RenaissanceRe Reports Record Annual Operating Income of $796.1 Million for 2006 or $11.05 Per Common Share; Record Annual Net Income of $761.6 Million or $10.57 Per Common Share.
Operating Income of $198.6 Million for the Fourth Quarter of 2006 or $2.74 Per Common Share; Net Income of $201.1 Million or $2.78 Per Common Share. Book Value per Common Share Increases 40.2% in 2006.
PEMBROKE, Bermuda--(BUSINESS WIRE)--
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $198.6 million in fourth quarter operating income available to common shareholders compared to a $206.9 million operating loss attributable to common shareholders in the fourth quarter of 2005. Operating income excludes net realized investment gains of $2.5 million and net realized investment losses of $3.5 million in the fourth quarters of 2006 and 2005, respectively. Operating income per common share was $2.74 in the fourth quarter of 2006, compared to an operating loss per common share of $2.92 in the fourth quarter of 2005. Net income available to common shareholders was $201.1 million or $2.78 per common share in the fourth quarter of 2006, compared to a net loss attributable to common shareholders of $210.4 million or $2.97 per common share for the same quarter of 2005.
The Company generated an operating return on average common equity of 33.3% in the fourth quarter of 2006, compared to a negative 44.2% operating return on average common equity in the fourth quarter of 2005. The Company's book value per common share increased by 7.9% in the fourth quarter of 2006, compared to a 12.4% decrease in the fourth quarter of 2005. The Company's fourth quarter 2006 results benefited significantly from light insured catastrophe loss activity compared to the fourth quarter of 2005.
Neill A. Currie, CEO, commented: "I am pleased to report record full year earnings, resulting in a 40% increase in book value per common share, and an operating return on equity of approximately 38%. These record earnings are a result of a low level of catastrophe losses and the extraordinary performance of our team. In particular, we supported our clients by providing needed capacity in a highly dislocated U.S. property cat market, further strengthening our franchise."
Mr. Currie added: "We are seeing signs of softening in several of our markets, and recognize that discipline will be critical for long-term success. We also recognize the uncertainty created by recent legislative changes in Florida, which will reduce demand for some of our products. We are responding as we have in past cycles -- by shrinking in areas that do not meet our standards and growing in areas that we find attractive. Overall, we are now expecting our top line to be down slightly in 2007 versus 2006. In terms of our prospects, we have a strong track record of successfully navigating such markets and are well positioned to do so once again."
Effective with this earnings release we are publishing a quarterly Financial Supplement. Please refer to 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.
2007 PREMIUM FORECASTS
The Company is revising its annual premium forecast for its catastrophe unit. Previously, the Company forecast over 15% growth in managed catastrophe premiums for 2007, compared to 2006 managed catastrophe premiums, net of fully-collateralized joint ventures. The Company currently expects its managed catastrophe premiums, net of fully collateralized joint ventures, to be down approximately 5% for 2007. The Company currently continues to expect its Individual Risk and specialty reinsurance premiums to be essentially flat in 2007, compared to 2006.
FOURTH QUARTER 2006 HIGHLIGHTS
Underwriting Results
Gross premiums written for the fourth quarter of 2006 were $195.0 million, a $93.6 million decrease from the fourth quarter of 2005. The decrease was principally driven by a lack of significant loss related premium in the fourth quarter of 2006. In the fourth quarter of 2005, the Company generated $71.3 million of loss related premium attributable to the 2005 large hurricanes. As described in more detail below, the Company generated $177.3 million of underwriting income and had a combined ratio of 53.4% in the fourth quarter of 2006, compared to a $343.7 million underwriting loss and 183.0% combined ratio in the fourth quarter of 2005. The underwriting loss in 2005 was driven by Hurricane Wilma which occurred in the fourth quarter of 2005 and resulted in a $434.6 million underwriting loss for the quarter ($313.9 million net negative impact). The Company experienced $29.9 million of favorable development on prior year reserves in the fourth quarter of 2006, compared to $4.8 million of adverse development in the fourth quarter of 2005.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment decreased $103.9 million to $51.7 million in the fourth quarter of 2006, compared to $155.6 million in the fourth quarter of 2005, primarily due to a lack of significant loss related premium in the fourth quarter of 2006. In the fourth quarter of 2005, the Company's Reinsurance segment generated $92.3 million of loss related premium, including $21.0 million assumed from the Individual Risk segment, attributable to the 2005 large hurricanes.
The Reinsurance segment generated $140.7 million of underwriting income and had a combined ratio of 42.4% in the fourth quarter of 2006, compared to a $308.2 million underwriting loss and 199.4% combined ratio in the fourth quarter of 2005. The underwriting loss in the fourth quarter of 2005 was driven by Hurricane Wilma which resulted in a $379.4 million underwriting loss ($258.6 million net negative impact). The Reinsurance segment experienced $25.5 million of favorable development on prior year reserves in the fourth quarter of 2006, compared to $5.9 million of adverse development in the fourth quarter of 2005. The favorable development in 2006 was principally attributable to lower than expected claims emergence in the Company's specialty reinsurance unit.
Individual Risk Segment
Gross premiums written for the Company's Individual Risk segment decreased $12.3 million to $141.6 million in the fourth quarter of 2006, compared to $153.9 million in the fourth quarter of 2005. The decrease was primarily due to a decrease in quota share personal lines property premium. The Company elected earlier in 2006 to reduce its quota share personal lines property capacity and redeploy this capacity to property catastrophe excess of loss reinsurance in the Company's Reinsurance segment, where the Company found the pricing and terms more attractive.
The Individual Risk segment generated $36.6 million of underwriting income and had a combined ratio of 73.1% in the fourth quarter of 2006, compared to a $35.5 million underwriting loss and 134.0% combined ratio in the fourth quarter of 2005. The underwriting loss in the fourth quarter of 2005 was driven by Hurricane Wilma which resulted in a $55.3 million underwriting loss ($55.3 million net negative impact).
Other Items
-- Net investment income increased $24.1 million to $83.2 million
in the fourth quarter of 2006 as a result of an increase in
the Company's average invested assets, combined with higher
yields on the Company's portfolio of fixed maturity
investments available for sale and short term investments.
Other investments, which include private equity and hedge fund
investments, contributed $15.3 million to the Company's fourth
quarter 2006 net investment income compared to $12.4 million
in the fourth quarter of 2005.
-- Corporate expenses of $8.0 million were incurred during the
fourth quarter of 2006, compared to $30.0 million in the
fourth quarter of 2005. The decrease in such expenses is due
in part to the difference in costs incurred related to the
Company's internal review and the ongoing investigations into
the Company and certain of its present and former executive
officers by governmental authorities. These costs totaled $2.2
million in the fourth quarter of 2006, compared to $10.2
million in the fourth quarter of 2005. The fourth quarter of
2005 was also impacted by $13.3 million of compensation
expense incurred due to the accelerated vesting of the
Company's former Chairman and CEO's previously unvested equity
grants upon his departure from the Company in that period.
-- The Company's cash flows from operations were $253.0 million
for the fourth quarter of 2006, compared to a net outflow of
$206.8 million for the fourth quarter of 2005.
-- In December 2006, the Company raised $300.0 million through
the issuance of 12 million Series D preference shares. On
December 15, 2006, the Company submitted redemption notices to
the holders of its Series A preference shares to redeem such
shares for $25 per share plus accrued and unpaid dividends
thereon. Subsequent to December 31, 2006, the Company has
redeemed all of the 6 million Series A preference shares for
$150.0 million plus accrued and unpaid dividends thereon.
-- On January 25, 2007, the Company called for redemption all
100,000 of its issued and outstanding 8.54% trust preferred
capital securities concurrently with the redemption of the
Company's underlying 8.54% Junior Subordinated Deferrable
Interest Debentures. The redemption is expected to take place
on March 1, 2007. The aggregate redemption price (including
accrued and unpaid dividends up to, but excluding, March 1,
2007) to be paid for the securities to be redeemed, excluding
securities owned by the Company, will be approximately $91.9
million.
-- On December 28, 2006, the remaining balance of $40.0 million
was drawn down on the $200.0 million revolving credit facility
of DaVinciRe.
-- The Company currently expects European windstorm Kyrill will
have a net negative impact on its first quarter 2007 results
of approximately $50.0 million. This preliminary estimate is
based on a review of exposed contracts and the Company's
estimates of losses to those contracts and is subject to
change as more information is reported and becomes available.
The net negative impact is all attributable to the Company's
Reinsurance segment.
Regulatory Update - Settlement of SEC Investigation
On February 6, 2007, the Company also announced that the Securities and Exchange Commission ("SEC") had accepted the Company's previously announced offer of settlement in connection with the SEC's investigation relating to the Company's restatement of its financial statements for the years ended December 31, 2001, 2002 and 2003. Pursuant to the terms of the settlement, which was unchanged from the settlement-in-principle previously disclosed, the Company has consented, without admitting or denying any wrongdoing, to entry of a final judgment enjoining future violations of certain provisions of the federal securities laws and ordering the Company to pay disgorgement of $1 and a civil penalty of $15 million. In addition, the Company will retain an independent consultant to review certain of the Company's internal controls, policies and procedures as well as the design and implementation of the prior review conducted by the independent counsel who reported to the non-executive members of the Company's Board of Directors, and certain additional procedures performed by the Company's auditors in connection with their audit of the Company's financial statements for the fiscal year ended December 31, 2004. The amount of the monetary penalty has been previously provided for.
The SEC settlement does not dispose of the consolidated securities class action lawsuit pending against the Company and certain of its current and former officers. This class action lawsuit, if adversely determined or resolved, could subject the Company to a material loss.
FULL YEAR 2006 HIGHLIGHTS
For the year ended December 31, 2006, the Company reported net operating income available to common shareholders of $796.1 million, compared to a net operating loss attributable to common shareholders of $274.5 million in 2005. Net operating income (loss) excludes net realized investment losses of $34.5 million and $7.0 million for 2006 and 2005, respectively. Net operating income per common share was $11.05 in 2006, compared to a net operating loss per common share of $3.89 in 2005. Net income available to common shareholders was $761.6 million or $10.57 per common share in 2006, compared to a net loss attributable to common shareholders of $281.4 million or a net loss of $3.99 per common share for 2005.
The Company generated an operating return on average common equity of 37.9% for the year, compared to a negative 13.3% operating return on average common equity in 2005. The Company's book value per common share increased 40.2% in 2006, compared to an 18.8% decrease in 2005. The Company's 2006 results benefited significantly from light insured catastrophe loss activity compared to 2005.
Underwriting Results
Gross premiums written for 2006 were $1,943.6 million, a $134.5 million increase from 2005. The increase was principally driven by growth in the Company's property catastrophe premium within the Company's Reinsurance segment. As described in more detail below, the Company generated $693.3 million of underwriting income and had a combined ratio of 54.7% in 2006, compared to a $556.4 million underwriting loss and 139.7% combined ratio in 2005. The underwriting loss in 2005 was principally driven by Hurricanes Katrina, Rita and Wilma which occurred in 2005 and resulted in a $1,136.9 million underwriting loss ($891.9 million net negative impact). The Company experienced $136.6 million of favorable development on prior year reserves in 2006, compared to $241.5 million of favorable development in 2005. The favorable development in 2006 was principally attributable to lower than expected claims emergence in the Company's specialty reinsurance unit.
Reinsurance Segment
Gross premiums written for the Company's Reinsurance segment increased $118.2 million to $1,321.2 million in 2006, compared to $1,203.0 million in 2005, primarily due to a significant increase in the Company's property catastrophe premium and partially offset by a decrease in the Company's specialty reinsurance premium. For the year, the Company's managed catastrophe premium, net of fully collateralized joint ventures, and its specialty premium, totaled $971.8 million and $222.0 million, respectively, compared to $791.9 million and $427.4 million, respectively, in 2005. Included in the Company's 2005 managed catastrophe premium, net of fully collateralized joint ventures, and its 2005 specialty reinsurance premium, is $115.0 million and $38.4 million of loss related premium, respectively, related to the 2005 large hurricanes.
The Reinsurance segment generated $636.2 million of underwriting income and had a combined ratio of 34.5% in 2006, compared to a $461.5 million underwriting loss and 148.7% combined ratio in 2005. The underwriting loss in 2005 was principally driven by Hurricanes Katrina, Rita and Wilma which resulted in a $996.8 million underwriting loss ($751.8 million net negative impact). The Company experienced $125.2 million of favorable development on prior year reserves in 2006, compared to $231.3 million of favorable development in 2005. The favorable development in 2006 was principally attributable to lower than expected claims emergence in the Company's specialty reinsurance unit.
Individual Risk Segment
Gross premiums written for the Company's Individual Risk segment increased $38.0 million to $689.4 million in 2006, compared to $651.4 million in 2005. The increase was primarily due to an increase in commercial property premium, which more than offset a decrease in personal lines property premium. The Company elected to reduce its quota share personal lines property capacity in 2006 and redeploy this capacity to property catastrophe excess of loss reinsurance in the Company's Reinsurance segment, where it found the pricing and terms more attractive.
The Individual Risk segment generated $57.0 million of underwriting income and had a combined ratio of 89.8% in 2006, compared to a $94.8 million underwriting loss and 120.8% combined ratio in 2005. The underwriting loss in 2005 was principally driven by Hurricanes Katrina, Rita and Wilma which resulted in a $140.1 million underwriting loss ($140.1 million net negative impact).
Other Items
-- Net investment income increased $100.9 million to $318.1
million for 2006, as a result of an increase in the Company's
average invested assets, combined with higher yields on the
Company's portfolio of fixed maturity investments available
for sale and short term investments. Other investments, which
include private equity and hedge fund investments, contributed
$65.7 million to the Company's net investment income in 2006
compared to $59.3 million in 2005.
-- Corporate expenses of $24.4 million were incurred during 2006,
compared to $71.8 million in 2005. The decrease in such
expenses is due in part to the difference in costs incurred
related to the Company's internal review and the ongoing
investigations into the Company and certain of its present and
former executive officers by governmental authorities. These
costs totaled $5.3 million in 2006 compared to $39.7 million
in 2005. As noted above, the Company also incurred $13.3
million of compensation expense in 2005 related to the
departure of the Company's former Chairman and CEO in the
fourth quarter of 2005.
-- The Company's cash flows from operations were $813.3 million
in 2006, compared to $335.6 million in 2005.
This press release includes certain non-GAAP financial measures including "operating income (loss) available (attributable) to common shareholders," "operating income (loss) available (attributable) to common shareholders per common share - diluted," "operating return on average common equity, annualized," "managed catastrophe premiums" and "managed catastrophe premiums, net of fully-collateralized joint ventures." 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 RenaissanceRe Holdings Ltd. Financial Supplement December 31, 2006, which is posted on the Company's website at www.renre.com, for additional information on the Company's financial performance. RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, February 7, 2007 at 9:00 a.m. (EST) 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. Our business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by our 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, 2005 and its quarterly reports on Form 10-Q for the quarters ending March 31, 2006, June 30, 2006 and September 30, 2006.
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
For the three and twelve months ended December 31, 2006 and 2005
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended Twelve months ended
--------------------- -----------------------
December December December December
31, 2006 31, 2005 31, 2006 31, 2005
---------- ---------- ----------- -----------
Revenues
Gross premiums written $ 194,952 $ 288,522 $1,943,647 $1,809,128
========== ========== =========== ===========
Net premiums written $ 156,846 $ 249,481 $1,529,620 $1,543,287
Decrease (increase) in
unearned premiums 223,242 164,626 157 (140,578)
---------- ---------- ----------- -----------
Net premiums earned 380,088 414,107 1,529,777 1,402,709
Net investment income 83,233 59,126 318,106 217,252
Net foreign exchange
(losses) gains (1,715) (4,394) (3,293) 5,183
Equity in earnings of
other ventures 8,624 5,271 34,528 28,259
Other (loss) income (4,160) 11,032 (3,917) 9,466
Net realized gains
(losses) on investments 2,489 (3,548) (34,464) (6,962)
---------- ---------- ----------- -----------
Total revenues 468,559 481,594 1,840,737 1,655,907
---------- ---------- ----------- -----------
Expenses
Net claims and claim
expenses incurred 97,280 662,480 446,230 1,635,656
Acquisition expenses 73,288 74,557 280,697 237,594
Operational expenses 32,235 20,759 109,586 85,838
Corporate expenses 7,987 29,965 24,418 71,813
Interest expense 8,439 7,710 37,602 28,218
---------- ---------- ----------- -----------
Total expenses 219,229 795,471 898,533 2,059,119
---------- ---------- ----------- -----------
Income (loss) before
minority interest and
taxes 249,330 (313,877) 942,204 (403,212)
Minority interest -
DaVinciRe Holdings (38,665) 112,138 (144,159) 156,449
---------- ---------- ----------- -----------
Income (loss) before
taxes 210,665 (201,739) 798,045 (246,763)
Income tax expense (42) - (935) -
---------- ---------- ----------- -----------
Net income (loss) 210,623 (201,739) 797,110 (246,763)
Dividends on preference
shares (9,488) (8,663) (35,475) (34,650)
---------- ---------- ----------- -----------
Net income (loss)
available
(attributable) to
common shareholders $ 201,135 $(210,402) $ 761,635 $ (281,413)
========== ========== =========== ===========
Operating income (loss)
available (attributable)
to common shareholders
per Common Share -
diluted (1), (2) $ 2.74 $ (2.92) $ 11.05 $ (3.89)
Net income (loss)
available (attributable)
to common shareholders
per Common Share - basic$ 2.83 $ (2.97) $ 10.72 $ (3.99)
Net income (loss)
available (attributable)
to common shareholders
per Common Share -
diluted (2) $ 2.78 $ (2.97) $ 10.57 $ (3.99)
Average shares
outstanding - basic 71,178 70,793 71,064 70,592
Average shares
outstanding - diluted
(2) 72,467 70,793 72,073 70,592
Net claims and claim
expense ratio 25.6% 160.0% 29.2% 116.6%
Expense ratio 27.8% 23.0% 25.5% 23.1%
---------- ---------- ----------- -----------
Combined ratio 53.4% 183.0% 54.7% 139.7%
========== ========== =========== ===========
Operating return on
average common equity,
annualized (1) 33.3% (44.2%) 37.9% (13.3%)
========== ========== =========== ===========
(1) Excludes net realized gains (losses) on investments (see -
Comments on Regulation G).
(2) In accordance with FAS 128, 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
--------------------------
December 31, December 31,
2006 2005
------------ ------------
Unaudited Audited
Assets
Fixed maturity investments available for
sale, at fair value $ 3,111,930 $ 2,872,294
Short term investments, at cost 2,410,971 1,653,618
Other investments, at fair value 592,829 586,467
Investments in other ventures, under equity
method 227,075 178,774
------------ ------------
Total investments 6,342,805 5,291,153
Cash and cash equivalents 214,399 174,001
Premiums receivable 419,150 363,105
Ceded reinsurance balances 133,971 57,134
Losses recoverable 301,854 673,190
Accrued investment income 41,234 25,808
Deferred acquisition costs 106,918 107,951
Other assets 208,695 178,919
------------ ------------
Total assets $ 7,769,026 $ 6,871,261
============ ============
Liabilities, Minority Interest and
Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 2,098,155 $ 2,614,551
Reserve for unearned premiums 578,424 501,744
Debt 450,000 500,000
Subordinated obligation to capital trust 103,093 103,093
Reinsurance balances payable 395,083 292,307
Other liabilities 213,490 142,815
------------ ------------
Total liabilities 3,838,245 4,154,510
------------ ------------
Minority interest - DaVinciRe Holdings 650,284 462,911
Shareholders' Equity
Preference shares 800,000 500,000
Common shares and additional paid-in capital 356,263 351,285
Accumulated other comprehensive income 25,217 4,760
Retained earnings 2,099,017 1,397,795
------------ ------------
Total shareholders' equity 3,280,497 2,253,840
------------ ------------
Total liabilities, minority interest and
shareholders' equity $ 7,769,026 $ 6,871,261
============ ============
Book value per common share $ 34.38 $ 24.52
============ ============
Common shares outstanding 72,140 71,523
============ ============
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
Three months ended December 31, 2006
---------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------- --------- ---------
Gross
premiums
written $ 51,719 $141,601 $ 1,632 $ - $194,952
=========== =========== ============= =========
Net premiums
written $ 52,026 $104,820 - $156,846
=========== =========== =========
Net premiums
earned $244,273 $135,815 - $380,088
Net claims
and claim
expenses
incurred 54,183 43,097 - 97,280
Acquisition
expenses 27,837 45,451 - 73,288
Operational
expenses 21,603 10,632 - 32,235
----------- ----------- --------- ---------
Underwriting
income $140,650 $ 36,635 - 177,285
=========== ===========
Net
investment
income 83,233 83,233
Equity in
earnings of
other
ventures 8,624 8,624
Other loss (4,160) (4,160)
Interest and
preference
share
dividends (17,927) (17,927)
Minority
interest -
DaVinciRe
Holdings (38,665) (38,665)
Other items,
net (9,744) (9,744)
Net realized
gains on
investments 2,489 2,489
--------- ---------
Net income
available to
common
shareholders $23,850 $201,135
========= =========
Net claims
and claim
expenses
incurred -
current
accident
year $ 79,666 $ 47,507 $127,173
Net claims
and claim
expenses
incurred -
prior
accident
years (25,483) (4,410) (29,893)
----------- ----------- ---------
Net claims
and claim
expenses
incurred -
total $ 54,183 $ 43,097 $ 97,280
=========== =========== =========
Net claims
and claim
expense
ratio -
current
accident
year 32.6% 35.0% 33.5%
Net claims
and claim
expense
ratio -
prior
accident
years (10.4%) (3.2%) (7.9%)
----------- ----------- ---------
Net claims
and claim
expense
ratio -
calendar
year 22.2% 31.8% 25.6%
Underwriting
expense
ratio 20.2% 41.3% 27.8%
----------- ----------- ---------
Combined
ratio 42.4% 73.1% 53.4%
=========== =========== =========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
Three months ended December 31, 2005
---------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ----------- ------------ --------- ----------
Gross
premiums
written (1) $ 155,604 $153,918 $(21,000) $ - $ 288,522
=========== =========== ============ ==========
Net premiums
written $ 137,093 $112,388 - $ 249,481
=========== =========== ==========
Net premiums
earned $ 309,849 $104,258 - $ 414,107
Net claims
and claim
expenses
incurred 572,393 90,087 - 662,480
Acquisition
expenses 30,196 44,361 - 74,557
Operational
expenses 15,466 5,293 - 20,759
----------- ----------- --------- ----------
Underwriting
loss $(308,206) $(35,483) - (343,689)
=========== ===========
Net
investment
income 59,126 59,126
Equity in
earnings of
other
ventures 5,271 5,271
Other income 11,032 11,032
Interest and
preference
share
dividends (16,373) (16,373)
Minority
interest -
DaVinciRe
Holdings 112,138 112,138
Other items,
net (34,359) (34,359)
Net realized
losses on
investments (3,548) (3,548)
--------- ----------
Net income
(loss)
available
(attribut-
able) to
common
shareholders $133,287 $(210,402)
========= ==========
Net claims
and claim
expenses
incurred -
current
accident
year $ 566,456 $ 91,215 $ 657,671
Net claims
and claim
expenses
incurred -
prior
accident
years 5,937 (1,128) 4,809
----------- ----------- ----------
Net claims
and claim
expenses
incurred -
total $ 572,393 $ 90,087 $ 662,480
=========== =========== ==========
Net claims
and claim
expense
ratio -
current
accident
year 182.8% 87.5% 158.8%
Net claims
and claim
expense
ratio -
prior
accident
years 1.9% (1.1%) 1.2%
----------- ----------- ----------
Net claims
and claim
expense
ratio -
calendar
year 184.7% 86.4% 160.0%
Underwriting
expense
ratio 14.7% 47.6% 23.0%
----------- ----------- ----------
Combined
ratio 199.4% 134.0% 183.0%
=========== =========== ==========
(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)
Twelve months ended December 31, 2006
---------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ---------- ------------ --------- -----------
Gross
premiums
written (1) $1,321,163 $689,392 $(66,908) $ - $1,943,647
=========== ========== ============ ===========
Net premiums
written $1,039,103 $490,517 - $1,529,620
=========== ========== ===========
Net premiums
earned $ 972,017 $557,760 - $1,529,777
Net claims
and claim
expenses
incurred 148,052 298,178 - 446,230
Acquisition
expenses 115,324 165,373 - 280,697
Operational
expenses 72,405 37,181 - 109,586
----------- ---------- --------- -----------
Underwriting
income $ 636,236 $ 57,028 - 693,264
=========== ==========
Net
investment
income 318,106 318,106
Equity in
earnings of
other
ventures 34,528 34,528
Other loss (3,917) (3,917)
Interest and
preference
share
dividends (73,077) (73,077)
Minority
interest -
DaVinciRe
Holdings (144,159) (144,159)
Other items,
net (28,646) (28,646)
Net realized
losses on
investments (34,464) (34,464)
--------- -----------
Net income
available to
common
shareholders $68,371 $ 761,635
========= ===========
Net claims
and claim
expenses
incurred -
current
accident
year $ 273,286 $309,502 $ 582,788
Net claims
and claim
expenses
incurred -
prior
accident
years (125,234) (11,324) (136,558)
----------- ---------- -----------
Net claims
and claim
expenses
incurred -
total $ 148,052 $298,178 $ 446,230
=========== ========== ===========
Net claims
and claim
expense
ratio -
current
accident
year 28.1% 55.5% 38.1%
Net claims
and claim
expense
ratio -
prior
accident
years (12.9%) (2.0%) (8.9%)
----------- ---------- -----------
Net claims
and claim
expense
ratio -
calendar
year 15.2% 53.5% 29.2%
Underwriting
expense
ratio 19.3% 36.3% 25.5%
----------- ---------- -----------
Combined
ratio 34.5% 89.8% 54.7%
=========== ========== ===========
(1) Represents gross premiums ceded from the Individual Risk segment
to the Reinsurance segment.
Twelve months ended December 31, 2005
---------------------------------------------------------
Individual Eliminations
Reinsurance Risk (1) Other Total
----------- ---------- ------------ --------- -----------
Gross
premiums
written (1) $1,202,975 $651,430 $(45,277) $ - $1,809,128
=========== ========== ============ ===========
Net premiums
written $1,024,010 $519,277 - $1,543,287
=========== ========== ===========
Net premiums
earned $ 947,389 $455,320 - $1,402,709
Net claims
and claim
expenses
incurred 1,252,644 383,012 - 1,635,656
Acquisition
expenses 92,763 144,831 - 237,594
Operational
expenses 63,522 22,316 - 85,838
----------- ---------- --------- -----------
Underwriting
loss $ (461,540) $(94,839) - (556,379)
=========== ==========
Net
investment
income 217,252 217,252
Equity in
earnings of
other
ventures 28,259 28,259
Other income 9,466 9,466
Interest and
preference
share
dividends (62,868) (62,868)
Minority
interest -
DaVinciRe
Holdings 156,449 156,449
Other items,
net (66,630) (66,630)
Net realized
losses on
investments (6,962) (6,962)
--------- -----------
Net income
(loss)
available
(attribut-
able) to
common
shareholders $274,966 $ (281,413)
========= ===========
Net claims
and claim
expenses
incurred -
current
accident
year $1,483,981 $393,137 $1,877,118
Net claims
and claim
expenses
incurred -
prior
accident
years (231,337) (10,125) (241,462)
----------- ---------- -----------
Net claims
and claim
expenses
incurred -
total $1,252,644 $383,012 $1,635,656
=========== ========== ===========
Net claims
and claim
expense
ratio -
current
accident
year 156.6% 86.3% 133.8%
Net claims
and claim
expense
ratio -
prior
accident
years (24.4%) (2.2%) (17.2%)
----------- ---------- -----------
Net claims
and claim
expense
ratio -
calendar
year 132.2% 84.1% 116.6%
Underwriting
expense
ratio 16.5% 36.7% 23.1%
----------- ---------- -----------
Combined
ratio 148.7% 120.8% 139.7%
=========== ========== ===========
(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 Twelve months ended
------------------- -----------------------
December December December December
Reinsurance Segment 31, 2006 31, 2005 31, 2006 31, 2005
----------------------- --------- --------- ----------- -----------
Renaissance catastrophe
premiums $ 20,630 $ 84,133 $ 773,638 $ 573,393
Renaissance specialty
premiums 28,164 35,457 198,111 402,207
--------- --------- ----------- -----------
Total Renaissance
premiums 48,794 119,590 971,749 975,600
--------- --------- ----------- -----------
DaVinci catastrophe
premiums 2,554 36,021 325,476 202,180
DaVinci specialty
premiums 371 (7) 23,938 25,195
--------- --------- ----------- -----------
Total DaVinci
premiums 2,925 36,014 349,414 227,375
--------- --------- ----------- -----------
Total Reinsurance
premiums $ 51,719 $155,604 $1,321,163 $1,202,975
========= ========= =========== ===========
Total specialty
premiums (1) $ 28,535 $ 35,450 $ 222,049 $ 427,402
========= ========= =========== ===========
Total catastrophe
premiums $ 23,184 $120,154 $1,099,114 $ 775,573
Catastrophe premiums
written on behalf of
our joint venture,
Top Layer Re (2) - - 51,244 59,908
Catastrophe premiums
assumed from the
Individual Risk
segment 1,632 (21,000) (64,573) (43,594)
--------- --------- ----------- -----------
Total managed
catastrophe
premiums (3) 24,816 99,154 1,085,785 791,887
Managed premiums
assumed for fully-
collateralized
joint ventures -
Renaissance 280 - (102,687) -
Managed premiums
assumed for fully-
collateralized
joint ventures -
DaVinci 42 - (11,290) -
--------- --------- ----------- -----------
Total managed
catastrophe premiums,
net of fully-
collateralized joint
ventures (3) $ 25,138 $ 99,154 $ 971,808 $ 791,887
========= ========= =========== ===========
(1) Total specialty premiums written includes $nil and $2.3 million of
premiums assumed from the Individual Risk segment for the three and
twelve months ended December 31, 2006, respectively, and $nil and
$1.7 million of premiums assumed from the Individual Risk segment for
the three and twelve months ended December 31, 2005, respectively.
(2) Top Layer Re is accounted for under the equity method of
accounting.
(3) See Comments on Regulation G.
Three months ended Twelve months ended
-------------------- ---------------------
December December December December
Individual Risk Segment 31, 2006 31, 2005 31, 2006 31, 2005
-------------------------- ---------- --------- ---------- ----------
Commercial multi-line $ 62,942 $ 69,468 $ 358,987 $ 316,553
Commercial property 47,199 38,338 226,205 123,236
Personal lines property 31,460 46,112 104,200 211,641
---------- --------- ---------- ----------
Total Individual Risk
premiums $ 141,601 $153,918 $ 689,392 $ 651,430
========== ========= ========== ==========
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses "operating income (loss)" as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating income (loss)" as used herein differs from "net income (loss) available (attributable) to common shareholders," which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on investments. In addition, the Company's management believes that "operating income (loss)" 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 business operations. The Company also uses "operating income (loss)" to calculate "operating income (loss) per common share" and "operating return on average common equity, annualized." The following is a reconciliation of: 1) net income (loss) available (attributable) to common shareholders to operating income (loss) available (attributable) to common shareholders; 2) net income (loss) available (attributable) to common shareholders per common share to operating income (loss) available (attributable) to common shareholders per common share; and 3) return on average common equity, annualized to operating return on average common equity, annualized:
Three months ended Twelve months ended
-------------------- --------------------
(In thousands of U.S.
dollars, except for per December December December December
share amounts) 31, 2006 31, 2005 31, 2006 31, 2005
--------- ---------- --------- ----------
Net income (loss) available
(attributable) to common
shareholders $201,135 $(210,402) $761,635 $(281,413)
Adjustment for net
realized (gains) losses
on investments (2,489) 3,548 34,464 6,962
--------- ---------- --------- ----------
Operating income (loss)
available (attributable) to
common shareholders $198,646 $(206,854) $796,099 $(274,451)
========= ========== ========= ==========
Net income (loss) available
(attributable) to common
shareholders
per common share (1) $ 2.78 $ (2.97) $ 10.57 $ (3.99)
Adjustment for net
realized (gains) losses
on investments (1) (0.04) 0.05 0.48 0.10
--------- ---------- --------- ----------
Operating income (loss)
available (attributable) to
common shareholders
per common share - diluted
(1) $ 2.74 $ (2.92) $ 11.05 $ (3.89)
========= ========== ========= ==========
Return on average common
equity, annualized 33.7% (45.0%) 36.3% (13.6%)
Adjustment for net
realized (gains) losses
on investments (0.4%) 0.8% 1.6% 0.3%
--------- ---------- --------- ----------
Operating return on average
common equity, annualized 33.3% (44.2%) 37.9% (13.3%)
========= ========== ========= ==========
(1) In accordance with FAS 128, 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, 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. "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; 2) the exclusion of catastrophe premiums assumed from the Company's Individual Risk segment; and 3) 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. 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 assumed from the Company's Individual Risk segment and net of catastrophe premiums written directly on behalf of the Company's fully-collateralized joint ventures.
Source: RenaissanceRe Holdings Ltd.
Released February 6, 2007