RenaissanceRe Reports Net Loss of $248.0 Million for the First Quarter of 2011 or $4.69 Per Diluted Common Share; Operating Loss of $242.9 Million or $4.59 Per Diluted Common Share
Net Negative Impact of $427.4 Million for the First Quarter of 2011 Related to the Australian Flooding, the February 2011 New Zealand Earthquake and the Tohoku Earthquake
Book Value per Common Share Decreased $5.57, or 8.9%, to $57.01 at March 31, 2011
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported a net loss attributable to RenaissanceRe common shareholders of $248.0 million or $4.69 per diluted common share in the first quarter of 2011, compared to net income available to RenaissanceRe common shareholders of $165.0 million or $2.73 per diluted common share in the first quarter of 2010. Operating loss attributable to RenaissanceRe common shareholders was $242.9 million or $4.59 per diluted common share for the first quarter of 2011, compared to operating income available to RenaissanceRe common shareholders of $116.5 million or $1.91 per diluted common share in the first quarter of 2010. The Company reported an annualized return on average common equity of negative 31.3% and an annualized operating return on average common equity of negative 30.7% in the first quarter of 2011, compared to positive 20.9% and positive 14.8%, respectively, in the first quarter of 2010. See Comments on Regulation G for a reconciliation of non-GAAP measures.
Book value per common share decreased $5.57, or 8.9%, in the first quarter of 2011 to $57.01, compared to a 4.2% increase in the first quarter of 2010.
Neill A. Currie, CEO, commented: "This quarter's catastrophic events have caused enormous human tragedy, and we extend our sympathies to all those affected. As we have throughout the history of our Company, we are responding to the needs of our clients quickly, whether it is paying valid claims with industry leading speed, or providing additional coverage in the wake of these events."
Mr. Currie commented further: "In the aftermath of the large catastrophes that have occurred over the last year, and as our clients' view of risk evolves, we anticipate demand for our products will increase over time. Our experienced team has the tools and the capital necessary to respond to the needs of our clients."
FIRST QUARTER 2011 HIGHLIGHTS (1)
-- Gross premiums written increased $94.5 million, or 18.3%, to $610.5
million, primarily driven by reinstatement premiums written from the
large catastrophes of the first quarter of 2011 and increases across
most lines of business within the Lloyd's segment. Excluding the impact
of $113.5 million and $27.0 million of reinstatement premiums written in
the first quarter of 2011 and 2010, respectively, gross premiums written
increased $8.0 million, or 1.6%.
-- Underwriting loss of $397.2 million and a combined ratio of 230.0%,
principally due to the Australian flooding, the February 2011 New
Zealand earthquake and the Tohoku earthquake, as detailed in the table
below, which had a net negative impact (2)of $427.4 million and added
212.3 percentage points to the combined ratio.
Three months ended March 31, 2011
February 2011
Australian New Zealand Tohoku
(in thousands, Flooding Earthquake Earthquake Total
except ratios)
Net claims and
claim expenses $ (46,118 ) $ (209,840 ) $ (402,045 ) $ (658,003 )
incurred
Assumed
reinstatement 8,050 23,375 82,041 113,466
premiums earned
Ceded
reinstatement - (2,140 ) (9,889 ) (12,029 )
premiums earned
(Lost) earned (1,550 ) (8,452 ) 1,337 (8,665 )
profit commisions
Net impact on
underwriting (39,618 ) (197,057 ) (328,556 ) (565,231 )
result
Equity in losses - (23,758 ) - (23,758 )
of Top Layer Re
Recoveries from
ceded reinsurance
contracts - - 45,000 45,000
accounted for at
fair value
Redeemable
noncontrolling 8,274 42,125 66,146 116,545
interest -
DaVinciRe
Net negative $ (31,344 ) $ (178,690 ) $ (217,410 ) $ (427,444 )
impact
Percentage point
impact on 9.8 59.6 100.6 212.3
consolidated
combined ratio
Net negative
impact on
Reinsurance $ (39,618 ) $ (191,103 ) $ (313,980 ) $ (544,701 )
segment
underwriting
result
Net negative
impact on Lloyd's
segment - (5,954 ) (14,576 ) (20,530 )
underwriting
result
Net negative
impact on $ (39,618 ) $ (197,057 ) $ (328,556 ) $ (565,231 )
underwriting
result
Underwriting Results by Segment (1)
Reinsurance Segment
Gross premiums written in the Reinsurance segment were $573.7 million, an increase of $75.1 million, or 15.1%. The increase is primarily due to a $74.6 million increase in the catastrophe reinsurance unit as a result of reinstatement premiums written on the February 2011 New Zealand earthquake and the Tohoku earthquake, and partially offset by the then softening market conditions on a risk-adjusted basis in our core markets during the January 2011 renewals. Excluding the impact of $112.8 million and $27.0 million of reinstatement premiums written in the first quarter of 2011 and 2010, respectively, Reinsurance segment gross premiums written declined $10.7 million, or 2.3%, and managed catastrophe premiums written declined $13.0 million, or 3.0%.
The Reinsurance segment incurred an underwriting loss of $368.1 million and a combined ratio of 227.2%, compared to underwriting income of $87.4 million and a combined ratio of 64.0%. Current accident year net claims and claim expenses in the Reinsurance segment of $667.4 million are comprised of $606.2 million and $61.1 million related to the catastrophe and specialty units, respectively. As detailed in the table below, the large catastrophes of the first quarter of 2011 had a net impact on the Reinsurance segment underwriting result of $544.7 million and added 220.9 percentage points to the Reinsurance segment's combined ratio.
Three months ended March 31, 2011
February 2011
Australian New Zealand Tohoku
(in thousands, Flooding Earthquake Earthquake Total
except ratios)
Net claims and
claim expenses $ (46,118 ) $ (203,886 ) $ (387,053 ) $ (637,057 )
incurred
Assumed
reinstatement 8,050 23,375 81,327 112,752
premiums earned
Ceded
reinstatement - (2,140 ) (9,591 ) (11,731 )
premiums earned
(Lost) earned (1,550 ) (8,452 ) 1,337 (8,665 )
profit commissions
Net impact on
Reinsurance
segment $ (39,618 ) $ (191,103 ) $ (313,980 ) $ (544,701 )
underwriting
result
Net negative
impact on
catastrophe unit $ (33,618 ) $ (178,603 ) $ (293,980 ) $ (506,201 )
underwriting
result
Net negative
impact on
specialty unit (6,000 ) (12,500 ) (20,000 ) (38,500 )
underwriting
result
Net impact on
Reinsurance
segment $ (39,618 ) $ (191,103 ) $ (313,980 ) $ (544,701 )
underwriting
result
Percentage point
impact on
Reinsurance 10.4 61.2 102.3 220.9
segment combined
ratio
The Reinsurance segment experienced $72.0 million of favorable development on prior year reserves, including $19.7 million in the catastrophe unit due to reductions in estimated ultimate losses on certain specific events, and $52.3 million in the specialty unit, with $18.4 million related to lower than expected claims emergence, $26.8 million associated with actuarial assumption changes and the remainder due to reductions in ultimate losses on large events.
Lloyd's Segment
Gross premiums written in the Lloyd's segment increased by $22.6 million, or 161.1%, to $36.6 million, primarily due to Syndicate 1458 increasing its book of business across all lines of business, most notably in lines within its specialty business. The Lloyd's segment incurred an underwriting loss of $26.3 million and a combined ratio of 267.7%, compared to $2.9 million and 141.7%, respectively. Net claims and claim expenses are comprised primarily of $15.0 million related to the Tohoku earthquake and $6.0 million related to the February 2011 New Zealand earthquake, with the remainder due to incurred but not reported loss activity in the specialty lines of business.
Investments (1)
Total investment result, which includes net investment income, net realized and unrealized (losses) gains on investments, net other-than-temporary impairments and the change in net unrealized gains on fixed maturity investments available for sale, decreased $49.9 million, to $55.3 million, primarily due to the lower total returns on the fixed maturity investments portfolio and certain non-investment grade allocations included in other investments, and partially offset by improved returns on private equity investments. The average yield to maturity on the fixed maturity and short term investment portfolio was 2.1% at March 31, 2011.
Other Income (Loss) (1)
Other income improved $56.3 million to $50.1 million primarily due to:
-- ceded reinsurance contracts accounted for at fair value generating
income of $43.5 million, compared to a loss of $1.5 million, as a result
of net recoverables on the Tohoku earthquake which are included in the
determination of net negative impact from the large catastrophes of the
first quarter of 2011;
-- a $3.0 million gain on the sale of the Platinum warrants, compared to a
mark-to-market loss of $3.7 million; and
-- an improvement of $5.1 million in other income from the Company's
weather and energy risk management operations due to overall more
favorable trading conditions experienced during the period.
Other Items (1)
-- Equity in losses of other ventures of $23.8 million declined $25.9
million from prior year primarily due to our equity in losses of Top
Layer Re of $22.5 million as a result of net claims and claim expenses
related to the February 2011 New Zealand earthquake recorded by Top
Layer Re.
-- Net loss attributable to the redeemable noncontrolling interests of
$85.5 million deteriorated from net income attributable to
noncontrolling interests of $10.6 million, primarily due to the
decreased profitability of DaVinciRe as a result of the large
catastrophes of the first quarter of 2011 and an increase in the
Company's ownership of DaVinciRe to 44.0% at March 31, 2011, compared to
41.2% at March 31, 2010.
-- Approximately 2.7 million common shares were repurchased in open market
transactions at an aggregate cost of $174.8 million and at an average
share price of $65.84.
-- On April 1, 2011, DaVinciRe repaid in full the $200.0 million borrowed
under the DaVinciRe Credit Agreement.
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, April 27, 2011 at 10:00 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 first quarter of 2010 unless specifically stated.
(2) Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, lost profit commissions, redeemable noncontrolling interest, equity in the net claims and claim expenses of Top Layer Re, and other income with respect of ceded reinsurance contracts accounted for at fair value. 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 events, delays in receiving claims data, the contingent nature of business interruption and other exposures, 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
Revenues March 31, March 31,
2011 2010
Gross premiums written $ 610,505 $ 516,011
Net premiums written $ 452,575 $ 407,159
Increase in unearned premiums (147,034 ) (156,506 )
Net premiums earned 305,541 250,653
Net investment income 60,281 65,709
Net foreign exchange gains (losses) 660 (11,342 )
Equity in (losses) earnings of other ventures (23,753 ) 2,156
Other income (loss) 50,145 (6,191 )
Net realized and unrealized (losses) gains on (5,214 ) 48,200
investments
Total other-than-temporary impairments - (33 )
Portion recognized in other comprehensive - -
income, before taxes
Net other-than-temporary impairments - (33 )
Total revenues 387,660 349,152
Expenses
Net claims and claim expenses incurred 628,537 97,340
Acquisition expenses 32,335 26,435
Operational expenses 41,830 45,150
Corporate expenses 2,064 5,309
Interest expense 6,195 3,156
Total expenses 710,961 177,390
(Loss) income from continuing operations before (323,301 ) 171,762
taxes
Income tax benefit 52 2,963
(Loss) income from continuing operations (323,249 ) 174,725
(Loss) income from discontinued operations (1,526 ) 11,447
Net (loss) income (324,775 ) 186,172
Net loss (income) attributable to noncontrolling 85,492 (10,550 )
interests
Net (loss) income attributable to RenaissanceRe (239,283 ) 175,622
Dividends on preference shares (8,750 ) (10,575 )
Net (loss) income (attributable) available to
RenaissanceRe common shareholders $ (248,033 ) $ 165,047
Operating (loss) income (attributable) available
to RenaissanceRe
common shareholders per common share - diluted $ (4.59 ) $ 1.91
(1)
(Loss) income from continuing operations
(attributable) available to
RenaissanceRe common shareholders per common $ (4.66 ) $ 2.55
share - basic
(Loss) income from discontinued operations
(attributable) available to
RenaissanceRe common shareholders per common (0.03 ) 0.20
share - basic
Net (loss) income (attributable) available to
RenaissanceRe
common shareholders per common share - basic $ (4.69 ) $ 2.75
(Loss) income from continuing operations
(attributable) available to
RenaissanceRe common shareholders per common $ (4.66 ) $ 2.54
share - diluted (2)
(Loss) income from discontinued operations
(attributable) available to
RenaissanceRe common shareholders per common (0.03 ) 0.19
share - diluted (2)
Net (loss) income (attributable) available to
RenaissanceRe
common shareholders per common share - diluted $ (4.69 ) $ 2.73
(2)
Average shares outstanding - basic 51,504 58,407
Average shares outstanding - diluted (2) 51,504 58,887
Net claims and claim expense ratio 205.7 % 38.8 %
Expense ratio 24.3 % 28.6 %
Combined ratio 230.0 % 67.4 %
Operating return on average common equity - (30.7 %) 14.8 %
annualized (1)
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial
measures.
Earnings per share calculations use average common shares outstanding -
(2) 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
Assets March 31, December 31,
2011 2010
Fixed maturity investments trading, at fair value $ 3,678,549 $ 3,871,780
Fixed maturity investments available for sale, at 232,320 244,917
fair value
Total fixed maturity investments, at fair value 3,910,869 4,116,697
Short term investments, at fair value 1,518,542 1,110,364
Equity investments trading, at fair value 12,707 -
Other investments, at fair value 782,325 787,548
Investments in other ventures, under equity method 78,623 85,603
Total investments 6,303,066 6,100,212
Cash and cash equivalents 252,631 277,738
Premiums receivable 574,547 322,080
Prepaid reinsurance premiums 125,722 60,643
Reinsurance recoverable 324,124 101,711
Accrued investment income 33,580 34,560
Deferred acquisition costs 56,656 35,648
Receivable for investments sold 136,943 99,226
Other secured assets 14,169 14,250
Other assets 176,644 205,373
Goodwill and other intangibles 14,537 14,690
Assets of discontinued operations held for sale 2,481 872,147
Total assets $ 8,015,100 $ 8,138,278
Liabilities, Noncontrolling Interests and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 2,070,095 $ 1,257,843
Unearned premiums 500,165 286,183
Debt 549,178 549,155
Reinsurance balances payable 256,663 318,024
Payable for investments purchased 417,257 195,383
Other secured liabilities 14,000 14,000
Other liabilities 165,717 222,310
Liabilities of discontinued operations held for 2,246 598,511
sale
Total liabilities 3,975,321 3,441,409
Redeemable noncontrolling interest - DaVinciRe 536,717 757,655
Shareholders' Equity
Preference shares 550,000 550,000
Common shares 51,742 54,110
Accumulated other comprehensive income 19,845 19,823
Retained earnings 2,878,315 3,312,392
Total shareholders' equity attributable to 3,499,902 3,936,325
RenaissanceRe
Noncontrolling interest 3,160 2,889
Total shareholders' equity 3,503,062 3,939,214
Total liabilities, noncontrolling interests and $ 8,015,100 $ 8,138,278
shareholders' equity
Book value per common share $ 57.01 $ 62.58
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars) (Unaudited)
Three months ended March 31, 2011
Reinsurance Lloyd's Insurance Eliminations Other Total
(1)
Gross premiums $ 573,682 $ 36,620 $ 280 $ (77) $ - $ 610,505
written
Net premiums $ 423,566 $ 28,737 $ 272 - $ 452,575
written
Net premiums $ 289,429 $ 15,674 $ 438 - $ 305,541
earned
Net claims and
claim expenses 595,404 30,523 2,610 - 628,537
incurred
Acquisition 29,792 2,461 82 - 32,335
expenses
Operational 32,363 8,972 495 - 41,830
expenses
Underwriting $ (368,130) $ (26,282) $ (2,749) - (397,161)
loss
Net investment 60,281 60,281
income
Net foreign 660 660
exchange gains
Equity in
losses of (23,753) (23,753)
other ventures
Other income 50,145 50,145
Net realized
and unrealized (5,214) (5,214)
losses on
investments
Corporate (2,064) (2,064)
expenses
Interest (6,195) (6,195)
expense
Loss from
continuing (323,301)
operations
before taxes
Income tax 52 52
benefit
Loss from
discontinued (1,526) (1,526)
operations
Net loss
attributable
to 85,492 85,492
noncontrolling
interests
Dividends on
preference (8,750) (8,750)
shares
Net loss
attributable
to $ (248,033)
RenaissanceRe
common
shareholders
Net claims and
claim expenses
incurred - $ 667,362 $ 29,326 $ 9 $ 696,697
current
accident year
Net claims and
claim expenses
incurred - (71,958) 1,197 2,601 (68,160)
prior accident
years
Net claims and
claim expenses $ 595,404 $ 30,523 $ 2,610 $ 628,537
incurred -
total
Net claims and
claim expense
ratio - 230.6% 187.1% 2.1% 228.0%
current
accident year
Net claims and
claim expense (24.9%) 7.6% 593.8% (22.3%)
ratio - prior
accident years
Net claims and
claim expense 205.7% 194.7% 595.9% 205.7%
ratio -
calendar year
Underwriting 21.5% 73.0% 131.7% 24.3%
expense ratio
Combined ratio 227.2% 267.7% 727.6% 230.0%
(1) Represents $0.1 million of gross premiums ceded from the Reinsurance
segment to the Lloyd's segment.
Three months ended March 31, 2010
Reinsurance Lloyd's Insurance Eliminations Other Total
(1)
Gross premiums $ 498,585 $ 14,024 $ 4,427 $ (1,025) $ - $ 516,011
written
Net premiums written $ 388,658 $ 13,651 $ 4,850 - $ 407,159
Net premiums earned $ 243,069 $ 6,971 $ 613 - $ 250,653
Net claims and claim 98,947 2,587 (4,194) - 97,340
expenses incurred
Acquisition expenses 22,659 1,159 2,617 - 26,435
Operational expenses 34,017 6,134 4,999 - 45,150
Underwriting income $ 87,446 $ (2,909 ) $ (2,809) - 81,728
(loss)
Net investment 65,709 65,709
income
Net foreign exchange (11,342) (11,342)
losses
Equity in earnings 2,156 2,156
of other ventures
Other loss (6,191) (6,191)
Net realized and
unrealized gains on 48,200 48,200
fixed maturity
investments
Net
other-than-temporary (33) (33)
impairments
Corporate expenses (5,309) (5,309)
Interest expense (3,156) (3,156)
Income from
continuing 171,762
operations before
taxes
Income tax benefit 2,963 2,963
Income from
discontinued 11,447 11,447
operations
Net income
attributable to
redeemable (10,550) (10,550)
noncontrolling
interest - DaVinciRe
Dividends on (10,575) (10,575)
preference shares
Net income available
to RenaissanceRe $ 165,047
common shareholders
Net claims and claim
expenses incurred - $ 204,065 $ 2,686 $ 2,859 $ 209,610
current accident
year
Net claims and claim
expenses incurred - (105,118) (99) (7,053) (112,270)
prior accident years
Net claims and claim
expenses incurred - $ 98,947 $ 2,587 $ (4,194) $ 97,340
total
Net claims and claim
expense ratio - 84.0% 38.5% 466.4% 83.6%
current accident
year
Net claims and claim
expense ratio - (43.3%) (1.4%) (1,150.6%) (44.8%)
prior accident years
Net claims and claim
expense ratio - 40.7% 37.1% (684.2%) 38.8%
calendar year
Underwriting expense 23.3% 104.6% 1,242.4% 28.6%
ratio
Combined ratio 64.0% 141.7% 558.2% 67.4%
Represents $0.8 million and $0.2 million of gross premiums ceded from the
(1) Insurance segment to the Reinsurance segment and from the Reinsurance
segment to the Lloyd's segment, respectively.
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
Reinsurance segment March 31, March 31,
2011 2010
Renaissance catastrophe premiums $ 311,642 $ 268,294
Renaissance specialty premiums 74,395 72,449
Total Renaissance premiums 386,037 340,743
DaVinci catastrophe premiums 187,036 155,826
DaVinci specialty premiums 609 2,016
Total DaVinci premiums 187,645 157,842
Total catastrophe unit premiums 498,678 424,120
Total specialty unit premiums 75,004 74,465
Total Reinsurance segment gross premiums written $ 573,682 $ 498,585
Lloyd's segment
Specialty $ 29,235 $ 7,723
Catastrophe 7,385 5,669
Insurance - 632
Total Lloyd's segment gross premiums written $ 36,620 $ 14,024
Insurance Segment
Commercial property $ 280 $ 1,097
Personal lines property - 3,330
Total Insurance segment gross premiums written $ 280 $ 4,427
Three months ended
March 31, March 31,
Managed Premiums (1) 2011 2010
Total catastrophe unit gross premiums written $ 498,678 $ 424,120
Catastrophe premiums written on behalf of our 22,528 26,186
joint venture, Top Layer Re (2)
Catastrophe premiums written in the Lloyd's 7,385 5,669
segment
Catastrophe premiums assumed from the Insurance - (175 )
segment
Total managed catastrophe premiums (1) $ 528,591 $ 455,800
(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
March 31, March 31,
2011 2010
Fixed maturity investments $ 27,913 $ 28,875
Short term investments 595 486
Equity investments trading 14 -
Other investments
Hedge funds and private equity investments 23,507 17,536
Other 10,827 21,218
Cash and cash equivalents 41 61
62,897 68,176
Investment expenses (2,616 ) (2,467 )
Net investment income 60,281 65,709
Gross realized gains 10,562 48,848
Gross realized losses (12,617 ) (5,170 )
Net realized (losses) gains on fixed maturity (2,055 ) 43,678
investments
Net unrealized (losses) gains on fixed maturity (3,758 ) 4,522
investments trading
Net unrealized gains on equity investments trading 599 -
Net realized and unrealized (losses) gains on (5,214 ) 48,200
investments
Total other-than-temporary impairments - (33 )
Portion recognized in other comprehensive income, - -
before taxes
Net other-than-temporary impairments - (33 )
Change in net unrealized gains on fixed maturity 252 (8,641 )
investment available for sale
Total investment result $ 55,319 $ 105,235
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 (loss) income (attributable) available 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 (loss) income (attributable) available to RenaissanceRe common shareholders to operating (loss) income (attributable) available to RenaissanceRe common shareholders; 2) net (loss) income (attributable) available 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
(in thousands of United States dollars, except March 31, March 31,
for per share
amounts) 2011 2010
Net (loss) income (attributable) available to $ (248,033 ) $ 165,047
RenaissanceRe common shareholders
Adjustment for net realized and unrealized
losses (gains)
on investments of continuing operations 5,214 (48,200 )
Adjustment for net other-than-temporary - 33
impairments of continuing operations
Adjustment for net realized and unrealized gains
on fixed maturity investments
and net other-than-temporary impairments of (42 ) (398 )
discontinued operations
Operating (loss) income (attributable) available $ (242,861 ) $ 116,482
to RenaissanceRe common shareholders
Net (loss) income (attributable) available to
RenaissanceRe common shareholders
per common share - diluted (1) $ (4.69 ) $ 2.73
Adjustment for net realized and unrealized
losses (gains)
on investments of continuing operations 0.10 (0.82 )
Adjustment for net other-than-temporary - -
impairments of continuing operations
Adjustment for net realized and unrealized gains
on fixed maturity investments
and net other-than-temporary impairments of - -
discontinued operations
Operating (loss) income (attributable) available
to RenaissanceRe common shareholders
per common share - diluted (1) $ (4.59 ) $ 1.91
Return on average common equity - annualized (31.3 %) 20.9 %
Adjustment for net realized and unrealized
losses (gains)
on investments of continuing operations 0.6 % (6.1 %)
Adjustment for net other-than-temporary - -
impairments of continuing operations
Adjustment for net realized and unrealized gains
on fixed maturity investments
and net other-than-temporary impairments of - -
discontinued operations
Operating return on average common equity - (30.7 %) 14.8 %
annualized
Earnings per share calculations use average common shares outstanding -
(1) basic, when in a net loss position, as required by FASB ASC Topic Earnings
per Share.
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.
Source: RenaissanceRe Holdings Ltd.
Released April 26, 2011