Form: 10-K

Annual report pursuant to Section 13 and 15(d)

March 24, 1997

Documents

10-K: Annual report pursuant to Section 13 and 15(d)

Published on March 24, 1997



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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NO. 34-0-26512

RENAISSANCERE HOLDINGS LTD.
(Exact name of Registrant as specified in its charter)

BERMUDA 98-013-8020
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)


RENAISSANCE HOUSE, 8-12 EAST BROADWAY, PEMBROKE HM19 BERMUDA
(Address of Principal Executive Offices)
(441) 295-4513
(Registrant's telephone number)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: COMMON SHARES, PAR
VALUE $1.00 PER SHARE (THE "COMMON SHARES")

SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: NONE

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 ( X) No ( )

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

The aggregate market value of Common Shares held by nonaffiliates of the
Registrant as of March 17, 1997 was $217,235,400, based on the closing sale
price of the Common Shares on the New York Stock Exchange on that date.

The number of Common Shares outstanding as of March 17, 1997 was
22,876,084.

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DOCUMENTS INCORPORATED BY REFERENCE

Sections of the Registrant's Annual Report to Shareholders mailed to
shareholders on or about March 21, 1997 (the "Annual Report") are incorporated
by reference into Part II of this Form 10-K. With the exception of the sections
of the Annual Report specifically incorporated by reference herein, the Annual
Report is not deemed to be filed as part of this Form 10-K.

Sections of the Registrant's definitive proxy statement to be filed with
the Securities and Exchange Commission (the "Commission") pursuant to Regulation
14A under the Securities Exchange Act of 1934 relating to the Registrant's
Annual General Meeting of Shareholders to be held on May 8, 1997 (the "Proxy
statement") are incorporated by reference into Part III of this Form 10-K. With
the exception of the sections of the Proxy Statement specifically incorporated
by reference herein, the Proxy Statement is not deemed to be filed as part of
this Form 10-K.

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RENAISSANCERE HOLDINGS LTD.

TABLE OF CONTENTS


PAGE

PART I
Item 1. Business........................................................... 1
Item 2. Properties......................................................... 19
Item 3. Legal Proceedings.................................................. 19
Item 4. Submission of Matters to a Vote of Security Holders................ 19

PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters........................................................... 20
Item 6. Selected Consolidated Financial Data.............................. 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 20
Item 8. Financial Statements and Supplementary Data....................... 21
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.............................................. 21

PART III

Item 10. Directors and Executive Officers of the Company................. 21
Item 11. Executive Compensation.......................................... 21
Item 12. Security Ownership of Certain Beneficial Owners
and Management.................................................. 21
Item 13. Certain Relationships and Related Transactions.................. 21

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K........................................................ 21

SIGNATURES................................................................ 24

-i-

PART I

ITEM 1. BUSINESS

Unless the context otherwise requires, references herein to the "Company"
include RenaissanceRe Holdings Ltd. and its subsidiaries, Renaissance
Reinsurance Ltd., a Bermuda company and wholly owned subsidiary ("Renaissance
Reinsurance"), and Glencoe Insurance Ltd., a Bermuda company and majority owned
subsidiary ("Glencoe"). This Report and the information incorporated herein by
reference may contain forward-looking statements which involve certain material
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in such forward-looking statements. The words
"believes," "anticipated," "expects" and similar expressions are intended to
identify forward-looking statements. Certain terms used below are defined in
the "Glossary of Selected Insurance Terms" appearing on pages 16-18 of this
Report.

GENERAL

RenaissanceRe Holdings Ltd. was formed in June 1993 and is the parent of
Renaissance and Glencoe. The Company was formed by Warburg, Pincus Investors,
L.P. ("WPI"), GE Investment Private Placement Partners I, Limited Partnership
("GEIPPPI"), Trustees of General Electric Pension Trust ("GEPT") and United
States Fidelity and Guaranty Company ("USF&G") (collectively, the "Founding
Institutional Investors"). As of March 17, 1997, WPI, USF&G and certain
affiliates of GEPT and GEIPPPI owned an aggregate of approximately 71.4% of the
Company's outstanding equity.

The Company's principal business is property catastrophe reinsurance,
written on a worldwide basis through Renaissance Reinsurance. Based on gross
premiums written, the Company is the largest Bermuda-based provider of property
catastrophe reinsurance coverage and one of the largest providers of this
coverage in the world. The Company provides property catastrophe reinsurance
coverage to insurance companies and reinsurers primarily on an excess of loss
basis. Excess of loss coverage generally provides coverage for claims in excess
of a specified loss. The Company is also exposed to claims arising from other
natural and man-made catastrophes such as winter storms, freezes, floods, fires
and tornados in connection with the coverages it provides.

The Company's principal operating objective is to utilize its capital
efficiently by focusing on the writing of property catastrophe reinsurance and
other insurance and reinsurance coverages with superior risk/return
characteristics, while maintaining a low cost operating structure in the
favorable regulatory and tax environment of Bermuda. The Company's primary
underwriting goal is to construct a portfolio of insurance and reinsurance
contracts that maximizes the return on shareholders' equity subject to prudent
risk constraints. The Company manages its risks through a variety of means,
including the use of contract terms, portfolio selection methodology,
diversification criteria and probability analyses. While property catastrophe
reinsurance represented approximately 95% of the Company's gross premiums
written in each of 1996, 1995 and 1994 and continues to be the Company's
primary focus, the Company may seek to take advantage of perceived
opportunities in other insurance and reinsurance markets.

For the years ended December 31, 1996, 1995 and 1994 the Company achieved
annualized returns on average shareholders' equity of 30.2%, 43.3% and 44.1%
respectively, and combined ratios of 51.3%, 52.0% and 61.6%, respectively. The
Company achieved these results despite the occurrence of several major
catastrophes in 1995 (which, according to industry trade sources, had the third
highest level of U.S. property catastrophe insured losses on record) and the
occurrence in January 1994 of the Northridge, California earthquake, the second
largest insured catastrophe loss in U.S. history. The major catastrophes
occurring in 1996 related to Hurricane Fran in September, which produced an
estimated $1.6 billion of insurance industry losses, the Northeastern United
States winter storms in January and the Northwestern United States floods in
December. At December 31, 1996, the Company had total assets of $904.8 million
and total shareholders' equity of $546.2 million. There can be no assurance
that the Company will achieve similar results in the future.

As part of the Company's exposure management modeling, the Company
analyzes the estimated impact of large natural catastrophes and weather-related
events. If one or a series of such large events occurred, the Company's return
on equity and combined ratio could be significantly adversely impacted. In
addition, the Company's historical returns on equity and combined ratios
resulted, in part, from industry pricing prevailing in such prior periods.
There can be no assurance that future industry pricing will not adversely
affect the Company's returns on equity or combined ratios.

In conjunction with the Company's strategy to identify and
participate in certain attractive insurance and reinsurance markets, the
Company capitalized Glencoe in January 1996 with a $50.0 million capital
contribution. Glencoe seeks to employ in the primary insurance market the
modeling, underwriting, customer service and capital management approaches that
Renaissance Reinsurance employs with respect to its reinsurance policies.
Glencoe primarily writes property insurance that is exposed to natural
catastrophes. Glencoe operates as a Bermuda-domiciled company and has been
approved to do business on an excess and surplus lines basis in twenty-one
states, including California, where it has primarily written earthquake
exposure insurance. Glencoe will also consider submissions from insureds
located in other international jurisdictions where it has been approved with
respect to exposures for which it has underwriting expertise. On June 7, 1996,
the Company sold an aggregate of 29.9% of the outstanding shares of Glencoe to
certain minority investors, and as of December 31, 1996 the Company's equity in
Glencoe was $35.7 million. For the year ended December 31, 1996, Glencoe had
gross written premiums and net income of $1.6 million and $.9 million,
respectively, and accordingly did not contribute materially to the Company's
results of operations in 1996.

RATINGS

Renaissance Reinsurance has been assigned an "A" claims-paying ability
rating from each of Standard & Poor's Rating Service ("S&P") and A.M. Best
Company ("A.M. Best"), representing independent opinions of the Company's
financial strength and ability to meet its obligations to policyholders.

The "A" range (A+, A and A--) is the second highest of four ratings ranges
within what S&P considers the "secure" category. Insurance companies assigned
a claims-paying ability rating in the "A" range are believed by S&P to provide
good financial security, but their capacity to meet policyholder obligations is
somewhat susceptible to adverse economic and underwriting conditions.

"A (Excellent") is the third highest of A.M. Best's fifteen ratings
designations. Insurance companies assigned an "A" or "A--" rating by A.M. Best
are companies which, in A.M. Best's opinion, have demonstrated excellent
overall performance when compared to the standards established by A.M. Best and
have a strong ability to meet their obligations to policyholders over a long
period of time.

STRATEGY

The principal components of the Company's business strategy are:

. Focus on Property Catastrophe Reinsurance Business. The company's
primary focus is property catastrophe reinsurance, which represented
approximately 95% of the Company's gross premiums written in each of
1996, 1995 and 1994. while the Company's management ("Management")
intends to maintain the Company's primary focus on property catastrophe
reinsurance for the foreseeable future, the Company may seek to take
advantage of perceived market opportunities in other insurance and
reinsurance markets.

. Build a Superior Portfolio of Property Catastrophe Reinsurance by
Utilizing Proprietary Modeling Capabilities. Management assesses
underwriting decisions on the basis of the expected incremental return
on equity of each new reinsurance contract in relation to the Company's
overall portfolio of reinsurance contracts. To facilitate this,
Management has developed REMS(C), a proprietary, computer-based pricing
and exposure management system. The Company utilizes REMS(C) to assess
property catastrophe risks, price treaties and limit aggregate exposure.
REMS(C) was developed with assistance

2

from Tillinghast, an actuarial consulting unit of Towers, Perrin, Forster &
Crosby, Inc. ("Tillinghast"), and Applied Insurance Research, Inc. ("AIR"),
the developer of the CATMAP/TM/ system. The Company combines the analyses
generated by REMS(C) with its own knowledge of the client submitting the
proposed program to assess the premium offered against the risk of loss that
such program presents. See "--Underwriting."

. Utilize the Company's Capital Base Efficiently While Maintaining Prudent Risk
Levels in the Company's Reinsurance Portfolio. The Company manages its risks
through a variety of means, including the use of contract terms, portfolio
selection methodology, diversification criteria and probability analyses. By
using such measures and by employing its proprietary modeling capabilities,
the Company attempts to construct a portfolio of reinsurance contracts which
maximizes the use of its capital while optimizing the risk-reward
characteristics of its portfolio. The Company relies less on traditional
ratios, such as net premiums written to surplus, because the Company believes
that such statistics do not adequately reflect the risk in the property
catastrophe reinsurance business. Management believes the level of net
premiums written relative to surplus does not reflect the composition of a
reinsurer's attachment points, aggregate limits, geographic diversification,
and other material elements of the risk exposures embodied in a reinsurer's
book of business.

. Capitalize on the Experience and Skill of Management. The Company's senior
management team has extensive experience in the reinsurance and/or insurance
industries, with an average of approximately 20 years of experience for the
five senior executives of the Company. Additionally, senior management is
supported by an officer group with an average of approximately ten years of
experience in the reinsurance and/or insurance industries.

. Build and Maintain Long-Term Relationships with Brokers and Clients. The
Company markets its products worldwide exclusively through reinsurance brokers
and excess and surplus lines brokers. The Company believes that its existing
portfolio of business is a valuable asset given the renewal practices of the
industry. The Company believes that it has established a reputation with its
brokers and clients for prompt response on underwriting submissions, for fast
claims payments and for the development of customized programs. See "--
Marketing."

. Maintain a Low Cost Structure. Management believes that as a result of its
ability to maintain a small staff and by basing operations in the favorable
regulatory and tax environment of Bermuda, the Company is able to maintain low
operating costs relative to its capital base and net premiums earned. As of
December 31, 1996, the Company had 29 employees.

INDUSTRY TRENDS

The high level of worldwide property catastrophe losses in terms of both
frequency and severity from 1987 to 1993 had a significant effect on the results
of property insurers and property catastrophe reinsurers and on the worldwide
property catastrophe reinsurance market, causing some reinsurers, including
Lloyd's of London, to withdraw from the market or reduce their underwriting
commitments while also causing a substantial increase in market demand,
particularly in the United States, Japan and the United Kingdom. In particular,
these events included Hurricane Hugo (U.S. 1989), Hurricane Andrew (U.S. 1992),
Typhoon Mireille (No. 19) (Japan 1991) and Winter Storm Daria (90A) (Northern
Europe 1990).

The increase in demand for property catastrophe reinsurance was attributable
to several factors. The significant property catastrophe losses occurring
during 1987 through 1993 caused many insurers and reinsurers to reexamine their
assumptions regarding their need for reinsurance protection from catastrophe
exposures. In addition, regulators and rating agencies, such as S&P, increased
their scrutiny of insurers and reinsurers with respect to their catastrophe
exposure. For example, Typhoon Mireille (No. 19) resulted in greater scrutiny
by the Minister of Finance of Japan of insurers and reinsurers with respect to
catastrophe exposure, thereby increasing

3

demand for property catastrophe reinsurance in Japan. In addition, A.M. Best
began to require completion of a catastrophe loss analysis questionnaire dealing
with expected claims resulting from potential catastrophic events. Finally, a
general increase in insured property values in catastrophe-exposed areas
contributed to increased demand for property catastrophe insurance and
reinsurance. This supply/demand imbalance caused a significant increase in
prevailing premium rates for property catastrophe reinsurance worldwide in 1993.

In response to this imbalance, approximately $4.0 billion of capital entered
the Bermuda-based property catastrophe reinsurance market in 1992 and 1993. The
Bermuda property-catastrophe reinsurance market has subsequently grown markedly,
having aggregate capital of approximately $5.5 billion as of December 31, 1996,
and accounting for approximately 25% to 35% of the worldwide property
catastrophe gross premiums written in 1996, according to industry trade reports.
The increased property catastrophe reinsurance capacity represented by the
Bermuda market helped balance supply and demand in the property catastrophe
reinsurance market and, as a result thereof, the terms of trade in the property
catastrophe reinsurance market stabilized in 1995. In 1996, according to
industry trade sources, worldwide price levels decreased by an average of 10% to
15%. Based on reinsurance treaty renewals received by the Company and publicly
available industry trade data, initial indications are that price levels will
decline at a similar pace in 1997. Rates have declined significantly in areas
outside the United States, where there has been favorable loss experience, while
in the United States, where the level of property catastrophe losses has
generally been higher than in international markets in recent years, rates have
decreased to a lesser degree. However, current terms of trade have remained,
and Management believes are likely to remain, higher than the terms of trade
that existed in 1992.

Premium rates or other terms or conditions of trade may vary in the future,
the present level of demand may not continue and the present level of supply may
increase as a result of capital provided by recent or future market entrants or
by existing property catastrophe reinsurers. Some of the property catastrophe
reinsurers who have entered the worldwide reinsurance markets (or may enter them
in the future) have or could have more capital than the Company. The full effect
of this additional capital on the property catastrophe reinsurance market may
not be known for some time. No assurance can be given as to what impact this
additional capital will ultimately have on terms or conditions for reinsurance
contracts of the types written by the Company.

Management is aware of a number of new, proposed or potential legislative or
industry changes that may impact the worldwide demand for property catastrophe
reinsurance and other products offered by the Company. In the United States,
the states of Hawaii and Florida have implemented arrangements whereby property
insurance in catastrophe prone areas is provided through state-sponsored
entities. Part of such reinsurance is placed outside of the traditional
reinsurance market (i.e., through the use of capital or derivative market
instruments) or in the finite reinsurance market. The California Earthquake
Authority, the first privately financed, publicly operated residential
earthquake insurance pool, provides earthquake insurance to California
homeowners. Currently before the U.S. Congress are two draft bills, the
Homeowners' Insurance Availability Act of 1997 and the Natural Disaster
Protection and Insurance Act of 1997, which would establish a federal program to
provide reinsurance for state disaster insurance programs and ensure the
availability and affordability of insurance against catastrophic natural
disasters, respectively, and could impact upon the demand for, and availability
of, traditional reinsurance. In the United Kingdom, the government has enacted
a bill to allow insurers to build claim equalization reserves which might reduce
the amount of property reinsurance necessary in the marketplace. Management is
also aware of many potential initiatives by capital market participants to
produce alternative products that may compete with the existing catastrophe
reinsurance markets. Management is unable to predict the extent to which the
foregoing new, proposed or potential initiatives may affect the demand for the
Company's products or the risks which may be available for the Company to
consider underwriting.

REINSURANCE PRODUCTS

The Company's property catastrophe reinsurance contracts are generally ''all
risk'' in nature. The Company's most significant exposure is to losses from
earthquakes and hurricanes, although the Company is also exposed to claims
arising from other natural and man-made catastrophes, such as winter storms,
freezes, floods, fires and tornados in connection with the coverages it
provides. The Company's predominant exposure under such coverages is to property
damage. However, other risks, including business interruption and other non-
property

4

losses, may also be covered under the property catastrophe reinsurance contract
when arising from a covered peril. In accordance with market practice, the
Company's property catastrophe reinsurance contracts generally exclude certain
risks such as war, nuclear contamination or radiation.

Catastrophic events of significant magnitude have historically been relatively
infrequent, although the property catastrophe reinsurance market has experienced
a high level of worldwide catastrophe losses in terms of both frequency and
severity from 1987 to 1996 as compared to prior years. However, because of the
wide range of the possible catastrophic events to which the Company is exposed,
and because of the potential for multiple events to occur in the same time
period, the Company's business is volatile, and its results of operations will
reflect such volatility. Further, the Company's financial condition may be
impacted by this volatility over time or at any point in time. The effects of
claims from one or a number of severe catastrophic events could have a material
adverse effect on the Company. The Company expects that increases in the values
and concentrations of insured property and the effects of inflation will
increase the severity of such occurrences per year in the future.

The Company seeks to diversify its reinsurance portfolio to moderate the
volatility described in the preceding paragraph. The principal means of
diversification employed by the Company are by type of reinsurance, geographic
coverage, attachment point and limit per program.

TYPE OF REINSURANCE

The following table sets forth the Company's gross premiums written and number
of programs written by type of reinsurance.




YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
------------------------------- ----------------------------- -------------------------------
GROSS PREMIUMS NUMBER OF GROSS PREMIUMS NUMBER OF GROSS PREMIUMS NUMBER OF
TYPE OF REINSURANCE WRITTEN PROGRAMS WRITTEN PROGRAMS WRITTEN PROGRAMS
--------------------------- ------------- ----------- ------------- ----------- ---------------- -------------
(dollars in millions) (dollars in millions) (dollars in millions)

Catastrophe excess
of loss.................... $157.6 293 $146.8 271 $136.0 239
Excess of loss
retrocessions............. 70.4 105 73.8 105 59.1 101
Proportional retrocessions
of catastrophe excess of
loss...................... 33.3 11 56.7 12 59.8 10
Marine, aviation and 8.6 25 15.3 35 18.6 44
other..................... ------ --- ------ ------ ------ ---
Total.................... $269.9 434 $292.6 423 $273.5 394
====== === ====== ====== ====== ===




Catastrophe Excess of Loss Reinsurance. Catastrophe excess of loss
reinsurance provides coverage when aggregate claims and claim adjustment
expenses from a single occurrence of a covered peril exceed the attachment point
specified in a particular contract. A portion of the Company's property
catastrophe excess of loss contracts limit coverage to one occurrence in a
contract year, but most such contracts provide for coverage of a second
occurrence after the payment of a reinstatement premium. The coverage provided
under excess of loss retrocessional contracts may be on a worldwide basis or
limited in scope to selected geographic areas. Coverage can also vary from "all
property" perils to limited coverage on selected perils, such as "earthquake
only" coverage.

Excess of Loss Retrocessional Reinsurance. The Company also enters into
retrocessional contracts pursuant to which it provides property catastrophe
coverage to other reinsurers or retrocedents. In providing retrocessional
reinsurance, the Company focuses on property catastrophe retrocessional
reinsurance which covers the retrocedent on an excess of loss basis when
aggregate claims and claim adjustment expenses from a single occurrence of a
covered peril and from a multiple number of reinsureds exceed a specified
attachment point. The coverage provided under excess of loss retrocessional
contracts may be on a worldwide basis or limited in scope to selected geographic
areas. Coverage can also vary from "all property" perils to limited coverage on
selected perils, such as ''earthquake only'' coverage. In general, excess of
loss retrocessional contracts are for a term of one year. Retrocessional
coverage is characterized by high volatility, principally because retrocessional
contracts expose a

5

reinsurer to an aggregation of losses from a single catastrophic event. In
addition, retrocessional underwriters information concerning the original
primary risk can be less precise than information received from primary
companies directly. Moreover, exposures from retrocessional business can change
within a contract term as the underwriters of a retrocedent alter their book of
business after retrocessional coverage has been bound.

Proportional Retrocessional Reinsurance. The Company writes proportional
retrocessions of catastrophe excess of loss reinsurance treaties when it
believes that premium rates and volume are attractive. In such proportional
retrocessional reinsurance, the Company assumes a specified proportion of the
risk on a specified coverage and receives an equal proportion of the premium.
The ceding insurer receives a commission, based upon the premiums ceded to the
reinsurer, and may also be entitled to receive a profit commission based on the
ratio of losses, loss adjustment expense and the reinsurer's expenses to
premiums ceded. A proportional retrocessional catastrophe reinsurer is dependent
upon the ceding insurer's underwriting, pricing and claims administration to
yield an underwriting profit, although the Company generally obtains detailed
underwriting information concerning the exposures underlying the proportional
retrocessions of catastrophe excess of loss reinsurance treaties which it
writes. In addition, all of the Company's proportional retrocessions of
catastrophe excess of loss reinsurance contracts have aggregate risk exposure
limits per event.

Marine, Aviation and Other Reinsurance. The Company has also written
short-tail marine and aviation reinsurance and retrocessional reinsurance for
selected domestic and foreign insurers and reinsurers. Marine and aviation risks
involve primarily property damage, although certain marine and aviation risks
may involve casualty coverage arising from the same event causing the property
claim. Coverage is generally written in excess of a substantial attachment
point, so events likely to cause a claim will occur infrequently, such as the
destruction of a drilling platform, the loss of a satellite or the loss of a
sizable vessel and its contents. Although the Company focuses on writing
catastrophe excess of loss reinsurance, the Company also writes risk excess of
loss reinsurance and retrocessions. The risk excess of loss treaties in which
the Company participates generally contain limited reinstatement provisions. In
selected cases, the Company also writes customized financial reinsurance
contracts when the expected returns are particularly attractive.

GEOGRAPHIC DIVERSIFICATION

The Company seeks to diversify its exposure across geographic zones. The
Company writes the majority of its business within the United States because the
returns obtained relative to the risks involved are currently most attractive in
the United States and because it is able to obtain the most detailed
underwriting information on U.S. risks. Within the United States, the Company's
zones of highest exposure are Southern California, Northern California,
metropolitan New York, New Madrid (midwestern United States) and Southern
Florida.

The following table sets forth the percentage of the Company's gross premiums
written allocated to the territory of coverage exposure.

6




YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
------------------------------ ------------------------------ ------------------------------
GROSS PERCENTAGE OF GROSS PERCENTAGE OF GROSS PERCENTAGE OF
PREMIUMS GROSS PREMIUMS PREMIUMS GROSS PREMIUMS PREMIUMS GROSS PREMIUMS
GEOGRAPHIC AREA WRITTEN WRITTEN WRITTEN WRITTEN WRITTEN WRITTEN
- -------------------------- --------------- --------------- -------------- -------------- --------------- ---------------
(dollars in millions) (dollars in millions) (dollars in millions)

United States.............. $126.6 46.9% $144.1 49.2% $129.3 47.3%
Worldwide.................. 44.5 16.5 59.1 20.2 50.8 18.6
Worldwide (excluding
U.S.)(1).................. 38.7 14.3 41.3 14.1 38.5 14.1
Europe
(including the U.K.)..... 31.5 11.7 25.4 8.7 26.1 9.5
Other...................... 19.0 7.0 11.7 4.0 19.2 7.0
Australia and New Zealand.. 9.6 3.6 11.0 3.8 9.6 3.5
------ ----- ------ ----- ------ -----
Total.................... $269.9 100.0% $292.6 100.0% $273.5 100.0%
====== ===== ====== ===== ====== =====

_________

(1) The category "Worldwide (excluding the U.S.)" consists of contracts that
cover more than one geographic zone (other than the U.S.). The exposure in
this category for gross premiums written to date is predominantly from
Europe and Japan.

PROGRAM LIMITS

The following table sets forth the number of the Company's programs in force
at December 31, 1996 by aggregate program limits.

NUMBER OF PROGRAMS
------------------
$25-35 million......... 8
$20-25 million......... 7
$15-20 million......... 9
$10-15 million......... 25
Less than $10 million.. 385
---
Total............. 434
===

UNDERWRITING

The Company's primary underwriting goal is to construct a portfolio of
reinsurance contracts that maximizes the return on shareholders' equity subject
to prudent risk constraints.

Management assesses underwriting decisions on the basis of the expected
incremental return on equity of each new reinsurance contract in relation to the
Company's overall portfolio of reinsurance contracts. To facilitate this,
Management has developed REMS(C), a proprietary, computer-based pricing and
exposure management system. Management utilizes REMS(C) to assess property
catastrophe risks, price treaties and limit aggregate exposure. REMS(C) was
developed with consulting assistance from Tillinghast and AIR, the developer of
the CATMAP/TM/ system. REMS(C) has analytic and modeling capabilities that
assist the Company's underwriters in assessing the catastrophe exposure risk and
return of each incremental reinsurance contract in relation to the Company's
overall portfolio of reinsurance contracts. Management combines the analyses
generated by REMS(C) with its own knowledge of the client submitting the
proposed program to assess the premium offered against the risk of loss which
such program presents.

REMS(C) provides more precise geographic information than is currently
generally analyzed throughout the property catastrophe reinsurance industry.
REMS(C) combines computer-generated, statistical simulations that

7

estimate catastrophic event probabilities, client exposure information and
coverage information on each client's reinsurance contract to produce expected
claims for reinsurance programs submitted to the Company. REMS(C) then uses
simulation techniques to generate 40,000 years of catastrophic event activity,
including individual events causing in excess of $200 billion in insured
industry losses. From this 40,000 year simulation, the Company is able to
obtain expected claims, expected profits and a probability distribution of
potential outcomes for each program in its portfolio and for its total
portfolio.

The Company has licensed and integrated into REMS(C) six commercially
available catastrophe computer models in addition to the Company's base model.
The Company uses these models to validate and stress test its base REMS(C)
results. In addition, the Company stress tests its exposures and potential
future results by increasing the frequency and severity of catastrophic events
above the levels embedded in the models purchased from the outside consultants.

Management believes that REMS(C) provides the Company's underwriters with
several competitive advantages which are not generally available. These include
(i) the ability to simulate 40,000 years of catastrophic event activity compared
to a much smaller sample in generally available models, allowing the Company to
analyze its exposure to a greater number of potential events, (ii) the ability
to analyze the incremental impact of an individual reinsurance contract on the
Company's overall portfolio, and (iii) the ability to collect detailed data from
a wide variety of sources which allows the Company to measure geographic
exposure at a detailed level.

For its property catastrophe reinsurance business, the Company has
developed underwriting guidelines that limit the amount of exposure it will
underwrite directly for any one cedent, the exposure to claims from any single
catastrophic event and the exposure to losses from a series of catastrophic
events. The Company also seeks to evaluate the geographic distribution of
risks. The zones with the greatest exposure are Southern California, Northern
California, metropolitan New York, New Madrid (midwestern United States) and
Southern Florida. The Company also attempts to distribute its exposure across a
range of attachment points. Although the Company has limited historical
underwriting experience because it was formed in June 1993, the Company's
underwriting personnel have substantial experience in the markets in which the
Company operates. Although Management has extensive prior experience in
assessing risks and managing exposures in the property catastrophe reinsurance
industry, the Company's operating experience is limited and no assurance can be
given that the Company will be able to accurately assess underwriting risks,
price treaties or sufficiently limit its aggregate exposure.

As part of its pricing and underwriting process, the Company typically
assesses a variety of factors, including the reputation of the proposed cedent
and the likelihood of establishing a long-term relationship with the cedent; the
geographic area in which the cedent does business and its market share;
historical loss data for the cedent and, where available, for the industry as a
whole in the relevant regions, in order to compare the cedent's historical
catastrophe loss experience to industry averages; the cedent's pricing
strategies; and the perceived financial strength of the cedent.

MARKETING

The Company markets its reinsurance products worldwide exclusively through
reinsurance brokers. The Company focuses its marketing efforts on targeted
brokers and insurance and reinsurance companies, placing primary emphasis on
existing clients. Management believes that its existing portfolio of business is
a valuable asset given the renewal nature of the reinsurance industry and,
therefore, attempts to continually strengthen relationships with its existing
brokers and clients. The Company also targets prospects that are deemed likely
to enhance the risk/return composition of its portfolio, that are capable of
supplying detailed and accurate underwriting data and potentially add
diversification to the Company's book of business.

Management believes that primary insurers' and brokers' willingness to use
a particular reinsurer is based not just on pricing terms, but on the financial
security of the reinsurer, its claims paying ability ratings, perceptions of the
quality of a reinsurer's service, the reinsurer's willingness to design
customized programs, its long-term stability and its commitment to provide
reinsurance capacity. Management believes that the Company has established a
reputation with its brokers and clients for prompt response on underwriting
submissions and for fast

8

claims payments. Since the Company selectively writes large lines on a limited
number of property catastrophe reinsurance contracts, it can establish
reinsurance terms and conditions on these contracts that are attractive in its
judgment, make large commitments to the most attractive programs and provide
superior client responsiveness. In addition, the Company acts as sole reinsurer
on several property catastrophe reinsurance contracts, which allows the Company
to take advantage of its ability to develop customized reinsurance programs.
Management believes that such customized programs help the Company to develop
long-term relationships with brokers and clients.

The Company's brokers perform data collection, contract preparation and
other administrative tasks, enabling the Company to market its reinsurance
products cost effectively by maintaining a smaller staff. The Company believes
that by maintaining close relationships with brokers, it is able to obtain
access to a broad range of potential reinsureds. Subsidiaries and affiliates of
Marsh & McLennan, Incorporated, E.W. Blanch Co., Inc., Greig Fester Limited,
Alexander Howden Reinsurance Brokers Ltd. and Bates Turner, Inc. accounted for
approximately 15.2%, 14.9%, 11.5%, 10.1% and 6.8%, respectively, of the
Company's net premiums written in 1996. During such period, the Company issued
authorization for coverage on programs submitted by 65 brokers worldwide. The
Company received approximately 1,584 program submissions during 1996. The
Company is highly selective and, from such submissions, the Company issued
authorizations for coverage for only 434 programs, or 27.4% of the program
submissions received.

RESERVES

The Company's policy is to establish claim reserves for the settlement
costs of all claims and claim adjustment expenses incurred. The Company incurred
claims of approximately $86.6 million, $110.6 million and $114.1 million for the
years ended December 31, 1996, 1995 and 1994, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 5 to the consolidated financial statements of the Company (the
"Consolidated Financial Statements") included in the Annual Report and
incorporated herein by reference thereto.

Under United States generally accepted accounting principles ("GAAP"), the
Company is not permitted to establish claim reserves with respect to its
property catastrophe reinsurance policies until an event which gives rise to a
claim occurs. Generally, reserves will be established without regard to whether
any future claim may subsequently be contested by the Company. Any reserve for
claims and claim expenses may also include reserves for unpaid reported claims
and claim expenses and reserves for estimated losses that have been incurred but
not reported to the Company. Such reserves are estimated by Management based
upon reports received from ceding companies, as supplemented by the Company's
own estimates of reserves on such reported losses as well as reserves for losses
that are incurred but not reported. The Company utilizes both proprietary and
commercially available models as well as historical reinsurance industry loss
development patterns to assist in the establishment of appropriate claim
reserves. In addition, when reviewing a proposed reinsurance contract, the
Company typically receives and evaluates the insured's historical and projected
loss experience with respect to certain events. The Company's reserve estimates
will be continually reviewed and, in accordance with GAAP, as adjustments to
these reserves become necessary, such adjustments will be reflected in current
operations.

Claim reserves represent estimates, including actuarial and statistical
projections at a given point in time, of an insurer's or reinsurer's
expectations of the ultimate settlement and administration costs of claims
incurred, and it is possible that the ultimate liability may exceed or be less
than such estimates. Such estimates are not precise in that, among other things,
they are based on predictions of future developments and estimates of future
trends in claim severity and frequency and other variable factors such as
inflation. During the claim settlement period, it often becomes necessary to
refine and adjust the estimates of liability on a claim either upward or
downward. Even after such adjustments, ultimate liability may exceed or be less
than the revised estimates. Reserve estimates by new property catastrophe
reinsurers, such as the Company, may be inherently less reliable than the
reserve estimates of a reinsurer with a stable volume of business and an
established claim history.

9

INVESTMENTS

The Company's strategy is to maximize its underwriting profitability and
fully deploy its capital through its underwriting activities; consequently, the
Company has established an investment policy which it considers to be
conservative. The Company's investment guidelines, which are established by
Management and approved by the Company's Board of Directors, stress
diversification of risk, preservation of capital and market liquidity.
Notwithstanding the foregoing, the Company's investments are subject to market-
wide risks and fluctuations, as well as to risks inherent in particular
securities. The primary objective of the portfolio, as set forth in such
guidelines, is to maximize investment returns consistent with these policies. To
achieve this objective, the Company's current fixed income investment guidelines
call for an average credit quality of AA and a target duration of two years. At
December 31, 1996, all of the securities in the portfolio were of non-U.S.
issuers. The Company's investment guidelines, which are subject to change at
the discretion of the Board of Directors of the Company, are discussed further
below.

During 1996, the Company developed a multi-currency asset/liability
optimization model in conjunction with Tillinghast and Falcon Asset Management
to integrate asset, liability and capital decisions. As a result of the
analysis generated by this model, the Company determined it could diversify its
investment portfolio by investing in common stocks with only a minimal increase
in overall risk. The analysis demonstrated that the benefits of this
diversification would substantially offset the volatility inherent in equity
investments, and would therefore not require significant amounts of additional
capital to support the Company's underwriting activities. During 1997, the
Company intends to reallocate $50 million of its fixed maturity portfolio to
equity securities.

The following table summarizes the fair value of the investments and cash
and cash equivalents of the Company.


DECEMBER 31,
-----------------------------------------------------
TYPE OF INVESTMENT 1996 1995 1994
--------------------- -------------- ------------- -------------
(dollars in (dollars in (dollars in
millions) millions) millions)

Fixed Maturities Available
for Sale:
Non-U.S. sovereign
government bonds.......... $239.4 $201.9 $ 64.0
Non-U.S. corporate debt
securities................ 329.6 299.5 128.6
Non-U.S. mortgage-backed
securities................ 34.5 22.4 14.4
------ ------ ------
Subtotal................. 603.5 523.8 207.0
Short-term investments..... - 5.0 77.5
Cash and cash equivalents.. 199.0 139.2 153.0
------ ------ ------
Total fixed maturity
investments, short-term
investments and cash
and cash equivalents..... $802.5 $668.0 $437.5
====== ====== ======

The following table summarizes the fair value by contractual maturities of
the Company's fixed maturity investment portfolio. All mortgage-backed
securities mature within five years.


DECEMBER 31,
-------------------------------------------------
1996 1995 1994
---------------- ----------------- ------------
(dollars in (dollars in (dollars in
millions) millions) millions)

Due in less than one year.. $ 56.1 $ 75.1 --
Due after one through five
years..................... 457.1 358.3 $154.3
Due after five through ten
years..................... 90.3 90.4 52.7
------ ------ ------
Total................. $603.5 $523.8 $207.0
====== ====== ======


MATURITY AND DURATION OF PORTFOLIO

Currently, the Company maintains a target duration of two years, reflecting
Management's belief that it is important to maintain a liquid, short duration
portfolio to better assure the Company's ability to pay claims on a timely
basis. The actual portfolio duration may not exceed the target duration by more
than two years. The

10

Company expects to reevaluate the target duration in light
of estimates of the duration of its liabilities and market conditions, including
the level of interest rates, from time to time.

QUALITY OF DEBT SECURITIES IN PORTFOLIO

The Company's investment guidelines stipulate that the minimum credit
rating for securities purchased for the Company's portfolio is BB , that a
maximum of 10% of the portfolio be rated BBB or below and that the overall
average rating of the portfolio, including cash and cash equivalents, be at
least AA.

The following table summarizes the composition of the fair value of the
fixed maturity portfolio by rating as assigned by S&P or, with respect to non-
rated issues, estimated by the Company's investment managers as to the rating
S&P would assign if such issues had been rated as of December 31, 1996, 1995 and
1994, respectively.


DECEMBER 31,
----------------------------
1996 1995 1994
---- ---- ----

AAA...... 28.1% 39.5% 12.9%
AA....... 50.1 41.6 45.0
A........ 20.2 15.3 35.3
BBB...... 1.6 3.6 6.8
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====

EQUITY SECURITIES/REAL ESTATE

The Company's portfolio does not contain any direct investments in real
estate or mortgage loans.

FOREIGN CURRENCY EXPOSURES

All of the Company's fixed maturities are currently invested in fixed
income securities denominated in U.S. dollars. The Company's investment managers
may be instructed to invest some of the investment portfolio in securities
denominated in currencies other than U.S. dollars based upon the business the
Company anticipates writing, the exposures and claims reserves on the Company's
books and currency outlooks compared to that of the U.S. dollar. The primary
risk exposures and premiums receivable are denominated in U.S. dollars, European
currencies, Japanese yen and Australian dollars. The Company's fixed maturity
portfolio is generally not invested so as to hedge exposures to various
currencies. The Company maintains a portion of its foreign currency premiums in
the original currency as cash investments in anticipation of known and potential
claims.

DIVERSIFICATION AND LIQUIDITY

Pursuant to the investment guidelines of the Company, there is no limit on
the percentage of the Company's investment portfolio that may be invested in the
securities of any sovereign government or agency issuing in its own currency. No
more than 20% of the portfolio may be invested in securities issued by any
single issuer, maturing in one year or less or in obligations of any single
issuer that is rated AA or AAA by S&P, or Aa or Aaa by Moody's and is either (i)
a sovereign (or guaranteed by a sovereign) issuing in a currency other than its
own, (ii) a local government entity or (iii) a supranational entity. Up to 10%
of the portfolio may be invested in obligations of issuers not described above,
but with ratings of AA or AAA by S&P, or Aa or Aaa by Moody's, and up to 7% and
5% of the portfolio may be invested in obligations of single A issuers and BBB
issuers, respectively, as rated by S&P or single A issuers and Baa issuers,
respectively, as rated by Moody's. In addition, BBB issuers and Baa issuers, in
the aggregate, are limited to 10% of total portfolio assets.

11


INVESTMENT ADVISERS

The Company has entered into investment advisory agreements (the
"Investment Advisory Agreements") with each of Warburg, Pincus Counsellors
(Bermuda) ("Counsellors"), an affiliate of a shareholder of the Company, GE
Investment Management Incorporated ("GE Investment Management"), an affiliate of
a shareholder of the Company, the Bank of N.T. Butterfield & Son Limited
("Butterfield Bank") and Falcon Asset Management (Bermuda), an affiliate of a
shareholder of the Company ("Falcon"). The terms of the Investment Advisory
Agreements were determined in arms' length negotiations. The performance of, and
the fees paid to, Counsellors, GE Investment Management, Falcon and Butterfield
Bank under the Investment Advisory Agreements are reviewed periodically by the
Investment Committee of the Board of Directors of the Company.

COMPETITION

The property catastrophe reinsurance industry is highly competitive and is
undergoing a variety of challenging developments, including a marked trend
toward greater consolidation. The Company competes, and will continue to
compete, with major U.S. and non-U.S. property catastrophe insurers, reinsurers
and certain underwriting syndicates. Many of these competitors have greater
financial, marketing and management resources than the Company. In addition,
new companies may enter the property catastrophe reinsurance market or existing
reinsurers may deploy additional capital in the property catastrophe reinsurance
market. The Company cannot predict what effect any of these developments may
have on the Company and its business.

Competition in the types of reinsurance business that the Company
underwrites is based on many factors, including premium charges and other terms
and conditions offered, services provided, speed of claims payment, ratings
assigned by independent rating agencies, the perceived financial strength and
experience of the reinsurer in the line of reinsurance to be written. The number
of jurisdictions in which a reinsurer is licensed or authorized to do business
is also a factor. Some of the reinsurers who have entered the Bermuda and other
reinsurance markets have or could have greater financial, marketing or
managerial resources than the Company. Ultimately, this competition could
affect the Company's ability to attract business on terms having the potential
to yield an attractive return on equity.

Management is also aware of many potential initiatives by capital market
participants to produce alternative products that may compete with the existing
catastrophe reinsurance markets. Management is unable to predict the extent to
which the foregoing new, proposed or potential initiatives may affect the demand
for the Company's products or the risks which may be available for the Company
to consider underwriting.

GLENCOE

Glencoe, which was incorporated in January 1996, operates as a Bermuda-
domiciled company and has been approved to do business in the United States on
an excess and surplus lines basis in 21 states. Glencoe will also consider
underwriting submissions from insureds located in other jurisdictions where it
has been approved with respect to exposures for which it has underwriting
expertise. Glencoe seeks to employ in the primary insurance market the
modeling, underwriting, customer service and capital management approaches that
Renaissance Reinsurance employs with respect to its reinsurance policies.

EMPLOYEES

As of December 31, 1996, the Company employed 29 people, all of whom are
either shareholders or optionholders of the Company. The Company believes that
its employee relations are satisfactory. None of the Company's employees are
subject to collective bargaining agreements, and the Company knows of no current
efforts to implement such agreements at the Company.

12

REGULATION

BERMUDA

The Insurance Act 1978, as amended, and Related Regulations. The
Insurance Act of 1978 of Bermuda, amendments thereto and related regulations
(the "Insurance Act"), which regulates the business of Renaissance and Glencoe,
provides that no person shall carry on an insurance business in or from within
Bermuda unless registered as an insurer under the Act by the Minister. The
Minister, in deciding whether to grant registration, has broad discretion to act
as he thinks fit in the public interest. The Minister is required by the
Insurance Act to determine whether the applicant is a fit and proper body to be
engaged in the insurance business and, in particular, whether it has, or has
available to it, adequate knowledge and expertise. In connection with the
applicant's registration, the Minister may impose conditions relating to the
writing of certain types of insurance.

An Insurance Advisory Committee appointed by the Minister advises him on
matters connected with the discharge of his functions and sub-committees thereof
supervise and review the law and practice of insurance in Bermuda, including
reviews of accounting and administrative procedures.

The Insurance Act imposes on Bermuda insurance companies solvency and
liquidity standards and auditing and reporting requirements and grants to the
Minister powers to supervise, investigate and intervene in the affairs of
insurance companies. Significant aspects of the Bermuda insurance regulatory
framework are set forth below.

Cancellation of Insurer's Registration. An insurer's registration may be
canceled by the Minister on certain grounds specified in the Insurance Act,
including failure of the insurer to comply with a requirement made of it under
the Insurance Act or, if in the opinion of the Minister after consultation with
the Insurance Advisory Committee, the insurer has not been carrying on business
in accordance with sound insurance principles.

Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will annually audit and report on the Statutory
Financial Statements and the Statutory Financial Return of the insurer, the
latter of which is required to be filed annually with the Registrar of Companies
(the ''Registrar''), who is the chief administrative officer under the Insurance
Act. The auditor must be approved by the Minister as the independent auditor of
the insurer. The approved auditor may be the same person or firm which audits
the insurer's financial statements and reports for presentation to its
shareholders.

Loss Reserve Specialist. Every Registered Class 3 and Class 4 insurer is
required to submit an annual loss reserve opinion when filing the Annual
Statutory Financial Return. This opinion must be issued by a Loss Reserve
Specialist. The Loss Reserve Specialist, who will normally be a qualified
casualty actuary, must be approved by the minister.

Statutory Financial Statements. An insurer must prepare annual Statutory
Financial Statements. The Insurance Act prescribes rules for the preparation and
substance of such Statutory Financial Statements (which include, in statutory
form, a balance sheet, income statement, and a statement of capital and surplus,
and detailed notes thereto). The insurer is required to give detailed
information and analyses regarding premiums, claims, reinsurance and
investments. The Statutory Financial Statements are not prepared in accordance
with GAAP and are distinct from the financial statements prepared for
presentation to the insurer's shareholders under the Companies Act 1981 of
Bermuda, which financial statements may be prepared in accordance with GAAP. See
Note 14 to the Consolidated Financial Statements contained in the Annual Report
and incorporated herein by reference thereto for information with respect to the
Company's statutory financial statements. The insurer is required to submit the
Annual Statutory Financial Statements as part of the Annual Statutory Financial
Return.

Minimum Solvency Margin. The Insurance Act provides that the statutory
assets of an insurer must exceed its statutory liabilities by an amount greater
than the prescribed minimum solvency margin which varies with the type of
business of the insurer and the insurer's net premiums written and loss reserve
level. The minimum solvency margin for a Class 4 insurer is the greater of
$100 million, 50% of net premiums written (with a maximum credit of 25% for
reinsurance ceded) or 15% of loss and loss expense provisions and other
insurance

13

reserves. The minimum solvency margin for a Class 3 insurer is the greater of
$1 million, 20% of the first $6 million of net premiums written plus 15% of net
premiums written in excess of $6 million, or 15% of loss and loss expense
provisions and other insurance reserves. See Note 14 to the Consolidated
Financial Statements included in the Annual Report and incorporated by reference
herein.

Minimum Liquidity Ratio. The Insurance Act provides a minimum liquidity
ratio for general business. An insurer engaged in general business is required
to maintain the value of its relevant assets at not less than 75% of the amount
of its relevant liabilities. Relevant assets include cash and time deposits,
quoted investments, unquoted bonds and debentures, first liens on real estate,
investment income due and accrued, accounts and premiums receivable and
reinsurance balances receivable. There are certain categories of assets which,
unless specifically permitted by the Minister, do not automatically qualify as
relevant assets, such as unquoted equity securities, investments in and advances
to affiliates, real estate and collateral loans. The relevant liabilities are
total general business insurance reserves and total other liabilities less
deferred income tax and sundry liabilities (by interpretation, those not
specifically defined).

Annual Statutory Financial Return. An insurer is required to file with
the Registrar a Statutory Financial Return no later than four months from the
insurer's financial year end (unless specifically extended). The Statutory
Financial Return includes, among other matters, a report of the approved
independent auditor on the Statutory Financial Statements of the insurer; a
declaration of the statutory ratios; a solvency certificate; the Statutory
Financial Statements themselves; the opinion of the approved Loss Reserve
Specialist and certain details concerning ceded reinsurance. The solvency
certificate and the declaration of the statutory ratios must be signed by the
principal representative and at least two directors of the insurer who are
required to state whether the Minimum Solvency Margin and, in the case of the
solvency certificate, the Minimum Liquidity Ratio, have been met, and the
independent approved auditor is required to state whether in its opinion it was
reasonable for them to so state and whether the declaration of the statutory
ratios complies with the requirements of the Insurance Act. The Statutory
Financial Return must include the opinion of a Loss Reserve Specialist in
respect of the loss and loss expense provisions of the insurer. Where an
insurer's accounts have been audited for any purpose other than compliance with
the Insurance Act, a statement to that effect must be filed with the Statutory
Financial Return.

Supervision, Investigation and Intervention. The Minister may appoint an
inspector with extensive powers to investigate the affairs of an insurer if the
Minister believes that an investigation is required in the interest of the
insurer's policyholders or persons who may become policyholders. In order to
verify or supplement information otherwise provided to him, the Minister may
direct an insurer to produce documents or information relating to matters
connected with the insurer's business.

If it appears to the Minister that there is a risk of the insurer becoming
insolvent, the Minister may direct the insurer not to take on any new insurance
business; not to vary any insurance contract if the effect would be to increase
the insurer's liabilities; not to make certain investments; to realize certain
investments; to maintain in Bermuda, or transfer to the custody of a Bermuda
bank, certain assets; not to declare or pay any dividends or other distributions
or to restrict the making of such payments and/or to limit its premium income.

An insurer is required to maintain a principal office in Bermuda and to
appoint and maintain a principal representative in Bermuda. For the purpose of
the Insurance Act, the principal office of the Company and its Subsidiaries is
at the Company's offices at Renaissance House, 8-12 East Broadway, Pembroke HM
19 Bermuda and Mr. Keith S. Hynes, the Company's Senior Vice President and Chief
Financial Officer, and Mr. John D. Nichols, Jr., the Company's Vice President,
Treasurer and Secretary, are the principal representatives of Renaissance and
Glencoe, respectively. Without a reason acceptable to the Minister, an insurer
may not terminate the appointment of its principal representative, and the
principal representative may not cease to act as such, unless thirty days'
notice in writing to the Minister is given of the intention to do so. It is the
duty of the principal representative, within thirty days of his reaching the
view that there is a likelihood of the insurer for which he acts becoming
insolvent or its coming to his knowledge, or his having reason to believe, that
an event has occurred, to make a report in writing to the Minister setting out
all the particulars of the case that are available to him.

14

Examples of such an event include failure by the reinsurer to comply
substantially with a condition imposed upon the reinsurer by the Minister
relating to a solvency margin or a liquidity or other ratio.

UNITED STATES AND OTHER

Renaissance is not admitted to do business in any jurisdiction except
Bermuda. The insurance laws of each state of the United States and of many other
countries regulate the sale of insurance and reinsurance within their
jurisdictions by alien insurers, such as Renaissance Reinsurance, which are not
admitted to do business within such jurisdiction. With some exceptions, such
sale of insurance or reinsurance within a jurisdiction where the insurer is not
admitted to do business is prohibited. Renaissance Reinsurance does not intend
to maintain an office or to solicit, advertise, settle claims or conduct other
insurance activities in any jurisdiction other than Bermuda where the conduct of
such activities would require that Renaissance Reinsurance be so admitted.

The Company's registered and principal executive offices are located in
Renaissance House, 8-12 East Broadway, Pembroke HM 19 Bermuda and its telephone
number is (441) 295-4513. The Company was originally formed under the name
Renaissance Holdings Ltd.

SUBSEQUENT EVENTS

On December 23, 1996, the Company commenced an offer to purchase for
cancellation from tendering shareholders an aggregate of up to 813,190 Common
Shares (the "Tender Offer") at a price of $34.50 per share, net to the seller in
cash, for an aggregate purchase price of approximately $28.1 million. The
Tender Offer expired as scheduled at midnight, New York City time, on January
22, 1997, and was oversubscribed. Following the expiration of the Tender Offer
and the determination of the final proration factor, the Company purchased an
aggregate of 813,190 Common Shares for cancellation from tendering shareholders.
None of Management or the Founding Institutional Investors participated in the
Tender Offer.

On March 4, 1996, a newly established subsidiary of the Company,
RenaissanceRe Capital Trust, a Delaware statutory business trust (the "Trust"),
issued $100 million aggregate liquidation amount of 8.54% Capital Securities
(liquidation amount $1,000 per Capital Security) to qualified institutional
buyers in a private offering (the "Offering"). The proceeds of the Offering
were invested in the 8.54% Junior Subordinated Deferrable Interest Debentures,
Series A due March 1, 2027, issued by the Company. The Company used the net
proceeds of the Offering to repay approximately $100 million of outstanding
indebtedness under the Company's revolving credit facility.

15

GLOSSARY OF SELECTED INSURANCE TERMS

Attachment point The amount of loss (per occurrence or in the
aggregate, as the case may be) above which excess
of loss reinsurance becomes operative.

Broker One who negotiates contracts of insurance or
reinsurance, receiving a commission for placement
and other services rendered, between (1) a policy
holder and a primary insurer, on behalf of the
insured party, (2) a primary insurer and
reinsurer, on behalf of the primary insurer, or
(3) a reinsurer and a retrocessionaire, on behalf
of the reinsurer.

Catastrophe excess of loss
reinsurance A form of excess of loss reinsurance that, subject
to a specified limit, indemnifies the ceding
company for the amount of loss in excess of a
specified retention with respect to an
accumulation of losses resulting from a
"catastrophe cover."

Cede; Cedent; Ceding company When a party reinsures its liability with another,
it "cedes" business and is referred to as the
"cedent" or "ceding company."

Claim adjustment expenses The expenses of settling claims, including legal
and other fees and the portion of general expenses
allocated to claim settlement costs.

Claim reserves Liabilities established by insurers and reinsurers
to reflect the estimated cost of claims payments
and the related expenses that the insurer or
reinsurer will ultimately be required to pay in
respect of insurance or reinsurance it has
written. Reserves are established for losses and
for claim adjustment expenses.

Excess of loss reinsurance A generic term describing reinsurance that
indemnifies the reinsured against all or a
specified portion of losses on underlying
insurance policies in excess of a specified
amount, which is called a "level" or "retention."
Also known as non-proportional reinsurance. Excess
of loss reinsurance is written in layers. A
reinsurer or group of reinsurers accepts a band of
coverage up to a specified amount. The total
coverage purchased by the cedent is referred to as
a "program" and will typically be placed with
predetermined reinsurers in prenegotiated layers.
Any liability exceeding the outer limit of the
program reverts to the ceding company, which also
bears the credit risk of a reinsurer's insolvency.

Funded cover A form of insurance where the insured pays
premiums to a reinsurer to serve essentially as a
deposit in order to offset future losses. On a
funded cover, there is generally limited or no
transfer of risk for catastrophe losses from the
insured to the reinsurer.

16

Generally accepted
accounting principles Accounting principles as set forth in opinions of
the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or
statements of the Financial Accounting Standards
Board and/or their respective successors and which
are applicable in the circumstances as of the date
in question.

Incurred but not reported Reserves for estimated losses that have been
incurred by insureds and reinsureds but not yet
reported to the insurer or reinsurer including
unknown future developments on losses which are
known to the insurer or reinsurer.

Layer The interval between the retention or attachment
point and the maximum limit of indemnity for which
a reinsurer is responsible.

Net premiums written Gross premiums written for a given period less
premiums ceded to reinsurers and retrocessionaires
during such period.

Proportional reinsurance A generic term describing all forms of reinsurance
in which the reinsurer shares a proportional part
of the original premiums and losses of the
reinsured. (Also known as pro rata reinsurance,
quota share reinsurance or participating
reinsurance.) In proportional reinsurance the
reinsurer generally pays the ceding company a
ceding commission. The ceding commission generally
is based on the ceding company's cost of acquiring
the business being reinsured (including
commissions, premium taxes, assessments and
miscellaneous administrative expense) and also may
include a profit factor.

Reinstatement premium The premium charged for the restoration of the
reinsurance limit of a catastrophe contract to its
full amount after payment by the reinsurer of
losses as a result of an occurrence.

Reinsurance An arrangement in which an insurance company, the
reinsurer, agrees to indemnify another insurance
or reinsurance company, the ceding company,
against all or a portion of the insurance or
reinsurance risks underwritten by the ceding
company under one or more policies. Reinsurance
can provide a ceding company with several
benefits, including a reduction in net liability
on individual risks and catastrophe protection
from large or multiple losses. Reinsurance also
provides a ceding company with additional
underwriting capacity by permitting it to accept
larger risks and write more business than would be
possible without a concomitant increase in capital
and surplus, and facilitates the maintenance of
acceptable financial ratios by the ceding company.
Reinsurance does not legally discharge the primary
insurer from its liability with respect to its
obligations to the insured.

17

Retention The amount or portion of risk that an insurer
retains for its own account. Losses in excess of
the retention level are paid by the reinsurer. In
proportional treaties, the retention may be a
percentage of the original policy's limit. In
excess of loss business, the retention is a dollar
amount of loss, a loss ratio or a percentage.

Retrocessional Reinsurance;
Retrocessionaire A transaction whereby a reinsurer cedes to another
reinsurer, the retrocessionaire, all or part of
the reinsurance that the first reinsurer has
assumed. Retrocessional reinsurance does not
legally discharge the ceding reinsurer from its
liability with respect to its obligations to the
reinsured. Reinsurance companies cede risks to
retrocessionaires for reasons similar to those
that cause primary insurers to purchase
reinsurance: to reduce net liability on individual
risks, to protect against catastrophic losses, to
stabilize financial ratios and to obtain
additional underwriting capacity.

Risk excess of loss
reinsurance A form of excess of loss reinsurance that covers a
loss of the reinsured on a single "risk" in excess
of its retention level of the type reinsured,
rather than to aggregate losses for all covered
risks, as does catastrophe excess of loss
reinsurance. A "risk" in this context might mean
the insurance coverage on one building or a group
of buildings or the insurance coverage under a
single policy, which the reinsured treats as a
single risk.

Underwriting The insurer's or reinsurer's process of reviewing
applications submitted for insurance coverage,
deciding whether to accept all or part of the
coverage requested and determining the applicable
premiums.

Underwriting capacity The maximum amount that an insurance company can
underwrite. The limit is generally determined by
the company's retained earnings and investment
capital. Reinsurance serves to increase a
company's underwriting capacity by reducing its
exposure from particular risks.

Underwriting expenses The aggregate of policy acquisition costs,
including commissions, and the portion of
administrative, general and other expenses
attributable to underwriting operations.

18

ITEM 2. PROPERTIES

The Company leases office space in Bermuda, where its executive offices
are located.


ITEM 3. LEGAL PROCEEDINGS

The Company is, from time to time, a party to litigation and arbitration
that arises in the normal course of its business operations. The Company is not
presently a party to any such litigation or arbitration that would have a
material adverse effect on its business or operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On December 23, 1996 the Company held a Special General Meeting of
Shareholders (the "Special Meeting") to consider three proposals relating to
(1) the creation of two series of diluted voting common shares of the Company
consisting of 16,789,776 shares of Diluted Voting Class I Common Shares, $1.00
par value per share, and 1,639,641 shares of Diluted Voting Class II Common
Shares, par value $1.00 per share, (collectively, the "Diluted Voting Shares")
to be issued pursuant to the approval of the Board of Directors of the Company
to certain shareholders of the Company in exchange for an equal number of
Common Shares held by such shareholders on a one-for-one basis (the "Shares
Proposal"); (2) the amendment to the Bye-laws of the Company (x) reducing the
requisite affirmative vote at an annual or special general meeting of the
Company's shareholders, from at least 66-2/3% of the issued and outstanding
capital shares of the Company in order to approve (A) an amalgamation or
reorganization of the Company; (B) an acquisition or disposition of all or
substantially all of the Company's assets; (C) a liquidation, dissolution or
winding up of the Company; or (D) an amendment to or repeal of such Bye-law, to
(i) the affirmative vote of a majority of all issued and outstanding capital
shares of the Company in order to approve such item (A), and (ii) the
affirmative vote of a majority of the voting rights attached to all issued and
outstanding Common Shares and Diluted Voting Shares in order to approve such
items (B), (C) and (D), (y) reducing the quorum requirement relating to
shareholder votes contemplated by Bye-law 43(b); and (z) providing that the
Board shall, with respect to any matter required to be submitted to a vote of
the shareholders of Renaissance, be required to submit a proposal relating to
such matters to the shareholders of the Company and shall vote all the shares
of Renaissance owned by the Company in accordance with and proportional to such
vote of the Company's shareholders (the "Bye-laws Proposal"); and (3) the
increase in the size of the Board from nine members (including one vacancy) to
eleven members and the authorization by the shareholders of the Company of the
Board to fill the vacancies created thereby without further shareholder action
(the "Board Proposal").

The following matters were voted on at the Special Meeting with the voting
results as indicated:


THE SHARES PROPOSAL


Votes For Votes Against Abstain
- ------------------------ ------------- -------
19,596,827 216,400 1,600

THE BYE-LAWS PROPOSAL

Votes For Votes Against Abstain
- ------------------------ ------------- -------
19,776,327 34,900 3,600

THE BOARD PROPOSAL

Votes For Votes Against Abstain
- ------------------------ ------------- -------
19,791,427 21,800 1,600


There were no broker non-votes in connection with any of the proposals
listed above.

19

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

The Common Shares began trading publicly on the Nasdaq National Market (the
"NNM") on July 26, 1995 under the symbol "RNREF." Prior to that date, there
was no public market for the Common Shares. The Common Shares have been listed
and trading on the New York Stock Exchange, Inc. (the "NYSE") under the symbol
"RNR" since July 24, 1996. The following table sets forth, for the periods
indicted, the reported (i) NNM per Common Share high ask and low bid
information from July 26, 1995 through July 23, 1996 and (ii) high and low NYSE
per Common Share closing sales prices from July 24, 1996 through December 31,
1996, and the amount of cash dividends paid per Common Share for each quarterly
period set forth below.

High Low Dividends
------ ------ ---------
FISCAL YEAR ENDED DECEMBER 31, 1995
Third Quarter (commencing July 26)..... $25.38 $22.00 $ --
Fourth Quarter......................... 33.13 22.88 0.16

FISCAL YEAR ENDED DECEMBER 31, 1996
First Quarter.......................... $31.88 $26.75 $0.20
Second Quarter......................... 31.25 26.88 0.20
Third Quarter (through July 23)........ 30.88 29.25 --
Third Quarter (commencing July 24)..... 30.88 26.75 0.20
Fourth Quarter......................... 36.00 27.75 0.20

As of March 15, 1997 there were approximately 2,500 holders of the Company's
common equity.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data of the
Company for the years ended December 31, 1996, 1995 and 1994. The selected
consolidated financial data of the Company should be read in conjunction with
the Consolidated Financial Statements of the Company and related Notes thereto
contained in the Annual Report and incorporated herein by reference thereto.


YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1995 1994
------------- ----------- -----------
(in millions, except per share amounts)

Gross premiums written.......... $269.9 $292.6 $273.5
Net income...................... 156.2 165.3 109.3
Net income available to common
shareholders.................. 156.2 162.8 96.4
Total assets.................... 904.8 757.1 509.4
Net income per Common Share..... $ 6.01 $ 6.75 $ 4.24
Dividends per Common Share...... 0.80 0.16 --

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information with respect to Management's discussion and analysis of
financial condition and results of operations, is contained under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 13 through 19 of the Annual Report and is incorporated
herein by reference thereto in response to this item.

20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company and related Notes
thereto are contained on pages 20 through 35 of the Annual Report and are
incorporated herein by reference thereto in response to this item. Reference
is made to Item 14(a) of this Report for the Schedules to the Consolidated
Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

This information with respect to directors and officers of the Company is
contained under the captions "Directors and Executive Officers of the Company"
on pages 4 through 6 of the Proxy Statement and "Proposal 1 - The Renaissance
Board Proposal" on page 21 of the Proxy Statement, and is incorporated herein
by reference thereto in response to this item.

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to executive compensation is contained under the
subcaption "Executive Officer and Director Compensation" on pages 13 through 20
of the Proxy Statement, and is incorporated herein by reference thereto in
response to this item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information with respect to security ownership of certain beneficial
owners and Management is contained under the caption "Security Ownership of
Certain Beneficial Owners, Management and Directors" on pages 7 through 9 of
the Proxy Statement, and is incorporated herein by reference thereto in
response to this item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information with respect to certain relationships and related
transactions is contained under the caption "Certain Relationships and Related
Transactions" on pages 10 and 11 of the Proxy Statement, and is incorporated
herein by reference thereto in response to this item.


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Financial Statements and Exhibits.

1. The Consolidated Financial Statements of the Company and related Notes
thereto are contained on pages 20 through 35 of the Company's 1996 Annual
Report to Shareholders and are incorporated herein by reference thereto.

2. The Schedules to the Consolidated Financial Statements of the Company are
listed in the accompanying Index to Schedules to Consolidated Financial
Statements and are filed as part of this Report.

3. The following exhibits are included in this Report:

3.1 Memorandum of Association.*
3.2 Amended and Restated Bye-Laws.+

21

4.1 Specimen Common Share certificate.*
4.2 Amended and Restated Shareholders Agreement, dated as of December 23,
1996, by and among Warburg, Pincus Investors, L.P., Trustees of General
Electric Pension Trust, GE Private Placement Partners I, Limited
Partnership and United States Fidelity and Guaranty Company.
4.3 Amended and Restated Registration Rights Agreement, dated as of December
23, 1996, by and among Warburg, Pincus Investors, L.P., PT Investments
Inc., GE Private Placement Partners I, -Insurance, Limited Partnership and
United States Fidelity and Guaranty Company.
4.4 Amended and Restated Declaration of Trust of RenaissanceRe Capital Trust,
dated as of March 7, 1997, among the Company, as Sponsor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee, and the Administrative Trustees named therein. +++
4.5 Indenture, dated as of March 7, 1997, among the Company, as Sponsor, and
The Bank of New York, as Debenture Trustee. +++
4.6 Series A Capital Securities Guarantee Agreement, dated as of March 7,
1997, between the Company and The Bank of New York, as Trustee. +++
4.7 Registration Rights Agreement, dated March 7, 1997, among the Company, the
Trust, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc. +++
10.1 Discretionary Investment Advisory Agreement, dated June 9, 1993, between
Renaissance Reinsurance Ltd. and Warburg, Pincus Counsellors, Inc.*
10.2 Investment Management Agreement, dated as of November 1, 1993, between GE
Investment Management Incorporated and Renaissance Reinsurance Ltd.*
10.3 RenaissanceRe Holdings Ltd. Restricted Stock Plan.*
10.4 Agreement and Plan of Recapitalization, dated as of March 26, 1995, by and
among RenaissanceRe Holdings Ltd., Renaissance Reinsurance Ltd. and the
Investors (as defined therein).*
10.5 Amended and Restated Employment Agreement, dated as of March 26, 1995,
between Renaissance Reinsurance Ltd. and James N. Stanard.*
10.6 Employment Agreement, dated as of March 26, 1995, between Renaissance
Reinsurance Ltd. and Keith S. Hynes.*#
10.7 Third Amended and Restated Credit Agreement, dated as of December 12,
1996, among RenaissanceRe Holdings Ltd., various financial institutions
which are, or may become, parties thereto (the "Lenders"), Fleet National
Bank of Connecticut and Mellon Bank, N.A., as Co-Agents, and Bank of
America National Trust and Savings Association, as Administrative Agent
for the Lenders.
10.8 Equity Purchase Agreement, dated as of December 13, 1996, by and among
RenaissanceRe Holdings Ltd., Warburg, Pincus Investors, L.P., Trustees of
General Electric Pension Trust, GE Private Placement Partners I, Limited
Partnership and United States Fidelity and Guaranty Company. ++
10.9 RenaissanceRe Holdings Ltd. Second Amended and Restated 1993 Stock
Incentive Plan.
10.10 RenaissanceRe Holdings Ltd. Amended and Restated Non-Employee Director
Stock Plan.
13.1 Annual Report to Shareholders of RenaissanceRe Holdings Ltd. for the year
ended December 31, 1996 (with the exception of the information
incorporated by reference into Items 5, 7, 8 and 14 of this Report, such
Annual Report to Shareholders is furnished for the information of the
Commission and is not deemed "filed" as part of this Report).
21.1 List of Subsidiaries of the Registrant.
27.1 Financial Data Schedule.

(b) Reports on Form 8-K:

The Company filed Current Reports on Form 8-K with the Commission on (i)
December 16, 1996 relating to an event which occurred on December 13,
1996, and (ii) December 23, 1996 relating to certain events which
occurred on December 23, 1996.

- ---------------
* Incorporated by reference to the Registration Statement on Form S-1 of the
Company (Registration No. 33-70008) which was declared effective by the
Commission on July 26, 1995.

** Incorporated by reference to the Registration Statement on Form S-1 of the
Company (Registration No. 333-00802) which was declared effective by the
Commission on February 27, 1996.

22

+ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on January 7, 1997, relating to certain events
which occurred on December 23, 1996.

++ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on December 16, 1996, relating to an event which
occurred on December 13, 1996.

+++ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on March 19, 1997, relating to certain events
which occurred on March 7, 1997.

# A substantially similar form of Employment Agreement has been entered into
by Renaissance Reinsurance Ltd. and each of Messrs. Currie, Riker and
Eklund.

23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda on
March 21, 1997.

RENAISSANCERE HOLDINGS LTD.

/s/ James N. Stanard
---------------------------
James N. Stanard
President, Chief Executive Officer and
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.

Signature Title Date

/s/ James N. Stanard President and Chief Executive March 21, 1997
- ------------------------ Officer and Chairman of the
James N. Stanard Board of Directors

/s/ Keith S. Hynes Senior Vice President and Chief March 21, 1997
- ------------------------ Financial Officer (Principal
Keith S. Hynes Accounting Officer)

/s/ Arthur S. Bahr Director March 21, 1997
- ------------------------
Arthur S. Bahr

/s/ Thomas A. Cooper Director March 21, 1997
- ------------------------
Thomas A. Cooper

/s/ Edmund B. Greene Director March 21, 1997
- ------------------------
Edmund B. Greene

/s/ Gerald L. Igou Director March 21, 1997
- ------------------------
Gerald L. Igou

/s/ Kewsong Lee Director March 21, 1997
- ------------------------
Kewsong Lee

/s/ John M. Lummis Director March 21, 1997
- ------------------------
John M. Lummis

/s/ Howard H. Newman Director March 21, 1997
- ------------------------
Howard H. Newman

/s/ Scott E. Pardee Director March 21, 1997
- ------------------------
Scott E. Pardee

/s/ John C. Sweeney Director March 21, 1997
- ------------------------
John C. Sweeney

/s/ David A. Tanner Director March 21, 1997
- ------------------------
David A. Tanner

24

RENAISSANCERE HOLDINGS LTD AND SUBSIDIARIES.

INDEX TO SCHEDULES TO CONSOLIDATED FINANCIAL STATEMENTS



Pages
-----

Report of Independent Auditors on Schedules.................................................. S-2

I Summary of Investments other than Investments in Related Parties at December 31, 1996... S-3

III Condensed Financial Information of the Registrant....................................... S-4

V Supplementary Insurance Information for the years ended December 31, 1996, 1995 and 1994 S-6

VI Reinsurance for the years ended December 31, 1996, 1995 and 1994........................ S-7

X Supplementary Information Concerning Property-Casualty Insurance Operations............. S-8


Schedules other than those listed above are omitted for the reason that
they are not applicable.

S-1

REPORT OF INDEPENDENT AUDITORS ON SCHEDULES

To the Board of Directors and Shareholders
of RenaissanceRe Holdings Ltd.

We have audited the consolidated financial statements of RenaissanceRe
Holdings Ltd. and Subsidiaries as of and for the years ended December 31, 1996
and 1995 and have issued our report thereon dated January 15, 1997; such
financial statements and our report thereon are incorporated by reference
elsewhere in this Annual Report to Shareholders on Form 10-K. Our audits also
included the financial statement schedules listed in item 14(a)(2) of this
Annual Report on Form 10-K for the year ended December 31, 1996. These schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audit.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

Ernst & Young

Hamilton, Bermuda
January 15, 1997

S-2

SCHEDULE I

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUMMARY OF INVESTMENTS

OTHER THAN INVESTMENTS IN RELATED PARTIES
(EXPRESSED IN UNITED STATES DOLLARS)

(DOLLARS IN THOUSANDS)


YEAR ENDED
DECEMBER 31,1996
---------------------------------- AMOUNT AT
AMORTIZED MARKET WHICH SHOWN IN
TYPE OF INVESTMENT: COST VALUE THE BALANCE SHEET
--------- ------- -----------------

Fixed Maturities Available for Sale:
Non U.S. sovereign government bonds................. $239.0 $239.4 $239.4
Non U.S. corporate debt securities.................. 328.4 329.6 329.6
Non U.S. mortgage-backed securities................. 34.5 34.5 34.5
------ ------ ------
Subtotal......................................... 601.9 603.5 603.5
Short-term Investments................................. -0- -0- -0-
Cash and cash equivalents.............................. 199.0 199.0 199.0
------ ------- -------
Total investments, short-term
investments, cash and cash
equivalents.................................... $ 800.9 $802.5 $802.5
========= ======== ========


S-3

SCHEDULE III

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RENAISSANCERE HOLDINGS LTD.
BALANCE SHEETS
(PARENT COMPANY)

(EXPRESSED IN UNITED STATES DOLLARS)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



DECEMBER 31,
--------------------
1996 1995
---------- ---------

ASSETS
Cash.................................... $ 50,212 $ 20,055
Investments available for sale.......... 23,106 -0-
Investment in subsidiaries.............. 598,220 525,796
Dividend receivable..................... 26,300 38,000
Due from subsidiary..................... -0- 3,433
Other assets............................ 421 161
--------- --------
Total assets....................... $ 698,259 $587,445
========= ========

LIABILITIES
Loan payable............................ $ 150,000 $100,000
Other liabilities....................... 2,056 1,109
--------- --------
Total liabilities.................. $ 152,056 $101,109
========= ========
Commitments and contingencies...........

SHAREHOLDERS' EQUITY
Series A 15% Cumulative Convertible
Voting Preference Shares-$100 par
value-1,412,000 shares authorized,
issued and outstanding at December 31,
1994...................................

Common Shares: $1 par value-authorized
200,000,000 shares, issued and
outstanding at December 31,
1995-25,605,000 (1994-1,500 shares).... $ 23,531 $ 25,605

Additional paid-in capital.............. 102,902 174,370
Loans to officers and employees......... (3,868) (2,728)
Net unrealized depreciation on
investments............................ 1,577 2,699
Retained earnings....................... 422,061 286,390
--------- --------
Total shareholders' equity......... 546,203 486,336
--------- --------
Total liabilities and 698,259 $587,445
shareholders' equity............ ========= ========

STATEMENTS OF INCOME
(PARENT COMPANY)
(EXPRESSED IN UNITED STATES DOLLARS)
(DOLLARS IN THOUSANDS)



YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
------------------ ------------------ ------------------

Income:

Investment income...................... $ 2,424 $ 92 --
Total income.......................... 2,424 92 --
Expenses:
Amortization of organizational expenses 168 1,439 $ 1,679
Interest expense....................... 6,553 6,424 192
Operating costs and expenses........... 2,298 3,092 869
-------- -------- --------
Total expenses........................ 9,019 10,955 2,740
Loss before equity in net income of
subsidiaries.......................... (6,595) (10,863) (2,740)
Equity in net income of Renaissance..... 161,855 176,185 112,038
Equity in net income of Glencoe......... 900 -0- -0-
-------- -------- --------
Net income.............................. 156,160 165,322 109,298
Net income allocable to Series B -0- 2,536 12,879
Preference Shares...................... -------- -------- --------
Net income available to Common $156,160 $162,786 $ 96,419
Shareholders........................... ======== ======== ========



S-4

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT-(CONTINUED)

RENAISSANCERE HOLDINGS LTD.

STATEMENTS OF CASH FLOWS
(PARENT COMPANY)
(EXPRESSED IN UNITED STATES DOLLARS)

(DOLLARS IN THOUSANDS)



YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
------------------ ------------------ ------------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net income 156,160 $165,322 $ 109,298
Less equity in net income of 162,755 176,185 112,038
subsidiaries -------- -------- ---------
(6,595) (10,863) (2,740)

Adjustments to reconcile net income to
net cash provided by operating
activities
Other 3,630 1,020 2,740
------- -------- -------

Net cash applied to operating
activities (2,965) (9,843) -0-
-------- --------- ---------

CASH FLOWS APPLIED TO INVESTING ACTIVITIES

Contributions to subsidiaries (50,000) -- (102,459)
Proceeds from sales of investments 40,623
Purchases of investments (63,440)
Dividends from subsidiary 135,629
Proceeds from sale of minority
interest in subsidiary 15,126
Net cash provided by (applied to) 77,939 -- (102,459)
investing activities -------- -------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Shares 54,496
Repurchase of Common Shares (73,460)
Dividend to Common Shareholders (20,489) (4,096)
Net proceeds from bank loan 50,000 40,000 60,000

Proceeds from issue Series B 15%
Cumulative Redeemable Voting
Preference Shares 100,000
Redemption of Series B 15% Cumulative
Redeemable Voting Preference Shares (57,874) (57,541)
Other (868) (2,628)
-------- --------
Net cash provided by financing (44,817) 29,898 102,459
activities -------- -------- ---------
Net increase in cash and cash $ 30,157 $ 20,055 0
equivalents
Balance at beginning of year 20,055 0 0
-------- -------- ---------
Balance at end of year $ 50,212 $ 20,055 $ -0-
======== ======== =========


S-5

SCHEDULE V

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION
(EXPRESSED IN UNITED STATES DOLLARS)

(DOLLARS IN THOUSANDS)




DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1996
------------------------------------- -------------------------------------------------------------------------------

FUTURE
POLICY
BENEFITS, BENEFITS, AMORTIZATION
DEFERRED LOSSES, CLAIMS, OF DEFERRED
POLICY CLAIMS AND NET LOSSES AND POLICY OTHER
ACQUISITION CLAIMS UNEARNED PREMIUM INVESTMENT SETTLEMENT ACQUISITION OPERATING PREMIUMS
COSTS EXPENSES PREMIUMS REVENUE INCOME EXPENSES COSTS EXPENSES WRITTEN



Property... $6,819 $105,421 $65,617 $252,828 $44,170 $ 86,945 $26,162 $16,731 $251,564
====== ======== ======= ======== ======= ======== ======= ======= ========

DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1995
------------------------------------- ----------------------------------------------------------------------------------

FUTURE
POLICY
BENEFITS, BENEFITS, AMORTIZATION
DEFERRED LOSSES, CLAIMS, OF DEFERRED
POLICY CLAIMS AND NET LOSSES AND POLICY OTHER
ACQUISITION CLAIMS UNEARNED PREMIUM INVESTMENT SETTLEMENT ACQUISITION OPERATING PREMIUMS
COSTS EXPENSES PREMIUMS REVENUE INCOME EXPENSES COSTS EXPENSES WRITTEN

Property... $6,163 $100,445 $60,444 $288,886 $32,320 $110,555 $29,286 $10,448 $289,928
====== ======== ======= ======== ======= ======== ======= ======= ========

DECEMBER 31, 1994 YEAR ENDED DECEMBER 31, 1994
------------------------------------- ---------------------------------------------------------------------------------

FUTURE
POLICY
BENEFITS, BENEFITS, AMORTIZATION
DEFERRED LOSSES, CLAIMS, OF DEFERRED
POLICY CLAIMS AND NET LOSSES AND POLICY OTHER
ACQUISITION CLAIMS UNEARNED PREMIUM INVESTMENT SETTLEMENT ACQUISITION OPERATING PREMIUMS
COSTS EXPENSES PREMIUMS REVENUE INCOME EXPENSES COSTS EXPENSES WRITTEN

Property.... $5,797 $ 63,268 $59,401 $242,762 $14,942 $114,095 $25,653 $ 9,725 $269,954
====== ======== ======= ======== ======= ======== ======= ======= ========


S-6


SCHEDULE VI

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

REINSURANCE

(EXPRESSED IN UNITED STATES DOLLARS)

(DOLLARS IN THOUSANDS)





PERCENTAGE
ASSUMED OF AMOUNT
CEDED TO FROM OTHER NET ASSUMED
GROSS AMOUNT OTHER COMPANIES COMPANIES AMOUNT TO NET
----------- --------------- ---------- ---------- -----------

Year ended December 31, 1996
Property Premiums Written...... $1,552 $18,349 $268,361 $251,564 107%
====== ======= ======== ======== ===
Year ended December 31, 1995
Property Premiums Written...... $ - $ 2,679 $292,607 $289,928 101%
====== ======= ======== ======== ===
Year ended December 31, 1994
Property Premiums Written...... $ - $ 3,527 $273,481 $269,954 101%
====== ======= ======== ======== ===



S-7


SCHEDULE X

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION CONCERNING
PROPERTY/CASUALTY INSURANCE OPERATIONS

(EXPRESSED IN UNITED STATES DOLLARS)
(DOLLARS IN THOUSANDS)



CLAIMS
AND
CLAIMS
RESERVE EXPENSE
FOR INSURED PAID
DEFERRED UNPAID RELATED TO CLAIMS
POLICY CLAIMS DISCOUNT NET -------------- AND
AFFILIATION ACQUISITION AND CLAIMS IF ANY, UNEARNED EARNED INVESTMENT CURRENT PRIOR ACQUISITION CLAIMS PREMIUM
WITH REGISTRANT COSTS EXPENSES DEDUCTED PREMIUMS PREMIUMS INCOME YEAR YEAR COSTS EXPENSES WRITTEN
- --------------- ----------- ---------- -------- -------- -------- ---------- ------- ----- ----------- -------- -------

Consolidated
Subsidiaries
Year ended
December 31, 1996. $6,819 $105,421 $ -- $65,617 $252,828 $44,170 $75,118 $11,827 $26,162 $81,969 $251,564
====== ======== ======== ======= ======== ======= ======= ======= ======= ======= ========
Year ended
December 31, 1995 $6,163 $100,445 $ -- $60,444 $288,886 $32,320 $80,939 $29,616 $29,286 $73,378 $289,928
====== ======== ======== ======= ======== ======= ======= ======= ======= ======= ========

Year ended
December 31, 1994 $5,797 $63,268 $ -- $59,401 $242,762 $14,942 $114,095 $ -- $25,653 $51,809 $269,954
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S-8


EXHIBIT INDEX


EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.1 Memorandum of Association.*
3.2 Amended and Restated Bye-Laws.+
4.1 Specimen Common Share certificate.*
4.2 Amended and Restated Shareholders Agreement, dated as of December 23,
1996, by and among Warburg, Pincus Investors, L.P., Trustees of General
Electric Pension Trust, GE Private Placement Partners I, Limited
Partnership and United States Fidelity and Guaranty Company.
4.3 Amended and Restated Registration Rights Agreement, dated as of
December 23, 1996, by and among Warburg, Pincus Investors, L.P., PT
Investments, Inc., GE Private Placement Partners I,-Insurance, Limited
Partnership and United States Fidelity and Guaranty Company.
4.4 Amended and Restated Declaration of Trust of RenaissanceRe Capital
Trust, dated as of March 7, 1997, among the Company, as Sponsor, The
Bank of New York, as Property Trustee, The Bank of New York (Delaware),
as Delaware Trustee, and the Administrative Trustees named therein. +++
4.5 Indenture, dated as of March 7, 1997, among the Company, as Sponsor,
and The Bank of New York, as Debenture Trustee. +++
4.6 Series A Capital Securities Guarantee Agreement, dated as of March 7,
1997, between the Company and The Bank of New York, as Trustee. +++
4.7 Registration Rights Agreement, dated March 7, 1997, among the Company,
the Trust, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc. +++
10.1 Discretionary Investment Advisory Agreement, dated June 9, 1993,
between Renaissance Reinsurance Ltd. and Warburg, Pincus Counsellors,
Inc.*
10.2 Investment Management Agreement, dated as of November 1, 1993, between
GE Investment Management Incorporated and Renaissance Reinsurance Ltd.*
10.3 RenaissanceRe Holdings Ltd. Restricted Stock Plan.*
10.4 Agreement and Plan of Recapitalization, dated as of March 26, 1995, by
and among RenaissanceRe Holdings Ltd., Renaissance Reinsurance Ltd. and
the Investors (as defined therein).*
10.5 Amended and Restated Employment Agreement, dated as of March 26, 1995,
between Renaissance Reinsurance Ltd. and James N. Stanard.*
10.6 Employment Agreement, dated as of March 26, 1995, between Renaissance
Reinsurance Ltd. and Keith S. Hynes.*#
10.7 Third Amended and Restated Credit Agreement, dated as of December 12,
1996, among RenaissanceRe Holdings Ltd., various financial institutions
which are, or may become, parties thereto (the "Lenders"), Fleet
National Bank of Connecticut and Mellon Bank, N.A., as Co-Agents, and
Bank of America National Trust and Savings Association, as
Administrative Agent for the Lenders.
10.8 Equity Purchase Agreement, dated as of December 13, 1996, by and among
RenaissanceRe Holdings Ltd., Warburg, Pincus Investors, L.P., Trustees
of General Electric Pension Trust, GE Private Placement Partners I,
Limited Partnership and United States Fidelity and Guaranty Company. ++
10.9 RenaissanceRe Holdings Ltd. Second Amended and Restated 1993 Stock
Incentive Plan.
10.10 RenaissanceRe Holdings Ltd. Amended and Restated Non-Employee Director
Stock Plan.
13.1 Annual Report to Shareholders of RenaissanceRe Holdings Ltd. for the
year ended December 31, 1996 (with the exception of the information
incorporated by reference into Items 5, 7, 8 and 14 of this Report,
such Annual Report to Shareholders is furnished for the information of
the Commission and is not deemed "filed" as part of this Report).
21.1 List of Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
- -----------------------
* Incorporated by reference to the Registration Statement on Form S-1 of the
Company (Registration No. 33-70008) which was declared effective by the
Commission on July 26, 1995.
** Incorporated by reference to the Registration Statement on Form S-1 of the
Company (Registration No. 333-00802) which was declared effective by the
Commission on February 27, 1996.


+ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on January 7, 1997, relating to events which
occurred on December 23, 1996.
++ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on December 16, 1996, relating to an event which
occurred on December 13, 1996.
+++ Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on March 19, 1997, relating to certain events
which occurred on March 7, 1997.
# A substantially similar form of Employment Agreement has been entered into
by Renaissance Reinsurance Ltd. and each of Messrs. Currie, Riker and
Eklund.