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): July 22, 2003 -------------- RenaissanceRe Holdings Ltd. ------------------------------------------------------------ (Exact name of registrant as specified in its charter) Bermuda 34-0-26512 98-014-1974 ------------- -------------- -------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) Renaissance House 8-12 East Broadway, Pembroke Bermuda HM 19 - ----------------------------------------- ----------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (441) 295-4513 --------------- Not Applicable ---------------------------------------------------------------- (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 July 22, 2003, RenaissanceRe Holdings Ltd. (the "Company") issued a press release (the "Press Release") announcing the Company's preliminary results for its quarter ended June 30, 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 and for comparison with other companies in 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 has included in the Press Release "net operating income available to common shareholders" of $124.4 million in the second quarter of 2003 (as compared with $93.3 million in the second quarter of 2002) and of $251.3 million for the six-month period ended June 30, 2003 (as compared with $179.9 million for the six-month period ended June 30, 2002). The Company has also included in the Press Release "operating income per common share" of $1.75 during in the second quarter of 2003 (as compared with $1.33 per common share in the second quarter of 2002, and of $3.55 for the six-month period ended June 30, 2003 (as compared with $2.57 for the six-month period ended June 30, 2002). Each of these measures 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. In the Press Release, the Company provides that "net income available to common shareholders" was $180.2 million in the second quarter of 2003 (as compared with $96.2 million in the second quarter of 2002) and was $331.4 million for the six-month period ended June 30, 2003 (as compared with $174.3 -2-
million for the six-month period ended June 30, 2002). The Company also provides in the Press Release that "net income per common share" was $2.54 in the second quarter of 2003 (as compared with $1.37 per common share for the second quarter of 2002) and was $4.68 for the six-month period ended June 30, 2003 (as compared with $2.49 for the six-month period ended June 30, 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 it more accurately measures and predicts the Company's results of operations by removing the variability arising from fluctuations in the registrant's investment portfolio and by removing non-recurring matters such as changes in accounting principles, which are not considered by management to be a relevant indicator of business operations. The Company has also included in the Press Release "summary of all income from joint venture relationships" of $31.6 million in the second quarter of 2003 (as compared with $28.9 million in the second quarter of 2002) and of $67.7 million for the six-month period ended June 30, 2003 (as compared with $51.2 million for the six-month period ended June 30, 2002), which is a non-GAAP financial measure. The principal differences between "summary of all income from joint venture relationships" 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 "summary of all income from joint venture relationships" as if reported under the equity accounting method, and that this 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 $7.2 million in the second quarter of 2003 (as compared with $8.1 million during the second quarter of 2002) and was $12.7 million for the six-month period ended June 30, 2003 (as compared with $16.3 million for the six-month period ended June 30, 2002). The Press Release also sets forth a revised estimate of "operating earnings per common share" for 2003 in the range of $6.35 and $6.60 versus a previous forecast of $5.30 to $5.70, assuming normal loss levels for the balance of 2003. The forecast of "operating earnings per common share" for 2003 is a non-GAAP financial measure and excludes realized gains on investments of $80.2 million for the first six months of 2003 and all realized gains and losses on investments for the final six months of 2003. The Company is unable to forecast "net income per common share for 2003", which the Company believes is the most directly comparable GAAP measure, as predictions as to the amount of realized gains and losses on investments for the final six months of 2003 are dependent on the performance of the financial markets. -3-
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 --------- ----------- 99.1* Copy of Company's press release, issued July 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. -4-
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: July 24, 2003 By: /s/ John M. Lummis ------------- ------------------------------ Name: John M. Lummis Title: Executive Vice President and Chief Financial Officer
INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 99.1* Copy of Company's press release, issued July 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.
Exhibit 99.1 (RENAISSANCERE LOGO) RENAISSANCERE REPORTS OPERATING EPS OF $1.75 PER COMMON SHARE FOR 2003 SECOND QUARTER COMPARED TO $1.33 FOR 2002 SECOND QUARTER NET INCOME OF $2.54 PER COMMON SHARE FOR 2003 SECOND QUARTER COMPARED TO $1.37 PER COMMON SHARE FOR 2002 SECOND QUARTER INCREASES 2003 OPERATING EARNINGS ESTIMATES TO A RANGE OF $6.35 TO $6.60 PER COMMON SHARE, FROM PRIOR ESTIMATE OF $5.30 TO $5.70 PEMBROKE, BERMUDA, JULY 22, 2003 -- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $124.4 million in second quarter net operating income available to common shareholders, compared to $93.3 million in the second quarter of 2002. Operating income excludes realized investment gains of $55.8 million and $3.0 million in the second quarters of 2003 and 2002, respectively. Operating income per common share grew to $1.75 in the second quarter of 2003, from $1.33 per common share in the second quarter of the previous year. Net income available to common shareholders rose 87% to $180.2 million or $2.54 per common share in the quarter, from $96.2 million or $1.37 per common share for the same quarter of 2002. James N. Stanard, Chairman and CEO, commented: "Our business continues to perform well and our second quarter came in ahead of expectations principally because of light catastrophe losses. We are especially pleased with the growth in our individual risk unit, which is now expected to deliver more than 40% growth in gross written premium for the year. We also continue to expect gross managed premium growth in specialty reinsurance of approximately 20%. While we currently expect gross managed premium in catastrophe reinsurance to be flat with last year, we now believe that overall premium growth, combined with light catastrophe loss activity through the first half of the year, will enable us to produce operating earnings per share in the range of $6.35 to $6.60, versus our previous forecast of $5.30 to $5.70, assuming normal loss levels for the balance of the year." For the six months ended June 30, 2003, net operating income available to common shareholders was $251.3 million or $3.55 per common share, compared to $179.9 million or $2.57 per common share for the same period in 2002. Operating income excludes realized investments gains of $80.2 million and $3.7 for the six months ended June 30, 2003 and 2002, respectively, and, in 2002, the cumulative effect of a change in accounting principle of $9.2 million. Net income available to common shareholders for the six months ended June 30, 2003 was $331.4 million or $4.68 per common share, compared to $174.3 million or $2.49 per common share for the same period in 2002. Gross premiums written for the second quarter of 2003 were $212.6 million, compared to $270.3 million for the same quarter of 2002. Net premiums written for the second quarter of 2003 were $160.2 million, versus $198.5 million for the same quarter of 2002. Net premiums earned for the second quarter of 2003 were $275.5 million, compared to $184.7 million for the same quarter of 2002. Those premiums include $17.1 million of gross written premiums, $19.0 million of net written premiums and $46.7 million of net premiums earned by the Company's consolidated joint venture, DaVinci Re during the second quarter of 2003, compared to $34.8 million of gross written premiums, $34.8 million of net written premiums and $34.2 million of net premiums earned by DaVinci Re during the second quarter of 2002. 1
Gross premiums written for the six months ended June 30, 2003 were $897.7 million, compared to $731.1 million for the same period of 2002. Net premiums written for the six months ended June 30, 2003 were $750.6 million, compared to $577.6 million for the same period of 2002. Net premiums earned for the first six months of 2003 were $539.0 million, compared to $335.1 million for the same period of 2002. Those premiums include $143.6 million of gross written premiums, $145.5 million of net written premiums and $95.8 million of net premiums earned by DaVinci Re during the first six months of 2003, compared to $130.1 million of gross written premiums, $130.1 million of net written premiums and $57.8 million of net premiums earned by DaVinci Re for the first six months of 2002. Total Managed Catastrophe Premiums Written, representing gross catastrophe premiums written by Renaissance Reinsurance and by related joint ventures, was $103.8 million for the second quarter, compared to $144.8 million for the same quarter of 2002. This decline was primarily attributable to contracts recorded in the second quarter of 2002 which were renewed and recorded in the first quarter of 2003. Total Managed Cat Premium for the six months ended June 30, 2003 increased to $568.5, compared to $515.2 million for the same period in 2002. See the attached supplemental financial data for additional details regarding managed premiums. Net investment income, excluding realized and unrealized investment gains and losses, for the second quarter of 2003 increased to $28.0 million, compared to $26.4 million for the same period in 2002. Net investment income, excluding realized and unrealized gains and losses, for the six months ended June 30, 2003 was $56.2 million, compared to $49.1 million for the same period in 2002. Investment income for the second quarter of 2003 includes $6.1 million of income and appreciation related to investments in hedge funds and private equity funds, compared with a loss of $.2 million for the same quarter in 2002. For the first six months of 2003, income and appreciation from these investments totaled $9.4 million as compared to $.1 million for the same six month period in 2002. Claims and claim expenses incurred for the quarter ended June 30, 2003 were $100.1 million, or 36.3% of net premiums earned. In comparison, claims and claim expenses incurred for the quarter ended June 30, 2002 were $73.1 million, or 39.6% of net premiums earned. Claims and claim expenses incurred for the six months ended June 30, 2003 were $182.9 million or 33.9% of net premiums earned, compared to $116.3 million or 34.7% of net premiums earned for the same period in 2002. Claims and claim expenses incurred for the both the quarters and the six months ending June 30, 2003 and 2002 benefited from the relatively low level of catastrophe losses during each of these periods. During the quarter, income from the DaVinci joint venture and other fee income on managed cat business was $31.6 million, compared to $28.9 million during the second quarter of 2002. Of the total $31.6 million of other income during the quarter, $15.6 million was generated from fees and profit commissions, compared to $14.8 million in the second quarter of 2002, and $16.5 million was generated from the Company's equity pick up from joint ventures, versus $14.2 million in the comparable quarter of 2002. A summary of income from joint venture relationships, 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 summary of income above from joint venture relationships are that the results of DaVinci Re are reflected as if it were reported under the equity accounting method, and the summary 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 $1.82 billion at June 30, 2003, compared to $1.49 billion at December 31, 2002. Book value per common share at June 30, 2003 was $25.94, compared to $21.39 per common share at December 31, 2002. RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 23, 2003 at 10:00 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. (NYSE: RNR), is a global provider of reinsurance and insurance. The Company's business primarily consists of four components: (1) catastrophe reinsurance; (2) catastrophe reinsurance written for 2
the account of joint ventures Top Layer Reinsurance Ltd. and DaVinci Reinsurance Ltd; (3) specialty reinsurance, including such lines as catastrophe-exposed workers compensation, surety, terrorism, property per risk, aviation and finite reinsurance; and (4) individual risk business 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 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, and Form 10-Q for the quarter ended March 31, 2003. 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 3
RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES SUMMARY CONSOLIDATED STATEMENTS OF INCOME For the three and six months ended June 30, 2003 and 2002 (in thousands of United States Dollars, except per share amounts) QUARTERS ENDED SIX MONTHS ENDED ------------------------------ ------------------------------- JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 ------------- ------------- ------------- ------------- (Unaudited) (Unaudited) REVENUES Gross premiums written $212,560 $ 270,294 $ 897,727 $ 731,128 ======== ========= ========= ========= Net premiums written $160,223 $ 198,517 $ 750,593 $ 577,613 Decrease (increase) in unearned premiums 115,312 (13,775) (211,584) (242,563) -------- --------- --------- --------- Net premiums earned 275,535 184,742 539,009 335,050 Net investment income 28,012 26,364 56,162 49,147 Net foreign exchange gains 7,640 3,650 11,591 1,700 Other income 7,238 8,147 12,743 16,276 Net realized gains on investments 55,757 2,968 80,153 3,654 -------- --------- --------- --------- TOTAL REVENUES 374,182 225,871 699,658 405,827 -------- --------- --------- --------- EXPENSES Claims and claim expenses incurred 100,076 73,149 182,856 116,267 Acquisition expenses 40,704 20,368 82,837 38,917 Operational expenses 16,332 9,962 31,239 20,625 Corporate expenses 4,677 4,688 8,145 7,378 Interest expense 5,335 3,433 9,834 6,147 -------- --------- --------- --------- TOTAL EXPENSES 167,124 111,600 314,911 189,334 -------- --------- --------- --------- Income before minority interest and taxes and change in accounting principle 207,058 114,271 384,747 216,493 Minority interest - Capital Securities 1,827 1,831 3,282 3,664 Minority interest - DaVinci 20,150 13,470 41,035 22,947 -------- --------- --------- --------- Income before taxes and change in 185,081 98,970 340,430 189,882 accounting principle Income tax benefit (expense) -- 273 55 (323) Cumulative effect of a change in accounting principle - SFAS 142 - Goodwill -- -- -- (9,187) -------- --------- --------- --------- NET INCOME 185,081 99,243 340,485 180,372 Dividends on Preference Shares 4,917 3,003 9,036 6,041 -------- --------- --------- --------- NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $180,164 $ 96,240 $ 331,449 $ 174,331 ======== ========= ========= ========= Operating Earnings per Common Share - diluted * $ 1.75 $ 1.33 $ 3.55 $ 2.57 Earnings per Common Share - basic $ 2.62 $ 1.43 $ 4.82 $ 2.60 Earnings per Common Share - diluted $ 2.54 $ 1.37 $ 4.68 $ 2.49 Average shares outstanding - basic 68,914 67,326 68,754 67,057 Average shares outstanding - diluted 71,056 70,209 70,810 69,998 Claims and claim expense ratio 36.3% 39.6% 33.9% 34.7% Expense ratio 20.7% 16.4% 21.2% 17.8% -------- --------- --------- --------- Combined ratio 57.0% 56.0% 55.1% 52.5% ======== ========= ========= ========= Operating return on average equity (annualized) * 28.8% 31.3% 30.5% 31.2% ======== ========= ========= ========= * Excludes realized gains on investments and, in 2002, the cumulative effect of a change in accounting principle - SFAS 142 - Goodwill. 4
RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands of United States Dollars, except per share amounts) AS AT ----------------------------------- JUNE 30, 2003 DECEMBER 31, 2002 ------------- ----------------- (Unaudited) (Audited) ASSETS Fixed maturity investments available for sale, at fair value (Amortized cost $2,280,154 and $2,153,715 at June 30, 2003 and December 31, 2002, respectively) $2,347,341 $ 2,221,109 Short term investments 1,135,185 570,497 Other investments 190,742 129,918 Equity investment in reinsurance company at fair value (Cost $84,199 at June 30, 2003 and December 31, 2002) 129,959 120,288 Cash and cash equivalents 60,129 87,067 ---------- ----------- Total investments and cash 3,863,356 3,128,879 Premiums receivable 381,102 199,449 Ceded reinsurance balances 83,385 73,360 Losses recoverable 164,069 199,533 Accrued investment income 22,524 25,833 Deferred acquisition costs 86,746 55,853 Other assets 54,865 62,829 ---------- ----------- TOTAL ASSETS $4,656,047 $ 3,745,736 ========== =========== LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY LIABILITIES Reserve for claims and claim $ 931,901 $ 804,795 expenses Reserve for unearned premiums 553,747 331,985 Debt 350,000 275,000 Reinsurance balances payable 173,806 146,732 Other 85,076 97,013 ---------- ----------- TOTAL LIABILITIES 2,094,530 1,655,525 ---------- ----------- Minority Interest - Capital 84,630 84,630 Securities Minority Interest - DaVinci 402,922 363,546 SHAREHOLDERS' EQUITY Preference Shares 250,000 150,000 Common shares and additional paid in capital 306,257 320,936 Unearned stock grant compensation -- (18,468) Accumulated other comprehensive income 112,947 95,234 Retained earnings 1,404,761 1,094,333 ---------- ----------- TOTAL SHAREHOLDERS' EQUITY 2,073,965 1,642,035 ---------- ----------- TOTAL LIABILITIES, MINORITY INTERESTS, AND SHAREHOLDERS' EQUITY $4,656,047 $ 3,745,736 ========== =========== BOOK VALUE PER COMMON SHARE $ 25.94 $ 21.39 ========== =========== COMMON SHARES OUTSTANDING 70,320 69,750 ========== =========== 5
RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (in thousands of United States Dollars) GROSS WRITTEN PREMIUMS QUARTERS ENDED SIX MONTHS ENDED ------------------------------ --------------------------------- JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 ------------- ------------- ------------- ------------- Renaissance Cat Premium $ 64,211 $ 87,854 $372,930 $324,647 Renaissance Specialty Premium 33,557 71,632 219,639 172,655 -------- -------- -------- -------- Total Renaissance Reinsurance Premium 97,768 159,486 592,569 497,302 -------- -------- -------- -------- DaVinci Cat Premium 16,402 34,794 123,218 130,063 DaVinci Specialty Premium 702 -- 20,409 -- -------- -------- -------- -------- Total DaVinci Reinsurance Premium 17,104 34,794 143,627 130,063 ======== ======== ======== ======== Total Reinsurance Premium 114,872 194,280 736,196 627,365 Individual Risk Premium (1) 97,688 76,014 161,531 103,763 -------- -------- -------- -------- Total Premiums $212,560 $270,294 $897,727 $731,128 ======== ======== ======== ======== Total Managed Cat Premiums (2) $103,821 $144,796 $568,509 $515,150 ======== ======== ======== ======== (1) Includes premium ceded to the reinsurance unit of $1.0 million for each of the quarters ended June 30, 2003 and 2002 and $5.7 million and $1.0 million for the six months ended June 30, 2003 and 2002, respectively. (2) Total Managed Cat Premiums include Renaissance and DaVinci Cat Premium, as above, and Cat Premium of $23.2 million and $22.1 million for the quarters ended June 30, 2003 and 2002, respectively, and $72.4 million and $60.4 million for the six months ended June 30, 2003 and 2002, respectively, written on behalf of our joint venture, Top Layer Re. OTHER INCOME QUARTERS ENDED SIX MONTHS ENDED -------------------------------- ------------------------------ JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 ------------- ------------- ------------- ------------- As Reported Cat business - fee income $ 1,250 $ 999 $ 2,478 $ 2,000 Cat business - equity pick up 6,493 7,146 12,561 11,136 Other items (505) 2 (2,296) 3,140 -------- ------- -------- ------- Total other income - as reported $ 7,238 $ 8,147 $ 12,743 $16,276 ======== ======= ======== ======= Summary of all income from joint venture relationships (3) Cat business - fee income (4) $ 15,616 $14,771 $ 35,820 $24,189 Cat business - equity pick up 16,522 14,152 34,224 23,856 Other items (505) 2 (2,296) 3,140 ======== ======= ======== ======= Total $ 31,633 $28,925 $ 67,748 $51,185 ======== ======= ======== ======= (3) Reported GAAP presentation adjusted to reflect: - fee income and the Company's interest in DaVinci as if DaVinci were accounted for under the equity method - other fee income on managed cat business which is reflected on the income statement as a reduction of acquisition and operational expenses (4) Excludes fee income received on capital invested by RenaissanceRe Holdings. 6