October 26, 2021 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14428

RENAISSANCERE HOLDINGS LTD.

(Exact Name Of Registrant As Specified In Its Charter)


Bermuda			98-0141974
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)

Renaissance House, 12 Crow Lane, Pembroke, Bermuda HM 19

(Address of Principal Executive Offices) (Zip Code)

(441) 295-4513

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Shares, Par Value $1.00 per share	RNR	New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a Series F 5.750% Preference Share, Par Value $1.00 per share	RNR PRF	New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a Series G 4.20% Preference Share, Par Value $1.00 per share	RNR PRG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒, Accelerated filer ☐, Non-accelerated filer ☐, Smaller reporting company ☐, Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of Common Shares, par value US $1.00 per share, outstanding at October 21, 2021 was 46,019,882.

RENAISSANCERE HOLDINGS LTD.

TABLE OF CONTENTS


		Page
	NOTE ON FORWARD-LOOKING STATEMENTS	3

PART I
ITEM 1.	FINANCIAL STATEMENTS	5






ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	53
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	95
ITEM 4.	CONTROLS AND PROCEDURES	95

PART II
ITEM 1.	LEGAL PROCEEDINGS	96
ITEM 1A.	RISK FACTORS	96
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	96
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	96
ITEM 4.	MINE SAFETY DISCLOSURES	96
ITEM 5.	OTHER INFORMATION	96
ITEM 6.	EXHIBITS	97

SIGNATURES - RENAISSANCERE HOLDINGS LTD.		98

NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) of RenaissanceRe Holdings Ltd. (the “Company” or “RenaissanceRe”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us. In particular, statements using words such as “may,” “should,” “estimate,” “expect,” “anticipate,” “intend,” “believe,” “predict,” “potential,” or words of similar import generally involve forward-looking statements. For example, we may include certain forward-looking statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with regard to trends in results, prices, volumes, operations, investment results, margins, combined ratios, fees, reserves, market conditions, risk management and exchange rates. This Form 10-Q also contains forward-looking statements with respect to our business and industry, such as those relating to our strategy and management objectives, market standing and product volumes, competition and new entrants in our industry, industry capital, insured losses from loss events, government initiatives and regulatory matters affecting the reinsurance and insurance industries.

The inclusion of forward-looking statements in this report should not be considered as a representation by us or any other person that our current objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially from those addressed by the forward-looking statements, including the following:

•the frequency and severity of catastrophic and other events we cover;

•the effectiveness of our claims and claim expense reserving process;

•the effect of climate change on our business, including the trend towards increasingly frequent and severe climate events;

•the highly competitive nature of our industry, resulting in consolidation of competitors, customers and insurance and reinsurance brokers, and our reliance on a small and decreasing number of brokers;

•our ability to maintain our financial strength ratings;

•the effect of emerging claims and coverage issues;

•collection on claimed retrocessional coverage, and new retrocessional reinsurance being available on acceptable terms;

•the uncertainty of the continuing and future impact of the COVID-19 pandemic, including measures taken in response thereto and the effect of legislative, regulatory and judicial influences on our potential reinsurance, insurance and investment exposures, or other effects that it may have;

•our exposure to credit loss from counterparties;

•the effect of continued challenging economic conditions throughout the world;

•the performance of our investment portfolio and financial market volatility;

•a contention by the United States (the “U.S.”) Internal Revenue Service that any of our Bermuda subsidiaries are subject to taxation in the U.S.;

•the effects of U.S. tax reform legislation, Organisation for Economic Co-operation and Development (“OECD”) or European Union measures and possible future tax reform legislation and regulations, including changes to the tax treatment of our shareholders or investors in our joint ventures or other entities we manage;

•the effect of cybersecurity risks, including technology breaches or failure;

•the effects of inflation;

•our ability to successfully implement our business strategies and initiatives, and the success of any of our strategic investments or acquisitions, including our ability to manage our operations as our product and geographical diversity increases;

•our ability to attract and retain key executives and employees;

•our ability to effectively manage capital on behalf of investors in joint ventures or other entities we manage;

•foreign currency exchange rate fluctuations;

•soft reinsurance underwriting market conditions;

•losses we could face from terrorism, political unrest or war;

•our ability to determine any impairments taken on our investments;

•the ability of our ceding companies and delegated authority counterparties to accurately assess the risks they underwrite;

•the effect of operational risks, including system or human failures;

•our ability to raise capital if necessary;

•our ability to comply with covenants in our debt agreements;

•changes to the accounting rules and regulatory systems applicable to our business, including changes in Bermuda laws or regulations or as a result of increased global regulation of the insurance and reinsurance industries;

•our dependence on the ability of our operating subsidiaries to declare and pay dividends;

•aspects of our corporate structure that may discourage third-party takeovers and other transactions;

•difficulties investors may have in serving process or enforcing judgments against us in the U.S.;

•the cyclical nature of the reinsurance and insurance industries;

•adverse legislative developments that reduce the size of the private markets we serve or impede their future growth and other political, regulatory or industry initiatives adversely impacting us;

•our ability to comply with applicable sanctions and foreign corrupt practices laws; and

•our need to make many estimates and judgments in the preparation of our financial statements.

As a consequence, our future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of us. The factors listed above, which are discussed in more detail in our filings with the U.S. Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2020, Item 1A of this Quarterly Report on Form 10-Q and our prospectus supplement dated July 7, 2021, should not be construed as exhaustive. The effects of the events and circumstances described in the risk factors contained in this Form 10-Q may have the effect of heightening many of the risks contained in our Form 10-K. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to revise or update forward-looking statements to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
Consolidated Balance Sheets at September 30, 2021 (unaudited) and December 31, 2020			6
Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020			7
Consolidated Statements of Comprehensive (Loss ) Income for the three and nine months ended September 30, 2021 and 2020			8
Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2021 and 2020			9
Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020			10
Notes to the Consolidated Financial Statements			11
Note 1. Organization			11
Note 2. Significant Accounting Policies			12
Note 3. Investments			13
Note 4. Fair Value Measurements			16
Note 5. Reinsurance			26
Note 6. Reserve for Claims and Claim Expenses			28
Note 7. Debt and Credit Facilities			32
Note 8. Noncontrolling Interests			32
Note 9. Variable Interest Entities			35
Note 10. Shareholders’ Equity			38
Note 11. Earnings per Share			40
Note 12. Segment Reporting			41
Note 13. Derivative Instruments			45
Note 14. Commitments and Contingencies and Other Items			51
Note 15. Subsequent Events			52

RenaissanceRe Holdings Ltd. and Subsidiaries

Consolidated Balance Sheets

(in thousands of United States Dollars, except share and per share amounts)


	September 30, 2021		December 31, 2020
Assets	(Unaudited)		(Audited)
Fixed maturity investments trading, at fair value – amortized cost $13,785,873 at September 30, 2021 (December 31, 2020 – $13,155,035)	$	13,839,248	$	13,506,503

Short term investments, at fair value	4,667,273		4,993,735
Equity investments trading, at fair value	527,839		702,617
Other investments, at fair value	1,738,737		1,256,948
Investments in other ventures, under equity method	93,344		98,373
Total investments	20,866,441		20,558,176
Cash and cash equivalents	1,440,734		1,736,813
Premiums receivable	4,141,899		2,894,631
Prepaid reinsurance premiums	1,137,556		823,582
Reinsurance recoverable	4,192,758		2,926,010
Accrued investment income	55,620		66,743
Deferred acquisition costs and value of business acquired	893,265		633,521
Receivable for investments sold	322,553		568,293
Other assets	240,491		363,170
Goodwill and other intangible assets	245,015		249,641

Total assets	$	33,536,332	$	30,820,580
Liabilities, Noncontrolling Interests and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses	$	13,233,244	$	10,381,138
Unearned premiums	4,039,546		2,763,599
Debt	1,137,829		1,136,265
Reinsurance balances payable	3,964,137		3,488,352
Payable for investments purchased	718,099		1,132,538
Other liabilities	235,665		970,121

Total liabilities	23,328,520		19,872,013
Commitments and contingencies
Redeemable noncontrolling interests	3,458,298		3,388,319
Shareholders’ Equity
Preference shares: $1.00 par value – 30,000 shares issued and outstanding at September 30, 2021 (December 31, 2020 – 11,010,000)	750,000		525,000
Common shares: $1.00 par value – 46,540,248 shares issued and outstanding at September 30, 2021 (December 31, 2020 – 50,810,618)	46,540		50,811
Additional paid-in capital	927,862		1,623,206
Accumulated other comprehensive loss	(12,709)		(12,642)
Retained earnings	5,037,821		5,373,873
Total shareholders’ equity attributable to RenaissanceRe	6,749,514		7,560,248


Total liabilities, noncontrolling interests and shareholders’ equity	$	33,536,332	$	30,820,580

See accompanying notes to the consolidated financial statements

RenaissanceRe Holdings Ltd. and Subsidiaries

Consolidated Statements of Operations

For the three and nine months ended September 30, 2021 and 2020

(in thousands of United States Dollars, except per share amounts) (Unaudited)


	Three months ended				Nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Revenues
Gross premiums written	$	1,774,180	$	1,143,058	$	6,520,780	$	4,870,651
Net premiums written	$	1,486,440	$	899,411	$	4,822,815	$	3,350,022
Decrease (increase) in unearned premiums	19,825		100,772		(969,924)		(426,645)
Net premiums earned	1,506,265		1,000,183		3,852,891		2,923,377
Net investment income	78,267		83,543		238,996		272,321
Net foreign exchange (losses) gains	(4,755)		17,426		(24,309)		4,503
Equity in earnings of other ventures	5,305		5,457		8,479		19,062
Other income (loss)	1,692		1,476		4,449		(4,161)
Net realized and unrealized (losses) gains on investments	(42,071)		224,208		(196,616)		561,891



Total revenues	1,544,703		1,332,293		3,883,890		3,776,993
Expenses
Net claims and claim expenses incurred	1,798,045		942,030		3,185,117		2,023,256
Acquisition expenses	328,048		215,180		880,872		659,394
Operational expenses	58,997		49,045		172,511		165,583
Corporate expenses	10,196		48,050		30,726		75,939
Interest expense	11,919		11,843		35,664		38,612
Total expenses	2,207,205		1,266,148		4,304,890		2,962,784
(Loss) income before taxes	(662,502)		66,145		(421,000)		814,209
Income tax benefit (expense)	23,630		8,244		29,284		(12,785)


Net (loss) income	(638,872)		74,389		(391,716)		801,424
Net loss (income) attributable to redeemable noncontrolling interests	198,495		(19,301)		131,801		(236,120)
Net (loss) income attributable to RenaissanceRe	(440,377)		55,088		(259,915)		565,304
Dividends on preference shares	(9,845)		(7,289)		(24,423)		(23,634)
Net (loss) income (attributable) available to RenaissanceRe common shareholders	$	(450,222)	$	47,799	$	(284,338)	$	541,670


Net (loss) income (attributable) available to RenaissanceRe common shareholders per common share – basic	$	(9.75)	$	0.94	$	(5.94)	$	11.60


Net (loss) income (attributable) available to RenaissanceRe common shareholders per common share – diluted	$	(9.75)	$	0.94	$	(5.94)	$	11.58
Dividends per common share	$	0.36	$	0.35	$	1.08	$	1.05

See accompanying notes to the consolidated financial statements

RenaissanceRe Holdings Ltd. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

For the three and nine months ended September 30, 2021 and 2020

(in thousands of United States Dollars) (Unaudited)


	Three months ended				Nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Comprehensive (loss) income
Net (loss) income	$	(638,872)	$	74,389	$	(391,716)	$	801,424
Change in net unrealized gains (losses) on investments, net of tax	6		2,186		(2,827)		41
Foreign currency translation adjustments, net of tax	1,346		(1,203)		2,760		(185)

Comprehensive (loss) income	(637,520)		75,372		(391,783)		801,280
Net loss (income) attributable to redeemable noncontrolling interests	198,495		(19,301)		131,801		(236,120)

Comprehensive loss (income) attributable to redeemable noncontrolling interests	198,495		(19,301)		131,801		(236,120)
Comprehensive (loss) income attributable to RenaissanceRe	$	(439,025)	$	56,071	$	(259,982)	$	565,160

See accompanying notes to the consolidated financial statements

RenaissanceRe Holdings Ltd. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the three and nine months ended September 30, 2021 and 2020

(in thousands of United States Dollars) (Unaudited)


	Three months ended				Nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Preference shares
Beginning balance	$	525,000	$	525,000	$	525,000	$	650,000
Issuance of shares	500,000		—		500,000		—
Repurchase of shares	(275,000)		—		(275,000)		(125,000)
Ending balance	750,000		525,000		750,000		525,000
Common shares
Beginning balance	48,026		50,811		50,811		44,148
Issuance of shares	—		—		—		6,777
Repurchase of shares	(1,483)		—		(4,503)		(406)
Issuance of restricted stock awards	(3)		(1)		232		291
Ending balance	46,540		50,810		46,540		50,810
Additional paid-in capital
Beginning balance	1,153,881		1,602,738		1,623,206		568,277
Issuance of shares	—		(42)		—		1,088,730
Repurchase of shares	(222,322)		—		(699,962)		(62,215)
Offering expenses	(11,111)		—		(11,111)		—
Change in redeemable noncontrolling interests	(3,662)		—		(6,352)		(353)
Issuance of restricted stock awards	11,076		12,632		22,081		20,889
Ending balance	927,862		1,615,328		927,862		1,615,328
Accumulated other comprehensive loss
Beginning balance	(14,061)		(3,066)		(12,642)		(1,939)
Change in net unrealized gains (losses) on investments, net of tax	6		2,186		(2,827)		41
Foreign currency translation adjustments, net of tax	1,346		(1,203)		2,760		(185)

Ending balance	(12,709)		(2,083)		(12,709)		(2,083)
Retained earnings
Beginning balance	5,504,760		5,171,689		5,373,873		4,710,881

Net (loss) income	(638,872)		74,389		(391,716)		801,424
Net loss (income) attributable to redeemable noncontrolling interests	198,495		(19,301)		131,801		(236,120)

Dividends on common shares	(16,717)		(17,722)		(51,714)		(50,785)
Dividends on preference shares	(9,845)		(7,289)		(24,423)		(23,634)
Ending balance	5,037,821		5,201,766		5,037,821		5,201,766

Total shareholders’ equity	$	6,749,514	$	7,390,821	$	6,749,514	$	7,390,821

See accompanying notes to the consolidated financial statements

RenaissanceRe Holdings Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2021 and 2020

(in thousands of United States Dollars) (Unaudited)


	Nine months ended
	September 30, 2021		September 30, 2020
Cash flows provided by operating activities
Net (loss) income	$	(391,716)	$	801,424
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Amortization, accretion and depreciation	(16,420)		(1,922)
Equity in undistributed losses (earnings) of other ventures	13,800		(907)
Net realized and unrealized losses (gains) on investments	200,092		(561,891)



Loss on sale of RenaissanceRe UK	—		30,242
Change in:
Premiums receivable	(1,247,268)		(736,070)
Prepaid reinsurance premiums	(313,974)		(314,489)
Reinsurance recoverable	(1,266,748)		(96,159)
Deferred acquisition costs and value of business acquired	(259,744)		(33,383)
Reserve for claims and claim expenses	2,852,106		675,092
Unearned premiums	1,275,947		745,506
Reinsurance balances payable	475,785		1,089,733
Other	(519,980)		(267,397)
Net cash provided by operating activities	801,880		1,329,779
Cash flows used in investing activities
Proceeds from sales and maturities of fixed maturity investments trading	12,222,225		11,564,999
Purchases of fixed maturity investments trading	(12,957,889)		(13,114,732)


Net sales of equity investments trading	150,755		1,842
Net sales (purchases) of short term investments	363,895		(549,218)
Net purchases of other investments	(421,318)		(101,302)
Net purchases of investments in other ventures	(20,908)		(2,407)
Return of investment from investment in other ventures	8,345		9,255

Net proceeds from sale of RenaissanceRe UK	—		136,744


Net cash used in investing activities	(654,895)		(2,054,819)
Cash flows (used in) provided by financing activities
Dividends paid – RenaissanceRe common shares	(51,714)		(50,785)
Dividends paid – preference shares	(24,423)		(23,634)
RenaissanceRe common share issuance, net of expenses	—		1,095,507
RenaissanceRe common share repurchases	(704,465)		(62,621)

Repayment of debt	—		(250,000)

Redemption of 6.08% Series C preference shares	—		(125,000)
Redemption of 5.375% Series E preference shares	(275,000)		—
Issuance of preference shares, net of expenses	488,889		—
Net third-party redeemable noncontrolling interest share transactions	128,839		59,104
Taxes paid on withholding shares	(9,945)		(10,264)

Net cash (used in) provided by financing activities	(447,819)		632,307
Effect of exchange rate changes on foreign currency cash	4,755		1,043
Net decrease in cash and cash equivalents	(296,079)		(91,690)

Cash and cash equivalents, beginning of period	1,736,813		1,379,068
Cash and cash equivalents, end of period	$	1,440,734	$	1,287,378

See accompanying notes to the consolidated financial statements

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(unless otherwise noted, amounts in tables expressed in thousands of United States (“U.S.”) dollars,

except shares, per share amounts and percentages) (Unaudited)

NOTE 1. ORGANIZATION

This report on Form 10-Q should be read in conjunction with RenaissanceRe’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended December 31, 2020. RenaissanceRe was formed under the laws of Bermuda on June 7, 1993. Together with its wholly-owned and majority-owned subsidiaries, joint ventures and managed funds, the Company provides property, casualty and specialty reinsurance and certain insurance solutions to its customers.

•Renaissance Reinsurance Ltd. (“Renaissance Reinsurance”), a Bermuda-domiciled reinsurance company, is the Company’s principal reinsurance subsidiary and provides property, casualty and specialty reinsurance coverages to insurers and reinsurers on a worldwide basis.

•Renaissance Reinsurance U.S. Inc. is a reinsurance company domiciled in the state of Maryland that provides property, casualty and specialty reinsurance coverages to insurers and reinsurers, primarily in the Americas.

•RenaissanceRe Syndicate 1458 (“Syndicate 1458”) is the Company’s Lloyd’s syndicate. RenaissanceRe Corporate Capital (UK) Limited, a wholly-owned subsidiary of RenaissanceRe, is Syndicate 1458’s sole corporate member. RenaissanceRe Syndicate Management Ltd., a wholly-owned subsidiary of RenaissanceRe, is the managing agent for Syndicate 1458.

•RenaissanceRe Europe AG (“RREAG”), a Swiss-domiciled reinsurance company, which has branches in Australia, Bermuda, the U.K. and the U.S., provides property, casualty and specialty reinsurance coverages to insurers and reinsurers on a worldwide basis.

•RenaissanceRe Specialty U.S. Ltd., a Bermuda-domiciled insurer, which operates subject to U.S. federal income tax.

•DaVinci Reinsurance Ltd. (“DaVinci”), a wholly-owned subsidiary of DaVinciRe Holdings Ltd. (“DaVinciRe”), is a managed joint venture formed by the Company to principally write property catastrophe reinsurance and certain casualty and specialty reinsurance lines of business on a global basis.

•Top Layer Reinsurance Ltd. is a managed joint venture formed by the Company to write high excess non-U.S. property catastrophe reinsurance.

•RenaissanceRe Underwriting Managers U.S. LLC, is licensed as a reinsurance intermediary broker in the State of Connecticut and underwrites specialty treaty reinsurance solutions on both a quota share and excess of loss basis on behalf of affiliates.

•Renaissance Underwriting Managers, Ltd. (“RUM”), a wholly-owned subsidiary of RenaissanceRe, acts as exclusive underwriting manager for certain of our joint ventures or managed funds in return for fee-based income and profit participation.

•RenaissanceRe Fund Management Ltd. (“RFM”) is a wholly-owned Bermuda exempted company and acts as the exclusive investment fund manager for several of the Company’s joint ventures or managed funds, in return for a management fee, a performance based incentive fee, or both. RFM is registered as an Exempt Reporting Adviser with the Securities and Exchange Commission and serves as the investment adviser to third-party investors in the various private investment partnerships and insurance-related investment products offered by the Company.

•RenaissanceRe Medici Fund Ltd. (“Medici”) is an exempted company, incorporated under the laws of Bermuda and registered as an institutional fund. Medici invests, primarily on behalf of third-party investors, in various instruments that have returns primarily tied to property catastrophe risk.

•Upsilon RFO Re Ltd. (“Upsilon RFO”), a Bermuda domiciled collateralized insurer, is a managed fund formed by the Company principally to provide additional capacity to the worldwide aggregate and per-occurrence primary and retrocessional property catastrophe excess of loss market.

•RenaissanceRe Upsilon Fund Ltd., an exempted Bermuda segregated accounts company registered as a Class A Professional Fund provides a fund structure through which third-party investors can invest in reinsurance risk managed by the Company.

•Vermeer Reinsurance Ltd. (“Vermeer”), an exempted Bermuda reinsurer, provides capacity focused on risk remote layers in the U.S. property catastrophe market. The Company maintains a majority voting control of Vermeer, while Stichting Pensioenfonds Zorg en Welzijn (“PFZW”), a pension fund represented by PGGM Vermogensbeheer B.V., a Dutch pension fund manager, retains economic benefits.

•Mona Lisa Re Ltd. (“Mona Lisa Re”), a Bermuda domiciled special purpose insurer (“SPI”), provides reinsurance capacity to subsidiaries of RenaissanceRe, namely Renaissance Reinsurance and DaVinci, through reinsurance agreements which are collateralized and funded by Mona Lisa Re through the issuance of one or more series of principal-at-risk variable rate notes.

•Fibonacci Reinsurance Ltd. (“Fibonacci Re”), a Bermuda-domiciled SPI, provides collateralized capacity to Renaissance Reinsurance and its affiliates. Fibonacci Re raises capital from third-party investors and the Company, via private placements of participating notes which are listed on the Bermuda Stock Exchange.

•The Company and Reinsurance Group of America, Incorporated are engaged in an initiative (“Langhorne”) to source third-party capital to support reinsurers targeting large in-force life and annuity blocks. Langhorne Holdings LLC (“Langhorne Holdings”) was incorporated to own and manage certain reinsurance entities within Langhorne. Langhorne Partners LLC (“Langhorne Partners”) is the general partner for Langhorne and manages the third-parties investing in Langhorne Holdings.

•Following the acquisition of Tokio Millennium Re AG and certain associated entities and subsidiaries (collectively, “TMR”) on March 22, 2019, the Company managed Shima Reinsurance Ltd. (“Shima Re”), Norwood Re Ltd. (“Norwood Re”) and Blizzard Re Ltd. (“Blizzard,” together with Shima Re and Norwood Re, the “TMR managed third-party capital vehicles”), which provided third-party investors with access to reinsurance risk. The TMR managed third-party capital vehicles no longer write new business. The Company ceased providing management services to Blizzard effective November 1, 2020, and to Shima Re and Norwood Re effective December 1, 2020.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as described in its Form 10-K for the year ended December 31, 2020, except as described below.

BASIS OF PRESENTATION

These consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, these unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented. All significant intercompany accounts and transactions have been eliminated from these statements.

Certain comparative information has been reclassified to conform to the current presentation. Because of the seasonality of the Company’s business, the results of operations and cash flows for any interim period will not necessarily be indicative of the results of operations and cash flows for the full fiscal year or subsequent quarters.

USE OF ESTIMATES IN FINANCIAL STATEMENTS

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The major estimates reflected in the Company’s consolidated financial statements include, but are not limited to, the reserve for claims and claim expenses; reinsurance recoverable and premiums receivable, including provisions for reinsurance recoverable and premiums receivable to reflect expected credit losses; estimates of written and earned premiums; fair value, including the fair value of investments, financial instruments and derivatives; impairment charges; deferred acquisition costs and the value of business acquired and the Company’s deferred tax valuation allowance.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other things, ASU 2019-12 eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocation and calculating income taxes in interim periods. ASU 2019-12 also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Accordingly, the Company adopted ASU 2019-12 effective January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated statements of operations and financial position.

NOTE 3. INVESTMENTS

Fixed Maturity Investments Trading

The following table summarizes the fair value of fixed maturity investments trading:



	September 30, 2021		December 31, 2020
U.S. treasuries	$	6,730,967	$	4,960,409
Agencies	297,057		368,032

Non-U.S. government	495,243		491,531

Non-U.S. government-backed corporate	409,322		338,014
Corporate	3,346,556		4,261,025
Agency mortgage-backed	754,118		1,113,792
Non-agency mortgage-backed	243,654		291,444
Commercial mortgage-backed	621,153		791,272
Asset-backed	941,178		890,984
Total fixed maturity investments trading	$	13,839,248	$	13,506,503

Contractual maturities of fixed maturity investments trading are described in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.




September 30, 2021	Amortized Cost		Fair Value
Due in less than one year	$	386,699	$	388,647
Due after one through five years	6,501,760		6,540,886
Due after five through ten years	4,012,242		4,003,465
Due after ten years	342,378		346,146
Mortgage-backed	1,603,160		1,618,926
Asset-backed	939,634		941,178
Total	$	13,785,873	$	13,839,248

Equity Investments Trading

The following table summarizes the fair value of equity investments trading:



	September 30, 2021		December 31, 2020
Financials	$	153,661	$	452,765
Communications and technology	92,993		119,592
Consumer	58,241		44,477
Industrial, utilities and energy	32,231		43,380
Healthcare	32,899		35,140
Basic materials	5,821		7,263
Exchange traded funds	151,993

Form: 10-Q

Documents