RenaissanceRe Reports Operating Loss of $327.3 Million for the Third Quarter of 2005 as a Result of Hurricanes
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PEMBROKE, Bermuda, Nov 01, 2005 (BUSINESS WIRE) -- RenaissanceRe Holdings Ltd. (NYSE: RNR):
- Operating Loss Per Common Share of $4.63 for the Third Quarter of 2005 vs. an Operating Loss Per Common Share of $5.19 for the Third Quarter of 2004.
- $322.1 Million Net Loss for the Third Quarter of 2005; Net Loss Per Common Share of $4.56 for the Third Quarter of 2005 vs. a Net Loss Per Common Share of $4.97 for the Third Quarter of 2004.
- Specialty Reserve Review Reduces Third Quarter 2005 Net Loss by $117.6 million.
- Estimates $250 - $300 million Net Negative Impact in Fourth Quarter from Hurricane Wilma.
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported a net operating loss attributable to common shareholders of $327.3 million, compared to a loss of $363.5 million in the third quarter of 2004. Net operating loss excludes net realized investment gains of $5.2 million and $15.0 million in the third quarters of 2005 and 2004, respectively. Net operating loss per common share was $4.63 in the third quarter of 2005, compared to net operating loss per common share of $5.19 in the third quarter of 2004. Net loss attributable to common shareholders was $322.1 million or $4.56 per common share in the quarter, compared to net loss attributable to common shareholders of $348.5 million or $4.97 per common share for the same quarter of 2004.
Neill A. Currie, CEO, commented: "This year's hurricanes have caused enormous human tragedy, and we extend our sympathies to all those affected. Following these hurricanes, Renaissance is serving its clients with industry leading speed in responding to claims, while our underwriting team remains the leader in providing catastrophe reinsurance."
Mr. Currie commented further: "As is typical in the aftermath of large catastrophe events, we expect additional business opportunities to emerge, and I believe we have a superior underwriting talent base and risk management system to capture these opportunities. Assuming normal catastrophe losses, we envision an attractive return on equity in 2006."
THIRD QUARTER 2005 RESULTS
Net Impact of Hurricanes
The Company has recorded a net negative impact of $572.6 million from hurricanes Dennis, Katrina and Rita. The net negative impact from the third quarter hurricanes impacted the Company's Reinsurance segment by $481.9 million and its Individual Risk segment by $90.7 million. These amounts are based on management's estimates following a review of the Company's potential exposures and discussions with counterparties. Given the magnitude and recent occurrence of these event, delays in receiving claims data, the unusual complexity of the coverage and legal issues relating to Hurricane Katrina, and the other uncertainties inherent in loss estimation, meaningful additional uncertainty remains regarding total covered losses for the insurance industry from these events and accordingly, this estimate is subject to change as new or revised data is received from the Company's counterparties, and other factors.
See the supplemental financial data below for additional information regarding the third quarter 2005 hurricane claims and claim expenses incurred and loss ratios by segment.
Premiums
Gross premiums written for the third quarter of 2005 were $382.8 million, compared to $273.2 million for the same quarter of 2004. Gross premiums written include $214.5 million in gross premiums written for the Company's Reinsurance segment in the third quarter of 2005, compared to $132.2 million for the same quarter of 2004; and $168.3 million in gross premiums written for the Company's Individual Risk segment in the third quarter of 2005, compared to $141.0 million for the same quarter of 2004. Gross premiums written in the Reinsurance segment include $42.6 million in premiums written for additional backup covers written following the occurrence of the hurricanes in the quarter; $5.5 million of reinstatement premium was also recognized. During the same period in 2004, gross premiums written in the Reinsurance segment included $20 million in reinstatement premiums and $27 million in premiums written for additional backup covers written in the Reinsurance segment as a result of the hurricanes occurring during the third quarter of 2004.
Net premiums written for the third quarter of 2005 were $290.1 million, compared to $219.2 million for the same quarter of 2004. Net premiums written include $174.3 million in net premiums written for the Company's Reinsurance segment in the third quarter of 2005, compared to $113.2 million for the same quarter of 2004; and $115.8 million in net premiums written for the Company's Individual Risk segment in the third quarter of 2005, compared to $106.0 million for the same quarter of 2004.
Net premiums earned for the third quarter of 2005 were $348.3 million, compared to $349.8 million for the same quarter of 2004. Net premiums earned include $230.5 million in net premiums earned for the Company's Reinsurance segment in the third quarter of 2005, compared to $265.6 million for the same quarter of 2004; and $117.8 million in net premiums earned for the Company's Individual Risk segment in the third quarter of 2005, compared to $84.2 million for the same quarter of 2004. Net premiums earned for the third quarter of 2005 include $42.7 million of additional ceded earned premiums as a result of the hurricanes occurring during the quarter.
Premiums for the third quarter of 2005 include $19.9 million of gross written premiums, $31.8 million of net written premiums and $49.5 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re, during the third quarter of 2005, compared to $10.1 million of gross written premiums, $24.5 million of net written premiums and $57.7 million of net premiums earned by DaVinci Re during the third quarter of 2004.
Underwriting Ratios, Reserve Development and Specialty Reinsurance Reserve Review
General
For the third quarter of 2005, the Company generated a combined ratio of 225.7%, a loss ratio of 200.2% and an expense ratio of 25.5%, compared to a combined ratio, loss ratio and expense ratio of 234.7%, 211.1% and 23.6% for the third quarter of 2004, respectively.
The Company's Reinsurance segment generated a loss ratio of 237.3% and an expense ratio of 19.6% for the third quarter of 2005, compared to a loss ratio and an expense ratio of 214.7% and 17.1%, for the third quarter of 2004, respectively. The third quarter 2005 Reinsurance loss ratio was negatively impacted by the third quarter 2005 hurricanes which added 247.9 percentage points to the Reinsurance loss ratio. In addition, the Reinsurance segment recorded an additional $29.5 million of ceded earned premium attributable to the third quarter 2005 hurricanes. As further described below, the Reinsurance loss ratio was favorably impacted by the Company's previously announced review of its specialty reinsurance reserves which reduced the Company's Reinsurance loss ratio by 56.4 percentage points. The increase in operating expenses in the third quarter of 2005 compared to the third quarter of 2004 was primarily due to the reduction of compensation accruals in the third quarter of 2004 which did not recur in 2005.
For the quarter, the Company's Individual Risk segment generated a loss ratio of 127.8% and an expense ratio of 37.0%, compared to a loss ratio and an expense ratio of 199.8% and 44.1%, for the third quarter of 2004, respectively. The third quarter 2005 Individual Risk loss ratio was negatively impacted by the third quarter 2005 hurricanes which added 65.9 percentages points to the Individual Risk loss ratio. In addition, the Individual Risk segment recorded an additional $13.2 million of ceded earned premium attributable to the third quarter 2005 hurricanes.
During the quarter, the Company recorded favorable development on prior year reserves of $128.8 million or a benefit of 37.0 percentage points to the Company's quarterly loss ratio, principally due to the specialty reinsurance reserve review described below. The Company's Reinsurance segment contributed $118.6 million of favorable development, and the Company's Individual Risk segment contributed $10.2 million of favorable development. Net paid losses for the quarter were $149.4 million.
Following is supplemental financial data regarding the net financial statement impact of the 2005 hurricanes and specialty reserve review and the impact on claims and claim expenses incurred and loss ratios by segment.
Analysis of net financial statement impact from the 2005 hurricanes and specialty reserve review:
Three months ended September 30, 2005
---------------------------------------
Net
claims
and
claim
expenses Minority
(in millions of U.S. dollars) incurred Other (1) interest Total
--------- --------- --------- ---------
Third quarter 2005 hurricanes
------------------------------
Hurricane Katrina $ 520.7 $ 36.8 $ (100.5) $ 457.0
Hurricane Rita 105.0 1.2 (12.3) 93.9
Hurricane Dennis 23.2 - (1.5) 21.7
--------- --------- --------- ---------
Subtotal - third quarter
2005 hurricanes 648.9 38.0 (114.3) 572.6
Specialty reserve review (129.9) - 12.3 (117.6)
--------- --------- --------- ---------
Net negative (positive)
financial statement
impact $ 519.0 $ 38.0 $ (102.0) $ 455.0
========= ========= ========= =========
(1) Other consists of assumed and ceded earned reinstatement premiums
and lost profit commissions.
Analysis of net claims and claim expenses incurred for the current calendar quarter:
Three months ended September 30, 2005
-----------------------------------------------------
Reinsurance net Individual Risk Total net
claims and claim net claims and claims and claim
expenses claim expenses expenses
----------------- ----------------- -----------------
(in millions of
U.S. dollars) Incurred Ratio Incurred Ratio Incurred Ratio
-------- -------- -------- -------- -------- --------
Net claims and
claim expenses
incurred
-----------------
Hurricane
Katrina $ 476.3 206.7% $ 44.4 37.7% $ 520.7 149.5%
Hurricane Rita 80.6 35.0% 24.4 20.7% 105.0 30.1%
Hurricane
Dennis 14.4 6.2% 8.8 7.5% 23.2 6.7%
-------- -------- -------- -------- -------- --------
Subtotal -
third
quarter 2005
hurricanes 571.3 247.9% 77.6 65.9% 648.9 186.3%
Specialty
reserve review (129.9) (56.4%) - 0.0% (129.9) (37.3%)
Losses
excluding
hurricanes and
specialty
reserve review 105.6 45.8% 72.9 61.9% 178.5 51.2%
-------- -------- -------- -------- -------- --------
Total net
claims and
claim
expenses
incurred $ 547.0 237.3% $ 150.5 127.8% $ 697.5 200.2%
======== ======== ======== ======== ======== ========
Specialty Reinsurance Reserve Review
The Company announced on May 3, 2005 that it would undertake a review of its processes and assumptions used in establishing its reserves during 2005. The Company completed its review of its catastrophe reinsurance reserves in the second quarter of 2005 and completed its review of its specialty reinsurance reserves this quarter. As a result of this review of specialty reinsurance reserves, the Company reduced its specialty reinsurance reserves within the Reinsurance segment by $129.9 million, which reduced the Company's quarterly Reinsurance loss ratio by 56.4 percentage points. After adjusting for the impact of minority interest, the net financial statement impact of the specialty reinsurance reserve review was a benefit of $117.6 million.
When Renaissance established its specialty reinsurance business unit in 2002 it adopted the Bornhuetter-Ferguson actuarial technique to estimate incurred but not reported reserves for this line of business. This technique, which it will continue to use, requires the Company to estimate an ultimate claims and claim expense ratio and select an estimated loss reporting pattern. In completing its specialty reinsurance review the Company reviewed substantially all of its case reserves and additional case reserves as well as its estimates of the ultimate claims and claim expense ratios and loss reporting patterns. The reduction in specialty reinsurance reserves is principally due to a reassessment of the Company's estimated loss reporting patterns. Since establishing the specialty reinsurance business unit in 2002, reported claim activity has been less than expected and therefore the Company has adjusted its estimated loss reporting patterns to reflect this experience.
Further Reserve Review; Reserving Philosophy
The Company expects, during the remainder of the year, to review its processes and assumptions used in establishing its Individual Risk reserves. It is possible that this review may result in a change to these reserves. However, because of the uncertainties related to the outcome of this review as described herein, it is not possible for the Company to reasonably estimate the amount of any potential change to its current loss 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.
Equity in Earnings of Other Ventures
Equity in earnings of other ventures generated $7.6 million in income in the third quarter of 2005 compared to $9.1 million in income in the third 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 third quarter of 2005. The decrease is largely due to a decrease in the Company's equity in the earnings of Channel Re compared to the third quarter of 2004.
Other (Loss) Income
During the third quarter of 2005 the Company recognized a loss of $1.3 million on fees and other items compared to a loss of $4.9 million in the third quarter of 2004. Fee income remained stable at $1.0 million in the third quarter of 2005 compared to $1.2 million in the third quarter of 2004. Other items, principally the mark-to-market on the Company's warrant to purchase shares of Platinum Underwriters Holdings Ltd. stock in 2005 and the mark-to-market on the Company's short position in credit derivatives in 2004, generated losses of $3.2 million and $6.4 million in the third quarters of 2005 and 2004, respectively.
Net Investment Income and Net Realized Gains and Losses on Investments
Net investment income for the third quarter of 2005 was $61.1 million, compared to $39.5 million for the same quarter in 2004. The increase in investment income was due to higher returns on the Company's fixed income and alternative asset investment portfolios. Other investments, which include the Company's hedge fund and private equity investments, generated $21.2 million of net investment income in the third quarter of 2005 compared with $7.9 million in the third quarter of 2004.
During the third quarter of 2005, the Company generated net realized gains of $5.2 million compared to $15.0 million during the third quarter of 2004.
Other Items
The Company's corporate expenses of $21.8 million incurred during the third quarter of 2005 were $17.3 million higher than the third quarter of 2004. The increase in such expenses is due principally to professional fees and an accrual for other costs incurred during the third quarter of 2005 related to the investigations by the Securities and Exchange Commission and other governmental authorities.
The Company's cash flows from operations were $117.1 million for the third quarter of 2005, compared to $231.5 million for the third quarter of 2004.
As described in the Company's 2004 Annual Report filed on Form 10-K, the Company has restated its first three quarters of 2004. The comparative 2004 financial data contained in this press release reflects these corrections.
Shareholders' Equity
Shareholders' equity attributable to common shareholders was $2.0 billion at September 30, 2005, compared to $2.1 billion at December 31, 2004. Book value per common share at September 30, 2005 was $27.50, compared to $30.19 per common share at December 31, 2004.
HURRICANE WILMA
The Company currently estimates, on a preliminary basis, that Hurricane Wilma will have a net negative impact of approximately $250 - $300 million on its fourth quarter results.
The Company's estimates of its losses from Hurricane Wilma, as well as the third quarter hurricanes described above, are based on factors including currently available information derived from the Company's proprietary models, industry assessments of losses from the events, preliminary claims information from clients and brokers and the terms and conditions of the Company's contracts. In particular, due to the size and unusual complexity of the issues relating to Hurricane Katrina, meaningful uncertainty remains regarding total covered losses for the insurance industry and accordingly, various of the key assumptions underlying the Company's loss estimates. In addition, actual losses from these events may increase if the Company's reinsurers fail to meet their obligations to the Company. The Company's actual losses from these events will likely vary, perhaps materially, from these current estimates due to the inherent uncertainties in reserving for such losses, including the preliminary nature of the available information, the potential inaccuracies and inadequacies in the data provided by clients and brokers, the inherent uncertainty of modeling techniques and the application of such techniques, the effects of any demand surge on claims activity and, in the case of the hurricanes, complex coverage and other legal issues.
This Press Release includes certain non-GAAP financial measures including "operating loss," "operating loss 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, November 2, 2005 at 9:00 a.m. (EST) 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 Operations
For the three and nine months ended September 30, 2005 and 2004
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Nine months ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------
(Restated) (Restated)
Revenues
Gross
premiums
written $ 382,790 $ 273,218 $ 1,520,606 $ 1,380,382
============= ============= ============= =============
Net premiums
written $ 290,124 $ 219,237 $ 1,293,806 $ 1,205,381
Decrease
(increase)
in unearned
premiums 58,224 130,557 (305,204) (198,493)
------------- ------------- ------------- -------------
Net premiums
earned 348,348 349,794 988,602 1,006,888
Net
investment
income 61,142 39,487 158,126 104,370
Net foreign
exchange
gains
(losses) 1,729 (1,839) 9,577 1,034
Equity in
earnings of
other
ventures 7,623 9,058 22,988 20,501
Other (loss)
income (1,256) (4,855) (1,566) (4,435)
Net realized
gains
(losses) on
investments 5,192 15,023 (3,414) 20,624
------------- ------------- ------------- -------------
Total
revenues 422,778 406,668 1,174,313 1,148,982
------------- ------------- ------------- -------------
Expenses
Net claims
and claim
expenses
incurred 697,538 738,502 1,007,985 971,417
Acquisition
expenses 65,955 72,434 163,037 194,512
Operational
expenses 22,859 10,116 65,079 38,994
Corporate
expenses 21,815 4,520 41,848 14,058
Interest
expense 6,936 6,683 20,508 19,288
------------- ------------- ------------- -------------
Total
expenses 815,103 832,255 1,298,457 1,238,269
------------- ------------- ------------- -------------
Loss before
minority
interest and
taxes (392,325) (425,587) (124,144) (89,287)
Minority
interest -
DaVinciRe (78,978) (89,888) (44,311) (57,406)
------------- ------------- ------------- -------------
Loss before
taxes (313,347) (335,699) (79,833) (31,881)
Income tax
expense - (4,003) - (4,003)
------------- ------------- ------------- -------------
Net loss (313,347) (339,702) (79,833) (35,884)
Dividends on
preference
shares 8,758 8,758 25,987 22,471
------------- ------------- ------------- -------------
Net loss
attributable
to common
shareholders $ (322,105) $ (348,460) $ (105,820) $ (58,355)
============= ============= ============= =============
Operating loss
attributable
to common
shareholders
per Common
Share -
diluted
(1), (2) $ (4.63) $ (5.19) $ (1.45) $ (1.13)
Net loss
attributable
to common
shareholders
per Common
Share - basic $ (4.56) $ (4.97) $ (1.50) $ (0.84)
Net loss
attributable
to common
shareholders
per Common
Share -
diluted (2) $ (4.56) $ (4.97) $ (1.50) $ (0.84)
Average shares
outstanding -
basic 70,632 70,098 70,525 69,735
Average shares
outstanding -
diluted (2) 70,632 70,098 70,525 69,735
Net claims and
claim expense
ratio 200.2% 211.1% 102.0% 96.5%
Expense ratio 25.5% 23.6% 23.1% 23.2%
------------- ------------- ------------- -------------
Combined ratio 225.7% 234.7% 125.1% 119.7%
============= ============= ============= =============
Operating
return on
average common
equity
(annualized)(1) (61.2%) (68.0%) (6.4%) (4.9%)
============= ============= ============= =============
(1) Excludes realized gains (losses) on investments (see - "Comments
on Regulation G")
(2) In accordance with SFAS 128, EPS calculations use average common
shares outstanding - basic, when in a net loss position.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
---------------------------
September 30, December 31,
2005 2004
------------- -------------
(Unaudited) (Audited)
Assets
Fixed maturity investments available for
sale, at fair value $ 3,085,509 $ 3,223,292
Short term investments, at cost 1,133,542 608,292
Other investments, at fair value 774,234 684,590
------------- -------------
Total managed investment portfolio 4,993,285 4,516,174
Equity investment in reinsurance company,
at fair value 142,788 150,519
Investments in other ventures, under equity
method 175,482 159,556
------------- -------------
Total investments 5,311,555 4,826,249
Cash and cash equivalents 156,878 66,740
Premiums receivable 478,665 206,813
Ceded reinsurance balances 97,066 61,303
Losses recoverable 508,651 217,788
Accrued investment income 26,754 30,060
Deferred acquisition costs 121,589 70,933
Other assets 55,637 46,432
------------- -------------
Total assets $ 6,756,795 $ 5,526,318
============= =============
Liabilities, Minority Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 2,300,231 $ 1,459,398
Reserve for unearned premiums 706,303 365,335
Debt 350,000 350,000
Subordinated obligation to capital trust 103,093 103,093
Reinsurance balances payable 340,954 188,564
Net payable on investments purchased 139,573 941
Other liabilities 60,977 67,151
------------- -------------
Total liabilities 4,001,131 2,534,482
------------- -------------
Minority interest - DaVinciRe 299,780 347,794
Shareholders' Equity
Preference shares 500,000 500,000
Common shares and additional paid-in
capital 339,811 328,896
Accumulated other comprehensive income 28,382 78,960
Retained earnings 1,587,691 1,736,186
------------- -------------
Total shareholders' equity 2,455,884 2,644,042
------------- -------------
Total liabilities, minority interest and
shareholders' equity $ 6,756,795 $ 5,526,318
============= =============
Book value per common share $ 27.50 $ 30.19
============= =============
Common shares outstanding 71,114 71,029
============= =============
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
Three months ended September 30, 2005
-----------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- -----------
Gross premiums
written (1) $ 214,471 $ 168,319 $ - $ 382,790
=========== =========== ===========
Net premiums written $ 174,307 $ 115,817 - $ 290,124
=========== =========== ===========
Net premiums earned $ 230,519 $ 117,829 - $ 348,348
Net claims and claim
expenses incurred 546,999 150,539 - 697,538
Acquisition expenses 28,756 37,199 - 65,955
Operational expenses 16,445 6,414 - 22,859
----------- ----------- ----------- -----------
Underwriting loss $ (361,681) $ (76,323) - (438,004)
=========== ===========
Net investment income 61,142 61,142
Equity in earnings of
other ventures 7,623 7,623
Other (loss) income (1,256) (1,256)
Interest and
preference share
dividends (15,694) (15,694)
Minority interest -
DaVinciRe 78,978 78,978
Other items, net (20,086) (20,086)
Net realized gains on
investments 5,192 5,192
----------- -----------
Net loss attributable
to common
shareholders $ 115,899 $ (322,105)
=========== ===========
Net claims and claim
expenses incurred -
current accident year $ 665,644 $ 160,700 $ 826,344
Net claims and claim
expenses incurred -
prior years (118,645) (10,161) (128,806)
----------- ----------- -----------
Net claims and claim
expenses incurred -
total $ 546,999 $ 150,539 $ 697,538
=========== =========== ===========
Net claims and claim
expense ratio -
accident year 288.8% 136.4% 237.2%
=========== =========== ===========
Net claims and claim
expense ratio -
calendar year 237.3% 127.8% 200.2%
Underwriting expense
ratio 19.6% 37.0% 25.5%
---------- ---------- ----------
Combined ratio 256.9% 164.8% 225.7%
=========== =========== ===========
(1) Reinsurance segment gross premiums written excludes $11.1 million
of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
Three months ended September 30, 2004
(Restated)
-----------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- -----------
Gross premiums
written (1) $ 132,191 $ 141,027 $ - $ 273,218
=========== =========== ===========
Net premiums written $ 113,244 $ 105,993 - $ 219,237
=========== =========== ===========
Net premiums earned $ 265,570 $ 84,224 - $ 349,794
Net claims and claim
expenses incurred 570,225 168,277 - 738,502
Acquisition expenses 40,264 32,170 - 72,434
Operational expenses 5,135 4,981 - 10,116
----------- ----------- ----------- -----------
Underwriting loss $ (350,054) $ (121,204) - (471,258)
=========== ===========
Net investment income 39,487 39,487
Equity in earnings of
other ventures 9,058 9,058
Other (loss) income (4,855) (4,855)
Interest and
preference share
dividends (15,441) (15,441)
Minority interest -
DaVinciRe 89,888 89,888
Other items, net (10,362) (10,362)
Net realized gains on
investments 15,023 15,023
----------- -----------
Net loss attributable
to common
shareholders $ 122,798 $ (348,460)
=========== ===========
Net claims and claim
expenses incurred -
current accident year $ 586,436 $ 176,510 $ 762,946
Net claims and claim
expenses incurred -
prior years (16,211) (8,233) (24,444)
----------- ----------- -----------
Net claims and claim
expenses incurred -
total $ 570,225 $ 168,277 $ 738,502
=========== =========== ===========
Net claims and claim
expense ratio -
accident year 220.8% 209.6% 218.1%
=========== =========== ===========
Net claims and claim
expense ratio -
calendar year 214.7% 199.8% 211.1%
Underwriting expense
ratio 17.1% 44.1% 23.6%
----------- ----------- -----------
Combined ratio 231.8% 243.9% 234.7%
=========== =========== ===========
(1) Reinsurance segment gross premiums written excludes $16.7 million
of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars)
Nine months ended September 30, 2005
-----------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- -----------
Gross premiums
written (1) $1,023,094 $ 497,512 $ - $1,520,606
=========== =========== ===========
Net premiums written $ 886,917 $ 406,889 - $1,293,806
=========== =========== ===========
Net premiums earned $ 637,540 $ 351,062 - $ 988,602
Net claims and claim
expenses incurred 715,060 292,925 - 1,007,985
Acquisition expenses 62,567 100,470 - 163,037
Operational expenses 48,056 17,023 - 65,079
----------- ----------- ----------- -----------
Underwriting loss $ (188,143) $ (59,356) - (247,499)
=========== ===========
Net investment income 158,126 158,126
Equity in earnings of
other ventures 22,988 22,988
Other (loss) income (1,566) (1,566)
Interest and
preference share
dividends (46,495) (46,495)
Minority interest -
DaVinciRe 44,311 44,311
Other items, net (32,271) (32,271)
Net realized losses on
investments (3,414) (3,414)
----------- -----------
Net loss attributable
to common
shareholders $ 141,679 $ (105,820)
=========== ===========
Net claims and claim
expenses incurred -
current accident year $ 917,525 $ 301,922 $1,219,447
Net claims and claim
expenses incurred -
prior years (202,465) (8,997) (211,462)
----------- ----------- -----------
Net claims and claim
expenses incurred -
total $ 715,060 $ 292,925 $1,007,985
=========== =========== ===========
Net claims and claim
expense ratio -
accident year 143.9% 86.0% 123.4%
=========== =========== ===========
Net claims and claim
expense ratio -
calendar year 112.2% 83.4% 102.0%
Underwriting expense
ratio 17.4% 33.5% 23.1%
----------- ----------- -----------
Combined ratio 129.6% 116.9% 125.1%
=========== =========== ===========
(1) Reinsurance segment gross premiums written excludes $24.3 million
of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
Nine months ended September 30, 2004 (Restated)
-----------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ----------- ----------- -----------
Gross premiums
written (1) $1,007,825 $ 372,557 $ - $1,380,382
=========== =========== ===========
Net premiums written $ 879,925 $ 325,456 - $1,205,381
=========== =========== ===========
Net premiums earned $ 713,766 $ 293,122 - $1,006,888
Net claims and claim
expenses incurred 693,780 277,637 - 971,417
Acquisition expenses 92,011 102,501 - 194,512
Operational expenses 21,885 17,109 - 38,994
----------- ----------- ----------- -----------
Underwriting loss $ (93,910) $ (104,125) - (198,035)
=========== ===========
Net investment income 104,370 104,370
Equity in earnings of
other ventures 20,501 20,501
Other (loss) income (4,435) (4,435)
Interest and
preference share
dividends (41,759) (41,759)
Minority interest -
DaVinciRe 57,406 57,406
Other items, net (17,027) (17,027)
Net realized gains on
investments 20,624 20,624
----------- -----------
Net loss attributable
to common
shareholders $ 139,680 $ (58,355)
=========== ===========
Net claims and claim
expenses incurred -
current accident year $ 754,221 $ 293,027 $1,047,248
Net claims and claim
expenses incurred -
prior years (60,441) (15,390) (75,831)
----------- ----------- -----------
Net claims and claim
expenses incurred -
total $ 693,780 $ 277,637 $ 971,417
=========== =========== ===========
Net claims and claim
expense ratio -
accident year 105.7% 100.0% 104.0%
=========== =========== ===========
Net claims and claim
expense ratio -
calendar year 97.2% 94.7% 96.5%
Underwriting expense
ratio 16.0% 40.8% 23.2%
----------- ----------- -----------
Combined ratio 113.2% 135.5% 119.7%
=========== =========== ===========
(1) Reinsurance segment gross premiums written excludes $17.4 million
of premiums assumed from the Individual Risk segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data
(in thousands of United States Dollars)
Gross Written
Premiums Three months ended Nine months ended
------------------ ------------------------- -------------------------
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ------------ ------------
Renaissance
catastrophe
premiums $ 109,257 $ 88,292 $ 501,198 $ 507,833
Renaissance
specialty premiums 85,320 33,786 365,067 324,916
------------ ------------ ------------ ------------
Total Renaissance
Reinsurance
premiums 194,577 122,078 866,265 832,749
------------ ------------ ------------ ------------
DaVinci catastrophe
premiums 18,814 10,548 131,627 143,629
DaVinci specialty
premiums 1,080 (435) 25,202 31,447
------------ ------------ ------------ ------------
Total DaVinci
Reinsurance
premiums 19,894 10,113 156,829 175,076
------------ ------------ ------------ ------------
Total
Reinsurance
premiums (1) 214,471 132,191 1,023,094 1,007,825
Individual Risk
premiums 168,319 141,027 497,512 372,557
------------ ------------ ------------ ------------
Total premiums $ 382,790 $ 273,218 $ 1,520,606 $ 1,380,382
============ ============ ============ ============
Total managed
catastrophe
premiums (2) $ 128,548 $ 104,704 $ 692,733 $ 721,597
============ ============ ============ ============
Total specialty
premiums $ 86,400 $ 33,351 $ 390,269 $ 356,363
============ ============ ============ ============
(1) Reinsurance gross premiums written excludes $11.1 million and
$24.3 million of premiums assumed from the Individual Risk segment
for the three and nine months ended September 30, 2005,
respectively, and $16.7 million and $17.4 million of premiums
assumed from the Individual Risk segment for the three and nine
months ended September 30, 2004.
(2) Total managed catastrophe premiums include Renaissance and DaVinci
catastrophe premium, as above, and catastrophe premium of $0.5
million and $5.9 million for the three months ended September 30,
2005 and 2004, respectively, and catastrophe premium of $59.9
million and $70.1 million for the nine months ended September 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 loss" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating loss" as used herein differs from "net loss attributable 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 loss" 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 loss" to calculate "operating loss per common share" and "operating return on average common equity". The following is a reconciliation of 1) net loss attributable to common shareholders to operating loss attributable to common shareholders; 2) net loss attributable to common shareholders per common share to operating loss attributable to common shareholders per common share; and 3) return on average common equity to operating return on average common equity:
Three months ended Nine months ended
------------------------- -------------------------
(In thousands of
U.S. dollars,
except for per September September September September
share amounts) 30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ------------ ------------
(Restated) (Restated)
Net loss
attributable to
common
shareholders $ (322,105) $ (348,460) $ (105,820) $ (58,355)
Adjustment for
net realized
(gains) losses
on investments (5,192) (15,023) 3,414 (20,624)
------------ ------------ ------------ ------------
Operating loss
attributable to
common
shareholders $ (327,297) $ (363,483) $ (102,406) $ (78,979)
============ ============ ============ ============
Net loss
attributable to
common
shareholders per
common share (1) $ (4.56) $ (4.97) $ (1.50) $ (0.84)
Adjustment for
net realized
(gains)
losses on
investments (1) (0.07) (0.22) 0.05 (0.29)
------------ ------------ ------------ ------------
Operating loss
attributable to
common
shareholders per
common share -
diluted (1) $ (4.63) $ (5.19) $ (1.45) $ (1.13)
============ ============ ============ ============
Return on average
common equity
(annualized) (60.2%) (65.2%) (6.6%) (3.6%)
Adjustment for
net realized
(gains) losses
on investments (1.0%) (2.8%) 0.2% (1.3%)
------------ ------------ ------------ ------------
Operating return on
average common
equity
(annualized) (61.2%) (68.0%) (6.4%) (4.9%)
============ ============ ============ ============
(1) In accordance with SFAS 128, EPS calculations use average common
shares outstanding - basic, when in a net loss position.
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.
SOURCE: RenaissanceRe Holdings Ltd.
Investor Contact:
RenaissanceRe Holdings Ltd.
Todd R. Fonner
Vice President - Treasurer
441-239-4801
or
Media Contact:
Kekst and Company
David Lilly or Dawn Dover
212-521-4800