RenaissanceRe Reports Record Operating Income of $247.0 Million for the Third Quarter of 2006 or $3.42 Per Common Share; Record Net Income of $251.1 Million or $3.48 Per Common Share.
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PEMBROKE, Bermuda--(BUSINESS WIRE)--Oct. 30, 2006--RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $247.0 million in third quarter operating income available to common shareholders compared to a $292.5 million operating loss attributable to common shareholders in the third quarter of 2005. Operating income excludes net realized investment gains of $4.2 million and $5.2 million in the third quarters of 2006 and 2005, respectively. Operating income per common share was $3.42 in the third quarter of 2006, compared to an operating loss per common share of $4.14 in the third quarter of 2005. Net income available to common shareholders was $251.1 million or $3.48 per common share in the quarter, compared to a net loss attributable to common shareholders of $287.3 million or $4.07 per common share for the same quarter of 2005. The Company's third quarter 2006 results benefited from light insured catastrophe loss activity compared to the third quarter of 2005 as well as a $31.4 million net positive impact resulting from the commutation of certain assumed and ceded reinsurance contracts in the quarter.
Neill A. Currie, CEO, commented: "We are very pleased to report another strong quarter with record results. Our core property cat business generated exceptional earnings, and our book value per share grew by over 12% this quarter. Our annualized compounded growth in book value per share plus accumulated dividends over the last ten years is 17%, reflecting our continued commitment to generate long-term growth in book value for our shareholders."
Mr. Currie added: "This year we met the demands of the market by providing capacity when it was most needed. We currently expect the demand for capacity to continue into 2007 and our priorities remain clear: maintaining a focused and disciplined approach to underwriting that enables us to achieve superior long-term results."
THIRD QUARTER 2006 RESULTS
Premiums
Gross premiums written for the third quarter of 2006 were $257.8 million, compared to $382.8 million for the same quarter of 2005. As described in more detail below, gross premiums written in the third quarter of 2005 reflect substantial loss related premium of $72.2 million as a result of the large hurricanes in the third quarter of 2005. Net premiums written for the third quarter of 2006 were $162.7 million, compared to $290.1 million for the same quarter of 2005. Net premiums earned were $367.1 million for the third quarter of 2006, compared to $348.3 million in the third quarter of 2005.
Reinsurance Segment
Gross premiums written include $91.5 million in gross premiums written for the Company's Reinsurance segment in the third quarter of 2006, compared to $214.5 million for the same quarter of 2005. Gross premiums written were impacted by several reinsurance contracts which were commuted during the third quarter of 2006 which resulted in the return of $28.3 million of premium. The third quarter of 2005 included $72.2 million in loss related premium which arose as a result of the large hurricanes that occurred in that period.
Net premiums written include $77.1 million in net premiums written for the Company's Reinsurance segment in the third quarter of 2006, compared to $174.3 million for the same quarter of 2005. Net premiums earned include $236.3 million in net premiums earned for the Company's Reinsurance segment in the third quarter of 2006, compared to $230.5 million for the same quarter of 2005.
Premiums for the third quarter of 2006 include $10.7 million of gross premiums written, $1.2 million of net premiums written and $72.1 million of net premiums earned by the Company's consolidated joint venture, DaVinci Reinsurance Ltd. ("DaVinci"), compared to $19.9 million of gross premiums written, $18.9 million of net premiums written and $49.5 million of net premiums earned by DaVinci during the third quarter of 2005.
Individual Risk Segment
Gross premiums written include $166.2 million in gross premiums written for the Company's Individual Risk segment in the third quarter of 2006, compared to $168.3 million for the same quarter of 2005. Net premiums written include $85.6 million in net premiums written for the Company's Individual Risk segment in the third quarter of 2006, compared to $115.8 million for the same quarter of 2005. Net premiums earned include $130.8 million in net premiums earned for the Company's Individual Risk segment in the third quarter of 2006, compared to $117.8 million for the same quarter of 2005.
Underwriting Ratios
For the third quarter of 2006, the Company generated a combined ratio of 36.5%, a loss ratio of 11.6% and an underwriting expense ratio of 24.9%, compared to a combined ratio, loss ratio and underwriting expense ratio of 215.7%, 190.2% and 25.5%, respectively, for the third quarter of 2005. The significant decrease in the combined ratio and loss ratio during the third quarter of 2006 compared to the third quarter of 2005 was principally the result of light catastrophe loss activity experienced in the third quarter of 2006 compared with the large hurricanes in the third quarter of 2005. During the third quarter of 2006, the Company recorded favorable development on prior year reserves of $53.4 million or a decrease of 14.5 percentage points in the Company's quarterly loss ratio. This compares to favorable development of $163.6 million in the third quarter of 2005 which decreased the Company's third quarter 2005 loss ratio by 47.0 percentage points. Net paid losses for the quarter were $164.5 million compared to $149.4 million in the third quarter of 2005.
Reinsurance Segment
Analysis of net claims and claim expenses incurred for the current quarter
Three months ended
---------------------------------
September 30, September 30,
2006 2005
---------------------------------
(in millions of U.S. dollars) Incurred Ratio Incurred Ratio
-------- ------- -------- -------
Net claims and claim expenses
incurred
------------------------------------
Third quarter 2006
commutations - current year $(13.2) (5.5%) $ - -
- prior year (44.4) (18.8%) - -
-------- ------- -------- -------
Total third quarter 2006
commutations $(57.6) (24.3%) - -
Third quarter 2005 hurricanes - - 571.3 247.9%
Third quarter 2005 specialty
reserve review - - (129.9) (56.4%)
Losses excluding hurricanes,
specialty reserve review and
commutations 16.8 7.1% 70.8 30.7%
-------- ------- -------- -------
Total net claims and claim
expenses incurred $(40.8) (17.2%) $ 512.2 222.2%
======== ======= ======== =======
The Company's Reinsurance segment generated a combined ratio of 2.4%, a negative loss ratio of (17.2%) and an underwriting expense ratio of 19.6% for the third quarter of 2006, compared to a combined ratio of 241.8%, a loss ratio of 222.2% and an underwriting expense ratio of 19.6% for the third quarter of 2005. The results for the third quarter of 2006 include $17.1 million of current accident year net claims and claim expenses resulting in a current accident year loss ratio of 7.2%, compared to current accident year net claims and claim expenses and a current accident year loss ratio of $665.6 million and 288.8%, respectively, for the third quarter of 2005. As noted above, the decrease in current accident year net claims and claim expenses is a direct result of the light catastrophe loss activity experienced during the third quarter of 2006 compared to the third quarter of 2005. During the third quarter of 2006, the Company's Reinsurance segment experienced $57.9 million of favorable development on prior year reserves or a decrease of 24.4 percentage points to the Company's Reinsurance segment quarterly loss ratio. Included in the favorable development is a $44.4 million decrease in prior year reserves as a result of the commutation of certain assumed and ceded reinsurance contracts during the quarter. The net positive impact to the Company of these commutations was $31.4 million, after considering return premium, expenses, net claims and claim expenses and minority interest. Included in the underwriting result in the third quarter of 2005 was a net reduction in prior year claims incurred of $153.5 million which reduced the Company's third quarter 2005 Reinsurance segment loss ratio by 66.6 percentage points. The favorable development in the third quarter of 2005 was principally the result of the Company's specialty reserve review which resulted in a $129.9 million decrease of prior year reserves and decreased the Company's net loss by $117.6 million, after minority interest.
Individual Risk Segment
Analysis of net claims and claim expenses incurred for the current quarter
Three months ended
------------------------------
September 30, September 30,
2006 2005
------------------------------
(in millions of U.S. dollars) Incurred Ratio Incurred Ratio
-------- ----- -------- ------
Net claims and claim expenses incurred
---------------------------------------
Third quarter 2005 hurricanes $ - - $ 77.6 65.9%
Losses excluding hurricanes 83.2 63.6% 72.9 61.9%
-------- ----- -------- ------
Total net claims and claim
expenses incurred $83.2 63.6% $150.5 127.8%
======== ===== ======== ======
The Company's Individual Risk segment generated a combined ratio of 98.0%, a loss ratio of 63.6% and an underwriting expense ratio of 34.4% for the third quarter of 2006, compared to a combined ratio, a loss ratio and underwriting expense ratio of 164.8%, 127.8% and 37.0%, respectively, for the third quarter of 2005. The results for the third quarter of 2006 include $78.7 million of current accident year net claims and claim expenses resulting in a current accident year loss ratio of 60.2%, compared to current accident year net claims and claim expenses and a current accident year loss ratio of $160.7 million and 136.4%, respectively, in the third quarter of 2005. The Individual Risk segment experienced lower loss ratios as a result of light catastrophe loss activity occurring during the third quarter of 2006 compared to the third quarter of 2005. During the quarter, the Company's Individual Risk segment experienced $4.5 million of adverse development on prior year reserves or an increase of 3.4 percentage points to the Company's Individual Risk segment quarterly loss ratio. In the third quarter of 2005, the Company experienced $10.2 million of favorable development on prior year reserves or a decrease of 8.6 percentage points to the Company's Individual Risk segment quarterly loss ratio.
Net Investment Income and Net Realized Gains and Losses on Investments
Net investment income for the third quarter of 2006 was $80.4 million, compared to $61.1 million for the same quarter in 2005, principally reflecting a higher yield on the Company's portfolio of fixed maturity investments available for sale and short term investments, combined with an increased level of average invested assets. Other investments, which include the Company's hedge fund and private equity investments, generated $12.8 million of net investment income in the third quarter of 2006 compared with $21.2 million in the third quarter of 2005.
During the third quarter of 2006, the Company recorded $4.2 million of net realized gains compared to $5.2 million of net realized gains in the third quarter of 2005. Included in net realized gains are other than temporary impairment charges of $0.5 million and $0.7 million in the third quarters of 2006 and 2005, respectively, with respect to the Company's portfolio of fixed maturity investments available for sale.
Equity in Earnings of Other Ventures
Equity in earnings of other ventures generated $10.1 million in income in the third quarter of 2006 compared to $7.6 million in income in the third quarter of 2005. The increase was principally due to a $1.9 million, $0.4 million and $0.9 million increase in the equity in earnings from ChannelRe Holdings Ltd., Tower Hill Holdings Inc. and Starbound Holdings Ltd., respectively, offset by a $0.8 million decrease in the equity in earnings of Top Layer Reinsurance Ltd. ("Top Layer Re"), compared to the third quarter of 2005.
Other Items
Corporate expenses of $5.1 million were incurred during the third quarter of 2006 compared to $21.8 million in the third quarter of 2005. The decrease in such expenses principally relates to the difference in costs incurred related to the Company's internal review and the ongoing investigations into the Company and certain of its present and former executive officers by governmental authorities.
The Company's cash flows from operations were $176.9 million for the third quarter of 2006, compared to $117.1 million for the third quarter of 2005.
Shareholders' equity attributable to common shareholders was $2.3 billion at September 30, 2006, compared to $1.8 billion at December 31, 2005. Book value per common share at September 30, 2006 was $31.86, compared to $24.52 per common share at December 31, 2005.
This press release includes certain non-GAAP financial measures including "operating income (loss) available (attributable) to common shareholders," "operating income (loss) available (attributable) to common shareholders per common share - diluted," "operating return on average common equity, annualized," "managed catastrophe premiums" and "managed catastrophe premiums net of fully-collateralized joint ventures." 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 Tuesday, October 31, 2006 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, 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, 2005 and its quarterly reports on Form 10-Q for the quarters ending March 31, 2006 and June 30, 2006.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
For the three and nine months ended September 30, 2006 and 2005
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Nine months ended
--------------------- -----------------------
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------- ---------- ----------- -----------
Revenues
Gross premiums written $257,752 $382,790 $1,748,695 $1,520,606
========== ========== =========== ===========
Net premiums written $162,695 $290,124 $1,372,774 $1,293,806
Decrease (increase) in
unearned premiums 204,381 58,224 (223,085) (305,204)
---------- ---------- ----------- -----------
Net premiums earned 367,076 348,348 1,149,689 988,602
Net investment income 80,427 61,142 234,873 158,126
Net foreign exchange
(losses) gains (2,160) 1,729 (1,578) 9,577
Equity in earnings of
other ventures 10,131 7,623 25,904 22,988
Other income (loss) 2,006 (1,256) 243 (1,566)
Net realized gains
(losses) on
investments 4,151 5,192 (36,953) (3,414)
---------- ---------- ----------- -----------
Total revenues 461,631 422,778 1,372,178 1,174,313
---------- ---------- ----------- -----------
Expenses
Net claims and claim
expenses incurred 42,436 662,729 348,950 973,176
Acquisition expenses 63,998 65,955 207,409 163,037
Operational expenses 27,364 22,859 77,351 65,079
Corporate expenses 5,121 21,815 16,431 41,848
Interest expense 9,492 6,936 29,163 20,508
---------- ---------- ----------- -----------
Total expenses 148,411 780,294 679,304 1,263,648
---------- ---------- ----------- -----------
Income (loss) before
minority interest and
taxes 313,220 (357,516) 692,874 (89,335)
Minority interest -
DaVinciRe 52,830 (78,978) 105,494 (44,311)
---------- ---------- ----------- -----------
Income (loss) before
taxes 260,390 (278,538) 587,380 (45,024)
Income tax expense (616) - (893) -
---------- ---------- ----------- -----------
Net income (loss) 259,774 (278,538) 586,487 (45,024)
Dividends on preference
shares 8,662 8,758 25,987 25,987
---------- ---------- ----------- -----------
Net income (loss)
available
(attributable) to
common shareholders $251,112 $(287,296) $560,500 $(71,011)
========== ========== =========== ===========
Operating income (loss)
available
(attributable) to
common shareholders per
Common Share - diluted
(1), (2) $3.42 $(4.14) $8.30 $(0.96)
Net income (loss)
available
(attributable) to
common shareholders per
Common Share - basic $3.53 $(4.07) $7.89 $(1.01)
Net income (loss)
available
(attributable) to
common shareholders per
Common Share - diluted
(2) $3.48 $(4.07) $7.79 $(1.01)
Average shares
outstanding - basic 71,093 70,632 71,026 70,525
Average shares
outstanding - diluted
(2) 72,115 70,632 71,942 70,525
Net claims and claim
expense ratio 11.6% 190.2% 30.4% 98.4%
Underwriting expense
ratio 24.9% 25.5% 24.8% 23.1%
---------- ---------- ----------- -----------
Combined ratio 36.5% 215.7% 55.2% 121.5%
========== ========== =========== ===========
Operating return on
average common equity,
annualized (1) 45.6% (54.2%) 39.8% (4.2%)
========== ========== =========== ===========
(1) Excludes net realized gains (losses) on investments (see -
"Comments on Regulation G").
(2) In accordance with SFAS 128, earnings per share 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 December
30, 2006 31, 2005
----------- -----------
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale,
at fair value $3,176,045 $2,872,294
Short term investments, at cost 1,841,330 1,653,618
Other investments, at fair value 559,256 586,467
Investments in other ventures, under equity
method 195,787 178,774
----------- -----------
Total investments 5,772,418 5,291,153
Cash and cash equivalents 245,817 174,001
Premiums receivable 623,869 363,105
Ceded reinsurance balances 232,439 57,134
Losses recoverable 394,335 673,190
Accrued investment income 38,437 25,808
Deferred acquisition costs 138,922 107,951
Other assets 93,320 178,919
----------- -----------
Total assets $7,539,557 $6,871,261
=========== ===========
Liabilities, Minority Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $2,155,213 $2,614,551
Reserve for unearned premiums 900,133 501,744
Debt 410,000 500,000
Subordinated obligation to capital trust 103,093 103,093
Reinsurance balances payable 437,653 292,307
Other liabilities 123,827 142,815
----------- -----------
Total liabilities 4,129,919 4,154,510
----------- -----------
Minority interest - DaVinciRe 612,431 462,911
Shareholders' Equity
Preference shares 500,000 500,000
Common shares and additional paid-in capital 358,700 351,285
Accumulated other comprehensive income 25,472 4,760
Retained earnings 1,913,035 1,397,795
----------- -----------
Total shareholders' equity 2,797,207 2,253,840
----------- -----------
Total liabilities, minority interest and
shareholders' equity $7,539,557 $6,871,261
=========== ===========
Book value per common share $31.86 $24.52
=========== ===========
Common shares outstanding 72,108 71,523
=========== ===========
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
----------------------------------------------------------------------
Three months ended September 30, 2006
---------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ---------- ---------- -----------
Gross premiums written
(1) $ 91,514 $166,238 $ - $ 257,752
=========== ========== ===========
Net premiums written $ 77,062 $ 85,633 - $ 162,695
=========== ========== ===========
Net premiums earned $ 236,310 $130,766 - $ 367,076
Net claims and claim
expenses incurred (40,756) 83,192 - 42,436
Acquisition expenses 27,890 36,108 - 63,998
Operational expenses 18,495 8,869 - 27,364
----------- ---------- ---------- -----------
Underwriting income $ 230,681 $ 2,597 - 233,278
=========== ==========
Net investment income 80,427 80,427
Equity in earnings of
other ventures 10,131 10,131
Other income 2,006 2,006
Interest and preference
share dividends (18,154) (18,154)
Minority interest -
DaVinciRe (52,830) (52,830)
Other items, net (7,897) (7,897)
Net realized gains on
investments 4,151 4,151
---------- -----------
Net income available to
common shareholders $ 17,834 $ 251,112
========== ===========
Net claims and claim
expenses incurred -
current accident year $ 17,131 $ 78,736 $ 95,867
Net claims and claim
expenses incurred -
prior years (57,887) 4,456 (53,431)
----------- ---------- -----------
Net claims and claim
expenses incurred -
total $ (40,756) $ 83,192 $ 42,436
=========== ========== ===========
Net claims and claim
expense ratio -
accident year 7.2% 60.2% 26.1%
=========== ========== ===========
Net claims and claim
expense ratio -
calendar year (17.2%) 63.6% 11.6%
Underwriting expense
ratio 19.6% 34.4% 24.9%
----------- ---------- -----------
Combined ratio 2.4% 98.0% 36.5%
=========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $31.8 million
of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
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 512,190 150,539 - 662,729
Acquisition expenses 28,756 37,199 - 65,955
Operational expenses 16,445 6,414 - 22,859
----------- ---------- ---------- -----------
Underwriting loss $ (326,872) $(76,323) - (403,195)
=========== ==========
Net investment income 61,142 61,142
Equity in earnings of
other ventures 7,623 7,623
Other loss (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 $ (287,296)
========== ===========
Net claims and claim
expenses incurred -
current accident year $ 665,644 $160,700 $ 826,344
Net claims and claim
expenses incurred -
prior years (153,454) (10,161) (163,615)
----------- ---------- -----------
Net claims and claim
expenses incurred -
total $ 512,190 $150,539 $ 662,729
=========== ========== ===========
Net claims and claim
expense ratio -
accident year 288.8% 136.4% 237.2%
=========== ========== ===========
Net claims and claim
expense ratio -
calendar year 222.2% 127.8% 190.2%
Underwriting expense
ratio 19.6% 37.0% 25.5%
----------- ---------- -----------
Combined ratio 241.8% 164.8% 215.7%
=========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $11.1 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, 2006
---------------------------------------------
Individual
Reinsurance Risk Other Total
----------- ---------- ---------- -----------
Gross premiums written
(1) $1,200,904 $547,791 $ - $1,748,695
=========== ========== ===========
Net premiums written $ 987,077 $385,697 - $1,372,774
=========== ========== ===========
Net premiums earned $ 727,744 $421,945 - $1,149,689
Net claims and claim
expenses incurred 93,869 255,081 - 348,950
Acquisition expenses 87,487 119,922 - 207,409
Operational expenses 50,802 26,549 - 77,351
----------- ---------- ---------- -----------
Underwriting income $ 495,586 $ 20,393 - 515,979
=========== ==========
Net investment income 234,873 234,873
Equity in earnings of
other ventures 25,904 25,904
Other income 243 243
Interest and preference
share dividends (55,150) (55,150)
Minority interest -
DaVinciRe (105,494) (105,494)
Other items, net (18,902) (18,902)
Net realized losses on
investments (36,953) (36,953)
---------- -----------
Net income available to
common shareholders $ 44,521 $ 560,500
========== ===========
Net claims and claim
expenses incurred -
current accident year $ 193,620 $261,995 $ 455,615
Net claims and claim
expenses incurred -
prior years (99,751) (6,914) (106,665)
----------- ---------- -----------
Net claims and claim
expenses incurred -
total $ 93,869 $255,081 $ 348,950
=========== ========== ===========
Net claims and claim
expense ratio -
accident year 26.6% 62.1% 39.6%
=========== ========== ===========
Net claims and claim
expense ratio -
calendar year 12.9% 60.5% 30.4%
Underwriting expense
ratio 19.0% 34.7% 24.8%
----------- ---------- -----------
Combined ratio 31.9% 95.2% 55.2%
=========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $68.5 million
of premiums assumed from the Individual Risk segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
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 680,251 292,925 - 973,176
Acquisition expenses 62,567 100,470 - 163,037
Operational expenses 48,056 17,023 - 65,079
----------- ---------- ---------- -----------
Underwriting loss $ (153,334) $(59,356) - (212,690)
=========== ==========
Net investment income 158,126 158,126
Equity in earnings of
other ventures 22,988 22,988
Other loss (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 $ (71,011)
========== ===========
Net claims and claim
expenses incurred -
current accident year $ 917,525 $301,922 $1,219,447
Net claims and claim
expenses incurred -
prior years (237,274) (8,997) (246,271)
----------- ---------- -----------
Net claims and claim
expenses incurred -
total $ 680,251 $292,925 $ 973,176
=========== ========== ===========
Net claims and claim
expense ratio -
accident year 143.9% 86.0% 123.4%
=========== ========== ===========
Net claims and claim
expense ratio -
calendar year 106.7% 83.4% 98.4%
Underwriting expense
ratio 17.4% 33.5% 23.1%
----------- ---------- -----------
Combined ratio 124.1% 116.9% 121.5%
=========== ========== ===========
(1) Reinsurance segment gross premiums written excludes $24.3 million
of premiums assumed from the Individual Risk segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Unaudited Supplemental Financial Data
(in thousands of United States Dollars)
-----------------------------------------------
Three months ended
-----------------------------------------------
Gross Premiums
Written September 30, 2006 September 30, 2005 % Change
------------------- ------------------ ------------------ ---------
Renaissance
catastrophe
premiums $ 61,219 $ 109,257 (44.0%)
Renaissance
specialty premiums 19,645 85,320 (77.0%)
------------------ ------------------ ---------
Total Renaissance
premiums 80,864 194,577 (58.4%)
------------------ ------------------ ---------
DaVinci catastrophe
premiums 10,400 18,814 (44.7%)
DaVinci specialty
premiums 250 1,080 (76.9%)
------------------ ------------------ ---------
Total DaVinci
premiums 10,650 19,894 (46.5%)
------------------ ------------------ ---------
Total Reinsurance
premiums (1) 91,514 214,471 (57.3%)
Individual Risk
premiums 166,238 168,319 (1.2%)
------------------ ------------------ ---------
Total premiums $ 257,752 $ 382,790 (32.7%)
================== ================== =========
Total specialty
premiums $ 19,895 $ 86,400 (77.0%)
================== ================== =========
Total catastrophe
premiums $ 71,619 $ 128,071 (44.1%)
================== ================== =========
Gross Premiums
Written Analysis
(2)
-------------------
Total catastrophe
premiums $ 71,619 $ 128,071 (44.1%)
Catastrophe
premiums written
on behalf of our
joint venture, Top
Layer Re 1,189 477 149.3%
------------------ ------------------ ---------
Managed catastrophe
premiums 72,808 128,548 (43.4%)
Managed premiums
assumed for fully-
collateralized
joint ventures -
Renaissance (3,046) - -
Managed premiums
assumed for fully-
collateralized
joint ventures -
DaVinci - - -
------------------ ------------------ ---------
Managed catastrophe
premiums, net of
fully-
collateralized
joint ventures $ 69,762 $ 128,548 (45.7%)
================== ================== =========
-----------------------------------------------
Nine months ended
-----------------------------------------------
Gross Premiums
Written September 30, 2006 September 30, 2005 % Change
--------------------- ------------------ ------------------ ---------
Renaissance
catastrophe premiums $ 690,472 $ 501,198 37.8%
Renaissance specialty
premiums 167,611 365,067 (54.1%)
------------------ ------------------ ---------
Total Renaissance
premiums 858,083 866,265 (0.9%)
------------------ ------------------ ---------
DaVinci catastrophe
premiums 319,254 131,627 142.5%
DaVinci specialty
premiums 23,567 25,202 (6.5%)
------------------ ------------------ ---------
Total DaVinci
premiums 342,821 156,829 118.6%
------------------ ------------------ ---------
Total Reinsurance
premiums (1) 1,200,904 1,023,094 17.4%
Individual Risk
premiums 547,791 497,512 10.1%
------------------ ------------------ ---------
Total premiums $ 1,748,695 $ 1,520,606 15.0%
================== ================== =========
Total specialty
premiums $ 191,178 $ 390,269 (51.0%)
================== ================== =========
Total catastrophe
premiums $ 1,009,726 $ 632,825 59.6%
================== ================== =========
Gross Premiums
Written Analysis (2)
---------------------
Total catastrophe
premiums $ 1,009,726 $ 632,825 59.6%
Catastrophe premiums
written on behalf of
our joint venture,
Top Layer Re 51,244 59,908 (14.5%)
------------------ ------------------ ---------
Managed catastrophe
premiums 1,060,970 692,733 53.2%
Managed premiums
assumed for fully-
collateralized joint
ventures -
Renaissance (102,967) - -
Managed premiums
assumed for fully-
collateralized joint
ventures - DaVinci (11,332) - -
------------------ ------------------ ---------
Managed catastrophe
premiums, net of
fully-collateralized
joint ventures $ 946,671 $ 692,733 36.7%
================== ================== =========
(1) Reinsurance gross premiums written excludes $31.8 million and
$11.1 million of premiums assumed from the Individual Risk segment
for the three months ended September 30, 2006 and 2005, respectively,
and $68.5 million and $24.3 million of premiums assumed from the
Individual Risk segment for the nine months ended September 30, 2006
and 2005, respectively.
(2) See Comments on Regulation G.
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating income (loss)" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating income (loss)" as used herein differs from "net income (loss) available (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 income (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 income (loss)" to calculate "operating income (loss) per common share" and "operating return on average common equity, annualized." The following is a reconciliation of: 1) net income (loss) available (attributable) to common shareholders to operating income (loss) available (attributable) to common shareholders; 2) net income (loss) available (attributable) to common shareholders per common share to operating income (loss) available (attributable) to common shareholders per common share; 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 U.S.
dollars, except for per September September September September
share amounts) 30, 2006 30, 2005 30, 2006 30, 2005
--------- ---------- --------- ---------
Net income (loss) available
(attributable) to common
shareholders $251,112 $(287,296) $560,500 $(71,011)
Adjustment for net realized
(gains) losses on
investments (4,151) (5,192) 36,953 3,414
--------- ---------- --------- ---------
Operating income (loss)
available (attributable) to
common shareholders $246,961 $(292,488) $597,453 $(67,597)
========= ========== ========= =========
Net income (loss) available
(attributable) to common
shareholders per common
share - diluted $3.48 $(4.07) $7.79 $(1.01)
Adjustment for net realized
(gains) losses on
investments (0.06) (0.07) 0.51 0.05
--------- ---------- --------- ---------
Operating income (loss)
available (attributable) to
common shareholders per
common share - diluted $3.42 $(4.14) $8.30 $(0.96)
========= ========== ========= =========
Return on average common
equity, annualized 46.3% (53.3%) 37.3% (4.4%)
Adjustment for net realized
(gains) losses on
investments (0.7%) (0.9%) 2.5% 0.2%
--------- ---------- --------- ---------
Operating return on average
common equity, annualized 45.6% (54.2%) 39.8% (4.2%)
========= ========== ========= =========
----------------------------------------------------------------------
The Company has also included in this Press Release "managed catastrophe premiums" and "managed catastrophe premiums, net of fully-collateralized joint ventures." "Managed catastrophe premiums" is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. "Managed catastrophe premiums" differ from total catastrophe premiums, 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. "Managed catastrophe premiums, net of fully-collateralized joint ventures" differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to: 1) 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 2) the deduction of catastrophe premiums that are written by the Company and ceded directly to the Company's fully-collateralized joint ventures which include Starbound Re and Timicuan Reinsurance Ltd.; The Company's management believes "managed catastrophe premiums" is useful to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures. The Company believes "managed catastrophe premiums, net of fully-collateralized joint ventures" is also a useful measure to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures, net of catastrophe premiums written directly on behalf of the Company's fully-collateralized joint ventures.
CONTACT: Investor:
RenaissanceRe Holdings Ltd.
Todd R. Fonner, 441-239-4801
Senior Vice President
or
Media:
Kekst and Company
David Lilly / Dawn Dover, 212-521-4800
SOURCE: RenaissanceRe Holdings Ltd.