RenaissanceRe Reports Net Income of $56.7 Million for the First Quarter of 2018, or $1.42 Per Diluted Common Share; Quarterly Operating Income of $135.2 Million or $3.40 Per Diluted Common Share
PEMBROKE,
FIRST QUARTER 2018 SUMMARY
-
Gross premiums written increased by
$237.6 million , or 25.8%, to$1.2 billion , in the first quarter of 2018, compared to the first quarter of 2017, driven by increases of$186.4 million in the Property segment and$51.1 million in the Casualty and Specialty segment. -
Underwriting income of
$129.6 million and a combined ratio of 70.6% in the first quarter of 2018. The Property segment generated underwriting income of$127.2 million and a combined ratio of 43.5%. The Casualty and Specialty segment generated underwriting income of$2.6 million and a combined ratio of 98.8%. - The Company’s portfolio of fixed maturity and short term investments had a yield to maturity of 2.9% at March 31, 2018.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were
Gross premiums written in the catastrophe class of business were
Ceded premiums written in the Property segment were
The Property segment generated underwriting income of
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment were
The Casualty and Specialty segment generated underwriting income of
During the first quarter of 2018, the Casualty and Specialty segment
experienced favorable development on prior accident years net claims and
claim expenses of
Other Items
-
The Company’s total investment result, which includes the sum of net
investment income and net realized and unrealized gains and losses on
investments, was a loss of
$25.7 million in the first quarter of 2018, compared to a gain of$97.7 million in the first quarter of 2017, a decrease of$123.4 million . The decrease in the total investment result was principally due to realized and unrealized losses on the Company’s fixed maturity investment portfolio driven by an upward shift in the interest rate yield curve during the first quarter of 2018, compared to less pronounced yield curve impacts in the first quarter of 2017. In addition, the Company’s equity investments trading portfolio experienced minimal unrealized losses during the first quarter of 2018, compared to significant realized gains during the first quarter of 2017. -
Effective
January 1, 2018 andApril 1, 2018 , Upsilon RFO issued$600.5 million and$31.7 million , respectively, of non-voting preference shares to investors, including$75.0 million and$26.5 million , respectively, to the Company. EffectiveApril 1, 2018 , the Company’s participation in the risks assumed by Upsilon RFO was 16.9%.
This Press Release includes certain non-GAAP financial measures
including “operating income available to
Please refer to the “Investor Information - Financial Reports - Financial Supplements” section of the Company’s website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company’s financial performance.
About
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this Press Release reflect
RenaissanceRe’s current views with respect to future events and
financial performance and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are subject to numerous factors that could cause actual
results to differ materially from those set forth in or implied by such
forward-looking statements, including the following: the frequency and
severity of catastrophic and other events that the Company covers; the
effectiveness of the Company’s claims and claim expense reserving
process; the Company’s ability to maintain its financial strength
ratings; the effect of climate change on the Company’s business;
collection on claimed retrocessional coverage, and new retrocessional
reinsurance being available on acceptable terms and providing the
coverage that we intended to obtain; the effects of U.S. tax reform
legislation and possible future tax reform legislation and regulations,
including changes to the tax treatment of the Company’s shareholders or
investors in the Company’s joint ventures or other entities the Company
manages; the effect of emerging claims and coverage issues; soft
reinsurance underwriting market conditions; the Company’s reliance on a
small and decreasing number of reinsurance brokers and other
distribution services for the preponderance of its revenue; the
Company’s exposure to credit loss from counterparties in the normal
course of business; the effect of continued challenging economic
conditions throughout the world; a contention by the
RenaissanceRe Holdings Ltd. | ||||||||||
Summary Consolidated Statements of Operations | ||||||||||
(in thousands of United States Dollars, except per share amounts and percentages) | ||||||||||
(Unaudited) | ||||||||||
Three months ended | ||||||||||
March 31, 2018 |
March 31, 2017 |
|||||||||
Revenues | ||||||||||
Gross premiums written | $ | 1,159,652 | $ | 922,090 | ||||||
Net premiums written | $ | 663,044 | $ | 544,136 | ||||||
Increase in unearned premiums | (222,762 | ) | (178,091 | ) | ||||||
Net premiums earned | 440,282 | 366,045 | ||||||||
Net investment income | 56,476 | 54,325 | ||||||||
Net foreign exchange gains | 3,757 | 8,165 | ||||||||
Equity in earnings (losses) of other ventures | 857 | (1,507 | ) | |||||||
Other (losses) income | (1,242 | ) | 1,665 | |||||||
Net realized and unrealized (losses) gains on investments | (82,144 | ) | 43,373 | |||||||
Total revenues | 417,986 | 472,066 | ||||||||
Expenses | ||||||||||
Net claims and claim expenses incurred | 171,703 | 193,081 | ||||||||
Acquisition expenses | 97,711 | 83,282 | ||||||||
Operational expenses | 41,272 | 47,283 | ||||||||
Corporate expenses | 6,733 | 5,286 | ||||||||
Interest expense | 11,767 | 10,526 | ||||||||
Total expenses | 329,186 | 339,458 | ||||||||
Income before taxes | 88,800 | 132,608 | ||||||||
Income tax benefit (expense) | 3,407 | (334 | ) | |||||||
Net income | 92,207 | 132,274 | ||||||||
Net income attributable to noncontrolling interests | (29,899 | ) | (34,327 | ) | ||||||
Net income attributable to RenaissanceRe |
62,308 | 97,947 | ||||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||||
Net income available to RenaissanceRe common shareholders | $ | 56,713 | $ | 92,352 | ||||||
Net income available to RenaissanceRe common shareholders per common share - basic | $ | 1.42 | $ | 2.26 | ||||||
Net income available to RenaissanceRe common shareholders per common share - diluted | $ | 1.42 | $ | 2.25 | ||||||
Operating income available to RenaissanceRe common shareholders per common share - diluted (1) | $ | 3.40 | $ | 1.30 | ||||||
Average shares outstanding - basic | 39,552 | 40,408 | ||||||||
Average shares outstanding - diluted | 39,599 | 40,623 | ||||||||
Net claims and claim expense ratio | 39.0 | % | 52.7 | % | ||||||
Underwriting expense ratio | 31.6 | % | 35.7 | % | ||||||
Combined ratio | 70.6 | % | 88.4 | % | ||||||
Return on average common equity - annualized | 5.7 | % | 8.3 | % | ||||||
Operating return on average common equity - annualized (1) | 13.5 | % | 4.8 | % | ||||||
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures.
RenaissanceRe Holdings Ltd. | |||||||||
Summary Consolidated Balance Sheets | |||||||||
(in thousands of United States Dollars, except per share amounts) | |||||||||
March 31, 2018 |
December 31, 2017 |
||||||||
Assets | (Unaudited) | (Audited) | |||||||
Fixed maturity investments trading, at fair value | $ | 7,404,761 | $ | 7,426,555 | |||||
Short term investments, at fair value | 1,616,597 | 991,863 | |||||||
Equity investments trading, at fair value | 387,462 | 388,254 | |||||||
Other investments, at fair value | 692,652 | 594,793 | |||||||
Investments in other ventures, under equity method | 120,232 | 101,974 | |||||||
Total investments | 10,221,704 | 9,503,439 | |||||||
Cash and cash equivalents | 647,973 | 1,361,592 | |||||||
Premiums receivable | 1,684,630 | 1,304,622 | |||||||
Prepaid reinsurance premiums | 794,921 | 533,546 | |||||||
Reinsurance recoverable | 1,572,321 | 1,586,630 | |||||||
Accrued investment income | 43,069 | 42,235 | |||||||
Deferred acquisition costs | 477,010 | 426,551 | |||||||
Receivable for investments sold | 111,431 | 103,145 | |||||||
Other assets | 127,571 | 121,226 | |||||||
Goodwill and other intangibles | 241,572 | 243,145 | |||||||
Total assets | $ | 15,922,202 | $ | 15,226,131 | |||||
Liabilities, Noncontrolling Interests and Shareholders’ Equity | |||||||||
Liabilities | |||||||||
Reserve for claims and claim expenses | $ | 4,912,727 | $ | 5,080,408 | |||||
Unearned premiums | 1,961,746 | 1,477,609 | |||||||
Debt | 989,995 | 989,623 | |||||||
Reinsurance balances payable | 1,758,948 | 989,090 | |||||||
Payable for investments purchased | 306,664 | 208,749 | |||||||
Other liabilities | 130,505 | 792,771 | |||||||
Total liabilities | 10,060,585 | 9,538,250 | |||||||
Redeemable noncontrolling interest | 1,425,364 | 1,296,506 | |||||||
Shareholders’ Equity | |||||||||
Preference shares | 400,000 | 400,000 | |||||||
Common shares | 40,246 | 40,024 | |||||||
Additional paid-in capital | 38,552 | 37,355 | |||||||
Accumulated other comprehensive income | 194 | 224 | |||||||
Retained earnings | 3,957,261 | 3,913,772 | |||||||
Total shareholders’ equity attributable to RenaissanceRe | 4,436,253 | 4,391,375 | |||||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 15,922,202 | $ | 15,226,131 | |||||
Book value per common share | $ | 100.29 | $ | 99.72 | |||||
RenaissanceRe Holdings Ltd. | ||||||||||||||||||||
Supplemental Financial Data - Segment Information | ||||||||||||||||||||
(in thousands of United States Dollars, except percentages) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three months ended March 31, 2018 | ||||||||||||||||||||
Property | Casualty and Specialty | Other | Total | |||||||||||||||||
Gross premiums written | $ | 706,968 | $ | 452,684 | $ | — | $ | 1,159,652 | ||||||||||||
Net premiums written | $ | 354,077 | $ | 308,967 | $ | — | $ | 663,044 | ||||||||||||
Net premiums earned | $ | 225,049 | $ | 215,233 | $ | — | $ | 440,282 | ||||||||||||
Net claims and claim expenses incurred | 30,607 | 141,078 | 18 | 171,703 | ||||||||||||||||
Acquisition expenses | 40,721 | 56,990 | — | 97,711 | ||||||||||||||||
Operational expenses | 26,546 | 14,593 | 133 | 41,272 | ||||||||||||||||
Underwriting income (loss) | $ | 127,175 | $ | 2,572 | $ | (151 | ) | 129,596 | ||||||||||||
Net investment income | 56,476 | 56,476 | ||||||||||||||||||
Net foreign exchange gains | 3,757 | 3,757 | ||||||||||||||||||
Equity in earnings of other ventures | 857 | 857 | ||||||||||||||||||
Other loss | (1,242 | ) | (1,242 | ) | ||||||||||||||||
Net realized and unrealized losses on investments | (82,144 | ) | (82,144 | ) | ||||||||||||||||
Corporate expenses | (6,733 | ) | (6,733 | ) | ||||||||||||||||
Interest expense | (11,767 | ) | (11,767 | ) | ||||||||||||||||
Income before taxes and redeemable noncontrolling interests | 88,800 | |||||||||||||||||||
Income tax benefit | 3,407 | 3,407 | ||||||||||||||||||
Net income attributable to redeemable noncontrolling interests | (29,899 | ) | (29,899 | ) | ||||||||||||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||||||||||||||
Net income attributable to RenaissanceRe common shareholders | $ | 56,713 | ||||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 58,169 | $ | 144,869 | $ | — | $ | 203,038 | ||||||||||||
Net claims and claim expenses incurred – prior accident years | (27,562 | ) | (3,791 | ) | 18 | (31,335 | ) | |||||||||||||
Net claims and claim expenses incurred – total | $ | 30,607 | $ | 141,078 | $ | 18 | $ | 171,703 | ||||||||||||
Net claims and claim expense ratio – current accident year | 25.8 | % | 67.3 | % | 46.1 | % | ||||||||||||||
Net claims and claim expense ratio – prior accident years | (12.2 | )% | (1.8 | )% | (7.1 | )% | ||||||||||||||
Net claims and claim expense ratio – calendar year | 13.6 | % | 65.5 | % | 39.0 | % | ||||||||||||||
Underwriting expense ratio | 29.9 | % | 33.3 | % | 31.6 | % | ||||||||||||||
Combined ratio | 43.5 | % | 98.8 | % | 70.6 | % | ||||||||||||||
Three months ended March 31, 2017 | ||||||||||||||||||||
Property | Casualty and Specialty | Other | Total | |||||||||||||||||
Gross premiums written | $ | 520,529 | $ | 401,561 | $ | — | $ | 922,090 | ||||||||||||
Net premiums written | $ | 289,871 | $ | 254,265 | $ | — | $ | 544,136 | ||||||||||||
Net premiums earned | $ | 186,988 | $ | 179,059 | $ | (2 | ) | $ | 366,045 | |||||||||||
Net claims and claim expenses incurred | 38,838 | 154,571 | (328 | ) | 193,081 | |||||||||||||||
Acquisition expenses | 29,103 | 54,179 | — | 83,282 | ||||||||||||||||
Operational expenses | 27,665 | 19,607 | 11 | 47,283 | ||||||||||||||||
Underwriting income (loss) | $ | 91,382 | $ | (49,298 | ) | $ | 315 | 42,399 | ||||||||||||
Net investment income | 54,325 | 54,325 | ||||||||||||||||||
Net foreign exchange gains | 8,165 | 8,165 | ||||||||||||||||||
Equity in losses of other ventures | (1,507 | ) | (1,507 | ) | ||||||||||||||||
Other income | 1,665 | 1,665 | ||||||||||||||||||
Net realized and unrealized gains on investments | 43,373 | 43,373 | ||||||||||||||||||
Corporate expenses | (5,286 | ) | (5,286 | ) | ||||||||||||||||
Interest expense | (10,526 | ) | (10,526 | ) | ||||||||||||||||
Income before taxes and noncontrolling interests | 132,608 | |||||||||||||||||||
Income tax expense | (334 | ) | (334 | ) | ||||||||||||||||
Net income attributable to noncontrolling interests | (34,327 | ) | (34,327 | ) | ||||||||||||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 92,352 | ||||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 39,766 | $ | 124,309 | $ | — | $ | 164,075 | ||||||||||||
Net claims and claim expenses incurred – prior accident years | (928 | ) | 30,262 | (328 | ) | 29,006 | ||||||||||||||
Net claims and claim expenses incurred – total | $ | 38,838 | $ | 154,571 | $ | (328 | ) | $ | 193,081 | |||||||||||
Net claims and claim expense ratio – current accident year | 21.3 | % | 69.4 | % | 44.8 | % | ||||||||||||||
Net claims and claim expense ratio – prior accident years | (0.5 | )% | 16.9 | % | 7.9 | % | ||||||||||||||
Net claims and claim expense ratio – calendar year | 20.8 | % | 86.3 | % | 52.7 | % | ||||||||||||||
Underwriting expense ratio | 30.3 | % | 41.2 | % | 35.7 | % | ||||||||||||||
Combined ratio | 51.1 | % | 127.5 | % | 88.4 | % | ||||||||||||||
RenaissanceRe Holdings Ltd. | |||||||||
Supplemental Financial Data - Gross Premiums Written | |||||||||
(in thousands of United States Dollars) | |||||||||
(Unaudited) | |||||||||
Three months ended | |||||||||
March 31, 2018 |
March 31, 2017 |
||||||||
Property Segment |
|||||||||
Catastrophe | $ | 590,337 | $ | 414,424 | |||||
Other property | 116,631 | 106,105 | |||||||
Property segment gross premiums written | $ | 706,968 | $ | 520,529 | |||||
Casualty and Specialty Segment |
|||||||||
Professional liability (1) | $ | 157,113 | $ | 132,306 | |||||
General casualty (2) | 126,626 | 122,293 | |||||||
Financial lines (3) | 93,267 | 85,143 | |||||||
Other (4) | 75,678 | 61,819 | |||||||
Casualty and Specialty segment gross premiums written | $ | 452,684 | $ | 401,561 | |||||
(1) | Includes directors and officers, medical malpractice, and professional indemnity. | |
(2) | Includes automobile liability, casualty clash, employer’s liability, umbrella or excess casualty, workers’ compensation and general liability | |
(3) | Includes financial guaranty, mortgage guaranty, political risk, surety and trade credit. | |
(4) | Includes accident and health, agriculture, aviation, cyber, energy, marine, satellite and terrorism. Lines of business such as regional multi-line and whole account may have characteristics of various other classes of business, and are allocated accordingly. |
RenaissanceRe Holdings Ltd. | ||||||||||
Supplemental Financial Data - Total Investment Result | ||||||||||
(in thousands of United States Dollars) | ||||||||||
(Unaudited) | ||||||||||
Three months ended | ||||||||||
March 31, 2018 |
March 31, 2017 |
|||||||||
Fixed maturity investments | $ | 45,643 | $ | 43,419 | ||||||
Short term investments | 5,304 | 1,724 | ||||||||
Equity investments trading | 698 | 811 | ||||||||
Other investments | ||||||||||
Private equity investments | (434 | ) | 7,802 | |||||||
Other | 8,023 | 4,072 | ||||||||
Cash and cash equivalents | 565 | 189 | ||||||||
59,799 | 58,017 | |||||||||
Investment expenses | (3,323 | ) | (3,692 | ) | ||||||
Net investment income | 56,476 | 54,325 | ||||||||
Gross realized gains | 4,583 | 11,461 | ||||||||
Gross realized losses | (25,853 | ) | (16,533 | ) | ||||||
Net realized losses on fixed maturity investments | (21,270 | ) | (5,072 | ) | ||||||
Net unrealized (losses) gains on fixed maturity investments trading | (55,372 | ) | 24,635 | |||||||
Net realized and unrealized losses on investments-related derivatives | (4,364 | ) | (56 | ) | ||||||
Net realized gains on equity investments trading | 234 | 20,915 | ||||||||
Net unrealized (losses) gains on equity investments trading | (1,372 | ) | 2,951 | |||||||
Net realized and unrealized (losses) gains on investments | (82,144 | ) | 43,373 | |||||||
Total investment result | $ | (25,668 | ) | $ | 97,698 | |||||
Total investment return - annualized | (1.0 | )% | 4.1 | % | ||||||
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
within the meaning of Regulation
The Company uses “operating income available to
Three months ended | ||||||||||
(in thousands of United States Dollars, except percentages) | March 31, 2018 |
March 31, 2017 |
||||||||
Net income available to RenaissanceRe common shareholders | $ | 56,713 | $ | 92,352 | ||||||
Adjustment for net realized and unrealized losses (gains) on investments | 82,144 | (43,373 | ) | |||||||
Adjustment for income tax (benefit) expense (1) | (3,648 | ) | 4,707 | |||||||
Operating income available to RenaissanceRe common shareholders | $ | 135,209 | $ | 53,686 | ||||||
Net income available to RenaissanceRe common shareholders per common share - diluted | $ | 1.42 | $ | 2.25 | ||||||
Adjustment for net realized and unrealized losses (gains) on investments | 2.07 | (1.07 | ) | |||||||
Adjustment for income tax (benefit) expense (1) | (0.09 | ) | 0.12 | |||||||
Operating income available to RenaissanceRe common shareholders per common share - diluted | $ | 3.40 | $ | 1.30 | ||||||
Return on average common equity - annualized | 5.7 | % | 8.3 | % | ||||||
Adjustment for net realized and unrealized losses (gains) on investments | 8.2 | % | (3.9 | )% | ||||||
Adjustment for income tax (benefit) expense (1) | (0.4 | )% | 0.4 | % | ||||||
Operating return on average common equity - annualized | 13.5 | % | 4.8 | % | ||||||
(1) | Adjustment for income tax (benefit) expense represents the income tax (benefit) expense associated with the adjustment for net realized and unrealized losses (gains) on investments. The income tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors. | |
The Company has included in this Press Release “tangible book value per common share” and “tangible book value per common share plus accumulated dividends”. “Tangible book value per common share” is defined as book value per common share excluding goodwill and intangible assets per share. “Tangible book value per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible assets per share, plus accumulated dividends. The Company’s management believes “tangible book value per common share” and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets. The following is a reconciliation of book value per common share to tangible book value per common share and tangible book value per common share plus accumulated dividends:
At | |||||||||||||||||||||||||
March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
|||||||||||||||||||||
Book value per common share | $ | 100.29 | $ | 99.72 | $ | 100.00 | $ | 113.08 | $ | 109.37 | |||||||||||||||
Adjustment for goodwill and other intangibles (1) | (6.66 | ) | (6.49 | ) | (6.55 | ) | (6.56 | ) | (6.55 | ) | |||||||||||||||
Tangible book value per common share | 93.63 | 93.23 | 93.45 | 106.52 | 102.82 | ||||||||||||||||||||
Adjustment for accumulated dividends | 18.33 | 18.00 | 17.68 | 17.36 | 17.04 | ||||||||||||||||||||
Tangible book value per common share plus accumulated dividends | $ | 111.96 | $ | 111.23 | $ | 111.13 | $ | 123.88 | $ | 119.86 | |||||||||||||||
Quarterly change in book value per common share | 0.6 | % | (0.3 | )% | (11.6 | )% | 3.4 | % | 0.8 | % | |||||||||||||||
Quarterly change in tangible book value per common share plus change in accumulated dividends | 0.8 | % | 0.1 | % | (12.0 | )% | 3.9 | % | 1.2 | % | |||||||||||||||
(1) | At March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, goodwill and other intangibles included $26.3 million, $16.7 million, $17.4 million, $18.1 million and $18.9 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180501006829/en/
Source:
INVESTORS:
RenaissanceRe Holdings Ltd.
Keith McCue,
441-239-4830
Senior Vice President, Finance and Investor Relations
or
MEDIA:
RenaissanceRe
Holdings Ltd.
Keil Gunther, 441-239-4932
Vice President,
Marketing & Communications
or
Kekst and Company
Peter
Hill or Dawn Dover, 212-521-4800