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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2005
RenaissanceRe Holdings Ltd.
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(Exact name of registrant as specified in its charter)
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| Bermuda | |
34-0-26512 | |
98-014-1974 | ||||||
| (State
or other jurisdiction of incorporation) |
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(Commission File Number) | |
(IRS Employer Identification No.) |
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| Renaissance
House 8-20 East Broadway, Pembroke Bermuda |
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HM 19 | ||||
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(Zip Code) | ||||
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Registrant's telephone number, including area code: (441) 295-4513
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
![[ ]](https://cdn.kscope.io/57b99dfc0eb901aee5db54c932804f11-ebox.gif){kind=small}
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition.
On May 3, 2005, RenaissanceRe Holdings Ltd. (the "Company") issued a press release (the "Press Release") announcing the Company's preliminary results for the quarter ended March 31, 2005. A copy of the Press Release is attached hereto as Exhibit 99.1 to this Form 8-K. This Form 8-K and Exhibit 99.1 hereto are each being furnished to the Securities and Exchange Commission (the "SEC") pursuant to Item 2.02 of Form 8-K and are therefore not to be considered "filed" with the SEC.
Non-GAAP Financial Measures
In addition to the GAAP financial measures set forth in the Press Release, the Company has included certain non-GAAP financial measures in the Press Release within the meaning of Regulation G. The Company has consistently provided these financial measurements in previous earnings releases 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 comparison with other companies in the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry, or by other insurers. Investors are cautioned not to place undue reliance on these non-GAAP measure in assessing the Company's overall financial performance.
The Company has included in the Press Release "net operating income available to common shareholders" of $54.5 million in the first quarter of 2005 (as compared with $136.4 million in the first quarter of 2004). The Company has also included in the Press Release "operating income per common share" of $0.76 during the first quarter of 2005 (as compared with $1.90 per common share during the first quarter of 2004). Each of these measures is a non-GAAP financial measure.
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" differs from "net income," which the Company believes is the most directly comparable GAAP measure, only by the exclusion of net realized gains and losses on investments. In the Press Release, the Company provides that "net income available to common shareholders" during the first quarter of 2005 was $44.3 million (as compared with $168.9 million during the first quarter of 2004). In the Press Release, the Company also provides that "net income per common share" during the first quarter of 2005 was $0.62 (as compared with $2.36 per common share during the first quarter of 2004). In addition to the reasons for this presentation set forth above, the Company's management also believes that presentation of "operating income" is useful to investors because it presents the Company's results of operations without the variability arising from fluctuations in net realized investment gains and losses from the Company's investment portfolio, which is not considered by the Company's management to be a relevant indicator of business operations.
The Company has also included in the Press Release "total managed catastrophe premium" of $375.4 million in the first quarter of 2005 (as compared with $441.4 million in the first quarter of 2004), which is a non-GAAP financial measure. The principal difference between "total managed catastrophe premium" and "total catastrophe premium," which the Company believes is the most directly comparable GAAP measure, is the inclusion in "total managed catastrophe premium" of catastrophe premium written by Top Layer Reinsurance Ltd., a joint venture which is accounted for under the equity method of accounting. In the Press Release, the Company provides that "total catastrophe premium" was $335.6 million in the first quarter of 2005 (as compared with $402.3 million during the first quarter of 2004).
The Company has also included in the Press Release "operating return on average common equity (annualized)" of 10.2% for the first quarter of 2005 (as compared with 25.2% for the first quarter of 2004), which is a non-GAAP financial measure. The principal differences between "operating return on average common equity (annualized)" and "return on average common equity (annualized)," which the Company believes is the most directly comparable GAAP measure, are that "operating return on average equity (annualized)" excludes net realized gains and losses on investments. In the Press Release, the Company provides that "return on average common equity (annualized)" was 8.3% in the first quarter of 2005 (as compared with 31.2% for the first quarter of 2004).
2
The Company also maintained its previously announced estimate of "operating income per common share" for 2005 at a range $6.30 to $6.70, assuming normal loss activity for the remainder of the year. The forecast of "operating income per common share" for 2005 is a non-GAAP financial measure and excludes net realized losses on investments of $10.2 million for the first three months of 2005 and all potential net realized gains and losses on investments for the remainder of 2005. The Company is unable to forecast "net income per common share" for 2005, which the Company believes is the most directly comparable GAAP measure, as predictions as to the amount of net realized gains and losses on investments for the remainder of 2005 are dependent on the performance of the financial markets.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
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| Exhibit # | |
Description | ||||
| 99.1* | |
Copy of the Company's press release, issued May 3, 2005 | ||||
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| * | Exhibit 99.1 is being furnished to the SEC pursuant to Item 2.02 and is not being filed with the SEC. Therefore, this exhibit is not incorporated by reference in any of the registrant's other SEC filings. |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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RENAISSANCERE HOLDINGS LTD. |
Date: May 3, 2005 By: /s/ John M. Lummis
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Name:
John M. Lummis Title: Executive Vice President, Chief Operating Officer and Chief Financial Officer |
4
INDEX TO EXHIBITS
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| Exhibit No. | |
Description | ||||
| 99.1* | |
Copy of the Company's press release, issued May 3, 2005 | ||||
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| * | Exhibit 99.1 is being furnished to the SEC pursuant to Item 2.02 and is not being filed with the SEC. Therefore, this exhibit is not incorporated by reference in any of the registrant's other SEC filings. |
5
RenaissanceRe Reports Operating Income of $54.5 Million for the First Quarter of 2005; Operating EPS of $0.76 Per Common Share for the First Quarter of 2005 vs. $1.90 for the First Quarter of 2004
$44.3 Million Net Income for the First Quarter of 2005; EPS of $0.62 for the First Quarter of 2005 vs. EPS of $2.36 for the First Quarter of 2004
Maintains Annual Operating EPS Guidance of $6.30 to $6.70 for 2005
Pembroke, Bermuda, May 3, 2005 — RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $54.5 million in first quarter net operating income available to common shareholders, compared to $136.4 million in the first quarter of 2004. Operating income excludes net realized investment losses of $10.2 million and net realized investment gains of $32.5 million in the first quarters of 2005 and 2004, respectively. Operating income per common share was $0.76 in the first quarter of 2005, compared to $1.90 per common share in the first quarter of 2004. Net income available to common shareholders was $44.3 million or $0.62 per common share in the quarter, compared to $168.9 million or $2.36 per common share for the same quarter of 2004.
James N. Stanard, Chairman and CEO, commented: "Our first quarter profit was well below our expectations for a normal catastrophe quarter, as a result of European windstorm Erwin and various smaller events and expense items. With respect to premiums, the decline in catastrophe reinsurance was in line with our previously announced expectations. Specialty reinsurance premium came in light relative to our anticipation of 10% growth, but we may be able to hit that growth target for the year. Individual Risk premium was relatively low in the first quarter, as previously indicated, although we have transactions in process for the second quarter that should support our growth expectation of 35% for the year. We are maintaining our earnings expectations for 2005, although there is more downside risk than upside potential."
FIRST QUARTER 2005 RESULTS
Premiums
Gross premiums written for the first quarter of 2005 were $694.3 million, compared to $780.3 million for the same quarter of 2004. Gross premiums written include $585.3 million in gross premiums written for the Company's Reinsurance segment in the first quarter of 2005, compared to $660.4 million for the same quarter of 2004; and $109.0 million in gross premiums written for the Company's Individual Risk segment in the first quarter of 2005, compared to $119.9 million for the same quarter of 2004. Net premiums written for the first quarter of 2005 were $615.8 million, versus $700.2 million for the same quarter of 2004. Net premiums written include $528.1 million in net premiums written for the Company's Reinsurance segment in the first quarter of 2005, compared to $590.4 million for the same quarter of 2004; and $87.7 million in net premiums written for the Company's Individual Risk segment in the first quarter of 2005, compared to $109.8 million for the same quarter of 2004.
Net premiums earned for the first quarter of 2005 were $301.5 million, compared to $308.1 million for the same quarter of 2004. Net premiums earned include $200.4 million in net premiums earned for the Company's Reinsurance segment in the first quarter of 2005, compared to $207.3 million for the same quarter of 2004; and $101.1 million in net premiums earned for the Company's Individual Risk segment in the first quarter of 2005, compared to $100.8 million for the same quarter of 2004.
1
Premiums for the first quarter of 2005 include $104.7 million of gross written premiums, $119.4 million of net written premiums and $40.9 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re, during the first quarter of 2005, compared to $130.8 million of gross written premiums, $128.7 million of net written premiums and $47.0 million of net premiums earned by DaVinci Re during the first quarter of 2004.
Other (Loss) Income
During the first quarter of 2005 RenaissanceRe recognized a net $3.5 million loss on fees and other items compared to income of $1.1 million in the first quarter of 2004. Fee income remained stable at $1.0 million in the first quarter of 2005 compared to $1.1 million in the first quarter of 2004 while other items generated a $4.5 million loss in the first quarter of 2005 compared with no loss for the first quarter of 2004. The $4.5 million loss in other items was primarily a result of a $2.1 million decrease in the fair value of the Company's Platinum Underwriters Holdings Ltd. ("Platinum") warrant and a $2.0 million loss on the Company's short positions in credit derivatives.
Equity in Earnings of Other Ventures
Equity in earnings of other ventures generated $7.6 million in income in the first quarter of 2005 compared to $6.5 million in income in the first quarter of 2004. Included in this is RenaissanceRe's equity in the earnings of the Company's investments in Top Layer Reinsurance Ltd. and ChannelRe Holdings Ltd. for the first quarter of 2005. In the first quarter of 2004, equity in earnings of other ventures included the Company's equity in the earnings of Top Layer Reinsurance Ltd. and the Company's investment in a joint venture focused on trading weather sensitive commodities. In the third quarter of 2004 the Company's ownership percentage in the weather sensitive trading joint venture decreased and the Company's income in this venture is currently reflected in net investment income.
Underwriting Ratios, Reserve Development
For the first quarter of 2005, the Company generated a combined ratio of 90.2%, a loss ratio of 66.9% and an expense ratio of 23.3%, compared to a combined ratio, loss ratio and expense ratio of 59.3%, 36.4% and 22.9% for the first quarter of 2004, respectively.
For the first quarter of 2005, the Company's Reinsurance segment generated a loss ratio of 70.8% and an expense ratio of 17.4%, compared to a loss ratio and an expense ratio of 28.2% and 14.4%, for the first quarter of 2004, respectively. For the quarter, the Company's Individual Risk segment generated a loss ratio of 59.0% and an expense ratio of 35.2%, compared to a loss ratio and an expense ratio of 53.2% and 40.2%, for the first quarter of 2004, respectively.
The results of the Reinsurance segment, for the three months ended March 31, 2005, include a net negative impact of $43.1 million related to the European windstorm, which includes net claims and claim expenses of $60.7 million, offset by reinstatement premiums of $1.3 million and minority interest of $16.3 million.
During the quarter, the Company recorded favorable development on prior year reserves of $17.6 million or a benefit of 5.8 percentage points to the Company's quarterly loss ratio. The Company's Reinsurance segment contributed $18.1 million of favorable development, and the Company's Individual Risk segment contributed $0.5 million of adverse development. Net paid losses for the quarter were $159.5 million. See the attached supplemental financial data for additional information regarding claims and claim expenses incurred and loss ratios by segment.
The Company expects, during the second quarter, to review its processes and assumptions used in establishing its catastrophe reinsurance reserves. It is possible that this review may result in a reduction to its loss reserves, which may be material. The Company intends to undertake similar reviews of its reserves for other lines of business later in 2005.
Operating expenses increased to $18.8 million from $12.4 million as a result of the benefit of a reversal of an accrual for incentive compensation expense in the first quarter of 2004 that did not recur in 2005.
2
Net Investment Income and Net Realized Gains and Losses on Investments
Net investment income for the first quarter of 2005 was $51.2 million, compared to $35.1 million for the same quarter in 2004. Net investment income includes $12.1 million of net unrealized gains in the first quarter of 2005 compared to $6.3 million in the first quarter of 2004 reflecting the Company's investments in hedge funds, private equity funds and other investments.
During the first quarter of 2005, the Company incurred net realized losses of $10.2 million as a result of trading activity in a rising interest rate environment, compared to net realized gains of $32.5 million during the first quarter of 2004.
Other Items
RenaissanceRe's corporate expenses of $11.3 million incurred during the first quarter of 2005 were $6.8 million higher than the first quarter of 2004. The increase in such expenses is due principally to $7.4 million of professional fees incurred during the first quarter of 2005 related to the Company's restatement of its consolidated financial statements for the years ended December 31, 2003, 2002 and 2001 and a review of the Company's business practices in light of the industry-wide investigations by various governmental authorities.
The Company's cash flows from operations were $253.2 million for the first quarter of 2005.
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 $2.1 billion at March 31, 2005, compared to $2.1 billion at December 31, 2004. Book value per common share at March 31, 2005 was $30.04, compared to $30.19 per common share at December 31, 2004. Book value per common share was affected by a $41.3 million reduction in accumulated other comprehensive income during the quarter, primarily as a result of a decrease in the fair value of the Company's fixed maturity investments available for sale due to rising interest rates as well as a reduction in the value of the Company's investment in Platinum common shares.
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, May 4, 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
3
Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2004.
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| INVESTOR CONTACT: | |
MEDIA CONTACT: | ||||
| Todd R. Fonner | |
David Lilly or Dawn Dover | ||||
| Vice President - Treasurer | |
Kekst and Company | ||||
| RenaissanceRe Holdings Ltd. | |
(212) 521-4800 | ||||
| (441) 239-4801 | |
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4
RenaissanceRe Holdings Ltd. and
Subsidiaries
Summary Consolidated Statements of Income
For
the three months ended March 31, 2005 and 2004
(in thousands of
United States Dollars, except per share
amounts)
(Unaudited)
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Three months ended | |||||||||||||
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March 31, 2005 | |
March 31, 2004 | |||||||||||
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(Restated) | ||||||||||||
| Revenues | |
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| Gross premiums written | |
$ | 694,333 | |
$ | 780,288 | ||||||||
| Net premiums written | |
$ | 615,793 | |
$ | 700,219 | ||||||||
| Increase in unearned premiums | |
(314,292 | ) | |
(392,127 | ) | ||||||||
| Net premiums earned | |
301,501 | |
308,092 | ||||||||||
| Net investment income | |
51,215 | |
35,050 | ||||||||||
| Net foreign exchange gains | |
714 | |
2,087 | ||||||||||
| Equity in earnings of other ventures | |
7,567 | |
6,520 | ||||||||||
| Other (loss) income | |
(3,515 | ) | |
1,109 | |||||||||
| Net realized gains (losses) on investments | |
(10,189 | ) | |
32,521 | |||||||||
| Total revenues | |
347,293 | |
385,379 | ||||||||||
| Expenses | |
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| Net claims and claim expenses incurred | |
201,648 | |
112,178 | ||||||||||
| Acquisition expenses | |
51,508 | |
58,031 | ||||||||||
| Operational expenses | |
18,843 | |
12,376 | ||||||||||
| Corporate expenses | |
11,339 | |
4,552 | ||||||||||
| Interest expense | |
6,605 | |
6,271 | ||||||||||
| Total expenses | |
289,943 | |
193,408 | ||||||||||
| Income before minority interest | |
57,350 | |
191,971 | |
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| Minority interest — DaVinciRe | |
4,384 | |
17,990 | ||||||||||
| Net income | |
52,966 | |
173,981 | ||||||||||
| Dividends on preference shares | |
8,663 | |
5,104 | ||||||||||
| Net income available to common shareholders | |
$ | 44,303 | |
$ | 168,877 | ||||||||
| Operating Income per Common Share — diluted* | |
$ | 0.76 | |
$ | 1.90 | ||||||||
| Net income available to common shareholders per Common Share — basic | |
$ | 0.63 | |
$ | 2.43 | ||||||||
| Net income available to common shareholders per Common Share — diluted | |
$ | 0.62 | |
$ | 2.36 | ||||||||
| Average shares outstanding — basic | |
70,358 | |
69,444 | ||||||||||
| Average shares outstanding — diluted | |
71,951 | |
71,592 | ||||||||||
| Net claims and claim expense ratio | |
66.9 | % | |
36.4 | % | ||||||||
| Underwriting expense ratio | |
23.3 | % | |
22.9 | % | ||||||||
| Combined ratio | |
90.2 | % | |
59.3 | % | ||||||||
| Operating return on average common equity (annualized)* | |
10.2 | % | |
25.2 | % | ||||||||
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| * Excludes net realized gains (losses) on investments (see — "Comments on Regulation G") |
5
RenaissanceRe Holdings Ltd. and
Subsidiaries
Summary Consolidated Balance Sheets
(in
thousands of United States Dollars, except per share
amounts)
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At | |||||||||
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March 31, 2005 | |
December 31, 2004 | |||||||
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(Unaudited) | |
(Audited) | |||||||
| Assets | |
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| Fixed maturity investments available for sale, at fair value | |
$ | 3,049,756 | |
$ | 3,223,292 | ||||
| Short term investments, at cost | |
752,582 | |
608,292 | ||||||
| Other investments, at fair value | |
800,506 | |
684,590 | ||||||
| Total managed investment portfolio | |
4,602,844 | |
4,516,174 | ||||||
| Equity investment in reinsurance company, at fair value | |
142,862 | |
150,519 | ||||||
| Investments in other ventures, under equity method | |
176,651 | |
159,556 | ||||||
| Total investments | |
4,922,357 | |
4,826,249 | ||||||
| Cash and cash equivalents | |
161,699 | |
66,740 | ||||||
| Premiums receivable | |
453,547 | |
206,813 | ||||||
| Ceded reinsurance balances | |
90,965 | |
61,303 | ||||||
| Losses recoverable | |
258,220 | |
217,788 | ||||||
| Accrued investment income | |
27,294 | |
30,060 | ||||||
| Deferred acquisition costs | |
104,986 | |
70,933 | ||||||
| Other assets | |
46,211 | |
46,432 | ||||||
| Total assets | |
$ | 6,065,279 | |
$ | 5,526,318 | ||||
| Liabilities, Minority Interest and Shareholders' Equity | |
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| Liabilities | |
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| Reserve for claims and claim expenses | |
$ | 1,541,997 | |
$ | 1,459,398 | ||||
| Reserve for unearned premiums | |
709,289 | |
365,335 | ||||||
| Debt | |
350,000 | |
350,000 | ||||||
| Subordinated obligation to capital trust | |
103,093 | |
103,093 | ||||||
| Reinsurance balances payable | |
315,935 | |
188,564 | ||||||
| Other liabilities | |
58,104 | |
68,092 | ||||||
| Total liabilities | |
3,078,418 | |
2,534,482 | ||||||
| Minority interest — DaVinciRe | |
349,207 | |
347,794 | ||||||
| Shareholders' Equity | |
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| Preference shares | |
500,000 | |
500,000 | ||||||
| Common shares and additional paid-in capital | |
333,796 | |
328,896 | ||||||
| Accumulated other comprehensive income | |
37,678 | |
78,960 | ||||||
| Retained earnings | |
1,766,180 | |
1,736,186 | ||||||
| Total shareholders' equity | |
2,637,654 | |
2,644,042 | ||||||
| Total liabilities, minority interest and shareholders' equity | |
$ | 6,065,279 | |
$ | 5,526,318 | ||||
| Book value per common share | |
$ | 30.04 | |
$ | 30.19 | ||||
| Common shares outstanding | |
71,172 | |
71,029 | ||||||
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6
RenaissanceRe Holdings Ltd. and
Subsidiaries
Unaudited Supplemental Financial Data — Segment
Information
(in thousands of United States Dollars)
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Three months ended March 31, 2005 | |||||||||||||||||
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Reinsurance | |
Individual Risk | |
Other | |
Total | |||||||||||
| Gross premiums written (1) | |
$ | 585,284 | |
$ | 109,049 | |
$ | — | |
$ | 694,333 | ||||||
| Net premiums written | |
$ | 528,133 | |
$ | 87,660 | |
— | |
$ | 615,793 | |||||||
| Net premiums earned | |
$ | 200,370 | |
$ | 101,131 | |
— | |
$ | 301,501 | |||||||
| Net claims and claim expenses incurred | |
141,944 | |
59,704 | |
— | |
201,648 | ||||||||||
| Acquisition expenses | |
20,538 | |
30,970 | |
— | |
51,508 | ||||||||||
| Operational expenses | |
14,227 | |
4,616 | |
— | |
18,843 | ||||||||||
| Underwriting income | |
$ | 23,661 | |
$ | 5,841 | |
— | |
29,502 | ||||||||
| Net investment income | |
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51,215 | |
51,215 | ||||||||||||
| Equity in earnings of other ventures | |
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7,567 | |
7,567 | ||||||||||||
| Other loss | |
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(3,515 | ) | |
(3,515 | ) | ||||||||||
| Interest and preference share dividends | |
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(15,268 | ) | |
(15,268 | ) | ||||||||||
| Minority interest — DaVinciRe | |
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(4,384 | ) | |
(4,384 | ) | ||||||||||
| Other items, net | |
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(10,625 | ) | |
(10,625 | ) | ||||||||||
| Net realized losses on investments | |
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(10,189 | ) | |
(10,189 | ) | ||||||||||
| Net income available to common shareholders | |
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$ | 14,801 | |
$ | 44,303 | ||||||||||
| Net claims and claim expenses incurred — current accident year | |
$ | 160,036 | |
$ | 59,202 | |
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$ | 219,238 | ||||||||
| Net claims and claim expenses incurred — prior years | |
(18,092 | ) | |
502 | |
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(17,590 | ) | |||||||||
| Net claims and claim expenses incurred — total | |
$ | 141,944 | |
$ | 59,704 | |
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$ | 201,648 | ||||||||
| Net claims and claim expense ratio — accident year | |
79.9 | % | |
58.5 | % | |
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72.7 | % | ||||||||
| Net claims and claim expense ratio — calendar year | |
70.8 | % | |
59.0 | % | |
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66.9 | % | ||||||||
| Underwriting expense ratio | |
17.4 | % | |
35.2 | % | |
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23.3 | % | ||||||||
| Combined ratio | |
88.2 | % | |
94.2 | % | |
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90.2 | % | ||||||||
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|
|
| (1) | Reinsurance segment gross premiums written excludes $11.5 million of premiums assumed from the Individual Risk segment. |
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Three months ended March 31, 2004 (Restated) | |||||||||||||||||
|
Reinsurance | |
Individual Risk | |
Other | |
Total | |||||||||||
| Gross premiums written | |
$ | 660,350 | |
$ | 119,938 | |
$ | — | |
$ | 780,288 | ||||||
| Net premiums written | |
$ | 590,436 | |
$ | 109,783 | |
— | |
$ | 700,219 | |||||||
| Net premiums earned | |
$ | 207,316 | |
$ | 100,776 | |
— | |
$ | 308,092 | |||||||
| Net claims and claim expenses incurred | |
58,539 | |
53,639 | |
— | |
112,178 | ||||||||||
| Acquisition expenses | |
23,811 | |
34,220 | |
— | |
58,031 | ||||||||||
| Operational expenses | |
6,126 | |
6,250 | |
— | |
12,376 | ||||||||||
| Underwriting income | |
$ | 118,840 | |
$ | 6,667 | |
— | |
125,507 | ||||||||
| Net investment income | |
|
|
35,050 | |
35,050 | ||||||||||||
| Equity in earnings of other ventures | |
|
|
6,520 | |
6,520 | ||||||||||||
| Other income | |
|
|
1,109 | |
1,109 | ||||||||||||
| Interest and preference share dividends | |
|
|
(11,375 | ) | |
(11,375 | ) | ||||||||||
| Minority interest — DaVinciRe | |
|
|
(17,990 | ) | |
(17,990 | ) | ||||||||||
| Other items, net | |
|
|
(2,465 | ) | |
(2,465 | ) | ||||||||||
| Net realized gains on investments | |
|
|
32,521 | |
32,521 | ||||||||||||
| Net income available to common shareholders | |
|
|
$ | 43,370 | |
$ | 168,877 | ||||||||||
| Net claims and claim expenses incurred — current accident year | |
$ | 75,410 | |
$ | 58,457 | |
|
$ | 133,867 | ||||||||
| Net claims and claim expenses incurred — prior years | |
(16,871 | ) | |
(4,818 | ) | |
|
(21,689 | ) | ||||||||
| Net claims and claim expenses incurred — total | |
$ | 58,539 | |
$ | 53,639 | |
|
$ | 112,178 | ||||||||
| Net claims and claim expense ratio — accident year | |
36.4 | % | |
58.0 | % | |
|
43.5 | % | ||||||||
| Net claims and claim expense ratio — calendar year | |
28.2 | % | |
53.2 | % | |
|
36.4 | % | ||||||||
| Underwriting expense ratio | |
14.4 | % | |
40.2 | % | |
|
22.9 | % | ||||||||
| Combined ratio | |
42.6 | % | |
93.4 | % | |
|
59.3 | % | ||||||||
|
||||||||||||||||||
7
RenaissanceRe Holdings Ltd. and
Subsidiaries
Unaudited Supplemental Financial Data
(in
thousands of United States
Dollars)
|
|
|
|
|
|
|
|
|
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|
| Gross Written Premiums | |
Three months ended | ||||||||
|
March 31, 2005 | |
March 31, 2004 | |||||||
| Renaissance catastrophe premiums | |
$ | 253,019 | |
$ | 299,136 | ||||
| Renaissance specialty premiums | |
227,525 | |
230,455 | ||||||
| Total Renaissance Reinsurance premiums | |
480,544 | |
529,591 | ||||||
| DaVinci catastrophe premiums | |
82,638 | |
103,196 | ||||||
| DaVinci specialty premiums | |
22,102 | |
27,563 | ||||||
| Total DaVinci Reinsurance premiums | |
104,740 | |
130,759 | ||||||
| Total Reinsurance premiums (1) | |
585,284 | |
660,350 | ||||||
| Individual Risk premiums | |
109,049 | |
119,938 | ||||||
| Total premiums | |
$ | 694,333 | |
$ | 780,288 | ||||
| Total managed catastrophe premiums (2) | |
$ | 375,438 | |
$ | 441,387 | ||||
| Total specialty premiums | |
$ | 249,627 | |
$ | 258,018 | ||||
|
||||||||||
|
|
| (1) | Reinsurance gross premiums written excludes $11.5 million of premiums assumed from the Individual Risk segment for the three months ended March 31, 2005. |
|
|
| (2) | Total managed catastrophe premiums include Renaissance and DaVinci catastrophe premium, as above, and catastrophe premium of $39.8 million and $39.1 million for the three months ended March 31, 2005 and 2004, respectively, written on behalf of our joint venture, Top Layer Re. |
8
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:
|
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|
|
|
|
|
|
|
|
|
|
Three months ended | |||||||||
| (In thousands of U.S. dollars) | |
March 31, 2005 | |
March 31, 2004 | ||||||
|
|
(Restated) | ||||||||
| Net income available to common shareholders | |
$ | 44,303 | |
$ | 168,877 | ||||
| Adjustment for net realized losses (gains) on investments | |
10,189 | |
(32,521 | ) | |||||
| Operating income available to common shareholders | |
$ | 54,492 | |
$ | 136,356 | ||||
| Net income available to common shareholders per common share | |
$ | 0.62 | |
$ | 2.36 | ||||
| Adjustment for net realized losses (gains) on investments | |
0.14 | |
(0.46 | ) | |||||
| Operating income available to common shareholders per common share — diluted | |
$ | 0.76 | |
$ | 1.90 | ||||
| Return on average common equity (annualized) | |
8.3 | % | |
31.2 | % | ||||
| Adjustment for net realized losses (gains) on investments | |
1.9 | % | |
(6.0 | %) | ||||
| Operating return on average common equity (annualized) | |
10.2 | % | |
25.2 | % | ||||
|
||||||||||
While the Company provides herein estimates of operating income for 2005, the Company has not provided estimates of net income for such period as it believes it is unable to accurately predict future gains and losses on investments, which investment results could influence the Company's net income for this period.
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.
9
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