RenaissanceRe Reports Net Income Available to RenaissanceRe Common Shareholders of $210.2 Million for the Second Quarter of 2010 or $3.66 Per Diluted Common Share
Operating Income of $139.9 Million for the Second Quarter of 2010 or $2.40 Per Diluted Common Share
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to common shareholders of $210.2 million or $3.66 per diluted common share in the second quarter of 2010, compared to net income available to common shareholders of $271.2 million or $4.32 per diluted common share for the second quarter of 2009. Operating income available to common shareholders was $139.9 million or $2.40 per diluted common share in the second quarter of 2010, compared to operating income available to common shareholders of $254.1 million or $4.05 per diluted common share for the second quarter of 2009. Operating income excludes net realized and unrealized gains on fixed maturity investments of $71.1 million and net other-than-temporary impairments of $0.8 million in the second quarter of 2010 and net realized gains on fixed maturity investments of $18.9 million and net other-than-temporary impairments of $1.8 million in the second quarter of 2009.
The Company reported an annualized return on average common equity of 26.8% and an annualized operating return on average common equity of 17.9% in the second quarter of 2010, compared to 41.5% and 38.9%, respectively, in the second quarter of 2009. Book value per common share increased $3.10, to $56.96 at June 30, 2010, a 5.8% increase in the second quarter of 2010, compared to an 11.4% increase in the second quarter of 2009.
Neill A. Currie, CEO, commented: "I am pleased to report another good quarter with an annualized operating return on average common equity of 18% and growth in book value per share of almost 6%. We generated strong underwriting profits, had a successful June 1st renewal season, and have underwritten an attractive portfolio of risks. We actively managed our capital during the quarter and remain committed to generating superior returns for our shareholders."
Mr. Currie added: "Our ability to produce an attractive portfolio of business in this market is a testament to our position as a market leader with strong client and broker relationships. We will continue to maintain our strong underwriting discipline in this market while also continuing to focus on risk management and laying the foundation for future opportunities and long-term performance."
SECOND QUARTER 2010 RESULTS
Underwriting Results
Gross premiums written for the second quarter of 2010 decreased $13.7 million, or 1.6%, to $841.5 million, compared to $855.2 million for the second quarter of 2009. As described in more detail below, the decrease in gross premiums written was primarily due to a decrease in managed catastrophe premiums of $70.4 million, or 12.0%, and partially offset by increases in the Company's specialty, Lloyd's and Insurance premiums. The Company generated $188.5 million of underwriting income and had a combined ratio of 42.3% in the second quarter of 2010, compared to $213.6 million of underwriting income and a 43.8% combined ratio in the second quarter of 2009. Included in the Company's underwriting income for the second quarter of 2010 was $86.4 million of favorable development on prior year reserves, compared to $106.2 million of favorable development on prior year reserves in the second quarter of 2009.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment decreased $24.3 million, or 4.4%, to $531.4 million in the second quarter of 2010, compared to $555.6 million in the second quarter of 2009. The Company's managed catastrophe premiums decreased $70.4 million, or 12.0%, to $515.6 million in the second quarter of 2010, compared to $586.0 million in the second quarter of 2009. The Company's reduction in managed catastrophe premiums principally reflected the deterioration of attractive market conditions on a risk-adjusted basis in the Company's core markets combined with the nonrenewal of Timicuan Reinsurance II Ltd. ("Tim Re II"), a fully-collateralized property catastrophe joint venture for the 2009 underwriting year, that generated $41.8 million of gross premiums written in the second quarter of 2009. The Company's managed specialty reinsurance premiums increased $16.9 million, to $13.5 million in the second quarter of 2010, compared to $(3.4) million in the second quarter of 2009. The increase in the Company's specialty reinsurance premiums was primarily due to the negative impact during the second quarter of 2009 related to the non-renewal and portfolio transfer out of a catastrophe exposed homeowners personal lines property quota share contract, representing $24.2 million of negative gross premiums written in the second quarter of 2009. Excluding the impact of this transaction in the second quarter of 2009, the Company's managed specialty premiums decreased $7.3 million, or 35.3%, in the second quarter of 2010 compared to the second quarter of 2009. This decrease was due to reductions in several lines of business due to softening market conditions combined with the timing of a political risk trade credit contract which incepted in the second quarter of 2009 and renewed in the first quarter of 2010. The Company's newly formed Lloyd's unit generated $13.8 million of managed gross premiums written in the second quarter of 2010.
Through the first six months of 2010, the Company's managed catastrophe premiums are down 12.1%, compared to the first six months of 2009, after excluding $29.7 million of reinstatement gross premiums written in the first six months of 2010 as a result of European windstorm Xynthia and the Chilean earthquake. The Company's managed specialty premiums are up 40.4% through the first six months of 2010, compared to the first six months of 2009 and the Company's Lloyd's unit generated $27.0 million of managed premiums written in the first six months of 2010. The Company's Reinsurance segment premiums are prone to significant volatility due to the timing of contract inception and also due to the business being characterized by a relatively small number of relatively large transactions.
The Company's Reinsurance segment generated $181.5 million of underwriting income and had a combined ratio of 15.5% in the second quarter of 2010, compared to $212.4 million and 6.8%, respectively, in the second quarter of 2009. The $30.9 million decrease in underwriting income in the second quarter of 2010 was due in part to a $13.1 million decrease in net premiums earned, driven by the decrease in gross premiums written noted above, combined with a $3.2 million increase in current accident year losses and a $15.0 million decrease in favorable development on prior year reserves in the second quarter of 2010, compared to the second quarter of 2009. The increase in current accident year losses was due in part to the establishment of $15.0 million of incurred but not reported reserves in the second quarter of 2010 in the Company's specialty unit as a result of the Deepwater Horizon oil rig event. The Reinsurance segment experienced $81.4 million of favorable development in the second quarter of 2010 which includes $60.9 million in the Company's catastrophe unit, $20.5 million in the Company's specialty unit and $0.1 million in the Company's Lloyd's unit. The favorable development in the Company's catastrophe unit was due to a $33.6 million decrease in estimated ultimate losses associated with a review of mature, large, mainly international catastrophe events conducted during the quarter, $11.2 million associated with decreases in estimated ultimate losses on certain specific events, including the 2004 hurricanes, 2005 hurricanes and the 2009 Austrian floods, as a result of lower than expected claims emergence, and $15.7 million due to better than expected claims emergence associated with a large number of relatively small catastrophes. In addition, the Company's specialty unit experienced lower than expected claims emergence on prior accident year losses in the second quarter of 2010 which resulted in $20.5 million of favorable development on prior year reserves.
Insurance Segment
Gross premiums written for the Company's Insurance segment increased $32.5 million, or 10.9%, to $331.2 million in the second quarter of 2010, compared to $298.7 million in the second quarter of 2009, primarily due to growth in the Company's crop insurance gross premiums written during the second quarter of 2010. Crop insurance gross premiums written increased $38.8 million, or 16.5%, to $273.8 million in the second quarter of 2010, compared to $235.0 million in the second quarter of 2009, driven by new business resulting from the Company's growth in overall market share. Net premiums earned for the Insurance segment decreased $40.2 million, or 26.5%, to $111.7 million in the second quarter of 2010, compared to $151.9 million in the second quarter of 2009, primarily as a result of an increase in ceded premiums written, principally associated with the Company's crop business. Gross premiums written in the Company's Insurance segment can fluctuate significantly between quarters and between years based on several factors, including, without limitation, the timing of the inception or cessation of new program managers and quota share reinsurance contracts, including whether or not the Company has portfolio transfers in, or portfolio transfers out, of quota share reinsurance contracts of in-force books of business.
The Insurance segment generated $7.0 million of underwriting income and had a combined ratio of 93.7% in the second quarter of 2010, compared to $1.3 million of underwriting income and a combined ratio of 99.2% in the second quarter of 2009. The increase in underwriting income was primarily due to a $37.4 million decrease in net claims and claim expenses and a $12.5 million decrease in acquisition expenses, and partially offset by the $40.2 million decrease in net premiums earned, as noted above. The decrease in the net claims and claim expenses was principally driven by a reduction of losses in the Company's crop insurance line of business in the second quarter of 2010, compared to the second quarter of 2009, due to lower expected loss activity as well as an increase in ceded losses. The decrease in acquisition expenses in the second quarter of 2010, compared to the second quarter of 2009, was primarily related to the $67.7 million increase in ceded premiums written during the second quarter of 2010, which resulted in additional ceding commissions offsetting gross acquisition expenses, combined with an increase in the proportional amount of crop insurance gross premiums written to date, which have a lower acquisition expense ratio than the Company's other lines of business within its Insurance segment. The Company's Insurance segment experienced $5.0 million of favorable development on prior year reserves in the second quarter of 2010, compared to $9.9 million of favorable development in the second quarter of 2009.
Investments
Returns on the Company's investment portfolio decreased in the second quarter of 2010, compared to the second quarter of 2009, primarily due to lower total returns in certain of the Company's non-investment grade allocations, a portion of which the Company includes in other investments, as well as lower returns in its hedge fund and private equity investments during the second quarter of 2010, compared to the second quarter of 2009. The Company's total investment result, which includes the sum of net investment income, net realized and unrealized gains on fixed maturity investments and net other-than-temporary impairments was $88.5 million in the second quarter of 2010, compared to $150.8 million in the second quarter of 2009. The Company's total investment result for the second quarter of 2010 was favorably impacted by declining interest rates, which was partially offset by a widening of credit spreads. Although the decline in interest rates resulted in improved total returns in the second quarter of 2010 on the Company's fixed maturity portfolio, the overall yield on the fixed maturity portfolio has declined, which the Company currently expects will result in lower net investment income in future periods based on the Company's current portfolio.
Net investment income was $27.6 million in the second quarter of 2010, compared to net investment income of $114.3 million in the second quarter of 2009. The $86.7 million decrease in net investment income was principally driven by a $69.9 million decrease from the Company's other investments, driven by lower returns for the Company's investments in senior secured bank loan funds and non-U.S. fixed income funds, a $4.1 million decrease from its hedge fund and private equity investments and a $12.3 million decrease in net investment income from its fixed maturity investments. The Company's hedge fund, private equity and other investments are accounted for at fair value with the change in fair value recorded in net investment income which included net unrealized losses of $19.2 million in the second quarter of 2010, compared to $69.3 million of net unrealized gains in the second quarter of 2009.
Net realized and unrealized gains on fixed maturity investments were $71.1 million in the second quarter of 2010, compared to net realized gains on fixed maturity investments of $18.9 million in the second quarter of 2009, an improvement of $52.2 million. During the fourth quarter of 2009, the Company started designating, upon acquisition, certain fixed maturity investments as trading, rather than available for sale, and as a result, $48.0 million of net unrealized gains on these securities are recorded in net realized and unrealized gains on fixed maturity investments in the Company's consolidated statements of operations in the second quarter of 2010 rather than in accumulated other comprehensive income in shareholders' equity. Net other-than-temporary impairments recognized in earnings were $0.8 million in the second quarter of 2010, compared to $1.8 million for the second quarter of 2009. The Company's change in net unrealized gains on available for sale fixed maturity investments included in accumulated other comprehensive income for the second quarter of 2010 was a loss of $9.4 million.
Other Items
-- During the second quarter of 2010, the Company repurchased 3.7 million
common shares in open market transactions at an aggregate cost of $207.6
million and at an average share price of $56.10. On May 18, 2010, the
Company approved an increase in its authorized share repurchase program
to an aggregate amount of $500.0 million. At June 30, 2010, the Company
had $375.1 million available under its authorized share repurchase
program. The Company has not repurchased any additional shares
subsequent to June 30, 2010.
-- In July 2010, the Company sold its entire ownership interest in
ChannelRe Holdings Ltd. ("ChannelRe"), a financial guaranty reinsurance
company, for $15.8 million. The Company expects to record a $15.8
million gain in its third quarter 2010 financial results as a result of
the sale. The Company no longer has an ownership interest in ChannelRe
and has no contractual obligations to provide capital or other financial
support to ChannelRe.
This Press Release includes certain non-GAAP financial measures including "operating income available to RenaissanceRe common shareholders", "operating income available to RenaissanceRe common shareholders per common share - diluted", "operating return on average common equity - annualized", "managed catastrophe premiums", "managed specialty premiums" and "managed Lloyd's unit 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 28, 2010 at 8:30 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 two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance, its Lloyd's operations and certain joint ventures and other investments managed by the Company's subsidiary RenaissanceRe Ventures Ltd., and (2) Insurance, which principally includes primary insurance. Effective January 1, 2010, the Company renamed its Individual Risk segment, Insurance.
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, 2009 and its quarterly reports on Form 10-Q.
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,
2010 2009 2010 2009
Revenues
Gross premiums written $ 841,506 $ 855,172 $ 1,404,971 $ 1,453,473
Net premiums written $ 552,562 $ 631,370 $ 968,545 $ 1,078,206
Increase in unearned (226,040 ) (251,553 ) (363,897 ) (396,641 )
premiums
Net premiums earned 326,522 379,817 604,648 681,565
Net investment income 27,607 114,293 94,788 156,419
Net foreign exchange (609 ) (4,162 ) (11,951 ) (14,317 )
losses
Equity in earnings of 3,160 5,432 5,316 7,168
other ventures
Other loss (3,094 ) (3,656 ) (8,825 ) (18,451 )
Net realized and
unrealized gains on 71,106 18,889 119,704 41,015
fixed maturity
investments
Total
other-than-temporary (798 ) (5,289 ) (831 ) (24,311 )
impairments
Portion recognized in
other comprehensive 2 3,456 2 3,456
income, before taxes
Net
other-than-temporary (796 ) (1,833 ) (829 ) (20,855 )
impairments
Total revenues 423,896 508,780 802,851 832,544
Expenses
Net claims and claim 47,667 66,823 126,724 153,020
expenses incurred
Acquisition expenses 39,944 52,495 84,619 97,099
Operational expenses 50,376 46,865 114,927 86,622
Corporate expenses 4,824 6,339 10,383 12,927
Interest expense 6,206 4,200 9,362 8,336
Total expenses 149,017 176,722 346,015 358,004
Income before taxes 274,879 332,058 456,836 474,540
Income tax (expense) (2,148 ) (652 ) 2,067 200
benefit
Net income 272,731 331,406 458,903 474,740
Net income attributable
to redeemable (51,915 ) (49,652 ) (62,465 ) (85,127 )
noncontrolling interest
- DaVinciRe
Net income
attributable to 220,816 281,754 396,438 389,613
RenaissanceRe
Dividends on preference (10,575 ) (10,575 ) (21,150 ) (21,150 )
shares
Net income available
to RenaissanceRe $ 210,241 $ 271,179 $ 375,288 $ 368,463
common shareholders
Operating income
available to
RenaissanceRe
common shareholders
per common share - $ 2.40 $ 4.05 $ 4.30 $ 5.57
diluted (1)
Net income available to
RenaissanceRe common
shareholders per $ 3.69 $ 4.35 $ 6.42 $ 5.94
common share - basic
Net income available to
RenaissanceRe common
shareholders per $ 3.66 $ 4.32 $ 6.37 $ 5.90
common share - diluted
Average shares 55,538 60,963 56,972 60,799
outstanding - basic
Average shares 56,044 61,322 57,465 61,156
outstanding - diluted
Net claims and claim 14.6 % 17.6 % 21.0 % 22.5 %
expense ratio
Underwriting expense 27.7 % 26.2 % 33.0 % 26.9 %
ratio
Combined ratio 42.3 % 43.8 % 54.0 % 49.4 %
Operating return on
average common equity - 17.9 % 38.9 % 16.3 % 27.5 %
annualized (1)
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial
measures.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
June 30, December 31,
2010 2009
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale, at $ 725,730 $ 3,559,197
fair value
Fixed maturity investments trading, at fair value 3,847,759 736,595
Total fixed maturity investments, at fair value 4,573,489 4,295,792
Short term investments, at fair value 792,308 1,002,306
Other investments, at fair value 782,345 858,026
Investments in other ventures, under equity method 86,448 97,287
Total investments 6,234,590 6,253,411
Cash and cash equivalents 285,054 260,716
Premiums receivable 1,021,496 589,827
Ceded reinsurance balances 276,296 91,852
Losses recoverable 179,841 194,241
Accrued investment income 34,649 31,928
Deferred acquisition costs 100,725 61,870
Receivable for investments sold 153,923 7,431
Other secured assets 17,418 27,730
Other assets 174,924 205,347
Goodwill and other intangibles 74,143 76,688
Total assets $ 8,553,059 $ 7,801,041
Liabilities, Redeemable Noncontrolling Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 1,682,083 $ 1,702,006
Reserve for unearned premiums 994,990 446,649
Debt 549,109 300,000
Reinsurance balances payable 406,891 381,548
Payable for investments purchased 202,562 59,236
Other secured liabilities 17,500 27,500
Other liabilities 217,141 256,669
Total liabilities 4,070,276 3,173,608
Redeemable noncontrolling interest - DaVinciRe 707,541 786,647
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 54,872 61,745
Additional paid-in capital - -
Accumulated other comprehensive income 22,153 41,438
Retained earnings 3,048,217 3,087,603
Total shareholders' equity 3,775,242 3,840,786
Total liabilities, redeemable noncontrolling $ 8,553,059 $ 7,801,041
interest and shareholders' equity
Book value per common share $ 56.96 $ 51.68
Common shares outstanding 54,872 61,745
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars) (Unaudited)
Three months ended June 30, 2010
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 531,358 $ 331,224 $ (21,076 ) $ - $ 841,506
written
Net premiums written $ 351,330 $ 201,232 - $ 552,562
Net premiums earned $ 214,853 $ 111,669 - $ 326,522
Net claims and claim (22,580 ) 70,247 - 47,667
expenses incurred
Acquisition expenses 21,113 18,831 - 39,944
Operational expenses 34,822 15,554 - 50,376
Underwriting income $ 181,498 $ 7,037 - 188,535
Net investment 27,607 27,607
income
Equity in earnings 3,160 3,160
of other ventures
Other loss (3,094 ) (3,094 )
Interest and
preference share (16,781 ) (16,781 )
dividends
Redeemable
noncontrolling (51,915 ) (51,915 )
interest - DaVinciRe
Other items, net (7,581 ) (7,581 )
Net realized and
unrealized gains on 71,106 71,106
fixed maturity
investments
Net
other-than-temporary (796 ) (796 )
impairments
Net income available
to RenaissanceRe $ 21,706 $ 210,241
common shareholders
Net claims and claim
expenses incurred - $ 58,808 $ 75,274 $ 134,082
current accident
year
Net claims and claim
expenses incurred - (81,388 ) (5,027 ) (86,415 )
prior accident years
Net claims and claim
expenses incurred - $ (22,580 ) $ 70,247 $ 47,667
total
Net claims and claim
expense ratio - 27.4 % 67.4 % 41.1 %
current accident
year
Net claims and claim
expense ratio - (37.9 %) (4.5 %) (26.5 %)
prior accident years
Net claims and claim
expense ratio - (10.5 %) 62.9 % 14.6 %
calendar year
Underwriting expense 26.0 % 30.8 % 27.7 %
ratio
Combined ratio 15.5 % 93.7 % 42.3 %
(1) Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.
Three months ended June 30, 2009
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 555,632 $ 298,731 $ 809 $ - $ 855,172
written
Net premiums written $ 394,981 $ 236,389 - $ 631,370
Net premiums earned $ 227,912 $ 151,905 - $ 379,817
Net claims and claim (40,789 ) 107,612 - 66,823
expenses incurred
Acquisition expenses 21,136 31,359 - 52,495
Operational expenses 35,189 11,676 - 46,865
Underwriting income $ 212,376 $ 1,258 - 213,634
Net investment 114,293 114,293
income
Equity in earnings 5,432 5,432
of other ventures
Other loss (3,656 ) (3,656 )
Interest and
preference share (14,775 ) (14,775 )
dividends
Redeemable
noncontrolling (49,652 ) (49,652 )
interest - DaVinciRe
Other items, net (11,153 ) (11,153 )
Net realized gains 18,889 18,889
on investments
Net
other-than-temporary (1,833 ) (1,833 )
impairments
Net income available
to RenaissanceRe $ 57,545 $ 271,179
common shareholders
Net claims and claim
expenses incurred - $ 55,575 $ 117,465 $ 173,040
current accident
year
Net claims and claim
expenses incurred - (96,364 ) (9,853 ) (106,217 )
prior accident years
Net claims and claim
expenses incurred - $ (40,789 ) $ 107,612 $ 66,823
total
Net claims and claim
expense ratio - 24.4 % 77.3 % 45.6 %
current accident
year
Net claims and claim
expense ratio - (42.3 %) (6.5 %) (28.0 %)
prior accident years
Net claims and claim
expense ratio - (17.9 %) 70.8 % 17.6 %
calendar year
Underwriting expense 24.7 % 28.4 % 26.2 %
ratio
Combined ratio 6.8 % 99.2 % 43.8 %
(1) Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars) (Unaudited)
Six months ended June 30, 2010
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 1,043,750 $ 383,104 $ (21,883 ) $ - $ 1,404,971
written
Net premiums written $ 753,639 $ 214,906 - $ 968,545
Net premiums earned $ 464,893 $ 139,755 - $ 604,648
Net claims and claim 78,954 47,770 - 126,724
expenses incurred
Acquisition expenses 44,931 39,688 - 84,619
Operational expenses 74,973 39,954 - 114,927
Underwriting income $ 266,035 $ 12,343 - 278,378
Net investment 94,788 94,788
income
Equity in earnings 5,316 5,316
of other ventures
Other loss (8,825 ) (8,825 )
Interest and
preference share (30,512 ) (30,512 )
dividends
Redeemable
noncontrolling (62,465 ) (62,465 )
interest - DaVinciRe
Other items, net (20,267 ) (20,267 )
Net realized and
unrealized gains on 119,704 119,704
fixed maturity
investments
Net
other-than-temporary (829 ) (829 )
impairments
Net income available
to RenaissanceRe $ 96,910 $ 375,288
common shareholders
Net claims and claim
expenses incurred - $ 265,559 $ 109,279 $ 374,838
current accident
year
Net claims and claim
expenses incurred - (186,605 ) (61,509 ) (248,114 )
prior accident years
Net claims and claim
expenses incurred - $ 78,954 $ 47,770 $ 126,724
total
Net claims and claim
expense ratio - 57.1 % 78.2 % 62.0 %
current accident
year
Net claims and claim
expense ratio - (40.1 %) (44.0 %) (41.0 %)
prior accident years
Net claims and claim
expense ratio - 17.0 % 34.2 % 21.0 %
calendar year
Underwriting expense 25.8 % 57.0 % 33.0 %
ratio
Combined ratio 42.8 % 91.2 % 54.0 %
(1) Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.
Six months ended June 30, 2009
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 1,088,548 $ 363,880 $ 1,045 $ - $ 1,453,473
written
Net premiums written $ 809,768 $ 268,438 - $ 1,078,206
Net premiums earned $ 453,883 $ 227,682 - $ 681,565
Net claims and claim (24,218 ) 177,238 - 153,020
expenses incurred
Acquisition expenses 40,157 56,942 - 97,099
Operational expenses 64,304 22,318 - 86,622
Underwriting income $ 373,640 $ (28,816 ) - 344,824
(loss)
Net investment 156,419 156,419
income
Equity in earnings 7,168 7,168
of other ventures
Other loss (18,451 ) (18,451 )
Interest and
preference share (29,486 ) (29,486 )
dividends
Redeemable
noncontrolling (85,127 ) (85,127 )
interest - DaVinciRe
Other items, net (27,044 ) (27,044 )
Net realized gains 41,015 41,015
on investments
Net
other-than-temporary (20,855 ) (20,855 )
impairments
Net income available
to RenaissanceRe $ 23,639 $ 368,463
common shareholders
Net claims and claim
expenses incurred - $ 96,881 $ 155,094 $ 251,975
current accident
year
Net claims and claim
expenses incurred - (121,099 ) 22,144 (98,955 )
prior accident years
Net claims and claim
expenses incurred - $ (24,218 ) $ 177,238 $ 153,020
total
Net claims and claim
expense ratio - 21.3 % 68.1 % 37.0 %
current accident
year
Net claims and claim
expense ratio - (26.6 %) 9.7 % (14.5 %)
prior accident years
Net claims and claim
expense ratio - (5.3 %) 77.8 % 22.5 %
calendar year
Underwriting expense 23.0 % 34.9 % 26.9 %
ratio
Combined ratio 17.7 % 112.7 % 49.4 %
(1) Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written and Managed Premiums
(in thousands of United States Dollars)
(Unaudited)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Reinsurance Segment
2010 2009 2010 2009
Renaissance catastrophe $ 302,625 $ 356,269 $ 570,919 $ 645,899
premiums
Renaissance specialty 7,389 (3,370 ) 79,838 65,603
premiums
Total Renaissance premiums 310,014 352,899 650,757 711,502
DaVinci catastrophe 186,917 202,733 342,743 374,519
premiums
DaVinci specialty premiums (414 ) - 1,602 2,527
Total DaVinci premiums 186,503 202,733 344,345 377,046
Lloyd's catastrophe 7,324 - 12,993 -
premiums
Lloyd's specialty premiums 6,508 - 14,231 -
Lloyd's Insurance premiums 21,009 - 21,641 -
Total Lloyd's unit 34,841 - 48,865 -
premiums
Catastrophe unit premiums - - (217 ) -
ceded to the Lloyd's unit
Total Lloyd's unit
premiums, net of 34,841 - 48,648 -
inter-unit cessions
Total Reinsurance segment $ 531,358 $ 555,632 $ 1,043,750 $ 1,088,548
premiums
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Insurance Segment
2010 2009 2010 2009
Crop $ 273,833 $ 234,994 $ 280,969 $ 243,146
Commercial multi-line 30,911 25,447 57,715 50,089
Commercial property 20,801 32,366 33,809 48,487
Personal lines property 5,679 5,924 10,611 22,158
Total Insurance segment $ 331,224 $ 298,731 $ 383,104 $ 363,880
premiums
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Managed Premiums (1)
2010 2009 2010 2009
Total catastrophe unit $ 489,542 $ 559,002 $ 913,662 $ 1,020,418
premiums
Catastrophe premiums
written on behalf of our 18,793 26,184 44,979 49,976
joint venture, Top Layer
Re (2)
Catastrophe premiums
written in the Lloyd's 7,324 - 12,776 -
unit
Catastrophe premiums
assumed from the Insurance (67 ) 809 (242 ) 1,045
segment
Total managed catastrophe $ 515,592 $ 585,995 $ 971,175 $ 1,071,439
premiums (1)
Total specialty unit $ 6,975 $ (3,370 ) $ 81,440 $ 68,130
premiums
Specialty premiums written 6,508 - 14,231 -
in the Lloyd's unit
Total managed specialty $ 13,483 $ (3,370 ) $ 95,671 $ 68,130
premiums (1)
Total Lloyd's unit premiums $ 34,841 $ - $ 48,865 $ -
Catastrophe unit premiums - - (217 ) -
ceded to the Lloyd's unit
Insurance segment premiums (21,009 ) - (21,641 ) -
ceded to the Lloyd's unit
Total managed Lloyd's unit $ 13,832 $ - $ 27,007 $ -
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,
2010 2009 2010 2009
Fixed maturity investments $ 27,742 $ 40,007 $ 56,385 $ 79,134
Short term investments 2,458 2,741 4,742 5,812
Other investments
Hedge funds and private 8,188 12,327 25,724 (7,414 )
equity investments
Other (8,184 ) 61,740 13,034 83,561
Cash and cash equivalents 65 157 131 530
30,269 116,972 100,016 161,623
Investment expenses (2,662 ) (2,679 ) (5,228 ) (5,204 )
Net investment income 27,607 114,293 94,788 156,419
Gross realized gains 29,058 33,213 77,945 64,636
Gross realized losses (5,962 ) (14,324 ) (11,132 ) (23,621 )
Net realized gains on fixed 23,096 18,889 66,813 41,015
maturity investments
Net unrealized gains on fixed 48,010 - 52,891 -
maturity investments trading
Net realized and unrealized
gains on fixed maturity 71,106 18,889 119,704 41,015
investments
Total other-than-temporary (798 ) (5,289 ) (831 ) (24,311 )
impairments
Portion recognized in other
comprehensive income, before 2 3,456 2 3,456
taxes
Net other-than-temporary (796 ) (1,833 ) (829 ) (20,855 )
impairments
Net unrealized losses on
fixed maturity investments (9,414 ) (57,166 ) (18,055 ) (62,573 )
available for sale
FAS 115-2 cumulative effect - 76,615 - 76,615
adjustment (1)
Net change in unrealized
holding gains on
fixed maturity investments (9,414 ) 19,449 (18,055 ) 14,042
available for sale
Total investment result $ 88,503 $ 150,798 $ 195,608 $ 190,621
(1) Cumulative effect adjustment to opening retained earnings as of April 1,
2009, related to the recognition and presentation of other-than-temporary
impairments, as required by FASB ASC Topic Investments - Debt and Equity
Securities.
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating income 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 income available to RenaissanceRe common shareholders" as used herein differs from "net income 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 fixed maturity investments and net other-than-temporary impairments. The Company's management believes that "operating income 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. The Company also uses "operating income available to RenaissanceRe common shareholders" to calculate "operating income 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 available to RenaissanceRe common shareholders to operating income available to RenaissanceRe common shareholders; 2) net income available to RenaissanceRe common shareholders per common share - diluted to operating income 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 United June 30, June 30, June 30, June 30,
States Dollars, except
for per share amounts) 2010 2009 2010 2009
Net income available to
RenaissanceRe common $ 210,241 $ 271,179 $ 375,288 $ 368,463
shareholders
Adjustment for net
realized and
unrealized gains on (71,106 ) (18,889 ) (119,704 ) (41,015 )
fixed maturity
investments
Adjustment for net
other-then-temporary 796 1,833 829 20,855
impairments
Operating income
available to $ 139,931 $ 254,123 $ 256,413 $ 348,303
RenaissanceRe common
shareholders
Net income available to
RenaissanceRe common $ 3.66 $ 4.32 $ 6.37 $ 5.90
shareholders per common
share - diluted
Adjustment for net
realized and
unrealized gains on (1.26 ) (0.31 ) (2.07 ) (0.67 )
fixed maturity
investments
Adjustment for net
other-then-temporary - 0.04 - 0.34
impairments
Operating income
available to
RenaissanceRe common $ 2.40 $ 4.05 $ 4.30 $ 5.57
shareholders per common
share - diluted
Return on average
common equity - 26.8 % 41.5 % 23.8 % 29.1 %
annualized
Adjustment for net
realized and
unrealized gains on (8.9 %) (2.9 %) (7.5 %) (3.2 %)
fixed maturity
investments
Adjustment for net
other-then-temporary - 0.3 % - 1.6 %
impairments
Operating return on
average common equity - 17.9 % 38.9 % 16.3 % 27.5 %
annualized
The Company has also included in this Press Release "managed catastrophe premiums", "managed specialty premiums" and "managed Lloyd's unit 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" differ from total catastrophe unit premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company's joint venture Top Layer Re, which is accounted for under the equity method of accounting, the inclusion of catastrophe premiums written on behalf of the Company's Lloyd's unit, and the exclusion of catastrophe premiums assumed from the Company's Insurance segment. "Managed specialty premiums" is defined as gross specialty premiums written by Renaissance Reinsurance, DaVinci and the Company's Lloyd's unit. "Managed specialty premiums" differ from total specialty unit premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of specialty premiums written on behalf of the Company's Lloyd's unit. "Managed Lloyd's unit premiums" is defined as gross premiums written by the Company Lloyd's unit, excluding premiums assumed from the Company's catastrophe unit and premiums assumed from the Company's Insurance segment. "Managed Lloyd's unit premiums" differ from total Lloyd's unit premiums, which the Company believes is the most directly comparable GAAP measure, due to the exclusion of premiums written on behalf of the Company's catastrophe unit, and the exclusion of premiums assumed from the Company's Insurance segment. The Company's management believes "managed catastrophe premiums", "managed specialty premiums" and "managed Lloyd's unit premiums" are useful to investors and other interested parties because they provide a measure of total catastrophe or specialty reinsurance premiums, as applicable, assumed by the Company through its consolidated subsidiaries and related joint ventures.
Source: RenaissanceRe Holdings Ltd.
Released July 27, 2010