RenaissanceRe Reports Net Income of $165.0 Million for the First Quarter of 2010 or $2.73 Per Diluted Common Share; Operating Income of $116.5 Million or $1.91 Per Diluted Common Share
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to common shareholders of $165.0 million or $2.73 per diluted common share in the first quarter of 2010, compared to $97.3 million or $1.57 per diluted common share for the first quarter of 2009. Operating income available to common shareholders was $116.5 million or $1.91 per diluted common share in the first quarter of 2010, compared to $94.2 million or $1.52 per diluted common share in the first quarter of 2009. Operating income excludes net realized and unrealized gains on fixed maturity investments of $48.6 million and net other-than-temporary impairments of $33 thousand in the first quarter of 2010 and net realized gains on fixed maturity investments of $22.1 million and net other-than-temporary impairments of $19.0 million in the first quarter of 2009.
The Company reported an annualized return on average common equity of 20.9% and an annualized operating return on average common equity of 14.8% in the first quarter of 2010, compared to 16.0% and 15.5%, respectively, in the first quarter of 2009. Book value per common share increased to $53.86 at March 31, 2010, a 4.2% increase in the first quarter of 2010, compared to a 2.3% increase in the first quarter of 2009.
Neill A. Currie, CEO, commented: "Industry insured catastrophe losses were among the highest recorded for a first quarter. We generated an annualized operating ROE of 14.8% and grew our book value per share by over 4%, including the $124.5 million of net negative impact from these catastrophes. Favorable reserve development and strong investment performance were key drivers for the quarter."
Mr. Currie continued: "An event like Xynthia is a relatively common occurrence, whereas the Chilean earthquake had a much lower probability of occurring. We are in the business of protecting our clients from such events and our estimated losses were well within our modeled expectations. "
FIRST QUARTER 2010 RESULTS
Net Impact of the Chilean Earthquake and European Windstorm Xynthia ("Xynthia")
The Company recorded $124.5 million of net negative impact from the Chilean earthquake and Xynthia in the first quarter of 2010. 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 noncontrolling interest. The Company's estimate of losses from the Chilean earthquake and Xynthia are based on initial industry insured loss estimates, market share analysis, the application of the Company's modeling techniques, and a review of the Company's in-force contracts. Given the preliminary nature of the information available, inadequacies in the data provided thus far by industry participants, the magnitude and recent occurrence of the events, the expected lengthy claims development period, in particular for the Chilean earthquake, and other factors and uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Company's actual ultimate net losses from these events will vary from these estimates, perhaps materially. Changes in these estimates will be recorded in the period in which they occur.
See the supplemental financial data below for additional information detailing the net negative impact from these events on the Company's consolidated financial statements and its Reinsurance segment results.
Underwriting Results
Gross premiums written for the first quarter of 2010 decreased 5.8%, to $563.5 million, compared to $598.3 million in the first quarter of 2009. The decrease in gross premiums written was primarily driven by a decrease in gross premiums written in the Company's catastrophe unit and Insurance segment, partially offset by an increase in gross premiums written in the Company's specialty unit, as discussed in more detail below. Included in the Company's gross premiums written is $27.0 million of reinstatement premium written as a direct result of the losses from the Chilean earthquake which occurred in the first quarter of 2010. The Company generated $89.8 million of underwriting income and had a combined ratio of 67.7% in the first quarter of 2010, compared to $131.2 million of underwriting income and a 56.5% combined ratio in the first quarter of 2009, principally driven by the decrease in gross premiums written and an increase in operating expenses during the first quarter of 2010, and partially offset by a decrease in net claims and claim expenses incurred as a result of $161.7 million of favorable development on prior years reserves. Current accident year net claims and claim expenses increased to $240.8 million in the first quarter of 2010, compared to $78.9 million in the first quarter of 2009, with the $161.8 million increase principally driven by net claims and claim expenses associated with the Chilean earthquake and Xynthia.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment decreased $20.5 million, or 3.9%, to $512.4 million in the first quarter of 2010, compared to $532.9 million in the first quarter of 2009, principally due to a decline of $37.3 million, or 8.1%, in gross premiums written in the Company's catastrophe unit which was impacted by reduced pricing on the January 1st renewals. The Company's specialty premiums increased $3.0 million, or 4.1%, to $74.5 million in the first quarter of 2010, compared to $71.5 million in the first quarter of 2009. In addition, commencing in the first quarter of 2010, the Company's Lloyd's unit, which recently commenced operations, and is presented as a separate unit within the Company's Reinsurance segment, generated $14.0 million of gross premiums written during the first quarter of 2010. In the first quarter of 2010, the Company's managed catastrophe premiums, excluding $27.0 million of reinstatement premium written as a result of the losses from the Chilean earthquake, decreased 11.7% from the first quarter of 2009. The Company's managed specialty premiums increased 14.9% in the first quarter of 2010 compared to the first quarter of 2009, due to several new contracts the Company added to its portfolio including $7.7 million of specialty premium written within the Company's recently established Lloyd's unit. 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 $84.5 million of underwriting income and had a combined ratio of 66.2% in the first quarter of 2010, compared to $161.3 million of underwriting income and a 28.6% combined ratio in the first quarter of 2009. The decrease in underwriting income in the first quarter of 2010 was primarily due to the comparably high level of insured catastrophe events in the quarter, principally due to the Chilean earthquake and Xynthia, combined with increased operational costs, in part due to the Company's new Lloyd's unit, as well as an increase in our headcount and related operating expenses, partially offset by increased net premiums earned. Current accident year net claims and claims expenses increased $165.4 million to $206.8 million in the first quarter of 2010, compared to $41.3 million in the first quarter of 2009, primarily related to increased losses within the catastrophe unit. The catastrophe unit incurred current accident year net claims and claim expenses of $181.1 million, principally due to $175.6 million of losses related to the Chilean earthquake and Xynthia.
Following is supplemental financial data regarding the net financial statement impact on the Company's first quarter 2010 results within the Company's Reinsurance segment due to the Chilean earthquake and Xynthia:
Three months ended March 31, 2010
Chilean
(in thousands of United States dollars) Xynthia Total
Earthquake
Net claims and claim expenses incurred $ (159,183 ) $ (23,924 ) $ (183,107 )
Net reinstatement premiums earned 27,000 - 27,000
Lost profit commissions (6,347 ) (857 ) (7,204 )
Net impact on Reinsurance segment (138,530 ) (24,781 ) (163,311 )
underwriting result
Noncontrolling interest - DaVinciRe 32,934 5,881 38,815
Consolidated net negative impact $ (105,596 ) $ (18,900 ) $ (124,496 )
Impact on consolidated combined ratio 58.6 % 8.9 % 68.5 %
Impact on Reinsurance segment combined 66.2 % 9.9 % 77.3 %
ratio
Net impact on catastrophe unit $ (131,030 ) $ (24,781 ) $ (155,811 )
underwriting result
Net impact on specialty unit (7,500 ) - (7,500 )
underwriting result
Net impact on Reinsurance segment $ (138,530 ) $ (24,781 ) $ (163,311 )
underwriting result
The Reinsurance segment experienced $105.2 million of favorable development on prior years reserves in the first quarter of 2010. This includes $73.5 million of net favorable development within the Company's specialty unit and $31.6 million of net favorable development within the Company's catastrophe unit. The favorable development within the Company's specialty unit includes $31.4 million associated with actuarial assumption changes made in the first quarter of 2010, principally in the Company's casualty clash and surety lines of business and partially offset by an increase in reserves within the Company's workers compensation per risk line of business, principally as a result of revised initial expected loss ratios and loss development factors due to actual experience coming in better than expected; $25.9 million due to a decrease in case reserves and additional case reserves, which are reserves established at the contract level for specific losses or large events; and $16.3 million due to certain actual reported losses coming in better than expected in the current quarter on prior accident years events. Within the Company's catastrophe unit the $31.6 million of favorable development was due to better than expected claims emergence which resulted in a reduction in ultimate net losses associated with the 2005 hurricanes of $8.1 million, 2008 hurricanes of $6.9 million, European windstorm Klaus of $4.5 million and the 2009 Austrian hail storms of $4.0 million, with the remainder due to a reduction in ultimate losses on a large number of relatively small catastrophes. In the first quarter of 2009, the Reinsurance segment experienced $24.7 million of favorable development on prior year reserves, principally attributable to reduced estimated ultimate losses on certain small catastrophes within the Company's catastrophe unit and lower than expected claims emergence in the Company's specialty reinsurance unit.
Insurance Segment
Gross premiums written for the Company's Insurance segment decreased $13.3 million, or 20.4%, to $51.9 million in the first quarter of 2010, compared to $65.1 million in the first quarter of 2009. The decrease was primarily due to the Company's prior decisions to terminate several program manager relationships and a commercial property quota share contract as a result of softening market conditions, resulting in reduced commercial property and personal lines property gross premiums written. Gross premiums written in the Company's Insurance segment can fluctuate, perhaps 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 $5.3 million of underwriting income and had a combined ratio of 81.1% in the first quarter of 2010, compared to an underwriting loss of $30.1 million and a combined ratio of 139.7% in the first quarter of 2009. The increase in underwriting income and decrease in the combined ratio in the first quarter of 2010, compared to the first quarter of 2009, were primarily due to a decrease in net claims and claim expenses as a result of favorable development on prior years reserves of $56.5 million, compared to unfavorable development on prior years reserves of $32.0 million in the first quarter of 2009, and a decrease in current accident year net claims and claim expenses of $3.6 million, partially offset by a $47.7 million decrease in net premiums earned and a $13.8 million increase in operational expenses. The increase in operational expenses was due in part to a $6.8 million charge for impairing software related assets and recognizing severance benefits related to the Company's decision in the first quarter of 2010 to discontinue a new start-up initiative which was under development in 2009 and had yet to commence operations.
During the first quarter of 2010, the Company settled the majority of its outstanding claims associated with the 2009 crop year for its crop insurance business. Due primarily to better than expected yields on late harvested crops for the 2009 crop year, the Company experienced significantly better than expected results on the settlement of its crop claims and, as a result, the Company experienced $44.1 million of favorable development associated with its crop insurance business in the first quarter of 2010. This resulted in a net underwriting gain of $19.5 million in the first quarter of 2010 and decreased the Insurance segment's combined ratio by 45.7 percentage points, after taking into consideration the fact that $24.7 million of the favorable development was ceded to the Federal Crop Insurance Corporation ("FCIC"), as discussed below. The $19.5 million underwriting gain includes $15.3 million and $4.2 million associated with the Company's multi-peril crop insurance and crop hail lines of business, respectively. The multi-peril crop insurance is written through the FCIC. The FCIC sponsors an insurance program that provides reinsurance to participating insurers, including the Company, for multi-peril crop insurance. The terms of the reinsurance agreement with the FCIC allow the Company to retain only a portion of any underwriting gain or loss experienced on multi-peril crop insurance policies issued in each state. The Company records the underwriting gain that is not retained as additional ceded premiums written and earned which totaled $24.7 million in the first quarter of 2010, and offsets a significant portion of the $44.1 million of favorable development on prior year reserves associated with the crop business in the first quarter of 2010. These components are summarized below:
Three months ended March 31, 2010
Insurance Segment
(in thousands of United 2009 Crop Year
States dollars) excluding 2009 Crop Insurance Segment
Impact (1)
Year Impact
Net premiums earned $ 52,761 $ (24,675 ) $ 28,086
Net claims and claim 21,671 44,148 (22,477 )
expenses
Underwriting expenses 45,257 - 45,257
Underwriting (loss) $ (14,167 ) $ 19,473 $ 5,306
income
Combined ratio 126.8 % (45.7 %) 81.1 %
The 2009 Crop Year Impact includes the favorable development on net claims
and claim expenses recorded during the three months ended March 31, 2010,
(1) combined with the resulting cession of a portion of the favorable
development to the FCIC which is reflected as ceded premiums earned in
accordance with the terms of the reinsurance agreement with the FCIC.
The unfavorable loss reserve development in the first quarter of 2009 of $32.0 million was primarily due to a $27.3 million increase in prior year losses in the Company's crop insurance line of business related to the 2008 crop year due to an increase in the severity of reported losses incurred during 2008 and reported during the first quarter of 2009. The net impact of this unfavorable development, after considering corresponding changes in net earned premium and related acquisition costs for the 2008 crop year, was a reduction in underwriting income of $25.8 million and an increase in the Company's combined ratio of 33.7 percentage points.
Investments
Returns on the Company's investment portfolio increased in the first quarter of 2010 compared to the first quarter of 2009, primarily due to higher total returns on the Company's fixed maturity investments and hedge funds and private equity investments as discussed in more detail below. 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 $107.1 million in the first quarter of 2010, compared to $39.8 million in the first quarter of 2009, an increase of $67.3 million. The Company's total investment result for the first quarter of 2010 continued to benefit from tightening credit spreads, improved economic conditions and increased average invested assets, and partially offset by a modest increase in interest rates.
Net investment income was $67.2 million in the first quarter of 2010, compared to $42.1 million in the first quarter of 2009. The $25.1 million increase in net investment income was principally driven by a $37.3 million increase from the Company's hedge fund and private equity investments and partially offset by a $10.5 million decrease in net investment income from the Company's fixed maturity investments, principally due to lower yields on these 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 gains of $24.9 million in the first quarter of 2010, compared to net unrealized losses of $17.0 million in the first quarter of 2009.
Net realized and unrealized gains on fixed maturity investments were $48.6 million in the first quarter of 2010, compared to $22.1 million in the first quarter of 2009, an increase of $26.5 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, $4.9 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 first quarter of 2010 rather than in accumulated other comprehensive income in shareholders' equity. Net other-than-temporary impairments recognized in earnings were $33 thousand in the first quarter of 2010, compared to $19.0 million for the first quarter of 2009. The significant decrease in net other-than-temporary impairments is due to the combination of improved economic conditions in the first quarter of 2010, compared to the first quarter of 2009, the adoption of new authoritative accounting guidance related to the recognition and presentation of other-than-temporary impairments during the second quarter of 2009, and the transition of a significant portion of the portfolio from available for sale to trading . The Company's gross unrealized losses on available for sale fixed maturity investments included in accumulated other comprehensive income was $3.5 million at March 31, 2010.
Other Items
-- During the first quarter of 2010, the Company incurred $11.3 million in
net foreign exchange losses, compared to net foreign exchange losses of
$10.2 million in the first quarter of 2009. The net foreign exchange
losses are a result of U.S. dollar exchange rate changes during the
quarter against other major currencies with which the Company does
business resulting in unfavorable foreign exchange translations on the
Company's net non-U.S. dollar denominated monetary assets and
liabilities.
-- The Company's other loss of $5.7 million incurred during the first
quarter of 2010 is primarily the result of a negative mark-to-market
relating to the Company's Platinum Underwriters Holdings Ltd. warrant of
$3.7 million. In addition, other loss in the first quarter of 2010
included $1.8 million of other loss related to the Company's weather and
energy derivatives trading activities compared to $4.8 million of other
income in the first quarter of 2009.
-- Operational expenses increased $24.8 million to $64.6 million in the
first quarter of 2010, compared to $39.8 million in the first quarter of
2009, primarily due to increased compensation and benefits-related costs
as a result of the Company's increased headcount, including $6.1 million
of operational expenses associated with the Company's new Lloyd's unit,
a $6.8 million charge for impairing software related assets and
recognizing severance benefits related to the Company's decision in the
first quarter of 2010 to discontinue a new initiative which was under
development in 2009 and had yet to commence operations, and $3.4 million
related to the previously announced retirement of senior executive
officers.
-- On March 17, 2010, RenRe North America Holdings Inc. ("RRNAH"), a wholly
owned subsidiary of the Company, issued, and RenaissanceRe guaranteed,
$250.0 million of 5.75% Senior Notes due March 15, 2020, with interest
on the notes payable semi-annually on March 15 and September 15. The
notes can be redeemed by the RRNAH prior to maturity subject to payment
of a "make-whole" premium.
-- During the first quarter of 2010, the Company repurchased 3.7 million
common shares in open market transactions at an aggregate cost of $203.7
million and at an average share price of $54.78. Subsequent to March 31,
2010, and through the period ending April 26, 2010, the Company
repurchased an additional 416 thousand common shares in open market
transactions at an aggregate cost of $23.7 million and at an average
share price of $56.85.
-- On April 22, 2010, the Company entered into a revolving credit agreement
with various financial institutions to replace its existing revolving
credit agreement which expired by its terms on March 31, 2010. The new
credit agreement provides for a revolving commitment to the Company of
$150.0 million, which may be increased to $250.0 million provided that
certain conditions are met. The scheduled commitment maturity date of
the new credit agreement is April 22, 2013.
-- On April 22, 2010, the Company's reimbursement agreement with respect to
its principal letter of credit facility was amended and restated to,
among other things, (i) extend the term of the agreement to April 22,
2013; and (ii) change the total commitment thereunder from $1.4 billion
to $1.0 billion (which may be increased up to $1.5 billion if certain
conditions are met).
-- On April 26, 2010, the Company entered into an amended agreement with
respect to its letter of credit facility to support business written by
the Company's Lloyd's syndicate, RenaissanceRe Syndicate 1458. The
amended agreement is fully secured.
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" and "managed specialty 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 28, 2010 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 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
March 31, March 31,
2010 2009
Revenues
Gross premiums written $ 563,465 $ 598,301
Net premiums written $ 415,983 $ 446,836
Increase in unearned premiums (137,857 ) (145,088 )
Net premiums earned 278,126 301,748
Net investment income 67,181 42,126
Net foreign exchange losses (11,342 ) (10,155 )
Equity in earnings of other ventures 2,156 1,736
Other loss (5,731 ) (14,795 )
Net realized and unrealized gains on fixed maturity 48,598 22,126
investments
Total other-than-temporary impairments (33 ) (19,022 )
Portion recognized in other comprehensive income, - -
before taxes
Net other-than-temporary impairments (33 ) (19,022 )
Total revenues 378,955 323,764
Expenses
Net claims and claim expenses incurred 79,057 86,197
Acquisition expenses 44,675 44,604
Operational expenses 64,551 39,757
Corporate expenses 5,559 6,588
Interest expense 3,156 4,136
Total expenses 196,998 181,282
Income before taxes 181,957 142,482
Income tax benefit 4,215 852
Net income 186,172 143,334
Net income attributable to redeemable noncontrolling (10,550 ) (35,475 )
interest - DaVinciRe
Net income attributable to RenaissanceRe 175,622 107,859
Dividends on preference shares (10,575 ) (10,575 )
Net income available to RenaissanceRe common $ 165,047 $ 97,284
shareholders
Operating income available to RenaissanceRe
common shareholders per common share - diluted (1) $ 1.91 $ 1.52
Net income available to RenaissanceRe common
shareholders per common share - basic $ 2.75 $ 1.57
Net income available to RenaissanceRe common
shareholders per common share - diluted $ 2.73 $ 1.57
Average shares outstanding - basic 58,407 60,635
Average shares outstanding - diluted 58,887 60,988
Net claims and claim expense ratio 28.4 % 28.6 %
Underwriting expense ratio 39.3 % 27.9 %
Combined ratio 67.7 % 56.5 %
Operating return on average common equity - 14.8 % 15.5 %
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
March 31, December 31,
2010 2009
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale, at $ 1,485,161 $ 3,559,197
fair value
Fixed maturity investments trading, at fair value 3,049,335 736,595
Total fixed maturity investments, at fair value 4,534,496 4,295,792
Short term investments, at fair value 864,328 1,002,306
Other investments, at fair value 866,865 858,026
Investments in other ventures, under equity method 84,942 97,287
Total investments 6,350,631 6,253,411
Cash and cash equivalents 358,773 260,716
Premiums receivable 511,832 589,827
Ceded reinsurance balances 121,836 91,852
Losses recoverable 156,820 194,241
Accrued investment income 32,784 31,928
Deferred acquisition costs 74,489 61,870
Receivable for investments sold 53,863 7,431
Other secured assets 27,651 27,730
Other assets 171,577 205,347
Goodwill and other intangibles 75,416 76,688
Total assets $ 7,935,672 $ 7,801,041
Liabilities, Redeemable Noncontrolling Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 1,695,397 $ 1,702,006
Reserve for unearned premiums 614,490 446,649
Debt 549,086 300,000
Reinsurance balances payable 241,544 381,548
Payable for investments purchased 136,838 59,236
Other secured liabilities 27,500 27,500
Other liabilities 221,001 256,669
Total liabilities 3,485,856 3,173,608
Redeemable noncontrolling interest - DaVinciRe 658,525 786,647
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 58,320 61,745
Additional paid-in capital - -
Accumulated other comprehensive income 30,771 41,438
Retained earnings 3,052,200 3,087,603
Total shareholders' equity 3,791,291 3,840,786
Total liabilities, redeemable noncontrolling interest $ 7,935,672 $ 7,801,041
and shareholders' equity
Book value per common share $ 53.86 $ 51.68
Common shares outstanding 58,320 61,745
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars) (Unaudited)
Three months ended March 31, 2010
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 512,392 $ 51,880 $ (807 ) $ - $ 563,465
written
Net premiums written $ 402,309 $ 13,674 - $ 415,983
Net premiums earned $ 250,040 $ 28,086 - $ 278,126
Net claims and claim 101,534 (22,477 ) - 79,057
expenses incurred
Acquisition expenses 23,818 20,857 - 44,675
Operational expenses 40,151 24,400 - 64,551
Underwriting income $ 84,537 $ 5,306 - 89,843
Net investment 67,181 67,181
income
Equity in earnings 2,156 2,156
of other ventures
Other loss (5,731 ) (5,731 )
Interest and
preference share (13,731 ) (13,731 )
dividends
Redeemable
noncontrolling (10,550 ) (10,550 )
interest - DaVinciRe
Other items, net (12,686 ) (12,686 )
Net realized and
unrealized gains on 48,598 48,598
fixed maturity
investments
Net
other-than-temporary (33 ) (33 )
impairments
Net income available
to RenaissanceRe $ 75,204 $ 165,047
common shareholders
Net claims and claim
expenses incurred - $ 206,751 $ 34,005 $ 240,756
current accident
year
Net claims and claim
expenses incurred - (105,217 ) (56,482 ) (161,699 )
prior accident years
Net claims and claim
expenses incurred - $ 101,534 $ (22,477 ) $ 79,057
total
Net claims and claim
expense ratio - 82.7 % 121.1 % 86.6 %
current accident
year
Net claims and claim
expense ratio - (42.1 %) (201.1 %) (58.2 %)
prior accident years
Net claims and claim
expense ratio - 40.6 % (80.0 %) 28.4 %
calendar year
Underwriting expense 25.6 % 161.1 % 39.3 %
ratio
Combined ratio 66.2 % 81.1 % 67.7 %
(1)Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.
Three months ended March 31, 2009
Reinsurance Insurance Eliminations Other Total
(1)
Gross premiums $ 532,916 $ 65,149 $ 236 $ - $ 598,301
written
Net premiums written $ 414,787 $ 32,049 - $ 446,836
Net premiums earned $ 225,971 $ 75,777 - $ 301,748
Net claims and claim 16,571 69,626 - 86,197
expenses incurred
Acquisition expenses 19,021 25,583 - 44,604
Operational expenses 29,115 10,642 - 39,757
Underwriting income $ 161,264 $ (30,074 ) - 131,190
(loss)
Net investment 42,126 42,126
income
Equity in earnings 1,736 1,736
of other ventures
Other loss (14,795 ) (14,795 )
Interest and
preference share (14,711 ) (14,711 )
dividends
Redeemable
noncontrolling (35,475 ) (35,475 )
interest - DaVinciRe
Other items, net (15,891 ) (15,891 )
Net realized gains 22,126 22,126
on investments
Net
other-than-temporary (19,022 ) (19,022 )
impairments
Net income available
to RenaissanceRe $ (33,906 ) $ 97,284
common shareholders
Net claims and claim
expenses incurred - $ 41,306 $ 37,629 $ 78,935
current accident
year
Net claims and claim
expenses incurred - (24,735 ) 31,997 7,262
prior accident years
Net claims and claim
expenses incurred - $ 16,571 $ 69,626 $ 86,197
total
Net claims and claim
expense ratio - 18.3 % 49.7 % 26.2 %
current accident
year
Net claims and claim
expense ratio - (11.0 %) 42.2 % 2.4 %
prior accident years
Net claims and claim
expense ratio - 7.3 % 91.9 % 28.6 %
calendar year
Underwriting expense 21.3 % 47.8 % 27.9 %
ratio
Combined ratio 28.6 % 139.7 % 56.5 %
(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
March 31, March 31,
Reinsurance Segment
2010 2009
Renaissance catastrophe premiums $ 268,294 $ 289,630
Renaissance specialty premiums 72,449 68,973
Total Renaissance premiums 340,743 358,603
DaVinci catastrophe premiums 155,826 171,786
DaVinci specialty premiums 2,016 2,527
Total DaVinci premiums 157,842 174,313
Lloyd's catastrophe premiums 5,669 -
Lloyd's specialty premiums 7,723 -
Lloyd's Insurance premiums 632 -
Total Lloyd's unit premiums 14,024 -
Catastrophe unit premiums ceded to the Lloyd's unit (217 ) -
Total Lloyd's unit premiums after intercompany cession $ 13,807 $ -
Total Reinsurance segment premiums $ 512,392 $ 532,916
Three months ended
March 31, March 31,
Insurance Segment
2010 2009
Commercial multi-line $ 26,804 $ 24,642
Commercial property 13,008 16,121
Crop 7,136 8,152
Personal lines property 4,932 16,234
Total Insurance segment premiums $ 51,880 $ 65,149
Three months ended
March 31, March 31,
Managed Premiums (2)
2010 2009
Total catastrophe unit premiums $ 424,120 $ 461,416
Catastrophe premiums written on behalf of our joint 26,186 23,792
venture, Top Layer Re (1)
Catastrophe premiums written in the Lloyd's unit 5,669 -
Catastrophe premiums assumed from the Insurance segment (175 ) 236
Total managed catastrophe premiums (2) $ 455,800 $ 485,444
Total specialty unit premiums $ 74,465 $ 71,500
Specialty premiums written in the Lloyd's unit 7,723 -
Total managed specialty premiums (2) $ 82,188 $ 71,500
(1) Top Layer Re is accounted for under the equity method of accounting.
(2) See Comments on Regulation G for a reconciliation of non-GAAP financial
measures.
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,
2010 2009
Fixed maturity investments $ 28,643 $ 39,127
Short term investments 2,284 3,071
Other investments
Hedge funds and private equity investments 17,536 (19,741 )
Other 21,218 21,821
Cash and cash equivalents 66 373
69,747 44,651
Investment expenses (2,566 ) (2,525 )
Net investment income 67,181 42,126
Gross realized gains 48,887 31,423
Gross realized losses (5,170 ) (9,297 )
Net realized gains on fixed maturity investments 43,717 22,126
Net unrealized gains on fixed maturity investments 4,881 -
trading
Net realized and unrealized gains on fixed maturity 48,598 22,126
investments
Total other-than-temporary impairments (33 ) (19,022 )
Portion recognized in other comprehensive income, - -
before taxes
Net other-than-temporary impairments (33 ) (19,022 )
Net change in unrealized holding gains on
fixed maturity investments available for sale (8,641 ) (5,407 )
Total investment result $ 107,105 $ 39,823
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
(in thousands of United States Dollars, except for March 31, March 31,
per share amounts)
2010 2009
Net income available to RenaissanceRe common $ 165,047 $ 97,284
shareholders
Adjustment for net realized and unrealized gains on (48,598 ) (22,126 )
fixed maturity investments
Adjustment for net other-then-temporary impairments 33 19,022
Operating income available to RenaissanceRe common $ 116,482 $ 94,180
shareholders
Net income available to RenaissanceRe common
shareholders
per common share - diluted $ 2.73 $ 1.57
Adjustment for net realized and unrealized gains on (0.82 ) (0.36 )
fixed maturity investments
Adjustment for net other-then-temporary impairments - 0.31
Operating income available to RenaissanceRe common
shareholders
per common share - diluted $ 1.91 $ 1.52
Return on average common equity - annualized 20.9 % 16.0 %
Adjustment for net realized and unrealized gains on (6.1 %) (3.6 %)
fixed maturity investments
Adjustment for net other-then-temporary impairments - 3.1 %
Operating return on average common equity - 14.8 % 15.5 %
annualized
The Company has also included in this Press Release "managed catastrophe premiums" and "managed specialty 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. The Company's management believes "managed catastrophe premiums" and "managed specialty 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 April 27, 2010