RenaissanceRe Reports Net Income of $258.6 Million for the Third Quarter of 2009 or $4.12 Per Diluted Common Share
Operating Income of $242.2 Million for the Third Quarter of 2009 or $3.85 Per Diluted Common Share
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported operating income available to common shareholders of $242.2 million for the third quarter of 2009, compared to an operating loss attributable to common shareholders of $143.4 million in the third quarter of 2008. Operating income (loss) excludes net realized gains on investments and net other-than-temporary impairments of $16.8 million and $0.3 million, respectively, in the third quarter of 2009, and $11.2 million and $98.8 million, respectively, in the third quarter of 2008. Operating income per diluted common share was $3.85 in the third quarter of 2009, compared to an operating loss per diluted common share of $2.35 in the third quarter of 2008. Net income available to common shareholders was $258.6 million or $4.12 per diluted common share in the third quarter of 2009, compared to a net loss attributable to common shareholders of $231.0 million or $3.79 per diluted common share for the third quarter of 2008.
The Company reported an annualized return on average common equity of 35.5% and an annualized operating return on average common equity of 33.3% in the third quarter of 2009, compared to negative 36.1% and negative 22.4%, respectively, in the third quarter of 2008. Book value per common share was $49.21 at September 30, 2009, an increase of $5.04, or 11.4%, in the third quarter of 2009, compared to a 10.1% decrease in the third quarter of 2008. For the nine months ended September 30, 2009, the Company's book value per common share has increased $10.47, or 27.0%.
Neill A. Currie, CEO, commented: "I am pleased to report another strong quarter with an annualized operating ROE of 33% and over 11% growth in book value per share in the quarter. We generated solid underwriting profits and strong investment returns in the quarter, reflecting the quality of the portfolio of risks we have underwritten, a lack of insured catastrophes and improved investment markets."
Mr. Currie added: "Year-to-date, our book value per share has increased 27% and we have generated an annualized operating return on equity in excess of 29%."
Mr. Currie concluded: "I'm very pleased with the quality of the portfolio of risks our team has constructed, which reflects our strong underwriting discipline. We look forward to continuing to serve our clients, brokers and joint venture partners during the upcoming renewal season."
THIRD QUARTER 2009 RESULTS
Underwriting Results
Gross premiums written for the third quarter of 2009 decreased $37.4 million to $202.4 million, compared to $239.8 million in the third quarter of 2008, principally due to $49.0 million in reinstatement premiums written in the Company's Reinsurance segment in the third quarter of 2008, as a result of hurricanes Gustav and Ike, that did not recur in the third quarter of 2009. The Company generated $167.7 million of underwriting income and a combined ratio of 43.3% in the third quarter of 2009, compared to an underwriting loss of $240.5 million and a combined ratio of 163.4% in the third quarter of 2008. The $408.3 million increase in underwriting income and 120.1 percentage point decrease in the combined ratio was driven by the comparably low level of insured catastrophes during the third quarter of 2009, compared to the third quarter of 2008, specifically the comparative impact of hurricanes Gustav and Ike which resulted in an underwriting loss of $419.6 million and increased the Company's combined ratio by 116.8 percentage points during the third quarter of 2008. The Company experienced $70.4 million of favorable development on prior year reserves in the third quarter of 2009, compared to $36.0 million of favorable development in the third quarter of 2008. As discussed in more detail below, the favorable development during the third quarter of 2009 is primarily a result of reductions in estimated ultimate losses on certain specific events within the catastrophe unit, and lower than expected claims emergence within the Company's specialty unit.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment decreased $37.0 million, or 21.8%, to $132.5 million in the third quarter of 2009, compared to $169.5 million in the third quarter of 2008. The decrease in the Company's Reinsurance segment gross premiums written is primarily due to the absence of $49.0 million of reinstatement premiums written and earned in the third quarter of 2008 as a result of hurricanes Gustav and Ike and partially offset by the inception of a new program in the catastrophe unit for the third quarter of 2009. For the nine months ended September 30, 2009, the Company's managed catastrophe gross premiums written increased $194.4 million, or 20%, compared to the comparative period in 2008, excluding the impact of $49.0 million of reinstatement premiums written in 2008 as a result of hurricanes Gustav and Ike, due to improved market conditions which has resulted in higher premium rates on business written during 2009. For the nine months ended September 30, 2009, the Company's specialty gross premiums written have decreased $37.6 million, or 28.7%, compared to the comparative period in 2008, principally due to the non-renewal and portfolio transfer out of a catastrophe exposed homeowners personal lines property quota share contract.
The Reinsurance segment generated $167.0 million of underwriting income and a combined ratio of 17.4% in the third quarter of 2009, compared to an underwriting loss of $227.6 million and a combined ratio of 190.6% in the third quarter of 2008. The $394.6 million increase in underwriting income and 173.2 percentage point decrease in the combined ratio in the third quarter of 2009 compared to the third quarter of 2008 was principally driven by the impact of hurricanes Gustav and Ike during the third quarter of 2008. Hurricanes Gustav and Ike resulted in an underwriting loss of $379.9 million and added 166.0 percentage points to the Reinsurance segment's combined ratio in the third quarter of 2008. The Reinsurance segment experienced $62.7 million of favorable development on prior years reserves in the third quarter of 2009, compared to $30.6 million in the third quarter of 2008. The favorable development during the third quarter of 2009 was primarily due to reductions in the Company's ultimate loss estimates on specific events in its catastrophe unit, including European windstorm Kyrill (2007), a California wildfire (2007), hurricane Dean (2007) and hurricane Emily (2005) combined with lower than expected claims emergence in the Company's specialty reinsurance unit.
Individual Risk Segment
Gross premiums written for the Company's Individual Risk segment were relatively flat at $83.3 million in the third quarter of 2009, compared to $83.7 million in the third quarter of 2008. The Company's multi-peril crop insurance gross premiums written increased $9.4 million during the third quarter of 2009, to $21.3 million from $11.9 million in the third quarter of 2008, primarily due to additional insured acres which more than offset a decline in commodity prices used in determining the policy premium. Offsetting the increase in multi-peril crop insurance gross premiums written during the third quarter of 2009, was the Company's commercial property gross premiums written, which decreased $9.3 million, to $15.5 million from $24.9 million in the third quarter of 2008, primarily due to the Company's decision in late 2008 to terminate a commercial property quota share reinsurance contract. For the nine months ended September 30, 2009, the Company's Individual Risk gross premiums written decreased $32.1 million, or 6.7%, compared to the comparative period in 2008. Gross premiums written in the Company's Individual Risk 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. In addition, the Company's gross premiums written in respect of its multi-peril crop insurance line of business are subject to fluctuations from a number of factors including the impact of relevant commodity prices.
The Individual Risk segment generated $0.7 million of underwriting income and a combined ratio of 99.3% in the third quarter of 2009, compared to an underwriting loss of $13.0 million and a combined ratio of 110.1% in the third quarter of 2008. The $13.6 million increase in underwriting income and 10.8 percentage point decrease in the combined ratio in the third quarter of 2009 compared to the third quarter of 2008 was principally driven by the absence of catastrophe events such as hurricanes Gustav and Ike which occurred in the third quarter of 2008. Hurricanes Gustav and Ike resulted in $39.7 million in underwriting losses and added 30.2 percentage points to the Individual Risk segment's combined ratio in the third quarter of 2008. Partially offsetting the lack of hurricane-related losses in the third quarter of 2009 was the impact of significantly higher crop hail losses within the Individual Risk segment's multi-peril crop insurance line of business in the third quarter of 2009. Multiple hail storms in highly insured areas during the third quarter of 2009 resulted in $16.6 million of underwriting losses in crop hail, a specific product line within the overall multi-peril crop insurance line of business, compared to $3.0 million of underwriting profits for this product line in the third quarter of 2008. The Individual Risk segment experienced $7.8 million of favorable development on prior years reserves in the third quarter of 2009 compared to $5.4 million of favorable development in the third quarter of 2008, primarily as a result of lower than expected reported claims on prior year reserves.
Underwriting expenses in the third quarter of 2009 were $38.6 million and the underwriting expense ratio was 41.2%, compared to $29.5 million and 23.0%, respectively, in the third quarter of 2008. The 18.2 percentage point increase in the Company's underwriting expense ratio was driven by increased acquisition expenses, primarily due to profit sharing commissions, increased operating expenses, as discussed below, and decreased net premiums earned, primarily due to the portion of the estimated underwriting income generated by the multi-peril crop insurance business that is remitted to the U.S. government in the form of ceded premiums earned. Operational expenses increased $1.8 million, adding 2.0 percentage points to the underwriting expense ratio, principally as a result of the Company's investment in personnel and related infrastructure in association with its ongoing business development initiatives.
Investments
Returns on the Company's investment portfolio were significantly higher in the third quarter of 2009 compared to the third quarter of 2008, primarily due to higher total returns on the Company's non-investment grade allocations which the Company includes in other investments including its senior secured bank loan funds and non-U.S. fixed income funds as discussed in more detail below. The Company's total investment result, which includes the sum of net investment income, net realized gains on investments, net other-than-temporary impairments on fixed maturity investments available for sale and the net change in unrealized holding gains on fixed maturity investments available for sale, was $198.0 million in the third quarter of 2009, compared to negative $93.3 million in the third quarter of 2008, an increase of $291.3 million. The Company's total investment result for the third quarter of 2009 benefitted from the significant tightening of credit spreads, which resulted in increases in the fair value of many of the Company's investments. The Company does not anticipate a repeat of this quarter's investment performance in future periods.
Net investment income was $106.8 million in the third quarter of 2009, compared to net investment income of $15.8 million in the third quarter of 2008. The $91.0 million increase in net investment income was principally driven by a $30.6 million increase from the Company's hedge fund and private equity investments and a $78.1 million increase in net investment income from its other investments, principally senior secured bank loan funds and non-U.S. fixed income funds, and partially offset by an $8.0 million and $7.7 million decrease in net investment income from the Company's fixed maturity investments available for sale and short term investments, respectively, 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 $19.2 million in the third quarter of 2009, compared to net unrealized losses of $54.3 million in the third quarter of 2008.
Net realized gains on investments were $16.8 million in the third quarter of 2009, compared to $11.2 million in the third quarter of 2008, an increase of $5.6 million. Net other-than-temporary impairments recognized in earnings were $0.3 million in the third quarter of 2009, compared to $98.8 million for the third quarter of 2008. The significant decrease in net other-than-temporary impairments is due to the combination of improved economic conditions in the third quarter of 2009, compared to the third quarter of 2008, and the adoption of new authoritative accounting guidance related to the recognition and presentation of other-than-temporary impairments during the second quarter of 2009.
Other Items
-- Corporate expenses decreased $7.4 million to negative $4.3 million in
the third quarter of 2009, compared to $3.1 million in the third quarter
of 2008, primarily due to the recognition of a corporate insurance
recovery.
-- Net (income) loss attributable to redeemable noncontrolling interest -
DaVinciRe increased to $(37.7) million for the third quarter of 2009,
compared to $92.0 million in the third quarter of 2008, principally due
to DaVinciRe generating net income in the third quarter of 2009,
compared to a net loss in the third quarter of 2008. The significant
change was driven by DaVinciRe generating strong underwriting profits
and investment income in the third quarter of 2009, compared to an
underwriting loss and lower investment income in the third quarter of
2008.
-- Other income increased by $11.2 million to $13.4 million in the third
quarter of 2009 compared to $2.3 million in the third quarter of 2008,
principally due to a $14.3 million increase in income from the Company's
weather and energy risk operations and a $7.3 million increase in the
mark-to-market on the Company's investment in the Platinum Underwriters
Holdings Ltd. warrant and partially offset by an $11.3 million increase
in losses on assumed and ceded reinsurance contracts accounted for at
fair value or as deposits.
-- The Company expects to exercise its option to purchase all of the
outstanding shares of Spectrum Partners Ltd., the parent company of
Spectrum Syndicate Management Ltd., the managing agency for the
Company's Lloyd's syndicate, RenaissanceRe Syndicate 1458. Subject to
specified closing conditions, the Company expects to complete the
transaction in the fourth quarter of 2009.
This press release includes certain non-GAAP financial measures including "operating income (loss)", "operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted", "operating return on average common equity - annualized" and "managed catastrophe premium". 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, October 28, 2009 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the "Investor Information - Company Webcasts" section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by the Company's subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk, which includes primary insurance and quota share reinsurance.
Cautionary Statement under "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news 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, 2008 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 Nine months ended
September September 30, September 30, September 30,
30,
2008 2009 2008
2009
Revenues
Gross premiums $ 202,413 $ 239,806 $ 1,655,886 $ 1,574,419
written
Net premiums written $ 75,098 $ 194,408 $ 1,153,304 $ 1,211,546
Decrease (increase) 220,915 184,934 (175,726 ) (146,717 )
in unearned premiums
Net premiums earned 296,013 379,342 977,578 1,064,829
Net investment 106,815 15,767 263,234 106,955
income
Net foreign exchange 1,556 3,448 (12,761 ) 8,153
gains (losses)
Equity in earnings 4,331 2,333 11,499 13,455
of other ventures
Other income (loss) 13,424 2,258 (5,027 ) 10,246
Net realized gains 16,794 11,198 57,809 28,322
on investments
Total
other-than-temporary (1,408 ) (98,808 ) (25,719 ) (150,763 )
impairments
Portion recognized
in other 1,062 - 4,518 -
comprehensive
income, before taxes
Net
other-than-temporary (346 ) (98,808 ) (21,201 ) (150,763 )
impairments
Total revenues 438,587 315,538 1,271,131 1,081,197
Expenses
Net claims and claim 38,567 535,347 191,587 731,720
expenses incurred
Acquisition expenses 44,203 54,231 141,302 154,272
Operational expenses 45,498 30,296 132,120 93,903
Corporate expenses (4,319 ) 3,116 8,608 18,930
Interest expense 3,748 5,379 12,084 18,120
Total expenses 127,697 628,369 485,701 1,016,945
Income (loss) before 310,890 (312,831 ) 785,430 64,252
taxes
Income tax (expense) (3,993 ) 455 (3,793 ) (936 )
benefit
Net income (loss) 306,897 (312,376 ) 781,637 63,316
Net (income) loss
attributable to
redeemable (37,694 ) 91,977 (122,821 ) 10,321
noncontrolling
interest - DaVinciRe
Net income (loss)
attributable to 269,203 (220,399 ) 658,816 73,637
RenaissanceRe
Dividends on (10,575 ) (10,575 ) (31,725 ) (31,725 )
preference shares
Net income (loss)
available
(attributable) to
RenaissanceRe
common shareholders $ 258,628 $ (230,974 ) $ 627,091 $ 41,912
Operating income
(loss) available
(attributable) to
RenaissanceRe
common shareholders
per common share - $ 3.85 $ (2.35 ) $ 9.43 $ 2.56
diluted (1)
Net income (loss)
available
(attributable) to
RenaissanceRe common
shareholders per $ 4.15 $ (3.79 ) $ 10.09 $ 0.66
common share - basic
Net income (loss)
available
(attributable) to
RenaissanceRe common
shareholders per
common share - $ 4.12 $ (3.79 ) $ 10.03 $ 0.65
diluted (2)
Average shares 60,898 60,943 60,832 63,131
outstanding - basic
Average shares
outstanding - diluted 61,367 61,694 61,226 64,125
(2)
Net claims and claim 13.0 % 141.1 % 19.6 % 68.7 %
expense ratio
Underwriting expense 30.3 % 22.3 % 28.0 % 23.3 %
ratio
Combined ratio 43.3 % 163.4 % 47.6 % 92.0 %
Operating return on
average common equity 33.3 % (22.4 %) 29.5 % 8.2 %
- 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 the Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("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
September 30, December 31,
2009 2008
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale, at $ 4,505,446 $ 2,996,885
fair value
Short term investments, at fair value 880,406 2,172,343
Other investments, at fair value 812,056 773,475
Investments in other ventures, under equity method 94,859 99,879
Total investments 6,292,767 6,042,582
Cash and cash equivalents 347,993 274,692
Premiums receivable 826,562 565,630
Ceded reinsurance balances 207,257 88,019
Losses recoverable 253,312 299,534
Accrued investment income 34,076 26,614
Deferred acquisition costs 95,614 81,904
Receivable for investments sold 188,497 236,485
Other secured assets 27,464 76,424
Other assets 201,982 217,986
Goodwill and other intangibles 69,175 74,181
Total assets $ 8,544,699 $ 7,984,051
Liabilities, Redeemable Noncontrolling Interest and Shareholders'
Equity
Liabilities
Reserve for claims and claim expenses $ 1,837,879 $ 2,160,612
Reserve for unearned premiums 805,199 510,235
Debt 450,000 450,000
Reinsurance balances payable 457,947 315,401
Payable for investments purchased 247,502 378,111
Other secured liabilities 27,500 77,420
Other liabilities 251,504 290,998
Total liabilities 4,077,531 4,182,777
Redeemable noncontrolling interest - DaVinciRe 746,698 768,531
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 62,390 61,503
Additional paid-in capital 25,494 -
Accumulated other comprehensive income 78,338 75,387
Retained earnings 2,904,248 2,245,853
Total shareholders' equity 3,720,470 3,032,743
Total liabilities, redeemable noncontrolling $ 8,544,699 $ 7,984,051
interest and shareholders' equity
Book value per common share $ 49.21 $ 38.74
Common shares outstanding 62,390 61,503
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
Three months ended September 30, 2009
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 132,487 $ 83,349 $ (13,423 ) $ - $ 202,413
written
Net premiums written $ 43,202 $ 31,896 - $ 75,098
Net premiums earned $ 202,260 $ 93,753 - $ 296,013
Net claims and claim (15,914 ) 54,481 - 38,567
expenses incurred
Acquisition expenses 17,164 27,039 - 44,203
Operational expenses 33,961 11,537 - 45,498
Underwriting income $ 167,049 $ 696 - 167,745
Net investment 106,815 106,815
income
Equity in earnings 4,331 4,331
of other ventures
Other income 13,424 13,424
Interest and
preference share (14,323 ) (14,323 )
dividends
Redeemable
noncontrolling (37,694 ) (37,694 )
interest - DaVinciRe
Other items, net 1,882 1,882
Net realized gains 16,794 16,794
on investments
Net
other-than-temporary (346 ) (346 )
impairments
Net income available
to RenaissanceRe $ 90,883 $ 258,628
common shareholders
Net claims and claim
expenses incurred - $ 46,755 $ 62,256 $ 109,011
current accident
year
Net claims and claim
expenses incurred - (62,669 ) (7,775 ) (70,444 )
prior accident years
Net claims and claim
expenses incurred - $ (15,914 ) $ 54,481 $ 38,567
total
Net claims and claim
expense ratio - 23.1 % 66.4 % 36.8 %
current accident
year
Net claims and claim
expense ratio - (31.0 %) (8.3 %) (23.8 %)
prior accident years
Net claims and claim
expense ratio - (7.9 %) 58.1 % 13.0 %
calendar year
Underwriting expense 25.3 % 41.2 % 30.3 %
ratio
Combined ratio 17.4 % 99.3 % 43.3 %
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance
segment.
Three months ended September 30, 2008
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 169,463 $ 83,685 $ (13,342 ) $ - $ 239,806
written
Net premiums written $ 129,229 $ 65,179 - $ 194,408
Net premiums earned $ 251,058 $ 128,284 - $ 379,342
Net claims and claim 423,568 111,779 - 535,347
expenses incurred
Acquisition expenses 34,469 19,762 - 54,231
Operational expenses 20,602 9,694 - 30,296
Underwriting loss $ (227,581 ) $ (12,951 ) - (240,532 )
Net investment 15,767 15,767
income
Equity in earnings 2,333 2,333
of other ventures
Other income 2,258 2,258
Interest and
preference share (15,954 ) (15,954 )
dividends
Redeemable
noncontrolling 91,977 91,977
interest - DaVinciRe
Other items, net 787 787
Net realized gains 11,198 11,198
on investments
Net
other-than-temporary (98,808 ) (98,808 )
impairments
Net loss
attributable to $ 9,558 $ (230,974 )
RenaissanceRe common
shareholders
Net claims and claim
expenses incurred - $ 454,187 $ 117,157 $ 571,344
current accident
year
Net claims and claim
expenses incurred - (30,619 ) (5,378 ) (35,997 )
prior accident years
Net claims and claim
expenses incurred - $ 423,568 $ 111,779 $ 535,347
total
Net claims and claim
expense ratio - 180.9 % 91.3 % 150.6 %
current accident
year
Net claims and claim
expense ratio - (12.2 %) (4.2 %) (9.5 %)
prior accident years
Net claims and claim
expense ratio - 168.7 % 87.1 % 141.1 %
calendar year
Underwriting expense 21.9 % 23.0 % 22.3 %
ratio
Combined ratio 190.6 % 110.1 % 163.4 %
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance
segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information (cont'd.)
(in thousands of United States Dollars)
(Unaudited)
Nine months ended September 30, 2009
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 1,221,035 $ 447,229 $ (12,378 ) $ - $ 1,655,886
written
Net premiums written $ 852,970 $ 300,334 - $ 1,153,304
Net premiums earned $ 656,143 $ 321,435 - $ 977,578
Net claims and claim (40,132 ) 231,719 - 191,587
expenses incurred
Acquisition expenses 57,321 83,981 - 141,302
Operational expenses 98,265 33,855 - 132,120
Underwriting income $ 540,689 $ (28,120 ) - 512,569
(loss)
Net investment 263,234 263,234
income
Equity in earnings 11,499 11,499
of other ventures
Other loss (5,027 ) (5,027 )
Interest and
preference share (43,809 ) (43,809 )
dividends
Redeemable
noncontrolling (122,821 ) (122,821 )
interest - DaVinciRe
Other items, net (25,162 ) (25,162 )
Net realized gains 57,809 57,809
on investments
Net
other-than-temporary (21,201 ) (21,201 )
impairments
Net income available
to RenaissanceRe $ 114,522 $ 627,091
common shareholders
Net claims and claim
expenses incurred - $ 143,636 $ 217,350 $ 360,986
current accident
year
Net claims and claim
expenses incurred - (183,768 ) 14,369 (169,399 )
prior accident years
Net claims and claim
expenses incurred - $ (40,132 ) $ 231,719 $ 191,587
total
Net claims and claim
expense ratio - 21.9 % 67.6 % 36.9 %
current accident
year
Net claims and claim
expense ratio - (28.0 %) 4.5 % (17.3 %)
prior accident years
Net claims and claim
expense ratio - (6.1 %) 72.1 % 19.6 %
calendar year
Underwriting expense 23.7 % 36.6 % 28.0 %
ratio
Combined ratio 17.6 % 108.7 % 47.6 %
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance
segment.
Nine months ended September 30, 2008
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 1,100,984 $ 479,351 $ (5,916 ) $ - $ 1,574,419
written
Net premiums written $ 825,336 $ 386,210 - $ 1,211,546
Net premiums earned $ 709,571 $ 355,258 - $ 1,064,829
Net claims and claim 490,757 240,963 - 731,720
expenses incurred
Acquisition expenses 78,495 75,777 - 154,272
Operational expenses 64,497 29,406 - 93,903
Underwriting income $ 75,822 $ 9,112 - 84,934
Net investment 106,955 106,955
income
Equity in earnings 13,455 13,455
of other ventures
Other income 10,246 10,246
Interest and
preference share (49,845 ) (49,845 )
dividends
Redeemable
noncontrolling 10,321 10,321
interest - DaVinciRe
Other items, net (11,713 ) (11,713 )
Net realized gains 28,322 28,322
on investments
Net
other-than-temporary (150,763 ) (150,763 )
impairments
Net income available
to RenaissanceRe $ (43,022 ) $ 41,912
common shareholders
Net claims and claim
expenses incurred - $ 582,624 $ 279,748 $ 862,372
current accident
year
Net claims and claim
expenses incurred - (91,867 ) (38,785 ) (130,652 )
prior accident years
Net claims and claim
expenses incurred - $ 490,757 $ 240,963 $ 731,720
total
Net claims and claim
expense ratio - 82.1 % 78.7 % 81.0 %
current accident
year
Net claims and claim
expense ratio - (12.9 %) (10.9 %) (12.3 %)
prior accident years
Net claims and claim
expense ratio - 69.2 % 67.8 % 68.7 %
calendar year
Underwriting expense 20.1 % 29.6 % 23.3 %
ratio
Combined ratio 89.3 % 97.4 % 92.0 %
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance
segment.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written Analysis
(in thousands of United States Dollars)
(Unaudited)
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
Reinsurance Segment
2009 2008 2009 2008
Renaissance
catastrophe $ 78,232 $ 97,839 $ 724,131 $ 614,124
premiums
Renaissance 25,249 28,408 90,852 126,826
specialty premiums
Total Renaissance 103,481 126,247 814,983 740,950
premiums
DaVinci catastrophe 29,076 43,413 403,595 355,940
premiums
DaVinci specialty (70 ) (197 ) 2,457 4,094
premiums
Total DaVinci 29,006 43,216 406,052 360,034
premiums
Total Reinsurance $ 132,487 $ 169,463 $ 1,221,035 $ 1,100,984
premiums
Total specialty $ 25,179 $ 28,211 $ 93,309 $ 130,920
premiums
Total catastrophe $ 107,308 $ 141,252 $ 1,127,726 $ 970,064
premiums
Catastrophe
premiums written
on behalf of our (434 ) (293 ) 49,542 55,370
joint venture, Top
Layer Re (1)
Catastrophe
premiums assumed
from the (13,423 ) (13,342 ) (12,378 ) (5,916 )
Individual Risk
segment
Total managed
catastrophe $ 93,451 $ 127,617 $ 1,164,890 $ 1,019,518
premiums (2)
(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.
Three months ended Nine months ended
Individual Risk September 30, September 30, September 30, September 30,
Segment
2009 2008 2009 2008
Multi-peril crop $ 21,296 $ 11,881 $ 264,442 $ 220,330
Commercial 31,066 29,773 81,155 92,856
multi-line
Commercial property 15,514 24,863 64,001 116,546
Personal lines 15,473 17,168 37,631 49,619
property
Total Individual $ 83,349 $ 83,685 $ 447,229 $ 479,351
Risk premiums
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars)
(Unaudited)
Three months ended Nine months ended
September September 30, September 30, September 30,
30,
2008 2009 2008
2009
Fixed maturity
investments $ 44,127 $ 52,087 $ 123,261 $ 147,930
available for sale
Short term 2,285 9,990 8,097 41,124
investments
Other investments
Hedge funds and
private equity 15,510 (15,080 ) 8,096 (46,415 )
investments
Other 47,748 (30,306 ) 131,309 (32,884 )
Cash and cash 102 1,956 632 5,900
equivalents
109,772 18,647 271,395 115,655
Investment expenses (2,957 ) (2,880 ) (8,161 ) (8,700 )
Net investment 106,815 15,767 263,234 106,955
income
Gross realized gains 26,734 20,007 91,370 58,885
Gross realized (9,940 ) (8,809 ) (33,561 ) (30,563 )
losses
Net realized gains 16,794 11,198 57,809 28,322
on investments
Total
other-than-temporary (1,408 ) (98,808 ) (25,719 ) (150,763 )
impairments
Portion recognized
in other 1,062 - 4,518 -
comprehensive
income, before taxes
Net
other-than-temporary (346 ) (98,808 ) (21,201 ) (150,763 )
impairments
Net unrealized gains
(losses) on fixed 74,697 (21,411 ) 12,124 (32,930 )
maturity investments
available for sale
FAS 115-2 cumulative
effect adjustment - - 76,615 -
(1)
Net change in
unrealized holding
gains on
fixed maturity
investments 74,697 (21,411 ) 88,739 (32,930 )
available for sale
Total investment $ 197,960 $ (93,254 ) $ 388,581 $ (48,416 )
result
Cumulative effect adjustment to opening retained earnings as of April 1,
(1) 2009, related to the recognition and presentation of other-than-temporary
impairments, as required by FASB ASC TopicInvestments - 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 (loss) available (attributable) 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 (loss) available (attributable) to RenaissanceRe common shareholders" as used herein differs from "net income (loss) available (attributable) to RenaissanceRe common shareholders," which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on investments and net other-than-temporary impairments on fixed maturity investments available for sale. The Company's management believes that "operating income (loss) available (attributable) 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 investment portfolio, which is not considered by management to be a relevant indicator of its business operations. The Company also uses "operating income (loss) available (attributable) to RenaissanceRe common shareholders" to calculate "operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted" and "operating return on average common equity - annualized". The following is a reconciliation of: 1) net income (loss) available (attributable) to RenaissanceRe common shareholders to operating income (loss) available (attributable) to RenaissanceRe common shareholders; 2) net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted to operating income (loss) available (attributable) 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 Nine months ended
(in thousands of September September 30, September 30, September 30,
United States 30,
Dollars, except for 2008 2009 2008
per share amounts) 2009
Net income (loss)
available
(attributable) to $ 258,628 $ (230,974 ) $ 627,091 $ 41,912
RenaissanceRe common
shareholders
Adjustment for net
realized gains on (16,794 ) (11,198 ) (57,809 ) (28,322 )
investments
Adjustment for net
other-then-temporary 346 98,808 21,201 150,763
impairments
Operating income
(loss) available
(attributable) to $ 242,180 $ (143,364 ) $ 590,483 $ 164,353
RenaissanceRe common
shareholders
Net income (loss)
available
(attributable) to
RenaissanceRe common
shareholders
per common share - $ 4.12 $ (3.79 ) $ 10.03 $ 0.65
diluted (1)
Adjustment for net
realized gains on (0.27 ) (0.18 ) (0.94 ) (0.44 )
investments
Adjustment for net
other-then-temporary - 1.62 0.34 2.35
impairments
Operating income
(loss) available
(attributable) to
RenaissanceRe common
shareholders
per common share - $ 3.85 $ (2.35 ) $ 9.43 $ 2.56
diluted (1)
Return on average
common equity - 35.5 % (36.1 %) 31.3 % 2.1 %
annualized
Adjustment for net
realized gains on (2.2 %) (1.8 %) (2.8 %) (1.4 %)
investments
Adjustment for net
other-then-temporary - 15.5 % 1.0 % 7.5 %
impairments
Operating return on
average common equity 33.3 % (22.4 %) 29.5 % 8.2 %
- annualized
Earnings per share calculations use average common shares outstanding -
(1) basic, when in a net loss position, as required by FASB ASC TopicEarnings
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 Individual Risk segment. "Managed catastrophe premiums" differ from total catastrophe 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, and the exclusion of catastrophe premiums assumed from the Company's Individual Risk 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 reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures.
Source: RenaissanceRe Holdings Ltd.
Released October 27, 2009