -
diluted $ 2.39 $ 1.69 $ 3.00 $ 4.05
Average shares
outstanding - basic 70,585 69,664 70,472 69,554
Average shares
outstanding - diluted 72,016 71,683 71,983 71,638
Net claims and claim
expense ratio 32.1% 34.6% 48.5% 35.4%
Expense ratio 20.4% 23.1% 21.8% 23.0%
--------- ----------- ----------- -----------
Combined ratio 52.5% 57.7% 70.3% 58.4%
========= =========== =========== ===========
Operating return on
average common equity
(annualized) (a) 30.6% 26.1% 20.4% 25.8%
========= =========== =========== ===========
(a) Excludes realized gains (losses) on investments (see - "Comments
on Regulation G")
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
-----------------------
June 30, December
2005 31, 2004
----------- -----------
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale,
at fair value $3,218,715 $3,223,292
Short term investments, at cost 687,356 608,292
Other investments, at fair value 838,199 684,590
----------- -----------
Total managed investment portfolio 4,744,270 4,516,174
Equity investment in reinsurance company, at
fair value 153,508 150,519
Investments in other ventures, under equity
method 165,371 159,556
----------- -----------
Total investments 5,063,149 4,826,249
Cash and cash equivalents 186,968 66,740
Premiums receivable 552,693 206,813
Ceded reinsurance balances 95,786 61,303
Losses recoverable 230,810 217,788
Accrued investment income 29,485 30,060
Deferred acquisition costs 119,932 70,933
Other assets 51,392 46,432
----------- -----------
Total assets $6,330,215 $5,526,318
=========== ===========
Liabilities, Minority Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $1,474,235 $1,459,398
Reserve for unearned premiums 763,247 365,335
Debt 350,000 350,000
Subordinated obligation to capital trust 103,093 103,093
Reinsurance balances payable 326,887 188,564
Other liabilities 108,319 68,092
----------- -----------
Total liabilities 3,125,781 2,534,482
----------- -----------
Minority interest - DaVinciRe 381,474 347,794
Shareholders' Equity
Preference shares 500,000 500,000
Common shares and additional paid-in capital 337,675 328,896
Accumulated other comprehensive income 61,361 78,960
Retained earnings 1,923,924 1,736,186
----------- -----------
Total shareholders' equity 2,822,960 2,644,042
----------- -----------
Total liabilities, minority interest
and shareholders' equity $6,330,215 $5,526,318
=========== ===========
Book value per common share $ 32.63 $ 30.19
=========== ===========
Common shares outstanding 71,187 71,029
=========== ===========
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
----------------------------------------------------------------------
Three months ended June 30, 2005
------------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ---------- -------------
Gross premiums
written (1) $223,339 $220,144 $ - $ 443,483
========== ========== ===========
Net premiums written $184,477 $203,412 - $ 387,889
========== ========== ===========
Net premiums earned $206,651 $132,102 - $ 338,753
Net claims and claim
expenses incurred 26,117 82,682 - 108,799
Acquisition expenses 13,273 32,301 - 45,574
Operational expenses 17,384 5,993 - 23,377
---------- ---------- --------- -----------
Underwriting income $149,877 $ 11,126 - 161,003
========== ==========
Net investment income 45,769 45,769
Equity in earnings of other
ventures 7,798 7,798
Other income 3,205 3,205
Interest and preference
share dividends (15,533) (15,533)
Minority interest -
DaVinciRe (30,283) (30,283)
Other items, net (1,560) (1,560)
Net realized gains
on investments 1,583 1,583
--------- -----------
Net income available to
common shareholders $ 10,979 $ 171,982
========= ===========
Net claims and claim
expenses incurred -
current accident year $ 91,845 $ 82,020 $ 173,865
Net claims and claim
expenses incurred -
prior years (65,728) 662 (65,066)
---------- ---------- -----------
Net claims and claim
expenses incurred -
total $ 26,117 $ 82,682 $ 108,799
========== ========== ===========
Net claims and claim
expense ratio - accident
year 44.4% 62.1% 51.3%
========== ========== ===========
Net claims and claim
expense ratio - calendar
year 12.6% 62.6% 32.1%
Underwriting expense
ratio 14.8% 29.0% 20.4%
---------- ---------- -----------
Combined ratio 27.4% 91.6% 52.5%
========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $1.7
million of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Three months ended June 30, 2004 (Restated)
------------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- ------------
Gross premiums written $215,284 $111,592 $ - $ 326,876
========== ========== ===========
Net premiums written $176,245 $109,680 - $ 285,925
========== ========== ===========
Net premiums earned $240,880 $108,122 - $ 349,002
Net claims and claim
expenses incurred 65,016 55,721 - 120,737
Acquisition expenses 27,936 36,111 - 64,047
Operational expenses 10,624 5,878 - 16,502
---------- ---------- --------- -----------
Underwriting income $137,304 $ 10,412 - 147,716
========== ==========
Net investment income 29,833 29,833
Equity in earnings of other
ventures 4,923 4,923
Other loss (689) (689)
Interest and preference
share dividends (14,943) (14,943)
Minority interest -
DaVinciRe (14,492) (14,492)
Other items, net (4,200) (4,200)
Net realized losses
on investments (26,920) (26,920)
--------- -----------
Net income available to
common shareholders $(26,488) $ 121,228
========= ===========
Net claims and claim
expenses incurred -
current accident year $ 92,375 $ 58,060 $ 150,435
Net claims and claim
expenses incurred -
prior years (27,359) (2,339) (29,698)
---------- ---------- -----------
Net claims and claim
expenses incurred -
total $ 65,016 $ 55,721 $ 120,737
========== ========== ===========
Net claims and claim
expense ratio - accident
year 38.3% 53.7% 43.1%
========== ========== ===========
Net claims and claim
expense ratio - calendar
year 27.0% 51.5% 34.6%
Underwriting expense
ratio 16.0% 38.8% 23.1%
---------- ---------- -----------
Combined ratio 43.0% 90.3% 57.7%
========== ========== ===========
----------------------------------------------------------------------
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars)
----------------------------------------------------------------------
Six months ended June 30, 2005
------------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- ------------
Gross premiums written
(1) $808,623 $329,193 $ - $1,137,816
========== ========== ===========
Net premiums written $712,610 $291,072 - $1,003,682
========== ========== ===========
Net premiums earned $407,021 $233,233 - $ 640,254
Net claims and claim
expenses incurred 168,061 142,386 - 310,447
Acquisition expenses 33,811 63,271 - 97,082
Operational expenses 31,611 10,609 - 42,220
---------- ---------- --------- -----------
Underwriting income $173,538 $ 16,967 - 190,505
========== ==========
Net investment income 96,984 96,984
Equity in earnings of other
ventures 15,365 15,365
Other loss (310) (310)
Interest and preference
share dividends (30,801) (30,801)
Minority interest -
DaVinciRe (34,667) (34,667)
Other items, net (12,185) (12,185)
Net realized losses
on investments (8,606) (8,606)
--------- -----------
Net income available to
common shareholders $ 25,780 $ 216,285
========= ===========
Net claims and claim
expenses incurred -
current accident year $251,881 $141,222 $ 393,103
Net claims and claim
expenses incurred -
prior years (83,820) 1,164 (82,656)
---------- ---------- -----------
Net claims and claim
expenses incurred -
total $168,061 $142,386 $ 310,447
========== ========== ===========
Net claims and claim
expense ratio - accident
year 61.9% 60.5% 61.4%
========== ========== ===========
Net claims and claim
expense ratio - calendar
year 41.3% 61.0% 48.5%
Underwriting expense
ratio 16.1% 31.7% 21.8%
---------- ---------- -----------
Combined ratio 57.4% 92.7% 70.3%
========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $13.2
million of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Six months ended June 30, 2004 (Restated)
------------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ---------- ------------
Gross premiums written $875,634 $231,530 $ - $1,107,164
========== ========== ===========
Net premiums written $766,681 $219,463 - $ 986,144
========== ========== ===========
Net premiums earned $448,196 $208,898 - $ 657,094
Net claims and claim
expenses incurred 123,555 109,360 - 232,915
Acquisition expenses 51,747 70,331 - 122,078
Operational expenses 16,750 12,128 - 28,878
---------- ---------- --------- -----------
Underwriting income $256,144 $ 17,079 - 273,223
========== ==========
Net investment income 64,883 64,883
Equity in earnings of other
ventures 11,443 11,443
Other income 420 420
Interest and preference
share dividends (26,318) (26,318)
Minority interest -
DaVinciRe (32,482) (32,482)
Other items, net (6,665) (6,665)
Net realized gains
on investments 5,601 5,601
--------- -----------
Net income available
to common shareholders $ 16,882 $ 290,105
========= ===========
Net claims and claim
expenses incurred -
current accident year $167,785 $116,517 $ 284,302
Net claims and claim
expenses incurred -
prior years (44,230) (7,157) (51,387)
---------- ---------- -----------
Net claims and claim
expenses incurred -
total $123,555 $109,360 $ 232,915
========== ========== ===========
Net claims and claim
expense ratio - accident
year 37.4% 55.8% 43.3%
========== ========== ===========
Net claims and claim
expense ratio - calendar
year 27.6% 52.4% 35.4%
Underwriting expense
ratio 15.3% 39.5% 23.0%
---------- ---------- -----------
Combined ratio 42.9% 91.9% 58.4%
========== ========== ===========
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data
(in thousands of United States Dollars)
----------------------------------------------------------------------
Gross Written Premiums
Three months ended Six months ended
---------------------------------------------- -----------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
--------- --------- ----------- -----------
Renaissance catastrophe
premiums $138,922 $120,405 $ 391,941 $ 419,541
Renaissance specialty
premiums 52,222 60,675 279,747 291,130
--------- --------- ----------- -----------
Total Renaissance
Reinsurance premiums 191,144 181,080 671,688 710,671
--------- --------- ----------- -----------
DaVinci catastrophe
premiums 30,175 29,885 112,813 133,081
DaVinci specialty premiums 2,020 4,319 24,122 31,882
--------- --------- ----------- -----------
Total DaVinci
Reinsurance premiums 32,195 34,204 136,935 164,963
--------- --------- ----------- -----------
Total Reinsurance
premiums (1) 223,339 215,284 808,623 875,634
Individual Risk premiums 220,144 111,592 329,193 231,530
--------- --------- ----------- -----------
Total premiums $443,483 $326,876 $1,137,816 $1,107,164
========= ========= =========== ===========
Total managed catastrophe
premiums (2) $188,747 $175,506 $ 564,185 $ 616,893
========= ========= =========== ===========
Total specialty premiums $ 54,242 $ 64,994 $ 303,869 $ 323,012
========= ========= =========== ===========
(1) Reinsurance gross premiums written excludes $1.7 million and
$13.2 million of premiums assumed from the Individual Risk
segment for the three and six months ended June 30, 2005,
respectively.
(2) Total managed catastrophe premiums include Renaissance and
DaVinci catastrophe premium, as above, and catastrophe premium
of $19.6 million and $25.2 million for the three months ended
June 30, 2005 and 2004, respectively, and catastrophe premium
of $59.4 million and $64.3 million for the six months ended
June 30, 2005 and 2004, respectively, written on behalf of our
joint venture, Top Layer Re.
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 consistently provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating income" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating income" as used herein differs from "net income available to common shareholders", which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on investments. In addition, the Company's management believes that "operating income" is useful to investors because it more accurately measures and predicts the Company's results of operations by removing the variability arising from fluctuations in the Company's investment portfolio, which is not considered by management to be a relevant indicator of business operations. The Company also uses "operating income" to calculate "operating income per common share" and "operating return on average common equity". The following is a reconciliation of 1) net income available to common shareholders to operating income available to common shareholders; 2) net income available to common shareholders per common share to operating income available to common shareholders per common share; and 3) return on average common equity to operating return on average common equity:
----------------------------------------------------------------------
Three months ended Six months ended
-------------------- --------------------
(In thousands of U.S. June 30, June 30, June 30, June 30,
dollars, except per 2005 2004 2005 2004
share amounts) --------- ---------- --------- ----------
(Restated) (Restated)
Net income available to
common shareholders $171,982 $121,228 $216,285 $290,105
Adjustment for net
realized (gains) losses
on investments (1,583) 26,920 8,606 (5,601)
--------- ---------- --------- ----------
Operating income available
to common shareholders $170,399 $148,148 $224,891 $284,504
========= ========== ========= ==========
Net income available to
common shareholders per
common share $ 2.39 $ 1.69 $ 3.00 $ 4.05
Adjustment for net
realized (gains) losses
on investments (0.02) 0.38 0.12 (0.08)
--------- ---------- --------- ----------
Operating income available
to common shareholders per
common
share - diluted $ 2.37 $ 2.07 $ 3.12 $ 3.97
========= ========== ========= ==========
Return on average common
equity (annualized) 30.8% 21.3% 19.6% 26.3%
Adjustment for net
realized (gains) losses
on investments (0.2%) 4.8% 0.8% (0.5%)
--------- ---------- --------- ----------
Operating return on average
common equity (annualized) 30.6% 26.1% 20.4% 25.8%
========= ========== ========= ==========
The Company has also included in this Press Release "managed catastrophe premium". "Managed catastrophe premium" is defined as gross catastrophe premium written by Renaissance Reinsurance and its related joint ventures. "Managed catastrophe premium" differs from total catastrophe premium, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premium written on behalf of the Company's joint venture Top Layer Re, which is accounted for under the equity method of accounting. Refer to supplemental financial data on gross written premiums.
CONTACT: Investor:
RenaissanceRe Holdings Ltd.
Todd R. Fonner, 441-239-4801
Vice President - Treasurer
or
Media:
Kekst and Company
David Lilly or Dawn Dover, 212-521-4800
SOURCE: RenaissanceRe Holdings Ltd.