UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2003
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RenaissanceRe Holdings Ltd.
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(Exact name of registrant as specified in its charter)
Bermuda 34-0-26512 98-014-1974
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
Renaissance House
8-12 East Broadway, Pembroke
Bermuda HM 19
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (441) 295-4513
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Not Applicable
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(Former name or former address, if changed since last report)
Item 9. Regulation FD Disclosure
The following information, including the text of the press release attached
as an Exhibit to this Form 8-K, are being furnished pursuant to Item 12,
"Results of Operations and Financial Condition," and Item 9 pursuant to the
interim guidance issued by the Securities and Exchange Commission in Release
Nos. 33-8216 and 34-47583. This Form 8-K and the attached exhibit are furnished
to, but not filed with, the Securities and Exchange Commission.
On April 22, 2003, RenaissanceRe Holdings Ltd. (the "Company") issued a
press release (the "Press Release") announcing the Company's preliminary results
for its first quarter ended March 31, 2003. A copy of the Press Release is
attached as Exhibit 99.1 to this Form 8-K.
Non-GAAP Financial Measures
In addition to the GAAP financial measures set forth in the Press Release,
the Company has included certain non-GAAP financial measures in the Press
Release within the meaning of Regulation G. The Company has consistently
provided these financial measurements in previous earnings releases 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.
The Company has included in the Press Release "net operating income
available to common shareholders" of $126.9 million in the first quarter of 2003
(as compared with $86.6 million in the first quarter of 2002) and "operating
earnings per common share" of $1.80 during this quarter (as compared with $1.24
per common share in the first quarter of 2002), each of which is a non-GAAP
financial measure. The Company uses "operating income" as a measure to evaluate
the underlying fundamentals of its operations and believes it to be a useful
measure of its corporate performance. "Operating income" differs from "net
income", which the Company believes is the most directly comparable GAAP
measure, only by the exclusion of realized gains and losses on investments and
the cumulative effect of a change in the Company's accounting for goodwill of
$9.2 million in the first quarter of 2002. In the Press Release, the Company
provides that "net income available to common shareholders" was $151.3 million
in the first quarter of 2003 (as compared with $78.1 million in the first
quarter of 2002) and that "net income per common share" was $2.14 in the first
quarter of 2003 (as compared with $1.12 per common share for the first quarter
of 2002). In addition to the reasons for this presentation set forth above, the
Company's management also believes that presentation of "operating income" is
useful to investors because by excluding realized gains and losses on
investments, it more accurately measures and predicts the Company's results of
operations by removing the variability arising from the management of the
registrant's investment portfolio and from non-recurring matters such as changes
in accounting principles.
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The Company has also included in the Press Release "pro forma other income"
of $36.1 million in the first quarter of 2003 (as compared with $22.3 million
during the first quarter of 2002), which is a non-GAAP financial measure. The
principal differences between "pro forma other income" and "other income", which
the Company believes is the most directly comparable GAAP measure, are that the
results of DaVinci Reinsurance Ltd., a joint venture the financial results of
which are consolidated in the Company's financial statements, are reflected in
"pro forma other income" as if reported under the equity accounting method, and
that the pro forma presentation also includes fees earned on certain quota share
cessions of catastrophe business by the Company which are reflected on its
income statement as a reduction of acquisition and operational expenses. In the
Press Release, the Company provides that "other income" was $5.5 million in the
first quarter of 2003 (as compared with $8.1 million during the first quarter of
2002).
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit # Description
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99.1* Copy of Company's press release, issued April 22,
2003.
* Exhibit 99.1 is being furnished to the Securities and Exchange Commission
("SEC") pursuant to Item 12 and is not being filed with the SEC. Therefore,
this exhibit is not incorporated by reference in any of the registrant's other
SEC filings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
RENAISSANCERE HOLDINGS LTD.
Date: April 28, 2003 By: /s/ John M. Lummis
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Name: John M. Lummis
Title: Executive Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
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99.1* Copy of Company's press release, issued April 22, 2003.
* Exhibit 99.1 is being furnished to the Securities and Exchange Commission
("SEC") pursuant to Item 12 and is not being filed with the SEC. Therefore,
this exhibit is not incorporated by reference in any of the registrant's
other SEC filings.
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[LOGO OF RENAISSANCERE]
RenaissanceRe Reports $126.9 Million Operating Profit for 2003 First
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Quarter; Operating EPS of $1.80 per Common Share for 2003 First Quarter vs.
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$1.24 for First Quarter of 2002
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25% Growth in Managed Catastrophe Premium for the First Quarter
Individual Risk Premium Grows to $63.8 Million in First Quarter of 2003
Compared to $27.7 Million for the Same Period in 2002
Specialty Reinsurance Premium Grows to $186.1 Million in First Quarter of 2003
Compared to $101.0 Million for the Same Period in 2002
Achieves Annualized Operating ROE of 32.5% for the First Quarter of 2003
Pembroke, Bermuda, April 22, 2003 -- RenaissanceRe Holdings Ltd. (NYSE: RNR)
today reported $126.9 million in first quarter net operating income available to
common shareholders, compared to $86.6 million in the first quarter of 2002.
Operating income excludes realized investment gains of $24.4 million and $0.7
million in the first quarters of 2003 and 2002, respectively and also excludes
the cumulative effect of a change in our accounting for goodwill of $9.2 million
in the first quarter of 2002. Operating earnings per common share grew to $1.80
in the first quarter, from $1.24 per common share in the first quarter of the
previous year. Net income available to common shareholders rose 94% to $151.3
million, or $2.14 per common share in the quarter, from $78.1 million or $1.12
per common share for the same quarter of 2002.
James N. Stanard, Chairman and CEO, commented: "We are very pleased with the
performance of our business across all categories. In particular, the 25%
increase in Managed Catastrophe Premium reflects the ongoing strength of our
market presence in our traditional core business."
"We are confident in our ability to deliver another year of growth in all of our
businesses in 2003. At the same time, we remain committed to careful
underwriting in a market in which property catastrophe prices have roughly
stabilized. Significant premium from large transactions produced growth in the
first quarter beyond our original expectations, and may create some variability
in premium growth rates going forward. For the 2003 first quarter, we also
estimate that we experienced approximately $25 million, or $0.35 per common
share, of benefit from the low level of catastrophe loss activity compared to
results from a period of normalized activity."
Gross premiums written for the first quarter of 2003 increased by 49% to $685.2
million, compared to $460.8 million for the same quarter of 2002. Net premiums
written for the first quarter of 2003 were $590.4 million, versus $379.1 million
for the same quarter of 2002. Net premiums earned for the first quarter of 2003
were $263.5 million, compared to $150.3 million for the same quarter of 2002.
Those premiums include $126.5 million of gross written premiums, $126.5 million
of net written premiums and $49.1 million of net premiums earned by the
Company's consolidated joint venture, DaVinci Re during the first quarter of
2003, compared to $95.3 million of gross written premiums, $95.3 million of net
written premiums and $23.6 million of net premiums earned by DaVinci Re during
the first quarter of 2002.
Total Managed Catastrophe Premiums Written, representing gross catastrophe
premiums written by RenaissanceRe Holdings Ltd. and by related joint ventures,
increased to $464.7 million for the first quarter, compared to $370.4 million
for the same quarter of 2002. See attached supplemental financial data for a
reconciliation of Managed Catastrophe Premiums.
Net investment income, excluding realized and unrealized investment gains and
losses, for the first quarter of 2003 increased to $28.2 million, compared to
$22.8 million for the same period in 2002. This increase was driven by the
increase in invested assets resulting both from strong operating cash flows as
well as the $196 million of net proceeds from the Perpetual Preferred Stock and
Senior Notes sold in the first quarter.
Claims and claim expenses incurred for the quarter ended March 31, 2003 were
$82.8 million, or 31.4% of net premiums earned. In comparison, claims and claim
expenses incurred for the quarter ended March 31, 2002 were $43.1 million, or
28.7% of net premiums earned.
During the quarter, the Company recorded pro-forma other income of $36.1
million, compared to $22.3 million during the first quarter of 2002. Of the
total $36.1 million of pro-forma other income during the quarter, $20.2 million
was generated from fees and profit commissions, compared to $9.4 million in the
first quarter of 2002, $17.7 million was generated from the Company's equity
pick up from joint ventures, versus $9.7 million in the comparable quarter of
2002 and the remaining loss of $1.8 million was primarily related to losses from
contracts triggered by physical variables, compared to income of $3.1 million in
the first quarter of last year. Pro-forma "other income", which includes
aggregate earnings from joint venture activities, fees related to catastrophe
business, and miscellaneous other items, is presented in the supplemental
disclosures. The principal differences between other income as reported and the
pro-forma presentation are that the results of DaVinci Re are reflected as if it
were reported under the equity accounting method, and the pro-forma presentation
also includes fees earned on certain quota share cessions of catastrophe
business by the Company which are reflected on the income statement as a
reduction of acquisition and operational expenses.
Shareholders' equity attributable to common shareholders was $1.63 billion at
March 31, 2003, compared to $1.49 billion at December 31, 2002. Book value per
common share at March 31, 2003 was $23.37, compared to $21.39 per common share
at December 31, 2002.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, April 23,
2003 at 10:00 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.
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."
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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 operations 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, 2002.
INVESTOR CONTACT: MEDIA CONTACT:
Martin J. Merritt David Lilly or Dawn Dover
Senior Vice President - Finance Kekst and Company
RenaissanceRe Holdings Ltd. (212) 521-4800
(441) 299-7230
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RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
For the quarters ended March 31, 2003 and 2003
(in thousands of United States Dollars, except per share amounts)
Quarters Ended
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March 31, 2003 March 31, 2002
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(Unaudited)
Revenues
Gross premiums written $ 685,167 $ 460,834
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Net premiums written $ 590,370 $ 379,096
Increase in unearned premiums (326,896) (228,788)
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Net premiums earned 263,474 150,308
Net investment income 28,150 22,783
Net foreign exchange gains (losses) 3,951 (1,950)
Other income 5,505 8,129
Net realized gains on investments 24,396 686
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Total revenues 325,476 179,956
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Expenses
Claims and claim expense incurred 82,780 43,118
Acquisition expenses 42,133 18,549
Operational expenses 14,907 10,663
Corporate expenses 3,468 2,690
Interest expense 4,499 2,714
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Total expenses 147,787 77,734
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Income before minority interest and taxes and
change in accounting principle 177,689 102,222
Minority interest - Capital Securities 1,455 1,833
Minority Interest - DaVinci 20,885 9,477
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Income before taxes and change in accounting principle 155,349 90,912
Income tax benefit (expense) 55 (596)
Cumulative effect of a change in accounting principle -
SFAS 142 - Goodwill -- (9,187)
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Net income 155,404 81,129
Dividends on Preference Shares 4,119 3,038
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Net income available to Common Shareholders $ 151,285 $ 78,091
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Operating earnings per Common Share - diluted* $ 1.80 $ 1.24
Earnings per Common Share - basic $ 2.21 $ 1.17
Earnings per Common Share - diluted $ 2.14 $ 1.12
Average shares outstanding - basic 68,593 66,788
Average shares outstanding - diluted 70,564 69,787
Claims and claim expense ratio 31.4% 28.7%
Expense ratio 21.6% 19.4%
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Combined ratio 53.0% 48.1%
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Operating return on average equity (annualized)* 32.5% 31.2%
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* - Excludes realized gains and losses on investments and cumulative effect of a
change in accounting principle - SFAS 142 - Goodwill.
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RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Income
(in thousands of United States Dollars, except per share amounts)
As at
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March 31, 2003 December 31, 2002
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(Unaudited) (Audited)
Assets
Fixed maturity investments available for sale, at fair value
(Amortized cost $2,458,937 and $2,153,715 at March 31,
2003 and December 31, 2002, respectively) $ 2,521,244 $ 2,221,109
Short term investments 922,444 570,497
Other investments 140,947 129,918
Equity investment in reinsurance company at fair value
(Cost $84,199 at March 31, 2003 and December 31, 2002) 117,914 120,288
Cash and cash equivalents 99,389 87,067
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Total investments and cash 3,801,938 3,128,879
Premiums receivable 474,523 199,449
Ceded reinsurance balances 96,976 73,360
Losses recoverable 178,593 199,533
Accrued investment income 25,212 25,833
Deferred acquisition costs 89,084 55,853
Other assets 70,205 62,829
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Total assets $ 4,736,531 $ 3,745,736
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Liabilities, Minority Interest and Shareholders' Equity
Liabilities
Reserve for claims and claim expenses $ 874,092 $ 804,795
Reserve for unearned premiums 682,649 331,985
Debt 375,000 275,000
Reinsurance balances payable 185,168 146,732
Net payable for investments purchased 210,653 24,734
Other 59,118 72,279
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Total liabilities 2,386,680 1,655,525
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Minority Interest - Capital Securities 84,630 84,630
Minority Interest - Da Vinci 382,953 363,546
Shareholders' Equity
Preference Shares 250,000 150,000
Common shares and additional paid-in capital 301,121 320,936
Unearned stock grant compensation -- (18,468)
Accumulated other comprehensive income 96,005 95,234
Retained earnings 1,235,142 1,094,333
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Total shareholders' equity 1,882,268 1,642,035
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Total liabilities, minority interest, and
shareholders' equity $ 4,736,531 $ 3,745,736
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Book value per Common Share $ 23.37 $ 21.39
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Common Shares outstanding 69,840 69,750
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RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data
(in thousands of United States Dollars)
Gross Written Premiums Quarters Ended
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Mar 31, 2003 Mar 31, 2002
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Renaissance Cat Premium $308,719 $236,793
Renaissance Specialty Premium 186,082 101,023
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Total Renaissance Reinsurance Premium 494,801 337,816
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Da Vinci Cat Premium 106,618 95,269
Da Vinci Specialty Premium 19,707 --
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Total Da Vinci Reinsurance Premium 126,523 95,269
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Total Reinsurance Premium 621,324 433,085
Individual Risk Premium 63,843 27,749
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Total Premiums $685,167 $460,834
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Total Managed Cat Premiums (1) $464,688 $370,354
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(1) Total Managed Cat Premiums include Renaissance and Da Vinci Cat Premium, as
above, and Cat Premium of $49.2 million and $38.3 million in 2003 and 2002,
respectively, written on behalf of our joint venture, Top Layer Re.
Other Income Quarters Ended
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Mar 31, 2003 Mar 31, 2002
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As Reported
Cat business - fee income $ 1,228 $ 1,001
Cat business - equity pick up 6,086 3,990
Other items (1,791) 3,138
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Total other income - as reported $ 5,505 $ 8,129
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Pro-Forma (2)
Cat business - fee income (3) $ 20,204 $ 9,418
Cat business - equity pick up 17,702 9,704
Other items (1,791) 3,138
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Total other income - pro-forma $ 36,115 $ 22,260
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(2) Non-GAAP restatement to reflect Da Vinci under the equity method and other
fee income on managed cat business.
(3) Excludes fee income received on capital invested by RenaissanceRe Holdings.
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