RenaissanceRe Reports Net Income of $92.4 Million for the First Quarter of 2017 or $2.25 Per Diluted Common Share; Quarterly Operating Income of $49.0 Million or $1.18 Per Diluted Common Share
PEMBROKE,
FIRST QUARTER 2017 HIGHLIGHTS
-
Gross premiums written increased
$60.0 million , or 7.0%, to$922.1 million , in the first quarter of 2017 compared to the first quarter of 2016. -
Underwriting income of
$42.4 million and a combined ratio of 88.4%, which included net adverse development on prior accident years of$33.5 million , or 9.1 percentage points, associated with the change in the Ogden rate. -
Total investment result was a gain of
$97.7 million in the first quarter of 2017, generating an annualized total investment return of 4.1%. -
Repurchased 550 thousand common shares in open market transactions at
an aggregate cost of
$80.0 million and an average price of$145.36 per common share.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were
Managed catastrophe premiums were
The Property segment generated underwriting income of
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment were
The Casualty and Specialty segment incurred an underwriting loss of
The Casualty and Specialty segment experienced
Current accident year net claims and claim expenses in the Casualty and Specialty segment were primarily impacted by a number of small events and higher attritional net claims and claim expenses.
Other Items
-
The Company’s total investment result, which includes the sum of net
investment income and net realized and unrealized gains on
investments, was a gain of
$97.7 million in the first quarter of 2017, compared to$90.2 million in the first quarter of 2016, an increase of$7.5 million . This increase was primarily driven by higher returns in the Company’s equity investments trading and private equity portfolios combined with higher average invested assets in the Company’s fixed maturity investments trading portfolio, partially offset by lower returns in its fixed maturity investments trading portfolio, principally driven by yield increases at the front end of the curve. -
Net income attributable to noncontrolling interests in the first
quarter of 2017 was
$34.3 million , a decrease from$44.6 million in the first quarter of 2016, principally due to a decrease in the profitability ofDaVinciRe Holdings Ltd. (“DaVinciRe”), partially offset by a decrease in the Company’s ownership in DaVinciRe to 22.6% at March 31, 2017, compared to 24.0% at March 31, 2016. -
Subsequent to March 31, 2017 and through the period ended April 28,
2017, the Company repurchased 163 thousand common shares in open
market transactions at an aggregate cost of
$22.8 million and an average price of$139.71 per common share.
This Press Release includes certain non-GAAP financial measures
including “operating income available to
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.
Cautionary Statement Regarding Forward Looking Statements
Any forward-looking statements made in this Press Release reflect
RenaissanceRe’s current views with respect to future events and
financial performance and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are subject to numerous factors that could cause actual
results to differ materially from those set forth in or implied by such
forward-looking statements, including the following: the frequency and
severity of catastrophic and other events that the Company covers; the
effectiveness of the Company’s claims and claim expense reserving
process; the Company’s ability to maintain its financial strength
ratings; the effect of climate change on the Company’s business; the
effect of U.S. business tax reform proposals; adverse tax developments,
including potential changes to the taxation of inter-company or related
party transactions, or changes to the tax treatment of shareholders or
investors in
RenaissanceRe Holdings Ltd. | ||||||||
Summary Consolidated Statements of Operations | ||||||||
(in thousands of United States Dollars, except per share amounts and percentages) | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
March 31, 2017 |
March 31, 2016 |
|||||||
Revenues | ||||||||
Gross premiums written | $ | 922,090 | $ | 862,133 | ||||
Net premiums written | $ | 544,136 | $ | 511,675 | ||||
Increase in unearned premiums | (178,091 | ) | (158,069 | ) | ||||
Net premiums earned | 366,045 | 353,606 | ||||||
Net investment income | 54,325 | 28,863 | ||||||
Net foreign exchange gains (losses) | 8,165 | (1,692 | ) | |||||
Equity in (losses) earnings of other ventures | (1,507 | ) | 1,611 | |||||
Other income | 1,665 | 4,079 | ||||||
Net realized and unrealized gains on investments | 43,373 | 61,653 | ||||||
Total revenues | 472,066 | 448,120 | ||||||
Expenses | ||||||||
Net claims and claim expenses incurred | 193,081 | 126,605 | ||||||
Acquisition expenses | 83,282 | 65,592 | ||||||
Operational expenses | 47,283 | 56,235 | ||||||
Corporate expenses | 5,286 | 8,225 | ||||||
Interest expense | 10,526 | 10,538 | ||||||
Total expenses | 339,458 | 267,195 | ||||||
Income before taxes | 132,608 | 180,925 | ||||||
Income tax expense | (334 | ) | (2,744 | ) | ||||
Net income | 132,274 | 178,181 | ||||||
Net income attributable to noncontrolling interests | (34,327 | ) | (44,591 | ) | ||||
Net income available to RenaissanceRe | 97,947 | 133,590 | ||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||
Net income available to RenaissanceRe common shareholders | $ | 92,352 | $ | 127,995 | ||||
Net income available to RenaissanceRe common shareholders per common share - basic | $ | 2.26 | $ | 2.97 | ||||
Net income available to RenaissanceRe common shareholders per common share - diluted | $ | 2.25 | $ | 2.95 | ||||
Operating income available to RenaissanceRe common shareholders per common share - diluted (1) | $ | 1.18 | $ | 1.51 | ||||
Average shares outstanding - basic | 40,408 | 42,577 | ||||||
Average shares outstanding - diluted | 40,623 | 42,912 | ||||||
Net claims and claim expense ratio | 52.7 | % | 35.8 | % | ||||
Underwriting expense ratio | 35.7 | % | 34.5 | % | ||||
Combined ratio | 88.4 | % | 70.3 | % | ||||
Return on average common equity - annualized | 8.3 | % | 11.8 | % | ||||
Operating return on average common equity - annualized (1) | 4.4 | % | 6.1 | % | ||||
(1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
||||||||
RenaissanceRe Holdings Ltd. | |||||||
Summary Consolidated Balance Sheets | |||||||
(in thousands of United States Dollars, except per share amounts) | |||||||
March 31, 2017 |
December 31, 2016 |
||||||
Assets | (Unaudited) | (Audited) | |||||
Fixed maturity investments trading, at fair value | $ | 7,259,851 | $ | 6,891,244 | |||
Short term investments, at fair value | 1,199,797 | 1,368,379 | |||||
Equity investments trading, at fair value | 388,424 | 383,313 | |||||
Other investments, at fair value | 514,667 | 549,805 | |||||
Investments in other ventures, under equity method | 97,131 | 124,227 | |||||
Total investments | 9,459,870 | 9,316,968 | |||||
Cash and cash equivalents | 454,087 | 421,157 | |||||
Premiums receivable | 1,283,275 | 987,323 | |||||
Prepaid reinsurance premiums | 628,091 | 441,260 | |||||
Reinsurance recoverable | 325,819 | 279,564 | |||||
Accrued investment income | 40,547 | 38,076 | |||||
Deferred acquisition costs | 388,681 | 335,325 | |||||
Receivable for investments sold | 316,948 | 105,841 | |||||
Other assets | 173,984 | 175,382 | |||||
Goodwill and other intangibles | 248,325 | 251,186 | |||||
Total assets | $ | 13,319,627 | $ | 12,352,082 | |||
Liabilities, Noncontrolling Interests and Shareholders’ Equity | |||||||
Liabilities | |||||||
Reserve for claims and claim expenses | $ | 2,934,688 | $ | 2,848,294 | |||
Unearned premiums | 1,596,495 | 1,231,573 | |||||
Debt | 945,701 | 948,663 | |||||
Reinsurance balances payable | 972,266 | 673,983 | |||||
Payable for investments purchased | 604,613 | 305,714 | |||||
Other liabilities | 217,036 | 301,684 | |||||
Total liabilities | 7,270,799 | 6,309,911 | |||||
Redeemable noncontrolling interest | 1,187,991 | 1,175,594 | |||||
Shareholders’ Equity | |||||||
Preference shares | 400,000 | 400,000 | |||||
Common shares | 40,785 | 41,187 | |||||
Additional paid-in capital | 131,173 | 216,558 | |||||
Accumulated other comprehensive (loss) income | (358 | ) | 1,133 | ||||
Retained earnings | 4,289,237 | 4,207,699 | |||||
Total shareholders’ equity attributable to RenaissanceRe | 4,860,837 | 4,866,577 | |||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 13,319,627 | $ | 12,352,082 | |||
Book value per common share | $ | 109.37 | $ | 108.45 | |||
RenaissanceRe Holdings Ltd. | ||||||||||||||||
Supplemental Financial Data - Segment Information | ||||||||||||||||
(in thousands of United States Dollars, except percentages) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended March 31, 2017 | ||||||||||||||||
Property |
Casualty and |
Other | Total | |||||||||||||
Gross premiums written | $ | 520,529 | $ | 401,561 | $ | — | $ | 922,090 | ||||||||
Net premiums written | $ | 289,871 | $ | 254,265 | $ | — | $ | 544,136 | ||||||||
Net premiums earned | $ | 186,988 | $ | 179,059 | $ | (2 | ) | $ | 366,045 | |||||||
Net claims and claim expenses incurred | 38,838 | 154,571 | (328 | ) | 193,081 | |||||||||||
Acquisition expenses | 29,103 | 54,179 | — | 83,282 | ||||||||||||
Operational expenses | 27,665 | 19,607 | 11 | 47,283 | ||||||||||||
Underwriting income (loss) | $ | 91,382 | $ | (49,298 | ) | $ | 315 | 42,399 | ||||||||
Net investment income | 54,325 | 54,325 | ||||||||||||||
Net foreign exchange gains | 8,165 | 8,165 | ||||||||||||||
Equity in losses of other ventures | (1,507 | ) | (1,507 | ) | ||||||||||||
Other income | 1,665 | 1,665 | ||||||||||||||
Net realized and unrealized gains on investments | 43,373 | 43,373 | ||||||||||||||
Corporate expenses | (5,286 | ) | (5,286 | ) | ||||||||||||
Interest expense | (10,526 | ) | (10,526 | ) | ||||||||||||
Income before taxes and redeemable noncontrolling interests | 132,608 | |||||||||||||||
Income tax expense | (334 | ) | (334 | ) | ||||||||||||
Net income attributable to redeemable noncontrolling interests | (34,327 | ) | (34,327 | ) | ||||||||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 92,352 | ||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 39,766 | $ | 124,309 | $ | — | $ | 164,075 | ||||||||
Net claims and claim expenses incurred – prior accident years | (928 | ) | 30,262 | (328 | ) | 29,006 | ||||||||||
Net claims and claim expenses incurred – total | $ | 38,838 | $ | 154,571 | $ | (328 | ) | $ | 193,081 | |||||||
Net claims and claim expense ratio – current accident year | 21.3 | % | 69.4 | % | 44.8 | % | ||||||||||
Net claims and claim expense ratio – prior accident years | (0.5 | )% | 16.9 | % | 7.9 | % | ||||||||||
Net claims and claim expense ratio – calendar year | 20.8 | % | 86.3 | % | 52.7 | % | ||||||||||
Underwriting expense ratio | 30.3 | % | 41.2 | % | 35.7 | % | ||||||||||
Combined ratio | 51.1 | % | 127.5 | % | 88.4 | % | ||||||||||
Three months ended March 31, 2016 | ||||||||||||||||
Property |
Casualty and |
Other | Total | |||||||||||||
Gross premiums written | $ | 444,959 | $ | 417,174 | $ | — | $ | 862,133 | ||||||||
Net premiums written | $ | 232,859 | $ | 278,816 | $ | — | $ | 511,675 | ||||||||
Net premiums earned | $ | 175,232 | $ | 178,374 | $ | — | $ | 353,606 | ||||||||
Net claims and claim expenses incurred | 21,804 | 104,883 | (82 | ) | 126,605 | |||||||||||
Acquisition expenses | 20,124 | 45,468 | — | 65,592 | ||||||||||||
Operational expenses | 28,657 | 27,518 | 60 | 56,235 | ||||||||||||
Underwriting income | $ | 104,647 | $ | 505 | $ | 22 | 105,174 | |||||||||
Net investment income | 28,863 | 28,863 | ||||||||||||||
Net foreign exchange losses | (1,692 | ) | (1,692 | ) | ||||||||||||
Equity in earnings of other ventures | 1,611 | 1,611 | ||||||||||||||
Other income | 4,079 | 4,079 | ||||||||||||||
Net realized and unrealized gains on investments | 61,653 | 61,653 | ||||||||||||||
Corporate expenses | (8,225 | ) | (8,225 | ) | ||||||||||||
Interest expense | (10,538 | ) | (10,538 | ) | ||||||||||||
Income before taxes and redeemable noncontrolling interests | 180,925 | |||||||||||||||
Income tax expense | (2,744 | ) | (2,744 | ) | ||||||||||||
Net income attributable to noncontrolling interests | (44,591 | ) | (44,591 | ) | ||||||||||||
Dividends on preference shares | (5,595 | ) | (5,595 | ) | ||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 127,995 | ||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 27,732 | $ | 100,477 | $ | — | $ | 128,209 | ||||||||
Net claims and claim expenses incurred – prior accident years | (5,928 | ) | 4,406 | (82 | ) | (1,604 | ) | |||||||||
Net claims and claim expenses incurred – total | $ | 21,804 | $ | 104,883 | $ | (82 | ) | $ | 126,605 | |||||||
Net claims and claim expense ratio – current accident year | 15.8 | % | 56.3 | % | 36.3 | % | ||||||||||
Net claims and claim expense ratio – prior accident years | (3.4 | )% | 2.5 | % | (0.5 | )% | ||||||||||
Net claims and claim expense ratio – calendar year | 12.4 | % | 58.8 | % | 35.8 | % | ||||||||||
Underwriting expense ratio | 27.9 | % | 40.9 | % | 34.5 | % | ||||||||||
Combined ratio | 40.3 | % | 99.7 | % | 70.3 | % | ||||||||||
RenaissanceRe Holdings Ltd. | |||||||||||||||||||
Supplemental Financial Data - Gross Premiums Written | |||||||||||||||||||
(in thousands of United States Dollars) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three months ended | |||||||||||||||||||
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
|||||||||||||||
Property Segment |
|||||||||||||||||||
Catastrophe | $ | 414,424 | $ | 7,705 | $ | 71,606 | $ | 432,033 | $ | 373,017 | |||||||||
Other property | 106,105 | 44,742 | 48,298 | 61,920 | 71,942 | ||||||||||||||
Property segment gross premiums written | $ | 520,529 | $ | 52,447 | $ | 119,904 | $ | 493,953 | $ | 444,959 | |||||||||
Casualty and Specialty Segment |
|||||||||||||||||||
Professional liability (1) | $ | 132,306 | $ |
83,804 |
$ |
90,984 |
$ | 97,000 | $ |
105,792 |
|||||||||
General casualty (2) | 122,293 | 79,669 | 82,234 | 53,099 | 112,937 | ||||||||||||||
Financial lines (3) | 85,143 | 85,208 | 110,771 | 74,255 | 142,834 | ||||||||||||||
Other (4) | 61,819 |
21,963 |
26,331 |
40,821 |
55,611 |
||||||||||||||
Casualty and Specialty segment gross premiums written | $ | 401,561 | $ | 270,644 | $ | 310,320 | $ | 265,175 | $ | 417,174 | |||||||||
(1) | Includes directors and officers, medical malpractice, and professional indemnity. | ||
(2) | Includes automobile liability, casualty clash, employer’s liability, umbrella or excess casualty, workers’ compensation and general liability. | ||
(3) | Includes financial guaranty, mortgage guaranty, political risk, surety and trade credit. | ||
(4) | Includes accident and health, agriculture, aviation, cyber, energy, marine, satellite, terrorism. Lines of business such as regional multi line and whole account may have characteristics of various other classes of business, and are allocated accordingly. |
RenaissanceRe Holdings Ltd. | ||||||||
Supplemental Financial Data - Total Investment Result | ||||||||
(in thousands of United States Dollars) | ||||||||
(Unaudited) | ||||||||
Three months ended | ||||||||
March 31, 2017 |
March 31, 2016 |
|||||||
Fixed maturity investments | $ | 43,419 | $ | 36,006 | ||||
Short term investments | 1,724 | 1,000 | ||||||
Equity investments trading | 811 | 1,663 | ||||||
Other investments | ||||||||
Private equity investments | 7,802 | (9,358 | ) | |||||
Other | 4,072 | 3,309 | ||||||
Cash and cash equivalents | 189 | 129 | ||||||
58,017 | 32,749 | |||||||
Investment expenses | (3,692 | ) | (3,886 | ) | ||||
Net investment income | 54,325 | 28,863 | ||||||
Gross realized gains | 11,461 | 17,750 | ||||||
Gross realized losses | (16,533 | ) | (14,665 | ) | ||||
Net realized (losses) gains on fixed maturity investments | (5,072 | ) | 3,085 | |||||
Net unrealized gains on fixed maturity investments trading | 24,635 | 85,465 | ||||||
Net realized and unrealized losses on investments-related derivatives | (56 | ) | (19,449 | ) | ||||
Net realized gains (losses) on equity investments trading | 20,915 | (818 | ) | |||||
Net unrealized gains (losses) on equity investments trading | 2,951 | (6,630 | ) | |||||
Net realized and unrealized gains on investments | 43,373 | 61,653 | ||||||
Change in net unrealized gains on fixed maturity investments available for sale | — | (269 | ) | |||||
Total investment result | $ | 97,698 | $ | 90,247 | ||||
Total investment return - annualized | 4.1 | % | 4.0 | % | ||||
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
within the meaning of Regulation
The Company uses “operating income available to
Three months ended | ||||||||
(in thousands of United States Dollars, except percentages) |
March 31, 2017 |
March 31, 2016 |
||||||
Net income available to RenaissanceRe common shareholders | $ | 92,352 | $ | 127,995 | ||||
Adjustment for net realized and unrealized gains on investments | (43,373 | ) | (61,653 | ) | ||||
Operating income available to RenaissanceRe common shareholders | $ | 48,979 | $ | 66,342 | ||||
Net income available to RenaissanceRe common shareholders per common share - diluted | $ | 2.25 | $ | 2.95 | ||||
Adjustment for net realized and unrealized gains on investments | (1.07 | ) | (1.44 | ) | ||||
Operating income available to RenaissanceRe common shareholders per common share - diluted | $ | 1.18 | $ | 1.51 | ||||
Return on average common equity - annualized | 8.3 | % | 11.8 | % | ||||
Adjustment for net realized and unrealized gains on investments | (3.9 | )% | (5.7 | )% | ||||
Operating return on average common equity - annualized | 4.4 | % | 6.1 | % | ||||
The Company has included in this Press Release “tangible book value per common share” and “tangible book value per common share plus accumulated dividends”. “Tangible book value per common share” is defined as book value per common share excluding goodwill and intangible assets per share. “Tangible book value per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible assets per share, plus accumulated dividends. The Company’s management believes “tangible book value per common share” and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets. The following is a reconciliation of book value per common share to tangible book value per common share and tangible book value per common share plus accumulated dividends:
At | ||||||||||||||||||||
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
||||||||||||||||
Book value per common share | $ | 109.37 | $ | 108.45 | $ | 107.10 | $ | 103.70 | $ | 101.19 | ||||||||||
Adjustment for goodwill and other intangibles (1) | (6.55 | ) | (6.58 | ) | (6.69 | ) | (6.73 | ) | (6.59 | ) | ||||||||||
Tangible book value per common share | 102.82 | 101.87 | 100.41 | 96.97 | 94.60 | |||||||||||||||
Adjustment for accumulated dividends | 17.04 | 16.72 | 16.41 | 16.10 | 15.79 | |||||||||||||||
Tangible book value per common share plus accumulated dividends | $ | 119.86 | $ | 118.59 | $ | 116.82 | $ | 113.07 | $ | 110.39 | ||||||||||
Quarterly change in book value per common share | 0.8 | % | 1.3 | % | 3.3 | % | 2.5 | % | 2.1 | % | ||||||||||
Quarterly change in tangible book value per common share plus change in accumulated dividends | 1.2 | % | 1.8 | % | 3.9 | % | 2.8 | % | 2.6 | % |
(1) | At March 31, 2017 December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016, goodwill and other intangibles included $18.9 million, $19.7 million, $20.6 million, $21.4 million and $22.3 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method. |
The Company has included in this Press Release “managed catastrophe
premiums” which is defined as gross catastrophe premiums written by the
Company and its related joint ventures. “Managed catastrophe premiums”
differs from Property segment gross premiums written, which the Company
believes is the most directly comparable GAAP measure, due to the
exclusion of other property gross premiums written and the inclusion of
catastrophe premiums written on behalf of the Company's joint venture
Three months ended | ||||||||
March 31, 2017 |
March 31, 2016 |
|||||||
Property Segment |
||||||||
Catastrophe | $ | 414,424 | $ | 373,017 | ||||
Other property | 106,105 | 71,942 | ||||||
Property segment gross premiums written | $ | 520,529 | $ | 444,959 | ||||
Managed Catastrophe Premiums |
||||||||
Property segment gross premiums written | $ | 520,529 | $ | 444,959 | ||||
Other property gross premiums written | (106,105 | ) | (71,942 | ) | ||||
Catastrophe gross premiums written | $ | 414,424 | $ | 373,017 | ||||
Catastrophe premiums written on behalf of the Company's joint venture, Top Layer Re | 12,385 | 11,096 | ||||||
Catastrophe premiums written by the Company and ceded to Top Layer Re | — | (8,367 | ) | |||||
Managed catastrophe premiums | $ | 426,809 | $ | 375,746 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170502006842/en/
Source:
Investors:
RenaissanceRe Holdings Ltd.
Aditya Dutt,
441-295-4513
Senior Vice President and Treasurer
or
Media:
RenaissanceRe
Holdings Ltd.
Elizabeth Tillman, 212-238-9224
Director -
Communications
or
Kekst and Company
Peter Hill or Dawn
Dover, 212-521-4800