RenaissanceRe Reports Net Income Available to RenaissanceRe Common Shareholders of $271.2 Million for the Second Quarter of 2009 or $4.32 Per Diluted Common Share
Operating Income of $254.1 Million for the Second Quarter of 2009 or $4.05 Per Diluted Common Share
PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to common shareholders of $271.2 million or $4.32 per diluted common share in the second quarter, compared to net income available to common shareholders of $135.7 million or $2.13 per diluted common share for the same quarter of 2008. Operating income available to common shareholders was $254.1 million, or $4.05 per diluted common share in second quarter, compared to operating income available to common shareholders of $159.9 million, or $2.50 per diluted common share for the same quarter of 2008. Operating income excludes net realized gains on investments and net other-than-temporary impairments on fixed maturity investments available for sale of $18.9 million and $1.8 million, respectively, in the second quarter of 2009 and $2.4 million and $26.6 million, respectively, in the second quarter of 2008.
The Company reported an annualized return on average common equity of 41.5% and an annualized operating return on average common equity of 38.9% in the second quarter of 2009, compared to 19.9% and 23.4%, respectively, in the second quarter of 2008. Book value per common share increased to $44.17 at June 30, 2009, an 11.4% increase in the second quarter of 2009, compared to a 2.8% increase in the second quarter of 2008.
Neill A. Currie, CEO, commented: "I am pleased to report a strong quarter with an annualized operating ROE of 39% and over 11% growth in book value per share in the quarter. We generated strong underwriting profits and had a successful June 1st renewal season. We are pleased with our portfolio of risks, which reflects improving market conditions in our Reinsurance segment, and our investment results benefited from spreads tightening and improving valuations during the quarter."
Mr. Currie added: "With our strong balance sheet, liquidity and market position, we were able to increase capacity for our clients in Florida, both via organic growth of our already strong portfolio and by the successful execution of our newest joint venture, Timicuan Reinsurance II Ltd. We also launched our Lloyd's syndicate, RenaissanceRe Syndicate 1458, and announced an agreement to acquire Spectrum Partners Ltd, its managing agency, to establish a fully-integrated platform to meet our clients' evolving needs. These activities reflect our commitment to strengthening our franchise by investing in people, risk management capabilities and underwriting tools while maintaining strong underwriting discipline."
SECOND QUARTER 2009 RESULTS
Underwriting Results
Gross premiums written for the second quarter of 2009 increased $47.6 million, or 5.9%, to $855.2 million, compared to $807.6 million for the second quarter of 2008. The increase was primarily due to a $67.8 million increase in gross premiums written in the Company's Reinsurance segment and partially offset by a $16.1 million decrease in gross premiums written within the Company's Individual Risk segment, as described in more detail below. The Company generated $213.6 million of underwriting income and had a combined ratio of 43.8% in the second quarter of 2009, compared to $175.2 million of underwriting income and a 53.5% combined ratio in the second quarter of 2008. The Company's underwriting results for the second quarter of 2009 were primarily driven by lower net claims and claim expenses incurred principally due to $106.2 million of favorable development on prior year reserves. The favorable development in the second quarter of 2009 is primarily due to the Company's Reinsurance segment and reflects reductions in estimated ultimate losses on certain specific events within the Company's catastrophe unit and better than expected claims emergence in the Company's specialty unit. Favorable development on prior year reserves in the second quarter of 2008 of $49.6 million was primarily due to lower than expected claims emergence in both the Company's Reinsurance and Individual Risk segments.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment increased $67.8 million, or 13.9%, to $555.6 million in the second quarter of 2009, compared to $487.8 million in the second quarter of 2008. Included in the Company's Reinsurance segment's gross premiums written is $41.8 million of premium written on behalf of a new fully-collateralized joint venture, Timicuan Reinsurance II Ltd. ("Tim Re II"), for which the Company can potentially receive a profit commission. Of the gross premiums written on behalf of Tim Re II, 83.2% is ceded to external parties, with the Company retaining the remaining 16.8% due to its 16.8% ownership interest in Tim Re II. The Company's managed catastrophe premiums increased $92.4 million, or 18.7%, to $586.0 million in the second quarter of 2009, compared to $493.6 million in the second quarter of 2008. The Company's growth in managed catastrophe premiums principally reflected the execution of the Tim Re II joint venture, the continuation of attractive market conditions on a risk-adjusted basis in the Company's core markets and the inception of several new programs and other organic growth of the Company's portfolio. This was partially offset by the impact on market demand of several large state catastrophe programs which purchased private market reinsurance in 2008 and prior periods, but have not done so to date in 2009. The Company's specialty reinsurance premiums decreased $26.5 million, to $(3.4) million in the second quarter of 2009, compared to $23.1 million in the second quarter of 2008. The decrease in the Company's specialty reinsurance premiums is due in part to the non-renewal and portfolio transfer out of a catastrophe exposed homeowners personal lines property quota share contract, representing a $24.2 million decrease in gross premiums written, which was partially offset by the inception of several new programs. The Company's specialty reinsurance 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 $212.4 million of underwriting income and had a combined ratio of 6.8% in the second quarter of 2009, compared to $157.9 million of underwriting income and a combined ratio of 30.2% in the second quarter of 2008. The increase in underwriting income in the second quarter of 2009 was primarily due to favorable development on prior year reserves of $96.4 million in the second quarter of 2009, compared to $37.7 million in the second quarter of 2008. As noted above, the favorable development on prior year reserves in the second quarter of 2009 was the result of reductions in estimated ultimate losses on certain specific events within the catastrophe unit, including hurricanes Gustav and Ike (2008), the United Kingdom flooding (2007) and European windstorm Kyrill (2007), and within the Company's specialty unit, lower than expected claims emergence on the 2005 through 2008 underwriting years. The Reinsurance segment experienced $37.7 million of favorable development in the second quarter of 2008 as a result of lower than expected claims emergence in the Company's catastrophe and specialty reinsurance units.
Individual Risk Segment
Gross premiums written for the Company's Individual Risk segment decreased $16.1 million, or 5.1%, to $298.7 million in the second quarter of 2009, compared to $314.8 million in the second quarter of 2008. The decrease in gross premiums written in the Individual Risk segment was primarily due to the Company's decision in late 2008 to terminate several program manager relationships and a commercial property quota share contract and, during the second quarter of 2009, to reduce its participation on a personal lines property quota share contract. The latter decision resulted in an $11.6 million reduction in gross premiums written. The decrease was partially offset by growth in the Company's multi-peril crop insurance gross premiums written during the second quarter of 2009, which increased $31.9 million, or 15.7%, to $235.0 million from $203.1 million in the second quarter of 2008, primarily driven by new business which more than offset a decline in commodity prices. 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, 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 Individual Risk segment generated $1.3 million of underwriting income and had a combined ratio of 99.2% in the second quarter of 2009, compared to $17.4 million of underwriting income and a combined ratio of 88.5% in the second quarter of 2008. The decrease in underwriting income was primarily due to a $13.5 million increase in net claims and claim expenses and a $3.3 million increase in acquisition expenses. The increase in the net claims and claim expenses was principally driven by several large losses reported in the Company's commercial property line of business. The increase in acquisition expenses is primarily related to the Company recognizing a full quarter of expenses for Agro National Inc. ("Agro National") during the second quarter of 2009 compared to one month in the second quarter of 2008, since the Company acquired Agro National on June 2, 2008. The Company's Individual Risk segment's prior year reserves experienced $9.9 million of favorable development in the second quarter of 2009 compared to $11.8 million of favorable development in the second quarter of 2008, primarily as a result of lower than expected reported claims on prior year reserves.
Investments
Returns on the Company's investment portfolio were significantly higher in the second quarter of 2009 compared to the second quarter of 2008, primarily due to higher total returns on the Company's fixed income portfolios including certain non-investment grade allocations which the Company includes in other investments. The Company also experienced higher returns in its hedge fund and private equity investments during the second quarter of 2009. 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, excluding a cumulative effect adjustment as a result of the adoption of FAS 115-2, as described in more detail below, was $150.8 million in the second quarter of 2009, compared to negative $20.7 million in the second quarter of 2008, an increase of $171.5 million. The Company's total investment result for the second quarter of 2009 benefitted from the significant tightening of credit spreads during the quarter, 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 $114.3 million in the second quarter of 2009, compared to net investment income of $38.7 million in the second quarter of 2008. The $75.6 million increase in net investment income was principally driven by a $41.7 million increase from the Company's hedge fund and private equity investments and a $49.9 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 a $6.3 million and $9.3 million decrease in net investment income from the Company's fixed maturity investments available for sale and short term investments, respectively. 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 $69.3 million in the second quarter of 2009, compared to $24.4 million of net unrealized losses in the second quarter of 2008.
Net realized gains on investments were $18.9 million in the second quarter of 2009, compared to $2.4 million in the second quarter of 2008, an improvement of $16.5 million. Net other-than-temporary impairments recognized in earnings were $1.8 million in the second quarter of 2009, compared to $26.6 million for the second quarter of 2008.
Other Items
-- The Company adopted Financial Accounting Standards Board Staff Position
("FSP") No. 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly ("FAS 157-4") effective
April 1, 2009. The adoption of FAS 157-4 did not have a material impact
on the Company's consolidated financial condition or results of
operations.
-- The Company also adopted FSP No. 115-2, Recognition and Presentation of
Other-Than-Temporary Impairments ("FAS 115-2") effective April 1, 2009.
FAS 115-2 required the Company to record, as of April 1, 2009, a
cumulative effect adjustment in shareholders' equity, to reclassify
certain other-than-temporary impairments previously taken through
earnings. In accordance with FAS 115-2, the Company determined that of
the $117.8 million in other-than-temporary impairments previously
recorded in earnings on fixed maturity investments available for sale
for which the Company held as of April 1, 2009, $76.2 million (net of
tax) of these losses are not considered other-than-temporary impairments
under FAS 115-2. As a result, the Company increased the amortized cost
basis of these fixed maturity investments available for sale by $76.6
million, resulting in a $76.2 million (net of tax) decrease in other
comprehensive income and a $76.2 million (net of tax) increase in
retained earnings. The cumulative effect adjustment had no net effect on
the Company's shareholders' equity or previously reported net income
(loss) or operating income (loss). Of the $41.6 million difference
between the $117.8 million of other-than-temporary impairments
previously recorded in earnings and the $76.2 million cumulative effect
adjustment, $20.6 million represents other-than-temporary impairments
due to the Company's intent to sell these securities and $21.0 million
represents other-than-temporary impairments due to the Company
determining that the present value of the cash flows expected to be
collected from these securities was below amortized cost (credit
impairments).
For the three months ended June 30, 2009, the Company recorded $1.8
million in other-than-temporary impairments which includes $0.2 million
due to the Company's intent to sell securities as of June 30, 2009 and
$1.6 million due to credit impairments.
This Press Release includes certain non-GAAP financial measures including "operating income", "operating income available to RenaissanceRe common shareholders per common share - diluted", "operating return on average common equity - annualized" and "managed catastrophe premiums". A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
Please refer to the "Investor Information - Financial Reports - Financial Supplements" section of the Company's website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company's financial performance.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 29, 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 the Company'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 Six months ended
June 30, June 30, June 30, 2009 June 30, 2008
2009 2008
Revenues
Gross premiums $ 855,172 $ 807,575 $ 1,453,473 $ 1,334,613
written
Net premiums written $ 631,370 $ 614,022 $ 1,078,206 $ 1,017,138
Increase in unearned (251,553 ) (237,449 ) (396,641 ) (331,651 )
premiums
Net premiums earned 379,817 376,573 681,565 685,487
Net investment 114,293 38,685 156,419 91,188
income
Net foreign exchange (4,162 ) (231 ) (14,317 ) 4,705
(losses) gains
Equity in earnings 5,432 4,872 7,168 11,122
of other ventures
Other (loss) income (3,656 ) (24 ) (18,451 ) 7,988
Net realized gains 18,889 2,412 41,015 17,124
on investments
Total
other-than-temporary (5,289 ) (26,573 ) (24,311 ) (51,955 )
impairments
Portion recognized
in other 3,456 - 3,456 -
comprehensive
income, before taxes
Net
other-than-temporary (1,833 ) (26,573 ) (20,855 ) (51,955 )
impairments
Total revenues 508,780 395,714 832,544 765,659
Expenses
Net claims and claim 66,823 114,217 153,020 196,373
expenses incurred
Acquisition expenses 52,495 53,613 97,099 100,041
Operational expenses 46,865 33,494 86,622 63,607
Corporate expenses 6,339 7,111 12,927 15,814
Interest expense 4,200 5,937 8,336 12,741
Total expenses 176,722 214,372 358,004 388,576
Income before taxes 332,058 181,342 474,540 377,083
Income tax (expense) (652 ) 6,295 200 (1,391 )
benefit
Net income 331,406 187,637 474,740 375,692
Net income attributable
to redeemable (49,652 ) (41,341 ) (85,127 ) (81,656 )
noncontrolling interest
- DaVinciRe
Net income
attributable to 281,754 146,296 389,613 294,036
RenaissanceRe
Dividends on preference (10,575 ) (10,575 ) (21,150 ) (21,150 )
shares
Net income available
to RenaissanceRe $ 271,179 $ 135,721 $ 368,463 $ 272,886
common shareholders
Operating income available to
RenaissanceRe common
shareholders per
common share - $ 4.05 $ 2.50 $ 5.57 $ 4.71
diluted (1)
Net income available to
RenaissanceRe common
shareholders per $ 4.35 $ 2.16 $ 5.94 $ 4.25
common share - basic
Net income available to
RenaissanceRe common
shareholders per
common share - $ 4.32 $ 2.13 $ 5.90 $ 4.18
diluted
Average shares 60,963 62,921 60,799 64,224
outstanding - basic
Average shares 61,322 63,878 61,156 65,340
outstanding - diluted
Net claims and claim 17.6 % 30.3 % 22.5 % 28.6 %
expense ratio
Underwriting expense 26.2 % 23.2 % 26.9 % 23.9 %
ratio
Combined ratio 43.8 % 53.5 % 49.4 % 52.5 %
Operating return on
average common equity - 38.9 % 23.4 % 27.5 % 22.3 %
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, 2009 December 31, 2008
(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale, $ 4,230,443 $ 2,996,885
at fair value
Short term investments, at fair value 1,074,469 2,172,343
Other investments, at fair value 779,416 773,475
Investments in other ventures, under equity 91,677 99,879
method
Total investments 6,176,005 6,042,582
Cash and cash equivalents 209,933 274,692
Premiums receivable 1,071,666 565,630
Ceded reinsurance balances 250,225 88,019
Losses recoverable 266,993 299,534
Accrued investment income 29,209 26,614
Deferred acquisition costs 114,836 81,904
Receivable for investments sold 332,763 236,485
Other secured assets 76,509 76,424
Other assets 206,455 217,986
Goodwill and other intangibles 70,843 74,181
Total assets $ 8,805,437 $ 7,984,051
Liabilities, Redeemable Noncontrolling
Interest and Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 1,938,295 $ 2,160,612
Reserve for unearned premiums 1,069,082 510,235
Debt 450,000 450,000
Reinsurance balances payable 499,437 315,401
Payable for investments purchased 468,329 378,111
Other secured liabilities 77,420 77,420
Other liabilities 198,710 290,998
Total liabilities 4,701,273 4,182,777
Redeemable noncontrolling interest - DaVinciRe 700,562 768,531
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 62,345 61,503
Additional paid-in capital 18,600 -
Accumulated other comprehensive income 12,065 75,387
Retained earnings 2,660,592 2,245,853
Total shareholders' equity 3,403,602 3,032,743
Total liabilities, redeemable noncontrolling $ 8,805,437 $ 7,984,051
interest and shareholders' equity
Book value per common share $ 44.17 $ 38.74
Common shares outstanding 62,345 61,503
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
Three months ended June 30, 2009
Reinsurance Individual Eliminations Other Total
Risk (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 Individual Risk segment to the Reinsurance
segment.
Three months ended June 30, 2008
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 487,793 $ 314,845 $ 4,937 $ - $ 807,575
written
Net premiums written $ 353,187 $ 260,835 - $ 614,022
Net premiums earned $ 226,286 $ 150,287 - $ 376,573
Net claims and claim 20,120 94,097 - 114,217
expenses incurred
Acquisition expenses 25,511 28,102 - 53,613
Operational expenses 22,756 10,738 - 33,494
Underwriting income $ 157,899 $ 17,350 - 175,249
Net investment 38,685 38,685
income
Equity in earnings 4,872 4,872
of other ventures
Other loss (24 ) (24 )
Interest and
preference share (16,512 ) (16,512 )
dividends
Redeemable
noncontrolling (41,341 ) (41,341 )
interest - DaVinciRe
Other items, net (1,047 ) (1,047 )
Net realized gains 2,412 2,412
on investments
Net
other-than-temporary (26,573 ) (26,573 )
impairments
Net income available
to RenaissanceRe $ (39,528 ) $ 135,721
common shareholders
Net claims and claim
expenses incurred - $ 57,861 $ 105,926 $ 163,787
current accident
year
Net claims and claim
expenses incurred - (37,741 ) (11,829 ) (49,570 )
prior accident years
Net claims and claim
expenses incurred - $ 20,120 $ 94,097 $ 114,217
total
Net claims and claim
expense ratio - 25.6 % 70.5 % 43.5 %
current accident
year
Net claims and claim
expense ratio - (16.7 %) (7.9 %) (13.2 %)
prior accident years
Net claims and claim
expense ratio - 8.9 % 62.6 % 30.3 %
calendar year
Underwriting expense 21.3 % 25.9 % 23.2 %
ratio
Combined ratio 30.2 % 88.5 % 53.5 %
(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)
Six months ended June 30, 2009
Reinsurance Individual Eliminations Other Total
Risk (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 Individual Risk segment to the Reinsurance
segment.
Six months ended June 30, 2008
Reinsurance Individual Eliminations Other Total
Risk (1)
Gross premiums $ 931,521 $ 395,666 $ 7,426 $ - $ 1,334,613
written
Net premiums written $ 696,107 $ 321,031 - $ 1,017,138
Net premiums earned $ 458,513 $ 226,974 - $ 685,487
Net claims and claim 67,189 129,184 - 196,373
expenses incurred
Acquisition expenses 44,026 56,015 - 100,041
Operational expenses 43,895 19,712 - 63,607
Underwriting income $ 303,403 $ 22,063 - 325,466
Net investment 91,188 91,188
income
Equity in earnings 11,122 11,122
of other ventures
Other income 7,988 7,988
Interest and
preference share (33,891 ) (33,891 )
dividends
Redeemable
noncontrolling (81,656 ) (81,656 )
interest - DaVinciRe
Other items, net (12,500 ) (12,500 )
Net realized gains 17,124 17,124
on investments
Net
other-than-temporary (51,955 ) (51,955 )
impairments
Net income available
to RenaissanceRe $ (52,580 ) $ 272,886
common shareholders
Net claims and claim
expenses incurred - $ 128,437 $ 162,591 $ 291,028
current accident
year
Net claims and claim
expenses incurred - (61,248 ) (33,407 ) (94,655 )
prior accident years
Net claims and claim
expenses incurred - $ 67,189 $ 129,184 $ 196,373
total
Net claims and claim
expense ratio - 28.0 % 71.6 % 42.5 %
current accident
year
Net claims and claim
expense ratio - (13.3 %) (14.7 %) (13.9 %)
prior accident years
Net claims and claim
expense ratio - 14.7 % 56.9 % 28.6 %
calendar year
Underwriting expense 19.1 % 33.4 % 23.9 %
ratio
Combined ratio 33.8 % 90.3 % 52.5 %
(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 Six months ended
Reinsurance Segment June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Renaissance $ 356,269 $ 291,317 $ 645,899 $ 516,285
catastrophe premiums
Renaissance (3,370 ) 22,955 65,603 98,418
specialty premiums
Total Renaissance 352,899 314,272 711,502 614,703
premiums
DaVinci catastrophe 202,733 173,349 374,519 312,527
premiums
DaVinci specialty - 172 2,527 4,291
premiums
Total DaVinci 202,733 173,521 377,046 316,818
premiums
Total Reinsurance $ 555,632 $ 487,793 $ 1,088,548 $ 931,521
premiums
Total specialty $ (3,370 ) $ 23,127 $ 68,130 $ 102,709
premiums
Total catastrophe $ 559,002 $ 464,666 $ 1,020,418 $ 828,812
premiums
Catastrophe
premiums written on
behalf of our joint 26,184 24,042 49,976 55,663
venture, Top Layer
Re (1)
Catastrophe
premiums assumed 809 4,937 1,045 7,426
from the Individual
Risk segment
Total managed
catastrophe premiums $ 585,995 $ 493,645 $ 1,071,439 $ 891,901
(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 Six months ended
Individual Risk June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Segment
Multi-peril crop $ 234,994 $ 203,077 $ 243,146 $ 208,449
Commercial 25,447 31,699 50,089 63,083
multi-line
Commercial property 32,366 60,830 48,487 91,683
Personal lines 5,924 19,239 22,158 32,451
property
Total Individual $ 298,731 $ 314,845 $ 363,880 $ 395,666
Risk premiums
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, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Fixed maturity
investments $ 40,007 $ 46,308 $ 79,134 $ 95,843
available for sale
Short term 2,741 12,054 5,812 31,134
investments
Other investments
Hedge funds and
private equity 12,327 (29,395 ) (7,414 ) (31,335 )
investments
Other 61,740 11,863 83,561 (2,578 )
Cash and cash 157 1,042 530 3,944
equivalents
116,972 41,872 161,623 97,008
Investment expenses (2,679 ) (3,187 ) (5,204 ) (5,820 )
Net investment 114,293 38,685 156,419 91,188
income
Gross realized gains 33,213 18,606 64,636 38,878
Gross realized (14,324 ) (16,194 ) (23,621 ) (21,754 )
losses
Net realized gains 18,889 2,412 41,015 17,124
on investments
Total
other-than-temporary (5,289 ) (26,573 ) (24,311 ) (51,955 )
impairments
Portion recognized
in other 3,456 - 3,456 -
comprehensive
income, before taxes
Net
other-than-temporary (1,833 ) (26,573 ) (20,855 ) (51,955 )
impairments
Net unrealized
losses on fixed (57,166 ) (35,248 ) (62,573 ) (11,519 )
maturity investments
available for sale
FAS 115-2 cumulative
effect adjustment 76,615 - 76,615 -
(1)
Net change in
unrealized holding
gains on
fixed maturity
investments 19,449 (35,248 ) 14,042 (11,519 )
available for
sale
Total investment $ 150,798 $ (20,724 ) $ 190,621 $ 44,838
result
(1) Cumulative effect adjustment to opening retained earnings as of April 1,
2009, as a result of the adoption of FAS 115-2.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Yield to Maturity and Credit Rating
(in thousands of United States Dollars)
(Unaudited)
Credit Rating (1)
% of Total
Non-
Amortized Fair Managed Yield to
At June 30, 2009 AAA AA A BBB Investment Not Rated
Cost Value Investment Maturity
Grade
Portfolio
Short term $ 1,074,469 $ 1,074,469 17.7 % 0.4 % $ 1,047,170 $ 23,160 $ 3,815 $ 124 $ 200 $ -
investments
100.0 % 97.5 % 2.2 % 0.3 % 0.0 % 0.0 % 0.0 %
Fixed maturity
investments
available for sale
U.S. treasuries 299,300 300,521 4.9 % 1.7 % 300,521 - - - - -
Agencies
Fannie Mae & 613,535 610,877 10.0 % 2.5 % 606,198 - 4,679 - - -
Freddie Mac
Other agencies 68,365 69,122 1.1 % 2.0 % 69,122 - - - - -
Total agencies 681,900 679,999 11.1 % 2.5 % 675,320 - 4,679 - - -
Non U.S. government 94,365 98,382 1.6 % 5.0 % 67,647 5,000 791 11,734 13,210 -
FDIC guaranteed 809,743 812,509 13.4 % 1.8 % 812,509 - - - - -
corporate
Non-U.S.
government-backed 142,525 143,284 2.4 % 2.7 % 129,992 13,292 - - - -
corporate
Corporate 726,114 741,295 12.2 % 4.6 % 61,751 324,996 222,027 73,260 59,261 -
Mortgage-backed
securities
Residential
mortgage-backed
securities
Agency 1,056,022 1,069,621 17.6 % 4.2 % 1,069,621 - - - - -
securities
Non-agency 37,039 34,407 0.6 % 9.5 % 32,084 1,129 - 1,194 - -
securities
Non-agency
securities - 16,015 15,183 0.2 % 15.0 % 14,081 471 306 - 325 -
Alt A
Non-agency
securities - - - 0.0 % 0.0 % - - - - - -
Sub-prime
Total
residential 1,109,076 1,119,211 18.4 % 4.5 % 1,115,786 1,600 306 1,194 325 -
mortgage-backed
securities
Commercial
mortgage-backed 217,382 204,275 3.4 % 8.7 % 204,275 - - - - -
securities
Total
mortgage-backed 1,326,458 1,323,486 21.8 % 5.2 % 1,320,061 1,600 306 1,194 325 -
securities
Asset-backed
securities
Auto 61,047 62,137 1.0 % 2.5 % 62,137 - - - - -
Stranded cost 6,996 7,105 0.1 % 1.9 % 7,105 - - - - -
Credit cards 6,460 6,574 0.1 % 2.1 % 6,574 - - - - -
Other 58,214 55,151 0.9 % 5.6 % 55,151 - - - - -
Total asset-backed 132,717 130,967 2.1 % 3.8 % 130,967 - - - - -
securities
Total securitized 1,459,175 1,454,453 23.9 % 5.0 % 1,451,028 1,600 306 1,194 325 -
assets
Total fixed
maturity 4,213,122 4,230,443 69.5 % 3.6 % 3,498,768 344,888 227,803 86,188 72,796 -
investments
available for sale
100.0 % 82.7 % 8.2 % 5.4 % 2.0 % 1.7 % 0.0 %
Other investments
Private equity 263,263 4.3 % - - - - - 263,263
partnerships
Senior secured 259,234 4.3 % - - - - 259,234 -
bank loan funds
Catastrophe 100,502 1.6 % - 24,214 - - 76,288 -
bonds
Non-U.S. fixed 68,192 1.1 % - - - 38,337 29,855 -
income funds
Hedge funds 66,625 1.1 % - - - - - 66,625
Miscellaneous
other 21,600 0.4 % - - - 13,319 8,281 -
investments
Total other 779,416 12.8 % - 24,214 - 51,656 373,658 329,888
investments
Total managed
investment $ 6,084,328 100.0 % $ 4,545,938 $ 392,262 $ 231,618 $ 137,968 $ 446,654 $ 329,888
portfolio
100.0 % 74.8 % 6.4 % 3.8 % 2.3 % 7.3 % 5.4 %
The credit ratings included in this table are those assigned by Standard & Poor's Corporation ("S&P"). When ratings provided by S&P
(1) were not available, ratings from other nationally recognized rating agencies were used. The Company has grouped short term
investments with an A-1+ and A-1 short-term issue credit rating as AAA, short term investments with A-2 short-term issue credit
rating as AA and short term investments with an A-3 short-term issue credit rating as A.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio
(in thousands of United States Dollars)
(Unaudited)
At June 30, 2009 At December 31, 2008 Change
% of Total % of Total
Fair Managed Fair Managed
$ %
Value Investment Value Investment
Portfolio Portfolio
Short term $ 1,074,469 17.7 % $ 2,172,343 36.6 % $ (1,097,874 ) (50.5 %)
investments
Fixed maturity
investments
available for
sale
U.S. treasuries 300,521 4.9 % 467,480 7.9 % (166,959 ) (35.7 %)
Agencies
Fannie Mae & 610,877 10.0 % 385,229 6.4 % 225,648 58.6 %
Freddie Mac
Other agencies 69,122 1.1 % 63,292 1.1 % 5,830 9.2 %
Total agencies 679,999 11.1 % 448,521 7.5 % 231,478 51.6 %
Non U.S. 98,382 1.6 % 55,370 0.9 % 43,012 77.7 %
government
FDIC guaranteed 812,509 13.4 % 207,393 3.5 % 605,116 291.8 %
corporate
Non-U.S.
government-backed 143,284 2.4 % 3,530 0.1 % 139,754 3959.0 %
corporate
Corporate 741,295 12.2 % 537,975 9.1 % 203,320 37.8 %
Mortgage-backed
securities
Residential
mortgage-backed
securities
Agency 1,069,621 17.6 % 756,902 12.7 % 312,719 41.3 %
securities
Non-agency 34,407 0.6 % 70,916 1.2 % (36,509 ) (51.5 %)
securities
Non-agency
securities - 15,183 0.2 % 27,756 0.5 % (12,573 ) (45.3 %)
Alt A
Non-agency
securities - - 0.0 % - 0.0 % - 0.0 %
Sub-prime
Total
residential 1,119,211 18.4 % 855,574 14.4 % 263,637 30.8 %
mortgage-backed
securities
Commercial
mortgage-backed 204,275 3.4 % 255,020 4.3 % (50,745 ) (19.9 %)
securities
Total
mortgage-backed 1,323,486 21.8 % 1,110,594 18.7 % 212,892 19.2 %
securities
Asset-backed
securities
Auto 62,137 1.0 % 95,812 1.6 % (33,675 ) (35.1 %)
Stranded cost 7,105 0.1 % 7,639 0.1 % (534 ) (7.0 %)
Credit cards 6,574 0.1 % 12,056 0.2 % (5,482 ) (45.5 %)
Other 55,151 0.9 % 50,515 0.8 % 4,636 9.2 %
Total
asset-backed 130,967 2.1 % 166,022 2.7 % (35,055 ) (21.1 %)
securities
Total securitized 1,454,453 23.9 % 1,276,616 21.4 % 177,837 13.9 %
assets
Total fixed
maturity
investments 4,230,443 69.5 % 2,996,885 50.4 % 1,233,558 41.2 %
available for
sale
Other investments
Private equity 263,263 4.3 % 258,901 4.3 % 4,362 1.7 %
partnerships
Senior secured 259,234 4.3 % 215,870 3.6 % 43,364 20.1 %
bank loan funds
Catastrophe 100,502 1.6 % 93,085 1.8 % 7,417 8.0 %
bonds
Non-U.S. fixed 68,192 1.1 % 81,719 1.6 % (13,527 ) (16.6 %)
income funds
Hedge funds 66,625 1.1 % 105,838 1.4 % (39,213 ) (37.1 %)
Miscellaneous
other 21,600 0.4 % 18,062 0.3 % 3,538 19.6 %
investments
Total other 779,416 12.8 % 773,475 13.0 % 5,941 0.8 %
investments
Total managed
investment $ 6,084,328 100.0 % $ 5,942,703 100.0 % $ 141,625 2.4 %
portfolio
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Fixed Maturity Investments Available for Sale - Securitized Assets
(in thousands of United States Dollars)
(Unaudited)
% of Total Managed Investment Portfolio
Vintage
% of Total
% of Total Weighted
Managed 2004
At June 30, 2009 Fair Value 2009 2008 2007 2006 2005 & Securitized Average
Investment Prior Life
Assets
Portfolio
Total managed
investment $ 6,084,328 100.0 %
portfolio
Mortgage-backed
securities
Residential
mortgage-backed
securities
Agency 1,069,621 17.6 % 3.0 % 7.3 % 4.0 % 0.7 % 0.8 % 1.8 % 73.5 % 4.4
securities
Non-agency 34,407 0.6 % 0.0 % 0.0 % 0.0 % 0.1 % 0.2 % 0.3 % 2.4 % 4.4
securities
Non-agency
securities - 15,183 0.2 % 0.0 % 0.0 % 0.0 % 0.0 % 0.1 % 0.1 % 1.0 % 4.0
Alt A
Non-agency
securities - - 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % -
Sub-prime
Total
non-agency 49,590 0.8 % 0.0 % 0.0 % 0.0 % 0.1 % 0.3 % 0.4 % 3.4 % 4.3
securities
Total
residential 1,119,211 18.4 % 3.0 % 7.3 % 4.0 % 0.8 % 1.1 % 2.2 % 76.9 % 4.4
mortgage-backed
securities
Commercial
mortgage-backed 204,275 3.4 % 0.0 % 0.2 % 0.3 % 0.5 % 0.8 % 1.6 % 14.0 % 3.1
securities
Total
mortgage-backed 1,323,486 21.8 % 3.0 % 7.5 % 4.3 % 1.3 % 1.9 % 3.8 % 90.9 % 4.2
securities
Asset-backed
securities
Auto 62,137 1.0 % 0.0 % 0.1 % 0.0 % 0.7 % 0.2 % 0.0 % 4.3 % 0.8
Stranded cost 7,105 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.1 % 0.0 % 0.5 % 1.5
Credit cards 6,574 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.1 % 0.0 % 0.5 % 1.5
Other 55,151 0.9 % 0.0 % 0.6 % 0.0 % 0.0 % 0.2 % 0.1 % 3.8 % 5.0
Total
asset-backed 130,967 2.1 % 0.0 % 0.7 % 0.0 % 0.7 % 0.6 % 0.1 % 9.1 % 2.6
securities
Total
securitized $ 1,454,453 23.9 % 3.0 % 8.2 % 4.3 % 2.0 % 2.5 % 3.9 % 100.0 % 4.1
assets
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Fixed Maturity Investments
Available for Sale - Corporate
(in thousands of United States Dollars)
(Unaudited)
At June 30, 2009
Non-Investment
Sector Total AAA AA A BBB
Grade
Financials $ $ 13,891 $ $ $ 13,383 $ 11,096
382,355 228,693 115,292
Industrial,
utilities and 112,710 3,164 28,569 36,632 26,514 17,831
energy
Consumer 157,290 29,838 67,734 27,834 13,809 18,075
Communications 80,439 14,858 - 37,999 17,678 9,904
and technology
Basic materials 8,501 - - 4,270 1,876 2,355
Total corporate
fixed maturity
investments
available $ $ $
for sale, 741,295 $ 61,751 324,996 222,027 $ 73,260 $ 59,261
at fair
value (1)
(1) Excludes FDIC guaranteed and non-U.S. government backed corporate fixed
maturity investments available for sale, at fair value.
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio
Short Term Investments and Fixed Maturity Investments Available for Sale
- Top 10 Corporate Issuers by Fair Value
(in thousands of United States Dollars)
(Unaudited)
At June 30, 2009
Fixed maturity
Short term
Issuer Total investments
investments
available for sale
General Electric Company $ 85,369 $ - $ 85,369
Wells Fargo & Company 62,693 - 62,693
JP Morgan Chase & Co. 34,761 4,909 29,852
Pfizer Inc. 28,172 - 28,172
The Bank of New York Mellon 26,334 - 26,334
Corporation
Novartis AG 24,276 - 24,276
Wal-mart Stores Inc. 17,571 - 17,571
Microsoft Corporation 14,858 - 14,858
US Bancorp 13,606 9,129 4,477
BP Plc 13,058 - 13,058
Total (1) $ 320,698 $ 14,038 $ 306,660
(1) Excludes FDIC guaranteed and non-U.S. government backed corporate
fixed maturity investments available for sale, at fair value.
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" 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" 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 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" 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" to calculate "operating income 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 States June 30, June 30, 2008 June 30, 2009 June 30, 2008
Dollars, except for 2009
per share amounts)
Net income available
to RenaissanceRe $ 271,179 $ 135,721 $ 368,463 $ 272,886
common shareholders
Adjustment for net
realized gains on (18,889 ) (2,412 ) (41,015 ) (17,124 )
investments
Adjustment for net
other-then-temporary 1,833 26,573 20,855 51,955
impairments
Operating income
available to $ 254,123 $ 159,882 $ 348,303 $ 307,717
RenaissanceRe common
shareholders
Net income available
to RenaissanceRe
common shareholders $ 4.32 $ 2.13 $ 5.90 $ 4.18
per common share -
diluted
Adjustment for net
realized gains on (0.31 ) (0.04 ) (0.67 ) (0.26 )
investments
Adjustment for net
other-then-temporary 0.04 0.41 0.34 0.79
impairments
Operating income
available to
RenaissanceRe common $ 4.05 $ 2.50 $ 5.57 $ 4.71
shareholders per
common share -
diluted
Return on average
common equity - 41.5 % 19.9 % 29.1 % 19.8 %
annualized
Adjustment for net
realized gains on (2.9 %) (0.4 %) (3.2 %) (1.2 %)
investments
Adjustment for net
other-then-temporary 0.3 % 3.9 % 1.6 % 3.7 %
impairments
Operating return on
average common equity 38.9 % 23.4 % 27.5 % 22.3 %
- annualized
The Company has also included in this Press Release "managed catastrophe premiums." "Managed catastrophe premiums" is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures, excluding catastrophe premiums assumed from the Company's 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 July 28, 2009