RenaissanceRe Reports Net Income of $24.8 Million for the Second Quarter of 2011 or $0.48 Per Diluted Common Share; Operating Loss of $10.2 Million or $0.21 Per Diluted Common Share
Net Negative Impact of $70.8 Million Related to the Large U.S. Tornadoes in the Second Quarter of 2011
Catastrophe Unit Gross Premiums Written Up 15% Excluding Reinstatement Premiums, and Managed Catastrophe Premiums up 16%, Excluding Reinstatement Premiums
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to RenaissanceRe common shareholders of $24.8 million or $0.48 per diluted common share in the second quarter of 2011, compared to $210.2 million or $3.66, respectively, in the second quarter of 2010. Operating loss attributable to RenaissanceRe common shareholders was $10.2 million or $0.21 per diluted common share for the second quarter of 2011, compared to operating income available to RenaissanceRe common shareholders of $139.9 million or $2.40 per diluted common share in the second quarter of 2010. The Company reported an annualized return on average common equity of 3.3% and an annualized operating return on average common equity of negative 1.4% in the second quarter of 2011, compared to positive 26.8% and positive 17.9%, respectively, in the second quarter of 2010. See Comments on Regulation G for a reconciliation of non-GAAP measures.
Book value per common share increased $0.29, or 0.5%, in the second quarter of 2011 to $57.30, compared to a 5.8% increase in the second quarter of 2010.
Mr. Neill A. Currie, CEO, commented: "Our results for the quarter were impacted by $70.8 million of net losses from the tornado activity in the U.S. As a result, we reported $24.8 million of net income, a $10.2 million operating loss and a 0.5% increase in book value per share in the quarter."
Mr. Currie added: "At the same time, we had a successful June 1st renewal season and are pleased with our portfolio of risks, which reflects improving market conditions in our Reinsurance segment. Our strong balance sheet, high ratings and leadership position in property catastrophe reinsurance allowed us to increase our catastrophe premiums by over 15%."
SECOND QUARTER 2011 HIGHLIGHTS (1)
-- Gross premiums written increased $135.0 million, or 26.7%, to $641.6
million, primarily driven by improving market conditions in our core
markets experienced during the June 2011 renewals and $22.5 million of
reinstatement premiums written from the large U.S. tornadoes in the
second quarter of 2011. Excluding the impact of $22.5 million of
reinstatement premiums written in the second quarter of 2011, gross
premiums written increased $112.5 million, or 22.2%.
-- Underwriting income of $9.7 million and a combined ratio of 95.5%,
compared to $169.4 million and 20.2%, primarily impacted by the large
U.S. tornadoes in the second quarter of 2011, as detailed in the table
below, which had a net negative impact (2)of $70.8 million and added
51.8 percentage points to the combined ratio.
Three months ended June 30, 2011
Large U.S.
(in thousands of U.S. dollars, except ratios)
Tornadoes
Net claims and claim expenses incurred $ (121,655)
Reinstatement premiums earned 22,499
Lost profit commissions (708)
Net impact on underwriting result (99,864)
Redeemable noncontrolling interest - DaVinciRe 29,054
Net negative impact $ (70,810)
Percentage point impact on consolidated combined ratio 51.8
Net negative impact on Reinsurance segment underwriting result $ (96,944)
Net negative impact on Lloyd's segment underwriting result (2,920)
Net negative impact on underwriting result $ (99,864)
Underwriting Results by Segment (1)
Reinsurance Segment
Gross premiums written in the Reinsurance segment were $607.4 million, an increase of $110.9 million, or 22.3%. The increase is primarily due to a $93.7 million increase in the catastrophe unit as a result of the improving market conditions in our core markets experienced during the June 2011 renewals, combined with reinstatement premiums written from the large U.S. tornadoes in the second quarter of 2011. Excluding the impact of $22.4 million of reinstatement premiums written in the second quarter of 2011, the Reinsurance segment gross premiums written increased $88.5 million, or 17.8%, and managed catastrophe premiums written increased $80.9 million, or 15.7%.
The Reinsurance segment generated underwriting income of $12.9 million and a combined ratio of 93.5%, compared to $180.7 million and a combined ratio of 8.8%. Current accident year net claims and claim expenses in the Reinsurance segment of $162.4 million are comprised of $139.2 million and $23.2 million related to the catastrophe and specialty units, respectively. As detailed in the table below, the large U.S. tornadoes in the second quarter of 2011 had a net impact on the Reinsurance segment underwriting result of $96.9 million and added 55.5 percentage points to the Reinsurance segment's combined ratio.
Three months ended June 30, 2011
Large U.S.
(in thousands of U.S. dollars, except ratios)
Tornadoes
Net claims and claim expenses incurred $ (118,655 )
Reinstatement premiums earned 22,419
Lost profit commissions (708 )
Net impact on Reinsurance segment underwriting result $ (96,944 )
Net negative impact on catastrophe unit underwriting result $ (96,944 )
Net negative impact on specialty unit underwriting result -
Net impact on Reinsurance segment underwriting result $ (96,944 )
Percentage point impact on Reinsurance segment combined ratio 55.5
The Reinsurance segment experienced $19.2 million of favorable development on prior year reserves, including $11.8 million in the catastrophe unit due to reductions in estimated ultimate losses on certain specific events, and $7.4 million in the specialty unit primarily due to better than expected claims emergence.
Lloyd's Segment
Gross premiums written in the Lloyd's segment decreased $0.7 million, or 2.1%, to $34.1 million. The Lloyd's segment incurred an underwriting loss of $3.3 million and a combined ratio of 119.3%, compared to generating underwriting income of $0.8 million and a combined ratio of 95.5%. Net claims and claim expenses include $3.0 million related to the large U.S. tornadoes in the second quarter of 2011.
Investments (1)
Total investment result, which includes net investment income, net realized and unrealized gains on investments, net other-than-temporary impairments and the change in net unrealized gains on fixed maturity investments available for sale, decreased $19.5 million, to $66.5 million, primarily due to the lower total returns on the fixed maturity investments portfolio, and partially offset by improved returns on certain non-investment grade allocations included in other investments. The weighted average effective yield on the fixed maturity and short term investment portfolio was 2.4% at June 30, 2011, compared to 2.1% at March 31, 2011.
Other Items (1)
-- On June 1, 2011, DaVinciRe Holdings Ltd. completed an equity raise of
$100.0 million from new and existing shareholders. The capital raised is
being used to support the ongoing underwriting activities of DaVinci,
which primarily writes property catastrophe reinsurance and certain
classes of specialty reinsurance. As a result of the equity raise, the
Company's ownership in DaVinciRe decreased to 42.8% effective June 1,
2011, compared to 44.0% at January 1, 2011.
This Press Release includes certain non-GAAP financial measures including "operating (loss) income (attributable) available to RenaissanceRe common shareholders", "operating (loss) income (attributable) available to RenaissanceRe common shareholders per common share - diluted", "operating return on average common equity - annualized" and "managed catastrophe premiums". A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
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.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 27, 2011 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the "Investor Information - Company Webcasts" section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business consists of three segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures managed by the Company's ventures unit, (2) Lloyd's, which includes reinsurance and insurance business written through Syndicate 1458, and (3) Insurance, which principally includes the Company's Bermuda-based insurance operations.
Cautionary Statement under "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this earnings 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, 2010 and its Quarterly Reports on Form 10-Q.
(1) All comparisons are with the second quarter of 2010 unless specifically
stated.
Net negative impact includes the sum of estimates of net claims and claim
expenses incurred, earned reinstatement premiums assumed and ceded, lost
profit commissions and redeemable noncontrolling interest - DaVinciRe. The
Company's estimates are based on a review of its potential exposures,
preliminary discussions with certain counterparties and catastrophe
modeling techniques. Given the magnitude and recent occurrence of these
(2) events, delays in receiving claims data, potential uncertainties relating
to reinsurance recoveries and other uncertainties inherent in loss
estimation, meaningful uncertainty remains regarding losses from these
events. Accordingly, the Company's actual net negative impact from these
events will vary from these preliminary estimates, perhaps materially so.
Changes in these estimates will be recorded in the period in which they
occur.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
Revenues
Gross premiums $ 641,563 $ 506,540 $ 1,252,068 $ 1,022,551
written
Net premiums written $ 427,995 $ 329,334 $ 880,570 $ 736,493
Increase in unearned (210,820 ) (117,163 ) (357,854 ) (273,669 )
premiums
Net premiums earned 217,175 212,171 522,716 462,824
Net investment 33,328 26,173 93,609 91,882
income
Net foreign exchange (4,521 ) (609 ) (3,861 ) (11,951 )
losses
Equity in earnings
(losses) of other 5,128 3,160 (18,625 ) 5,316
ventures
Other (loss) income (5,167 ) (3,742 ) 44,978 (9,933 )
Net realized and
unrealized gains on 34,979 70,051 29,765 118,251
investments
Total
other-than-temporary - (798 ) - (831 )
impairments
Portion recognized
in other - 2 - 2
comprehensive
income, before taxes
Net
other-than-temporary - (796 ) - (829 )
impairments
Total revenues 280,922 306,408 668,582 655,560
Expenses
Net claims and claim 151,261 (18,803 ) 779,798 78,537
expenses incurred
Acquisition expenses 13,883 23,580 46,218 50,015
Operational expenses 42,299 38,040 84,129 83,190
Corporate expenses 4,011 4,493 6,075 9,802
Interest expense 5,730 6,206 11,925 9,362
Total expenses 217,184 53,516 928,145 230,906
Income (loss) from
continuing operations 63,738 252,892 (259,563 ) 424,654
before taxes
Income tax benefit 1,773 958 1,825 3,921
Income (loss) from
continuing 65,511 253,850 (257,738 ) 428,575
operations
(Loss) income from
discontinued (10,094 ) 18,881 (11,620 ) 30,328
operations
Net income (loss) 55,417 272,731 (269,358 ) 458,903
Net (income) loss
attributable to (21,903 ) (51,915 ) 63,589 (62,465 )
noncontrolling
interests
Net income (loss)
attributable to 33,514 220,816 (205,769 ) 396,438
RenaissanceRe
Dividends on (8,750 ) (10,575 ) (17,500 ) (21,150 )
preference shares
Net income (loss)
available
(attributable) to $ 24,764 $ 210,241 $ (223,269 ) $ 375,288
RenaissanceRe common
shareholders
Operating (loss)
income (attributable)
available to
RenaissanceRe $ (0.21 ) $ 2.40 $ (4.97 ) $ 4.30
common shareholders
per common share -
diluted (1)
Income (loss) from
continuing operations
available
(attributable) to $ 0.68 $ 3.35 $ (4.16 ) $ 5.89
RenaissanceRe common
shareholders per
common share - basic
(Loss) income from
discontinued
operations
(attributable) (0.20 ) 0.34 (0.23 ) 0.53
available to
RenaissanceRe common
shareholders per
common share - basic
Net income (loss)
available
(attributable) to
RenaissanceRe $ 0.48 $ 3.69 $ (4.39 ) $ 6.42
common shareholders
per common share -
basic
Income (loss) from
continuing operations
available
(attributable) to $ 0.68 $ 3.32 $ (4.16 ) $ 5.84
RenaissanceRe common
shareholders per
common share -
diluted (2)
(Loss) income from
discontinued
operations
(attributable)
available to (0.20 ) 0.34 (0.23 ) 0.53
RenaissanceRe common
shareholders per
common share -
diluted (2)
Net income (loss)
available
(attributable) to
RenaissanceRe $ 0.48 $ 3.66 $ (4.39 ) $ 6.37
common shareholders
per common share -
diluted (2)
Average shares 50,493 55,538 50,994 56,972
outstanding - basic
Average shares
outstanding - diluted 51,050 56,044 50,994 57,465
(2)
Net claims and claim 69.6 % (8.9 %) 149.2 % 17.0 %
expense ratio
Expense ratio 25.9 % 29.1 % 24.9 % 28.8 %
Combined ratio 95.5 % 20.2 % 174.1 % 45.8 %
Operating return on
average common equity (1.4 %) 17.9 % (16.3 %) 16.3 %
- annualized (1)
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures.
(2) Earnings per share calculations use average common shares outstanding - basic,
when in a net loss position, as required by FASB ASC Topic Earnings per Share.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
June 30, December 31,
2011 2010
Assets
Fixed maturity investments trading, at fair value $ 3,864,205 $ 3,871,780
Fixed maturity investments available for sale, at 202,769 244,917
fair value
Total fixed maturity investments, at fair value 4,066,974 4,116,697
Short term investments, at fair value 774,421 1,110,364
Equity investments trading, at fair value 32,252 -
Other investments, at fair value 839,643 787,548
Investments in other ventures, under equity method 82,197 85,603
Total investments 5,795,487 6,100,212
Cash and cash equivalents 237,737 277,738
Premiums receivable 933,519 322,080
Prepaid reinsurance premiums 245,676 60,643
Reinsurance recoverable 333,245 101,711
Accrued investment income 36,266 34,560
Deferred acquisition costs 90,858 35,648
Receivable for investments sold 257,075 99,226
Other secured assets - 14,250
Other assets 219,226 205,373
Goodwill and other intangibles 14,383 14,690
Assets of discontinued operations held for sale 2,868 872,147
Total assets $ 8,166,340 $ 8,138,278
Liabilities, Noncontrolling Interests and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 2,170,728 $ 1,257,843
Unearned premiums 830,939 286,183
Debt 349,201 549,155
Reinsurance balances payable 403,152 318,024
Payable for investments purchased 102,545 195,383
Other secured liabilities - 14,000
Other liabilities 152,853 222,310
Liabilities of discontinued operations held for sale 10,220 598,511
Total liabilities 4,019,638 3,441,409
Redeemable noncontrolling interest - DaVinciRe 628,001 757,655
Shareholders' Equity
Preference shares 550,000 550,000
Common shares 51,753 54,110
Additional paid-in capital 5,768 -
Accumulated other comprehensive income 18,031 19,823
Retained earnings 2,889,719 3,312,392
Total shareholders' equity attributable to 3,515,271 3,936,325
RenaissanceRe
Noncontrolling interest 3,430 2,889
Total shareholders' equity 3,518,701 3,939,214
Total liabilities, noncontrolling interests and $ 8,166,340 $ 8,138,278
shareholders' equity
Book value per common share $ 57.30 $ 62.58
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars) (Unaudited)
Three months ended June 30, 2011
Reinsurance Lloyd's Insurance Eliminations Other Total
Gross premiums $ 607,404 $ 34,126 $ 33 $ - $ - $ 641,563
written
Net premiums written $ 395,856 $ 32,084 $ 55 - $ 427,995
Net premiums earned $ 199,461 $ 17,233 $ 481 - $ 217,175
Net claims and claim 143,219 8,619 (577 ) - 151,261
expenses incurred
Acquisition expenses 10,431 3,305 147 - 13,883
Operational expenses 32,901 8,635 763 - 42,299
Underwriting income $ 12,910 $ (3,326 ) $ 148 - 9,732
(loss)
Net investment 33,328 33,328
income
Net foreign exchange (4,521 ) (4,521 )
losses
Equity in earnings 5,128 5,128
of other ventures
Other loss (5,167 ) (5,167 )
Net realized and
unrealized gains on 34,979 34,979
investments
Corporate expenses (4,011 ) (4,011 )
Interest expense (5,730 ) (5,730 )
Income from
continuing 63,738
operations before
taxes
Income tax benefit 1,773 1,773
Loss from
discontinued (10,094 ) (10,094 )
operations
Net income
attributable to (21,903 ) (21,903 )
noncontrolling
interests
Dividends on (8,750 ) (8,750 )
preference shares
Net income
available to $ 24,764
RenaissanceRe
common shareholders
Net claims and claim
expenses incurred - $ 162,398 $ 9,612 $ (78 ) $ 171,932
current accident
year
Net claims and claim
expenses incurred - (19,179 ) (993 ) (499 ) (20,671 )
prior accident years
Net claims and claim
expenses incurred - $ 143,219 $ 8,619 $ (577 ) $ 151,261
total
Net claims and claim
expense ratio - 81.4 % 55.8 % (16.2 %) 79.2 %
current accident
year
Net claims and claim
expense ratio - (9.6 %) (5.8 %) (103.8 %) (9.6 %)
prior accident years
Net claims and claim
expense ratio - 71.8 % 50.0 % (120.0 %) 69.6 %
calendar year
Underwriting expense 21.7 % 69.3 % 189.2 % 25.9 %
ratio
Combined ratio 93.5 % 119.3 % 69.2 % 95.5 %
Three months ended June 30, 2010
Reinsurance Lloyd's Insurance Eliminations Other Total
(1)
Gross premiums $ 496,517 $ 34,841 $ (3,742 ) $ (21,076 ) $ - $ 506,540
written
Net premiums written $ 319,000 $ 32,330 $ (21,996 ) - $ 329,334
Net premiums earned $ 198,223 $ 16,630 $ (2,682 ) - $ 212,171
Net claims and claim (30,332 ) 7,752 3,777 - (18,803 )
expenses incurred
Acquisition expenses 17,941 3,172 2,467 - 23,580
Operational expenses 29,869 4,953 3,218 - 38,040
Underwriting income $ 180,745 $ 753 $ (12,144 ) - 169,354
(loss)
Net investment 26,173 26,173
income
Net foreign exchange (609 ) (609 )
losses
Equity in earnings 3,160 3,160
of other ventures
Other loss (3,742 ) (3,742 )
Net realized and
unrealized gains on 70,051 70,051
fixed maturity
investments
Net
other-than-temporary (796 ) (796 )
impairments
Corporate expenses (4,493 ) (4,493 )
Interest expense (6,206 ) (6,206 )
Income from
continuing 252,892
operations before
taxes
Income tax benefit 958 958
Income from
discontinued 18,881 18,881
operations
Net income
attributable to
redeemable (51,915 ) (51,915 )
noncontrolling
interest - DaVinciRe
Dividends on (10,575 ) (10,575 )
preference shares
Net income
available to $ 210,241
RenaissanceRe
common shareholders
Net claims and claim
expenses incurred - $ 50,994 $ 7,814 $ 2,627 $ 61,435
current accident
year
Net claims and claim
expenses incurred - (81,326 ) (62 ) 1,150 (80,238 )
prior accident years
Net claims and claim
expenses incurred - $ (30,332 ) $ 7,752 $ 3,777 $ (18,803 )
total
Net claims and claim
expense ratio - 25.7 % 47.0 % NMF 29.0 %
current accident
year
Net claims and claim
expense ratio - (41.0 %) (0.4 %) NMF (37.9 %)
prior accident years
Net claims and claim
expense ratio - (15.3 %) 46.6 % NMF (8.9 %)
calendar year
Underwriting expense 24.1 % 48.9 % NMF 29.1 %
ratio
Combined ratio 8.8 % 95.5 % NMF 20.2 %
(1) Represents $21.0 million and $0.1 million of gross premiums ceded from the Insurance segment to the
Lloyd's segment and from the Insurance segment to the Reinsurance segment, respectively.
NMF - Not a meaningful figure.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars) (Unaudited)
Six months ended June 30, 2011
Reinsurance Lloyd's Insurance Eliminations Other Total
(1)
Gross premiums $ 1,181,086 $ 70,746 $ 313 $ (77 ) $ - $ 1,252,068
written
Net premiums written $ 819,422 $ 60,821 $ 327 - $ 880,570
Net premiums earned $ 488,890 $ 32,907 $ 919 - $ 522,716
Net claims and claim 738,623 39,142 2,033 - 779,798
expenses incurred
Acquisition expenses 40,223 5,766 229 - 46,218
Operational expenses 65,264 17,607 1,258 - 84,129
Underwriting loss $ (355,220 ) $ (29,608 ) $ (2,601 ) - (387,429 )
Net investment 93,609 93,609
income
Net foreign exchange (3,861 ) (3,861 )
losses
Equity in losses of (18,625 ) (18,625 )
other ventures
Other income 44,978 44,978
Net realized and
unrealized gains on 29,765 29,765
investments
Corporate expenses (6,075 ) (6,075 )
Interest expense (11,925 ) (11,925 )
Loss from
continuing (259,563 )
operations before
taxes
Income tax benefit 1,825 1,825
Loss from
discontinued (11,620 ) (11,620 )
operations
Net loss
attributable to 63,589 63,589
noncontrolling
interests
Dividends on (17,500 ) (17,500 )
preference shares
Net loss
attributable to $ (223,269 )
RenaissanceRe
common shareholders
Net claims and claim
expenses incurred - $ 829,760 $ 38,938 $ (69 ) $ 868,629
current accident
year
Net claims and claim
expenses incurred - (91,137 ) 204 2,102 (88,831 )
prior accident years
Net claims and claim
expenses incurred - $ 738,623 $ 39,142 $ 2,033 $ 779,798
total
Net claims and claim
expense ratio - 169.7 % 118.3 % (7.5 %) 166.2 %
current accident
year
Net claims and claim
expense ratio - (18.6 %) 0.6 % 228.7 % (17.0 %)
prior accident years
Net claims and claim
expense ratio - 151.1 % 118.9 % 221.2 % 149.2 %
calendar year
Underwriting expense 21.6 % 71.1 % 161.8 % 24.9 %
ratio
Combined ratio 172.7 % 190.0 % 383.0 % 174.1 %
(1) Represents $0.1 million of gross premiums ceded from the Reinsurance segment to the Lloyd's segment.
Six months ended June 30, 2010
Reinsurance Lloyd's Insurance Eliminations Other Total
(1)
Gross premiums $ 995,102 $ 48,865 $ 685 $ (22,101 ) $ - $ 1,022,551
written
Net premiums written $ 707,658 $ 45,981 $ (17,146 ) - $ 736,493
Net premiums earned $ 441,292 $ 23,601 $ (2,069 ) - $ 462,824
Net claims and claim 68,615 10,339 (417 ) - 78,537
expenses incurred
Acquisition expenses 40,600 4,331 5,084 - 50,015
Operational expenses 63,886 11,087 8,217 - 83,190
Underwriting income $ 268,191 $ (2,156 ) $ (14,953 ) - 251,082
(loss)
Net investment 91,882 91,882
income
Net foreign exchange (11,951 ) (11,951 )
losses
Equity in earnings 5,316 5,316
of other ventures
Other loss (9,933 ) (9,933 )
Net realized and
unrealized gains on 118,251 118,251
fixed maturity
investments
Net
other-than-temporary (829 ) (829 )
impairments
Corporate expenses (9,802 ) (9,802 )
Interest expense (9,362 ) (9,362 )
Income from
continuing 424,654
operations before
taxes
Income tax benefit 3,921 3,921
Income from
discontinued 30,328 30,328
operations
Net income
attributable to
redeemable (62,465 ) (62,465 )
noncontrolling
interest - DaVinciRe
Dividends on (21,150 ) (21,150 )
preference shares
Net income
available to $ 375,288
RenaissanceRe
common shareholders
Net claims and claim
expenses incurred - $ 255,059 $ 10,500 $ 5,486 $ 271,045
current accident
year
Net claims and claim
expenses incurred - (186,444 ) (161 ) (5,903 ) (192,508 )
prior accident years
Net claims and claim
expenses incurred - $ 68,615 $ 10,339 $ (417 ) $ 78,537
total
Net claims and claim
expense ratio - 57.8 % 44.5 % NMF 58.6 %
current accident
year
Net claims and claim
expense ratio - (42.3 %) (0.7 %) NMF (41.6 %)
prior accident years
Net claims and claim
expense ratio - 15.5 % 43.8 % NMF 17.0 %
calendar year
Underwriting expense 23.7 % 65.3 % NMF 28.8 %
ratio
Combined ratio 39.2 % 109.1 % NMF 45.8 %
Represents $21.6 million, $0.2 million and $0.2 million of gross premiums ceded from the Insurance segment
(1) to the Lloyd's segment, from the Insurance segment to the Reinsurance segment and from the Reinsurance
segment to Lloyd's segment, respectively.
NMF - Not a meaningful figure.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written and Managed Premiums
Analysis
(in thousands of United States Dollars)
(Unaudited)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Reinsurance Segment
2011 2010 2011 2010
Renaissance catastrophe $ 366,929 $ 302,625 $ 678,571 $ 570,919
premiums
Renaissance specialty premiums 23,066 7,389 97,461 79,838
Total Renaissance 389,995 310,014 776,032 650,757
premiums
DaVinci catastrophe premiums 216,317 186,917 403,353 342,743
DaVinci specialty premiums 1,092 (414 ) 1,701 1,602
Total DaVinci premiums 217,409 186,503 405,054 344,345
Total catastrophe unit 583,246 489,542 1,081,924 913,662
premiums
Total specialty unit premiums 24,158 6,975 99,162 81,440
Total Reinsurance segment $ 607,404 $ 496,517 $ 1,181,086 $ 995,102
gross premiums written
Lloyd's Segment
Specialty $ 17,546 $ 6,508 $ 46,781 $ 14,230
Catastrophe 16,580 7,324 23,965 12,993
Insurance - 21,009 - 21,642
Total Lloyd's segment $ 34,126 $ 34,841 $ 70,746 $ 48,865
gross premiums written
Insurance Segment
Commercial property $ 33 $ 20 $ 313 $ 1,117
Personal lines property - (3,762 ) - (432 )
Total Insurance segment $ 33 $ (3,742 ) $ 313 $ 685
gross premiums written
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Managed Premiums (1)
2011 2010 2011 2010
Total catastrophe unit gross $ 583,246 $ 489,542 $ 1,081,924 $ 913,662
premiums written
Catastrophe premiums
written on behalf of our 19,079 18,793 41,607 44,979
joint venture, Top Layer
Re (2)
Catastrophe premiums
written in the Lloyd's 16,580 7,324 23,965 12,993
segment
Catastrophe premiums
assumed from the - (67 ) - (242 )
Insurance segment
Total managed catastrophe $ 618,905 $ 515,592 $ 1,147,496 $ 971,392
premiums (1)
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial
measures.
(2) Top Layer Re is accounted for under the equity method of accounting.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars)
(Unaudited)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
Fixed maturity investments $ 24,426 $ 28,014 $ 52,339 $ 56,889
Short term investments 433 682 1,028 1,168
Equity investments trading 112 - 126 -
Other investments
Hedge funds and private 8,230 8,188 31,737 25,724
equity investments
Other 2,838 (8,184 ) 13,665 13,034
Cash and cash equivalents 45 22 86 83
36,084 28,722 98,981 96,898
Investment expenses (2,756 ) (2,549 ) (5,372 ) (5,016 )
Net investment income 33,328 26,173 93,609 91,882
Gross realized gains 15,430 28,753 25,992 77,601
Gross realized losses (4,156 ) (5,962 ) (16,773 ) (11,132 )
Net realized gains on fixed 11,274 22,791 9,219 66,469
maturity investments
Net unrealized gains on fixed 24,728 47,260 20,970 51,782
maturity investments trading
Net unrealized losses on (1,023 ) - (424 ) -
equity investments trading
Net realized and unrealized 34,979 70,051 29,765 118,251
gains on investments
Total other-than-temporary - (798 ) - (831 )
impairments
Portion recognized in other
comprehensive income, before - 2 - 2
taxes
Net other-than-temporary - (796 ) - (829 )
impairments
Change in net unrealized
gains on fixed maturity (1,763 ) (9,414 ) (1,511 ) (18,055 )
investment available for sale
Total investment result $ 66,544 $ 86,014 $ 121,863 $ 191,249
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 (loss) income (attributable) available to RenaissanceRe common shareholders" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating (loss) income (attributable) available to RenaissanceRe common shareholders" as used herein differs from "net income (loss) available (attributable) to RenaissanceRe common shareholders," which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on investments from continuing and discontinued operations and net other-than-temporary impairments from continuing and discontinued operations. The Company's management believes that "operating (loss) income (attributable) available to RenaissanceRe common shareholders" 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 fixed maturity investment portfolio and equity investments trading. The Company also uses "operating (loss) income (attributable) available to RenaissanceRe common shareholders" to calculate "operating (loss) income (attributable) available to RenaissanceRe common shareholders per common share - diluted" and "operating return on average common equity - annualized". The following is a reconciliation of: 1) net income (loss) available (attributable) to RenaissanceRe common shareholders to operating (loss) income (attributable) available to RenaissanceRe common shareholders; 2) net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted to operating (loss) income (attributable) available to RenaissanceRe common shareholders per common share - diluted; and 3) return on average common equity - annualized to operating return on average common equity - annualized:
Three months ended Six months ended
(in thousands of June 30, June 30, June 30, June 30,
United States
dollars, except for 2011 2010 2011 2010
per share amounts)
Net income (loss)
available
(attributable) to $ 24,764 $ 210,241 $ (223,269 ) $ 375,288
RenaissanceRe common
shareholders
Adjustment for net
realized and
unrealized (gains) (34,979 ) (70,051 ) (29,765 ) (118,251 )
losses
on investments of
continuing operations
Adjustment for net
other-than-temporary - 796 - 829
impairments of
continuing operations
Adjustment for net
realized and
unrealized gains on
fixed maturity
investments - (1,055 ) (42 ) (1,453 )
and net
other-than-temporary
impairments of
discontinued
operations
Operating (loss)
income (attributable)
available to $ (10,215 ) $ 139,931 $ (253,076 ) $ 256,413
RenaissanceRe common
shareholders
Net income (loss)
available
(attributable) to
RenaissanceRe common $ 0.48 $ 3.66 $ (4.39 ) $ 6.37
shareholders
per common share -
diluted
Adjustment for net
realized and
unrealized (gains) (0.69 ) (1.26 ) (0.58 ) (2.07 )
losses
on investments of
continuing operations
Adjustment for net
other-than-temporary - 0.02 - 0.02
impairments of
continuing operations
Adjustment for net
realized and
unrealized gains on
fixed maturity
investments - (0.02 ) - (0.02 )
and net
other-than-temporary
impairments of
discontinued
operations
Operating (loss)
income (attributable)
available to
RenaissanceRe common $ (0.21 ) $ 2.40 $ (4.97 ) $ 4.30
shareholders
per common share -
diluted
Return on average
common equity - 3.3 % 26.8 % (14.4 %) 23.8 %
annualized
Adjustment for net
realized and
unrealized (gains) (4.7 %) (8.9 %) (1.9 %) (7.5 %)
losses
on investments of
continuing operations
Adjustment for net
other-than-temporary - 0.1 % - 0.1 %
impairments of
continuing operations
Adjustment for net
realized and
unrealized gains on
fixed maturity
investments - (0.1 %) - (0.1 %)
and net
other-than-temporary
impairments of
discontinued
operations
Operating return on
average common equity (1.4 %) 17.9 % (16.3 %) 16.3 %
- annualized
The Company has also included in this Press Release "managed catastrophe premiums". "Managed catastrophe premiums" is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures, excluding catastrophe premiums assumed from the Company's Insurance segment. "Managed catastrophe premiums" differs from total catastrophe unit gross premiums written, 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, the inclusion of catastrophe premiums written on behalf of the Company's Lloyd's segment, and the exclusion of catastrophe premiums assumed from the Company's Insurance segment. The Company's management believes "managed catastrophe premiums" is useful to investors and other interested parties because it provides a measure of total catastrophe premiums, as applicable, assumed by the Company through its consolidated subsidiaries and related joint ventures, excluding catastrophe premiums assumed from the Company's Insurance segment.
Source: RenaissanceRe Holdings Ltd.
Released July 26, 2011