RenaissanceRe Reports Operating Loss of $143.4 Million for the Third Quarter of 2008 or $2.35 Operating Loss Per Common Share
Net Loss of $231.0 Million for the Third Quarter of 2008 or $3.79 Loss Per Common Share
PEMBROKE, Bermuda--(BUSINESS WIRE)--
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported an operating loss attributable to common shareholders of $143.4 million for the third quarter of 2008, compared to operating income available to common shareholders of $167.8 million in the third quarter of 2007. Operating (loss) income excludes net realized investment losses of $87.6 million and net realized investment gains of $1.6 million in the third quarters of 2008 and 2007, respectively, and net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method of $nil and $36.0 million in the third quarters of 2008 and 2007, respectively. Operating loss per diluted common share was $2.35 in the third quarter of 2008, compared to operating income per diluted common share of $2.33 in the third quarter of 2007. Net loss attributable to common shareholders was $231.0 million or $3.79 per diluted common share in the third quarter of 2008, compared to net income available to common shareholders of $133.4 million or $1.85 per diluted common share for the third quarter of 2007.
Tangible book value per common share was $37.02 at September 30, 2008, a 12.2% decrease in the third quarter of 2008, compared to a 4.3% increase in the third quarter of 2007. Book value per common share was $38.94 at September 30, 2008, a 10.1% decrease in the third quarter of 2008, compared to a 4.2% increase in the third quarter of 2007. As described in more detail below, the Company's book value per share for the third quarter of 2008 was negatively impacted by $276.0 million of net negative impact from hurricanes Gustav and Ike and negative investment results of $93.3 million. Tangible book value per share was also impacted by the addition of $46.4 million of goodwill and other intangibles during the third quarter of 2008.
Neill A. Currie, CEO, commented: "The combination of the U.S. hurricanes and turmoil in the financial markets resulted in a decrease in our tangible book value per share this quarter, but also served to reinforce our position as a market leader. Our brokers and clients value our financial strength and proven willingness to pay claims quickly as well as our ability to provide substantial reinsurance capacity in these turbulent times."
Mr. Currie added: "We anticipate that additional opportunities will emerge with the expected decline in industry capital and continued stress in the financial markets. As we look ahead to 2009 and the upcoming January 1st renewal season, our strong ratings, solid balance sheet and experienced underwriting team, coupled with our proven risk management systems, position us well to capture these opportunities."
THIRD QUARTER 2008 RESULTS
Net Impact of Hurricanes Gustav and Ike
The Company recorded $276.0 million of net negative impact from hurricanes Gustav and Ike in the third quarter of 2008. 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 minority interest. These amounts are based on management's estimates following a review of the Company's potential exposures and discussions with certain clients and brokers. Given the magnitude and recent occurrence of these events, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Company's actual ultimate net losses from these events may vary materially from these estimates.
See the supplemental financial data below for additional information detailing the net negative impact from hurricanes Gustav and Ike on the Company's consolidated financial statements and its Reinsurance and Individual Risk segment results.
Underwriting Results
Gross premiums written for the third quarter of 2008 were $239.8 million, a $31.0 million increase from the third quarter of 2007. As described in more detail below, the increase in gross premiums written was driven by a $27.9 million increase in gross premiums written in the Company's Reinsurance segment combined with a $20.9 million decrease in gross premiums ceded from the Individual Risk segment to the Reinsurance segment, and partially offset by a $17.8 million decrease in gross premiums written in the Company's Individual Risk segment. The Company incurred an underwriting loss of $240.5 million and had a combined ratio of 163.4% in the third quarter of 2008, compared to $144.5 million of underwriting income and a combined ratio of 60.6% in the third quarter of 2007. The $385.0 million decrease in underwriting income and 102.8 percentage point increase in the combined ratio was driven by hurricanes Gustav and Ike which occurred in the third quarter of 2008 and resulted in an underwriting loss of $419.6 million and increased the Company's combined ratio by 116.8 percentage points. The impact of these hurricanes on the Company's Reinsurance and Individual Risk segments was $379.9 million and $39.7 million of underwriting losses, respectively. The Company experienced $36.0 million of favorable development on prior year reserves in the third quarter of 2008, compared to $20.2 million of favorable development in the third quarter of 2007. The favorable development is primarily due to lower than expected claims emergence in the Company's Reinsurance segment.
Following is supplemental financial data regarding the net financial statement impact on the Company's third quarter 2008 results due to hurricanes Gustav and Ike:
----------------------------------------------------------------------
Three months ended September 30, 2008
-------------------------------------
(in thousands of United States
dollars) Gustav Ike Total
------------ --------------- --------
Net claims and claim expenses
incurred $ (80.3) $(378.5) $(458.8)
Net reinstatement premiums earned 12.3 31.6 43.9
Lost profit commissions (1.9) (2.8) (4.7)
------------ --------------- --------
Net impact on underwriting
result (69.9) (349.7) (419.6)
Minority interest - DaVinciRe 25.3 118.3 143.6
------------ --------------- --------
Net negative impact $ (44.6) $(231.4) $(276.0)
============ =============== ========
Impact on combined ratio 16.9% 94.8% 116.8%
----------------------------------------------------------------------
Following is supplemental financial data regarding the underwriting
impact by segment on the Company's third quarter 2008 results due to
hurricanes Gustav and Ike:
----------------------------------------------------------------------
Three months ended September 30, 2008
-------------------------------------
(in thousands of United States
dollars) Reinsurance Individual Risk Total
------------ --------------- --------
Net claims and claim expenses
incurred $(424.2) $ (34.6) $(458.8)
Net reinstatement premiums earned 49.0 (5.1) 43.9
Lost profit commissions (4.7) - (4.7)
------------ --------------- --------
Net impact on underwriting
result $(379.9) $ (39.7) $(419.6)
============ =============== ========
Impact on combined ratio 166.0% 30.2% 116.8%
----------------------------------------------------------------------
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment increased $27.9 million to $169.5 million in the third quarter of 2008, compared to $141.5 million in the third quarter of 2007. As detailed in the table above, the increase in gross premiums written in the quarter relative to the third quarter of 2007 was primarily due to $49.0 million of reinstatement premiums written and earned as a result of hurricanes Gustav and Ike. Excluding the impact of reinstatement premiums, gross premiums written would have been down due to softening market conditions which resulted in lower premium rates on business written during the third quarter of 2008. Net premiums earned increased to $251.1 million in the third quarter of 2008, compared to $242.5 million in the third quarter of 2007.
The Reinsurance segment incurred an underwriting loss of $227.6 million in the third quarter of 2008, compared to $126.8 million of underwriting income in the third quarter of 2007. In the third quarter of 2008, the Reinsurance segment generated a net claims and claim expense ratio of 168.7%, an underwriting expense ratio of 21.9% and a combined ratio of 190.6%, compared to 27.8%, 20.0% and 47.8%, respectively, in the third quarter of 2007. The $354.3 million decrease in underwriting income and 142.8 percentage point increase in the combined ratio in the third quarter of 2008 compared to the third quarter of 2007 was principally driven by the impact of hurricanes Gustav and Ike. As noted in the table above, 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 $30.6 million of favorable loss reserve development in the third quarter of 2008, compared to $15.8 million in the third quarter of 2007, primarily due to lower than expected claims emergence in the Company's catastrophe unit in the third quarter of 2008 and lower than expected claims emergence in the Company's catastrophe and specialty reinsurance units during the third quarter of 2007.
Individual Risk Segment
Gross premiums written for the Company's Individual Risk segment decreased $17.8 million to $83.7 million in the third quarter of 2008, compared to $101.5 million in the third quarter of 2007. For the first nine months of 2008, gross premium written in the Company's Individual Risk segment increased $16.1 million, or 3.5%, to $479.4 million, compared to $463.2 million for the same period in 2007. The increase in gross premiums written for the first nine months of 2008 compared to the first nine months of 2007 was principally driven by a $70.2 million, or 46.8% increase, in the Company's multi-peril crop insurance premium and partially offset by decreases in the segment's other lines of business. Net premiums earned increased $3.7 million to $128.3 million in the third quarter of 2008, compared to $124.5 million in the third quarter of 2007.
The Individual Risk segment incurred an underwriting loss of $13.0 million in the third quarter of 2008, compared to $17.8 million of underwriting income in the third quarter of 2007. In the third quarter of 2008, the Individual Risk segment generated a net claims and claim expense ratio of 87.1%, an underwriting expense ratio of 23.0% and a combined ratio of 110.1%, compared to 51.7%, 34.1% and 85.8%, respectively, in the third quarter of 2007. The $30.7 million decrease in underwriting income and 24.3 percentage point increase in the combined ratio in the third quarter of 2008 compared to the third quarter of 2007 was principally driven by the impact of hurricanes Gustav and Ike. As noted in the table above, 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. The decrease in underwriting income was partially offset by a decrease in acquisition expenses which was principally driven by an increase in the proportion of net premiums earned from the Company's multi-peril crop insurance, which when compared to the Individual Risk segment's other lines of business, has lower acquisition costs than the other lines. The Individual Risk segment experienced $5.4 million of favorable development in the third quarter of 2008 compared to $4.4 million of favorable development in the third quarter of 2007.
Investments
The return on the Company's investment portfolio was down significantly in the third quarter of 2008 compared to the third quarter of 2007. The lower returns were principally due to widening credit spreads as a result of the turmoil in the financial markets which resulted in realized and unrealized losses within the Company's fixed maturity investments available for sale combined with lower returns within the Company's other investments. The Company's total investment result, which includes the sum of net investment income, net realized (losses) gains on investments and the net change in unrealized holding gains on fixed maturity investments available for sale, was negative $93.3 million in the third quarter of 2008, a $212.9 million decrease from $119.6 million in the third quarter of 2007.
Net investment income was $15.8 million in the third quarter of 2008 compared to $95.6 million in the third quarter of 2007, a decrease of $79.8 million. The decrease was principally driven by a $32.1 million decrease in net investment income from the Company's hedge fund and private equity investments and a $33.1 million decrease in the Company's other investments, principally senior secured bank loan funds and non-U.S. fixed income funds. The Company's other investments are accounted for at fair value with the change in fair value recorded in net investment income.
Net realized investment losses were $87.6 million in the third quarter of 2008 compared to net realized investment gains of $1.6 million in the third quarter of 2007, a decrease of $89.2 million. The decrease was driven by a $94.5 million increase in other than temporary impairments which totaled $98.8 million in the third quarter of 2008 compared to $4.3 million in the third quarter of 2007, principally due to a widening of credit spreads. Included in other than temporary impairment charges are credit-related charges of $7.2 million and $nil for the third quarters of 2008 and 2007, respectively, with the third quarter 2008 credit related impairments due to the Company's direct holdings of fixed maturity securities issued by Lehman Brothers Holdings Inc. and its subsidiaries ("Lehman Brothers"). The Company had no fixed maturity investments available for sale in an unrealized loss position at September 30, 2008.
Other Items
-- During the third quarter of 2008, the Company repurchased 1.6
million shares at an aggregate cost of $75.8 million. At
September 30, 2008, $382.4 million remained available under
the Company's share repurchase program.
-- The Company's cash flows from operations were $177.5 million
for the third quarter of 2008, compared to $284.9 million for
the third quarter of 2007.
This press release includes certain non-GAAP financial measures including "operating (loss) income", "operating (loss) income per common share - diluted", "operating return on average common equity - annualized", "managed catastrophe premium" and "tangible book value per common share". 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 29, 2008 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the Investor 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, as amended, for the year ended December 31, 2007 and its quarterly reports on Form 10-Q for the quarters ending March 31, 2008 and June 30, 2008.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
For the three and nine months ended September 30, 2008 and 2007
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Nine months ended
--------------------- -----------------------
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
----------- --------- ----------- -----------
Revenues
Gross premiums
written $ 239,806 $208,821 $1,574,419 $1,687,410
=========== ========= =========== ===========
Net premiums written $ 194,408 $149,163 $1,211,546 $1,330,032
Decrease (increase)
in unearned premiums 184,934 217,894 (146,717) (241,903)
----------- --------- ----------- -----------
Net premiums earned 379,342 367,057 1,064,829 1,088,129
Net investment income 15,767 95,594 106,955 321,749
Net foreign exchange
gains (losses) 3,448 (5,424) 8,153 (630)
Equity in earnings
(losses) of other
ventures 2,333 (23,986) 13,455 (3,610)
Other income (loss) 2,258 (10,008) 10,246 (17,709)
Net realized (losses)
gains on investments (87,610) 1,592 (122,441) (5,889)
----------- --------- ----------- -----------
Total revenues 315,538 424,825 1,081,197 1,382,040
----------- --------- ----------- -----------
Expenses
Net claims and claim
expenses incurred 535,347 131,700 731,720 416,546
Acquisition expenses 54,231 63,719 154,272 186,957
Operational expenses 30,296 27,126 93,903 82,177
Corporate expenses 3,116 7,158 18,930 19,089
Interest expense 5,379 7,226 18,120 26,400
----------- --------- ----------- -----------
Total expenses 628,369 236,929 1,016,945 731,169
----------- --------- ----------- -----------
(Loss) income before
minority interest and
taxes (312,831) 187,896 64,252 650,871
Minority interest -
DaVinciRe 91,977 (43,820) 10,321 (110,326)
----------- --------- ----------- -----------
(Loss) income before
taxes (220,854) 144,076 74,573 540,545
Income tax benefit
(expense) 455 (101) (936) (888)
----------- --------- ----------- -----------
Net (loss) income (220,399) 143,975 73,637 539,657
Dividends on preference
shares (10,575) (10,575) (31,725) (32,286)
----------- --------- ----------- -----------
Net (loss) income
(attributable)
available to common
shareholders $(230,974) $133,400 $ 41,912 $ 507,371
=========== ========= =========== ===========
Operating (loss) income
(attributable)
available to common
shareholders per Common
Share - diluted (1) (2) $ (2.35) $ 2.33 $ 2.56 $ 7.60
Net (loss) income
(attributable)
available to common
shareholders per Common
Share - basic $ (3.79) $ 1.89 $ 0.66 $ 7.14
Net (loss) income
(attributable)
available to common
shareholders per Common
Share - diluted (2) $ (3.79) $ 1.85 $ 0.65 $ 7.02
Average shares
outstanding - basic 60,943 70,575 63,131 71,038
Average shares
outstanding - diluted
(2) 61,694 71,945 64,125 72,296
Net claims and claim
expense ratio 141.1% 35.9% 68.7% 38.3%
Underwriting expense
ratio 22.3% 24.7% 23.3% 24.7%
----------- --------- ----------- -----------
Combined ratio 163.4% 60.6% 92.0% 63.0%
=========== ========= =========== ===========
Operating return on
average common equity -
annualized(1) (22.4%) 23.6% 8.2% 27.1%
=========== ========= =========== ===========
(1) See Comments on Regulation G for a reconciliation of non-GAAP
financial measures.
(2) In accordance with FAS 128, diluted earnings per share
calculations use average common shares outstanding - basic, when in a
net loss position.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At
------------------------------------
September 30, 2008 December 31, 2007
------------------ -----------------
(Unaudited) (Audited)
Assets
Fixed maturity investments
available for sale, at fair
value $ 3,645,294 $ 3,914,363
Short term investments, at fair
value 1,438,201 1,821,549
Other investments, at fair value 902,328 807,864
Investments in other ventures,
under equity method 117,789 90,572
----------------- -----------------
Total investments 6,103,612 6,634,348
Cash and cash equivalents 427,176 330,226
Premiums receivable 728,046 475,075
Ceded reinsurance balances 155,487 107,916
Losses recoverable 300,076 183,275
Accrued investment income 35,134 39,084
Deferred acquisition costs 114,038 104,212
Receivable for investments sold 368,313 144,037
Other secured assets 107,252 90,488
Other assets 178,163 171,457
Goodwill and other intangibles 71,942 6,237
----------------- -----------------
Total assets $ 8,589,239 $ 8,286,355
================= =================
Liabilities, Minority Interest
and Shareholders' Equity
Liabilities
Reserve for claims and claim
expenses $ 2,433,420 $ 2,028,496
Reserve for unearned premiums 757,624 563,336
Debt 450,000 451,951
Reinsurance balances payable 360,829 275,430
Payable for investments purchased 545,100 422,974
Other secured liabilities 106,420 88,920
Other liabilities 195,071 162,294
----------------- -----------------
Total liabilities 4,848,464 3,993,401
----------------- -----------------
Minority interest - DaVinciRe 699,534 815,451
Shareholders' Equity
Preference shares 650,000 650,000
Common shares 61,401 68,920
Additional paid-in capital - 107,867
Accumulated other comprehensive
income 16,544 44,719
Retained earnings 2,313,296 2,605,997
----------------- -----------------
Total shareholders' equity 3,041,241 3,477,503
----------------- -----------------
Total liabilities, minority
interest and shareholders'
equity $ 8,589,239 $ 8,286,355
================= =================
Book value per common share
(unaudited) $ 38.94 $ 41.03
================= =================
Common shares outstanding 61,401 68,920
================= =================
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
Three months ended September 30, 2008
---------------------------------------------------------
Elimi-
Individual nations
Reinsurance Risk (1) Other Total
------------ ---------- --------- ---------- ------------
Gross
premiums
written $ 169,463 $ 83,685 $(13,342) $ - $ 239,806
============ ========== ========= ============
Net premiums
written $ 129,229 $ 65,179 - $ 194,408
============ ========== ============
Net premiums
earned $ 251,058 $128,284 - $ 379,342
Net claims
and claim
expenses
incurred 423,568 111,779 - 535,347
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
income 15,767 15,767
Equity in
earnings of
other
ventures 2,333 2,333
Other income 2,258 2,258
Interest and
preference
share
dividends (15,954) (15,954)
Minority
interest -
DaVinciRe 91,977 91,977
Other items,
net 787 787
Net realized
losses on
investments (87,610) (87,610)
---------- ------------
Net loss
attributable
to common
shareholders $ 9,558 $ (230,974)
========== ============
Net claims
and claim
expenses
incurred -
current
accident
year $ 454,187 $117,157 $ 571,344
Net claims
and claim
expenses
incurred -
prior
accident
years (30,619) (5,378) (35,997)
------------ ---------- ------------
Net claims
and claim
expenses
incurred -
total $ 423,568 $111,779 $ 535,347
============ ========== ============
Net claims
and claim
expense
ratio -
current
accident
year 180.9% 91.3% 150.6%
Net claims
and claim
expense
ratio -
prior
accident
years (12.2%) (4.2%) (9.5%)
------------ ---------- ------------
Net claims
and claim
expense
ratio -
calendar
year 168.7% 87.1% 141.1%
Underwriting
expense
ratio 21.9% 23.0% 22.3%
------------ ---------- ------------
Combined
ratio 190.6% 110.1% 163.4%
============ ========== ============
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Three months ended September 30, 2007
---------------------------------------------------------
Elimi-
Individual nations
Reinsurance Risk (1) Other Total
------------ ---------- --------- ---------- ------------
Gross
premiums
written $ 141,545 $101,534 $(34,258) $ - $ 208,821
============ ========== ========= ============
Net premiums
written $ 91,112 $ 58,051 - $ 149,163
============ ========== ============
Net premiums
earned $ 242,520 $124,537 - $ 367,057
Net claims
and claim
expenses
incurred 67,335 64,365 - 131,700
Acquisition
expenses 32,122 31,597 - 63,719
Operational
expenses 16,301 10,825 - 27,126
------------ ---------- ---------- ------------
Underwriting
income $ 126,762 $ 17,750 - 144,512
============ ==========
Net
investment
income 95,594 95,594
Equity in
losses of
other
ventures (23,986) (23,986)
Other loss (10,008) (10,008)
Interest and
preference
share
dividends (17,801) (17,801)
Minority
interest -
DaVinciRe (43,820) (43,820)
Other items,
net (12,683) (12,683)
Net realized
gains on
investments 1,592 1,592
---------- ------------
Net income
available to
common
shareholders $ (11,112) $ 133,400
========== ============
Net claims
and claim
expenses
incurred -
current
accident
year $ 83,104 $ 68,755 $ 151,859
Net claims
and claim
expenses
incurred -
prior
accident
years (15,769) (4,390) (20,159)
------------ ---------- ------------
Net claims
and claim
expenses
incurred -
total $ 67,335 $ 64,365 $ 131,700
============ ========== ============
Net claims
and claim
expense
ratio -
current
accident
year 34.3% 55.2% 41.4%
Net claims
and claim
expense
ratio -
prior
accident
years (6.5%) (3.5%) (5.5%)
------------ ---------- ------------
Net claims
and claim
expense
ratio -
calendar
year 27.8% 51.7% 35.9%
Underwriting
expense
ratio 20.0% 34.1% 24.7%
------------ ---------- ------------
Combined
ratio 47.8% 85.8% 60.6%
============ ========== ============
(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, 2008
---------------------------------------------------------
Elimi-
Individual nations
Reinsurance Risk (1) Other Total
------------ ---------- --------- ---------- ------------
Gross
premiums
written $1,100,984 $479,351 $ (5,916) $ - $1,574,419
============ ========== ========= ============
Net premiums
written $ 825,336 $386,210 - $1,211,546
============ ========== ============
Net premiums
earned $ 709,571 $355,258 - $1,064,829
Net claims
and claim
expenses
incurred 490,757 240,963 - 731,720
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
income 106,955 106,955
Equity in
earnings of
other
ventures 13,455 13,455
Other income 10,246 10,246
Interest and
preference
share
dividends (49,845) (49,845)
Minority
interest -
DaVinciRe 10,321 10,321
Other items,
net (11,713) (11,713)
Net realized
losses on
investments (122,441) (122,441)
---------- ------------
Net income
available to
common
shareholders $ (43,022) $ 41,912
========== ============
Net claims
and claim
expenses
incurred -
current
accident
year $ 582,624 $279,748 $ 862,372
Net claims
and claim
expenses
incurred -
prior
accident
years (91,867) (38,785) (130,652)
------------ ---------- ------------
Net claims
and claim
expenses
incurred -
total $ 490,757 $240,963 $ 731,720
============ ========== ============
Net claims
and claim
expense
ratio -
current
accident
year 82.1% 78.7% 81.0%
Net claims
and claim
expense
ratio -
prior
accident
years (12.9%) (10.9%) (12.3%)
------------ ---------- ------------
Net claims
and claim
expense
ratio -
calendar
year 69.2% 67.8% 68.7%
Underwriting
expense
ratio 20.1% 29.6% 23.3%
------------ ---------- ------------
Combined
ratio 89.3% 97.4% 92.0%
============ ========== ============
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
----------------------------------------------------------------------
----------------------------------------------------------------------
Nine months ended September 30, 2007
---------------------------------------------------------
Elimi-
Individual nations
Reinsurance Risk (1) Other Total
------------ ---------- --------- ---------- ------------
Gross
premiums
written $1,263,727 $463,241 $(39,558) $ - $1,687,410
============ ========== ========= ============
Net premiums
written $ 995,686 $334,346 - $1,330,032
============ ========== ============
Net premiums
earned $ 723,286 $364,843 - $1,088,129
Net claims
and claim
expenses
incurred 221,990 194,556 - 416,546
Acquisition
expenses 86,411 100,546 - 186,957
Operational
expenses 50,943 31,234 - 82,177
------------ ---------- ---------- ------------
Underwriting
income $ 363,942 $ 38,507 - 402,449
============ ==========
Net
investment
income 321,749 321,749
Equity in
losses of
other
ventures (3,610) (3,610)
Other loss (17,709) (17,709)
Interest and
preference
share
dividends (58,686) (58,686)
Minority
interest -
DaVinciRe (110,326) (110,326)
Other items,
net (20,607) (20,607)
Net realized
losses on
investments (5,889) (5,889)
---------- ------------
Net income
available to
common
shareholders $ 104,922 $ 507,371
========== ============
Net claims
and claim
expenses
incurred -
current
accident
year $ 317,718 $225,207 $ 542,925
Net claims
and claim
expenses
incurred -
prior
accident
years (95,728) (30,651) (126,379)
------------ ---------- ------------
Net claims
and claim
expenses
incurred -
total $ 221,990 $194,556 $ 416,546
============ ========== ============
Net claims
and claim
expense
ratio -
current
accident
year 43.9% 61.7% 49.9%
Net claims
and claim
expense
ratio -
prior
accident
years (13.2%) (8.4%) (11.6%)
------------ ---------- ------------
Net claims
and claim
expense
ratio -
calendar
year 30.7% 53.3% 38.3%
Underwriting
expense
ratio 19.0% 36.1% 24.7%
------------ ---------- ------------
Combined
ratio 49.7% 89.4% 63.0%
============ ========== ============
(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
------------------- -----------------------
Reinsurance Segment September September September September
30, 2008 30, 2007 30, 2008 30, 2007
-------------------------- --------- --------- ----------- -----------
Renaissance catastrophe
premiums $ 97,839 $ 84,271 $ 614,124 $ 665,211
Renaissance specialty
premiums 28,408 39,536 126,826 240,384
--------- --------- ----------- -----------
Total Renaissance
premiums 126,247 123,807 740,950 905,595
--------- --------- ----------- -----------
DaVinci catastrophe
premiums 43,413 17,856 355,940 348,708
DaVinci specialty premiums (197) (118) 4,094 9,424
--------- --------- ----------- -----------
Total DaVinci premiums 43,216 17,738 360,034 358,132
--------- --------- ----------- -----------
Total Reinsurance premiums $169,463 $141,545 $1,100,984 $1,263,727
========= ========= =========== ===========
Total specialty premiums $ 28,211 $ 39,418 $ 130,920 $ 249,808
========= ========= =========== ===========
Total catastrophe premiums $141,252 $102,127 $ 970,064 $1,013,919
Catastrophe premiums
written on behalf of
our joint venture, Top
Layer Re (1) (293) - 55,370 63,725
Catastrophe premiums
assumed from the
Individual Risk
segment (13,342) (34,258) (5,916) (39,558)
--------- --------- ----------- -----------
Total managed
catastrophe
premiums (2) 127,617 67,869 1,019,518 1,038,086
Managed premiums
assumed for fully-
collateralized
joint ventures (20) (938) (2,306) (60,301)
--------- --------- ----------- -----------
Total managed catastrophe
premiums, net of fully-
collateralized joint
ventures (2) $127,597 $ 66,931 $1,017,212 $ 977,785
========= ========= =========== ===========
(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 Segment September September September September
30, 2008 30, 2007 30, 2008 30, 2007
-------------------------- --------- --------- ----------- -----------
Multi-peril crop $ 11,881 $ 22,171 $ 220,330 $ 150,112
Commercial property 24,863 26,361 116,546 143,879
Commercial multi-line 29,773 38,257 92,856 130,582
Personal lines property 17,168 14,745 49,619 38,668
--------- --------- ----------- -----------
Total Individual Risk
premiums $ 83,685 $101,534 $ 479,351 $ 463,241
========= ========= =========== ===========
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 September September
30, 2008 30, 2007 30, 2008 30, 2007
--------- --------- ---------- ---------
Fixed maturity investments
available for sale $ 52,087 $ 42,429 $ 147,930 $132,446
Short term investments 9,990 33,108 41,124 90,426
Other investments
Hedge funds and private
equity investments (15,080) 16,978 (46,415) 80,642
Other (30,306) 2,775 (32,884) 17,726
Cash and cash equivalents 1,956 2,919 5,900 7,506
--------- --------- ---------- ---------
18,647 98,209 115,655 328,746
Investment expenses (2,880) (2,615) (8,700) (6,997)
--------- --------- ---------- ---------
Net investment income 15,767 95,594 106,955 321,749
--------- --------- ---------- ---------
Gross realized gains 20,007 7,527 58,885 17,938
Gross realized losses (8,809) (1,613) (30,563) (5,835)
Other than temporary
impairments (98,808) (4,322) (150,763) (17,992)
--------- --------- ---------- ---------
Net realized (losses) gains on
investments (87,610) 1,592 (122,441) (5,889)
--------- --------- ---------- ---------
Net change in unrealized
holding gains on fixed
maturity investments
available for sale (21,411) 22,433 (32,930) 6,890
--------- --------- ---------- ---------
Total investment result $(93,254) $119,619 $ (48,416) $322,750
========= ========= ========== =========
----------------------------------------------------------------------
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Yield to Maturity
and Credit Rating
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
% of Total
Managed Yield
Amortized Fair Investment to
At September 30, 2008 Cost Value Portfolio Maturity
----------------------------------- ---------- ------------ --------
Short term investments $1,438,201 $1,438,201 24.0% 3.6%
-------------------------
100.0%
Fixed maturity
investments available
for sale
-------------------------
U.S. treasuries and
agencies
U.S. treasuries 685,787 690,265 11.5% 2.4%
Agency debt
Fannie Mae & Freddie
Mac 388,600 390,796 6.5% 4.0%
Other agencies 27,803 28,256 0.5% 3.7%
---------- ---------- ------------
Total agency debt 416,403 419,052 7.0% 4.0%
---------- ---------- ------------
Total U.S. treasuries and
agencies 1,102,190 1,109,317 18.5% 3.0%
Non U.S. government 82,785 83,556 1.4% 5.9%
Corporate 738,023 740,013 12.4% 7.1%
Mortgage-backed
securities
Residential mortgage-
backed securities
Agency securities 702,139 708,269 11.8% 5.4%
Non-agency securities 159,431 160,289 2.7% 9.7%
Non-agency securities
- Alt A 59,789 60,189 1.0% 12.8%
Non-agency securities
- Sub-prime - - 0.0% 0.0%
---------- ---------- ------------
Total residential
mortgage-backed
securities 921,359 928,747 15.5% 6.6%
Commercial Mortgage
Backed Securities 435,000 435,000 7.3% 6.9%
---------- ---------- ------------
Total mortgage-backed
securities 1,356,359 1,363,747 22.8% 6.7%
Asset-backed securities
Auto 132,072 132,185 2.2% 6.0%
Credit cards 96,207 96,226 1.6% 5.6%
Other - Stranded cost 44,838 44,841 0.7% 5.8%
Other 75,289 75,409 1.3% 5.3%
---------- ---------- ------------
Total asset-backed
securities 348,406 348,661 5.8% 5.7%
---------- ---------- ------------
Total securitized assets 1,704,765 1,712,408 28.6% 6.5%
---------- ---------- ------------
Total fixed maturity
investments available
for sale 3,627,763 3,645,294 60.9% 5.6%
100.0%
Other investments
-------------------------
Private equity
partnerships 297,167 5.0%
Senior secured bank loan
funds 272,752 4.6%
Hedge funds 115,345 1.9%
Non-U.S. fixed income
funds 104,196 1.7%
Catastrophe bonds 83,434 1.4%
Miscellaneous other
investments 29,434 0.5%
---------- ------------
Total other investments 902,328 15.1%
Total managed investment
portfolio $5,985,823 100.0%
100.0%
Credit Rating (1)
---------------------------------------------------------------------
Non-
Invest-
At September ment Not
30, 2008 AAA AA A BBB Grade Rated
------------------------- -------- -------- -------- -------- --------
Short term
investments $1,313,234 $120,281 $ 3,998 $ 408 $ 280 $ -
--------------
91.3% 8.4% 0.3% 0.0% 0.0% 0.0%
Fixed maturity
investments
available for
sale
--------------
U.S.
treasuries
and agencies
U.S.
treasuries 690,265 - - - - -
Agency debt
Fannie Mae
& Freddie
Mac 390,796 - - - - -
Other
agencies 28,256 - - - - -
----------- -------- -------- -------- -------- --------
Total agency
debt 419,052 - - - - -
----------- -------- -------- -------- -------- --------
Total U.S.
treasuries
and agencies 1,109,317 - - - - -
Non U.S.
government 27,355 30,465 1,095 10,777 13,864 -
Corporate 79,597 346,956 171,802 82,729 58,929 -
Mortgage-
backed
securities
Residential
mortgage-
backed
securities
Agency
securities 708,269 - - - - -
Non-agency
securities 160,289 - - - - -
Non-agency
securities
- Alt A 60,189 - - - - -
Non-agency
securities
- Sub-
prime - - - - - -
----------- -------- -------- -------- -------- --------
Total
residential
mortgage-
backed
securities 928,747 - - - - -
Commercial
Mortgage
Backed
Securities 435,000 - - - - -
----------- -------- -------- -------- -------- --------
Total
mortgage-
backed
securities 1,363,747 - - - - -
Asset-backed
securities
Auto 132,185 - - - - -
Credit cards 96,226 - - - - -
Other -
Stranded
cost 44,841 - - - - -
Other 75,409 - - - - -
----------- -------- -------- -------- -------- --------
Total asset-
backed
securities 348,661 - - - - -
----------- -------- -------- -------- -------- --------
Total
securitized
assets 1,712,408 - - - - -
----------- -------- -------- -------- -------- --------
Total fixed
maturity
investments
available for
sale 2,928,677 377,421 172,897 93,506 72,793 -
80.3% 10.4% 4.7% 2.6% 2.0% 0.0%
Other
investments
--------------
Private
equity
partnerships - - - - - 297,167
Senior
secured bank
loan funds - - - - 272,752 -
Hedge funds - - - - - 115,345
Non-U.S.
fixed income
funds - - - 69,991 34,205 -
Catastrophe
bonds - 23,905 - - 59,529 -
Miscellaneous
other
investments - - - 20,476 - 8,958
----------- -------- -------- -------- -------- --------
Total other
investments - 23,905 - 90,467 366,486 421,470
Total managed
investment
portfolio $4,241,911 $521,607 $176,895 $184,381 $439,559 $421,470
70.9% 8.7% 3.0% 3.1% 7.3% 7.0%
----------------------------------------------------------------------
(1)The credit ratings included in this table are those assigned by
Standard & Poor's Corporation. 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 - Fixed Maturity Investments Available for
Sale - Securitized Assets
(in thousands of United States Dollars)
(Unaudited)
----------------------------------------------------------------------
% of Total Managed
Investment Portfolio
-------------------------------
Vintage
-------------------------------
%
of
Total
Managed 2003
At September Investment &
30, 2008 Fair Value Portfolio 2008 2007 2006 2005 2004 Prior
------------- ---------- ----------- ---- ---- ---- ---- ---- ------ -
Total managed
investment
portfolio $5,985,823 100.0%
Mortgage-
backed
securities
Residential
mortgage-
backed
securities
Agency
securities 708,269 11.8% 8.0% 1.6% 1.0% 0.6% 0.3% 0.4%
Non-agency
securities 160,289 2.7% 0.0% 0.5% 1.0% 0.4% 0.5% 0.2%
Non-agency
securities
- Alt A 60,189 1.0% 0.0% 0.2% 0.1% 0.4% 0.2% 0.1%
Non-agency
securities
- Sub-
prime - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
---------- ----------- ---- ---- ---- ---- ---- ------
Total non-
agency
securities 220,478 3.7% 0.0% 0.7% 1.1% 0.8% 0.7% 0.3%
---------- ----------- ---- ---- ---- ---- ---- ------
Total
residential
mortgage-
backed
securities 928,747 15.5% 8.0% 2.3% 2.1% 1.4% 1.0% 0.7%
Commercial
mortgage-
backed
securities 435,000 7.3% 0.1% 1.5% 0.9% 1.5% 0.6% 2.6%
---------- ----------- ---- ---- ---- ---- ---- ------
Total
mortgage-
backed
securities 1,363,747 22.8% 8.1% 3.8% 3.0% 2.9% 1.6% 3.3%
Asset-backed
securities
Auto 132,185 2.2% 0.3% 0.1% 1.1% 0.7% 0.0% 0.0%
Credit cards 96,226 1.6% 0.0% 0.4% 0.3% 0.3% 0.0% 0.5%
Other -
Stranded
cost 44,841 0.7% 0.0% 0.0% 0.0% 0.3% 0.0% 0.4%
Other 75,409 1.3% 0.7% 0.2% 0.0% 0.2% 0.1% 0.1%
---------- ----------- ---- ---- ---- ---- ---- ------
Total asset-
backed
securities 348,661 5.8% 1.0% 0.7% 1.4% 1.5% 0.1% 1.0%
---------- ----------- ---- ---- ---- ---- ---- ------
Total
securitized
assets $1,712,408 28.6% 9.1% 4.5% 4.4% 4.4% 1.7% 4.3%
========== =========== ==== ==== ==== ==== ==== ======
----------------------------------------------------------------------
% of Total
Securitized Average
At September 30, 2008 Assets Duration
---------------------------------------------- ------------- ---------
Total managed investment portfolio
Mortgage-backed securities
Residential mortgage-backed securities
Agency securities 41.4% 4.6
Non-agency securities 9.4% 2.9
Non-agency securities - Alt A 3.5% 2.3
Non-agency securities - Sub-prime 0.0% -
-------------
Total non-agency securities 12.9% 2.8
-------------
Total residential mortgage-backed securities 54.2% 4.1
Commercial mortgage-backed securities 25.4% 2.8
-------------
Total mortgage-backed securities 79.6% 3.7
Asset-backed securities
Auto 7.7% 0.8
Credit cards 5.6% 1.6
Other - Stranded cost 2.6% 1.6
Other 4.4% 0.7
-------------
Total asset-backed securities 20.4% 1.1
-------------
Total securitized assets 100.0% 3.2
=============
----------------------------------------------------------------------
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 September 30, 2008
------------------------------------------------------
Non-
Investment
Sector Total AAA AA A BBB Grade
--------------- -------- ------- -------- -------- ------- -----------
Financials $495,477 $77,531 $324,632 $ 72,756 $ 9,645 $10,913
Industrial,
utilities and
energy 90,036 2,066 2,436 41,938 25,599 17,997
Consumer 74,770 - 19,888 23,060 15,786 16,036
Communications
and technology 66,641 - - 30,115 26,657 9,869
Basic materials 13,089 - - 3,933 5,042 4,114
-------- ------- -------- -------- ------- -----------
Total corporate
fixed maturity
investments
available for
sale $740,013 $79,597 $346,956 $171,802 $82,729 $58,929
======== ======= ======== ======== ======= ===========
----------------------------------------------------------------------
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 September 30, 2008
-----------------------------------
Fixed
maturity
investments
Short term available
Issuer Total investments for sale
---------------------------------- ---------- ------------------------
Bank of America Corporation $ 71,836 $ 2,299 $ 69,537
General Electric Co. 65,136 10,997 54,139
Citigroup, Inc. 61,741 1,993 59,748
Goldman Sachs Group, Inc. 48,268 - 48,268
JP Morgan Chase & Co. 49,733 11,180 38,553
US Bancorp 29,231 8,300 20,931
PNC Financial Services Group Inc. 21,025 19,771 1,254
Royal Bank of Canada 17,798 11,962 5,836
Barclays Bank PLC 17,726 14,160 3,566
Wells Fargo & Company 17,531 - 17,531
---------- ----------- ------------
Total $ 400,025 $ 80,662 $ 319,363
========== =========== ============
----------------------------------------------------------------------
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating (loss) income" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating (loss) income" as used herein differs from "net (loss) income (attributable) available to common shareholders," which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on the Company's investments and, in the third and fourth quarters of 2007, net unrealized gains and losses on credit derivatives issued by entities included in investments in other ventures, under equity method. Prior to the third quarter of 2007, the Company had no net unrealized gains and losses on credit derivatives issued by entities included in investments in other ventures, under equity method. In the presentation below, the only adjustments in respect of unrealized gains and losses reflect unrealized mark-to-market losses on credit derivatives and other credit-related products issued by ChannelRe Holdings Ltd. ("ChannelRe"), a financial guarantee reinsurer whose investment is accounted for by the Company under the equity method. The Company believes that the prevailing convention among financial guarantee insurers, reinsurers and other market participants, such as ChannelRe, is to exclude from operating (loss) income such unrealized gains and losses attributable to credit derivatives and other credit-related products. The Company's management believes that "operating (loss) 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 and credit derivatives issued by entities included in investments in other ventures, under equity method, which are not considered by management to be relevant indicators of business operations. The Company also uses "operating (loss) income" to calculate "operating (loss) income per common share - diluted" and "operating return on average common equity - annualized". The following is a reconciliation of: 1) net (loss) income (attributable) available to common shareholders to operating (loss) income (attributable) available to common shareholders; 2) net (loss) income (attributable) available to common shareholders per common share - diluted to operating (loss) income (attributable) available to 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 United
States dollars, except for September September September September
per share amounts) 30, 2008 30, 2007 30, 2008 30, 2007
----------- ---------- --------- ---------
Net (loss) income
(attributable) available
to common shareholders $(230,974) $133,400 $ 41,912 $507,371
Adjustment for net
realized losses (gains)
on investments 87,610 (1,592) 122,441 5,889
Adjustment for net
unrealized losses on
credit derivatives
issued by entities
included in investments
in other ventures,
under equity method - 35,970 - 35,970
----------- ---------- --------- ---------
Operating (loss) income
(attributable) available
to common shareholders $(143,364) $167,778 $164,353 $549,230
=========== ========== ========= =========
Net (loss) income
(attributable) available
to common shareholders per
common share - diluted (1) $ (3.79) $ 1.85 $ 0.65 $ 7.02
Adjustment for net
realized losses (gains)
on investments 1.44 (0.02) 1.91 0.08
Adjustment for net
unrealized losses on
credit derivatives
issued by entities
included in investments
in other ventures,
under equity method - 0.50 - 0.50
----------- ---------- --------- ---------
Operating (loss) income
(attributable) available
to common shareholders per
common share - diluted (1) $ (2.35) $ 2.33 $ 2.56 $ 7.60
=========== ========== ========= =========
Return on average common
equity - annualized (36.1%) 18.8% 2.1% 25.0%
Adjustment for net
realized losses (gains)
on investments 13.7% (0.2%) 6.1% 0.3%
Adjustment for net
unrealized losses on
credit derivatives
issued by entities
included in investments
in other ventures,
under equity method - 5.0% - 1.8%
----------- ---------- --------- ---------
Operating return on average
common equity - annualized (22.4%) 23.6% 8.2% 27.1%
=========== ========== ========= =========
(1) In accordance with FAS 128, diluted earnings per share
calculations use average common shares outstanding - basic, when in a
net loss position.
----------------------------------------------------------------------
The Company has also included in this Press Release "managed catastrophe premiums" and "managed catastrophe premiums, net of fully-collateralized joint ventures". "Managed catastrophe premiums" is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. "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. "Managed catastrophe premiums, net of fully-collateralized joint ventures" differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to: 1) 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 2) the deduction of catastrophe premiums that are written by the Company and ceded directly to the Company's fully-collateralized joint ventures which include Starbound Reinsurance Ltd., Starbound Reinsurance II Ltd. and Timicuan Reinsurance Ltd. 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. The Company believes "managed catastrophe premiums, net of fully-collateralized joint ventures" is also a useful measure 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, net of catastrophe premiums written directly on behalf of the Company's fully-collateralized joint ventures.
The Company has also included in this Press Release "tangible book value per common share plus accumulated dividends". This is defined as book value per common share excluding goodwill and other intangibles, plus accumulated dividends. "Tangible book value per common share plus accumulated dividends" differs from book value per common share, which the Company believes is the most directly comparable GAAP measure, due to the exclusion of goodwill and other intangibles and the inclusion of accumulated dividends. The following is a reconciliation of book value per common share to tangible book value per common share plus accumulated dividends:
----------------------------------------------------------------------
At
-----------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
--------- -------- --------- -------- ---------
Book value per common
share $ 38.94 $ 43.32 $ 42.14 $ 41.03 $ 40.53
Adjustment for
goodwill and other
intangibles (1) (1.92) (1.18) (0.09) (0.09) (0.09)
--------- -------- --------- -------- ---------
Tangible book value
per common share $ 37.02 $ 42.14 $ 42.05 $ 40.94 $ 40.44
Adjustment for
accumulated
dividends 7.69 7.46 7.23 7.00 6.78
--------- -------- --------- -------- ---------
Tangible book value
per common share plus
accumulated dividends $ 44.71 $ 49.60 $ 49.28 $ 47.94 $ 47.22
========= ======== ========= ======== =========
----------------------------------------------------------------------
(1) At September 30, 2008, goodwill and other intangibles includes
$46.4 million of goodwill and other intangibles related to the
Company's third quarter of 2008 investment in the Tower Hill
Companies which is recorded in investments in other ventures, under
equity method.
Source: RenaissanceRe Holdings Ltd.
Released October 28, 2008